1. BUSINESS LAW & ETHICS BFT 103
Hirwan Jasbir Bin Jaafar
4th Lecture 1

2. QUESTION!!!!!!
WHY DO YOU NEED TO LEARN ABOUT COMERCIAL LAW 1. As a Businessman/woman 2. Protect Your Right

3. Commercial law Sale Of Goods Direct Selling Moneylender Banking Law
Intellectual property
etc

4. History Barter System Sale Of Goods Act 1893
COMMERCIAL SYSTEM
Barter System
ENGLAND
Sale Of Goods Act 1893
INDIA
Sale Of Goods Act 1930(India)
FMS
Contract Act 1950
Sale Of Goods (Malay State) Ordinance 1957
MALAYSIA
Sale Of Goods Act 1957 (revise 1989)
NOW
Sale Of Goods(Amendment And Extension) Act 1990

5. Application SOGA 1957 SOGA 1979 (UK) Civil Law Act Sec. 5(2) Sabah
Sarawak
SOGA 1957
Peninsular Malaysia
Malay State
Pulau Pinang & Melaka
(1990)

6. Important Sale Of Good Act
Sec 4(1) A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price.

7. Application SOGA 1957 SOGA It’s not a complete Law….
Application Of Contract Act 1950 as far as they are not inconsistent with SOGA. (Sec. 3)
Only applies to Contract for sale of
goods

8. Sale Of Goods
Definition Sec. 2 SOGA ‘Goods includes every kind of moveable property other than actionable claim and money and includes stocks and shares, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale.

9. Case
Morgan v. Russel
The Judge stated that a contract of sale of a pile of earth is a contract of sale of something detached from land. Therefore it may be understood that a sale of a pile of earth is a sale of goods.

10. GOODS
SOGA
Sec. 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.

11. CLASSIFICATION OF GOODS
Sec. 6
Existing
Sec. 2
Specified Goods
Unspecified and
Unascertained
Future
Goods to be manufactured after contract

12. Existing Goods
Goods already owned or possessed by the seller, and may be either specified or agreed upon at the time a contract of sale is made
SOGA Sec. 2 :
“Goods possessed or owned by the seller at the time the contract of sale was made”

13. Specific Goods
Goods identified and agreed upon at the time a contract of sale is made.
SOGA Sec. 2:
goods identified and agreed upon at the time a contract of sale is made; and any expression used but not defined in this Act which is defined in the Contracts Act 1950 [Act 136], shall have the meaning
assigned to it in that Act.
Example :
Jabar agrees to buy Hafiz’s car bearing a registration number KDW3475.

14. Specific Goods Example :
Jabar agrees to buy Hafiz’s car bearing a registration number KDW3475.

15. Unascertained goods Good are those identified by description only
Example:
Sabrina buys from Nora two rolex gold watches, the goods would be ascertained goods only when they have been appropriated to the contract, as when two Rolex gold watches have been set a side for Sabrina in accordance with the contract.

16. Future Goods
Goods to be manufactured or produced or acquired by the seller after the making of the contract of sale
SOGA Sec. 2 :
“future goods” means goods to be manufacture or produced or acquired by the seller after the making of the contract of sale;

17. Example Future Goods
Agreement to sell 2 units Toyota Vios yet to be manufactured by the seller

18. Contract Of Sale
A contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price
In the past, a person had some goods or services and needed some other goods or services, he exchanged his goods or services for the goods or services which he needed. – contract of exchange 0r
barter system

19. Contract Of Sale vs. Agreement To Sell.
AGREMENT TO SELL
Transfer Of Title and good
Transfer Of title in the goods is subject to compliance with certain condition
Buyer may claim specific performance
Title in the goods remains with the seller although possession of the good with the buyer
Where the seller has breached an agreement to sell, the buyer may claim unliquidated damages.

20. Contract For The Sale Of Goods
A contract for the sale of goods is formed when all the essential elements of a contract are satisfied.
Sec. 5(1)

21. Sec.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. The Contract may provide for the immediate delivery of the goods or immediate payment of the price or both, or for the delivery or payment by installments or that the delivery or payment or both shall be postponed.

22. Illustration
Rahmat agrees to sell Jamal a football Jersey at Rahmat’s shop on condition That Jamal bring along cash within a week. The contract between Rahmat n Jamal is an agreement to sell. When \ Jamal brings along cash within one week, the agreement become a contract of sale.

23. Harper Gillfillan Sdn. Bhd v. Kean Toh Amang Factory Sdn
Harper Gillfillan Sdn. Bhd v. Kean Toh Amang Factory Sdn. Bhd & Lee Kwee Hong
The Plaintiffs’ creditor obtained an order for seizure of goods of the Defendants debtor at the Defendant’ Factory. Lee Kwee Hong, the Claimant, alleged that the seized goods were his property because he had contracted with the Defendants to Purchase them.

24. Court Decision
At the time of the seizure by the Plaintiffs’ title in the goods were with the Defendants because as between the Claimant and the Defendants, there was only an agreement to sell, not a contract of sale. Therefore, Lee was not entitled to the goods. Lee may only sue the Defendant for damages.

25. Terms Of Contract Of Sale
Sec. 12.
Condition
(Sec 12(2)
Warranties
(Sec. 12(3)

26. Important to Fulfill All Terms Of Contract
Sec. 13 SOGA
A party breaches a condition of the Contract, the innocent party may repudiate the contract or treat the breach of condition as a breach of warranty and affirm the contract; in which event the innocent party may claim damages based on breach of warranties.

27. Condition Strictly state in the contract and been agree by both party.
For example;
A term of purchase of a laundrymachine clearly states that the load capacity shall be 12 kg per washing. If the term not satisfied, it breach of condition.
In this case buyer may repudiate the contract and recover the price paid or treat the breach

28. Sec.12(2)
A condition is a stipulation essential to the main purpose of the contract, the breach of which gives rise to a right to treat the contract as repudiated.

29. Choice For Buyer
In this case buyer may repudiate the contract and recover the price paid; or
Treat as breach of warranty and claim for the difference in prices between the 12kg machine and a 10kg machine

30. Warranties Is a term which is not fundamental to the contract
Sec. 12(3)-
A warranty is a stipulation collateral to the main purpose of the contract, the breach of which gives rise to a claim for damages but not to a right to reject the goods and treat the contract as repudiated.

31. TERMS OF CONTRACT
EXPRESS
Terms that are expressed agreed by the parties orally, in writing or partly orally, party in writing
IMPLIED
Terms that work on the presumed intention of the parties to give effect to the business efficacies of the contract.

32. IMPLIED TERMS Title In The Goods S.14(A)
Enjoyment Of Quiet Possession of the goods
Sec.14(b)
Free from any charge or encumbrance
Sec. 14(c)
Goods correspond with the description
Sec. 15
Quality & Fitness For a Particular purpose
Sec. 16(1)
Merchantable quality of the goods
Sec. 16(1)(b)
The goods correspond with the sample
Sec. 17

33. Implied Condition As To The Title In The Goods Sec. 14(A)
An implied condition on the part of the seller, that in the case of a sale, he has a right to sell the goods, and that, in the case of an agreement to sell, he will have a right to sell the goods at the time when the property is to pass

34. Implied Condition As To The Title In The Goods
A contract of sale involves the transfer of title in the goods of the seller to the buyer. So the seller must have title in the goods which he sells.
In contract of sale, title in the goods must exist at the time of the contract.
Failure to comply the contract voidable
on the grounds of breach of
condition.

35. Example
Ramli sell a motorcycle which has been stolen from Kamal. Ramli sell the stolen motorcycle to Jamil. Ramli is not the real owner of the motorcycle so Ramli is in breach of the term as to the title in the goods. The title still remains with Kamal who are the lawful owner.

36. Implied Condition As To The Title In The Goods
A breach of condition as to the title goods allow buyer to rescind the contract and recover payment, even he has used the goods.
Case Rowland v. Divall
Unaware that the motorcar has been stolen, the PL bought the motorcar. After using the motorcar for sometimes, the PL was forced to return it to the lawful owner. The PL was entitled to recover from the Def the price which had paid because
there was no consideration from Def.

37. Lian Lee Motor Sdn Bhd v Azizuddin Bin Khairuddin [2001] 1 MLJ 5 334
The Def. sold a car, a Toyota purportedly registered with the JPJ Pahang to the Pl. The said Toyota was later seized by the police. It was found to be a stolen car, and its registration card has been forged. The Pl sued the Def for the refund, being the money had and received by the Def as consideration for the said Toyota.

38. Court Held:
The Def had a right to sell the said Toyota when he sold it to the Pl. This is under an implied condition in Sec. 14(a) of SOGA. However it was an invalid contract because of the total failure consideration by the PL as he did not get the car after he had the purchase price. The Def did not have the right of ownership over the car nor could he sell the car to the Pl. Thus, the Pl as an innocent party had the right to sue for the purchase price.

39. Implied Warranty as to the Enjoyment Of Quiet Possession Of The Goods Sec. 14(b)
An implied warranty that the buyer shall have and enjoy quiet possession of the goods;

40. Implied Warranty as to the Enjoyment Of Quiet Possession Of The Goods
A third party has no right to interfere in the buyer’s quiet possession.
Example;
Rahim buy a hand phone from Saleh. Samad a third party cannot interfere in Rahim quiet possession of the handphone, by claiming to have a better title.

41. HENG LONG MOTOR TRADING CO. v OSMAN BIN ABDULLAH [1994] 2 MLJ 456
The third party interfered in the Respondent’s quit possession, where the Respondent had to bear the cost of repurchasing the van, which amounted to RM500, and also suffered loss since the van was seized by the third party.

42. Court Held
It was obvious that there had been a breach of the implied warranty of quite possession of the van by appellant. The implied warranty of quite enjoyment protect the buyer(respondent) not only against all acts of the seller but also the lawful acts of third persons. If a buyer’s full possession of goods is disturbed by a third party acting within his or other’s right, the buyer is entitled to hold the seller liable and to be indemnified by the seller.

43. Implied Warranty that the Goods Sold are Free From Any Charge or Encumbrance Sec. 14 ( c )
An implied warranty that the goods shall be free from any charge or encumbrance in favor of any third party not declared or known to the buyer before or at the time when the contract is made.

44. Example
Huda sold a piece of land to Nora without disclosing the fact that the land has been charged to Bank Muamalat. Huda has breached the warranty which entitles Nora to claim for damages. However if Nora still decided to proceed with the sale despite knowing about the charge, it would not amount to breach on the part of Huda

45. Implied Warranty that the Goods Sold are Free From Any Charge or Encumbrance
If the buyer after being informed of the charge or encumbrance by the seller, agrees to purchase subject to the charge or encumbrance, the buyer is not entitled to allege that the seller is in breach of the implied warranty.
Buyer got a burden to prove that the buyer knows of the charge or
encumbrance before or at the time
of making contract.

46. Llyods & Scottish Finance Ltd. v. Mordern Cars & Caravan Ltd.
A caravan was put under an execution order issued by the court againts the debtor. The debtor subsequently sold the caravan to its distributor, the Def, who had no knowledge of the execution order. The Def then let the caravan to the Pl under hire purchase. There was an express term that the caravan was the property of the Def, free from encumbrances. The court held that the Def. had no complied with the condition that the property was free from encumbrances, although there was title in the goods which could be transferred.

47. Steinke vs. Edward
C telah membeli kereta dari B yang kemudiannya menjualkannya kepada D. Tanpa pengetahuan semua pihak, cukai jalan kenderaan tersebut masih belum dijelaskan oleh pemilik terdahulu iaitu A dan atas sebab itu kenderaan itu telah dirampas oleh pihak berkuasa. D terpaksa membayar cukai tersebut untuk mendapatkan semula kereta tersebut.
Mahkamah memutuskan berlaku pelanggaran syarat waranti bahawa barang bebas dari sebarang tanggungan,maka D berhak menuntut bayaran dari B. B boleh tuntut pada C dan C pada A.

48. Implied Condition That The Goods Correspond with the Description Sec
Where there is a contract for the sale of goods by description there is an implied condition that the goods shall correspond with the description; and, if the sale is by sample as well as by description, it is not sufficient that the bulk of the goods corresponds with the sample if the goods
do not also correspond with the
description.

49. Implied Condition That The Goods Correspond with the Description
The goods sold correspond with the description. Exmpl: Rashid enters a watch shop and ask for a Rolex watch.
Although the buyer has had looked at the goods, the contract of sale may be deemed a contract of sale by description. Exmpl; Kasim picked a shirt which was stated as made from cotton. After wearing the shirt, he got skin problems. Upon examination, it was discovered that the shirt was actually made from synthetic fibre.

50. Case Beale v Taylor
This case tells of how a seller had advertised a motorcar as “Herald Convertible, white, 1961, twin carbs.” The buyer choose and bought the motorcar. Later the Buyer discovered that only the rear potion of the motorcar was a 1961 model, while the front was of a different model.
The court held that the seller had breached the implied condition that the
goods must correspond with the
description given.

51. Nagurdas Purshotundas & Co. v. Mitsui Busan Kaisha Ltd
A contract of sale was made between two parties in a sale of a well known type of Flour. After the buyer ran out of such flour, he made an order describing it as “the same as our previous contract”. The seller delivered flour identical in quality as the previous one but of a different brand. It was held that the seller did not comply with the buyer’s stipulated description.

52. Implied Condition As To The Quality and Fitness For A Particular Purpose Sec. 16(1)(a)
Sec. 16(1) states that there is no implied warranty or implied condition as to the quality or fitness for a particular purpose of goods supplied under a contract of sale.
Buyer has an obligation to exercise care based on the principle of “caveat emptor”(let the buyer beware).
If the Buyer fails to exercise care and the goods
which has bought does not fit the
purpose which he intends, the buyer cannot
blame the seller.

53. Implied Condition As To The Quality and Fitness For A Particular Purpose
Sec. 16(1)(a) states that where the buyer, expressly or impliedly makes known to the seller the particular purpose for which the goods were bought, so as to show that the buyer relies on the seller’s skills and judgment, and the goods are of the description which it is in the course of the seller’s business to supply, there is an implied condition that the goods shall be reasonably fit for such purpose.

54. CONDITION OF IMPLIED TERMS AS TO QUALITY FOR A PARTICULAR PURPOSE
The Buyer, expressly or impliedly, makes known to the seller before or at the time of the making of the contract, the particular purpose the goods were bought.
The buyer relies on the skills and judgment of the seller
The goods are of the description which it is in the course of the seller’s business to supply
Specific goods which are bought not for its patent or trade name 4
CONDITION OF IMPLIED TERMS AS TO QUALITY FOR A PARTICULAR PURPOSE

55. The Buyer, expressly or impliedly, makes known to the seller before or at the time of the making of the contract, the particular purpose the goods were bought.
Ahmad bought a van. If the goods are not suitable as a van, there is a breach of the seller’s obligations because the goods do not meet the quality and the particular purpose for which it was baught.

56. Case Griffiths v. Peter Conway Ltd
A woman without making known her sensitive skin condition to the seller, bought a ‘haris tweed coat’. After wearing the coat, she got skin problems. She was not able to claim damages for breach of implied condition as to quality and fitness for purpose because the coat was reasonably fit for the purpose of all normal people

57. Lucy Mydlach v. Daimlerchrysler Corporation
This case is about the Pl who bought a used 1996 Dodge Neon manufactured by McGrath Brick, Nissan. The Pl. bought it on 20 June 1998.
After 2 weeks asked def for repairs
7 July 1998 asked def for repairs
15 July 1998 asked def for repairs
24 July 1998 asked def for repairs
31 July 1998 asked def for repairs
6 August 1998 asked def for repairs
21 August 1998 asked def for repairs
On 16 May 2001 Pl sued Def because the Def had breached the
contract. The Pl could not use the car as she
intended. The Def had failed to properly repair her car.

58. Court Held
Def. had breached the contract by selling a defective car. According to sec. 16(1)(a) of SOGA, it is an implied condition that goods must be reasonably fit for the purpose. The car cannot be used for the purpose intended by the buyer.

59. The buyer relies on the skills and judgment of the seller
Hasan enters Samad’s shop and purchase an oven. Upon using an oven, its cover came off causing injuries to Hasan. On examination it is discovered that there are defects in the installation of the cover. Hasan entitled to sue the seller because he had relied on the skills and judgment of the seller who knows his stock of good better.

60. The goods are of the description which it is in the course of the seller’s business to supply
Nabil has been in the business of suplying furniture for the past 10 years. Nabil enters into a contract with Basri to sell a television. Although Nabil has never been in the electricity business, the contract is subject to the implied condition as to the quality And fitness for purpose of the tv which he supplies.

61. Specific goods which are bought not for its patent or trade name
Ali buy a pair of Adidas shoes after he was informed by the seller that the pair of shoes suits all weather conditions. If he got skin disease because the shoes are only suitable in cold weather, the seller may be liable to Ali because Ali bought the shoes on the encouragement of the seller, not of his personal preference for the brand name.

62. Implied Condition As To Merchantable Quality Sec. 16(1)(b)
Where goods are bought by description from seller who deals in goods of the description, there is an implied condition that the goods shall be of merchantable quality and free from defect which ought to have been revealed from usual examination of the goods

63. Implied Condition As To Merchantable Quality
Merchantable quality means that the goods are capable of being resold on the description without reduction price.

64. Case Wilson v. Ricket, Cockerall & Co. Ltd.
The PL bought fuel which when used caused explosions. Upon examination, it was discovered that the fuel contained explosive substances.
The court held that the whole supply of the goods were not of merchantable quality because the goods could not be used for the purpose it was bought.

65. Implied Condition in a Contract For Sale Of Goods by Sample Sec. 17
Sec.17(1) – A contract of sale is a contract for sale by sample where there is a term in the contract express or implied to the effect.
Sec. 17(2) – Implied Condition
That the bulk shall correspond with the sample in quality.
(b) That the buyer shall have a reasonable opportunity of comparing the bulk with sample;
( C) that the goods shall be free from any defect
rendering them unmerchantable which would
not be apparent on reasonable examination of
the sample.

66. Example
Azam who intends to purchase 10kg. Of wheat flour at the price of RM3 a kg. Here if it proved that Azam and Rahim had intended the contract to be contrac t for sale by sample, Rahim must comply with certain implied conditions under sec,17(2)

67. The whole goods shall correspond with the sample in quality
This rule specifies that the bulk of the goods with the sample.
There for the buyer is entitle to reject the contract if the bulk of the goods do not correspond with the sample, or affirm the contract to be a contract and claim for damages.

68. TRANSFER OF TITLE

69. Not Entitled To Claim The Price Transfer Of Title to Third Party
Risk Of Property
Not Entitled To Claim The Price
Transfer Of Title to Third Party
Protected From Claim in case of Bankruptcy
IMPORTANT OF TOT

70. When Does TOT Occur Contract For Sale Of Unascertained Goods
Contract For The Sale Of Specific Goods
Goods Delivered ‘on sale or return’
Sec. 18 & Sec. 23
-Title in the goods does not pass unless until the goods are ascertained.
- Where the sale is by description and the goods are in a deliverable state or when appropriated.
- Where there are other condition to be satisfied the title in the goods does not pass when they are in deliverable state or when appropriated.
Sec. 20 & Sec 22
- Title in the goods passes at the time the parties intended it to pass
Sec. 24
Title is not transfer until:
i. The buyer signifies his acceptance to the seller; or
ii. The buyer does any act adopting the transaction; or
iii. The buyer retains the goods or does not give notice of rejection on expiration of the time fixed for the return of the goods. If no such ti me is fixed, on the expiration of a reasonable time

71. SALE BY A PERSON WHO IS NOT THE OWNER
Latin Principle “nemo dat quod non habet” A person who does not own title to goods cannot confer it on another person.

72. A seller who is not the owner
Sec. 27
A seller who is not the owner
A person who sell without the authority of the owner
Acquires no better title in the goods than the seller has, unless the owner, by conduct, is precluded in law from denying the seller’s authority
A person who sells without the consent of the owner

73. Case: Lim Chui Lai v. Zeno Ltd.
The respondents supplied raw materials to a contractor for sewage works under a contract with the Petaling Jaya authorities. The contractor faced some problems and the contract was terminated. The respondents went to the work site to recover the building materials, and discovered that they had been sold to the appellant. The respondents successfully sued the appellant. The Federal Court rejected the appellant’s appeal on the grounds that the contractor is not the owner of the buildings materials. Therefore, the contractor had no authority to sell and transfer the title in the goods to the appellant.

74. Circumstances In Which The Owner is Precluded From Denying The Buyers Rights
The SOGA 1957 provided circumstances where the seller who is not the owner of goods sell the goods, title in the goods effectively passes to buyer

75. 6 exceptions to ‘nemo dat quod non habet principle Estopel
Sale by mercantile Agent
Sale by one of joint Owner
Sale by a person in possession under voidable
Sale Of Goods in Possession of the Seller
Sale Of Goods in Possession of the buyer

76. Estopel The rule applies under either two circumstances, that is:
i. Where the owner expressly authorizes the seller to sell the goods; or
ii. Where the conduct of the person in possession of the goods appears to the buyer that the seller in possession of the goods is authorized by the owner of the goods.

77. So the owner is estopped from denying the authority of the seller to sell the goods.
It’s mean the buyer is entitled to the goods which he has bought.

78. Case NZ Securities & Finance Ltd v. Wrightcars Ltd
A agreed to sell B a motor car upon B’s payment by cheque, A delivered possession of the car to B. They agreed that the title in the goods would pass after receipt of payment by A. B subsequently sold the motor car to C. Before completion of this subsequent sale, C telephoned A’s office and was informed by A’s employee that B had paid for the motor car.
However upon presentation, the bank dishonoured B’s cheque and A repossessed the motor car from C. C successfully sued A because by the conduct of A’s employee in informing C that B had paid for the motor
car. A is estopped from denying B’s authority to
sell the motor car.

79. Syarikat Batu Sinar Bhd & Ors v. UMBC Finance Bhd & Ors(1990)
The second Pl. (Supreme Leasing) purchased a tractor from a seller and leased it to the first Pl (Sy. Batu Sinar). The first Def. (UMBC) had previously bought the same tractor from the seller and leased it to the second def. However, at the same time UMBC purchased it, the registration card to the tractor was in the seller’s possession and no certification was made in the card to show that the tractor then belonged to UMBC. The issue was on who was entitled to the tractor.
The court held that the failure by UMBC to take steps to make the certification in the registration card
precluded it from denying Supreme Leasing
now has the title to the tractor.

80. Sale By Mercantile Agent
Under agency laws, an agent may transfer the title in the goods of his principal provided that the agent has acted in the ordinary course of his business.

81. What is mean by mercantile agent
A person who ordinarily has authority to sell goods, to consign goods for the purpose of sale, to buy goods, or to raise money on the security of goods on behalf of his principal

82. Sec. 27
A Mercantile agent is with the consent of the owner, in possession of the goods, any sale made by him in the ordinary course of business of a mercantile agent shall be valid as if he were expressly authorised by the owner to sell the goods

83. So in this case the buyer who claim title in the goods must prove that he has acted in good faith and has not at the time of the contract of sale noticed that the seller has no authority to sell

84. Lowther v. Harris
Pl. wished to sell furniture together with certain tapestry, stored it in a house an engaged with an antique art dealer to be sold in the dealer’s house for him on commission. The def that came as a customer dealt with the dealer only and did not know anything of the Pl, but the dealer had no authority to complete a sale without the Pl approval. The dealer fraudelently sold and delivered the tapestry to def. The def acted in good faith in the usual course of business and had no notice of the Pl. title.

85. Held:
The dealer was a mercantile agent and not a mere servant or shop man.
The dealer was not in possession of the tapestry by virtue of his residence in the house, bit that he came into possession of it as mercantile agent, when he was allowed to take it away under color of the supposed sale to the def.

86. Sale By One Of Joint Owner
Sec. 28 – if one of the joint owners of the goods has possession of them by permission of the co-owners, the title in the goods is transffered to any person who buys them in good faith and has not at the time of the contract of sale noticed that the seller has no authority to sell the goods.

87. The seller must be in sole possession of the goods and the buyer must proved that at the time of the contract of sale, he has noticed the seller’s defect of authority to sell.
Exmp: Jamal and Saleh jointly owned a small lorry, which is kept at Jamal’s house, and Jamal uses it in his daily business. All the villagers consider the lorry is Jamal’s personal property as they have not known Saleh to be the joint owner. If Jamal sell the lorry to one
of his neighbours, the buyer receives
good title as he has acted in good faith.

88. Chia Kay Heng & Anor v. Chia Kim Siah & Anor
The Def. had purchased the property from the previous surviving joint owner, A, after the other joint owner, B, died and A had by operation of law become solely and absolutely entitled to the property. The Pl. contended that production and registration of the grant was necessary to prove the death of B and the property was free from first charge for payment of estate duty. They argued that production by the def. of a copy of the death certificate of B was not sufficient answer to apply for the contract of sale and that the failure to register the grant entitled them to a declaration that a
good title to the property had not been shown
in accordance with the term of the contract of sale.

89. Held:
A certified true copy of the death certificate was acceptable evidence of death of one joint owner, which under operation of law, under the rule of survivorship, caused the cessation of the joint tenancy and vested the entire interest in the property in the surviving joint owner.
The def. would have shown a good title at the original date for completion of the sale and purchase by producing a certified true copy of the death certificate of B. The Pl were therefore not entitled to the reliefs they wanted and were rightly ordered to pay liquidated damages for late completion.

90. Sale By A Person In Possession Under A Voidable Contract.
Sec. 29 stated that where the seller of goods has obtained possession thereof under a contract voidable under sec. 19 & sec. 20 of the contract Act, but the contract has not been rescinded and the goods are subsequently sold, the buyer acquires title to the goods provided he buys them in good faith and without notice of the seller’s defect of title

91. Car & Universal Finance Co. Ltd v. Caldwell
Caldwell, the owner of a jaguar car, was persuaded to sell and deliver a car to a rogue, who gave caldwell a car of a much lower value and a cheque which caldwell later found to be worthless. Caldwell reported to the police and asked the Automobile Association to recover his car. They found that the car had passed through several hands and eventually was acquired by the car and universal finance co. ltd.
The court held that even though the car universal finance purchased the car in good faith without notice of the real situation, since caldwell had acted speedily
in rescinding the contract with A, the
rogue, Caldwell was still entitled to the car.

92. Sale Of Goods In Possession Of The Seller
Sec. 30(1) states that where a person, having sold goods, continues or is in possession of the goods or the documents of title to the goods, and he or his mercantile agent subsequently sells or disposes of the goods or the documents of title, the subsequent buyer in good faith and without notice of the previous
sale receives good title to the
goods.

93. Pacific Motor Auction Pty Ltd v. Motor Credits (Hire Finance) Ltd
Pl. put several of his cars at a car dealer’s shop and made an agreement for the sale of the cars. Problem arose between them and the Pl. rescinded his agreement with the car dealer but he left them there. The car dealer then sold the said cars to the def without his consent. The Privy Council held that the def was entitled to the car he bought.

94. Sale Of Goods In Possession Of The Buyer
Sec. 30(2) refers to the sale of goods in which possession is transferred to the buyer although title in the goods has not passed to the buyer.
A buyer in possession of the goods or the documents of title thereof, with the consent of the seller, may pass good title to his buyer.

95. Case Newtons Of Wembley Ltd. Vs. Williams
The PL sold A a motor car and A received possession thereof. A paid by cheque for the purchase. A term of the contract was that the title in the goods would pass upon encashment of the cheque. However, before encashment of the cheque, A sold the motor car to B, who subsequently sold it to the Def. The Cheque was dishonoured and the Pl. attempted to recover the motor car from the Def. The court held that A was in possession of the goods with the PL. consent. A was therefore capable of transferring goods title to B and consequently B was also capable of transferring good title in the motor car to the Def.

96. Delivery Of Goods By The Seller

97. Sec. 31
states the duties of the seller to deliver the goods and the buyer to accept delivery thereof and to pay for them in accordance with the terms of the contract of sale.

98. Sec. 32
states that unless otherwise agreed, delivery of the goods and payment of the price are concurrent conditions. Nevertheless, parties to a contract of sale may by stipulation, vary their obligations such as delivery with payments by instalments, or prepayment before delivery or by some other arrangements.

99. What is meant by delivery
S.2 defines delivery as the voluntary transfer of possession from one person to another.

100. Seller delivers to the buyer a set of keys to a motorcycle,
DELIVERY
PHYSICAL
Actual delivery of the
Goods to the buyer.
A delivers a radio
set to B.
CONSTRUCTIVE
Delivery of something
Which represents
the goods sold.
Seller delivers to the buyer a
set of keys to a motorcycle,
Signifying delivery of the
motorcycle.

101. Delivery
Parties to a contract of sale are free to agree on the delivery.
All these may be agreed to by the parties in their contract of sale as provided in S.36(1).
Where the goods at the time of the contract of sale are in the possession of a third
party, there is no delivery by the seller to the buyer unless and until such third
party acknowledges to the buyer that he holds the goods on his behalf

102. Delivery
There is no obligation to deliver the goods unless and until the buyer demands delivery or the time of delivery is specified in the contract of sale.
Where the contract of sale involves delivery of the documents relating to the goods, delivery of such documents, for example the bill of lading, constitutes sufficient delivery of the goods.

103. Place Of Delivery – Sec. 36
(1) Whether it is for the buyer to take possession of the goods or for the seller to send them to the buyer is a question depending in each case on the contract, express or implied, between the parties. Apart from any such contract, good sold are to be delivered at the place at which they are at the time of the sale, and goods agreed to be sold are to be delivered at the place at which they are at the time of the agreement to sell, or if not then in existence at the place at which they are manufactured or produced.

104. ACCEPTANCE OF GOODS BY THE BUYER
S.31 states that it is the duty of the buyer to accept delivery of the goods and pay for them in accordance with the terms of the contract of sale.
S.13(2) states that where a contract of sale is not severable and the buyer has accepted the goods or part thereof, the breach of any condition by the seller can only be treated as a
breach of warranty.

105. What is meant by acceptance of the goods?
S.42 provides that the buyer is deemed to have accepted the goods when:
(i) He intimates to the seller that he has accepted the goods; or
(ii) The goods have been delivered to him and he does any act in relation to them which is inconsistent with the ownership of the seller, such as selling the goods to another; or
(iii) After the lapse of a reasonable time, the buyer retains the goods without intimating to
the seller that he has rejected them.

106. When is delivery complete?
S.41, where goods are delivered to the buyer which he has not previously examined, he is not deemed to have accepted them unless and until he has had a reasonable opportunity of examining them for the purpose of ascertaining whether they are in conformity with the contract.

107. ACCEPTANCE OF GOODS BY THE BUYER
S.41 seems to contradict with S.42 because, at times, it is a trade practice that the buyer delivers the goods to a subsequent buyer without the first buyer examining the goods.
Any damage or defects would only be discovered by the subsequent buyer.

108. SELLER’S REMEDIES AGAINST THE BUYER

109. There are four remedies available to the seller against the buyer.
Failure Of the Buyer to take delivery of the goods – Sec. 44
Failure of the buyer to Accept The Goods – Sec. 56
Failure of the Buyer to Pay For the Goods – Sec. 55
Additional Remedies – Sec. 46

110. Failure Of the Buyer to take delivery of the goods. Sec 44
The seller is entitled to claim compensation; and if it amounts to a breach of condition of the contract, the seller is entitled to a repudiation of the contract.

111. Failure of the buyer to Accept The Goods. Sec. 56
The seller may sue the buyer for damages; and if the title in the goods has passed, the seller is entitled to claim payment for the goods.

112. Failure of the Buyer to Pay For the Goods. Sec. 55
The seller is entitled to claim payment for the goods.

113. Additional Remedies Sec. 46
The right of unpaid seller are;
A lien on the goods where the seller is in possession of them
Right of stoppage of the goods in transit; and
Right of resale of the goods.

114. The seller is entitled to remedies from the buyer when
The buyer fails to take delivery of the goods
The buyer fails to accept the goods
The buyer fails to pay for the goods

115. Failure of the Buyer to Take Delivery – Damages and Repudiation of the Contract
S.44 stipulates that when the seller requests the buyer to take delivery, and the buyer does not, within a reasonable time after such request, take delivery of the goods, the buyer is liable to the seller for any loss occasioned by his neglect or refusal to take delivery, and also for a reasonable charge for the care and custody of the goods.

116. Failure of the Buyer to Take Delivery – Damages and Repudiation of the Contract
Where the neglect or refusal amounts to a breach of condition of the contract of sale, the seller is entitled to a repudiation of the contract.
A delay in the acceptance of delivery on the part of the buyer does not discharge the seller of his obligations to deliver at a date specified by the buyer, unless the delay amounts to a breach of condition of the contract which entitles the seller to a repudiation of the contract of sale.

117. Failure of the Buyer to Accept the Goods – Damages and Price for the Goods
Taking Delivery of the Goods
Acceptance of the Goods
May involve constructive delivery.
Example: Accepting the documents, such as the bill of lading, representing the goods.
Physically accepting the goods.
Example: Accepting the motorcycle
bought from the seller..

118. What happens when the buyer refuses to accept the goods from the buyer
What happens when the buyer refuses to accept the goods from the buyer? What recourse does the seller have?
S.56 stipulates that where the buyer wrongfully neglects or refuses to accept the goods, the seller may sue him for damages.
Under this circumstance, the seller is not bound to act to mitigate his loss; such as selling the goods to another because he
has no more title in the goods.

119. S.74(1) Contracts Act 1950
stipulates that the party who suffers by the breach of the contract is entitled to claim compensation for loss or damage which:
(i) naturally arose in the usual course of thing from the breach; or
(ii) which the parties knew, when they made the contract, to be likely to result from the breach of it.

120. Example
A contracts to buy of B, at a stated price, 50 gantangs of rice, no time being fixed for delivery. A afterwards informs B that he will not accept the rice if tendered to him. B is entitled to receive from A, by way of compensation the amount, if any, by which the contract price exceeds that which B can obtain for the rice at the time when A informs B that he will not accept it.

121. Failure of the Buyer to Pay for the Goods – Price for the Goods
S.55(1) stipulates that where under a contract of sale the title in the goods has passed to the buyer and the buyer wrongfully neglects or refuses to pay for the goods, the seller may sue him for the price of the goods.
Based on this provision, the seller, in general, may only sue for the price of the goods if the title in the goods has passed
to the buyer.

122. S.55(2) is an exception to the above provision.
S.55(2) stipulates that where under a contract of sale the price is payable on a specified day irrespective of delivery, the seller may sue the buyer for the price although the title in the goods has not passed.

123. Additional Remedies
There are additional remedies available to the seller?
These additional remedies are based on S.46(1).
These additional remedies are available to the unpaid seller.

124. RIGHT OF UNPAID SELLER

125. S.45 The seller of goods is an „unpaid seller:
(i) When the whole of the price has not been paid or tendered; or
(ii) When a bill of exchange or other negotiable instrument has been received as conditional payment, and the condition on which it was received has not been fulfilled by reason of the dishonour of the instrument.

126. Example
A gives B a cheque for payment of a computer which B supplies A. The payment is on condition that the cheque is honoured by the bank in favour of B. If the cheque is subsequently dishonoured, the condition of payment has not been fulfilled. B is, therefore, deemed an unpaid seller.

127. Based on S.46(1) and (2), the rights of the unpaid seller are
(a) A Lien on the Goods in His Possession
A lien depends on possession of goods. Based on the principle of lien, an unpaid seller in possession of the goods may hold such goods until payment.
This right may be enforced irrespective of whether or not the title in the goods has passed to the buyer.
If the title in the goods has not passed and the time for delivery is due, the seller may postpone delivery on the lien of the goods. Where the goods are in transit, the seller may stop the goods in transit, postpone delivery and claim a lien on the goods. All the three acts may be concurrently enforced if the title in the goods has not passed to the buyer.

128. Based on S.46(1) and (2), the rights of the unpaid seller are
The unpaid seller may hold the goods on lien in the following three circumstances:
(i) The goods have been sold without any stipulation as to credit and payment has not been received at a reasonable time;
(ii) Where the goods have been sold on credit, and the term of credit has expired; and
(iii) Where the buyer becomes insolvent (bankrupt).

129. Sec. 47,
Based on S.47, the seller may exercise his right of lien on the goods in his possession, notwithstanding that he is not the seller of the goods.

130. Case : Grice v Richardson
The seller, a trader, sold goods at his godown to the buyer and issued a delivery order in favour of the buyer. Subsequently, before acceptance of delivery, the buyer became insolvent.
The court held that in the circumstances where the goods were in possession of the seller pending the acceptance of delivery, the seller held the goods as a bailee (that is, a person who holds goods on behalf of the owners of the goods are bound to take reasonable care and custody of them), not as a seller. This means that the buyer may at any time orders that the goods be delivered to him. In the circumstance of the case, the seller was entitled to a
lien on the goods in his custody.

131. Sec. 48
S.48 states that where an unpaid seller has made part delivery of the goods, under a contract of sale which is not severable, 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.

132. Example
A buys 30 tonnes of wheat from B. Delivery is by six instalments of five tonnes each. The contract of sale is severable. When part of the goods have been delivered but not paid for while the other part in possession of the unpaid seller has been paid for, the seller has no right to lien on the goods in his possession.

133. 3 circumstances when unpaid seller loses his lien
When the seller delivers the goods to a carrier or other bailee for the purpose of transmission to the buyer without reserving the right of disposal of the goods.
(ii) The Buyer or His Agent Lawfully Obtains Possession of the Goods.
(iii) The Seller Waives His Right of Lien

134. When the seller delivers the goods to a carrier or other bailee for the purpose of transmission to the buyer without reserving the right of disposal of the goods.
In general, when the seller delivers goods to a carrier, unless the carrier is his agent, the seller loses his lien.
S.39(1) states that where the seller is authorised to send the goods to the buyer, delivery of the goods to a carrier is delivery of the goods to the buyer.

135. Example
When goods are delivered to the buyer, the sellerÊs carrier will be given the bill of lading stating that the goods are to be delivered on order of the seller or his agent. Here, the seller does not lose his lien, although the goods have been delivered to the carrier for the purpose of transmission to the buyer.

136. The Buyer or His Agent Lawfully Obtains Possession of the Goods
If the buyer or his agent has unlawfully obtained possession of the goods, the seller does not lose his lien.
Lawful possession is taking actual physical possession or constructive possession of the goods, or as when the buyer’s control over the goods under storage is acknowledged by the person in possession.

137. Example
A buys some sugar from B and is given a delivery order which is to be presented to the godown for collection of the sugar. Here, A has lawful possession when the godown accepts the delivery order.

138. The Seller Waives His Right of Lien
The seller’s conduct, besides his explicit statement, may bar him from exercising his right of lien.

139. Knights v Wiffen
An unpaid seller instructed his bailee to accept the delivery order produced by the subsequent buyer, who has bought the goods from the first buyer. The first buyer became insolvent.
The court held that the unpaid seller had lost his right of lien. The seller was barred from exercising his lien on the goods upon his instructions to the bailee to release the goods to the subsequent buyer.

140. Rights of Stoppage of the Goods in Transit
In general, when goods are delivered to a carrier, the seller loses his right of lien because the goods are deemed to have been delivered to the buyer.
Nevertheless, the Sale of Goods Act grants the right of stoppage of the goods in transit when the buyer becomes insolvent.

141. Sec. 50
the seller may resume possession of the goods and may retain them until payment of the price.

142. Rights of Stoppage of the Goods in Transit
If the seller has exercised his right of stoppage of the goods in transit, and the buyer is subsequently discovered to be not insolvent, the buyer is entitled to the delivery of the goods and damages from the seller for any losses caused by the stoppage.

143. Goods in transit need not be goods which are being transported
Goods in transit need not be goods which are being transported. Goods in the possession of a carrier are also goods in transit.
Based on S.51, the carrier is not the seller’s or the buyer’s agents.
If he is the seller’s agent, the goods are deemed goods in transit and if the buyer’s agent, the goods are deemed to have been delivered.
If part of the goods have been delivered, the right of stoppage on the balance of the goods
remains.

144. Sec. 52,
the unpaid seller may exercise his right of stoppage in transit either by taking actual possession of the goods, or by giving notice of his claim to the carrier or other bailee in whose possession the goods are.

145. When notice of the stoppage in transit is given by the seller, the carrier or other bailee shall redeliver the goods to the seller or any other person named in the notice.
The seller bears the costs of redelivery. Until and unless the costs of redelivery are paid to the carrier or bailee, they may withhold redelivery.

146. The seller’s right of stoppage in transit ends under four circumstances
When the buyer or his agent takes delivery of the goods from the carrier or bailee, base on sec. 51(1)
If the buyer or his agent obtains delivery of the goods before their arrival at the appointed destination, as stipulated in Sec. 51(2)
If after the arrival of the goods at the appointed destination, the carrier or other bailees acknowledges to the seller that he holds the goods on behalf of the buyer and continues in possession for them as his agent
Where the carrier or other bailee wrongfully refuses to deliver the goods to the buyer or his agent

147. Right of Resale of the Goods
Based on S.54(3), an unpaid seller who has exercised his right of stoppage in transit may resell the goods to another party.
The subsequent buyer acquires a good title to the goods, notwithstanding that he knows that the goods in possession of the seller arise from the exercise of the seller’s right of stoppage in transit.

148. Sec. 30(1),
a buyer in good faith and without notice of the previous sale acquires a good title to the goods from a person who has previously sold the goods but continues or is in possession of the goods.