(Sale of Goods)

CHAPTER 6
Sale of Goods
Business Law All Rights Reserved

© Oxford Fajar Sdn. Bhd. (008974-T) 2010 Ch9: 1
OBJECTIVES
After studying this chapter, you should be able to:

 lays down the basic principles of the law
governing sale of goods

PREVIEW
 Applicable Laws
 Definition of ‘Goods’
 The Contract of Sale
 Agreement to Sell
 Formation of the Contract
 Terms of the Contract
 Transfer of Property
 Transfer of Title
 Performance of the Contract
 Remedies for Breach
 Consumer Protection Legislation
APPLICABLE LAWS
 Sale of Goods Act 1957 (SOGA 1957) applies in

Malaysia (except Penang, Malacca, Sabah and
Sarawak) – Section 1 of the Sale of Goods Act 1957
 Penang, Malacca, Sabah and Sarawak is governed
by the English Sale of Goods Act 1893
 see Seng Djit Hin v Nagurdas Purshotumdas & Co
 the provisions of the Contracts Act 1950 (Revised
1974) continues to apply to contracts for the sale of
goods unless they are inconsistent with the express
provisions of the Sale of Goods Act – section 3 of
the Sale of Goods Act 1957
DEFINITION OF ‘GOODS’
 ‘every kind of movable property other than
actionable claims and money; and includes stock
and shares, growing crops, grass and things
attached to or forming part of the land which are
agreed to be severed before sale or under the
contract of sale’ – section 2, SOGA 1957
 it does not include:
– land
– things attached to land (though it does include timber and
growing crops which are to be harvested before sale or
under the contract of sale)
– choses in action or rights, e.g. debts, negotiable
instruments and patents
– services, such as work and labour, or repair

DEFINITION OF ‘GOODS’ (cont.)
 classifications of goods:
1. Existing 4. Unascertained
2. Future 5. Ascertained
3. Specific
 goods which form the subject of a contract of sale
may either be existing goods or future goods –
section 6 of SOGA 1957
 existing goods – goods already owned or possessed
by the seller, and may be either specified or agreed
upon at the time a contract of sale is made
DEFINITION OF ‘GOODS’ (cont.)
 specific goods – goods identified and agreed upon

at the time a contract of sale is made
 ascertained goods – goods which, in a contract for
the sale of unascertained goods, have become
identified and agreed upon by the parties
 unascertained goods – those identified by
description only
 future goods – goods to be manufactured or
produced or acquired by the seller after the making
of the contract of sale: section 2 of SOGA 1957
THE CONTRACT OF SALE
 a contract whereby the seller transfers or agrees to

transfer the property in goods [the ownership] to the
buyer for a price [a money consideration] – section
4(1) of SOGA 1957
 there must be:
1. Goods
2. Money consideration (price)
3. Transfer of property

AGREEMENT TO SELL
 a contract under which the transfer of the

property in the goods is to take place at a future
time or subject to some condition thereafter to be
fulfilled – section 4(3), SOGA 1957
 an agreement to sell becomes a sale when the
time elapses or the conditions are fulfilled subject
to which the property in the goods is to be
transferred – section 4(4), SOGA 1957

FORMATION OF THE CONTRACT
Formation
 a contract of sale is made by an offer to buy or sell
goods at a price and by the acceptance of such an
offer – section 5(1), SOGA 1957
 the contract may provide for the immediate delivery
of the goods or the immediate payment of the price
or both
 delivery or payment may even be by instalments –
section 5(1), SOGA 1957
 price – the money consideration for the sale of
goods
(cont.)
Formalities
 a contract of sale may be made in writing or by word
of mouth, or partly in writing and partly by word of
mouth, or may be implied from the conduct of the
parties – section 5(2), SOGA 1957
Price
 may be fixed in the following manner:
1. It may be fixed by the contract
2. It may be left to be fixed in a manner agreed in
the contract
(cont.)
3. It may be determined by the course of dealing
between the parties
4. Where the price is not determined in any one of
the aforesaid ways, the buyer must pay a
reasonable price
 what is a reasonable price is a question of fact
dependent on the circumstances of each particular
case – section 9, SOGA 1957
Capacity to Contract
 the legal principles and the law on contract
governing capacity in ordinary contract law apply to
contracts of sale
TERMS OF THE CONTRACT
Conditions and Warranties

 where it is possible to discover, by inspection, the
quality and condition of the goods and their fitness
for a particular purpose, the buyer will generally lose
any legal rights that may have existed against the
seller if the goods are not satisfactory
 a stipulation in a contract of sale with reference to
goods which are the subject thereof may be a
condition or a warranty – section 12(1), SOGA 1957

(cont.)
 whether a stipulation is a condition or warranty
depends in each case on the construction of the
contract. The stipulation may be a condition,
though called a warranty in the contract –
1. Condition
 ‘a stipulation essential to the main purpose of the
contract, the breach of which gives rise to a right
to treat the contract as repudiated’ – section
12(2), SOGA 1957

(cont.)
 a breach of condition entitles the innocent party to
repudiate the contract
 however, in the following circumstances, the
innocent party cannot repudiate the contract but
can merely claim damages:
– where the buyer waives the condition
– where the buyer elects to treat the breach of condition as
a breach of warranty and claims damages only
– where the contract of sale is not severable and the buyer
has accepted the goods or part thereof, the breach of
any condition must be accepted as a breach of warranty
unless otherwise provided in the contract
(cont.)
– where the contract is for specific goods the
property in which has passed to the buyer, the
breach of any condition must be accepted as a
breach of warranty unless otherwise provided in
the contract
2. Warranty
 a warranty is ‘a stipulation collateral to the main
purpose of the contract, the breach of which gives
rise to a claim for damages but not to a right to
reject the goods and treat the contract as
repudiated’ – section 12(3), SOGA 1957

(cont.)
Stipulation as to Time
 unless a different intention appears from the terms
of the contract, stipulations as to time of payment
are not deemed to be of the essence with respect to
the contract of sale – section 11, SOGA 1957
 whether any other stipulation as to time (e.g. time for
delivery) is of the essence of the contract or not
depends on the terms of the contract – section 11,
SOGA 1957

(cont.)
Implied Terms
 Sale of Goods Act 1957, sections 14 to 17:
– Implied condition as to title
– Implied warranty that buyer shall have quiet
possession of the goods
– Implied warranty that the goods are unencumbered
– Implied condition that in a sale of goods by
description, the goods must correspond with the
description
– Goods must be reasonably fit for purposes for which
the buyer wants them
– Goods must be of merchantable quality
(cont.)
– In a contract for the sale of goods by sample, implied
conditions are as follows:
a) the bulk shall correspond with the sample in quality
b) the buyer shall have a reasonable opportunity of
comparing the bulk with the sample before acceptance
c) the goods are free from the defect rendering them
unmerchantable which would not be apparent on
reasonable examination of the sample
3. Implied Condition as to Title
 there is an implied condition that the seller:
– has the right to sell the goods in the case of a sale

Case:Rowland v Divall [1923] 2
KB 500
 R bought a car from D, used it for 4 months before
discovering it had been stolen
 R had to hand over the car to the true owner
 Issue: Whether R could recover the full amount he had
paid from D eventhough he had used the car for 4
months
 Held: although R had used the car for some time, he
was entitled to recover the full price he had paid bcos
D had no right to sell him the car ( car was stolen). R
had failed to get the property ( title) in the car, so there
was total failure of consideration
(cont.)
– in the case of an agreement to sell, will have the right to
sell the goods when the time comes for the buyer to
become the owner (that is, by the time property is to
pass)
 a breach of this condition entitles the buyer to
repudiate the contract – section 14(a) SOGA 1957
4. Implied Warranty that the Buyer shall have and
Enjoy Quiet Possession of the Goods
 in a contract of sale, unless the circumstances of the
contract are such as to show a different intention,
there is an implied warranty that the buyer shall have
and enjoy quiet possession of the goods – section
14(b), SOGA 1957
(cont.)
 a breach of this stipulation will not entitle the innocent

party to repudiate the contract
5. Implied Warranty that the Goods are Unencumbered

 there is an implied warranty that the goods are free
from any charge in favour of a third party who is
unknown to the buyer; for example, storage charges
which have to be paid before the goods can be
collected – section 14(c) of SOGA 1957

(cont.)
6. Condition that in a Sale of Goods by Description, the

Goods Must Correspond with the Description
 where the sale is by sample as well as by description, it is
not sufficient that the bulk of the goods correspond with
the sample if the goods do not also correspond with the
description – section 15, SOGA 1957
 see Lau Yaw Seng v Cooperativa Ceramica D’Imola,
Nagurdas Purshotumdas & Co v Mitsui Bussan Kaisha
Ltd, Beale v Taylor

(cont.)
7. Goods Must be Reasonably Fit for Purposes for
which the Buyer Wants Them
 the common law rule is ‘Let the buyer beware’ – a buyer
must exercise care when he makes purchases. If he
does not, he must bear the consequences.
 this rule is restated in section 16 of the SOGA 1957 –
there is no implied warranty or condition as to the quality
or fitness for any particular purpose of goods supplied
under a contract of sale
 exceptions to this rule are:
a) Goods must be reasonably fit for purposes for which
the buyer wants them
b) Goods must be of merchantable quality
(cont.)
 where the goods have only one purpose, the
description of the goods is enough to indicate their
purpose – see Grant v Australian Knitting Mills
 however, even when goods may have only one
obvious use, if the goods are required for a special
purpose, the buyer must expressly notify the seller
of that purpose and rely on the seller to provide
him with a suitable article
 see Griffiths v Peter Conway Ltd, Cammell Laird &
Co. v Manganese Bronze and Brass Co Ltd

Griffiths v Peter Conway Ltd
 A woman with abnormally sensitive skin bought a

coat without telling the salesman that she had
sensitive skin. She subsequently contracted
dermatitis from wearing the coat
 Held: she was unable to recover for breach of
fitness for purpose because there was nothing in
the cloth that would have affected the skin of a
normal person.
 She had failed to disclose that she suffered from
skin problem
Grant v Australian Knitting Mills
 Grant bought cellophone-packaged woolen
underwear from a shop that specialized in selling
goods of that description. After wearing the
garments for a short time, he developed severe
dermatitis because the garments contained
chemicals left over from processing the wool
 Issue:whether there was reliance on the retailer`s
choice of a quality product such that there was a
breach of the implied condition of fitness for
purpose

Grant v Australian Knitting Mills
 Held: the goods were not reasonably fit for the

their only proper use.
 The plaintiff relied on the retailer`s choice of a
quality product that could be worn without being
washed first.
 As this was not the case, there was a breach of
the implied condition of fitness for purpose.

(cont.)
8. Goods Must be of Merchantable Quality

 quality of goods refers to their state or condition
 factors to be taken into account to determine
‘merchantability’ include:
a) price
b) the description applied to the goods
c) whether the purpose for the goods had been made
known to the seller
d) any other circumstances relevant to the sale

David Jones Ltd v Willis
 Willis went to the shoe department of David Jones
(DJ) and told the saleswoman that she wanted a
comfortable pair of walking shoes because she
had a bunion on her foot
 After trying on a number of pairs, she bought a
pair which was recommended by the saleswoman.
 The third time she wore the shoes, the heel broke
off that causing her to fall and break her leg

David Jones Ltd v Willis
 Evidence showed that the shoes were not well

made and that the heels had not been properly
attached to the shoes
 Held: as the shoes had been bought by
description, there had been a breach of the
implied condition of merchantable quality.

(cont.)
 if the description in the contract is so general that

goods sold under it can normally be used for several
purposes, then goods would be merchantable under
that description if they were fit for any one of those
purposes – see Henry Kendall & Sons v William Lillico
& Sons Ltd, Wren v Holt
 sometimes there can be a breach of both of the

conditions of fitness for purpose and merchantable
quality on the same set of facts – Grant v Australian
Knitting Mills, McWilliams Wines Ltd v Liaweena
(NSW) Pty Ltd

(cont.)
9. Sale by Sample
 a contract is a contract of sale by sample where there is
an express or implied term to that effect in the contract
the bulk of the goods must correspond with the sample
– section 17, SOGA 1957
 3 implied conditions in contracts of sale by sample:
a) the bulk shall correspond with the sample in quality
b) if the differences are only of a minor nature and the quality of
the goods is still the same, this condition will not be breached
c) the buyer shall have a reasonable opportunity of comparing
the bulk with the sample
 see Drummond v Van Ingen, Godley v Perry, Lau Yaw
Seng v Cooperativa Ceramica D’Imola
(cont.)
10. Privity of Contract

 terms implied in a contract of sale are only between
the contracting parties, i.e. the buyer and the seller
 if a third party uses goods purchased by another
and is injured as a result of some defects in the
goods, he cannot sue the seller in an action under
contract
 his remedy would be to sue the manufacturer under
tort – see Donoghue v Stevenson

TRANSFER OF PROPERTY
 when property passes to the buyer, the goods are

at the buyer’s risk irrespective of whether the goods
have been actually delivered to the buyer or not –
section 26, SOGA 1957
 the importance of transfer of ownership is that risk
of loss of the goods goes with the person who has
the ownership in the goods – section 26, SOGA
1957
 unless the parties agree otherwise, risk is borne by
the owner regardless of whether he is in possession
or not – section 26, SOGA 195
(cont.)
 in the case of a contract for the sale of unascertained
goods, the property in the goods can only be
transferred to the buyer after the goods are
ascertained – section 18, SOGA 1957
 in the case of a contract for the sale of specific or
ascertained goods, the property in them is transferred
to the buyer at such time as the parties to the contract
intend it to be transferred – section 19(1), SOGA 1957
 in order to ascertain the intention of the parties, the
following are to be considered:
a) The terms of the contract
b) The conduct of the parties and the circumstances of the
case
(cont.)
 unless otherwise determined by the parties, the rules
of ascertaining the intention of the parties as to the
time at which the property in the goods is to pass to
the buyer are those laid down in sections 20–24,
SOGA 1957. They are:
– where there is an unconditional contract for the sale of
specific goods in a deliverable state, the property in goods
passes to the buyer when the contract is made. It is
immaterial whether the time of payment of the price, or the
time of delivery of the goods, or both, is postponed –
section 20, SOGA 1957

(cont.)
– where there is a contract for the sale of specific goods and
the seller is bound to do something to the goods for the
purpose of putting them into a deliverable state, the
property does not pass until such thing is done, and the
buyer has notice of it – section 21, SOGA 1957
– where there is a contract for the sale of specific goods in a
deliverable state, but the seller is bound to weigh,
measure, test or do some other act or thing with reference
to the goods for the purpose of ascertaining the price, the
property passes after such act or thing is done and the
buyer has notice of it – section 22, SOGA 1957

(cont.)
– where there is a contract for the sale of unascertained or

future goods by description and the goods of that
description and in a deliverable state are unconditionally
appropriated to the contract, either by the seller with the
assent of the buyer or by the buyer with the assent of the
seller, the property in the goods thereupon passes to the
buyer. Such assent may be express or implied; and may
be given either before or after the appropriation is made –

(cont.)
– when goods are delivered to the buyer on approval or

‘sale or return’ or other similar terms, the property in the
goods passes to the buyer:
a) when he signifies his approval or acceptance to the seller
or does any other act adopting that transaction
b) if he does not signify his approval or acceptance to the
seller but retains the goods without giving notice of
rejection upon expiration of the time fixed for the return of
the goods, or where no time has been fixed for the return
of the goods, upon expiration of a reasonable time

TRANSFER OF TITLE
 nemo dat quod non habet ( no one gives who

possesses not) maxim under Common Law
 As a general rule, a seller/a person who has no
authority or not legal owner of that goods cannot
gives title to the buyer.
 according to section 27, SOGA 1957, when a
person takes goods (e.g. a buyer), he or she gets
only the same rights to the goods as the person
from whom he or she took them (e.g. a seller) –
 see Lim Chui Lai v Zeno Ltd, Ng Ngat Siang v Arab-
Malaysian Finance Bhd & Anor
Ng Ngat Siang v Arab-Malaysian Finance
Bhd & Anor [1988] 3 MLJ 319
 Plaintiff bought a car form second Defendant
where he had to pay off the finance company a
hire purchase facility.
 Second Defendant retained the registration card
and then sold to the car to B after cancellation of
indorsement of the finance company`s ownership.
 The purchasing by B was financed by the first
Defendant. The first Defendant indorsed its
ownership claim on the registration card.

Cont`
 Issue: Whether the Plaintiff or the First Defendant
had a better title to the car
 Held: allowing the application. After a full payment
was made by the second Defendant to the finance
company. The latter had relinquished all rights to
ownership over the car and the Plaintiff had
acquired ownership to the car.
 The First Defendant acquired no title or interest
over the car and their only remedy was against the
second Defendant personally for the return of
purchased price.
TRANSFER OF TITLE (cont.)
 exceptions to the nemo dat quod non habet rule:

1. Estoppel
2. Sale by mercantile agent
3. Sale by one of joint
owners
4. Sale under a voidable title
5. Sale by a seller in possession after sale
6. Sale by a buyer in possession

1. Estoppel
 where the owner by his conduct makes it appear to the
buyer that the person who sells the goods has his authority
to do so and the buyer relies on that conduct, the buyer
obtains a good title because the owner is precluded by his
conduct from denying the seller’s authority to sell – section
27, SOGA 1957
 Case: Sykt Batu Sinar Sdn Bhd & Ors v UMBC
Finance Bhd [1990] 3 MLJ 468

Sykt Batu Sinar Sdn Bhd & Ors v UMBC
Finance Bhd [1990] 3 MLJ 468
 A leasing company (2nd Def) bought a tractor from
a tractor dealer (3rd Def) and leased to 1st Plaintiff ,
a finance company
 In registration card:-dealer (1st owner), leasing
company ( 2nd owner) and finance company (3rd
owner)
 The dealer had earlier sold the tractor to another
finance company who then hired to the 2nd Def
 The finance company sought to repossess the
tractor because defendant`s default in repayment
Cont`
 There was no registration card during the
purchasing of tractor by finance company and they
made application through the dealer for issuance
 Finance company claimed ownership in form of
letter sent to the dealer for registration.
 The registration card and possession of the tractor
were left to the dealer
 Plaintiff sued the defendants and sought
declaration that defendants were not entitled to the
tractor.
Cont`
 Held: allowing the plaintiff`s application on the

ground that the failure to carry out the practice of
registering an ownership claim on the registration
card would create the necessary representation to
him with regard to the status of the vehicle.

2. Sale by Mercantile Agent

 where a mercantile agent is, with the consent of the owner, in
possession of the goods or of a document of title to the
goods, any sale made by him when acting in the ordinary
course of business of a mercantile agent shall be as valid as if
he were expressly authorized by the owner of the goods to
make the same – section 27, SOGA 1957
 Case: Folkes v King [1932] 1 KB 282

Folkes v King [1932] 1 KB 282
 Folkes left his car with a mercantile agent and told
him not to sell it below a certain price.
 However,the agent sold to King for less minimun
price who purchased the car in good faith and for
valuable consideration without any notice of any
fraud.
 The agent then disappeared with the money.
 Folkes sued to recover the car from King

Cont`
 Held:as the mercantile agent was in possession of

the car with the consent of the owner for the
purpose of sale, and the sale had been in the
ordinary course of business, the purchaser
received good title
 Folkes therefore could not recover the car from
King.

 however, the buyer must have acted in good faith and, at the
time of the contract of sale, had not received notice that the
seller has no authority to sell
 ‘a mercantile agent having in the customary course of business
as such agent authority either to sell goods, or to consign
goods for the purpose of sale, or to buy goods, or raise money
on the security of goods’ – section 2, SOGA 1957
3. Sale by One of Joint Owners
 if one of several joint owners of goods has the sole possession
of them by permission of the co-owners, the property in the
goods is transferred to any person who buys them from such
joint owner in good faith and has not at the time of the contract
of sale notice that the seller has no authority to sell – section
28, SOGA 1957

4. Sale under a Voidable Title

 where the seller of goods has obtained possession thereof
under a contract voidable under sections 19 or 20,
Contracts Act 1950 (Revised 1974), but the contract has
not been rescinded at the time of the sale, the buyer
acquires a good title to the goods provided he buys them in
good faith and without notice of the seller’s defect of title –
sections 29, SOGA 1957
 a contract is voidable under either section 19 or section 20
of the Contracts Act 1950 when the consent of the original
owner is caused by coercion, fraud, misrepresentation or
undue influence

5. Sale by a Seller in Possession after Sale

 if a seller resells to a second buyer the goods sold by him
previously to the first buyer, the second buyer will obtain
good title to the goods if he has received the goods in good
faith and without notice of the previous sale – section 30(1),
SOGA 1957
 Case: Pacific Motor Auctions Pty Ltd v Motor Credits

( Hire Finance) Ltd (1965)112 CLR 192

Pacific Motor Auctions Pty Ltd v
Motor Credits ( Hire Finance)
Ltd (1965)112 CLR 192
 A car dealer entered into a display agreement with
Motor Credits where cars bought were sold to the
finance company for 90% of their purchase price
 The finance company cancelled the agreement
when the dealer got into financial difficulty
 The dealer sold all his stock to Pacific Motor
Auctions whom was unaware of the withdrawal
of the car dealer`s authority.

Cont`
 Issue: whether the finance company can

successfully sue Pacific Motor Auctions for the
return of the cars
 Held: Pacific Motor Auctions had title to the cars
as they had bought them in good faith and without
notice of the seller who had continued in
possession of the goods after the sale.

6. Sale by a Buyer in Possession

 if a buyer, having bought or agreed to buy goods, obtains
possession of the goods or the documents of title with the
consent of the seller, he can pass a good title to a subsequent
buyer acting in good faith, even if under the first transaction
he has not obtained a good title – section 30(2), SOGA 1957
 Case: Newtons of Wembley Ltd v Williams [1965] 1 QB
560

Newtons of Wembley Ltd v
Williams [1965] 1 QB 560
 The plaintiff sold a car to A by cheque where in the
agreement there was term that the property would
not pass until the cheque was dishonoured.
 The cheque was dishonoured but A had resold the
car to B who bought it without knowledge of the
position. B resold it to the Defendant.
 Plaintiff tried to recover the car from him
 Held: A as original buyer was in possession with the
consent of the owner who could pass a good title to
B, who transferred to Def. The Def entitled to keep
the car.
PERFORMANCE OF THE
CONTRACT
 Chapter IV, SOGA 1957 – the physical
performance of the terms of the contract which
includes:
a) Delivery b) Acceptance
Delivery
 it is the duty of the seller to deliver the goods whilst
the buyer’s duty is to accept and pay for them in
accordance with the terms of the contract of sale –
section 31
 unless otherwise agreed, delivery of the goods and
payment of the price are concurrent conditions –
sections 32
PERFORMANCE OF THE
CONTRACT (cont.)
1. Definition of Delivery
 voluntary transfer of possession from one person to
another
 delivery of goods may be made by doing anything
which the parties agree shall be treated as delivery or
which has the effect of putting the goods in the
possession of the buyer or of any person authorized
to hold them on his behalf – section 33
 if the seller wrongfully neglects or refuses to deliver
the goods to the buyer, the buyer may sue the seller
for damages for non-delivery
PERFORMANCE OF THE
CONTRACT (cont.)
2. Place of Delivery
 whether the seller is required to send the goods to the
buyer or the buyer has to take possession of the goods
depends on what has been agreed upon between them
– section 36(1), SOGA 1957
 goods agreed to be sold are to be delivered at the place
at which they are at the time of the agreement to sell, or,
in the case of goods which are still non-existent, at the
place of manufacture or production – section 36(1),
SOGA 1957
 unless the parties agree otherwise, the expenses of and
goods incidental to putting the goods into a deliverable
state shall be borne by the seller – section 36(5)
PERFORMANCE OF THE
CONTRACT (cont.)
3. Time of Delivery
 where under the contract of sale the seller is bound to
send the goods to the buyer, but no time for sending
them is fixed, the seller is bound to send them within a
reasonable time
 what is deemed ‘reasonable’ time is a question of fact
4. Delivery of Wrong Quantity
 where the seller delivers to the buyer a quantity of goods
less than that which he contracted to sell, the buyer may
reject all the goods so delivered. If the buyer accepts the
goods so delivered, he is bound to pay for them at the
contract rate – section 37(1)
PERFORMANCE OF THE
CONTRACT (cont.)
 if the seller delivers to the buyer a larger quantity of
goods than that which was contracted, the buyer may:
a) Accept the goods included in the contract and reject the
rest
b) Reject all the goods
c) Accept all the goods
 where the seller delivers to the buyer the goods he

contracted to sell mixed with goods of a different
description not included in the contract, the buyer may:
a) Accept the goods which are in accordance with the
contract and reject the rest
b) Reject the whole

PERFORMANCE OF THE CONTRACT
(cont.)
5. Instalment Delivery
 unless agreed by the parties, the buyer is not bound to
accept delivery by instalments
6. Delivery to Carrier or Wharfingers

 where the seller is authorized or required to send goods
sold to the buyer and the goods are delivered to a carrier
for transmission to the buyer or to a wharfinger for safe
custody, such delivery to the carrier or wharfinger is
prima facie deemed to be a delivery of the goods to the
buyer
PERFORMANCE OF THE
CONTRACT (cont.)
 however, unless otherwise authorized by the buyer,
the seller shall make such contract with the carrier or
wharfinger on behalf of the buyer as may be
reasonable having regard to the nature of the goods
and the other circumstances of the case
 if the seller omits to do so, and if the goods are lost or
damaged in the course of transit or whilst in the
custody of the wharfinger, the buyer may:
a) Decline to treat the delivery to the carrier or
wharfinger as a delivery to himself
b) Hold the seller responsible in damages

PERFORMANCE OF THE
CONTRACT (cont.)
Acceptance
 performance of the contract and transfer of
ownership
 unless otherwise agreed, when the seller delivers
the goods to the buyer, the seller is bound when
requested by the buyer to allow the buyer a
reasonable opportunity of examining the goods in
order to ascertain whether they conform to the
contract

PERFORMANCE OF THE
CONTRACT (cont.)
 the buyer is deemed to have accepted the goods in
the following circumstances:
1. When he intimates to the seller that he has accepted them
2. When the goods have been delivered to him and he does
any act in relation to them that is inconsistent with (or
which would prejudice) the ownership of the goods by the
seller
3. When, after the lapse of a reasonable time, he retains the
goods without intimating to the seller that he has rejected
them general rule is that a buyer is not bound to return
rejected goods since it is sufficient if he intimates to the
seller that he is rejecting the goods

PERFORMANCE OF THE
CONTRACT (cont.)
 when a buyer neglects or refuses delivery of goods,
he is liable to the seller for any loss caused by his
neglect or refusal to take delivery. He is also liable
to pay a reasonable charge for the care and custody
of the goods – section 44, SOGA 1957
 where the buyer wrongfully neglects or refuses to
accept and pay for the goods, the seller may sue
him for damages for non-acceptance – section 56,
SOGA 1957

REMEDIES FOR BREACH
 Chapters V and VI of the Sale of Goods Act 1957

deal with the:
1. Rights of the unpaid seller against the goods
2. Rights to sue for breach of the contract
3. Rights of the buyer to sue for damages for non-
delivery
4. Rights of the buyer to bring an action for specific
performance
5. Remedies available to the buyer for breach of
warranty
6. Buyer’s action in tort
REMEDIES FOR BREACH (cont.)
1. Rights of Unpaid Seller against the Goods

 an ‘unpaid seller’ is a seller to whom:
– the whole of the price has not been paid or
tendered
– where a bill of exchange or other negotiable
instrument has been received as conditional
payment, and the condition on which it was received
has not been fulfilled due to the instrument being
dishonoured or for some other reason

 the rights of an unpaid seller against the goods are:

– (where he is in possession of the goods) a lien on
the goods for the price – section 46(1)(a)
– (where he has parted with the possession of the
goods) a right of stopping the goods in transit in the
case of the buyer’s insolvency – section 46(1)(b)
– (subject to section 54), a right of resale – section
46(1)(c)
– (where the property in goods has not passed to the
buyer) a right of withholding delivery – section 46(2)

Lien
 the unpaid seller of goods who still possesses them
is entitled to retain possession of them until payment
or tender of the price in any of the following events:
1. The goods have been sold without any stipulation
as to credit
2. The goods have been sold on credit, but the term
of credit has expired
3. The buyer becomes insolvent

 the unpaid seller loses his lien in the following

circumstances:
1. When he delivers the goods to a carrier or other
bailee in order that the goods be transmitted to the
buyer without reserving the right of disposal of the
goods
2. The buyer or his agent lawfully obtains
possession of the goods
3. When the seller waives his lien

Stoppage in Transit
 when the buyer of goods becomes insolvent and the
unpaid seller has parted with the possession of the
goods, the seller has the right of stopping them in
transit so long as the goods are in the course of
transit. This means that the seller may resume
possession of the goods and retain them until
payment or tender of the price

 stoppage in transit is effected by the unpaid seller in

the following ways:
1. By taking actual possession of the goods
2. By giving notice of the seller’s claim to the carrier or
bailee in whose possession the goods are the unpaid
seller’s right of lien or stoppage in transit is not affected
by any sale or disposition of the goods which the buyer
may have made unless the seller has assented to it
Resale
 a contract of sale is not rescinded by the mere
exercise by an unpaid seller of his right of lien or
stoppage in transit – section 54(1), SOGA 1957
 since the contract is not rescinded, the seller would

not be allowed to resell the goods
 however, section 54(2), SOGA 1957 provides that
the seller has authority to resell where:
1. The goods are of a perishable nature – section 54(2)
2. He gives notice to the buyer of his intention to resell
and the buyer does not within a reasonable time pay or
tender the price – section 54(2), SOGA 1957
3. The seller expressly reserves a right of resale in case
the buyer should make default and the buyer makes
such default – section 54(4), SOGA 1957
2. Right of the Seller to Sue for Breach of

Contract
 the seller can sue for the price of the goods where:
– the property in the goods has passed to the buyer
and the buyer wrongfully neglects or refuses to
pay for the goods
– where it is contracted that the price be paid on a
certain date irrespective of delivery and the buyer
wrongfully neglects or refuses to pay such price even
though the property in the goods has not passed and
the goods have not been appropriated to the contract

3. Right of Buyer to Bring an Action for Non-

delivery
 where the seller wrongfully neglects or refuses to
deliver the goods to the buyer, the buyer may sue the
seller for damages for non-delivery – section 57,
SOGA 1957
4. Right of Buyer to Bring an Action for Specific
Performance
 the buyer may bring an action for the specific
performance of the contract by the delivery of specific
or ascertained goods. But this remedy is available
only at the discretion of the courts – section 58
5. Remedies Available to Buyer for Breach of

Warranty
 where the seller commits a breach of warranty or
where the buyer elects or is compelled to treat a
breach of condition by the seller as a breach of
warranty, the buyer cannot reject the goods but he
may:
– set up against the seller the breach of warranty in
diminution or extinction of the price
– sue the seller for damages for breach of warranty

6. Buyer’s Action in Tort

 the buyer can sue the seller in tort by bringing an
action in detinue and conversion
 detinue – wrongful detention of chattels belonging
to the plaintiff after their return has been
demanded
 conversion – the dealing with the goods in a
manner inconsistent with the ownership of the
buyer

CONSUMER PROTECTION
LEGISLATION
 The Consumer Protection Act 1999 provides for:
1. The protection of consumers
2. The establishment of the National Consumer
Advisory Council and the Tribunal for Consumer
Claims
3. Matters connected to consumer protection
 definition of ‘goods’ – goods which are primarily
purchased, used or consumed for personal, domestic
or household purposes, and includes fixtures, vessels
and vehicles but does not include negotiable
instruments, shares, debentures and money – section
3, SOGA 1957
CONSUMER PROTECTION
LEGISLATION (cont.)
 protects consumers against misleading and deceptive
conduct, false representation and unfair practice;
ensures safety standards and requirement for goods and
prohibits unsafe goods; provides guarantees in respect
of supply of goods; such as:
1. Implied guarantee as to title – section 31
2. Implied guarantee as to acceptable quality – section 32
3. Implied guarantee as to fitness for particular purpose –
section 33
4. Implied guarantee that goods comply with description –
section 34

CONSUMER PROTECTION
LEGISLATION (cont.)
5. Implied guarantee that goods comply with sample –
section 35
6. Implied guarantee as to price – section 36
7. Implied guarantee as to repairs and spare parts –
section 8
8. Manufacturer’s express guarantee – section 38
 Part VI of the Act – provides consumers with certain
rights against suppliers in respect of guarantees in the
supply of goods
 Part VII – provides consumers with rights against
manufacturers in respect of guarantees in the supply
of goods
CONSUMER PROTECTION
LEGISLATION (cont.)
 Part X of the Act – concerns product liability
 Tribunal for Consumer Claims:
1. Hears claims of up to a value of RM10,000
2. No jurisdiction over land matters (except fixtures), wills or
intestacy, goodwill, chose in action, trade secret or
intellectual property
3. No representation by advocates and proceedings are open
to the public
4. Agreed settlements and awards are final and binding and
deemed an order of Magistrate’s Court and are enforceable
5. Failure to comply with an award within 14 days – fine of up
to RM5,000 or 2 years imprisonment or both

REVIEW
 Applicable Laws
 Definition of ‘Goods’
 The Contract of Sale
 Agreement to Sell
 Formation of the Contract
 Terms of the Contract
 Transfer of Property
 Transfer of Title
 Performance of the Contract
 Remedies for Breach
 Consumer Protection Legislation

(Sale of Goods)

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CHAPTER 6

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After studying this chapter, you should be able to:

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 Sale of Goods Act 1957 (SOGA 1957) applies in

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 specific goods – goods identified and agreed upon

 a contract whereby the seller transfers or agrees to

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 a contract under which the transfer of the

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Conditions and Warranties

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 a breach of this stipulation will not entitle the innocent

5. Implied Warranty that the Goods are Unencumbered

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6. Condition that in a Sale of Goods by Description, the

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 A woman with abnormally sensitive skin bought a

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 Held: the goods were not reasonably fit for the

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8. Goods Must be of Merchantable Quality

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 Evidence showed that the shoes were not well

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 if the description in the contract is so general that

 sometimes there can be a breach of both of the

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10. Privity of Contract

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 when property passes to the buyer, the goods are

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– where there is a contract for the sale of unascertained or

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– when goods are delivered to the buyer on approval or

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 nemo dat quod non habet ( no one gives who

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 exceptions to the nemo dat quod non habet rule:

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 Held: allowing the plaintiff`s application on the

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2. Sale by Mercantile Agent

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 Held:as the mercantile agent was in possession of

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4. Sale under a Voidable Title

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5. Sale by a Seller in Possession after Sale

 Case: Pacific Motor Auctions Pty Ltd v Motor Credits

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