SALE OF GOODS Applicable Laws

Law applicable- Other than Penang, Malacca, Sabah

and Sarawak, the Sale of Goods Act 1957 (SGA)

applies in other states. In the four states still refer to

UK Sale of Goods Act 1893.

Only slight differences as SGA 1957 is based on UK SGA 1893

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S 2 of SGA defines goods as:

every kind of movable property other than actionable

claims and money; includes stocks, shares, growing

crops, grass and things attached to or forming part of

the land which are agreed to be severed before sale

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S 6 SGA: Goods may be existing goods or

future goods, may either be specific or

unascertained goods.

The Contract of Sale: is a contract where the

sellers transfers or agrees to transfer the

property in goods to the buyer for a price.

Agreement to sell: future transfer of property

in goods where some conditions need to

fulfilled

Formation of Contract of Sale of Goods

A contract of sale is made by an offer to buy or sell

goods at a price.

Capacity is according to Contracts Act 1950.

Delivery/ payment may be immediate/ by instalments.

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A contract of sale may be made in

writing or by word of mouth, or partly

in writing or partly by word of mouth,

or may be implied from conduct from

the conduct of the parties

Terms of the Contract

Caveat Emptor- let the buyer beware,

if inspection reveal the quality & condition of goods the

buyer will lose rights against seller if goods are not

satisfactory

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Condition- 12(2) SGA

Essential to the main purpose of

contract, breach- it may be treated as

repudiated-exceptions on pg.308

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Warranty- 12(4) SGA

Collateral to the main contract; any breach-

can claim damages but not to reject the

goods/ repudiate the contract.

IMPLIED TERMS

Time- S 11 SGA: Time of payment are not deemed to be

the essence of the contract of sale unless stated

otherwise

Title- S 14 (a) : Seller has the right to sell the goods

(Rowland v Divall)

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Quiet possession- 14 (b): The buyer

shall have and enjoy quiet

possession of the good.

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Goods are free from encumbrances- 14 (3):

Goods are free from any charge/encumbrance in

favour of third party not known or declared to

buyer at the contract was made.

Goods correspond with description- S 15: the goods shall

correspond with the description, if sale by sample &

description, goods must correspond with both

Nagurdas Porshutamdas v Mitsui Bussan Kaisha

Varley v Whipp

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Fitness for a particular purpose- S 16 (1)-Deutz Far East v

Pacific Navigation

Merchantable Quality- S 16 (1) (b)- ..goods brought from a

seller who deals in goods of that description, the goods

must be in merchantable quality. However, if buyer has

examined the goods, there shall be no implied condition..

Wren v Holt

Mcwilliam Wines Ltd v Liaweena

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David Jones Ltd v Willis

Reevex International v Maclaine Watson

Trading

Wilson v Rickett, Cockerall & Co. Ltd.

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Sale by sample- S 17 (1) & (2): The

bulk shall correspond with sample;

buyer has ample opportunity to

examine the bulk of goods; and goods

are free from any defect-

Godley v Perry

TRANSFER OF PROPERTY IN GOODS

Property in goods (title/ownership) must be distinguished from

possession, IOW: Goods may have been sold to buyer but possession still

remains with the seller.

1. S 18- Sale of unascertained goods: Property in goods can only be

transferred to buyer after goods are ascertained.

2. S 19- Sale of ascertained goods: Property is transferred to the buyer

when the parties to the contract intend it to be transferred

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3. S 20- the property in goods passes to the buyer when the contract

is made.

4. S 21- The seller must do something to put the goods in a

deliverable state, property does not pass until such thing is done.

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5. S 22- Where seller is supposed to weigh,

measure, test or do something to ascertain the

price of goods, property does not pass until

such thing is done and buyer has notice of it.

6. S 23- Sale of unascertained or future goods,

by description; goods in that description

unconditionally appropriated to the contract by

both buyer & seller, the property in goods

passes to the buyer.

7. S 24- When goods are delivered to the buyer on approval, the property

in goods passes to the buyer.

TRANSFER OF TITLE

Nemo dat quod non habit

No one can pass better title than he has himself

Maxim contained in S 27 SGA- ..where goods are sold by a person who is

not the owner and sells without the authority or consent of the owner,

the buyer acquires no better title..

Lim Chu Lai v Zeno Ltd.

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Exceptions to Nemo dat rule

1. Estoppel: S 27 SGA- Owner of goods by his own

conduct precluded from denying the seller s

authority to sale

2. Sale by mercantile agent: proviso of S 27(

Folkes v King)

3. Sale by one of joint owners: S 28- One of the

owner has sole possession of goods by permission

of the co-owners; the buyer buys in good faith and

has not noticed that the seller lacks authority

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4. Sale under a voidable contract: S 29- Seller of goods obtained

possession under a contract voidable under S 19 & S 20 of CA but

contract not yet rescinded at time of sale, the buyer acquires title of

goods in good faith and without notice of sellers defect of title.

5. Sale by a seller in possession after sale: S 30(1)- If seller continues

to be in possession of goods or document of title to the goods, sells it

to another person and the second buyer buys in good faith (Pacific

Motor Auctions Pty Ltd v Motor Credit Ltd)

6. Sale by a buyer in possession: S 30 (2) the buyer with the

consent of the seller obtains possession of goods or document of title

to goods, may dispose or pledge the goods to another person who

purchases in good faith..( Newton of Wembley Ltd v Williams).

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PERFORMANCE OF CONTRACT

Chapter IV of the Sale of Goods Act

1. Delivery - S 31: The duty of seller to deliver goods while the

buyers duty as to accept and pay for them..

S32-unless otherwise agreed, delivery and payment are

concurrent conditions.

2. Place of delivery- S 36 (1): Goods sold are to be delivered at the

place at which they are at the time of the sale..

3. Time of delivery: 36 (2) within reasonable time

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3. Delivery of wrong quantity

S37(1)- if seller delivers less than he contracted to sell,

the buyer may reject all the goods delivered. If buyer

accepts he has to pay for them.

37(2)- if seller delivers more than contracted, buyer may:

accept the goods included in the contract and reject the

rest; reject all the goods; or accept all the goods.

If seller deliver mixed goods of different description not

included in the contract, the buyer may:

Accept the goods mentioned in the contract; or reject the

whole delivery- 37(3)

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5. Delivery by Instalments: S 38 (1): Unless agreed by the

parties, the buyer is not bound to accept delivery by

instalments (Hammer & Barrow v Coca Cola)

6. Delivery to carriers or Wharfingers: S 39(1)- Seller

delivers goods to carriers for transmission or to

wharfingers for safe custody it is deemed to be a delivery

of goods to buyer.

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RIGHTS OF UNPAID SELLER AGAINST THE GOODS

SGA accords additional remedies for the unpaid seller.

Remedies are against the goods themselves and not

personal. S 45 defines unpaid seller as:

a. when the whole price has not been paid or tendered for;

b. when bill of exchange or negotiable instrument has been

dishonoured

S 46: (a) right of lien (b) stoppage in transit (c) resale 25

RIGHT OF LIEN

Rights arises based on S 47:

1. Goods sold without any stipulation of credit

2. Goods sold on credit but term of credit has expired

3. The buyer becomes insolvent

Seller loses rights if (based on S 49 (1)):

1. Goods delivered to carrier for transmission without

reserving the rights for the disposal of the goods

2. When buyer or his agents lawfully obtains possession

of the goods

3. When the seller waives his lien 26

STOPPAGE IN TRANSIT

S 50: An unpaid seller who has parted with the

possession of goods has the right to stop them in transit

when the buyer becomes insolvent.

Applies only to insolvent buyer or insolvent person

under S 2.

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Putting stoppage in transit into effect

S52-unpaid seller may take possession or give notice to

carrier or bailee who has possession of goods

52(1)- if notice given to principal of carrier, principal must

communicate it to subordinate to prevent delivery

52(2)-if seller instruct to redeliver, seller must bear the

cost

54(1)- stoppage in transit or lien does not rescind a valid

contract of sale

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Remedies of the Buyer

Action for Non-Delivery of Goods

S57- where the seller wrongfully neglects or refuses to

deliver goods to the buyer, buyer may sue the seller for

damages for non-delivery.

Action for specific performance

S58- a buyer may bring an action for the specific

performance of contract

Mensa Mercantile v Eikobina

Behnke v Bede Shipping

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Remedies for buyer in breach of Warranty

Where seller commits breach of warranty, buyer may:

1. set up against seller the dimunition or extinction of the

price;

2. sue the seller for damages for breach of warranty

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