SALE OF GOODS

Applicable Laws
Law applicable- Other than Penang, Malacca, Sabah
and Sarawak, the Sale of Goods Act 1957 (SGA)
applies in other states. In the four states still refer to
UK Sale of Goods Act 1893.
Only slight differences as SGA 1957 is based on UK
SGA 1893
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S 2 of SGA defines goods as:

every kind of movable property other than actionable
claims and money; includes stocks, shares, growing
crops, grass and things attached to or forming part of
the land which are agreed to be severed before sale

S 6 SGA: Goods may be existing goods or

future goods, may either be specific or
unascertained goods.

The Contract of Sale: is a contract where the

sellers transfers or agrees to transfer the
property in goods to the buyer for a price.
Agreement to sell: future transfer of property
in goods where some conditions need to
fulfilled

Formation of Contract of Sale of Goods

A contract of sale is made by an offer to buy or sell
goods at a price.
Capacity is according to Contracts Act 1950.

Delivery/ payment may be immediate/ by instalments.

A contract of sale may be made in

writing or by word of mouth, or partly
in writing or partly by word of mouth,
or may be implied from conduct from
the conduct of the parties

Terms of the Contract

Caveat Emptor- let the buyer beware,
if inspection reveal the quality & condition of goods the
buyer will lose rights against seller if goods are not
satisfactory

Condition- 12(2) SGA

Essential to the main purpose of
contract, breach- it may be treated as
repudiated-exceptions on pg.308

Warranty- 12(4) SGA

Collateral to the main contract; any breachcan claim damages but not to reject the
goods/ repudiate the contract.

IMPLIED TERMS
Time- S 11 SGA: Time of payment are not deemed to be
the essence of the contract of sale unless stated
otherwise
Title- S 14 (a) : Seller has the right to sell the goods
(Rowland v Divall)

Quiet possession- 14 (b): The buyer

shall have and enjoy quiet
possession of the good.

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Goods are free from encumbrances- 14 (3):

Goods are free from any charge/encumbrance in
favour of third party not known or declared to
buyer at the contract was made.

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Goods correspond with description- S 15: the goods shall

correspond with the description, if sale by sample &
description, goods must correspond with both

Nagurdas Porshutamdas v Mitsui Bussan Kaisha

Varley v Whipp

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Fitness for a particular purpose- S 16 (1)-Deutz Far East v

Pacific Navigation
Merchantable Quality- S 16 (1) (b)- ..goods brought from a
seller who deals in goods of that description, the goods
must be in merchantable quality. However, if buyer has
examined the goods, there shall be no implied condition..

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David Jones Ltd v Willis

Reevex International v Maclaine Watson
Trading
Wilson v Rickett, Cockerall & Co. Ltd.

Wren v Holt
Mcwilliam Wines Ltd v Liaweena

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Sale by sample- S 17 (1) & (2): The

bulk shall correspond with sample;
buyer has ample opportunity to
examine the bulk of goods; and goods
are free from any defect-

Godley v Perry

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TRANSFER OF PROPERTY IN GOODS

Property in goods (title/ownership) must be distinguished from
possession, IOW: Goods may have been sold to buyer but possession still
remains with the seller.
1. S 18- Sale of unascertained goods: Property in goods can only be
transferred to buyer after goods are ascertained.

2. S 19- Sale of ascertained goods: Property is transferred to the buyer

when the parties to the contract intend it to be transferred

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3. S 20- the property in goods passes to the buyer when the contract
is made.
4. S 21- The seller must do something to put the goods in a
deliverable state, property does not pass until such thing is done.

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5. S 22- Where seller is supposed to weigh,

measure, test or do something to ascertain the
price of goods, property does not pass until
such thing is done and buyer has notice of it.
6. S 23- Sale of unascertained or future goods,
by description; goods in that description
unconditionally appropriated to the contract by
both buyer & seller, the property in goods
passes to the buyer.

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7. S 24- When goods are delivered to the buyer on approval, the property
in goods passes to the buyer.

TRANSFER OF TITLE
Nemo dat quod non habit
No one can pass better title than he has himself
Maxim contained in S 27 SGA- ..where goods are sold by a person who is
not the owner and sells without the authority or consent of the owner,
the buyer acquires no better title..

Lim Chu Lai v Zeno Ltd.

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Exceptions to Nemo dat rule

1. Estoppel: S 27 SGA- Owner of goods by his own
conduct precluded from denying the seller s
authority to sale
2. Sale by mercantile agent: proviso of S 27(
Folkes v King)
3. Sale by one of joint owners: S 28- One of the
owner has sole possession of goods by permission
of the co-owners; the buyer buys in good faith and
has not noticed that the seller lacks authority
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4. Sale under a voidable contract: S 29- Seller of goods obtained

possession under a contract voidable under S 19 & S 20 of CA but
contract not yet rescinded at time of sale, the buyer acquires title of
goods in good faith and without notice of sellers defect of title.

5. Sale by a seller in possession after sale: S 30(1)- If seller continues

to be in possession of goods or document of title to the goods, sells it
to another person and the second buyer buys in good faith (Pacific
Motor Auctions Pty Ltd v Motor Credit Ltd)
6. Sale by a buyer in possession: S 30 (2) the buyer with the
consent of the seller obtains possession of goods or document of title
to goods, may dispose or pledge the goods to another person who
purchases in good faith..( Newton of Wembley Ltd v Williams).
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PERFORMANCE OF CONTRACT
Chapter IV of the Sale of Goods Act
1. Delivery - S 31: The duty of seller to deliver goods while the
buyers duty as to accept and pay for them..
S32-unless otherwise agreed, delivery and payment are
concurrent conditions.
2. Place of delivery- S 36 (1): Goods sold are to be delivered at the
place at which they are at the time of the sale..
3. Time of delivery: 36 (2) within reasonable time

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3. Delivery of wrong quantity

S37(1)- if seller delivers less than he contracted to sell,
the buyer may reject all the goods delivered. If buyer
accepts he has to pay for them.
37(2)- if seller delivers more than contracted, buyer may:
accept the goods included in the contract and reject the
rest; reject all the goods; or accept all the goods.
If seller deliver mixed goods of different description not
included in the contract, the buyer may:
Accept the goods mentioned in the contract; or reject the
whole delivery- 37(3)
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5. Delivery by Instalments: S 38 (1): Unless agreed by the

parties, the buyer is not bound to accept delivery by
instalments (Hammer & Barrow v Coca Cola)

6. Delivery to carriers or Wharfingers: S 39(1)- Seller

delivers goods to carriers for transmission or to
wharfingers for safe custody it is deemed to be a delivery
of goods to buyer.

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RIGHTS OF UNPAID SELLER AGAINST THE GOODS

SGA accords additional remedies for the unpaid seller.
Remedies are against the goods themselves and not
personal. S 45 defines unpaid seller as:
a. when the whole price has not been paid or tendered for;
b. when bill of exchange or negotiable instrument has been
dishonoured
S 46: (a) right of lien (b) stoppage in transit (c) resale

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RIGHT OF LIEN
Rights arises based on S 47:
1. Goods sold without any stipulation of credit
2. Goods sold on credit but term of credit has expired
3. The buyer becomes insolvent
Seller loses rights if (based on S 49 (1)):
1. Goods delivered to carrier for transmission without
reserving the rights for the disposal of the goods
2. When buyer or his agents lawfully obtains possession
of the goods
3. When the seller waives his lien
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STOPPAGE IN TRANSIT

S 50: An unpaid seller who has parted with the

possession of goods has the right to stop them in transit
when the buyer becomes insolvent.
Applies only to insolvent buyer or insolvent person
under S 2.

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Putting stoppage in transit into effect

S52-unpaid seller may take possession or give notice to
carrier or bailee who has possession of goods
52(1)- if notice given to principal of carrier, principal must
communicate it to subordinate to prevent delivery
52(2)-if seller instruct to redeliver, seller must bear the
cost
54(1)- stoppage in transit or lien does not rescind a valid
contract of sale
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Remedies of the Buyer

Action for Non-Delivery of Goods
S57- where the seller wrongfully neglects or refuses to
deliver goods to the buyer, buyer may sue the seller for
damages for non-delivery.
Action for specific performance
S58- a buyer may bring an action for the specific
performance of contract
Mensa Mercantile v Eikobina
Behnke v Bede Shipping
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Remedies for buyer in breach of Warranty

Where seller commits breach of warranty, buyer may:
1. set up against seller the dimunition or extinction of the
price;
2. sue the seller for damages for breach of warranty

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