SALE OF GOODS

Applicable Laws
Law applicable- Other than Penang, Malacca, Sabah
and Sarawak, the Sale of Goods Act 1957 (SGA)
applies in other states. In the four states still refer to
UK Sale of Goods Act 1893.
Only slight differences as SGA 1957 is based on UK
SGA 1893
1

S 2 of SGA defines goods as:
every kind of movable property other than actionable
claims and money; includes stocks, shares, growing
crops, grass and things attached to or forming part of
the land which are agreed to be severed before sale…

2

S 6 SGA: Goods may be existing goods or
future goods, may either be specific or
unascertained goods.

The Contract of Sale: is a contract where the
sellers transfers or agrees to transfer the
property in goods to the buyer for a price.
Agreement to sell: future transfer of property
in goods where some conditions need to
fulfilled

3

4 . Capacity is according to Contracts Act 1950. Delivery/ payment may be immediate/ by instalments.Formation of Contract of Sale of Goods A contract of sale is made by an offer to buy or sell goods at a price.

A contract of sale may be made in writing or by word of mouth. or may be implied from conduct from the conduct of the parties 5 . or partly in writing or partly by word of mouth.

Terms of the Contract Caveat Emptor.let the buyer beware. if inspection reveal the quality & condition of goods the buyer will lose rights against seller if goods are not satisfactory 6 .

it may be treated as repudiated-exceptions on pg.12(2) SGA Essential to the main purpose of contract.308 7 .Condition. breach.

12(4) SGA Collateral to the main contract. any breachcan claim damages but not to reject the goods/ repudiate the contract.Warranty. 8 .

S 14 (a) : Seller has the right to sell the goods (Rowland v Divall) 9 .IMPLIED TERMS Time.S 11 SGA: Time of payment are not deemed to be the essence of the contract of sale unless stated otherwise Title.

14 (b): The buyer shall have and enjoy quiet possession of the good.Quiet possession. 10 .

Goods are free from encumbrances. 11 .14 (3): Goods are free from any charge/encumbrance in favour of third party not known or declared to buyer at the contract was made.

if sale by sample & description. goods must correspond with both… Nagurdas Porshutamdas v Mitsui Bussan Kaisha Varley v Whipp 12 .S 15: the goods shall correspond with the description.Goods correspond with description.

S 16 (1)-Deutz Far East v Pacific Navigation Merchantable Quality.Fitness for a particular purpose. However. the goods must be in merchantable quality. if buyer has examined the goods. 13 ... there shall be no implied condition..goods brought from a seller who deals in goods of that description.S 16 (1) (b).

Ltd. Cockerall & Co. Wren v Holt Mcwilliam Wines Ltd v Liaweena 14 .David Jones Ltd v Willis Reevex International v Maclaine Watson Trading Wilson v Rickett.

S 17 (1) & (2): The bulk shall correspond with sample.Sale by sample. and goods are free from any defect- Godley v Perry 15 . buyer has ample opportunity to examine the bulk of goods.

S 19. 1.TRANSFER OF PROPERTY IN GOODS Property in goods (title/ownership) must be distinguished from possession.Sale of ascertained goods: Property is transferred to the buyer when the parties to the contract intend it to be transferred 16 . 2.Sale of unascertained goods: Property in goods can only be transferred to buyer after goods are ascertained. S 18. IOW: Goods may have been sold to buyer but possession still remains with the seller.

S 20. S 21. property does not pass until such thing is done. 17 .3.The seller must do something to put the goods in a deliverable state.the property in goods passes to the buyer when the contract is made. 4.

18 . S 22. by description. goods in that description unconditionally appropriated to the contract by both buyer & seller.Where seller is supposed to weigh. the property in goods passes to the buyer. measure. S 23. property does not pass until such thing is done and buyer has notice of it. 6. test or do something to ascertain the price of goods.Sale of unascertained or future goods.5.

. 19 . TRANSFER OF TITLE Nemo dat quod non habit No one can pass better title than he has himself Maxim contained in S 27 SGA.where goods are sold by a person who is not the owner and sells without the authority or consent of the owner. the buyer acquires no better title.When goods are delivered to the buyer on approval. Lim Chu Lai v Zeno Ltd. S 24... the property in goods passes to the buyer.7.

Estoppel: S 27 SGA.One of the owner has sole possession of goods by permission of the co-owners. Sale by one of joint owners: S 28. Sale by mercantile agent: proviso of S 27( Folkes v King) 3.Owner of goods by his own conduct precluded from denying the seller’ s authority to sale 2.Exceptions to Nemo dat rule 1. the buyer buys in good faith and has not noticed that the seller lacks authority 20 .

.Seller of goods obtained possession under a contract voidable under S 19 & S 20 of CA but contract not yet rescinded at time of sale. 21 .( Newton of Wembley Ltd v Williams). may dispose or pledge the goods to another person who purchases in good faith. Sale by a buyer in possession: S 30 (2) – the buyer with the consent of the seller obtains possession of goods or document of title to goods. Sale under a voidable contract: S 29.If seller continues to be in possession of goods or document of title to the goods.4. the buyer acquires title of goods in good faith and without notice of seller’s defect of title. sells it to another person and the second buyer buys in good faith… (Pacific Motor Auctions Pty Ltd v Motor Credit Ltd) 6. Sale by a seller in possession after sale: S 30(1). 5.

S32-unless otherwise agreed. Place of delivery. Delivery . 3.S 31: The duty of seller to deliver goods while the buyer’s duty as to accept and pay for them.PERFORMANCE OF CONTRACT Chapter IV of the Sale of Goods Act 1.S 36 (1): Goods sold are to be delivered at the place at which they are at the time of the sale.. delivery and payment are concurrent conditions.. 2. Time of delivery: 36 (2) within reasonable time 22 .

or reject the whole delivery. 37(2). Delivery of wrong quantity S37(1). If buyer accepts he has to pay for them.if seller delivers more than contracted.37(3) 23 . If seller deliver mixed goods of different description not included in the contract. buyer may: accept the goods included in the contract and reject the rest. the buyer may: Accept the goods mentioned in the contract.3. or accept all the goods. reject all the goods.if seller delivers less than he contracted to sell. the buyer may reject all the goods delivered.

Delivery by Instalments: S 38 (1): Unless agreed by the parties. 24 . the buyer is not bound to accept delivery by instalments (Hammer & Barrow v Coca Cola) 6.Seller delivers goods to carriers for transmission or to wharfingers for safe custody it is deemed to be a delivery of goods to buyer.5. Delivery to carriers or Wharfingers: S 39(1).

RIGHTS OF UNPAID SELLER AGAINST THE GOODS SGA accords additional remedies for the unpaid seller. S 45 defines unpaid seller as: a. Remedies are against the goods themselves and not ‘personal’. when bill of exchange or negotiable instrument has been dishonoured S 46: (a) right of lien (b) stoppage in transit (c) resale 25 . when the whole price has not been paid or tendered for. b.

Goods sold on credit but term of credit has expired 3. When the seller waives his lien 26 . Goods delivered to carrier for transmission without reserving the rights for the disposal of the goods 2.RIGHT OF LIEN Rights arises based on S 47: 1. The buyer becomes insolvent Seller loses rights if (based on S 49 (1)): 1. Goods sold without any stipulation of credit 2. When buyer or his agents lawfully obtains possession of the goods 3.

Applies only to insolvent buyer or insolvent person under S 2.STOPPAGE IN TRANSIT S 50: An unpaid seller who has parted with the possession of goods has the right to stop them in transit when the buyer becomes insolvent. 27 .

if notice given to principal of carrier.Putting stoppage in transit into effect S52-unpaid seller may take possession or give notice to carrier or bailee who has possession of goods 52(1). seller must bear the cost 54(1).stoppage in transit or lien does not rescind a valid contract of sale 28 . principal must communicate it to subordinate to prevent delivery 52(2)-if seller instruct to redeliver.

Remedies of the Buyer Action for Non-Delivery of Goods S57. buyer may sue the seller for damages for non-delivery.where the seller wrongfully neglects or refuses to deliver goods to the buyer. Action for specific performance S58.a buyer may bring an action for the specific performance of contract Mensa Mercantile v Eikobina Behnke v Bede Shipping 29 .

sue the seller for damages for breach of warranty 30 . set up against seller the dimunition or extinction of the price. 2.Remedies for buyer in breach of Warranty Where seller commits breach of warranty. buyer may: 1.