Sale of Goods The Sale of Goods Act

Sale of Goods The Sale of Goods Act 1957

Definition of ‘Goods’ Section 2 of Sale of Goods Act 1957 • 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.

Moveable property Stock and shares Growing crops and grass Things attached to the land become a part of the land Which are agreed to be severed before sale/under the contract of sale

S 6(1) Sales of Goods Act Subject matter of the contract/ Types of goods • Specific Goods Existing Goods ‘goods owned by the seller’ • ‘goods identified and agreed at the time the contract is made’ • Unascertained goods • ‘the goods exists but it is not ascertained yet at the time of the contract is made Future Goods S. 2 • ‘goods which are to be made manufactured@ • produced @ acquired • by the seller after the making of the contract

Defination of Contracts of Sale of Goods S 4(1) 2 of Sale of Goods Act 1957 ‘. . a contract whereby the seller transfers @ agrees to transfer the property in goods to the buyer for a price…’ There must be goods available The seller transfers @ agrees to transfer the property in goods There is a price

How a contract of sale of goods can be made There must be an offer to buy or sell goods There must be an acceptance to the offer May provide the types of payment agreed between the seller and the buyer May be made in writing or by word of mouth or implied from the conduct of the parties Capacity to buy & sell ( af the age of majority, sound mind, not bankrupt)

Time of Payment Stipulations as to time of payment are not important S 11 Sales of Goods act Whether it is important @ not depends on the terms of the contract

PRICING S 4(1) Provides that a contract of sale is for ‘price’ S 2 Price is defined as the money consideration for a sale of goods The price may be S 9 ascertained in a number of ways

Price (S 9 Sale of Goods Act) Fixed by the contract itself Fixed according to certain manner agreed Determined by the course of dealing between the parties Reasonable price

Terms of the Contract of Sale of Good Need to be understood by parties, the seller and the buyer Can be an express term or implied term Very important to determine the intention of both parties Classified into 2: Condition & Warranties

Terms of the Contract S 12(1) • The contracting parties are free to put any term in their contract of sale. • This depends on the construction of the contract S 12(4) • May be made either in expressly in the contract or implied from the conduct of the parties or by operation of law S 14 –S 17

Terms of the Contract S 12(2) : Condition As a stipulation essential to the main purpose of the contract that may give the right to repudiate the contract S 12(3 ): Warranty Is a stipulation collateral to the main purpose of the contract that may give the right to claim for damages but not the right to reject or repudiate the contract

Exception (When breach of ’condition’ can be treated as breach of warranty’) S 13(1) 13(2) • When the buyer waives the ‘condition’ or elects to treat the breach • Buyer has accepted the goods • Where the contract is for specific goods and the property(ownership) of the goods has transferred to the buyer

Implied Terms S 14(a) Implied Condition As To Title 14(b) Implied Warranty As To Quiet Possession 14(c) Implied Warranty Free From Encumbrances S 15 Implied Condition Must Correspond With Description S 16 Implied Condition As to Fitness For Particular Purpose S 16 Implied Condition As To Merchantable Quality S 17 Implied Condition In A Sale By Sample

S 14 Sale of Goods Act S 14(a) Implied Condition As To Title The seller has the ownership/title over the goods The seller is presumed to have a right to sell Case: Remedy: Rowland v Divall rescission of the Butterworth v contract by the Kingsway Motor buyer Ltd

S 14 Sale of Goods Act 14(b) Implied Warranty As To Quiet Possession *The buyer shall have & enjoy quiet possession of the goods without any wrongful interference by a stranger or 3 rd party or even by the seller himself, claiming a right. *Entitled the buyer to damages

S 14(c) Sale of Goods Act Such fact is not declared or made known to the buyer or encumbrance, which is in favour of any 3 rd party The goods are free from any charge, which is in favour of any 3 rd party Implied Warranty Free From Encumbrance s The seller is liable for breach of warranty and entitled the buyer to damages Steinke v Edwards

S 15 Implied Condition Arise where the consumer selects goods on basis of description of the goods or consumer agrees to buy goods to be made to their specifications Must Correspond With Description The buyer is entitled to reject the goods and rescind the contract Varley v Whipp Beale v Taylor Grant v Knitting Mills Ltd

S 16 Implied Condition As to Fitness For Particular Purpose Caveat Emptor which means, the buyer must beware. It is for the buyer to satisfy himself as to the quality of the goods purchase. The buyer must make known to the seller particular purpose, which the goods are required Exception : S 16(1)(a) provides four conditions, namely: The goods must be of a description, which it is in the course of the sellers’ business to supply Not bought under patent or trade name The buyer relied on the seller’s skill and judgment to supply suitable goods Griffiths v Peter Conway Priest v Last Grant v Australian Knitting Mills

S 16 Implied Condition As To Merchantable Quality Another exception to the caveat emptor. The goods must have a merchantable quality which means that the goods sold must fit the particular use which they were sold. If the goods are defective for their purpose, they are not merchantable quality To determine whether the goods is having merchantable quality or not, it depends on the description of the goods

Exception Does not apply if the buyer has examined the goods, by which through that examination, the buyer might discover the defects However, if the defects could not discovered by any reasonable examination, then the implied conditions as to the Merchantable Quality apply. Wilson v Ricket, Cockerell & Co Ltd

S 17 Implied Condition In A Sale By Sample S 17(1) S 17(2) • Sample is use to describe the goods to buyer • The court has to determine whethere is asale by sample or not • Implied condition for contract of sale when: • a. The bulk shall correspond with sample in quality b. The buyer shall have reasonable opportunity of comparing the bulk with the sample c. The goods are free from any defect rendering them un merchantable, which would not apparent on reasonable examination of the sample Godfrey v Perry Drummond v Van Ngen

Transfer Of Property It is important to ascertain the time as to when property in goods passes to the buyer because of : • S 26: Once the property passes to the buyer, the buyer would bear the risk even though the goods has been delivered to the buyer • However, if the delivery has been delayed due to the fault of the seller, then the seller has to bear the risk, even though the property has passed to the buyer. If any party sought to claim any right over the property from a 3 rd party, only the person who has the property in goods may claim • The seller would only entitle to claim for the price if the property in goods has passed to the buyer In order to determine when the property in goods is transferred to the buyer it is necessary to look at the types of goods being sold.

S 18 : Sale of Unascertained Goods If the goods is unascertained goods, the property in goods will not pass to the buyer until it is ascertained Once the goods has been ascertained, then only the property in goods passed to the buyer

S 19: Sale of Specific @ Ascertained Goods For the sale of specified goods, the property in goods is transferred to the buyer at such time as the parties to the contract intend it to be transferred To determined such intention, the terms of the contract, the conduct of the parties and the circumstances of the case should be taken into consideration

S 20 : Unconditional Contract Requires that the property in the goods pass to the buyer when the contract is made. Underwood v Burgh Castle Brick and Cement Syndicate.

S 21 Contract of Specific Goods • Provides that when the seller is bound to do something to the goods • For the purpose of putting them in a delivery state in a contract of specific goods • The property does not pass until such thing is done and • The buyer takes note on this matter

S 22 Contract of Specific Goods 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

S 24: Goods sent on approval or ‘sale or return’ When goods are delivered to the buyer on approval or ‘sale or return, the property in the goods passes to the buyer: When he signifies his approval or acceptance to the seller or does any other act adopting that transaction ; 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 Where no time has been fixed for the return of the goods, upon expiration of a reasonable time

S 27 – S 30 Sale of Goods Act TRANSFER OF TITLE

As a general rule, when a person takes goods(a buyer) He or she gets only the same rights to the goods as the person from whom he or she took them. Nemo dat quad non habet

Nemo Dat Quad Non Habet Means that if goods are bought from a person who is not the owner, and who does not sell them under the owner’s authority, the buyer does not acquire any title. Lim Chui Lai v Zeno Ltd Ng Ngat Siang v Arab. Malaysian Finance Bhd & Anor

Exception to the nemo dat quad non habet 1. 2. 3. 4. 5. Estoppel - S 27 Sale by mercantile agent – S 27 Sale by one of joint owner – S 28 Sale under a voidable titles- S 29 Sale by a seller in possession after sale- S 30(1) 6. Sale by a buyer in possession - S 30(2)

Estoppel – S 27 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 obtains a good title because the owner Syarikat Batu Sinar Sdn. Bhd & Ors v Umbc Finance Bhd & Ors

Sale by Mercantile Agent – S 27 Where a mercantile agent is With the consent of the owner In possession of the goods or a documents of title to the goods Any sale made by him when acting in the ordinary course of business of a mercantile agent shall be valid By the owner of the goods to If he were expressly authorized make the same However the buyer must have acted in good faith And at the time of the contract of sale Would have no notice that the seller had not authority to sell

• A ‘mercantile agent’ • Define in section 2 of Sale of Goods Act 1957 as ’ 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’. • Folkes v King

Sale by one of joint owner – S 28 Goods may be owned by more than one person If one of several joint owners of goods has the sole possession of the goods by permission of the co-owners The property in the goods is transferred to any person who buys them In good faith and Has not at the time of the contract of sale notice that the seller had no authority to sell

Sale Under a Voidable Titles- S 29 Where the seller of goods has obtained possession under a contract voidable of Contract Act But the contract has been rescinded at the time of the sale The buyer acquires a good title to the goods Without notice of the seller’s defect of title Provided he buys them in goods faith

Sale by a seller in possession after sale- S 30(1) • • • Section 30(1) provides that: if a seller continues or is in possession of the goods or of the documents of title to the goods, the delivery or transfer by that person, or by a mercantile agent acting for him, of the goods or documents of title under sale, pledge, or other disposition thereof to any person receiving in good faith and without notice of previous sale shall have the same effect as if the person making the delivery or transfer were expressly authorized by the owner of goods to make the same Pacific Motors Auctions Pty Ltd V Motor Credit Ltd

Sale by a buyer in possession- S 30(2) • • Provides that: if a buyer, having bought or agreed to buy goods, obtains with the consent of the seller possession of the goods or the documents of title to the goods, The delivery or transfer by that person or by a mercantile agent acting for him of the goods or the documents of title under any sale, Pledge or disposition thereof to any person receiving the same in goods faith and without notice of any lien or other right of the original seller in respect of the goods shall have effect as if such lien or right did not exist. Newtons of Wembley Ltd v Williams

PERFORMANCE OF THE CONTRACT DELIVERY AND ACCEPTANCE

S 31 : Duties of Seller and Buyer • It is the duty of the seller to deliver the goods • It is duty of the buyer to accept and pay for them in accordance with the terms of the contract of sale

Means voluntary transfer of possession from one person to another 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. S 36(2) Sale of Goods Act Delivery If the seller delivers to the buyer a larger Where the seller delivers to the buyer a quantity of goods less that which he contracted to sell, the buyer may reject all the goods so delivered. S 37(1) Sale of Goods Act quality of goods than which was contracted, the buyer may: 1, Accept the goods included in the contract and reject the rest or 2. Reject all the goods or 3. Accept all the goods(pay at the contract rate) S 37(2) Sale of Goods Act

Delivery Where the seller delivers to the buyer the goods he contracted to sell mixed with goods of different description not included in the contract S 37(3) 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 S 37(4) The buyer may: Accept the goods which are in accordance with the contract and reject the rest Reject the whole Such delivery to the carrier is prima facie deemed to be delivery of goods to the buyer.

ACCEPTANCE

Meaning of acceptance S 42 Sale of Goods Act • He intimates to the seller that he has accepted them • When the goods have been delivered to him and he does any act in relation to them which is inconsistent with the ownership of the seller • When after the lapse of reasonable time, he ratain the goods withput intimating to the seller that he has rejected them

Buyer not bound to return rejected goods : S 43 • Unless otherwise agreed, where goods are delivered to the buyer and he refuses to accept them, having the right to do so, he is not bound to return them to the seller, but it is sufficient if he intimates to the seller that he refuses to accept them

Liability of buyer for neglecting or refusing delivery of goods: S 44 • When the seller is ready and willing to deliver the goods and requests the buyer to take delivery, and the buyer does not, within a reasonable time after such request, take delivery of the goods, he is liable to the seller for any loss occasioned by his neglect or refusal to take delivery, and also a reasonable charge for the care and custody of the goods.

S 45 Sale of Goods Act 1957 RIGHTS OF UNPAID SELLER AGAINST THE GOODS

Unpaid seller defined : S 45 a) When the whole of the price has not been paid b) When a bill of exchange or other negotiable instrument has been received as conditional payment, and the condition on which it was has not been fulfilled

Unpaid seller’s rights – S 46 1. A lien on the goods for the price while he is in possession of them 2. In case of the insolvency of the buyer a right of stopping the goods in transit after he has parted with the possession of them 3. A right of resale as limited by this Act

Unpaid seller’s rights – S 46 A lien on the goods Stoppage in transit A right of resale

Unpaid Seller’s Lien : S 47 • The unpaid seller of goods who is in possession of them is entitled to retain possession of them until payment or tender of the price. a) Where the goods have been sold without any stipulation as to credit b) Where the goods have been sold on credit, but the term of credit has expired c) Where the buyer becomes insolvent

Part Delivery : S 48 • Where an unpaid seller has made part delivery of the goods, he may exercise his right of lien on the remainder, unless such part delivery has been made under such circumstances as to show an agreement to waive the lien.

Termination of lien – S 49 a) When he delivers the goods to a carrier for the purpose of transmission to the buyer without reserving the right of disposal of the goods b) When the buyer or his agent lawfully obtains possession of the goods c) By the waiver thereof

S 50 Sale of Goods Act STOPPAGE IN TRANSIT

Stoppage in transit – S 50 Sale of Goods When the buyer of goods becomes insolvent He may resume possession of the goods as long as they are in the course of transit

S 51 : Duration of Transit • Goods are deemed to be in course of transit from the time when they are delivered to a carrier for the purpose of transmission to the buyer, until the buyer or his agent in that behalf takes delivery of them from such carrier.

How stoppage in transit is effected – S 52 Taking actual possession of the goods or By giving notice whose possession the goods are When notice of stoppage in transit is given by the seller to the carrier in possession of the goods, he shall redeliver the goods to or according to the direction of the seller

Effect of subsale or pledge by buyer – S 53 The unpaid seller’s right of lien or stoppage in transit is not effected by any sale or other disposition of goods if: Where a document of title to goods has been issued or lawfully transferred to any person as buyer or owner of the goods That person transfers the document to a person who takes the document in good faith

Remedies available to a buyer when a seller is in breach of a sale of goods contract Damages for none - delivery Action for specific performance Remedies for breach of warranty • Where the seller wrongfully neglect or refuses to deliver the goods to the buyer , the buyer may sue him for damages for- non delivery • The buyer may bring an action for specific performance by delivery of specific or ascertained goods • Where there is a breach of warranty by the seller or where the buyer elects to treat any breach of a condition as breach of warranty, the buyer is not entitled to reject the goods.