Professional Documents
Culture Documents
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SALES OF GOODS
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1. LAW Sales of Goods Act
APPLICABLE 1957 (Revised 1989)
Goods – the
subject
Capacity matter of
the contract
3. NATURE &
FORMATION
OF CONTRACT
FOR SALE OF
GOODS
Formalities Consideration
Formation
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3.1 Parties to
Seller the contract Buyer
Existing Goods – S2
• goods already own & possessed by the seller
• may be specific or unascertained
Specific Goods – S2
• goods identified & agreed upon at the time a contract of the sale is made
Unascertained Goods
• goods identified by description only
• e.g. 500 tons of wheat
Future Goods – S2
• goods to be manufactured or acquired by the seller after the making of the
cont of sale
• e.g. - a ship to be built by a seller to a specification
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• the consideration for the SOG is called ‘the price’
• therefore there must be an exchange between goods
and money
3.3 Consideration • S.2 – def of price – money consideration
• * cont of barter not a cont of sale.
• no specific provision
• govern by cont act
3.6 Capacity
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A TERM ESSENTIAL TO
THE CONTRACT
Condition S.12(2): a condition is a
stipulation essential to the main
purpose of the contract.
Where the seller is in breach of
4. TERMS OF CONTRACT
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6. IMPLIED TERM/CONDITION TO TITLE:s.14(a)
S 14(a): Right to sell the goods
in a case of sale, it is implied that the seller has a right to sell the goods.
in an agreement to sell, the seller has a right to sell the goods at the time
the property is to pass
the effect if the seller has no right to sell the goods:
he cannot pass a good title to the buyer
he is in breach of condition in S 14(a)
the buyer’s right are:
I. to cancel the contract
II. to claim for the refund of the money paid
CASE: ROWLAND V DIVALL
R bought a car & used it for 4 months when he discovered that it was
stolen. The car was return to the true owner. R claimed a refund from D.
Held: D (seller) had breached condition as to title. R was allowed to recover
full price.
Stolen car
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Section 14(b) SOGA (quite possession)
Buyer shall have enjoy quiet possession of the goods unless specified
otherwise.
Exception in the case where title is defective and subsequent failure
disturbance of possession of the goods.
The purpose of this is to cover the buyer rights against wrongful
interference by a stranger claiming a lawful right by virtue of a better title
than the seller as well as the wrongful act of the seller himself.
Eg- A sold his car to B. A sometimes persuaded B to allow him to use the car. A had
spare key and sometimes used the car regardless whether B needed the car or not. A
= breached the Implied warranty (B did not have Quiet Possession ).
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7. IMPLIED CONDITION THAT GOODS CORRESPOND
WITH DESCRIPTION: S.15
where the purchaser has not seen the goods but relying on description alone- sale of
unascertained goods.
Specific goods only apply where the buyer has not seen the goods such as mail
orders & sale from a catalogue
e.g. sale in a self service shop where the goods are selected & examined- describe
either on the label or packaging.
Under previous contracts between the parties for the sale of flour, the flour had been
sold in bags bearing a well known trademark. Subsequently, the flour was ordered ‘ the
same as the previous contract‘. Flour of the same quality was delivered but it did not
bear the same well-known trademark. The court HELD the goods did not comply with
the description.
CASE: BEALE V TAYLOR
The buyer discover that the car was a mixture of a 1961 model and the earlier model. HELD : in the
case of sale by description, the buyer was entitled to damaged for breach of an implied condition
relating to the sale by description where the car did not correspond with the description.
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8. IMPLIED CONDITION AS TO FITNESS FOR A PARTICULAR
PURPOSE: S.16(1)(a)
General rule: under the common law, the gen rule is that the buyer is expected to
exercise care in making purchases. This rule is known as Caveat Emptor (let the buyer
beware) Buyer must exercise care in making purchases, if he does not, he must bear
the consequences. The seller will not be liable if the goods is not fit or does not have
the quality as required by the buyer.
However,S16(1)(a) provides some exception to the caveat emptor general rule. S.16 (1)
(a) provides that there is an implied condition that the goods must be reasonably fit
for a particular purpose of the buyer
If the goods are not fit for the particular purpose of the buyer, the seller would be
liable for breach of this condition and the buyer is entitled to claim for damages
and/or rescind the contract.
Under this section there are 4 conditions to be fulfilled:
i. Disclosure of purpose
ii. Reliance on the seller’s skill and judgement
iii. The goods supplied are of the description which it is in the course of the seller’s
business to supply
iv. If the goods are specific, they must not be bought under the patent or trade name.
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i. Disclosure of purpose
the buyer must make known either expressly or impliedly to the seller at or before
the time when the contract is made the particular purpose for which the goods are
required.
CASE: GRIFFITHS V PETER CONWAY LTD
However if the description of the goods show that it has only one purpose, no
disclosure is required. It is implied that the goods is fit for that particular purpose.
E.g If A buys a loaf of bread which contains a stone on which he breaks a tooth on
eating, is there a breach of implied condition that the bread if fit for the purpose i.e.
to be eaten ?
CASE:PRIEST V LAST
The Plaintiff purchased a hot water bottle from the defendant, a retail chemist.Some
days later, the bottle,while in use by the P’s wife burst.As a result,she was scalded
and the P sued the D. HELD: the description of the goods by which they were sold
pointed to one particular purpose only,then the requirement of disclosure of purpose
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ii. Reliance on the seller’s skill and
judgment
The buyer must establish that he had relied on the seller’s skill &
judgment before purchasing the goods
CASE: GRANT V AUSTRALIAN KNITTING MILLS
The court held that reliance usually arises by implication from the
circumstances. For instance, of a purchase from a retailer, the reliance will
be inferred from the fact that a buyer goes to the shop in the confidence
that the seller has selected his stock with skill and judgment .(underpants
contained excessive sulphites which caused dermatitis to the buyer)
CAMMELL LAIRD & COMPANY V MANGANESE BRONZE &
BRASS CO LTD
A contract to build a propeller in accordance with the specification and
design and to fit a particular ship and its engine. However the details as to
the thickness of the blades were left to the S’s skill and judgment. The
propeller supplied complied with the specification but did not suit the ship
engine. The court held that S was liable for breach of implied condition
because the B had informed the S of the purpose for which he needed the
propeller & relied on the S’s skill and judgment.
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iii. The goods supplied are of the description which it is
in the course of the seller’s business to supply
The seller was the manufacturer & dealer of the animal feed. It had never made
feed for drink. This was made clear to the B but the seller however agreed to
make up such a compound from a formula provided by the B. The compound
produced was not fit for the mink. The issue was whether the compound was of the
description which was in the course of the seller’s bss to supply. HELD: the
product was a feeding compound. Although the seller has never supplied
iv. The goods were not bought under particular
patent or trade name
If the buyer asks for specific goods under a patent or trade name with
the impression that he is not relying on the sellers skill or judgment, he
16 cannot later complain if the goods bought are not for the purpose which
he requires them.
But if the buyer purchases the goods under a trade name and relying on the
seller’s skill or judgment, this means that the buyer is relying on the seller’s
skill or judgment
In Baldry v Marshall, a contract for the sale of a Bugatti car was entered
into between the buyer and the dealer as a result of the dealer’s
recommendation that the car was suitable for touring. However it was found
that the car was unsuitable for touring. It was held that the dealer was
liable for breach of contract because the buyer had relied on the dealer’s
judgment in the selection of a car suitable to the buyer’s stated purpose
even if it was sold under a trade name.
In Frost v. Aylesbury Dairy Co. Ltd [1905] The defendant in this case is
a milk dealer where he supplied milk contained germs of typhoid fever.
Plaintiff’s wife died due to the infection. Court held that it was an implied
condition that the milk must be reasonably fit for consumption
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9. IMPLIED CONDITION AS TO MERCHANTABLE QUALITY-
S.16(1) (b)
need not have made known to the seller, the particular purpose for which
the goods are required so long as they are bought:
i. by description
ii. from a seller who deals in goods of that description
iii. exclude private sale
iv. include sale under patent or trade name.
GEDDLING V MARSH
Facts: Mineral water was sold in the bottles. A defective bottle burst and injured
the buyer. It was an implied condition of the contract that the water and the bottle
supplied must be of merchantable quality. Court held that there is an implied
condition as to merchantable quality even though the goods were sold under patent
or trade name.
WILSON V RICKETT
Fuel by its trade name ‘coalite’ was ordered from a fuel merchant, contaminated,
resulting in an explosion. Held: the consignment was unmerchantable, having
defects, making it unfit for burning. However, the requirement of implied condition
on merchantable quality does not apply where the buyer has examined the goods.
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10. GOODS CORRESPOND WITH SAMPLE – S.17
usually used in the sale of bulk goods like rice, wheat or flour & in a household item
like tile, floor covering, carpets.
Condition:
a) the bulk shall correspond with the sample in quality – S 17(2) (a)
b) that the buyer shall have a reasonable opportunity of comparing the bulk with the
sample.
c) goods are free from any defect rendering them unmerchantable which would not be
apparent on reasonable examination of the sample –S 17(2)(c)
breach of any of the three conditions entitle the buyer to reject the goods &
terminate contract.
Facts: The cloth supplied by the seller was equal to samples previously examined.
However, there was a latent defect not discoverable by a reasonable examination.
Court held that the seller was held liable for breach of the subsection because
eventhough the bulk correspond with the sample. There was a latent defect rendering
the goods unmerchantable. The buyer was entitled to reject the goods.
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General Rule – Section 27 SOGA 1957
“ If goods were bought from a person who is not the owner and who sold
them without the owner’s authority, the buyer does not get any title”
Maxim Nemo Dat Quad Non Habet ( No one can transfer a better title
than he has himself”
Rationale is for the protection of the ownership of goods to be retained. In
the same time to protect the interest of true owner in the case goods are
stolen
Basically Section 27 explained or adopted nemo dat principle that is only a
person with title can transfer good title to another. A person with title
could be the owner or the authorised agent. Only sale by those persons can
transfer good title to another. Objective is to protect right of ownership .
Example, if the goods were stolen and sold to another party.
CASE : LIM CHU LAI V. ZENO LTD (1964)
Court held that at the time sale happened, the seller had no title to the
goods ( he was the bailee and not the owner). Therefore, he had no
authority to sell them. No title has passes as the title of the goods
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remained with the owner.
ESTOPPEL
SALE BY
SALE BY BUYER IN MERCHANTILE
POSSESSION AGENT
SALE UNDER A
VOIDABLE TITLE
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• when the owner of the goods is by his
conduct precluded from denying the S
authority to sell i.e makes it appear to the
ESTOPPEL –
B that the person who sells the goods has
his authority to do so & the B acts in
reliance on it
S.27 • -the B who takes in good faith for value
will acquire a good title by estoppels.
JOINT OWNERS
• -two conditions:
• a)one of the several joint owners has the sale
– S.28 possession of the goods by permission of the
co-owners.
• b)the B acts in good faith & has not at the
time of the cont of sale notice that the S lacks
authority to sell.
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• a S who has parted with the title to the goods
SALE BY but remains in possession of the goods or of
the document of title( D.o.t) can pass a good
SELLER IN title to a bona fide purchaser
POSSESSION
• the 2nd B gets a good title, whereas the
original B loses it
AFTER SALE–
• the 1st B has to pursue his remedy against the
S
S.30 (1)
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CASE : NEWTONS OF WEMBLEY LTD V. WILLIAMS
YEA
YEAAHHH!
The car is
MINE!!! Court held in this case that YY , the
original buyer was in possession of the
car with the consent of the owner.
Therefore , he can pass good title to
XX, who in turn later transferred the
car to William. Thus, William was
entitled to keep the car.
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REMEDIES FOR BREACH OF
CONTRACT (SALE OF GOODS)
Breach done by the Buyer or the Seller. The other party who is not in breach (the
innocent party) is entitled to remedies.
BREACH BY THE BUYER
May occur as a result of the following:
i. Failure of the B to take delivery – S.44
If the seller is ready and willing to deliver the goods and requests buyer to take
delivery but the buyer does not within reasonable time take delivery upon the request,
the buyer will be liable to the seller for any loss occasioned by his neglect or refusal to
take delivery.
Buyer also responsible for additional charges for care and custody of the goods.
Seller must make delivery if the buyer is later willing to take delivery
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RIGHTS OF UNPAID
SELLER
Definition of UNPAID
SELLER-
Sec. 45 (SOGA)
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RIGHTS OF
UNPAID
SELLER
Right to retain possession of the goods until payment or tender of
the price
Sec 46 (1) (a): where the property in the goods has passed to the
B but delivery has not been made.
Sec 46 (2) : if the property in the goods has passed to the B, the
S may with hold delivery
Sec 47 (1) –the right of lien arises where the goods sold without
stipulation as to credit OR Goods sold on credit but the period of
credit has expired OR the buyer becomes insolvent.
Sec 48- What if part delivery has been done? – The lien can be
done over the remaining goods
Section 54- The seller obtains possession of the goods where he has
exercised the right of lien and right of stopping the goods in transit.
Resell can be done if:
the goods are of a perishable nature – Section 54(2)
Notice to resell has been given to the original buyer and he fails to pay
the price within the time allocated – Section 54(2)
The seller reserved a right to resale in case of buyer’s default – Section
54(4)
What is the effects of resale?? – Section 54(3) stated that the 2nd buyer
will get a good title
OTHER RIGHTS
Seller may sue the buyer for the price if the title of the goods passed to
the buyer – Section 55 (1)
Section 56 deals with damages for non acceptance where the seller may
sue the buyer for damages for non acceptance if the buyer wrongfully
neglects or refuses to accept and pay for the goods.
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REMEDIES FOR BUYER
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