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SALE OF GOODS Prepared for: LAW 251 Prepared by:.

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1 SALE OF GOODS Prepared for: LAW 251 Prepared by:

2 THE LAW OF SALE OF GOODS Introduction The contract of sale of goods is governed by the Sale of Goods Act 1957 (hereinafter refers as SOGA) SOGA operates against the background of contract law that are not inconsistent with its express provisions. Sale of Goods Act 1957 (SOGA) - It applies to contract for the sale of all types of goods, including second-hand goods.

3 Section 3 SOGA The Contracts Act 1965, in so far as they are not inconsistent with the express provisions of this Act shall continue to apply to contracts of the sale of goods

4 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 his car to B. B then pay RM10000 for a price of the car.

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6 Continue….. three (3) main elements in a contract of sale of goods: There must be goods which are to be transferred to the buyer The seller transfers or agrees to transfer the property in goods to the buyer There is a price for the said transfer

7 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

8 Parties to the contract are known as : buyer ; and seller

9 Continue…. Section 4(3) An agreement to sell is a contract under which the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled Section 4(4) An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods to be transferred

10 Definition of goods 1.Goods : Section 2 of SOGA every kind of movable property other than money include stock and shares,

11 Continue… Growing crops, grass and things attached to or forming part of the land which are agreed to be severed before the sale or under the contract of sale

12 Continue…. The followings are EXCLUDED from being goods under a sale of goods of contract: Land (houses & building on the land are part of the land) Actionable claims (right to sue for debt/other reasons) Money ( current currency)

13 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.

14 Mills v Stockman There was a contract to sell a heap of slate which have been left on the ground for many years by a quarrying business. The contract gave the buyer a right to enter the land and to remove the heap of slate. It was held that the contract was not for the sale of goods. The slate had been left in such circumstances that they had become part of the land and further, there was no term in the contract that they be severed under the contract of sale.

15 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)

16 Continue…. Specific goods Section 2 sale of goods Act Goods identified and agreed upon at that time a contract of sale is made (example: Khair sells his motorcycle bearing registration number BCD 4994)

17 Continue…. Unascertained: The goods exists but it is not ascertained yet at that time of the contract is made. Goods to be by the seller Generic goods e.g tones of wheat An unidentified part of a specific whole Example: 100 kg of wheat out of 200 kg of wheat

18 Continue…. Ascertained goods Unascertained goods which have been identified and appropriated to the contract after the contract has been made Example: Upon selection of the 5 dress from the 10 boxes of dresses.

19 Continue… 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.

20 Please Identify Eon is now discussing the possibility of manufacturing a new car called Proton Wardina. Izham enters into an agreement with EON to purchase Proton Wardina. Proton Wardina belongs to the category of ______________ goods? future goods

21 Halim has signed an agreement with Ali to sell his one and only car; a red Proton Wira. Halims red Proton Wira belongs to the category of ________ goods? EXISTING GOODS

22 Siti wanted to buy 2 kg sugar from Pak Mat. In the shop, she saw a sack full of sugar which weighed about 5kg. Therefore, Sitis 2kg sugar belonged to the category of ____________ goods? UNASCERTAINED GOODS

23 Ownership/property in goods In a contract of sale of goods, the seller transfers or agrees to transfer property in goods. Property in goods Ownership (Having legal title/rights over the goods)

24 Continue…. A person may be an owner of the goods although not in the possession of the goods A possessor of the goods may not be the owner event though he has physical control over the goods BUT

25 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 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

26 PRICE THE MONEY CONSIDERATION FOR A SALE OF GOODS

27 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.

28 Section 9(2) Of SOGA Where the price is not determined The buyer shall pay the seller the reasonable price

29 Formation Of The Contract FORMALITIES TIME OF PAYMENT CAPACITY

30 continue…. 1. CAPACITY SECTION 11 Contract Act SECTION 69 Contract Act

31 2. Formalities A contract of sale may be made: in writing,

32 by word of mouth/ Verbally, both - partly in writing & partly by word of mouth, or may be implied from the conduct of the parties - (s 5 (2) SGA) -

33 Continue…. 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 OROR BOTH OR Delivery of goods Delivery of payments 2. Delivery or payments by Installment Delivery or payments postponement

34 Continue…. 3. TIME OF PAYMENT Stipulation as to the time of payment are not deemed to be the essence of a contract of sale. It is depend to the term of the contract SECTION 11 SALE OF GOODS ACT

35 TERMS OF THE CONTRACT CONDITION WARRANTIES

36 A. CONDITIONS A term which is essential to contract; breach of it would allow the other party to treat the contract as repudiated. (s. 12(2) SOGA) If the condition is breached, the party not in default entitled to repudiate the contract because the contract can be deemed to be VOID

37 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

38 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

39 Continue….. (Section 13(2) ) (situations) a. Where a contract of sale is not severable and the buyer has accepted the goods or part thereof; b. The contract is a specific goods the property in which has passed to the buyer;

40 CONTINUE… buyer has accepted the goods The buyer told the seller that he had accepted 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 SECTION 42

41 The breached of any condition to be full filled by seller can only be treated as a breach of warranty and not the ground of rejecting the goods or repudiate the contract UNLESS THERE IS A TERM OF THE CONTRACT EXPRESS OR IMPLIED

42 Implied Terms The SOGA implies a number of stipulations (implied terms) in every contract for the sale of goods The stipulations applicable only if the parties did not exclude or modified the terms/stipulation (s.62 SOGA) where any right, duty, or liability would arise under a contract of sale by implication of law, it may be negatived or varied by express agreement or by the course of dealing between parties, or by usage, if the usage is such as to bind both parties to the contract.

43 cont 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.

44 But whether time is of essence of the contract / not, it depends on intention of the parties in the terms of the contract e.g. : When time (for delivery)is the essence of the contract which has been determined & agreed by the parties, if the seller fails to perform according to the term, it would entitle the buyer to repudiate the contract. e.g.: commercial transaction involving livestock e.g.:if goods are to be shipped within particular time.

45 Harrington v. Browne (1917) 23 CLR 297 Held: in commercial transaction involving livestock, time of delivery is the essence of the contract. If the goods are to be shipped within a particular time then time of shipment is important & should be strictly adhered to.

46 2. Implied condition as to title:- S.14 (a) SOGA: In the case of sale, the seller must have a right to sell the goods & in the case of agreement to sell, he must have a right to sell at the time when the property is to pass

47 Continue…. Seller must be the owner of the goods Seller has the ownership/title over the goods Presumed to have a right to sell

48 Rowland v Divall [1923] 2 KB 500 P bought a car from the seller (D) & after using it for several months, then he discovered that it was stolen. He had to return it to true owner. 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.

49 Sometimes, seller need not be the owner of the goods (S. 14 (a) of SOGA BUT the law requires at least able to create the appropriate rights in the buyer. i.e. causing third party to transfer ownership directly to the buyer. i.e. the car that still hired to the bank. Thus, seller with no title to sell the goods at the time of the agreement to sell but later acquires title, can hold the buyer to the bargain provided the title is acquired before the buyer repudiates on discovery.

50 Butterworth v Kingsway Motors Ltd The D sold a car taken on hire-purchase and it was resold a number of times before it was discovered that the hirer had no right to sell while the car was on the hire- purchase. The P who was the last buyer rescind the contract on being informed about the fact and demanded the return of the purchase price from the defendant. Court held: P was entitled to rescind the contract of purchasing the car and could recover the money paid from the D since the D had no right to sell the car.

51 …cont 3. Implied warranty as to quite possession:- S.14 (b) SOGA In a cont. of sale, unless the circumstances of the contract are such as to show a different intention, there is an implied warranty that the buyer shall have & enjoy quite possession of the goods.

52 This provision covers not only where the title is defective but also a subsequent future disturbance of possession of the goods.

53 Example: A sold his car to his friend Ali and because Kassim like the car very much he often persuaded Ali to lend him the car. Kassim had a set of the car key and he used the car whenever he liked regardless of whether Ali needed the car or not. Kassim had breached the implied warranty that Ali should have enjoy quiet possession of the car.

54 Microbeads A.G v Vinhurst Road Markings Ltd In this case, a patentee (3 rd party) had brought an action against the buyer alleging the use of certain road marking machines was in breach of their patent, two years after the sale of machines by the Plaintiff to the Defendant. It was held by the Court that there was a breach of implied warranty as the buyer did not enjoy the future quiet enjoyment of the goods.

55 4. Implied warranty that the goods are free from encumbrance :- S 14 (c) SOGA: The goods must be free from any charge (gadaian) or encumbrance in favour of any third party not declared or known to the buyer before or at the time when the contract is made.

56 Example: Syarikat ABC sold a machine to XYZ company. XYZ did not know that syarikat ABC had charged the machine to Bank X. syarikat ABC had breach the warranty.

57 Steinke v Edwards Facts: The Plaintiff who had brought a car from the Defendant had to pay off the tax which was still owing to the government. The Plaintiff sought to recover the amount he has paid for the tax from defendant/seller. It was held by the Court that the Plaintiff was entitled to recover the money as the Defendant had breached the implied warranty. The right of the government to levy a tax on a vehicle coupled with a right to seize the car to enforce collection was a charge or encumbrances within the meaning of the provision.

58 5. Implied condition that the goods must correspond with the description:- Section 15 If the contract is for the sale of goods by description, there is an implied condition that the goods must correspond with the description it is not sufficient that the bulk of goods correspond with the sample if the goods do not also correspond with the description (bulk of goods shall correspondence with the sample and description).

59 Continue.... Sale of goods by description covers all cases where the buyer has not seen the goods but is relying on the description alone (the contract is made through telephone, mail order or sale for catalogue)

60 Nagurdas Purshotumdas v. Mitsui Bussan Kaisha Facts: Flour was ordered described as the same as our previous contracts whereby the flour had been sold in bags bearing a well known trademark. Flour identical to quality was delivered but did not bear the same well-known trade mark. Held: It did not comply with the description. D had breach the condition as to description.

61 Buyer has seen the goods but the defect may be concealed from the buyer. Associated Metal Smelters Ltd v Tham Cheow Toh The D agreed to sell a metal melting furnace to the P and had given the undertaking that the furnace will have a temperature of at least 2600 degrees Fahrenheit. However, the furnace supplied by the D did not meet the requirement.

62 Court held: The failure on the part of the D to supply the furnace which would meet the required temperature constituted a breach of condition of the contract.

63 Cases of failure of goods to correspondence with the descriptions: 1) Where the goods is substantially what is required but there is some small discrepancy from the contract particulars.

64 Arcos Ltd v E A Ronaasen & Sons Staves of ½ inch thick were ordered. Only 15% conformed to the requirement. Despite the fact that the goods were reasonably fit for their purpose, the Court held that the buyers were entitled to reject them for failing to correspond with the contract description.

65 2) those involving goods described in a more general sense in the absence of detailed commercial description. ( Because the description is more general, a considerable discrepancy must occur before it can constitute a breach ).

66 Varley v Whipp The seller agreed to sell a 2 nd hand reaping machine described as new the previous year. The buyer did not look at the machine but relied on the description. When the machine was delivered, it was found the machine was very old machine which had been repaired. The buyer sued the seller for breach of implied condition. The court held: The seller has breached the implied conditions as the goods supplied were not corresponding with the description. The buyer is entitled to rescind the contract and reject the machine.

67 6. Implied condition as to fitness for particular purpose:- GENERAL RULE : The rule of common law applies; that is, CAVEAT EMPTOR (let the buyer beware) – where the buyer must exercise due care in making purchases. If he does not, he must bear the consequences

68 CAVEAT EMPTOR RULE IS PRESERVED UNDER SECTION 16(1) SOGA subject to this Act and any other law for the time being in force, there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale…

69 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 BUYER MAY SUE THE SELLER FOR BREACH OF IMPLIED CONDITION

70 CONDITIONS TO BE FULLFILLED 1. DISCLOSURE OF PURPOSE (s. 16 (1) (a) ). EVEN THOUGH THE GOODS IS NOT FIT

71 GRIFFITHS v PETER CONWAY LTD HELD: A woman with an unusual sensitive skin who bought a Harris Tweed coat, without disclosing her sensitivity to the seller, did not succeed under this section

72 However, if the description of the goods shows that it has only one purpose, no disclosure of that purpose is required. It is implied that the goods is fit for that particular purpose.

73 Priest v Last The P purchased a hot water bottle from the D, a retail chemist. Some days later, the bottle while in use by the Ps wife, burst. A s a result, she was scalded & the P sued the D. It was held that if the description of the goods by which they were sold pointed to one particular purpose only, then the requirement of disclosure of purpose is deemed fulfilled.

74 CONTINUE….. 2. RELIANCE ON THE SELLERS SKILL AND JUDGMENT (s. 16 (1) (a)) The buyer must also established that he had relied on the sellers skill and judgment before purchasing the goods

75 GRANT V AUSTRALIAN KNITTING MILLS The Court held that reliance usually arises by implication from the circumstances. For instances, 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 skills and judgment

76 Continue…. 3. The goods are of a description which it is in the course of the sellers business to supply. (S. 16 (a)) The goods bought by the buyer must be the kind which is in the course of the sellers business to supply.

77 Spencer Trading Co. Ltd v Devon The manufactured had previously supplied to the Plaintiff on a special order, an adhesive substance made from gum resin for making flypapers. The following year, the Plaintiff ordered a further supply for the same purpose from the manufacturer, who on this occasion used synthetic raw materials in place of the natural material previously used. Consequently, the flypapers were unsatisfactory for its purpose

78 Continue….. 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.

79 Continue…. 4. The goods must not have been brought under patent or trade name. (proviso of S. 16 (1) (a)). If brought under a patent or trade name it gives the impression that he is not relying on the sellers skill & judgment. Therefore he cannot later complain that the goods are not fit for the particular purpose he required. The implied condition DID NOT applied.

80 However, if the goods were not bought under the patent or trade name, or if the buyer did buy under a trade name but relies on the sellers skill & judgment The implied condition applied.

81 7. Implied condition as to merchantable quality 2. (s.16(1)(b)SOGA:- Where goods are bought by description from a seller who deals in goods of that description, there is an implied condition that the goods shall be of merchantable quality.

82 …cont Merchantable Quality of goods means the goods must meet the standard which a reasonable person would regard as satisfactory. Goods sold must be fit for particular use for which they were sold i.e. with reference to the expectations of the average buyer. E g: in a sale of a lorry, it is an implied condition that the lorry will not overheat easily.

83 Henry Kendall & Sons v William Lilico & Sons Ltd Held: If the description in the contract was so limited that goods sold under it would normally be used for only one purpose, then the goods would be UNMERCHANTABLE if they were of NO USE for that purpose. However, if the description was so general, or used for several purposes, the goods would be MERCHANTABLE if they were fit for any one of the purpose.

84 Wilson v Ricket, Cockerell & Co. Ltd A lady ordered fuel by its trade name Coalite from a fuel merchant. The consignment included a piece of coal in which a detonator was embedded and resulting in an explosion in the fireplace. Held: The consignment as a whole was UNMERCHANTABLE. It had defects making it unfit for burning.

85 Proviso of S. 16 (1) (b) …Provided that if the buyer has examined the goods, there shall be NO IMPLIED condition as regards defect which such examination ought to have revealed. Exceptions

86 Proviso of S. 16 (1)( b) IMPLIED CONDITION DOES NOT APPLY Where the BUYER HAS EXAMINED the goods and by such examination the BUYER WOULD DISCOVER THE DEFECTS. if there was an examination before or at the time of contract, the buyer cannot later complain of defects which a proper examination would have revealed.

87 HOWEVER, If the DEFECT COULD NOT BE DISCOVERED, by any reasonable examination; IMPLIED CONDITION AS MERCHANTABLE QUALITY WOULD APPLY.

88 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.

89 Thornett & Fehr v Beers & Sons Though the buyer has conducted a superficial look at the outside of some barrels of glue, there was NO examination and therefore, THE IMPLIED CONDITION DID NOT APPLY. A proper examination MUST BE CONDUCTED such as opening the barrel would revealed the defect.

90 8. Sale by Sample Used in the sale of bulk of goods like rice, wheat, flour, carpets, etc

91 Section 17(2): In the case of contract for sale by sample there is an implied condition that: (a) The bulk shall correspond with the sample in quality. (a) Buyer has reasonable opportunity of comparing the bulk with the sample. (a) The goods shall be free from any defect which would not be apparent on reasonable examination of the sample.

92 CONTINUE…. Breach of any one of the three conditions, the buyer is entitled to REJECT the goods and treat the contract as at end.

93 If the bulk correspondence with the sample but there is a latent defect rendering the goods unmarchantable BUYER ENTITLED TO REJECT THEM.

94 Drummond v Van Ingen The cloth supplied by the Seller was equal to samples previously examined but because of latent defect not discoverable by a reasonable examination. Court held: the seller is liable of the subsection.

95 S.17 (2) (C) The seller LIABLE for all defects Which a BUYER of ordinary EXPERINCE and DILIGENCE not discover on reasonable inspection of the sample.

96 Godley v Perry A boy bought a catapult. While using it, the catapult broke and he lost the sight of an eye. The shopkeeper bought it from a wholesaler by sample and tested it by pulling back the elastic. The shopkeeper was sued for the boys injury and the court held that the catapult was not fit for the purpose for which buyer wanted it and it was of unmerchantable quality.

97 Then, the shopkeeper filed an action against the wholesaler. Although the shopkeeper made a reasonable examination, the defect was not one which was apparent on such examination. Thus, he succeeded in his action against the wholesaler.

98 PRIVITY OF CONTRACT The implied conditions and warranties bind the contracting parties only BUYER SELLER

99 Continue…. 3 rd PARTY, if suffer injury/ damages CANNOT SUE SELLER OR MANUFACTURER NO CONTRACTUAL RELATIONSHIP

100 3 rd party – entitled to Remedy May sue the seller under the law of tort. Entitled only if he can prove there is negligence on Sellers part.

101 Donoughue v Stevenson The Plaintiff became ill as a result of drinking a bottle of ginger beer which contained a decomposed snail in the bottle. The ginger beer was purchased by the Plaintiffs friend. Held: The manufacturer of the drink was liable to pay damages to the Plaintiff for negligence. The P had to bring action under the law of tort and not contract as there is no privity of contract between the Plaintiff and the manufacturer.

102 Exclusion of Implied terms. S. 62 of SOGA where any right, duty, or liability would arise under a contract of sale by implication of law, it may be negatived or varied by express agreement or by the course of dealing between parties, or by usage, if the usage is such as to bind both parties to the contract.

103 TRANSFER OF PROPERTY

104 WHY IS THIS IMPORTANT?

105 Introduction Once property passes to the buyer, the buyer would bear the risk. E/Though, the goods HAS NOT BEEN DELIVERED to the BUYER. S. 26 of SOGA. …when the property is transferred to the BUYER the goods are at the buyers risk whether delivery has been made or not.

106 However, if the delivery has been delayed due to the fault of the seller, then the seller has to bear the risk. Even though the property has passed to the buyer. Proviso of S. 26 of SOGA.

107 If any party sought to claim any right over the property from 3 rd party, only the person who has the property in goods may claim. the seller would entitle to claim for the price, if the property in goods has passed to the buyer.

108 WHEN PROPERTY IN GOODS PASSES TO THE BUYER? TIME

109 WHEN THE PROPERTIES IN GOOD TRANSFERRE D TO BUYER? 1. SALE OF UNASCERTAIN GOODS SECTION SALE OF UNASCERTAIN GOODS SECTION SALE OF GOODS SECTION SALE OF GOODS SECTION 19 3.SALE OF SPECIFIC GOODS IN A DELIVERABLE STATE SECTION 20 3.SALE OF SPECIFIC GOODS IN A DELIVERABLE STATE SECTION SALE OF SPECIFIC GOODS TO BE PUT IN A DELIVERABLE STATE SECTION SALE OF SPECIFIC GOODS TO BE PUT IN A DELIVERABLE STATE SECTION SALE OF SPECIFIC GOODS TO BE PUT IN A DELIVERABLE STATE BUT SELLER HAS TO ASCERTAIN THE PRICE SECTION SALE OF SPECIFIC GOODS TO BE PUT IN A DELIVERABLE STATE BUT SELLER HAS TO ASCERTAIN THE PRICE SECTION SALE OF GOODS BY DESCRIPTION SECTION SALE OF GOODS BY DESCRIPTION SECTION GOODS SENT ON APPROVAL SECTION GOODS SENT ON APPROVAL SECTION 24

110 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

111 E.G. A contracts to buy a new car which forms part of a larger consignment. No property passes until the seller ascertained the car to be sold to A.

112 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

113 Continue…. Section 19(2) HOW TO DETERMINE THE INTENTION OF THE PARTIES? BY CONDUCT BY CIRCUMSTANCES

114 a. SALE OF SPECIFIC GOODS IN DELIVERABLE STATE DELIVERABLE STATE: Goods that in the state that the buyer would under the contract BE BOUND to take delivery of them S.20 of SOGA

115 Section 20 CONTRACT FOR THE SALE OF SPECIFIC GOODS IN DELIVERABLE STATE THE PROPERTY PASSES to the BUYER, WHEN THE CONTRACT IS MADE IMMATERIAL THE TIME OF PAYMENT OF THE PRICE THE TIME OF DELIVERY OF GOODS OR BOTH are POSTPONED

116 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.

117 Underwood Ltd v Burgh Castle Brick & Cement There was a contract for the sale of a condensing engine to be delivered on rail in London. At the time of contract, the engine was affixed to the sellers premise and it had to be separated from the concrete floor and to be dismantled, before it could be delivered on rail. While the main engine was being loaded on a railway truck, it was partially broken by accident.

118 Issue: who has bear the risk of 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.

119 B. SPECIFIC GOODS TO BE PUT IN DELIVERABLE STATE Section 21 The seller is bound to do something on the goods for the purpose of putting them into deliverable state The property does not pass until such thing is done and the buyer has notice

120 Example The seller agrees to sell a particular 2 nd hand motorcycle to the buyer, It is agreed that under the contract that the seller would change the tyres before the delivery to the buyer. The property in the motorcycle does not pass to the buyer until the seller has changed the tyres. Once the tyres have been changed, then only the property passes to the buyer.

121 C. Sale of Specific Goods In a Deliverable State; but The Seller has to do Something in Order To ascertain The Price The goods are of specific and in a deliverable state. Where the seller bound to weigh, measure, test or do something for the purpose of ascertaining the price of the goods Section 22 The property does not pass to the buyer until such thing is done by the seller, and the buyer has notice/knowledge of it.

122 example: A agrees to sell all remaining sugar contained in a particular bag for RM 2 per kg. The said property does not passed to the buyer until the seller weighs them and the buyer knows that they have been weighed. Sale of specific goods which are ascertained in quantity but the price cannot be calculated until the quantity of the goods is ascertained by weighing.

123 Please identify: If the seller is required to measure 10 kg from a bag containing more than quantity to be sold? Not a sale of specific goods Unascertained goods Governed by s. 23 (1).

124 Sale of Future Goods By Description; and Appropriation S. 23 (1) where there is a contract for the sale of unascertained or future goods by description and goods of that description and in a deliverable state are unconditionally appropriated to the contract, either by seller with the assent of the buyer or by buyer with the assent of the seller, the property in the goods thereupon passes to the buyer.

125 Unascertained goods by description means, goods which cannot be specifically identified at the time of the contract, but are referred to by description 1. Future goods by description means goods to be manufactured or produced or acquired by the seller according to certain description

126 Continue….. Section 23(1) goods of that description; and in a deliverable state appropriated to the contract the property thereupon passes to the buyer

127 what is Unconditionally appropriated? any act showing an intention to identify goods without any further condition. example: selection, separation, of weighing from a bulk

128 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.

129 Therefore the property in goods passes to the buyer at the moment the goods are handed over to a carrier

130 7. Goods Sent on Sale or Return S.24 of SOGA When goods are delivered to the buyer on approval or on sale or return, the property in goods passes to the buyer a.When the buyer signifies his approval or does any other act adopting the transaction b.if the buyers does not signify his approval but retains the goods without giving notice of rejection, then if the time has been fixed for the return; the property passes on the expiration of a reasonable time

131 This rule applied where the goods are :- sent to the buyer for trial or giving the buyer option to purchase. If the buyer chooses to buy goods:- He may signify his acceptance / approval to the seller

132 The buyer may also does any other act adopting the transaction. Implied from such act i.e: buyer used the goods himself.

133 Kirkham v Attenborough The buyer received some jewelerry from the seller, which was subject to on sale or return. The buyer then pledged the jewelerry to a 3 rd party. Held: The buyer had adopted the transaction. The property in the jewelerry has passed to the buyer.

134 S.24 of SOGA b.if the buyers does not signify his approval but retains the goods without giving notice of rejection, then if the time has been fixed for the return; the property passes on the expiration of a reasonable time If the buyer failed to return the goods within specific / reasonable time He is deemed to have accepted the sale The property passes to the buyer.

135 What is reasonable time? POOLE V SMITHS CAR SALES (BALHAM) LTD A car dealer supplied 2 cars on sale or return to another dealer. 1 of the cars was sold, but the unsold 2 nd car was returned about 3 months later in poor condition. It was rejected by 1 st dealer, who then claimed for the price from 2 nd dealer. Held: a reasonable time had expired. Therefore, the property in goods passed to the 2 nd dealer. Thus, the 2 nd dealer has to pay for the price of the car to 1 st dealer.

136 If the goods are LOST or destructed WITHOUT THE DEFAULT of the BUYER BUYER is NOT LIABLE PROVIDED that it happen before the due date or before the reasonable time lapses.

137 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.

138 …cont Exceptions: 1. s.26 SOGA – Unless otherwise agreed…. RISK will NOT PASS with property where there is an express / implied provision in the agreement to the contrary. Example: The parties can state in the contract who is to bear the risk.

139 …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.

140 …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.

141 The Passage of Risk Until risk passes, the B may refuse to take delivery of goods which are damaged in transit. BUT once risk has passed to the B, the S is exempted of liability for loss / damage to the goods (unless caused by the Ss negligent)

142 Perishing Goods S.7: where goods perishing before making a contract, the contract is void S.8: where goods perishing before sale but after agreement to sell, the agreement is thereby avoided.

143 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?

144 GENERAL RULE: Rule- Latin Maxim: nemo dat quod non habet – no one can give what he has not got or no one can give a better title than he has himself. Meaning: A seller who does not own the goods, or who sells them without the owners authority CANNOT transfer ownership to the buyer.

145 The maxim has been adopted into s.27 SOGA S. 27 SGA …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..

146 example A stole a car and sold it to B. In this situation, A does not have the title to the car. Therefore, B also would not get a title to the car even though he had paid for it.

147 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]

148 Continue…. Lim Chui Lai v Zeno Ltd 1964) 30 MLJ 314 Zeno Ltd had entered into agreement with Ahmad (contractor) who had contract with PJ Authority to construct culvert. Under the contract between Zeno Ltd and Ahmad, Zeno was to provide A with all material for the construction. Then, Z delivered all the materials to the construction site. Unfortunately, As contract with PJ was cancelled; Z thereupon informed PJ that the materials on site belonged to them. When Z attempted to sell the material, they discovered the materials had been sold by A to Lim Chui Lai.

149 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

150 Continue…. Rowland v Divall Plaintiff bought a car from D, & after using it for some 4 months, discovered that it was a stolen car. He had to return it to the true owner. Held: The D had breached the condition as to title & allowed recovery by the P of full price on the basis of a total failure of consideration.

151 Continue….. The Buyer would have to return the goods to its original owner 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)

152 exceptions Estoppel Sale by a mercantile agent Sale by of joint owners Sale under a voidable contract Sale by a seller in possession after sale Sale by a buyer in possession after sale

153 Exceptions to NEMO DAT QUOD NON HABET RULE: 1. Estoppel (second limb of s.27 of SOGA).. Unless the owner of the goods is by his conduct precluded from denying the Ss authority to sell.

154 Owner by his conduct makes it appear to the buyer that the person who sells the goods has his authority to do so & buyer relies on that conduct, the buyer obtains a good title because the owner is precluded by his conduct from denying the sellers authority to sell

155 Continue….. *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

156 N.Z Securities v Wrightcars Ltd A agreed to sell a car to B and B was given possession of the car upon the tender of a cheque as payment. It was agreed between them that the title to the car was not to pass to B until the price had been received (i.e. the cheque has been honoured/ cashed). B then sold the car to C. Before the sale to C was finalised, C had contacted As office. In response to Cs inquiry, C was informed by As employee that B had paid for the car. Later the cheque which was given to A by B was dishonoured. Therefore A repossessed the car from C.

157 Held: C was successful in claiming that A was precluded / estopped by his conduct from denying Bs authority to sell. Therefore, the title has passed to C.

158 - 2. Sale by mercantile agent – proviso of s.27 of SOGA …Sale by mercantile agent, with the consent of owner, in possession of goods or of a document of title to the goods, any sale made by him when acting in the ordinary course of business shall be valid as if he were expressly authorized by the owner of the goods to make the same…

159 Definition mercantile agent – s.2 of SOGA Merchantile agent having in a customary course of business as such agent authority either to sell goods, or to consign goods for the purposes of sale, or to buy goods or to raise money on the security Example: Second-hand automobile dealer, a broker, or an auctioneer

160 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

161 3. Sale by one of joint owners Section 28 If one of several joint owners of goods has the sole possession of the goods by permission / consent of the co-owners, the property in the goods is transferred to any person who buys them from such joint owner in good faith & has not at the time of the contract of sale notice that the seller has no authority to sell.

162 Elements: 1 of the owners has the sole possession of the goods by permission of the co-owners. The buyer has acted in good faith and must not have knowledge of the agents lack of authority to sell

163 Continue….. 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.

164 4. Sale under a voidable title s.29 of SOGA The seller of goods has obtained possession thereof under a contract voidable under s.19 or 20 of the Contracts Act 1950, but the contract has NOT been rescinded at the time of the sale… (i.e. his title has not been avoided at the time of the sale), the buyer acquires a good title to the goods provided he buys them in good faith.

165 Elements: The seller obtained possession of the goods under a voidable contract. The said voidable contract has not been rescinded The buyer has acted in good faith and without knowledge of the fact that the seller has NO good title to pass

166 Continue….. 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).

167 5. Sale by SELLER in possession after sale s.30(1) SOGA …if seller continues/is in possession of the goods or of the document of title, the delivery/transfer by that person or by mercantile agent acting for him, of the goods or documents of title under any sale, pledge or other disposition … thereof to any person receiving the same in good faith shall have the same effect as if the person making the delivery/transfer were expressly authorized by the owner of the goods to make the same.

168 Happen when a seller has transferred the property in goods to a buyer but he (the seller) remains in the possession of the goods The seller then, sell the goods to another buyer who buys in good faith 2 nd buyer will get a good title The 1 st buyer losses his title and he HAS to get his REMEDY against the seller.

169 Example: If a seller resells to a 2 nd buyer the goods sold by him previously to the 1 st buyer, the 2 nd buyer will obtain good title to the goods if he has received the goods in good faith & without notice of the previous sale. The 1 st buyer will lose the title but he can take legal action against the seller who would be liable to him.

170 Motor Credits (Hire Finance) Ltd v Pacific Motor Auction Pty Ltd Motor Credits Ltd (MCL) who was a dealer in vehicles sold a number of vehicles to the Plaintiff under a display agreement, whereby Motor Credits remained in possession of the cars for display in their showrooms. MCL were paid 90% of the price and were authorised to sell the vehicles as agent for the P. MCL got into financial difficulties and the P revoked the MCLs authority to sell the vehicles but MCL nevertheless had sold numbers of the cars to D who were bona fide purchasers for value.

171 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.

172 6. Sale by a BUYER in possession AFTER SALE s30(2) SOGA if a buyer, having bought/agreed to buy goods, obtains possession of the goods/the documents of title with the consent of the seller, he can pass a good title to a subsequent buyer acting in good faith, even if under the first transaction he has not obtained a good title.

173 Buyer obtains possession with the consent of the seller However, the property in goods is still subject to some rights or interest of the seller. The said buyer can pass a good title to another bona fide buyer who has NO knowledge about the rights or interest of the original seller.

174 Newtons of Wembley Ltd v Williams [1965] 1 QB 560 Plaintiff sold a car to A who paid by cheque. It was agreed that the title would not pass until the cheque was honoured. A was given possession of the car but the, but later on, the cheque was dishonoured. P then rescinded the contract with A. However, A had sold the car to B who bought it without knowledge of the position. Furthermore, B had resold it to the defendant. Plaintiff tried to recover the car from him.

175 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.

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177 Delivery and acceptance of Goods s.31 SOGA – Its the duty of seller to deliver the goods whilst the buyers duty is to accept & pay for them accordance with the terms of the contract.

178 Delivery Means voluntary transfer of possession from one person to another. Constructive delivery is sufficient.(need not include physical transfer) :s.33 SGA

179 Non-delivery – buyer may sue the seller for damages for non delivery(s.57 SGA). Place of delivery – whether the seller is required to send the goods to the buyer or the buyer has to take possession of the goods depends on what has been agreed upon between them ( s.36(1) SGA

180 …contd Unless the parties agree otherwise, the expenses of & incidental to putting the goods into a deliverable state shall be borne by the seller. 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)

181 Delivery of wrong quantity- S.37(1), (2),(3) &(4) 1. Seller delivers to the buyer a quantity of goods less than that which he contracted to sell:- a) the buyer may reject all the goods so delivered, or b) if the buyer accepts the goods so delivered, he is bound to pay for them at the contract rate.(s.37(1) SOGA)

182 Case: Harland & Wolff Ltd v J. Burstall & Co A contract for 500 loads of timber. Held: that delivery of 470 loads would have been non-performance of the contract entitling buyer to reject

183 …cont Seller delivers to the buyer a larger quantity of goods than that which he contracted to sell, the buyer may:- a) Accept the goods included in the contract & reject the rest; or b) Reject all the goods c) Accept all the goods (if buyer accepts all the goods, he has to pay for the goods at the contract rate) - s.37(2) SOGA

184 …cont Seller delivers to the buyer the goods he contracted to sell mixed with goods of a different description not included in the contract, the buyer may:- 1. Accept the goods which are in accordance with the contract & reject the rest; or 2. Reject the whole. – s.37(3) SOGA (s.37(4): SOGA are subjects to any usage of trade, special agreement or course of dealing between the parties.)

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187 BREACH BY THE BUYER 1. Failure of the Buyer to Take Delivery 2. Failure of Buyer to pay for The Goods 3. Failure of Buyer to Accept the Goods

188 Continue….. 1. Failure of Buyer to Take Delivery Section 44 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

189 the Buyer would also LIABLE for a reasonable charge for the care and custody of the goods by the seller.

190 Continue….. 2. Failure of Buyer to Pay for the Goods Section 55 If the buyer failed to pay for the price of the goods, the seller may sue the buyer for the price when: i. 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) )

191 Continue….. 3. Failure of Buyer to ACCEPT the Goods Section 56 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

192 Rights (Remedies) Of Unpaid Seller Against The Goods

193 WHO IS HE? UNPAID SELLER (S. 45 (1)) THE SELLER HAS NOT BEEN PAID WITH THE WHOLE PRICE WHEN THE BILL OF EXCHANGE OR OTHER NEGOTIABLE INSTRUMENT, RECEIVED BY THE SELLER AS A CONDITIONAL PAYMENT IS DISHONOURED

194 RIGHTS IN PERSONAM (personal) RIGHTS IN PERSONAM (personal) RIGHTS IN REM (property) RIGHTS IN REM (property)

195 Common remedies that are available for the unpaid seller against the buyer 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).

196 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.

197 Continue…. Section 56 Where buyer wrongfully neglects or refuses to accept and pay for the goods ; the seller may sue him for the damages for non-acceptance.

198 In respect of the goods themselves: RIGHT OF LIEN RIGHT OF STOPPAGE IN TRANSIT RIGHT OF RESELL RIGHTS IN REM

199 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 payment or tender of the price. The right still exist even where the property in goods has passed to the buyer, but the delivery has not been made. (s. 46 (1) (a))

200 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

201 Continue…. Section 46(2) Where the properties in goods has not passed to the buyer, the seller may with hold delivery in addition to his other remedies

202 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.

203 Continue….. 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

204 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.

205 Continue….. Section 49 The unpaid seller losses his lien in the following circumstances: When he delivers the goods to the carrier or other bailee in order that the goods be transmitted to the buyer without reserving the right of disposal of the goods The buyer or his agent lawfully obtains possession of the goods When the seller waives his lien (s. 48)

206 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.

207 This is a right of an unpaid seller to stop the goods in transit, to resume possession of the goods as long as they are in the course of transit (lintasan barang-barang dagangan, pengangkutan (barang, orang) The seller may retain the goods until payment of the price

208 Continue… Buyer becomes insolvent The goods are in control of a carrier (in transit) WHEN?

209 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.

210 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.

211 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)

212 Continue…. Transit cannot recommence merely because the buyer has instructed that the goods be sent on a further journey to another destination iv. Where the carrier wrongfully refuses to deliver the goods to the buyer. Section 51(6)

213 Continue…. If part of the goods has been delivered to the buyer, and the remainder of the goods are still in transit, the unpaid seller has the right of stoppage in transit for such remainder which are still with the carrier. Section 51(7)

214 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

215 Continue….. Giving notice to the carrier The carrier shall redeliver the goods to the seller or according to the sellers directions. The expenses of redelivery shall be borne by the seller

216 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))

217 Continue….. 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))

218 THUS…. The seller may also recover from the original buyer, damages for any loss due to his breach of contract; The buyer shall not be entitled to any profit, which may occur out of that resale; However, if the seller failed to give such notice, the seller shall not be entitled to recover such damages, and the buyer shall be entitled to the profit out of the resale, if any. Section 54(2)

219 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)

220 Continue…. The effect of such resale is that, the original contract with such default buyer would terminate Therefore, the original buyer is no longer required to pay for the price, and the seller is entitled to keep any profit out of that resale However the seller is still entitled for damages from the original buyer for breach of contract and for any loss suffered by the seller out of that breach.

221 BREACH BY THE SELLER 1. DAMAGES FOR NON DELIVERY OF THE GOODS 2. SPECIFIC PERFORMANCE 3. ACTION IN TORT 4. DAMAGEs FOR BREACH OF WARRANTY

222 1.Damages For Non-delivery of the Good s Where seller wrongfully neglects / refuses to deliver the goods to buyer, the buyer may sue the seller for damages for non-delivery - (s.57 SGA) 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))

223 2. Specific Performance In certain circumstances, which are subject to Chapter II of the Specific Relief Act 1950, the buyer may apply to the Court to grant a decree, directing the seller to the perform the contract specifically, without giving the seller the option of retaining the goods by paying damages to the buyer.

224 Specific Performance is a discretionary decree by Court. This remedy is available only if the contract is to deliver specific goods or ascertained goods. (Re Wait- 5oo tons of wheat from a tons).

225 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.

226 …cont conversion – means the dealing with the goods in a manner inconsistent with the ownership of the buyer. E.g. if the seller wrongfully sells that goods to a third party although the property in the goods has passed to the buyer.

227 4. DAMAGES FOR BREACH OF WARRANTY Whenever there is a breach of warranty by the seller, the buyer is not entitled to reject the goods. However the buyer is entitled to sue the seller for damages because of breach of warranty Section 59(1)(b)

228 GLOSARY Ascertained goods: Goods identified and upon by the parties Unascertained goods: Goods that are defined by descriptions only Nemo dat rule: A buyer getting the same rights to the goods as the person they took it from (the seller) Possession of goods: Control or custody of goods Property in goods: Ownership Sale of goods: The transfer of ownership from seller to buyer at the time of contract

229 End of Topic


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