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Published by Ara Ridzuan
Advanced Business Law
Advanced Business Law

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Categories:Types, School Work
Published by: Ara Ridzuan on May 28, 2013
Copyright:Attribution Non-commercial


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PAST YEAR JANUARY 2013QUESTION 3(A)Mr. Walls sold to his best friend, Mr. Magnum, a Ferrari for RM1.5 million and Mr. Magnum paidfor the full purchase price on April 2011. However, since Mr. Walls had a set of the car keys, heused the car whenever he liked. After almost one year, Mr. Magnum has now discovered thatthe car belongs to Mr. Cometto. It turns out that, Mr. Walls was looking after Mr. Cornetto'spossessions, including his Ferrari while he was overseas. Advise Mr. Magnum as to his legal rights under the Sale of Goods Act 1957 with reference torelevant statutory provisions and decided cases.(15marks)The issue is whether Mr. Magnum entitled to his legal right under the Sale of Good Act1957.Sec 2 SOGA
defines the word “GOODS”
as meaning every kind of movable propertyincludes stock and shares, growing crops, grass and any detachable things from land. Thiswould mean land is excluded from the definition of goods therefore it is not governed by SOGA. According to Section 4(1) of SOGA provide that a contract whereby the seller transfersor agrees to transfer the property in goods to the buyer for a price.It is fundamental rule that no one can give what he has not got. Section 27 of the SOGAsets out the general rule as follows: where goods are sold by a person who is not the owner,and who does not sell them under the authority or with the consent of the owner, the buyer will
not get a better title to the goods than the seller had…
The rule is enshrined in the maxim
nemo dat quod non habet,
meaning that no one cantransfer a better title than he has himself. Thus, if goods are purchased from a person who is
not the owner, and who are not sell them under the owner’s authority, the buyer does not
acquire a title even if he has paid value in good faith.
Therefore, if A’s computer stolen by B, B has possession of the computer but has no title
to it. If B sells the computer to C, C will get the possession of the computer but that is no titlebecause B had no title. If A can trace the computer to C, A will able to repossess it because C
has no right of ownership.C would be able to sue B for damages (if B could be found) .Both theunauthorized seller, B and the innocent purchaser, C may be sued for the tort of conversionwhich is a civil action against a person for dealing with goods of another in consistent with thatperson ownership.This rule is to protect the right of ownership. If not, the rule of interest of the true owner of the goods would be lost if the good were stolen. This general rule, is illustrated in cases suchas Lim Chui Lai V Zeno Ltd (1964)3 MLJ 314 and Ng Ngat Siang v Arab Malaysia-MalaysiaFinance Berhad & Anors [1988] 3 MLJ 319.The first cases states that in January 1961, Zeno Ltd contracted with Ahmad for theconstruction of culverts with Petaling Jaya Local Authority. Zeno supplied all the materials at thesite but later the contract was cancelled. Zeno Ltd informed PJ Authority that the materials atthe site belonged to them. In September 1961, the respondent discovered that the materials hadbeen sold by Ahmad to Lim Chui Lai for RM 14,000 of which Ahmad had received RM 7,000 aspart payment.The court held that, Ahmad was not the owner of the materials at the time he sold themto Lim Chui Lai. Therefore Ahmad has no title to the goods and he cannot pass the title to LimChui Lai. Thus Lim Chui Lai does not have the title upon the materials bought from Ahmad.However there are exceptions to
Nemo Dat quod non habet 
are found in severalprovisions of the act and they may be categorized into different heading: Estoppel; Sale bymerchantile agent; Sale by one of joint owners; Sale under a voidable title; Sale by a seller inpossession after sale; and Sale by a buyer in possession.So, under the issue of Mr. Magnum is related to sale under voidable title. Under Sec 29of SOGA provides that when seller obtained goods through a voidable contract, buyer acquiresgood title to the goods provided he buys i
n good faith and without notice of the seller’s defect in
title. According to Section 10 of Contracts Act 1950 provides inter alia that all agreements arecontracts if they are made the free consents of parties. By virtue of Section 14 of Contracts Act,consent is said to be free when it is not cause by one or more of the following; coercion, undueinfluence, fraud, misrepresentation and mistake.

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