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1 Prepared for: LAW 251 Prepared by: SALE OF GOODSPrepared for:LAW 251Prepared by:Miss. Norazuan Binti AmiruddinMadam Norazla Abddul Wahab
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 SOGAThe 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 thebuyer for a price”...Seller------Buyer PriceE.g: A agrees to transfer the ownership of his car to B. B then pay RM10000 for a price of the car.
6 Continue….. three (3) main elements in a contract of sale of goods: There must be goods which are tobe transferred to the buyerThe seller transfers or agrees to transfer the property in goods to the buyerThere 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 considerationSale occurs when the ownership or property in goods passes to the buyer
8 Parties to the contract are known as : buyer ; andseller
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 fulfilledSection 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 moneyinclude 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 It was held by the Court : Continue….Morgan v RusselThe 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 StockmanThere 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 goodsThere 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 sellerGeneric goods e.g tones of wheatAn unidentified part of a specific wholeExample: 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 madeExample: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 saleExample:Agreement to buy Mitsubishi Evolution yet to be manufactured by the seller.
20 Please Identify future goods 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. Halim’s red Proton Wira belongs to the category of ________ goods?EXISTING GOODS
22 Siti wanted to buy 2 kg sugar from Pak Mat 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, Siti’s 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 goodsOwnership(Having legal title/rightsover 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 goodsBUT
25 THE POSSESSOR WHO IS NOT THE OWNER IS NOT ENTITLED 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 ENTITLEDTO DO SO
26 THE MONEY CONSIDERATION FOR A SALE OF GOODS PRICETHE 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 FORMALITIESTIME OF PAYMENTCAPACITY
31 A contract of sale may be made: 2. FormalitiesA contract of sale may be made:in writing,
32 by word of mouth/ Verbally, both - partly in writing & partly by word of mouth, ormay 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 OR OR BOTH OR2. Delivery or payments by InstallmentDelivery of goodsDelivery of paymentsDelivery or payments postponement
34 SECTION 11 SALE OF GOODS ACT Continue….3. TIME OF PAYMENTStipulation 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 contractSECTION 11 SALE OF GOODS ACT
36 A. CONDITIONSA 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 Party in default is entitled for damages 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 becauseit is not voidableHOWEVERParty 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 “ “buyer has accepted the goods” CONTINUE…SECTION 42“ “buyer has accepted the goods”The buyer told the seller that he had accepted the goodsWhen the goods has been delivered to the buyer and the buyer has done something which against the ownership of the sellerAfter the expiry of a reasonable time, the buyer keep the goods without informing the seller that he rejected the goods
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 contractUNLESS THERE IS A TERM OF THE CONTRACT EXPRESS OR IMPLIED
42 Implied TermsThe SOGA implies a number of stipulations (implied terms) in every contract for the sale of goodsThe 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... 1. implied warranty as to “time” s.11 of SOGA Time of payment are NOT deemed to be of the essence.Meaning that, if a buyer fails to pay by an agreed time, the seller does not automatically repudiate the contract.
44 But whether time is of essence of the contract / not , it depends on intention of the parties in the terms of the contracte.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 livestocke.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 has the ownership/title over the goods Seller must be the owner of the goodsSeller has the ownership/title over the goodsPresumed to have a right to sell
48 Defendant had breach the implied condition as to title. Rowland v Divall  2 KB 500P 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 i.e. the car that still hired to the bank. 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 (3rd 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 EdwardsFacts: 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 samewell-known trade mark.Held: It did not comply with the description. D had breach the condition as to description.
61 Associated Metal Smelters Ltd v Tham Cheow Toh Buyer has seen the goods but the defect may be concealed from the buyer.Associated Metal Smelters Ltd v Tham Cheow TohThe 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 WhippThe seller agreed to sell a 2nd 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 FITBUYER MAY SUE THE SELLER FOR BREACH OF IMPLIED CONDITION
70 CONDITIONS TO BE FULLFILLED IF NOT DISCLOSE, THE BUYER HAS TO TAKE THE RISKSELLER WOULD NOT LIABLEDISCLOSURE OF PURPOSE (s. 16 (1) (a) ).EVEN THOUGH THE GOODS IS NOT FITBuyer must make known or disclose to the seller the purpose of the goods required
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 It is implied that the goods is fit for that particular purpose. 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 A s a result, she was scalded & the P sued the D. Priest v LastThe P purchased a hot water bottle from the D, a retail chemist. Some days later, the bottle while in use by the P’s 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…..RELIANCE ON THE SELLER’S SKILL AND JUDGMENT (s. 16 (1) (a))The buyer must also established thathe had relied on the seller’s skill and judgmentbefore 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 seller’s business to supply. (S. 16 (a))The goods bought by the buyer must be the kind which is in the course of the seller’s 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 The implied condition DID NOT applied. Continue….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 seller’s 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, if the buyer did buy under a trade name but relies on the seller’s skill & judgmentThe 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 soldi.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 Exceptions 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”.
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 IMPLIED CONDITION AS MERCHANTABLE QUALITY WOULD APPLY. HOWEVER,If the DEFECT COULD NOT BE DISCOVERED, by any reasonable examination;IMPLIED CONDITION AS MERCHANTABLE QUALITY WOULD APPLY.
88 Wren v HoltThe 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 SampleUsed in the sale of bulk of goods like rice, wheat, flour, carpets, etc
91 The bulk shall correspond with the sample in quality. Section 17(2):In the case of contract for sale by sample there is an implied condition that:The bulk shall correspond with the sample in quality.Buyer has reasonable opportunity of comparing the bulk with the sample.The goods shall be free from any defect which would not be apparent on reasonable examination of the sample.
92 Breach of any one of the three conditions, 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 BUYER ENTITLED TO REJECT THEM. If the bulk correspondence with the sample but there is a latent defect rendering the goods unmarchantableBUYER ENTITLED TO REJECT THEM.
94 Court held: the seller is liable of the subsection. Drummond v Van IngenThe 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 The seller LIABLE for all defects S.17 (2) (C)The seller LIABLE for all defectsWhich a BUYER of ordinary EXPERINCE and DILIGENCE not discover on reasonable inspection of the sample.
96 Godley v PerryA 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 boy’s 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 BUYER SELLER The implied conditions and warranties bind the contracting parties onlySELLERBUYER
99 NO CONTRACTUAL RELATIONSHIP CANNOT SUE SELLER OR MANUFACTURER Continue….3rd PARTY, if suffer injury/ damagesNO CONTRACTUAL RELATIONSHIPCANNOT SUE SELLER OR MANUFACTURER
100 3rd party – entitled to Remedy May sue the seller under the law of tort.Entitled only if he can prove there is negligence on Seller’s part.
101 Donoughue v StevensonThe 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 Plaintiff’s 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 SOGAwhere 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”.
105 IntroductionOnce 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 buyer’s risk whether delivery has been made or not”.
106 if the delivery has been delayed due to the fault of the seller, 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 only the person who has the property in goods may claim. If any party sought to claim any right over the property from 3rd 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? TIMEWHEN PROPERTY IN GOODS PASSES TO THE BUYER?
109 WHEN THE PROPERTIES IN GOOD TRANSFERRED TO BUYER? 2. SALE OF GOODSSECTION 194. SALE OF SPECIFIC GOODS TO BE PUT IN A DELIVERABLE STATESECTION 213.SALE OF SPECIFIC GOODS IN A DELIVERABLE STATESECTION 20WHEN THE PROPERTIES IN GOOD TRANSFERRED TO BUYER?1. SALE OF UNASCERTAIN GOODSSECTION 185. SALE OF SPECIFIC GOODS TO BE PUT IN A DELIVERABLE STATEBUT SELLER HAS TO ASCERTAIN THE PRICESECTION 226. SALE OF GOODS BY DESCRIPTIONSECTION 237. GOODS SENT ON APPROVALSECTION 24
110 1. SALE OF UNASCERTAINED GOODS SECTION 18CONTRACT FOR THE SALE OF UNASCERTAIN GOODSNO PROPERTY IN GOODS ISTRANSFERRED TO THE BUYERUNLESSTHE GOODS ARE ASCERTAINED
111 A contracts to buy a new car which forms part of a larger consignment. 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 goodsis transferred to the buyerWHENTHE PARTIES INTENDED TO IT TO BE TRANSFERRED
113 INTENTION OF THE PARTIES? Continue….Section 19(2)HOW TO DETERMINE THEINTENTION OF THE PARTIES?BY CONDUCTBY CIRCUMSTANCES
114 a. SALE OF SPECIFIC GOODS IN DELIVERABLE STATE Goods that in the state that the buyer would under the contract BE BOUND to take delivery of themS.20 of SOGA
115 Section 20CONTRACT FOR THE SALE OF SPECIFIC GOODS IN DELIVERABLE STATETHE PROPERTY PASSES to the BUYER , WHEN THE CONTRACT IS MADEIMMATERIALTHE TIME OF PAYMENT OF THE PRICETHE TIME OF DELIVERY OF GOODSOR BOTH are POSTPONED
116 A buyer agrees to buy a particular book on credit. 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 seller’s 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 21The seller is bound to do something on the goods for the purpose of putting them into deliverable stateThe property does not pass until such thing is done and the buyer has notice
120 ExampleThe seller agrees to sell a particular 2nd 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 ascertaining the price of the goods C. Sale of Specific Goods In a Deliverable State; but The Seller has to do Something in Order To ascertain The PriceThe goods are of specific and in a deliverable state.Where the seller bound to weigh, measure, test or do something for the purpose ofascertaining the price of the goodsSection 22The 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 Not a sale of specific goods 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 goodsUnascertained goodsGoverned by s. 23 (1).
124 Sale of Unascertained @ 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 or acquired by the seller according to certain description Unascertained goods by description means, goods which cannot be specifically identified at the time of the contract, but are referred to by description1. Future goods by description means goods to be manufactured or producedor 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 Approval @on Sale or Return S.24 of SOGAWhen goods are delivered to the buyer on approval or on sale or return, the property in goods passes to the buyera. When the buyer signifies his approval or does any other act adopting the transactionb. 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 orgiving 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 acti.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 3rd party.Held:The buyer had adopted the transaction. The property in the jewelerry has passed to the buyer.
134 the return; the property passes on the expiration of a reasonable time S.24 of SOGAb. if the buyers does not signify his approval but retains the goods without giving notice of rejection, then if the time has been fixed forthe return; the property passes on theexpiration of a reasonable timeIf the buyer failed to return the goods within specific / reasonable timeHe is deemed to have accepted the saleThe property passes to the buyer.
135 What is reasonable time? POOLE V SMITH’S CAR SALES (BALHAM) LTDA car dealer supplied 2 cars “ on sale or return” to another dealer. 1 of the cars was sold, but the unsold 2nd car was returned about 3 months later in poor condition. It was rejected by 1st dealer, who then claimed for the price from 2nd dealer.Held:“ a reasonable time “ had expired. Therefore, the property in goods passed to the 2nd dealer. Thus, the 2nd dealer has to pay for the price of the car to 1st dealer.
136 If the goods are LOST or destructed WITHOUT THE DEFAULT of the BUYER BUYER is NOT LIABLEPROVIDED that it happen before the due date or before the reasonable time lapses.
137 Transfer of RiskGeneral 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 s.26 SOGA – “Unless otherwise agreed….” …contExceptions: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 …cont2. 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 …cont3. 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 RiskUntil 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 S’s negligent)
142 Perishing GoodsS.7: where goods perishing before making a contract, the contract is voidS.8: where goods perishing before sale but after agreement to sell, the agreement is thereby avoided.
143 Buyer bought goods from a non- owner. Transfer Of TitleIssues: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 owner’s 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 A person who has no title cannot pass good/valid title to another. 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, A’s 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 He had to return it to the true owner. Continue….Rowland v DivallPlaintiff 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 The Buyer would have to return the goods Continue…..The Buyer would have to return the goodsto its original ownerUNLESSthe 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 contractSale by a seller in possession after saleSale by a buyer in possession after sale
153 Exceptions to NEMO DAT QUOD NON HABET RULE: Estoppel(second limb of s.27 of SOGA)“.. Unless the owner of the goods is by his conduct precluded from denying the S’s 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 seller’s authority to sell
155 Continue…..*Application:Owner is estopped (prevented) from denying the S’s 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 A’s office. In response to C’s inquiry , C was informed by A’s 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 Therefore, the title has passed to C. Held:C was successful in claiming that A was precluded / estopped by his conduct from denying B’s 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 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 The possession must be with the consent of the owner Elements:The possession must be with the consent of the ownerAt 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 agentThe buyer has acted in good faith and must not have knowledge of the agent’s 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 agent’s 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 & Z’s permission, sold the oven to A who did not know about X’s 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 rescindedThe buyer has acted in good faith and without knowledge of the fact that the seller has NO good title to pass
166 C obtains good title to the goods. (e.g. of not avoided). 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 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 2nd buyer will get a good title Happen when a seller has transferred the property in goods to a buyer but he (the seller) remains in the possession of the goodsThe seller then, sell the goods to another buyer who buys in good faith2nd buyer will get a good titleThe 1st buyer losses his title and he HAS to get his REMEDY against the seller.
169 Example: If a seller resells to a 2nd buyer the goods sold by him previously to the 1st buyer, the 2nd buyer will obtain good title to the goods if he has received the goods in good faith & without notice of the previous sale. The 1st buyer will lose the title but he can take legal action against the seller who would be liable to him.
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 MCL’s 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) SOGAif 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  1 QB 560Plaintiff 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.
177 Delivery and acceptance of Goods s.31 SOGA –It’s the duty of seller to deliver the goods whilst the buyer’s 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 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 …cont’dUnless the parties agree otherwise, the expenses of & incidental to putting the goods into a deliverable state shall be borne by the seller.Time of DeliveryWhere 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 …con’tSeller delivers to the buyer a larger quantity of goods than that which he contracted to sell, the buyer may:-Accept the goods included in the contract & reject the rest; orReject all the goodsAccept 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 …con’tSeller 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:-Accept the goods which are in accordance with the contract & reject the rest; orReject 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.)
185 REMEDIES FOR BREACH OF CONTRACT OF SALE OF GOODS
186 REMEDIES FOR BREACH OF CONTRACT OF SALE OF GOODS 1. BREACH BY THE BUYER2. BREACH BY THE SELLER
187 BREACH BY THE BUYER 1. Failure of the Buyer to Take Delivery 2. Failure of Buyer to pay for The Goods3. Failure of Buyer to Accept the Goods
188 1. Failure of Buyer to Take Delivery Continue…..1. Failure of Buyer to Take DeliverySection 44When 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 sellerIf the Buyer refused or neglect to take delivery, the buyer would be liable for any loss due tohis 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 2. Failure of Buyer to Pay for the Goods Continue…..2. Failure of Buyer to Pay for the GoodsSection 55If the buyer failed to pay for the price of the goods, the seller may sue the buyer for the price when:The property in goods (ownership) has passed to the buyer (S. 55(1) ); orThe 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 THE SELLER HAS NOT BEEN PAID WITH THE WHOLE PRICE UNPAID SELLER (S. 45 (1))WHEN THE BILL OF EXCHANGE OR OTHER NEGOTIABLE INSTRUMENT, RECEIVED BY THE SELLER AS A CONDITIONAL PAYMENT IS DISHONOUREDWHO IS HE?THE SELLER HAS NOT BEEN PAID WITH THE WHOLE PRICE
194 REMEDIES FOR UNPAID SELLER RIGHTS IN REM(property)RIGHTS IN PERSONAM(personal)
195 Remedies of the unpaid seller :- RIGHTS IN PERSONAMCommon remedies that are available for the unpaid seller against the buyerRemedies of the unpaid seller :-To sue the buyer for the price (S. 55);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 STOPPAGE IN TRANSIT RIGHTS IN REMIn respect of the goods themselves:RIGHT OF LIENRIGHT OF STOPPAGE IN TRANSITRIGHT OF RESELL
199 Is entitled to retain possession until payment or tender of the price. 1. RIGHT OF LIENA legal lien is dependant on possession.The unpaid seller who is in possession of the goodsIs 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 48Where 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 49The 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 goodsThe buyer or his agent lawfully obtains possession of the goodsWhen 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 The seller may retain the goods until payment of the price 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 WHEN?Buyer becomes insolventThe goods are in control of a carrier (in transit)
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: When the buyer takes delivery from the carrier. Section 51(1)When the Buyer obtains delivery of the goods before their arrival at the appointed destination. Section 51(2)After the arrival, the carrier acknowledges to the buyer that he holds the goods on the buyer’s 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 destinationiv. 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 seller’s directions.The expenses of redelivery shall be borne by the seller
216 3. RIGHT OF RESELLSection 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 terminateTherefore, the original buyer is no longer required to pay for the price, and the seller is entitled to keep any profit out of that resaleHowever 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 PERFORMANCE3. ACTION IN TORT4. DAMAGEs FOR BREACH OF WARRANTY
222 1.Damages For Non-delivery of the Goods 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 lawIf 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 the buyer may apply to the Court to grant a decree, 2. Specific PerformanceIn 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. Buyer’s Action in TortBuyer 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 …con’t“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 warrantySection 59(1)(b)
228 GLOSARY Ascertained goods: Goods identified and upon by the parties Unascertained goods: Goods that are defined by descriptions onlyNemo 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 goodsProperty in goods: OwnershipSale of goods: The transfer of ownership from seller to buyer at the time of contract