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LECTURE 1

LAW ON SALE OF
GOODS

Applicable laws

Sale of Goods Act 1957


Consumer Protection Act 1999
Contract Act 1950
Common law

A contract of sale of goods

Types
Commercial
sales (B2B)

Consumer
sales (B2C)

Private
sales (C2C)

The law
B2B The Sale of Goods Act (SoGA)
B2C The SoGA, Consumer Protection
Act 1999
C2C Law of contract

Scope of the SoGA


The model of the SoGA was the English Sale of
Goods Act 1893.
The Act is a general law on a contract for the
sale of goods and thus applies to both
commercial and consumer sales.
It covers various aspects of a contract for the
sale of goods such as formation of contract,
implied terms, payment, delivery and rights and
liabilities of seller and buyer.

Cont.
However it applies only to Peninsular Malaysia.
Sabah and Sarawak English law by virtue of
section 5 of the Civil Law Act 1956 which provides,
among others, that 'the law to be administered shall
be the same as would be administered in England in
the like case as at the corresponding period.'
It can be interpreted as adopting the latest
developments of English law into these states
including the Sale of Goods Act 1979 and the Unfair
Contract Terms Act 1977.

SoGA and the Contract Act


Section 3 provides the Contracts Act
1950, in so far as they are not inconsistent
with the express provisions of this Act
shall continue to apply to contracts for the
sale of goods

What is a Contract of sale of


goods?
The SoGA applies only to contracts for the sale
of goods as defined in section 4(1) as 'a
contract whereby the seller transfer the property
in goods to the buyer for a price.
'Price' is defined in section 2 as 'the money
consideration for a sale of goods'.
The main feature of a contract of sale is the
transfer of ownership or property in goods for a
money consideration.

5 elements of a sale contract


Seller

A person who sells or agrees to sell


goods

Buyer

A person who buys or aggress to buy


goods

Good
Transfer of
property
Price

Transfer of ownership
Money consideration for a sale of goods.

Sale v. other contracts

Sale and exchange (a contract of barter)


Sale and gift
Sale and hire-purchase
Sale and supply of services

Types of sale
Absolute
sale

Conditional
sale

The ownership is transferred


without any condition.
All requirements of contract
are fulfilled.

Also known as an agreement


to sell.
The transfer of property in
goods takes place at a future
time or subject to some
condition to be fulfilled.

Meaning of goods
Section 2 of the SoGA defines goods as
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.

Goods
Stock and
shares

Collection
of money
(coins)

Moveable
property

Things
attached/
forming
part of the
land

Products of
the soil

Excluded
Immoveable property land, fixtures and
house. (sand from a quarry ?)
Actionable claims debt, copyright.
Money (currency exchange).

Debatable issues
Whether human blood and organs can be
considered as goods?
Whether computer software may
constitute goods?

Cases
St Albans City and District Council v
International Computers Ltd. [1996] 4 All
ER 481 a computer disk is within the
definition of goods. However a computer
program is not goods.
Watford Electronics Ltd v Sanderson
[2001] 1 All ER 696 the SoGA was not
applicable as the software had not been
sold, but merely licensed.

Different types of goods


Section 6 of the SoGA states:
(1) The goods which form the subject of a contract of sale
may be either existing goods, owned or possessed by
the seller, or future goods.
(2) There may be a contract for the sale of goods the
acquisition of which by the seller depends upon a
contingency which may or may not happen.
(3) Where by a contract of sale the seller purport to effect a
present sale of future goods, the contract operates as
an agreement to sell the goods.

Types of
goods
Existing goods
(a contract of
sale)

Future goods
(an agreement
to sell)

Future goods
Future goods means goods to be
manufactured or produced or acquired by
the seller after the making of the contract
of sale section 2.
The SoGA recognises the contingent sale
of future goods and the sale of a spes (a
chance)

Illustration
Mr.A agrees to buy whatever crop that would be
produced from a particular field at a fixed price.
It may be a contingent sale of goods if the
crop does not come into existence, the contract
will not become operative.
It may be a sale of a mere chance, that is the
buyer may take the risk of the crop failing
completely, in which case the price is still
payable.

Further division of goods


Existing and future goods can be further
divided into specific and unascertained
goods.
Specific goods means goods identified
and agreed upon at the time a contract of
sale is made.
unascertained goods are not defined by
the SoGA. It refers to the goods which are
not specific.

Illustrations
Illustration 1 (existing and specific goods)
A agrees to buy Bs Proton Iswara car
registration number WFY 5158. At the time of
the contract, the parties know which particular
car is being purchased.
Illustration 2 (existing but unascertained goods)
A agrees to buy 10 out of 50 cows in Bs farm
without specifying them. At the time of the
contract, the goods are not yet ascertained.

Cont..
Illustration 3 (future and specific goods)
A, a car dealer agrees to sell a Proton
Perdana car registration number WWE 6560
to B. But the car is yet to be acquired by A
from C.
Illustration 4 (future and unascertained
goods)
A agrees to buy a car of a specific make and
model yet to be manufactured by B.

Formation of a Contract of Sale


A contract of sale is formed when there is
an offer to buy or sell goods for a price
and the acceptance of such offer (section
5(1)).
It may be made in many ways in
writing, or orally, or partly in writing and
partly by word of mouth. It may even be
implied from the conduct of the parties
(section 5(2))

The price
According to section 9, the price in a
contract of sale may be:
(a) fixed by the contract;
(b) left to be fixed in a manner agreed by the
contract;
(c) determined by the course of dealing
between the parties.

Cont.
Section 9(2) states where the price is not
determined in accordance with the foregoing
provisions, the buyer shall pay the seller a
reasonable price. What is reasonable price is a
question of fact dependent on the circumstances
of each case. (fixed by a judge/arbitrator)
Section 10 provides that where there is an
agreement to sell goods on the terms that the
price is to be fixed by the valuation of a third party
and such third party cannot or does not make such
valuation, the agreement is thereby avoided.