3. SOGA.SALEOFGOODS.LAW416.SLIDESLEARN.ppt

1. Definition
2. Classification of goods
3. Formation
4. Implied terms
5. Transfer of title where the seller is not the owner
Nemo Dat Quod Non Habet Rule
Exceptions
6. Remedies for breach of Sale of Goods Contract
Seller’s remedies
Buyer’s remedies

1. 1
SALE OF GOODS

2. 2
Contents
1.Definition
2.Classification of goods
3.Formation
4.Implied terms
5.Transfer of title where the seller is not the owner
Nemo Dat Quod Non Habet Rule
Exceptions
6.Remedies for breach of Sale of Goods Contract
Seller’s remedies
Buyer’s remedies

3. 3
Introduction
TheSaleofGoodsAct(SOGA)appliesonlywhenthebuyerpays
thegoodsbycash(orbychequeorcreditcard).Ifthereisnocash
involved,theSOGAwillnotapply.
TheActappliestoPeninsularMalaysiaexceptPenang&Melaka,
SabahandSarawak.
Penang,Malacca,SabahandSarawakisgovernedbytheEnglish
SaleofGoodsAct1893

4. 4
AllcontractsfortheSOGarebasicallythesameasanyother
contract,thelegalprinciplesgoverningcontracts;offer,acceptance,
capacity,intention,considerationarealsoapplicablehere.
Sec3SOGA–theprovisionsoftheContractsActcontinuestoapply
tocontractsfortheSOG.
TheSOGAisaimedtoofferprotectiontotheconsumer.

5. 5
1. Definition
i)Goods
 Sec2:“goods”-“everykindofmovablepropertyotherthanactionableclaim
andmoney,andincludesstocksandshares,growingcrops,grassand‘things
attachedtoorformingpartofthelandwhichareagreedtobeseveredbefore
saleorunderthecontractofsale”.
 Tangiblemovableproperty.
 Fromthisdefinitionsaleoflandarenotsaleofgoods.Alsoexcludedare
actionableclaimi.erighttosueanotherforadebtdue.
E.gTreesformpartoflandsbutlogswhichhavebeenseveredwouldbe
classifiedasgoodssincetheyhavebeensevered.

6. 6
The contract of sale of goods
Sec 4(1) :
AcontractofSOGisacontractwherebythesellertransfersoragreeto
transferpropertyingoodstothebuyerforamoneyconsiderationcalled
theprice.
ItisclearfromSection4(1)thattheobjectofthecontractofsaleis
transferofownershipofthegoodstothebuyerforamoneyconsideration.
“propertyingoods”meansownershipofgoods.Propertyorownershipin
goodsmustbedistinguishedfrompossessions.

7. 7
Apersonmaybetheowneralthoughnotinpossessionofgoods.
e.g.whenhelendsthemtoanother.
Orapersonmaybeinpossessionofgoodsbutnottheowner
e.g.ifheborrowsbookfromthelibrary.
Indealingwithsaleofgoodswearedealingwithtransferof
ownershipofthegoodsfromthesellertobuyer.

8. 8
2. Classification of goods
i)Specific Goods
Goodsidentifiedandagreeduponatthetimeofcontractofsaleismade.
Eg:AagreestobuyB’sHondahybridcarbearingaregistrationnumberofWWW11.This
isacontractforthesaleofspecificgoods.
ii)Unascertainedgoods
Goodsidentifiedbydescriptiononly.
Eg:acontracttobuyHondahybridofaspecificdescription(colour,registrationnumber)
althoughyouhavenotidentifiedthespecificone.
Itbecomesascertainedgoods(specific)whenwechoosewhichHondahybridwewishto
buy.

9. 9
iii)Future goods
Goods which must be manufactured or acquired by the seller after
the making of the contract of sale.
Goods which are not in existence yet.
Eg: A contract to buy kuih rayawhich the seller must then make.

10. 10
3. Formation of the Contract.
Sec5(1)-Acontractofsaleismadebyanoffertobuyorsellgoods
atapriceandbytheacceptanceofanoffer.
Sec5(2)-Acontractofsalemaybemadeinwriting,bywordof
mouth,partlyinwritingandpartlybywordofmouth.itmayevenbe
impliedbytheconductoftheparties.

11. 11
4. IMPLIED TERMS OF THE CONTRACT OF
SALE OF GOODS
AnumberofstipulationswhichareimpliedintoallcontractofSOGto
protectthebuyer.
Section14,15,16,17SOGAimpliedthatthegoodswillbeofacertain
quality.
Eachsectionalsolabeledtheimpliedtermsasa
conditionorwarranty.

12. 12
(a)Implied terms as to title
Sec14(a)Itisanimpliedconditionthatthesellerhasarighttosellthe
goodsorinthecaseofanagreementtosellthatwhenthepropertyis
topass,hewillhaverighttosellthem.
ThemainpurposeofacontractofSOGistotransferownershiptothe
buyer.Ifsellerdoesnothavetitleorownership,nocontractcanbe
made.

13. 13
RowlandvDivall[1923]2KB500
ThePtboughtacarandafterusingitforfourmonths,discovered
thatitwasastolencar.TheCourtheldthattheDfhadbreached
theconditionastotitleandallowedthePlaintiffforrecoveryofthe
fullpriceonthebasisoftotalfailureofconsideration.Ptentitledto
recoverthefullpriceasdfhadnorighttosellhimthecar.

14. 14
(b) Implied condition that in a sale of goods by
description, the goods must correspond with
description
NagurdasPurshotmundas&covMitsuiBussan
Kaishaltd[1911]
TheDfcontractedtoselltothePtflourknownas‘golden
dragon’.Later,Ptorderedsomemoreflour‘thesameas
ourpreviouscontracts’.Flouridenticalinqualitywas
deliveredbutitdidnotbearthesamewellknowntrade
marki.e.‘goldendragon’.
Held:Thegoodsdidnotcomplywiththedescription.

15. 15
(c) Implied conditions that goods must be reasonably fit for the
purposes for which buyer wants them.
Sec16(1)(a)SOGA:ifthegoodsaresoldinthecourseofbusiness;
and
thebuyerexpresslyorimpliedlymustmakeknownthepurposefor
whichherequiresthegoods,thereisanimpliedconditionthatthe
goodssuppliedwillbereasonablyfitforthatpurpose.
Theconditiondoesnotapplyifwherethebuyerdoesnotrelyoritis
unreasonableforhimtorelyontheseller’sskillandjudgment.

16. 16
E.g.IfAbuysaloafofbreadwhichcontainsastone
uponwhichhebrokeatoothwheneating,thereisa
breachofanimpliedconditionthatthebreadisfitto
beeaten.
i.e.thebreadisnotfitforpurposesforwhichthebuyer
wantsthem.

17. 17
Frost v Aylesbury (1905)
Thebuyerboughtsomemilkfromtheseller(milksuppliers).Thesellers
tookallprecautionsknownatthetimetokeepthemilkfreefromgermsbut
thisparticularmilkcontainedtyphoidgerms.Thebuyer’swifedrankthemilk
anddiedoftyphoid.
Held:ThedefendantwasliableforbreachofSec16(1)(a)asthemilkwasnot
fitforhumanconsumption.

18. 18
d)Goods must be of merchantable quality
Sec16(1)(b)SOGA-impliedconditionthatthe
goodssuppliedmustbeormerchantablequality
exceptinrespectof:-
Defectsspecificallydrawntothebuyer’sattention
beforethecontractismade,and
Defectswhichanyexaminationactuallycarriedoutby
thebuyerbeforethecontractoughttoreveal.

19. 19
Tobemerchantablequality,thegoodsmustbefitfortheirordinarypurpose.
E.g.AminbuysapairofQuicksilverjeans.Itisanimpliedconditionthathe
willnotgetrasheswhenwearingitduetothechemicalswhichmighthave
beenusedduringthemanufactureofsuchjeans.
RogersvParish(1987)
Held:Anewcarisbought,notjusttobedrivenfromoneplacetoanother
buttoenabletodosowithappropriatedegreeofcomfort,easeofhandling,
reliabilityandprideinthevehicle’soutwardandinwardappearance.

20. 20
Bartlett Sydney Marcus Ltd (1965)
Ptwasofferedacarbutbeforethesale,hewasinformedthat
thevehiclehasafaultyclutch.Thesellerofferedtosellthe
carwiththefaultyclutchfor550poundorsaidthathecould
havetheclutchrepairedbeforepurchase,inwhichcasethe
carwouldcost575pound.
Ptchosetobuythecarasitstoodfor550poundbutwhenhe
laterhadtheclutchrepaired,hediscoveredthattherepair
cost45pound.
Ptbroughtanactionclaimingthatthesellerwasinbreachas
thedefectwasmoreseriousthanhehadbeenleadto
believe.
Held:thatthecarwasofmerchantablequality.Thedefecthad
beenpointedouttothePtbeforethesaleandwasnot
substantiallyworsethanthePthadbeentold.ThePt
thereforelosthisaction.

21. 21
e) Implied warranty as to quiet possessions.
Sec14(b)-Thereisanimpliedwarrantythatthebuyershallhaveandenjoy
aquietpossessionofthegoods.
Eg:AsoldhiscomputertoB.Alikedthecomputersomuch,heoftenused
B’scomputerwheneverhelikedregardlessofwhetherBneededtousehis
computertodoanassignment.AhasbreachedtheimpliedwarrantythatAli
shouldhaveandenjoyquietpossessionofthecomputer.
Itmustbenotedthatabreachofthisstipulationwillnotentitletheaggrieved
partytorepudiatethecontract.

22. 22
f)Implied warranty that the goods are unencumbered
Sec14(c)-Thereisanimpliedwarrantythatthegoodsshallbefree
fromanychargeorencumbrance
E.g.CompanyAsoldaprintingmachinetocompanyB.CompanyB
didnotknowthatCompanyAhaschargedthemachinetotheCitibank.
CompanyAhasbreachedawarranty.However,ifCompanyBknew
aboutthechargeandstillproceedwiththesale,therewouldbeno
breach.

23. 23
The English rule :-Nemo dat quod non habet”
(no one can dispose of that which is not his to
dispose of.)
Therationaleofthisruleistoprotecttherightofownership.
Whenapersonsellsgoodswhichbelongtosomeoneelse,thebuyer
cannotgetagoodtitle.
Thetrueownerstillcanrecoverthegoodsatlawwithoutpayingany
compensationtothebuyer,evenifthebuyerhadpaidthesellerforthe
goods.

24. 24
Rights of third party in a contract of sale of goods
Theimpliedconditionandwarrantyinacontractofsale
bindthecontractingpartiesi.ebuyerandseller.
Ifthirdpartiesusesthegoodspurchasedbyanotherand
sufferinjuryasaresultofsomedefect,thethirdparty
cannotsuethesellerinacontractofsaleofgoods
becausethereisnocontractualrelationshipbetween
them.
However,hisremedymaybetosuethemanufacturer
underTORT.

25. 25
Donoghue v Stevenson
ThePtbecameillasaresultofdrinkinggingerbeerwhich
containedthedecomposedremainsofasnail.Thegingerbeer
waspurchasedbyafriend.Inthiscasethecourtheldthatthe
manufacturerwasliablefornegligent.

26. 26
5. TRANSFER OF TITLE
Sec27(1)ofSOGA:-
Thegeneralruleisthat“wheregoodsaresoldbyapersonwho
isnottheownerthereofandwhodoesnotsellthemunderthe
authoritynorwiththeconsentoftheowner,thebuyeracquireno
bettertitletothegoodsthanthesellerhad.”

27. 27
However, there are exceptions for this general rule (nemo dat
quod non habet rule).They are:-
i)Estoppel
ii) Sale by mercantile agent
iii) Sale by one of joint owner
iv) sale under a voidable title
v) Sale by seller in possession after sale
vi) Sale by a buyer in possession

28. 28
(1) Estoppel
Wheretheownermadearepresentation(by
statementorconduct)thatthesellerwasentitledto
sellthegoodsandthebuyerreliesonthat
representation,thebuyerobtainedagoodtitle
because theownerisestoppedbyhis
representationfromdenyingtheseller’sauthorityto
sell.

29. 29
Eastern Distributors v Goldring [1957] 2 QB
600
Fact:Theownerofavan,Murphy,allowedanotheracarsalesmanto
representtothePlaintiff(hirepurchasecompany)thathe(thesalesman)
wastheownerandcouldsellthevehicle.
Plaintiffreliedonthisrepresentationtopurchasethevanfromthesalesman.
Meanwhile,MurphysoldthevantotheDefendant.ThePlaintiffclaimedto
repossessthevehicle.
Held:PlaintiffhadagoodtitletothevanasMurphyhadpermittedthe
salesmantoactastheownerandwastherefore,estoppedfromdenyingthe
seller’sauthoritytosell.

30. 30
(2) Sale by Mercantile Agent
A person acts as a mercantile agent where he has authority either to sell
goods or to consign (deliver) goods for the purpose of sale or to buy goods or
to raise money on the security of goods.
Eg: second hand car dealer, broker or auctioneer
A person in possession of goods or document of title to goods with the
consent of owner can pass a good title to the buyer as a mercantile agent.
The sale shall be valid as if he was expressly authorized by the owner of
goods PROVIDED that the person taking the goods(buyer) acting in a good
faith and has no notice that the agent did not have authority.

31. 31
Pearson v Rose & Young Ltd [1950] 2 All ER
PearsonlefthiscarwithHunt,amercantileagent.Hehadnotauthorized
Hunttosellthecarorhedidnotintendtopassthepropertyincar.Shortly
afterHuntobtainedthecar,hesoldittoathirdparty.Itwasarguedthata
goodtitlecannotpassbecausePearsonhadnotconsentedtoHunthaving
possessionofthecar.
Held:Eventhoughpossessionwasobtainedbytrick,thiswasasufficient
consent.

32. 32
(3)Sale by one of Joint Owner
Goods may be owned by more than one person.
Sec 28 SOGA states that:-
Ifoneofseveraljointownerofgoodshasthesolepossessionofthemby
permissionoftheco-owners,thepropertyingoodsistransferredtoany
personwhobuysthemfromsuchjointowneringoodfaithandhasnotatthe
timeofthecontractofsalenoticethatthesellerhasnoauthoritytosell.

33. 33
Forexample:AandBisco-ownersofProtonPerdana
car.AwithBconsentusedthecar.AlaterwithoutB
consentsellthecartoC.Cwillgetagoodtitleeven
thoughBdidnotgivehisconsentprovidedCactedin
goodfaithandhasnonoticethatAhasnoauthorityto
sell.

34. 34
(4.)Sale Under a Voidable Title
Thesellermayderivehistitlefromanearliersalebythetrue
owner.Thatearliersalemayhavebeenvoidable.(underSection
19or20oftheContractAct1957)butiftheearliersalewasnot
rescindedatthetimeofthesecondsale,thebuyeracquiresgood
titleprovidedhebuysingoodfaithandwithoutnoticeofany
defectintitle.

35. 35
Acontractisvoidablewhenconsentoftheoriginalowneris
causedbycoercion,fraud,misrepresentationorundue
influence.
Eg: BobbyobtainedgoodsfromInabycoercionandsells
themtoDorriswhobuytheminnocently.AtthetimeDorris
buysthegoods,Inahasnotrescindedthecontractmadewith
Bobby.Dorrisobtainsgoodtitletothegoods.

36. 36
(5.)Sale by a seller in possession after sale
Sec 30 SOGA
Apurchasercanobtainagoodtitletogoodswhenhebuys
fromasellerwhohasalreadysoldthegoodstoprevious
buyerbutretainedpossessionofgoodsordocumentoftitleto
them,hasthensoldthemtosecondpurchaser.

37. 37
AslongasSecondpurchaserisingoodfaithandhasno
noticeoftheprevioussaleheobtainagoodtitleeven
thoughsellerhadnotitletogivetosecondpurchaser.
Thefirstbuyerwilllosethetitlebuthecantakelegal
actionagainstthesellerwhowouldbeliabletohim

38. 38
(6)Sale by a buyer in possession
Sec 30(2) SOGA:-
Ifabuyerhavingboughtoragreedtobuygoods,obtain
possessionofthegoodsordocumentoftitlewiththeconsentof
theseller,hecanpassagoodtitletoasubsequentbuyeracting
inagoodfaith,evenifunderthefirsttransactionhehasnot
obtainedagoodtitle.

39. 39
Newton of Wembley Ltd v Williams (1964) 3 ALL ER532
ThePlaintiffsoleacartoAwhopaidbycheque.
Althoughhewasgivenpossessionofcar,itwas
agreedthatthepropertywouldnotpassuntilthe
chequewashonoured.Thechequewas
dishonoured.ButAhadresoldthecartoBwho
boughtitwithoutknowledgeoftheposition.Bresold
ittoC,(Defendant).ThePlaintifftriedtorecoverthe
carfromC.
Held:A,theoriginalownerwasinpossessionwith
theconsentoftheowner.Hence,hecouldpassa
goodtitletoBwholaterontransferredittoC.The
Plaintiff’sclaimfailed&Cwasthereforeentitledto
keepthecar.

40. 40
REMEDIES FOR BREACH OF CONTRACT
OF SALE OF GOODS

41. 41
REMEDIES FOR BREACH OF SALE OF GOODS CONTRACT
A. SELLER’S REMEDIES
1.Rights of unpaid seller against the goods
There are three types of remedies:-
Lien
Stoppage in transit
Resale of goods

42. 42
(i) Lien
Sec 47 SOGA:
Alienisarightofanunpaidsellerinpossessionofgoodstoretainthem
untilthepricehasbeenpaidorhisdebtsecuredorsatisfied.
Thesellerhasrighttoretainthegoodsifheisunpaidsellerandtheright
ofretentionoperatesuntilthesellerispaid.

43. 43
(ii)Right of stoppage in transit
Sec50SOGA
a)Thisisarightgiventoanunpaidsellerwhohas
handedthegoodstoanindependentcarrierforthe
purposeofhavingthemtransportedtothebuyerto
recoverthegoodsfromthecarrierandtoholdthem
untilthebuyerpaystheprice.

44. 44
b)Therighttostopexistsforaslongasthegoodsarein
thehandoftheindependentcarrier.Thesellermay
exercisetherightatanytimebeforethegoodsare
handedovertothebuyerorbeforethecarrier
acknowledgestothebuyerthatthegoodsarebeing
heldforthem.
c)Stoppagewillbecarriedoutbyunpaidsellergiving
noticetothecarrier,alteringoriginalinstructions.The
carriermustobeyhisnoticeandthesellermustpay
theexpensesofre-delivery.

45. 45
(iii)Right of Resale
Sec54SOGA
Asaseller,hemayresellthegoodsandifhedoesso,
thesecondbuyerobtainsgoodtitleandtheoriginal
buyer’srighttothegoodsisdefeated.
Circumstances in which the unpaid seller may re-sell
the goods:-
i)Wherethegoodsareperishableinnature;

46. 46
ii)Whereunpaidsellergivesnoticeofhisintentionto
resellifthebuyerdoesnotwithinreasonabletime,
paythepriceandthebuyerdoesnotdoso;or
iii)Whereinthecontract,thesellerreservestherightto
disposeofthegoodsifthebuyerdoesnotpay,and
thebuyerdoesnotdoso.

47. 47
2. Rights of seller to sue for breach of contract
Personal remedies
(i)Thesellerwillhaverighttosuethebuyerforthepriceofgoodswhere
thebuyerfailedtopayforthegoodsafterthepropertyhaspassedtothe
buyerorthepriceispayableonacertaindayregardlessofthepassingof
theproperty.(Section55)
(ii)Ifthepropertyhasnotpassedtothebuyerorthepriceisnotpayableona
certainday,theseller’sremedyforbuyer’swrongfulnonpaymentwillbe
anactionindamages.

48. 48
(iii)Actionofdamagesfornonacceptance.Ifthe buyerwrongfully
refusestoacceptandpayforthegoods,thesellermaysuehimfor
damagesfornon-acceptance(Section56).

49. 49
B. THE BUYER’S REMEDIES
1.Damages for non-delivery
Wherethesellerwrongfullyneglectorrefusestodeliverthegoodsto
thebuyer,thebuyermaysuethesellerfordamagesfornon-delivery.
2. Specific Performance
Inacontractfordeliveryofspecificgoods,thecourtmayordertheseller
toperformthecontracti.ebydeliveringthesaidgoodstothebuyer.

50. 50
3.Damagesforbreachofwarranty
Wherethereisabreachofwarrantybytheseller,the
buyermaysuehimfordamagesforbreachof
warranty.
4.Sueforspecialdamages
Buyermaysuethesellerfortherefundofthepricein
acaseofbreachofthecontractmadebyseller.
5.Sueforwrongfuldetentionofgoods
Wherethetitletothegoodshadpassedtothebuyer,
hemaysuethesellerfortortofwrongfuldetentionof
goods.