DPB3063:BUSINESSLAW

CHAPTER5:SALEOFGOODS
COURSELEARNINGOUTCOMES(CLO2)
Applyappropriatelythebasicconceptsandprinciplesof
businesslawinMalaysia.(C3)

Attheendofthischapter,studentsshouldbeableto:
1. Discussthenatureofsaleofgoods
2. Interpretimpliedtermsrelatingtosaleofgoodscontract
3. Describetransferofpropertyandtitleundersaleofgoods
4. Describetheprotectionstobuyersandowners
5. Describethebreachofcontractandtheremediesofcontract
ofsale
INTRODUCTION
TheSaleofGoodsAct1957appliestoallthestatesin
MalaysiaexceptthestateofPenang,Malacca,Sabah&
Sarawak
S3SOGA1957providesthattheprovisionsoftheContract
Act1950(Revised1974)willapplytoallcontractsforthesale
ofgoodsunlesstheyareinconsistentwiththeexpress
provisionsoftheSOGA.
Thesaleofgoodslegislationisaimedatofferingprotectionto
theconsumerand;themainpurposeofacontractinvolving
goodsisthetransferofownership
DEFINITIONOFGOODS

goodseverykindofmovableproperty
otherthanactionableclaimsandmoney;&
S2SOGA includesstock&shares,growingcrops,
1957 grass&thingsattachedtoorformingpart
ofthelandwhichareagreedtobeservedbefore
saleorunderthecontractofsale

Goodsdoesnotinclude:
Land
Chosesonactionorrights
Services
DEFINITIONOFGOODS
Goodsthataresubjectofacontractofsalecanbeclassified
inanumberofways;
a) Existing
b) Future
c) Specific
d) Unascertained
e) Ascertained
 DEFINITIONOFGOODS
TypesofGoods Description
Existing Goodsalreadyownedbytheseller,&maybeeither
specificgoodsthatareagreeduponatthetimeacontract
ofsaleismade
Future Goodstobemanufacturedorproducedoracquiredbythe
selleraftermakingofthecontractofsale
Specific Goodsidentified&agreeduponatthetimeacontractof
saleismade
Unascertained Goodsthatareidentifiedbydescriptiononly
Ascertained Goodswhichinacontractforthesaleofunascertained
goods,havebecomeidentified&agreedupontheparties
THECONTRACTOFSALE
S4(1)SOGA1957Acontractofsaleofgoodsisacontract
whereinthesellertransfersoragreestotransfertheproperty
ingoods(theownership)tothebuyerforaprice(amoney
consideration)
Asaleoccurswhentheownershipofpropertyingoodspasses
tothebuyer.Thesemeansthattheremustbe:
1. Goods
2. Moneyconsideration(price)
3. Transferofproperty
AGREEMENTTOSELL
S4(3)SOGA1957isacontractunderwhichthetransferof
thepropertyinthegoodsistotakeplaceatafuturetimeor
subjecttosomeconditionthereaftertobefulfilled.
S4(4)SOGA1957anagreementtosellbecomesasalewhen
thetimeelapsesortheconditionsarefulfilledsubjectto
whichthepropertyinthegoodstobetransferred.
FORMATIONOFTHECONTRACT
S5(1)SOGA1957acontractofsaleismadebyanofferto
buyorsellgoodsatapriceandbytheacceptanceofsuchan
offer.
Thecontractmayprovideforimmediatedeliveryofthegoods
ortheimmediatepaymentofthepriceorboth.Deliveryor
paymentmayevenbebyinstalments.
Pricemeansthemoneyconsiderationforthesaleofgoods.
S5(2)1957acontractofsalemaybemadeinwritingorby
wordofmouth,orpartlyinwritingandpartlybywordof
mouth,ormaybeimpliedfromtheconductoftheparties.
TERMSOFCONTRACT
Ifitispossibletodiscover,byinspection,thequality&
conditionofthegoods&theirfitnessforaparticularpurpose,
thebuyerwillgenerallyloseanylegalrightsthatmayhave
existedagainstthesellerifthegoodsarenotsatisfactory.
Buyershaveonlythemselvestoblameiftheyfailtomakea
carefulinspectionofthegoodsbeforetheypurchasethem.
CaveatEmptorletthebuyerbeware
TERMSOFCONTRACT
However,thereareexceptionintheapplicationofcaveat
emptor:
1) Whenthereisnoreasonableopportunityforinspection;and
2) Whenthebuyerhastorelyonthespecialknowledgeorexpert
judgementoftheseller.
TheSOGA1957impliesanumberoftermsintosuchcontractas
eitherconditionsorwarranties.
TERMSOFCONTRACT

CONDITIONS
S12(2)SOGA1957astipulationessentialtothemain
purposeofthecontract,thebreachofwhichgivesrisetoa
righttotreatthecontractasrepudiated
Abreachofconditionsentitlestheinnocentpartytorepudiate
thecontract.
However,thereare4circumstances,theinnocentparty
cannotrepudiatethecontractbutcanmerelyclaimdamages.
 TERMSOFCONTRACT

CONDITIONS
1. Wherethebuyerwaivesthecondition;
2. Wherethebuyerelectstotreatthebreachofconditionasa
breachofwarranty&claimdamagesonly;
3. Wherethecontractofsaleisnotseverable&thebuyerhas
acceptedthegoodsorpartthereof,thebreachofanycondition
mustbeacceptedasabreachofwarrantyunlessotherwise
providedinthecontract;
4. Wherethecontractisforspecificgoodsthepropertyinwhichhas
passedtothebuyer,thebreachofanyconditionmustbeaccepted
asabreachofwarrantyunlessprovidedinthecontract
TERMSOFCONTRACT

WARRANTY
S12(3)SOGA1957astipulationcollateraltothemain
purposeofthecontract
Thebreachofwhichgiverisetoaclaimfordamagesbutnot
toarighttorejectthegoods&treatthecontractas
repudiated.
 TERMSOFCONTRACT

IMPLIEDCONDITION
Impliedtermsaretermsnotstatedbutunderstoodfromparties
conduct,circumstancesandprevailingpractice.
Becauseitisdifficulttoprovethepartiesintentionsasintentions
arenotexpresslystatedincontract.
SOGA1957impliesanumberofstipulationsineverycontractfor
thesaleofgoods.
Theseimpliedtermsapplyonlywhenthepartiestothecontractof
salehavenotexcludedormodified.
Theseimpliedtermslaiddowninsection14to17oftheSOGA
TERMSOFCONTRACT

IMPLIEDCONDITION

Salegoodsby
Title
sample

Thegoodsmust
correspondwith
thedescription
TERMSOFCONTRACT

IMPLIEDCONDITION
TITLE
S14(a)SOGA1957sellerhastherighttosellthegoodsand
whentopassthepropertywhenitistimetodoso.
Abreachofthisconditionentitlesthebuyertorepudiatethe
contract,i.e.totreatthecontractasatanend&recoverthe
priceinfulleventhoughthebuyerhasusedthegoods.
Case: RowlandvDivall[1923]2KB500
TERMSOFCONTRACT

IMPLIEDCONDITION
Case: ROWLANDVDIVALL[1923]
Fact: WhetherRowlandcouldrecoverthefullamountthe
hehadpaidfromDivalleventhoughhehadusedthecarfor
4months.
Held: AlthoughRowlandhadtheuseofthecarsometime,
hewasentitledtorecoverthefullpricehehadpaidbecause
Divallhadnorighttosellhimthecarbecauseitwasstolen.
Rowlandhadfailedtogettheproperty(title)inthecar,so
therewasatotalfailureofconsideration.
TERMSOFCONTRACT

IMPLIEDCONDITION
SALEBYDESCRIPTION
S14(5)SOGA1957wherethereisacontractforthesaleof
goodsbydescription,thereisanimpliedconditionthatthegoods
shallcorrespondwiththedescription
Wheregoodsaresoldbyreferencetoasampleaswellas
description,thegoodsmustcorrespondwithboththesample&
thedescription
Case: VarleyvWhipp[1900]

Breach of this condition: buyer

can reject goods and treat
contract as ending.
TERMSOFCONTRACT

IMPLIEDCONDITION
Case: VARLEYVWHIPP[1900]
Fact: Thebuyerpurchaseda2ndhandreapingmachine
withouteverhavingseenit.Thesellerhaddescribeditas
newthepreviousyear&usedittocutonly50or60acres.In
fact,themachinewasveryold.
Held: Thiswasasalebydescription,&sincethemachine
didnotcorrespondtoitsdescription,thesellerwasin
breach.
TERMSOFCONTRACT

IMPLIEDCONDITION
SALEBYSAMPLE
Thereare3impliedconditionsincontractsofsaleby
sample:
1. thebulkshallcorrespondwithsampleinquality;
2. ifthedifferencesareonlyofaminornatureandthe
qualityofthegoodsisstillthesame,thisconditionwill
notbebreach;
3. thebuyershallhaveareasonableopportunityof
comparingthebulkwiththesample conditions:
Breach of any one of the
buyer can reject
goods and treat contract as
TERMSOFCONTRACT

IMPLIEDWARRANTY

Quiet
Goodsare
Possessionof
Unencumbered
theGoods

Goods GoodsMustbeof
ReasonablyFit Merchantable
forPurpose Quality
TERMSOFCONTRACT

IMPLIEDWARRANTY
QUIETPOSESSIONOFGOODS
S14(b)SOGA1957thereisanimpliedwarrantythatthe
buyershallhave&enjoyquietpossessionofthegoods.
Buyerhaveexclusiveprivacyandenjoymentwiththegoods.
Sellercannotinterfereinanymannerunlesswithexpress
consentfrombuyer.
Abreachofthisstipulationwillnotentitletheinnocent
partytorepudiatethecontract.
TERMSOFCONTRACT

IMPLIEDWARRANTY
GOODSAREUNENCUMBERED
S14(c)SOGA1957thegoodsarefreefromanychargein
favourof3rdpartywhoisunknowntothebuyer.
E.g.:storagechargeswhichhavetobepaidbeforethegoods
canbecollected.
TERMSOFCONTRACT

IMPLIEDWARRANTY
GOODSAREFITFORPURPOSE
S16(1)(a)Goodsmustbereasonablyfitforthepurpose
whichthebuyeracquiresthem.Ifbuyeraskssellerto
supplygoodswhichisspecified,conditionsmustbeas
requestedbythebuyer.
1. Goodsmustbereasonablyfitforpurposeforwhichthebuyer
wantsthem;
2. Goodsmustbeofmerchantablequality.
TERMSOFCONTRACT

IMPLIEDWARRANTY
GOODSAREFITFORPURPOSE
Buyershouldindicatetheparticularpurposeofthegoodsto
ensurethatisthequalityofthegoodsheexpects.
Sometimesbuyermayrelyonskillofsellertosupplyhim
suchgoods.
TERMSOFCONTRACT

IMPLIEDWARRANTY
GOODSMUSTBEOFMERCHANTABLEQUALITY
S16(1)(b)SOGA1957wheregoodsareboughtby
descriptionfromasellerwhodealsingoodsofthat
descriptionthereisanimpliedconditionthatthegoodsshall
beofmerchantablequality:providedthatifthebuyerhas
examinedthegoodsthereshallbenoimpliedconditionas
regardsdefectwhichsuchexaminationoughttohave
revealed.
PRIVITYOFCONTRACT
Asanytypeofcontract,thegeneralruleisthattermsofa
contractareonlybindingonthepartiestosuchacontract.
Thetermsimpliedinacontractofsaleareonlybetweenthe
contractingparties,whichisbuyerandseller.
Ifathirdpartyusesgoodspurchasedbyanotherandis
injuredasaresultofsomedefectsinthegoods,hecannotsue
thesellerinanactionundercontract.
Hisremedywouldbetosuethemanufacturerundertort
DonoghuevStevenson.
 PRIVITYOFCONTRACT

PRIVITYOFCONTRACT
Case: DONOGHUEVSTEVENSON[1932]

Fact: Amanufacturerofgingerbeerhadsoldtoaretailerginger
bearinaopaquebottle.TheretailerresoldittoDonoghuewho
treatedherfriendtoitscontents.Thegingerbeerbottlealso
containedthedecomposedremainsofasnailwhichhadfounditsway
intothebottleatthefactory.Donoghueallegedthatshebecame
seriouslyillinconsequenceandsuedthemanufacturerfornegligence.
Issue: Isthereliabilityinnegligenceforinjurycausedbyanotherin
theabsenceofacontract?
TRANSFEROFPROPERTY&TITLE
Whenapersontakesgoods,hegetsonlythesamerightsto
thegoodsasthepersonfromwhomhetookthem.
ThisruleisexpressedinLatinmaximnemodatquodnon
habetS27SOGA1957.
Thisprovisionmeansthatifgoodsareboughtfromaperson
whoisnottheowner,andwhodoesnotsellthemunderthe
ownersauthority,thebuyerdoesnotacquireanytitle.
Therightfulownerofgoodsisentitledtorecoverhisgoods
fromthosewhohavenotitletothem.
TRANSFEROFPROPERTY&TITLE
Butthereareexceptionstothenemodatquodnonhabet;

Saleby
Saleby1of
Estoppel mercantile
jointowners
agent

Salebyaseller
Saleundera Salebyabuyer
inpossession
voidabletitle inpossession
aftersale
TRANSFEROFPROPERTY&TITLE

ESTOPPEL
S27SOGA1957Wheretheownerbyhisconductmakesit
appeartothebuyerthatthepersonwhosellsthegoodshas
hisauthoritytodoso&thebuyerreliesonthatconduct,the
buyerobtainsagoodtitlebecausetheownerisprecludedby
hisconductfromdenyingthesellersauthoritytosell
TRANSFEROFPROPERTY&TITLE

SALEBYAMERCANTILEAGENT
Withtheconsentoftheownerinpossession,ofthegoods
orofadocumentoftitletothegood,anysalemadebyhim
whenactingintheordinarycourseofbusinessofmercantile
agentshallbeasvalidasifhewasexpresslyauthorizedby
theownerofthegoods(principal)tomakethesame.
TRANSFEROFPROPERTY&TITLE

SALEBYAMERCANTILEAGENT

Goodssoldbyamercantileagentmaypassgoodtitlein
sellingifhehasthefulfilledtherequirementsunderS27as
wellashavingtheauthoritytosell:
a) theagentmustpossessthegoodsordocumentoftitle;
b) thepossessionmustbewiththeconsentorauthorityof
theowner;
c) thesalemustbeintheordinarycourseofbusinessofa
mercantileagent.
TRANSFEROFPROPERTY&TITLE

SALEBYAMERCANTILEAGENT

S2definesmercantileagentasanagenthavinginthe
customarycourseofbusinesshassuchauthorityeitherto
sellgoods,forthepurposeofsale,ortobuygoods
Thusagent:whohasauthoritymaypassgoodtitleinselling
goodsbelongingtohisprincipalprovidedheisactingwithin
thescopeoftheactualauthority.
Case :FolkesvKing[1923]1KB282
TRANSFEROFPROPERTY&TITLE

SALEBY1OFJOINTOWNER

Goodsmaybeownedbymorethanoneperson.
S28Ifoneseveraljointownersofgoodshasthesole
possessionofthembypermissionofthecoowners,the
propertyinthegoodsistransferredtoanypersonwhobuys
themfromsuchjointowneringoodfaith.
However,thebuyermustnothavehadanynoticethatthe
sellerhadnoauthoritytosell
TRANSFEROFPROPERTY&TITLE

SALEUNDERAVOIDABLETITLE
S29providesthatwheresellerofgoodshasobtained
possessionthereofunderacontractvoidableunderS19&S20
butthecontracthasnotbeenrescindedatthetimeofthesale,
thebuyeracquiresagoodtitletothegoodsprovidedhebuys
themingoodfaithandw/outnoticeofthesellersdefectof
title.
AcontractisavoidableundereitherS19orS20ofthe
ContractAct1950whentheconsentoftheoriginalowneris
causedbycoercion,fraud,misrepresentationorundue
influence.
TRANSFEROFPROPERTY&TITLE

SALEBYASELLERINPOSSESSIONAFTERSALE
S30(1)Ifasellercontinuesinpossessionofthegoodsor
holdsdocumentsoftitleaftersale,andthenhetransfersthe
goodsorthedocumentoftitletoathirdparty,whobuysthem
ingoodfaithandwithoutknowledgeoftheprevioussale,the
secondsaleisconsideredasgood.
Itisassumedthattheownerauthorizedit.
Case :PacificMotorAuctionsPtyLtdvMotorCredits(Hire
Finance)Ltd[1965]
TRANSFEROFPROPERTY&TITLE

SALEBYABUYERINPOSSESSION
S30(2)Ifabuyerhavingboughtoragreedtobuygoods,
obtainswiththeconsentofthesellerpossessionofthegoods
orthedocumentsoftitletothegoods,thedeliveryortransfer
bythatpersonorbyamercantileagentactingforhimthereof
toanypersonreceivingthesameingoodfaithandwithout
noticeofanylienorotherrightoftheoriginalsellerinrespect
ofthegoodsshallhaveeffectasifsuchlienorrightdidnot
exist
Case :NewtonsofWembleyLtdvWilliams[1965]
REMEDIESFORBREACHOFCONTRACT

Failureof Failureof
BuyertoTake BuyertoTake
Delivery Goods
Rightsof
aseller
Failureof
BuyertoPay
forGoods
RIGHTSOFASELLER

FAILUREOFBUYERTOTAKEDELIVERY

S44Whenabuyerneglectorrefusesdeliveryofgoods,
he/sheisliabletothesellerforanylosscausedbythebuyer
neglectorrefusaltotakedelivery.Thebuyeralsoliabletopay
reasonablechargeforthecare&custodyofthegoods.
S56providesthatwherethebuyerwrongfullyneglectsor
refusestoaccept&payforthegoods,thesellermaysuehim
fordamagesfornonacceptance.
RIGHTSOFASELLER

FAILUREOFBUYERTOTAKEGOODS

S36(1)Whetherthesellerisrequiredtosendthegoodsto
thebuyerorthebuyerhastotakepossessionofthegoods
dependsonwhathasbeenagreeduponbetweenthem.
S56providesthatwherethebuyerwrongfullyneglectsor
refusestoaccept&payforthegoods,thesellermaysuehim
fordamagesfornonacceptance.
RIGHTSOFASELLER

FAILUREOFBUYERTOPAYFORGOODS
Wherethesellerdeliverstothebuyeraquantityofgoodsless
thanthatwhichhecontractedtosell,thebuyermayrejectall
thegoods.Ifthebuyeracceptthegoodssodelivered,heis
boundtopayforthematthecontractrate.S37(1)
Ifthesellerdeliverstothebuyeralargerquantityofgoods
thanthatwhichwascontracted,thebuyermay;
Acceptthegoodsincludedinthecontract&rejecttherest;or
Rejectallthegoods;or
Acceptallthegoods.
RIGHTSOFASELLER

FAILUREOFBUYERTOPAYFORGOODS

Ifthebuyerchoosetoacceptallgoods,hehastopayforthe
goodsatthecontractrate.
Wherethesellerdeliverstothebuyerthegoodshecontracted
tosellmixedwithgoodsofadifferentdescriptionnotincluded
inthecontract,thebuyermay;
Acceptthegoodsandrejecttherest;or
Rejectthewhole
RIGHTFORBREACHOFCONTRACT

Stoppage
Lien in
Rightsof
Transit the
unpaid
seller
Resale
RIGHTSOFTHEUNPAIDSELLER

Anunpaidsellerisasellertowhom:
a) Thewholeofthepricehasnotbeenpaidortendered;or
b) Whereabillofexchangeorothernegotiableinstrument
hasbeenreceivedasconditionalpayment,&thecondition
onwhichitwasreceivedhasnotbeenfulfilleddueto
instrumentbeingdishonoredorforsomeotherreason
 RIGHTSOFTHEUNPAIDSELLER

Therightoftheunpaidselleragainstthegoodsare:
1. S46(1)(a)Lien
Arightofsellertokeeppossessionofthegoodsuntilthe
buyersettlethedebt
2. S46(1)(b)StoppageinTransit
Arightofstoppingthegoodsintransitinthecaseofthe
buyersinsolvency
3. S46(1)(c)Resale
Sellerhasauthoritytoresalethegoodswithregardswith
S54(2)
RIGHTFORBREACHOFCONTRACT

Actionfor
Actionfor
Specific Rightsof
Non
Performanc thebuyer
delivery
e
RIGHTSOFTHEBUYER

Besidesbreachofcontractbeingcommittedbybuyer,itmay
bethatthebreachofcontractiscommittedbytheseller.
Thishappens,e.g.whenthesellermayfailtodeliverthe
goodsorwherethereisabreachofwarranty.
RIGHTSOFTHEBUYER
Rightofbuyertobringactionfornondelivery
S57Wherethesellerwrongfullyneglectsorrefusesto
deliverthegoodstothebuyer,thebuyermaysuetheseller
fordamagesfornondelivery.

Rightofbuyertobringanactionforspecificperformance
S58thebuyermaybringanactionforthespecific
performanceofthecontractbythedeliveryofspecificor
ascertainedgoods.
Usuallyspecificperformanceisorderedbythecourtonlywhen
goodsarespecialorpeculiarkind.
Q&ASESSION
THEEND.THANKYOU