Sale of Goods [Sales of Goods Act 1957]

All about transaction and transferring the goods between the seller and the buyer.

What is “Goods”?
Under section 2 of sale of goods act 1957, every kind of goods that agreed to severed before sale or under
the contract of sale such as movable property, stock and shares, growing crops and grass and things that
attached to the land and become part of the land.

Types of Goods: section 6(1) of SOGA

1. Existing Goods
Goods that are physically existed and belong to the seller when the time of the contract of sale.

Specific Goods Unascertained Goods

- Are the goods that agreed between
the buyers and the seller and the
goods are being identified when the
time of the contract of sale is made.
- Are the goods that agreed by both
buyers and seller, but the goods are
not specifically identified in the
contract.
- Such as a bag of sugar, which is
difficult to define how much of the
sugar whenever the buyer will be
received.

2. Future Goods
- Goods that are not yet existed and not yet belong to the seller when the contract is made. It is only
produced when acquired by the seller after the contract was made, under s.2 of SOGA. The
example of future goods are cars or pre-order products which are not yet physically existed in the
market.

What are Contracts of Sale of Goods?

- Under s.4(1) of SOGA 1957, it is a contract where the seller agrees to transfer the property in goods
to the buyer with a price and the goods have to be available.

How this contract made?

- There must be a sell or buy the goods
- There must be an acceptance to the offer
- There must be types of payment method agreed by both seller and buyer
- May be made in word from mouth, written or implied of the parties
- Capacity to buy and sell
Time of payment
- Under section 11 of SOGA 1957, time of the payment is essence between the buyer and the seller,
but it is not essence to the contract in which means that the stipulations of time are not necessary
stated in the contract.

Pricing
- Under s.4(1) of SOGA 1957, the goods must be sold with a price and the price is defined as the
money consideration for a sale of goods (s.2). The price of the goods may be fixed depends on the
amount stated in the agreement with agreed by both seller and buyer under section 9(1). Besides,
under s.9(2), the price can be ascertained in a number of ways as well, but it must be with
reasonable price based on the circumstance of the case.

Terms of the contract of sale of good

1. Must be understood by both parties
2. Can be express or implied term
3. Must determine the intention of both parties
4. Classified into 2: condition and warranties

Terms of contract
Under s.12(1) of SOGA 1957, the terms of the contract such as conditions and warranties are free to put in
a contract by both parties which are the seller and buyer, and it is based on the construction of the
contract under s.12(4) of SOGA 1957. Besides, the terms of the contract can be either in express or implied
depends on the favor of the seller and the buyer or the operation of law.

What is warranty?
- Under s.12(3) of SOGA 1957, warranty is an additional stipulation of a contract and a protection for
the buyer to claim for the damages of the goods, but he has no right to terminate the contract
made when there is a breach. When the buyer has accepted and received the possession of the
goods, he has no right to reject the goods.

What is condition?
- Under s.12(2) of SOGA 1957, condition which is a fundamental stipulation to a contract, and it
tends to give the right for the parties to terminate the contract or asked for the compensation
when there is a breach.

Exception
- On the other hand, there is an exception where the buyer decides to waive the breach of condition,
it can be also treated as breach of warranty under s.13(1) of SOGA 1957.
 Tham Cheow Toh v Associated Metal Smelters Ltd 1971
The defendants promised to deliver the specific requirements but later he failed to fulfil, and this
has fall under a breach of condition of the contract. Later than the plaintiff decides to waive it and
choose to treat breach of condition as breach of warranty, which he does not have the right to
terminate the contract but only claim for the damages.

- When after the buyer accepted the goods, the breach of condition can be fulfilled by the seller and
the law recognized that the property of the goods has transferred to the buyer unless there is a
term of contract express or implied to that effect under s.13(2) of SOGA 1957.

Implied condition as to title

- Under s.14(a) of SOGA 1957, the seller has the right to sell the goods if he has the ownership or the
title of the goods, and the buyer entitled to reject the goods and recover the price if the title turns
out to be defective.
- For example, Person A has bought a car from person B which he has no title to the car. After person
A has used for 3 months, and the legal owner of the car demands it back from person A. In this
case, the court will be held that person A must return the car back to the actual owner. Besides, he
is entitled to sue person B and claim for the purchase price from him.

- Rowland v. Divall [1923] 2 KB 500

Fact: Mr. Rowland bought a car from Mr.Divall in good faith. After then, Mr. Rowland decided to
sell the car and he realized that the car was a stolen car, and he had no idea about this matter, he
was instructed to return the car to the owner. Besides, he wanted to claim for the whole purchase
price from Mr. Dival.
Held: Mr. Rowland has to return the car to the original owner, and there is a breach of implied
condition as to title by the seller. Besides, Mr. Divall has no right to sell the car to Mr. Rowland as
well. The item must be sold under the possession of the one who sells. On the other hand, Mr.
Rowland can claim back the whole purchase price from Mr. Divall too.

- Butterworth v Kingsway Motors Ltd [1954] 1 WLR 1286

A hire purchase company borrowed a car to a woman, and she thought she had the right to sell to
other. After that, she sold the car to another person in a good faith. After the car passed through
several hands, Kingsway Motors wanted to sell the car to Butterworth with a price of ₤ 1,275 under
a hire-purchase contract with a finance company, and after he had used for nearly one year, he
received a notice from a finance company for returning the car to them.
Held: Kingsway Motors has no right to sell the car and they are not the owner of the car.
Butterworth can recover the whole of the purchase price from KM.

Implied condition must correspond with description

- Under section 15 of SOGA 1957, the contract for the sale of goods must be correspond with the
description. The goods sold must same as the sample of the goods displayed. For instance, if the
person sells the goods by description and published to a catalogue or newspaper advert, then the
actual goods have to correspond to that description and the goods must have the same quality as
the sample.
 - Beale v Taylor [1967] 3 All ER 253
Taylor has published an advertisement of a car with a description as “white, 1961, herald
convertible….”. After Beale has seen the advertisement and bought the car without testing because
he has no license. He bought the car with good faith from Taylor and believe the car is model 1961.
After he got his license, he found unsatisfactory of the car and it is not same as the advertisement
published by Taylor.
Held: The sale was not sale by description. Therefore, he can sue Taylor and entitled to claim for the
damages.

- Baker v Asia Motor Co. Ltd [1962] MLJ 425

A statement that made by the defendant that the car was a 1958 model and it was also a term of
the contract. In fact, it was 1953 model.
Held: The plaintiff was entitled to claim for the damages. It was a breach of express term of the
contract since it had stated in the contract, but it did not mention that whether express term of a
contract was a warranty or a condition. In this case, the plaintiff only allowed for the damages and
deemed it as warranty.

Implied condition as to fitness for particular purpose

- Under section 16 of SOGA 1957, the goods must be reasonably fit for the particular purpose
described by the seller. But these three conditions must fulfilled which are the buyer has to rely on
the skills of the seller, the particular purpose of the goods must be informed expressly or implied
from the buyer to the seller to ensure the goods described and provided by the seller are able to
satisfy himself under section 16(1)(a).

- For example, Person A asked the suggestion of the medicine for diabetes and also, he is allergic to
some antibiotics from the pharmacist. After he intake the medicine realized that he started to get
fever due to the allergic to the antibiotic offered by the pharmacist. The pharmacist is liable for
breach of condition as to fitness because person A has relied the skill and judgement of the
pharmacist. Person A is entitled to reject the medicine and get the refund of the price paid.

Implied condition as to merchantable quality

- Under section 16 (2) of SOGA 1957, while the seller sold the goods to the buyer with description
shall be of merchantable quality in which must fit to the particular use.

- Example: X bought a mouse from a dealer. While after he inserted the battery into the mouse, but
it is not functioning. X is entitled to claim damages because the mouse he bought form the deller is
not of merchantable quality.

- On the other hand, under section 16 (2) of SOGA 1957, if the buyer has examined the goods before
purchased, there shall no implied conditions for that unless the contract has stated for the
additional warranty for the goods.
Implied condition in a sale by sample
- Under section 17(1) of SOGA 1957, sample is a free-trial of the goods for the seller to describe the
goods to the buyer. A term of contract of sale by sample can be either express or implied to that
effect.

- Under section 17(2) of SGA 1957, the implied condition for a contract of sale must fulfill these three
conditions which are:
a) The goods must be same quality as the sample given.
b) The buyer is entitled to comparing the bulk with sample.
c) The goods must be free from any defects, if there is a latent defect in which the goods have
been discovered when in use, the seller is liable for that. On the other hand, the seller will not
be liable for apparent and visible defects in which could be easily discovered by a person.

- Example: Person A bought a laptop form a seller and before that he noticed there is a problem for
the keyboard of the laptop, but he does not care about it. After then, he realized he could not even
type while using the laptop. In this case, the seller will not be liable because of the visible defects of
the laptop which can be easily discovered.

Implied Warranty as to a quiet possession

Quiet possession means after the buyer bought the goods and he must allow to use the goods without any
interference and entitled to claim for damages from the seller.
Under section 14(b)(1) of SOGA, the buyer can enjoy quiet possession of the goods if there is an implied
warranty.

Implied warranty free from encumbrances

Under s.14(c) of SOGA 1957, the seller is liable for a breach of warranty and the buyer is entitled to claim
for the damage.