SALE OF GOODS ACT (SOGA)

SOGA

Intro to Sale of Goods Law

# The Sale of Goods Act 1957 (SOGA)

   * s.1 SOGA - This Act shall apply to the States of West Malaysia

Definition Sale of Goods Act (SOGA)
#According to section 4(1) of sale of goods act defined that a contract of sale of goods is a contract whereby the seller transfer or agree to transfer the property in goods to the buyer for a price.

"GOODS" (Sec. 2 SOGA)
   *Movable Property
   *Stock & Shares
   *Growing Crops
   *Grass
#Things attached to/forming part of the land: which agreed to be severed before sale.

1. Agreement/Contract (s. 5 SOGA)

#There must be an OFFER to buy/to sell goods at the price and the ACCEPTANCE of such offer

#The contract may provide for the =

   *immediate delivery goods.        

   *immediate payment of the price

            (The delivery & payment may be through installment)

#Contract of sale may be made in =

   *writing

   *by words of mouth

   *partly in writing & partly in words

   *may be implied from the conduct of panties

2. Parties

#Both parties shall have LEGAL CAPACITY to enter into the contract.

3. Price

#According to s. 9 means the MONETARY CONSIDERATION as to compensate for the sale of goods

#Price may be fixed by =

   *the contract itself

   *in the manner agreed in the contract

   *in the course of dealing between the parties

   *paying a reasonable price, if the price is not determined in any of the aforesaid ways

Classification of Goods

Existing Goods
Goods already owned or possessed by the seller.

#Ascertained Goods    
  Goods identified and agree upon at the time the contract made.
  (must be a legal owner)
#Unascertained Goods
  Goods not identify and agreed upon at the time a contract of sale is made and may be           identify and appropriated to the contract after the contract has been made.

Future Goods 
Goods to be manufactured or produced or acquired by the seller after the making of the contract of sale.

#Ascertained Goods
  Goods in existence but not yet acquired or possessed by the seller.
#Unascertained Goods
  Goods yet manufactured or invented 

Terms of Contract 

Condition	Warranty
A term essential to the contract	A less vital term of a contract
Sec. 12(2) A stipulation essential to the contract the breach of which gives rise to a right to treat the contract as repudiated	Sec 12(3) A stipulation collateral to the main purpose of the contract the breach of which gives rise to claim for damages, but not to a right to reject the goods & treat the contract as repudiated

  

S.13

Breach of Condition → Breach of Warranty

General rule

 a breach of condition entitles the innocent party to repudiate the contract

Exceptions 

Some situations where the contract cannot be repudiated and the innocent party can merely claim damages 

• Buyer waives the condition/ elect to treat that the breach of condition as breach of warranty - s.13(1)
• Contract is not severable and the buyer has accepted the goods of part there of - s.13(2) + s.42
• Where the contract is specific goods and the property in goods/ownership has been transferred - s.13(3)

Implied Terms of Contract (s. 14 - s. 17 SOGA)

#The SOGA implies a number of stipulations in every contract of the sale of goods.

#These implied terms apply only went the party to the contract of the sale have not excluded or modified them.

#There are -

   *5 implied condition

   *2 implied warranties

Implied Warranty
#The buyer shall have quiet possession of the goods (sec. 14(b))
#The goods are free from any encumbrance (sec. 14(c))

I) Implied Term/Condition as to Title sec. 14(a)

• Seller must have title/ownership/property in goods to transfer to buyer in sale of goods contract.
• If seller does not have title, seller is in breach & buyer can repudiate contract
• Case law: Rowland v Divall
• Fact : The pf bought the car. After using it for 4 months, the pt discovered that it was a stolen car. The df (seller) has no title to it . The pt had to return the car to the true owner and the pt sued the df for breached of implied condition as to title
• Held: The df had breached the implied term and the pt may rescind the contract and claim for the payment.

II) Implied Condition That The Goods Correspond With Description sec. 15

• The obligation of the seller is absolute
• all contract for Sale of Unascertained Goods are sales by description
• For specific goods - Buyer has not seen the goods & is relying on description (eg. Mail order, catalogue)
• Case : Nagurdas Purshotumdas & Co. v Mitsui Bussan Kaisha Ltd
• Fact : Under the previous contract of selling & buying flour between the parties, flour bearing a well-known trademark Subsequently, the second order was made with the same as our previous contract : Flour the same quality were delivery but with different trademark
• Held : The goods do not comply with the description.

III) Implied Condition as to Fitness for Particular Purpose - sec. 16(1)(a)

• Exception to Common Law Rule : caveat emptor
• Conditions to be fulfilled by the buyer in order to invoke sec. 16(1)(a)

* Disclosure of purpose

   case: Griffiths v. Peter Conway Ltd

   (coat - sensitive skin - flailed to inform the seller)

* Reliance on seller skill & judgment 

   case : Cammell Laird & co. v Maganese Bronze and Brass Co.

   (ship propeller - not fit the ship & its engine - relies on the seller expertise)

* Goods supplied are the kind that seller normally supply in his business

* The goods were bought under patent or trade name

   case : Baldry v Marshall supra

   (Bugatti car - touring - buyer relied on the dealer's skills & judgment)

IV) Implied Condition as to Merchantable Quality - s.16 (1)(b)

• Exception to Caveat Emptor 
• Merchantable quality = goods must not be defective. Goods must be of a quality suitable for its use - depends on the description of the goods.
• if The Goods were unmerchantable, the seller would be liable for breach of implied condition , even though the are sold under their patent or trade name.
• Case : Wilson v. Ricket, Cockerell & Co Ltd (fuel - coalite -coal - fireplace - exploded)
• Exception : if buyer has examined the goods & defect ought to have been revealed, buyer cannot claim that seller has breached the condition.
• If examination/inspection carried out but could not be discovered, implied condition as to merchantable quality applies.

V) Implied Condition in a Sale by Sample - s.17(2)

• Condition are implied :

           1. The goods must correspond with the sample

           2. The buyer must be given reasonable opportunity to compare the bulk with the sample

           3. The goods must be free from defect rendering them unmerchantable which would not be                     apparent on reasonable examination of the sample

• Case : Godley v Perry (catapult - injured the eyes-wholesale-unmerchantable)

#Bimplied Warranty as To Quiet Possession - s. 14(b)

• Quiet possession : ability to enjoy usage of goods without interference from anyone (seller or third party)
• If buyer's quiet possession is disturbed, it is a breach by seller. Buyer can only get damages
• case : Microbeads A.G  v Vinhurst Road Marking Ltd (roadmarking-patentee) 

#Implied Warranty that Goods are Free from Encumbrance - s. 14(c)

• Encumbrance = impediment / financial bar or restriction e.g. charge or an outstanding debt
• Buyer can only claim damages when seller breaches the warranty (case : Steinke v Edwards)

 #Transfer of Property/Risk

   Definition

• Transfer of OWNERSHIP of goods
• Transfer of TITLE of the goods
• "passing of property" x "passing of possession"

When the property in goods passes to buyer?

Gen. Rule:When the parties to contract intend that it should pass.

sec. 26: Unless the parties agree otherwise, risk is borne by the OWNER regardless of whether he is in possession or not.

Before - Seller's Risk

After   - Buyer's Risk

sec. 18: Contract for sale of unstained goods

- after the goods are ascertained

sec.19(1): Contract for sale Of Specific/Ascertained Goods 

- at such time as the parties intended it to be passed.

5) TRANSFER OF PROPERTY/RISK

When the property in goods passes to the buyer? Sec. 19(2)

The following are to be considered:

*Terms of contract

*Conduct of parties

*Circumstances of the case

Rules in SOGA 1957 as to the time when the property in goods passes to the buyer (sec. 20 -sec. 24)

i) Contract for sale of specific goods (unconditional contract) in deliverable state: sec. 20

• when the contract is made
• immaterial whether the time for payment of price/delivery or both.

ii)Contract for sale of specific goods & the seller is bound to do something to put the goods in deliverable state: sec.24

• until such things has done & buyer has notice of it.

iii)Contract for sale of specific goods in a deliverable state, but the seller is bound to weight. measure, test etc in order to ascertain price: sec. 22

• until such act is done & buyer notice of it.

iv)Contract for sale of unasertained goods or future goods by description in deliverable state: sec. 23

• unconditionally appropriated to the contract by the seller with the assent of the buyer or vice versa. 

v)Goods are delivered to the buyer on approval or 'sale or return': sec. 24

• when he signifies his approval/acceptance/does any act adopting the transaction.
• retains the goods without giving notice of rejection.

6) TRANSFER OF TITLE 

General Rule

Legal maxim/rule : "nemo dat quod nan habet"

-No one can give a better title than he has himself

-No one can give what he or she has not got

Sec. 27 SOGA

"where goods are sold by a person who is not the owner thereof & who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had"

RATIONALE OF THE RULE

-To protect the right of owner.

-To protect the interest of the owner.

Lim Chui Lai v. zeno Ltd [1964] 30 MLJ 314 

Held: Ahmad was merely the bailee &not the owner of the chattles at the time he sold the to the Appellent. As he had no title to the chattels or authority to sell them, he could not give the appelant any title.

EXCEPTIONS TO THE RULE OF “nemo dat quod nan habet ”
Estoppel – s.27	Sale by a Mercantile Agent – s. 27	Sale by One of the joint owner – s. 28	Sale Under a Voidable Contract – s.29	Sale by a Seller in Possession After Sale – s. 30(1)	Sale by a Buyer In Possession After Sale – s.30(2)
Unless the owner of the goods is by his conduct precluded from denying the seller’s authority to sell	The person must have the authority to sell goods or consignment for sale or buy them or raise money on their security e.g. a broker, an auctioneer	Where the goods are owns jointly by several persons, a sale by one of the joint – owners may effectively transfer the title to the buyer	A contract is voidable under section 19 or 20 of the Contract Act 1950 when consent of the original owner is caused by coercion, fraud	This happens when the seller has transfer the property in the goods to a buyer but remains in possession of the goods.	The buyer obtains possession with the consent of the seller
Case: N.Z. Securities v Wrightcars Ltd				Case: Worcester Works v Coolen Engineering Co. Ltd	Case: Newtons of Wembley Ltd v Williams

REMEDIES

• A breach of contract of sale of goods may either be a breach by the buyer or seller
• When either the seller or buyer breaches the contract of sale of goods, the other party who is no in breach is entitled to remedies. 

A) Right of Unpaid Seller Against The Goods

• Breach by the buyer may occur as a result of the following
• *Failure of the buyer to take delivery of goods - s. 44
• *Failure of the buyer to accept the goods - s. 56
• *Failure of the buyer to pay for the goods - s. 55

B)The right of an unpaid seller against the goods are

1. A LIEN on the goods for the price ( where he is in possession of the goods): s. 46(1)(a), s. 47, s.48, s. 49
2. A right of STOPPING THE GOODS IN TRANSIT in case of the buyer's insolvency (where he has parted with the possession of the goods): s.. 46(1)(b), s. 50, s. 51, s. 52, s. 53
3. A right of RESALE : s.46(1)(c), s.54, s. 55

Breach by The Seller 

• Where the seller is in breach, the following remedies are available to the buyer.

1. Damages for non-delivery of goods (where the seller wrongfully neglect or refuses to delivery the goods to the buyer, the buyer may sue the seller for damages for non-delivery - section 57
2. Specific Performance (The court has discretion to award a degree of Specific Performance - section 58
3. Action in Tort (If the property in goods had passed to the buyer and he entitled to delivery.
4. Damages for breach of warranty (The buyer is entitled to damages whenever there is a breach of warranty - section 59