CHAPTER 5

SALE OF GOOD
(SOGA- SALES OF
1 GOODS ACT 1957)
Definition of Sale of Goods Contract
 S4(1) of Sales of Goods Act 1957 (SOGA) : A contract
wherein the seller transfers or agrees to transfer the
property in goods (the ownership) to the buyer for a
price (a money) consideration.
 Contract is an agreement which is legally binding between
the parties.
 A sale occurs when the ownership or property in goods
passes to the buyer. There must be :
 Goods
 Money consideration (the price)
 Transfer of property/ownership
2 Sale of Goods
 Definition of Goods
 Section 2 : Sale of Good Act 1957 (SOGA 1957)
Goods mean every kind of movable property other than actionable
claims and money, and includes stock and shares, growing crops, grass
and things attached to or form part of the land which are agreed to be
severed before sale or under a contract of sale.
Goods does not include:
 Land or things attached to land
 Choses in action or rights
 Services
Goods can be classified under the sale of goods legislation by :
 Existing goods
 Future goods
 Specific goods
 Unascertained goods
 Ascertained goods

3 Sale of Goods
 CLASSIFICATION/TYPES OF GOODS
 existing goods – goods already owned or possessed by
the seller, and may be either specified or agreed upon at
the time a contract of sale is made
 specific goods – goods identified and agreed upon at the time
a contract of sale is made
 ascertained goods – goods which, in a contract for the sale of
unascertained goods, have become identified and agreed upon
by the parties
• unascertained goods – those identified by description only
• future goods – goods to be manufactured or produced or
acquired by the seller after the making of the contract of sale:
section 2 of SOGA 1957
4 Law of Contract
Difference between sale agreement and
agreement for sale
 A contract of sale includes a sale and an agreement to
sell.
 A sale is a contract under which the property in the
goods is transferred from the seller to the buyer.
 Section 4 (3) - An agreement to sell is a contract under
which the transfer of the property in the goods is to take
place at a future time or subject to same condition there
after to be fulfilled.
 Section 4 (4) - An agreement to sell becomes a sale
when the time elapses or the condition are fulfilled
subject to which the property in the goods is to be
transferred.
5 Sale of Goods
Formation of the Contract

Formalities

FORMATION
Capacity to OF THE Formation
Contract CONTRACT

Price

6 Sale of Goods
Formation of the Contract
 S5(1), SOGA 1957 : A contract of sale is made by an
offer/proposal to buy or sell goods at a price and by the
acceptance of such an offer. {Offer-goods(sell/buy)-price-
acceptance}
 Contract may provide immediate delivery of the goods or the
immediate payment of the price or both.
 S5(1), SOGA 1957 : Price means the money consideration for
the sale of goods.

 FORMALITIES

 S5(2), SOGA 1957 : A contract of sale may be made in writing

or by word of mouth (orally), or partly in writing and partly by
word of mouth, or may be implied(tersirat) from the
conduct of the parties.
7 Law of Contract
 Terms Of Sales of Goods Contract

Condition
Terms Of
Contract
Warranty
8 Sale of Goods
Terms Of Contract can be divided into
Condition and Warranty
3) Terms Of Contract can be divided into Condition and
Warranty.

i) Conditions - s12(2) SOGA 1957 – syarat utama

 It is a stipulation essential to the main purpose of the contract.
 a breach of the conditions entitles the innocent party to
repudiate (cancel/revoke) the contract.

ii) Warranty – s12(3) SOGA 1957 – syarat sampingan

 It is a stipulation collateral to the main purpose of the
contract.
 A breach of warranty entitles the innocent party to claim for
damages but not the right to repudiate the contract.

9 Sale of Goods
Implied terms of contract: implied (tersirat)
conditions

• Illustration:
implied • Marry sold to Jean a piano and Jean paid Mary
condition as the purchase price. After one year, Jean
discovered that the piano actually belonged to
to title: John and that Mary was actually looking after
John possession and house while john was
s14(a) overseas. Jean can recover the price in full even
though she had used the piano for one year.

sale of goods • Implied condition that in a

sale of goods by description,
by the goods must correspond
description with the description: s15

10 Law of Contract
Implied terms of contract: implied
conditions
Goods must be • If the goods are ordered for a
reasonably fit for specific purpose and seller is made
aware of it and the buyer relies on
the purpose the skill or judgment of the seller,
which the buyer there is an implied condition that the
wants them – goods shall be reasonably fit.
s16(a) • Grant v Australian Knitting Mills

• If (i) sale is by description and (ii)

purchased from the seller who deals in
Merchantable goods of that description, there is an
Quality - s16(b) implied condition that the goods are of
merchantable quality.
• Wilson v Ricket, Cockerall & Co. Ltd
11 Law of Contract
Implied terms of contract: implied
conditions

Implied • The bulk shall correspond

condition with the sample in quality
that in • There should be only minor
differences and quality of
contracts goods is still the same
of sale by • Buyer shall have reasonable
sample – opportunity to compare the
s17: bulk with the sample.

12 Law of Contract
Implied terms of contract: implied
warranties.

Implied warranty
Implied warranty that
goods are unencumbered.
Goods shall be free from
Implied warranty that
any charge in favor of any
buyer shall have quiet
3rd party not declared or
possession : s14(b)
known to the buyer before
or at the time when the
contract : s14(c)

13 Sale of Goods
Exercise
 Provide examples of contract of sale for ascertained
goods and future goods.
 Discuss the meaning of sale of goods by description and
provide examples of sale by description.
 Electra bordered 5 leather handbags by sample from Pure
Leather Sdn Bhd. When the bags arrived, she inspected
them and found that all the bags were similar with the
sample and she was satisfied. However, on a closer and
detailed inspection, she discovered minor defects on 3 of
the bags. What is the position of the contract? Advise
Electra. CASE: DRUMMOND v.VAN INGEN (1887)

14 Sale of Goods
 TRANSFER OF PROPERTY(OWNERSHIP)

 There is a difference between the concept of property

(ownership) and possession.
 In a sale of goods contract, the property and possession
must pass from the seller to the buyer. The passing of
property determines who to bear the risks of such
property. Only when the property passes to the buyer,
the risk will also pass to him irrespective whether or not
the good has been physically delivered to the buyer.

 E.g. when A buys from B the latest Honda car to be

consigned from Japan. Only when B has set aside the car
for A, the property passes to A.
15 Law of Contract
TRANSFER OF PROPERTY(OWNERSHIP)
 s.26: unless otherwise agreed, risk of goods is borne by the seller
until the property (ownership) is transferred to the buyer. But when
the property (ownership) is transferred to the buyer, the goods are
the buyer’s risk whether delivery has been made or not.
 In a contract of unascertained goods, the property passes to the
buyer only after the goods are ascertained - s.18
 .E.g. when A buys from B the latest Honda (CITY) car to be
consigned from Japan. Only when B has set aside the car for A, the
property passes to A.
 In a contract of ascertained/specific goods, the property in goods
passes to the buyer at such time as the parties to the contract
intend it to be transferred - s.19.
 This intention can be identified by looking at: TERM of contract
and/or the CONDUCT of parties & CIRCUMSTANCES of the case.

16 Sale of Goods
PROTECTIONS TO BUYERS & OWNERS
 The common law rule is CAVEAT EMPTOR which means
“let the buyer beware”. That is, the buyer must exercise
care when making purchases or he must bear the
consequences.
 In a contract for sale of goods there is no implied
warranty or condition as to the quality or fitness for any
particular purpose of goods. Therefore, the buyer
purchases the goods at his risk relying on his own skill
and judgment (Section 16) – e.g a buyer should know that
a toothbrush is for brushing teeth and not anything else.
 There are certain cases where the Doctrine of Caveat
Emptor does not apply.

17 Law of Contract
PROTECTIONS TO BUYERS & OWNERS
 Section 27 of the Sale Of Goods Act 1957 sets out the ‘nemo dat quod non
habet’ (nemo dat) maxim which means ‘no one can give a better title(hak)
than he has himself’. This means that if goods are bought from a person
who is not the owner or who sell them without the owner’s authority, the
buyer does not acquire any title.
 Case: Lim Chui Lai v. Zeno Ltd and Ng Ngat Siang v. Arab Malaysian
Finance Bhd & Anor
 Exception(s) to the above rule are:
 a. Estoppel
 b. Sale by a Mercantile agents
 c. Sale by one of Joint owners
 d. Sale under a Voidable title
 e. Sale by a Seller in possession after sale
 f. Sale by a Buyer in possession
18 Sale of Goods
PROTECTIONS TO BUYERS & OWNERS
(TRANSFER OF TITLE ): Exception(s) to the the
‘nemo dat quod non habet’ rule :
• Section 27 – Where the owner by his conduct
make it appear to the buyer that the person who
sells the goods has his authority to do so and the
Estoppel buyer relies on that conduct the buyer obtains a
(persekatan) goods title because the owner is precluded by his
conduct from denying the seller’s authority to
sell.
• EASTERN DISTRIBUTERS v GOLDING
• Section 27 - provide that where a mercantile
agent is, with the consent of owner, in possession
of the goods or the document of the title to the
Sale by goods, any sale made by him when acting in the
Mercantile ordinary course of business of a mercantile agent
Agent shall be as valid as if he were expressly
authorized by the owner of the goods to make
the same.
• FOLKES v KING
19 Sale of Goods
PROTECTIONS TO BUYERS & OWNERS
(TRANSFER OF TITLE ): Exception(s) to the the
‘nemo dat quod non habet’ rule :

Sale by • Section 28 – provided that if one of

one of several joint owners of goods has the sole
possession of the goods by permission of
Joint the co- owners, property in the goods is
Owners transferred to any person who buy them.

• Section 29 – provides that where the

Sale under a seller of goods has obtained possession
Voidable Title there of under a contract voidable under
(jualan section19 or 20 but the contract has not
dibawah been rescinded at the time of the sale, the
kontrak boleh buyer acquires good title if he buys them
batal) in good faith and without notice of defect
to seller’s title.
20 Sale of Goods
PROTECTIONS TO BUYERS & OWNERS
(TRANSFER OF TITLE ): Exception(s) to the the
‘nemo dat quod non habet’ rule :
• Section 30(1) – if a seller continues in possession
of the goods or holds documents of title after a
Sale by a sale, and then he/she transfers the
Seller in goods/documents of title to a third party, who
buys them in good faith and without knowledge of
Possession the previous sale, the second sale is considered as
after Sale good, as if it was authorized by the owner.
• PACIFIC MOTOR AUCTIONS PTY LTD v MOTOR
CREDITS

• Section 30(2) – if a buyer, having bought or

agreed to buy goods, obtains possession of
Sale by a the goods or documents of title to the
Buyer in goods with the consent of the seller, he
Possession can pass a good title to subsequent ‘bona
fide’ (in good faith) buyer.
• NEWTONS OF WEMBLEY LTD v WILLIAMS
21 Sale of Goods
Remedies For Breach
• Rights of the unpaid seller
Rights of against the goods.
• Rights to sue for breach of the
seller contract

• Rights of the buyer to sue for

damage for non-delivery
Rights of • Rights of the buyer to commence
an action for specific performance
buyer • Remedies available to the buyer for
breach of warranty
• Buyer’s action in tort (salah laku
(yg tidak melibatkan pelanggaran
kontrak) yg boleh dikenakan
22 tindakan sivil, spt ganti rugi.) Sale of Goods
Rights of Seller
 S45: Unpaid seller is:

One who has not been paid or tendered the whole of

the price or;

One who receives a bill of exchange or other

negotiable instrument as conditional payment and the
condition on which it was received has not been
fulfilled by reason of the dishonor of the
instrument.(cheque)

23 Sale of Goods
Rights of Unpaid Seller: s46
Right of lien (hak untuk menyimpan) on the goods for the
price while he is in possession of the goods: s46(1)(a)

Right of stoppage in transit – in case of buyer’s insolvency

(unable to pay) and the seller has parted with the
possession of the goods: s46(1)(b)

Right of Resale: s46(1)(c)

Right of withholding delivery (if property in goods has not

passed to the buyer) : s46(2)

24 Sale of Goods
Rights of Unpaid Seller: Right of lien -
s47
 Seller is entitled to retain possession until payment under
the following cases:

If goods have been sold without any stipulation as
to credit.

If goods have been sold on credit and the term has

expired.

Where the buyer becomes insolvent(UNABLE TO

PAY) and the seller is in possession of the goods.

25 Sale of Goods
Rights of Unpaid Seller:
Right of stoppage in transit – s50
When the buyer of goods becomes insolvent (unable
 to pay), the unpaid seller who has parted with the
possession of the goods has the right of stopping them
in transit.
That is, he may resume possession of the goods as long
as they are in the course of transit and may retain them
until payment.
What is Transit? If it is with a middle man who is
required to deliver the goods to the buyer, but has not
reached it to the buyer, then goods are said to be in
transit.

26 Sale of Goods
Rights of Unpaid Seller:
Right of Resale – s54(1)

If goods are of perishable (mudah rosak) nature: s54(2)

If the seller gives notice to the buyer of his intention to

resell and the buyer does not pay within a reasonable
time after notice: s54(2)

If the seller has expressly reserved his right of re-sale in

case the buyer makes default: s54(4)

27 Sale of Goods
Rights of Unpaid Seller: To sue for Breach of
Contract

If the buyer neglects or refuses to pay as per terms of

contract, after the property in goods has passed to the
buyer.

For non-acceptance: If buyer wrongfully neglects or

refuses to accept and pay, the seller may sue for
damages for non-acceptance.

28 Sale of Goods