Sale of Goods (LATEST)
Sale of Goods (LATEST)
Sale of Goods (LATEST)
Prepared for:
LAW 251
Prepared by:
Section 3 SOGA
Contract of Sale
Sale and Agreement to Sell
S.4 (1) SOGA:
A contract of sale of goods
a contract whereby the seller transfer the
property in goods to the
buyer for a price...
Seller------Buyer---------Price
E.g: A agrees to transfer the ownership of
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three (3) main elements in a contract
of sale of goods:
There must be goods which are to
Continue.
Objectives
of the contract of
sale:
The transfer of ownership of the
goods to the buyer for money
consideration
Sale occurs when the ownership
or property in goods passes to the
buyer
Continue.
Section 4(3)
Definition of goods
1.Goods :
Section 2 of SOGA
every kind of movable property
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Growing crops, grass and things attached
Continue.
The followings are EXCLUDED from being
the land)
reasons)
Money ( current currency)
Continue.
Morgan v Russel
The vendor was the lessee of certain land which was
composed of slag and cinders.
He then sold the purchasers all the slag on his premises
so much as the purchasers should desire to remove.
It was held by the Court :
that the sale of cinders and slag was not a sale of
goods but a sale of an interest in the land. The
vendor did not sell any definite quantity of mineral,
which could be said to be a separate thing.
Mills v Stockman
There was a contract to sell a heap of slate which
Types/Categories of Goods
Section 6(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
There are 5 categories of goods:
Existing goods (goods already owned by
the seller)
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Specific goods
Continue.
Unascertained:
Continue.
Ascertained goods
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Future goods
Section 2
Goods to be manufactured or produced
or acquired by the seller after the
making of the contract of sale
Example:
Agreement to buy Mitsubishi Evolution yet
to be manufactured by the seller.
Please Identify
Eon is now discussing the possibility
future goods
EXISTING GOODS
UNASCERTAINED
GOODS
Ownership/property in goods
In a contract of sale of goods, the seller
Ownership
(Having legal title/rights
over the goods)
Continue.
A person may be an owner of the goods
although not in the possession of the
goods
BUT
A possessor of the goods may not be the
owner event though he has physical
control over the goods
Continue.
ONLY THE OWNER WHO HAS THE
PROPERTY IN GOODS IS ENTITLED TO
SELL/TRANSFER THE TITLE TO THE
BUYER.
THE POSSESSOR WHO IS NOT THE
OWNER IS NOT ENTITLED
TO DO SO
PRICE
THE MONEY CONSIDERATION
FOR A SALE OF GOODS
CONTINUE..
s.9 (1)SOGA - It may: Be fixed by the contract.
Be left to be fixed in a manner
agreed in the contract.
Be determined by the course of
dealing between parties.
The buyer
shall pay the
seller the
reasonable
price
continue.
1. CAPACITY
SECTION 11 Contract Act
SECTION 69 Contract Act
2. Formalities
A contract of sale may be made:
in writing,
mouth, or
may be implied from the conduct of the
parties
- (s 5 (2) SGA) -
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Section 5(1)
A contract of sale is made by an offer to buy or sell goods
for a price and the acceptance of such offer.
1. Immediate
Delivery
OR ofOR BOTH
goods
Delivery
of
payments
OR
2. Delivery
or
payments
by
Installment
Delivery or
payments
postponement
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3. TIME OF PAYMENT
Stipulation as to the time of payment
TERMS OF THE
CONTRACT
A. CONDITIONS
A term which is essential to contract;
B. WARRANTIES
Warranty a less vital term of a contract
(collateral to the main purpose) , breach of it
would give rise to a claim for damages, not a
right to discharge/reject the goods.
(s.12(3) SOGA)
If the warranty is breached, the party not in
default is not entitled to repudiate the
contract because
it is not voidable
HOWEVER
Party in default is entitled for damages
EXCEPTION.
Circumstances where contract cannot be
repudiated event though there is a
breach of condition:
Generally, Section 13(1):
Buyers may waive the condition or elect to
treat the breach of the condition as the
breach of warranty and do not want to
repudiate the contract
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CONTINUE
SECTION 42
the goods
When the goods has been delivered to the
buyer and the buyer has done something
which against the ownership of the seller
After the expiry of a reasonable time, the
buyer keep the goods without informing
the seller that he rejected the goods
THE CONTRACT
IMPLIED
EXPRESS
OR
Implied Terms
The SOGA implies a number of stipulations (implied
cont...
1. implied warranty as to time
s.11 of SOGA
Time of payment are NOT deemed to
be of the essence.
Meaning that, if a buyer fails to pay by
an agreed time, the seller does not
automatically repudiate the contract.
2. Implied
title:-
condition
as
to
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Seller must be the owner of the
goods
Court held:
Defendant had breach the implied condition as to
title.
Therefore, the P was allowed to rescind the
contract and claim for the return of the full
price of the car paid to the Defendant.
Butterworth v
Kingsway Motors Ltd
The D sold a car taken on hire-purchase and it was
cont
3. Implied warranty as to quite
possession: S.14 (b) SOGA
Example:
A sold his car to his friend Ali and
Example:
Syarikat ABC sold a machine to
Steinke v Edwards
Facts: The Plaintiff who had brought a car from the
Continue....
Sale of goods by description covers all
Court held:
Arcos Ltd v E A
Ronaasen & Sons
Staves of inch thick were ordered. Only
Varley v Whipp
The seller agreed to sell a 2nd hand reaping machine
Exceptions to Caveat
Emptor Rule
1. s.16(1)(a)
Implied condition that the goods
must be reasonably fit for a
particular purpose of the buyer
IF GOODS NOT FIT
CONDITIONS TO BE
FULLFILLED
1. DISCLOSURE OF PURPOSE (s. 16 (1) (a) ).
EVEN THOUGH
THE GOODS IS NOT FIT
Priest v Last
The P purchased a hot water bottle from the
CONTINUE..
2. RELIANCE ON THE SELLERS SKILL
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3. The goods are of a description which
it is in the course of the sellers
business to supply. (S. 16 (a))
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Held:
The goods are of a description which
it is in the course of the sellers
business to supply.
Therefore the manufacturer was liable
for breach of an implied condition
that the goods were fit for the
purpose for which they were
required.
Continue.
4. The goods must not have been brought under
7. Implied condition as to
merchantable quality
2. (s.16(1)(b)SOGA:Where goods are bought by
cont
Wilson v Ricket,
Cockerell & Co. Ltd
A lady ordered fuel by its trade name
Exceptions
Proviso of S. 16 (1) (b)
Provided that if the buyer
HOWEVER,
If the DEFECT COULD NOT BE
IMPLIED CONDITION AS
Wren v Holt
The P recovered damages for breach
of condition of merchantability of
beer which was contaminated by
arsenic.
The exception was not
applicable because the defect
was not discoverable on
reasonable examination.
8. Sale by Sample
Used in the sale of bulk of goods like
Section 17(2):
sample in quality.
CONTINUE.
Breach of any one of the three
conditions,
THEM.
Drummond v Van
Ingen
The cloth supplied by the Seller was
Godley v Perry
A boy bought a catapult. While using it, the
PRIVITY OF CONTRACT
The implied conditions and warranties bind
BUYE
R
SELLER
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3rd PARTY, if
suffer injury/
damages
CANNOT SUE
SELLER OR
MANUFACTURE
R
NO
CONTRACTUA
L
RELATIONSHI
P
Donoughue v
Stevenson
The Plaintiff became ill as a result of drinking a
Exclusion of Implied
terms. S. 62 of SOGA
where any right, duty, or liability would
TRANSFER
OF
PROPERTY
TRANSFER OF PROPERTY
WHY IS THIS
IMPORTANT?
Introduction
Once property passes to the buyer, the buyer
However,
if the delivery has been delayed due
the price,
if the property in goods has passed to
the buyer.
TIME
WHEN PROPERTY IN
GOODS PASSES TO THE
BUYER?
4. SALE OF
SPECIFIC GOODS
TO BE PUT IN A
DELIVERABLE
STATE
SECTION 21
1. SALE OF
UNASCERTAIN
GOODS
SECTION 18
6. SALE OF
UNASCERTAIN
ED@FUTURE
GOODS BY
DESCRIPTION
SECTION 23
2. SALE OF
SPECIFIC
@ASCERTAINED
GOODS
SECTION 19
WHEN THE
PROPERTIES
IN GOOD
TRANSFERR
ED TO
BUYER?
7. GOODS SENT
ON APPROVAL
SECTION 24
3.SALE OF
SPECIFIC
GOODS IN A
DELIVERABLE
STATE
SECTION 20
5. SALE OF SPECIFIC
GOODS TO BE PUT
IN A DELIVERABLE
STATE
BUT SELLER HAS TO
ASCERTAIN THE
PRICE
SECTION 22
1. SALE OF UNASCERTAINED
GOODS
SECTION 18
CONTRACT FOR THE SALE OF UNASCERTAIN GOODS
NO PROPERTY IN GOODS IS
TRANSFERRED TO THE BUYER
UNLESS
THE GOODS ARE ASCERTAINED
E.G.
A contracts to buy a new car which
2. SALE OF SPECIFIC OR
ASCERTAINED GOODS
Section 19(1)
For the sale of SPECIFIC GOODS OR ASCERTAINED
GOODS,
the property in goods
is transferred to the buyer
WHEN
THE PARTIES INTENDED TO IT TO BE TRANSFERRED
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Section 19(2)
HOW TO DETERMINE THE
INTENTION OF THE PARTIES?
BY CONDUCT
BY CIRCUMSTANCES
S.20 of SOGA
Section 20
IMMATERIAL
THE TIME OF PAYMENT OF THE PRICE
THE TIME OF DELIVERY OF GOODS
OR BOTH are POSTPONED
Example:
A buyer agrees to buy a particular
book on credit.
The property in goods PASSES
immediately to the BUYER when the
contract of sale is made, even
though the payment is
postponed.
Underwood Ltd v
Burgh Castle Brick &
Cement
There was a contract for the sale of a
damages?
Held:
The property in goods HAD NOT PASSED
to the buyer at the time of accident. The
engine is still at the risk of the seller.
S. 20 could not applied because the
engine was not in a deliverable state
at the time of contract.
Example
The seller agrees to sell a particular 2nd
example:
A agrees to sell all remaining sugar contained in
Please identify:
If the seller is required to measure 10 kg
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Section 23(1)
goods of that description;
and in a deliverable state
appropriated to the contract
the property thereupon passes to the
buyer
what is Unconditionally
appropriated?
any act showing an intention to identify
goods without any further condition.
example:
selection, separation, of weighing from a
bulk
Continue.
Section 23(2)
If the contract involves delivery to a carrier,
once the seller delivers the goods to the buyer
or to the carrier for the purpose of
transmission (delivery) to the buyer.
The seller is deemed too have an
unconditionally appropriated the goods to
the contract.
Kirkham v
Attenborough
The buyer received some jewelerry from
S.24 of SOGA
Held:
a reasonable time had expired. Therefore, the
property in goods passed to the 2nd dealer. Thus, the
2nd dealer has to pay for the price of the car to 1st
dealer.
Transfer of Risk
General Rule: s.26 SOGA 1957
Application:
the risk of accidental loss/ damage to
the goods passes with property
whether delivery has been made or
not.
*
The Buyer would have to pay for the
goods even though they had been
destroyed.
cont
Exceptions:
agreed.
cont
2. proviso I of S. 26 of SOGA
But where delivery has been delayed
through the fault of either B or S, the goods
are at the risk of the party at fault as
regards any loss which might not have
occurred but for such fault.
Application: Risk lies with the party at
fault for delays in delivery, irrespective
of where property lies.
cont
3. proviso II of s. 26 of SOGA Nothing in this
section shall effect the duties or liabilities of
either S or B as a bailee of the goods of the
other party.
Application: Risk lies with the bailee at
fault.
E.g: Property in goods may have passed to the B,
but if the goods were lost thru the negligent of
the S (the bailee) while in his custody, S will be
liable for the lost.
Perishing Goods
S.7: where goods perishing
Transfer Of Title
Issues:
Buyer bought goods from a
non-owner.
Whether Buyer has obtained
a good (valid) title?
if not, whether Buyer can
sue under s.14(a) SOGA?
GENERAL RULE:
Meaning:
A seller who does not own the goods, or who sells them without
the owners authority CANNOT transfer ownership to the
buyer.
S. 27 SGA
example
A stole a car and sold it to B.
In this situation, A does not have the
Continue.
Application:
A person who has no title cannot pass good/valid title to another.
[this is to protect the ownership so that if goods are stolen &
subsequently sold, the right of the original owner is retained]
Continue.
Lim Chui Lai v Zeno Ltd 1964) 30 MLJ
314
Continue.
Held:
A was merely the bailee & not the owner
of the goods at the time he sold them to
the Appellant.
Because A had no title to the goods /
authority to sell them, he could not pass
any title to Appellant.
Thus, Lim Chui Lai does not have the title
upon the materials bought from Ahmad
Continue.
Rowland v Divall
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UNLESS
the Buyer can prove that he came within ONE OF THE EXCEPTIONS to the Nemo date rule contained in
Section 27, proviso 27, 28, 29, 30(1) & 30(2)
exceptions
Exceptions to
NEMO DAT QUOD NON HABET
RULE:
1.
Estoppel
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*Application:
Owner is estopped (prevented) from denying the Ss right to sell. The owner is estopped
from asserting his title.
Example:
Samy tells Ali in front of Muthu that Samy want to sell Muthu's Books to Ali and Muthu keep on
silent.
If Samy sells the books to Ali, Muthu cannot complain or estopped from denying that Samy has
sold his books without his authority
N.Z Securities v
Wrightcars Ltd
A agreed to sell a car to B and B was given
Held:
C was successful in claiming that A
Elements:
The possession must be with the consent of
the owner
At the time of sale, the mercantile agent must
be in possession of the goods or the document
of title to the goods.
the mercantile agent sells the goods in the
ordinary course of business as mercantile
agent
The buyer has acted in good faith and must not
have knowledge of the agents lack of authority
to sell
Elements:
1 of the owners has the sole possession
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Example:
X,Y & Z jointly owned an oven. X was allowed to
keep the oven & to cook with it since Y & Z did
not know how to cook.
X, without Y & Zs permission, sold the oven to
A who did not know about Xs lack of
authority.
Held: A would acquire a good title to the oven.
Elements:
The seller obtained possession of the
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Example:
A obtains good from B by fraud & sells
them to C who buys them innocently.
At the time C buys the goods, B has not
rescinded the contract made with A.
C obtains good title to the goods. (e.g. of
not avoided).
Example:
If a seller resells to a 2nd buyer the goods
sold by him previously to the 1st buyer,
the 2nd buyer will obtain good title to
the goods if he has received the
goods in good faith & without notice
of the previous sale.
The 1st buyer will lose the title but he can
take legal action against the seller who
would be liable to him.
Held:
The D obtained a good title. MCL is
to be treated as continuing in
possession and is able to pass a good
title under S. 30.
of the seller
However, the property in goods is still
subject to some rights or interest of the
seller.
Held:
A, the original buyer, was in possession with
the consent of the owner. Hence, he could
pass a good title to B, who in turn
transferred it to the defendant.
Thus, the defendant had a good title to the
car and entitled to keep the car.
Delivery and
acceptance of Goods
s.31 SOGA
Its the duty of seller to deliver the
Delivery
Means voluntary transfer of possession from
contd
Unless the parties agree otherwise, the
Time of Delivery
Where under the contract of sale the seller
is bound to send the goods to the buyer,
but NO TIME for sending them is fixed, the
seller is bound to send them within a
reasonable time (s.36(2) SGA)
cont
Seller delivers to the buyer a larger
a)
b)
c)
(if
cont
Seller delivers to the buyer the goods
BREACH BY THE
BUYER
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When the seller is ready to deliver the goods, and request the buyer to take delivery, the buyer must take delivery of the goods within the
reasonable time after the request of the seller
If the Buyer refused or neglect to take delivery, the buyer would be liable for any loss due to
his own refusal or negligence
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If the buyer failed to pay for the price of the goods, the seller may sue the buyer for the price when:
The property in goods (ownership) has passed to the buyer (S. 55(1) ); or
ii. The price is payable on a certain day but the buyer failed to pay on that day; irrespective of delivery, or the property in the goods has not passed
to the buyer (S. 55(2) )
i.
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If the buyer WRONGFULLY neglects or refuses to accept and pay for the goods
The Seller may sue the buyer for damages for non-acceptance
Rights (Remedies)
Of Unpaid Seller
Against The
Goods
UNPAID
SELLER (S. 45
(1))
WHO IS HE?
THE SELLER
HAS NOT
BEEN PAID
WITH THE
WHOLE
PRICE
RIGHTS IN
PERSONA
M
(personal)
RIGHTS IN
REM
(property)
RIGHTS IN PERSONAM
Remedies of the unpaid seller :1.To sue the buyer for the price (S.
55);
2.To sue the buyer for damages for
non-acceptance (S. 56).
Section 55
Where under a contract of sale, of
property in the goods has passed to
the buyer and the buyer
wrongfully neglect or refuses to
pay for the goods according to the
terms of the contract,
the seller may sue him for the
price of the goods.
Continue.
Section 56
RIGHTS IN REM
In respect of the goods themselves:
RIGHT OF LIEN
RIGHT OF STOPPAGE IN TRANSIT
RIGHT OF RESELL
1. RIGHT OF LIEN
A legal lien is dependant on possession.
The unpaid seller who is in possession of the
goods
Is entitled to retain possession until
Section 46(1)(a)
This rights exists even where the
property in the goods has
passed to the buyer but
delivery has not been made
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Section 46(2)
Continue.
These rights may exercise in the following situations :-
Section 47(1):
(a) Where the goods have been sold without any stipulation as to credit;
(b) Where the goods have been sold on credit but the term of credit has expired;
( c) Where the buyers becomes insolvent.
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Section 47(2)
The seller may exercise his
right of lien notwithstanding
that he is possession of the
goods as agent or bailee for
the buyer
Continue.
Section 48
Where an unpaid seller has made part
delivery of the goods, he may
exercise his right of lien on the
remainder, unless such part
delivery has been made under such
circumstances as to show an
agreement to waive the lien.
Continue..
Section 49
The unpaid seller losses his lien in the following
circumstances:
2. RIGHT OF STOPPAGE IN
TRANSIT
Section 50
Subject to this Act when the buyer of
goods becomes insolvent;
the unpaid seller who has parted with the
possession of the goods has the right
of stopping them in transit, that is to
say, he may resume possession of the
goods as long as they are in the course in
transit, and may in retain them until
payment or tender of the price.
Continue
WHEN?
Who is insolvent?
A person who has ceased to pay his debts in
the ordinary course of business, or cannot
pay his debts as they become due, whether
he has committed an act of bankruptcy or
not.
Continue.
Duration of transit
Section 51
Goods are deemed to be in the course of
transit ;
from the time when they are delivered to a
carrier or other bailee for the purpose of
transmission to the buyer, or
until the buyer or his agent in that behalf takes
delivery of them from such carrier or other
bailee.
Continue.
Transit is at the end in the following circumstances:
i. When the buyer takes delivery from the carrier. Section 51(1)
ii. When the Buyer obtains delivery of the goods before their arrival at the appointed destination. Section 51(2)
iii.After the arrival, the carrier acknowledges to the buyer that he holds the goods on the buyers behalf and continues in possession.
It is immaterial/not important that a further destination may have been indicated by the buyer. Section 51(3)
Continue.
Transit cannot recommence merely because
Continue.
If part of the goods has been
Continue
Methods for effecting stoppage
The unpaid seller may exercise stoppage in transit by the following ways:
by taking actual possession of the goods as provided under section 52(1) or;
Giving notice to the carrier or his principal
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Giving notice to the carrier
3. RIGHT OF RESELL
Section 54 gives a right of resell to the unpaid seller in the following circumstances:
1. Where the goods are perishable nature. (Section 54(2))
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2. Where the unpaid seller who had exercised his right of lien or
stoppage in transit, and has given notice to the buyer of his
intention to resell,
but the buyer fails to pay for the price within a reasonable time
after receiving such notice
(section 54(2))
THUS.
The seller may also recover from the original buyer, damages for any
Section 54(2)
Continue
3. Where the seller expressly in the
contract, reserve the right of
resale in cases the buyer failed to
pay for the price.
Section 54(4)
Continue.
The effect of such resale is that, the original
Where seller wrongfully neglects / refuses to deliver the goods to buyer, the buyer may sue
The buyer may also be entitled for special damages, which may be recoverable under the law
If the buyer is also entitled for interest as such rate as the court thinks fit, on the amount of
the price paid, from the date on which the payment was made. (Section 61(1))
2. Specific Performance
In certain circumstances, which are subject to
decree,
directing the seller to the perform the
by Court.
This remedy is available only if the contract is
3. Buyers Action in
Tort
Buyer can sue the seller in tort for wrongful
interference with the goods inconsistent
with the ownership of the buyer.
1. Detinue; and
2. Conversion (s.56 SGA)
Detinue wrongful detention of the goods
e.g: where the prop.in goods has passed to the
buyer & seller withholds the goods
although the buyer demands for them.
cont
conversion means the dealing with the
the seller,
the buyer is not entitled to reject the goods.
However the buyer is entitled to sue the
GLOSARY
Ascertained goods: Goods identified and