Sales Of Goods Act 1967

Prepared by : Rasidah binti Kassim

PPD

DEFINATION

Goods means every kind of movable property other than actionable claims and money; and includes stock and shares, growing crops, grass and things attached and forming part of lands which are agreed to be served before sale or under the contract of sale. Section 2.

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Meaning of Goods

• “...all chattels other than things in action and money.”

• Physical thing which can be touched and moved

• Things in action are rights that can only be enforced by legal action (intellectual property rights, guarantees, debts), and are not goods

Kinds Of Goods:Kinds Of Goods:

• Existing goods- Section 6(1) These are the goods which are in existence and are physically present in the seller’s possession.

• Specific goods- Section 2(14) – These are the goods identified and agreed upon at the time the contract is made.

• Ascertained goods- These are identified after the formation of the contract.

• Unascertained goods- These are the goods which are not specifically identified or agreed upon at the time of the contract of sale.

• Future goods – Section 2(6) Goods which are to be manufactured or produced or acquired by the seller after making contract of sale.

Contract of Sale

• Sec 4(1) a contract wherein the seller transfer or agrees to transfer the property in goods to the buyer for a price.

• Sale occurs when the ownership passes to the buyer.

Agreement to Sell

• Sec 4(3) to sell is a contract under which the transfer of the property in the goods is to take place at future time or subject to some condition thereafter to be fulfilled.

• Sec 4(4) 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 tranfered.

Formation of the contract

• Contact must have an offer and buy : 5(1)• Contact provide immediate delivery/

payment/ both. payment can by installment : 5(1)

• Price paid for goods is the money consideration.

• Contract may be writing/ oral or both : 5(2)• Capacity to contract refer to Contract Act

1950.

Terms of the contract

Condition: It is a stipulation essential to main purpose of the contract, the breach of which gives right to the repudiate the contract and to claim damages. 12(2) SOGA 1967

Warranty: It is a stipulation collateral to main purpose of the contract, the breach of which gives rise to claim for damages but not the right to reject the goods and treat contract as repudiated. 12(3) SOGA 1967

Differences Between Condition and Warranties

Condition1. A condition is essential to

the main purpose of the contract.

2. The aggrieved party can repudiate the contract or claim damages or both in case of breach of condition.

3. A breach of condition may be treated as breach of warranty.

Warranty1. It is only collateral to

main purpose of contract.

2. The aggrieved party can claim only the damages in case of breach of warranty.

3. A breach of warranty cannot be treated as breach of condition.

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1. Condition as to title : sec.14(a) seller has the right to sell.

2. Sale by description :sec.15 goods shall correspond with the description.

3. Condition as to quality or fitness :sec16(1)

4. Condition as to merchantability :sec.16(2)

5. Sale by sample :sec.1710

Implied Warranties

1. Warranty of quiet possession : sec.14(b)

2. Warranty of freedom from encumbrances sec.14(c)

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CONDITION

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1.Sec 14 (a) Right to sell

• Unless circumstances show a different intention, there is an implied condition that a seller has a right to sell the goods

• If the seller did not own the goods, the contract is void

• A seller can enter an agreement to sell what he does not already own so long as he owns them at the time of the sale

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• Rowland v Divall (1923)• A thief stole a car and sold it to the

defendant. The defendant sold it to the claimant (a car dealer) who sold it to a customer.

• The police took the car from the customer and returned it to the owner.

• The Claimant returned the customer’s money and sued the defendant.

Case :

…continued

• The claimant was successful.

• The court held that since the defendant never had the right to sell the car, which still belonged to the owner, the contract was void.

• Normally, the looser will be the party who bought from the thief.

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2. Correspondence with Description Sec 15 SOGA

• When goods are sold by description, there is an implied condition that the goods will correspond with that description

• Goods may be specific or unascertained

• Specific goods must be the exact same product described (a particular bicycle)

• Unascertained goods can be any that match the description (a load of corn)

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Case :

Arcos Ltd v E.A. Ronaasen & Son (1933)

• Seller contracted to sell wooden parts for making barrels. The goods were unascertained. 10% did not correspond to the description (were too large).

• The court held that the contract was void and the claimant could reject all parts received.

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3. Quality and Fitness : Sec 16(1) (a)

• Implies reasonable fitness for buyer’s purposes

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• satisfactory quality means that a reasonable person would believe the quality to be acceptable considering the description (if any), price, and all other relevant circumstances

….. continued

• will not be implied when:– Defects are specifically pointed out before the

contract was made– The buyer examines the goods before buying

them and the defect is the type that the buyer should have noticed

– Case :

4. Merchantability QualitySec 16 (1) (b)

5. Sale by Sample :Sec 17 (1)

• If goods are sold by sample, – The bulk of the goods must correspond with

the sample in quality– The bulk must be free from hidden defects

that would make the quality unsatisfactory if the defects would not be discovered after a reasonable examination of the sample

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Case :

• Godley v Perry (1960)• A boy bought a toy that was defective and

caused him to loose an eye. He sued the shopkeeper under Sec. 17 and won.

• The shopkeeper sued the supplier who had sold the products to him under

• The court held that the defect was not discoverable by reasonable examination of the sample

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WARRANTY

1. Enjoy Quiet Possession Sec 14 (b)

• No person will interfere with buyer’s right to quiet enjoyment of the good– Ex. Patent right

2. Goods are Unencumbered Sec14( C)

• Goods will be sold without encumbrances– Ex. No mortgage on the house or claim to the

good

Privity of Contract

• Contract only binding between contracting parties. Buyer and seller.

• If third party used he cannot sue the seller but the manufacturer.

Transfer of Property

Transfer of Property

• We need to know exactly when ownership passes from seller to buyer because– The goods might become lost or damaged– Either the buyer or seller might become

insolvent (bankrupt) and this affects the other party’s rights

• Sec 26 when property passes to the buyer the goods are in buyer’s risk whether the goods are delivered or not.

Transfer of Property

• Ownership of specific goods passes from buyer to seller:– At the time the parties agreed it will– If they do not state when, it can be implied by

conduct– There are 4 special rules dealing with specific

goods if the parties have not stated when ownership transfers or it cannot be implied

….continued

• Sec 20: specific goods in a deliverable state that are sold unconditionally are transferred upon making the contract

• Sec 21: when the seller must do something to the specific goods to put them into a deliverable state, they are transferred when he does it and notifies the buyer

…continued

• Sec 22: when the seller must weigh, measure, or test the goods to find the price, ownership transfers once this is done and the buyer is notified

• Sec 23(1) : contract for unascertained or future goods

… continued

• : when the goods must be delivered on approval, sale or return, ownership transfers when approved, buyer shows he accepts the good, or keeps goods longer than a reasonable time

Transfer of Title

Nemo Dat Quod Non Habet

• Definition : Sec 27; no one can transfer better title than he has himself.

• Example :

• Case : Lim Chui Lai Vs Zeno Ltd

Exception to Nemo Dat Quod Non Habet

1. Estoppel

• The owner of the goods is by his conduct precluded from denying the seller’s authority to sell. Sec 27 SOGA

• Example :

2. Sale by a Mercantile Agent

• Sec 27 SOGA

• An agent may pass good title in selling goods belong to his principal.

• An agent having a customary course of business have authority to sell goods.

• Example broker, autioner.

3. Sale by One Joint Owner

• Sale by one of the owner effectively transfer title to a buyer but must follow sec 28 :

a) one owner has sole possession of the goods by permission other owner.

b) buyer good faith and don’t know the seller lack of authority.

4. Sale under a Voidable contract

• Sec 29 seller get a goods from other party under voidable contract and then sale to other buyer, the buyer have good title if the buyer :

a) good faith

b) the buyer don’t know the seller does not have a title/ ownership.

5. Sale by a Seller in Possession after sale

• Sec 30 (1) SOGA

• a seller who has parted with title to the goods but remains possession of the goods or document of title can pass a good title to a bona fide buyer.

• Second buyer have a good title, and original buyer loses. First buyer can sue the seller.

6. Sale by a Buyer in Possession

• Sec 30 (2) SOGA

• buyer have bought goods obtain possession of the good and document from the seller can pass a good title to innocent buyer (good faith).

• The second buyer have a good title.

• Case : Newton Vs William

PERFORMANCE OF THE CONTRACT

1. DELIVERY2. ACCEPTANCE

1. DELIVERYa) Delivery• Sec 31 :Duty seller deliver goods, duty buyer to accept

goods and pay for them.

• Exception sec 32 :

• Sec 33 Definition of Delivery :voluntary transfer of possession from one person to another.

• Sec 57 : If seller neglect or not deliver goods buyer can sue the seller for undeliver.

b) Place of Delivery

• Sec 36 (1) : goods are send to the buyer according to terms in contract.

• Sec 36 (5)

• Sec 40

c) Time of Delivery

• Sec 36(2) : if time for deliver the good not stated fixed so have to send at resonable time.

• Sec 36 (4) : it is not efficient delivery if the time is not resonable.

d) Delivery of Wrong Quantity• Sec 37 (1): Qty less than from the contract –

buyer can reject them or accept and have to pay at contract rate.

• Sec 37 (2) : Qty larger than buyer can :-

a) accept the goods and reject the rest

b) reject all

c) accept all and have to pay at the contract rate• Sec 37 (3) : Mixed goods buyer can :-

a) accept the goods and reject the rest

b) reject all

e) Delivery by Installments

• Sec 38 (1) : Good must be deliver at one and same time except is not bound to accept the goods by installment.

• Sec 38(2) : If the contract by installment the seller is not deliver the goods or buyer not pay depends to contract either cancel the contract or claim for compensation only.

• F) Delivery to Carrier or Wharfingers

• Sec 39 (1) : Send the goods to carrier either named or not for purpose of transmission and prima facie the risk to the buyer.

• Sec 39(2) :The seller duty is not only to ship the goods but also arrange insurance

2. Acceptance• Sec 42 : buyer accept the good if :-

a) when buyer intimates to the seller his acceptance

b) when goods deliver to buyer and buyer not act inconsistent

c) after reasonable time buyer still retains goods • Sec 41 (1) :buyer must check the goods before

seller deliver if not the buyer not deem to accept.• Sec 41 (2) : except the seller is bound to give

buyer to check the goods to make sure folwed the contract.

REMEDIES FOR BREACH OF CONTRACT

1. SELLER REMEDIES2. BUYER REMEDIES

REMEDIES OF THE SELLER

1. Right of seller to sue the buyer for breach contract

• Failure of buyer to take delivery

Sec 44

• Failure of buyer to accept goods

Sec 56

• Failure of buyer to pay for goods

Sec 55

2. Right of Unpaid Seller

• Sec 45 (1): Unpaid seller is:-

a) the whole price is not paid

b) Negotiable instruments is conditional payment.

• Right of unpaid seller :-

a)Right of Lien

b)Right of Stoppage in Transit

c)Right of Seller to Resale

a) Lien Sec 46 (1) (a)

• Seller can retain the goods until payment made.

• The right arise if:-

a) good sold without any stipulation of credit

b)goods sold through credits and term credit was expired

c)buyer become insolvent

b) Right to Stoppage in Transit Sec 50

• Unpaid seller who has parted with the possession can stopping goods in transit when buyer become insolvent.

• Stopping transit can :-

a) seller take the goods from bailee Sec 51 (1)

b) seller give notice to bailee

c) Right to Resell Sec 54 (3)

• Seller cannot end the sale contract for breach the contract.

• But seller can resell (sec 54(2) if :-

a) goods is perishable

b) seller give notice to buyer for resell goods and buyer still not pay

c) seller have express right buyer breach contract.

REMEDIES OF THE BUYER

2. Buyer Remedies1. Damage for Non Delivery

Sec 57 : Seller not deliver the goods

2. Specific Performance

Sec 58 : Through court order and for special goods

3. Action in Tort

Sec 56 :

4. Breach of Warranty

Sec 59 :

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