LAW OF SALE OF GOODS

STATUTE : SALE OF GOODS ACT 1957

DEFINITION OF GOODS
 Section 2 of the Sale of Goods Act 1957:
Goods includes ‘…every kind of movable property
other than actionable claims and money and includes:
- Stock 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.

From the definition given, land is not regarded as

goods.
 Classification
of good
GOODS

Existing Future Goods

Goods

Specific Unascertained Specific Unascertained

Goods Goods Goods Goods
 DEFINITION OF ‘GOODS’ (CONT.)
• goods which form the subject of a contract of sale may
either be existing goods or future goods – section 6 of
SGA 1957
•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
•specific goods – goods identified and agreed upon at
the time a contract of sale is made
•ascertained goods – goods which, in a contract for the
sale of unascertained goods, have become identified
and agreed upon by the parties
DEFINITION OF ‘GOODS’ (CONT.)
•unascertained goods – those identified by
description only
•future goods – goods to be manufactured or
produced or acquired by the seller after the
making of the contract of sale: section 2 of SGA
1957
 “price” – means the money consideration for a sale of
goods
Price may be fixed in the following manner:
i. It may be fixed by the contract
ii. It may be left to be fixed in a manner agreed in
the contract
iii. It may be determined by the course of dealing
between the parties
iv. Where the price is not determined in any one of the
aforesaid ways, the buyer must pay a reasonable
price
what is a reasonable price is a question of fact
dependent on the circumstances of each particular case
– section 9, SGA 1957
Capacity- governed by Contract Act 1950 – above 18
years old.
Contract of Sale
Sale (Section 4 (1) of SOGA)
-A contract under which the property in the goods
is transferred from the seller to the buyer.
-If the buyer breaches the contract, for example
he fails to pay for the price; the seller’s proper
remedy is to sue for the contract price since the
ownership has passed to the buyer
Agreement to sell (Section 4 (3) of SOGA)
-A contract under which the transfer of the
property in the goods is to take place at future
time or subject to some condition thereafter to be
fulfilled.
-If the buyer breaches the agreement: the seller
may sue for damages.
-If the seller breaches the agreement: the buyer
has only personnel remedy for the damages
against the seller.
Formation of Contract of Sale
Section 5 (1):
A contract of sale is made by an offer to buy or sell
goods for a price and the accceptance of such an
offer. The contract of sale may provide for the
immediate delivery of the goods or immediate
payment of the price or both. However, both
delivery of the goods and payment may be
postponed.
Section 5 (2):
A contract of sale may be in writing or by word of
mouth, or partly in writing and partly by word of
mouth or may be implied from the conduct of the
parties.
 TERMS OF THE CONTRACT OF SALE
Section 12 (1):
Terms of the contract of sale refers to a stipulation in a
contract of sale with reference to goods which are subject
thereof.
i) Condition
Section 12 (2):
A stipulation essential to the main purpose of the
contract.
General Rule
A breach of condition gives right to the innocent party
to repudiate the contract and to claim damages.
ii) Warranty

Section 12 (3) A stipulation collateral to the main

purpose of the contract.

General Rule
A breach of warranty gives right to the innocent
party to claim for damages. He or she has no
right to reject the goods and treat the contract as
repudiated.
 IMPLIED TERMS
1. Implied condition as to time
Section 11 of Sale of Goods Act 1957 – time is not the essence of
the sale of contract unless specified. The effect to the contract of
sale is if the buyer fails to pay by an agreed date, the seller
cannot repudiate the contract automatically.
HARRINGTON V BROWNE (1917)
Court held: time of delivery is the essence of contract in
commercial transaction involving livestock. The reason is that a
seller of livestock would have to gather the animals, and
considerable problems would be caused in keeping the herd
together beyond the time when the buyer was to take delivery of
the animals.
2. Implied condition as to title
Section 14 (a)
Unless a different intention is shown in the contract, there
is 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.
Rowland v Divall [1923] 2 K.B 500
The plaintiff bought a car and after using it for some four
months, discovered that it was stolen. He had to return it to
the true owner and asked for return of purchase money.
Court held: the defendant had breached the condition as to
title and allowed recovery by the plaintiff of the full price
on the basis of total failure of consideration.
3. Implied condition that the goods correspond
with description

Section 15:
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.
VARLEY V WHIPP (1900)
A private individual who was selling a second-hand reaping
machine said that it had only cut 50 acres. On delivery, it proved
to be much older and was in a bad condition. Court Held: the
buyer could sue for the recovery of the price.

MOORE & CO V LANDAUER & CO [1921]

The plaintiffs entered into a contract to sell to the defendants a
certain quantity of Australian canned fruit, the goods to be
packed in cases containing 30 tins each. When the goods
arrived, it was found that about half of the goods were packed
in cases containing 34 tins only, instead of 30.
Held: the sale was by description and the description had not
been complied with. Thus the buyers were entitled to reject the
whole lot of the goods.
4. Implied condition as to fitness for particular
purpose
Section 16:
There would be an implied condition that the goods purchased
shall be reasonably fit for the purpose for which it was required
provided four (4) pre-conditions have been satisfied:
i) the purpose for which the goods are required is made known,
either expressly or impliedly to the seller at or before the time
when the contract is made
ii) the buyer relies on the seller’s skill or judgement
iii) the goods are of a description which it is in the course of the
seller’s business to supply
iv) if the goods are specific, they must not be sold under their
patent or trade name.
Griffiths v Peter Conway Ltd [1939] 1 All ER 685
Caveat Emptor – let the buyer beware – a
buyer should exercise care in making
purchase. If he does not, he must bear the
consequences. However, there are
exceptions to that.
CAMMELL LAIRD & CO. V MANGANESE BRONZE & BRASS CO LTD
(1934)
Facts: A firm of shipbuilders orders two ship’s propellers from MB to
be built according to the firm’s own design & specifications as to fit
a particular ship and its engine.
The propeller supplied complied with the specifications but did not
suit the ship’s engine.
Court held: the MB were liable for breach of an implied condition
of fitness for a particular purpose because part of the
manufacturing process was in the control of the blade
manufacturers, & the ship-owners were relying on the control of the
blade manufacturer’s skill to determine the correct thickness of the
blades. The buyer had informed the seller of the purpose for which
he required the goods and relied on the sellers’ skill and judgment
to provide them.
GRIFFITHS V PETER CONWAY LTD (1939)
A women with an unusually sensitive skin bought a Haris
Tweed coat without disclosing that fact to the seller. It
turned out that the goods afflicted her health. Court
held: the woman could not succeed under this section, as
the coat would not harm a normal person.
5. Implied condition that the goods must be of
merchantable quality
Section 16 (1) (b):
Where goods are bought by description from a seller who deals
in good of that description (whether he is the manufacture or
producer or not) there is an implied condition that the goods shall
be of merchantable quality provided that if the buyer has
examined the goods, there shall be no implied condition as
regards defects which such examination ought to reveal.

- Merchantable quality means that the goods sold are fit for
the particular use to which they were sold. If they are defective
for the purpose, they are unmerchantable.
David Jones v Willis [1934] 52 CLR 110
DAVID JONES V WILLIS (1934)
It was held that a pair of shoes that heels came
off on the third occasion was unmerchantable. The
goods were defective for the purpose for which
they were sold.
6. Implied condition that the goods must be in accordance
to the sample when there is a sale by sample.
Section 17 (1):
A contract of sale by sample is where there is a term in the
contract express or implied to that effect.
- Samples are usually used in the sale of bulk goods like rice,
flour and in household items like tiles, floor covering, carpets and
so forth.
Section 17 (2):
There is an implied conditions for a contract of sale by sample
that:
a) the bulk shall correspond with the sample in quality
b) the buyer shall have reasonable opportunity of comparing the
bulk with sample
c) the goods are free from any defect rendering them
unmerchantible, which would not be apparent on reasonable
examination of the sample.
Godley v Perry [1960] 1 WLR 9
DRUMMOND V VAN INGEN (1887)
The cloth supplied by the seller was equal to samples
previously examined. However, there was a laten defect
not discoverable by a reasonable examination. Court
held: the seller was held for breach of the subsection
because even though the bulk corresponded with the
sample, there was a latent defect rendering the goods
unmerchantable. The buyer was entitled to reject the
goods.
7. Implied warranty that the buyer shall have and enjoy
quiet possession of the goods
Section 14 (b):
Unless a different intention is shown, there is an implied
warranty that the buyer shall have and enjoy quiet
possession of the goods.
Microbeads A.G v Vinhurst Road Marking Ltd [1875] 1 WLR
218
Breach of the section- because the buyer did not enjoy the
future quite enjoyment if the goods. Claim was ,made by
the owner of a patent affecting the goods.
Example:
Hadi sold his car to his Housemate; Amin in order to pay
back his bank loan. Now the car is belong to Amin.
However, when Amin left his car at his home, Hadi will
drive his former car without Amin’s permission. Hadi’s act
is consider as breach the ‘Implied warranty as to quite
possession’ – reason: only Amin will received the full
ownership and possession of the car not Hadi.
8. Implied warranties that the goods are free from
encumbrances
Section 14 (c):
There is an implied warranty that the goods shall be free from any
charge 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.
STEINKE V EDWARDS (1935)
The plaintiff who had bought the car paid off the tax owing and
sought to recover it from the defendant-seller. Court held: 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
encumbrance’. Therefore, the claim was allowed for breach of the
implied warranty.
Privity of Contract

- In the contract of sale, only the buyer

and the seller has a right to sue each other
when there is a breach of contract.
- The terms of the contract are only
binding on the contracting parties.
 TRANSFER OF PROPERTY IN THE GOODS
Differences between Property in Goods and
Possession
Property in goods refers to title or ownership.
Possession refers to physical control.
General Rule:
Section 26:
Unless otherwise agreed, goods remain at seller’s risk
until the property is transferred to the buyer, but
when the property is transferred to the buyer, the
goods at the buyer’s risk irrespective of whether
delivery has been made.
 WHEN DOES PROPERTY IN GOODS PASS?
1. Section 18:
When there is a contract for the sale of unascertained goods,
no property in goods is transferred to the buyer unless and
until the goods are ascertained.
2. Section 19 (1)
The property in goods is transferred to the buyer at such
time as the parties to the contract intend it to be transferred
Section 19 (2)
For the purposeof ascertaining the intention of the parties
regard shall be had tothe terms of the contract, the conduct
of the parties and the circumstancesof the case.
3. Sec 20. Specific goods in a deliverable state
Where there is an unconditional contract for the sale of
specific goods in a deliverable state the property in the
goods passes to the buyer when the contract is made, and it
is immaterial whether the time of payment of the price, or the
time of delivery of the goods, or both, is postponed.

4. Sec 21. Specific goods to be put into a deliverable state

Where there is a contract for the sale of specific goods and
the seller is bound to do something to the goods for the
purpose of putting them into a deliverable state, the
property does not pass until such thing is done and the buyer
has notice thereof.
5. Sec 22. Specific goods in a deliverable state when
the seller has to do anything thereto in order to
ascertain price
Where there is a contract for the sale of specific goods
in a deliverable state, but the seller is bound to weigh,
measure, test, or do some other act or thing with
reference to the goods for the purpose of ascertaining
the price, the property does not pass until such act or
thing is done and the buyer has notice thereof.
6. Sec 23. Sale of unascertained goods and appropriation
(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 the seller with the assent of the buyer or by
the buyer with the assent of the seller, the property in the
goods thereupon passes to the buyer.
Such assent may be express or implied, and may be given
either before or after the appropriation is made
7. Section 24. Goods sent on approval or "on sale or return"
When goods are delivered to the buyer on approval or "on sale
or return", or other similar terms, the property therein passes to the
buyer—
(a) when he signifies his approval or acceptance to the seller or
does any other act adopting the transaction;
(b) if he does not signify his approval or acceptance to the seller
but retains the goods without giving notice of rejection, then, if a
time has been fixed for the return of goods, on the expiration of
such time, and if no time has been fixed, on the expiration of a
reasonable time.
 PASSING OF RISK
Section 26:
Unless otherwise agreed, goods remain at seller’s risk until the
property is transferred to the buyer, but when the property is
transferred to the buyer, the goods at the buyer’s risk irrespective
of whether delivery has been made.

General Rule:
risk passes when the property in the goods passes irrespective of
whether delivery has been made unless otherwise agreed.
Exception:

Section 26
if the delivery of goods has been delayed through the
fault of the buyer or seller, the risk of the goods would
be borne by the party in fault as regards to any loss
which might not have occurred but for such fault.
Demby Hamilton & Co.Ltd v Barden [1949] 1 All ER 435
 TRANSFER OF TITLE
Section 27 (1)
Subject to this Act and of any other law for the time being in
force, where goods are sold by a person who is not the owner
thereof, and 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, ….

The maxim ‘Nemo Dat Quod Non Habet’

----‘no one can give a better title than he himself possesses’
 Exceptions to the rule

1. Estoppel
Section 27
Subject…,unless the owner of the goods is by his conduct precluded
from denying the seller’s authority to sell:
- The buyer obtains a good title in the case where the owner
by his conduct, makes it appear to the buyer that the person who
sells the goods has authority to do so and the buyer relies on that
conduct. By that, the owner is precluded by his conduct from
denying the seller’s authority to sell.
N.Z. SECURITIES V WRIGHT CARS LTD (1925)
This situation where B given a dishonored cheque to the
A for buying his car. A try to get back his loses. The car
were sold by B to C. then, A repossessed the car and C
sue A for conversion. In court held: C successful in
claiming that A was precluded by his conduct from
denying B’s authority to sell. Therefore, the title has
passed to C.
2. Sale by Mercantile Agent

Proviso to section 27:

Provided that where a mercantile agent is, with the
consent of the owner, in possession of the goods or of a
document of title to the goods, any sale made by him
when acting in the ordinary course of business of a
mercantile agent shall be as valid as if he were
expressly authorized by the owner of the goods to make
the same; provided that the buyer acts in good faith
and has not at the time of the contract of sale notice that
the seller has no authority to sell.
 Conditions:
i) The mercantile agent is in possession of the goods or
of a document of title to the goods.
ii) The mercantile agent made a sale when acting in the
ordinary course of business.
iii) The buyer has no knowledge that the mercantile
agent has no authority to sell and he bought the goods
in good faith.
OPPENHEIMER V ATTENBOROUGH & SON (1908)
It was held that the phrase ‘in the customary course of his
business means the person must act ‘in such a way that a
mercantile agent would act; that is to say, within business
hours, at a proper place of business, and in other
respects in the ordinary way in which a mercantile agent
would act…’
3. Sale by one of joint owners

Section 28
If one of several joint owners of goods has the sole possession of
them by permission of the co-owners, the property in the goods is
transferred to any person who buys them of such joint owner in
good faith and has not at the time of the contract of sale notice
that the seller has no authority to sell.
Conditions:
i) one of the several joint owners has the sole possession of the
goods by permission of the co-owners; and
ii) the buyer acts in good faith and at the time of the contract, he
has no notice that the seller has no authority to sell.
4. Sale under a voidable title

Section 29
Where the seller of goods has obtained possession
thereof under a contract voidable under section 19 or
section 20 of the Contract act 1950, but the contract has
not been rescinded at the time of the sale, the buyer
acquires a good title to the goods provided he buys
them in good faith and without notice of the seller’s
defect of title.
5. Sale by a seller in possession after sale

Section 30 (1)
Where a person, having sold goods, continues or is in possession
of the goods or of the documents of title to the goods, the
delivery or transfer by that person or by a 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 and without notice of the previous sale shall
have the same effect as if the person making the delivery or
transfer were expressly authorized by the owner of the goods to
make the same.
PACIFIC MOTOR AUCTIONS PTE LTD V MOTOR CREDITS (1965)
(Pacific Motor), where the plaintiffs became owners of several
cars in the possession of dealer and under a ‘floor plan
agreement’, the dealer would retain the cars and sell them in the
same way as it sold other cars. Whenever a car covered by the
plan was sold, the dealer would account to the plaintiffs for the
money received. When the plaintiffs discovered that the dealer
was in financial difficulties, they revoked his authority to sell.
Nevertheless, the dealer went ahead and sold a number of
vehicles. The question was whether the buyer obtained a good
title as the dealer had no authority to sell. The court held that the
situation feel under this exception as the sellers was in continuous
possession after the sale.
6. Sale by a buyer in possession

Section 30 (2)
Where a person, having bought or agreed to buy goods, obtains,
with the consent of the seller, possession of the goods or the
documents of title to the goods, the delivery or transfer by that
person or by a 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 and
without notice of any lien or other right of the original seller in
respect of the goods shall have effect as if such lien or right did
not exist.
NEWTON OF WEMBLEY LTD V WILLIAMS (1965)
Refer to the case in The plaintiffs sold a car to A who paid by
cheque. Although he was given possession, it was agreed that the
property would not pass until the cheque was honoured. The
cheque was dishonoured but A has resold the car to B who
bought it without knowledge of the position. B resold it to the
defendant. The plaintiffs tried to recover the car from him.
The court held that 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. The defendant was,
therefore, entitled to keep the car.
PERFORMANCE OF THE CONTRACT

Section 31

It is the duty of the seller to deliver the goods and

of the buyer to accept and pay for them in
accordance with the terms of the contract of sale.
Delivery

Section 2 of SOGA 1957:

Delivery means voluntary transfer of possession from one
person to another. This definition was further clarified under
section 33.

Section 33
Delivery of goods sold may be made by doing anything
which the parties agree shall be treated as delivery or which
has the effect of putting the goods in the possession of the
buyer or of any person authorized to hold them on his behalf.
Effects of Non- Delivery

If the seller wrongfully neglects or refuses to deliver the goods to

the buyer, the buyer may sue the seller for damages for non-
delivery.

Place of Delivery

Section 36 (1)
‘…goods 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’.
Time of Delivery

Section 36 (2)
Where under the contract of sale the seller is bound to
send the goods to the buyer, but no time for sending
them is fixed, the seller is bound to send them within a
reasonable time.
Delivery of Wrong Quantity

Section 37 (1)
Where the seller delivers to the buyer a quantity of goods less
than he contracted to sell, the buyer may reject them, but if the
buyer accepts the goods so delivered he shall pay for them at the
contract rate.
Section 37 (2)
Where the seller delivers to the buyer a quantity of goods larger
than he contracted to sell, the buyer may accept the goods
included in the contract and reject the rest, or he may reject the
whole. If the buyer accepts the whole goods so delivered he shall
pay for them at the contract rate.
Acceptance

The buyer is deemed to have accepted the goods

when he intimates to the seller that he has accepted
them,, or when 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, or when,
after the lapse of a reasonable time, he retains the
goods without intimating to the seller that he has
rejected them.
 Remedies for breach
i) Seller’s remedies
Remedies for unpaid seller

Unpaid seller
Section 45 (1)
a) when the whole of the price has not been paid
or tendered:
b) 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 or otherwise.
Rights of unpaid seller

i) Right of Lien

Section 46 (1)
- only applicable to the ‘unpaid seller’ who is still in
possession of the goods. The seller in this case is entitled to
retain possession until payment or tender of price by the
buyer.
Section 48: Part Delivery
Where an unpaid seller has made part delivery of the
goods, he may exercise his right of lien on the remainder,
unless such part delivery has been made under such
circumstances as to show an agreement to waive the lien.
ii) Stoppage in Transit
Section 46 (1)(b)
In case of the insolvency of the buyer a right of stopping the
goods in transit after he has parted with the possession of
them;
Section 50: Right of stoppage in transit
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 of
transit, and may retain them until payment or tender of the
price.
Goods in transit.
Section 51: Duration of transit
(1) Goods are deemed to be in course of transit from the time
when they are delivered to a carrier or other bailee for the purpose
of transmission to the buyer, until the buyer or his agent in that
behalf takes delivery of them from such carrier or other bailee.
 iii) Right to Resell
Section 46 (1)(c)
General rule
Section 54 (1):Subject to this section, a contract of sale is not rescinded
by the mere exercise by an unpaid seller of his right of lien or stoppage
in transit.
Section 54 (2):Where the goods are of perishable nature, or where the
unpaid seller who has exercised his right of lien or stoppage in transit
gives notice to the buyer of his intention to resell, the unpaid seller
may, if the buyer does not within a reasonable time pay or tender the
price, resell the goods within a reasonable time and recover from the
original buyer damages for any loss occasioned by his breach of
contract; but the buyer shall not be entitled to any profit which may
occur on the resale. If such notice is not given, the unpaid seller shall not
be entitled to recover such damages and the buyer shall be entitled to
the profit, if any, on the resale
-The right to resell also applicable in the case where the seller expressly
reserves a right of resale in the case the buyer should make default
as stated under section 54 (4).
Failure of buyer to take delivery
Section 44
When the seller is ready and willing to deliver the
goods and requests the buyer to take delivery, and the
buyer does not, within a reasonable time after such
request, take delivery of the goods, he 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.

Failure of buyer to accept the goods

Section 56: Damages for non-acceptance
Where the buyer wrongfully neglects or refuses to
accept and pay for the goods the seller may sue him for
damages for non-acceptance.
ii) Buyer’s Remedies

i) Damages

Section 57: Damages for non-delivery

Where the seller wrongfully neglects or refuses to deliver the goods to the
buyer, the buyer may sue the seller for damages for non-delivery.

ii) Specific Performance

Section 58 of SOGA 1957.

Upon the application made by a buyer the court by its decree direct that
the contract shall be performed specifically, without giving the defendant
the option of retaining the goods on payment of damages. The seller will
be ordered by the court to deliver the specific or ascertained goods.
iii) Remedy for breach of warranty

Section 59 (1)
Where there is a breach of warranty by the seller, or where the
buyer elects or is compelled to treat any breach of a condition on
the part of the seller as a breach of warranty, the buyer is not by
reason only of such breach of warranty entitled to reject the
goods; but he may
a) set up against the seller the breach of warranty in diminution
or extinction of the price; or
b) sue the seller for damages for breach of warranty.
iv) Action under Tort

Detinue
Detinue is the wrongful detention of chattels belonging
to the buyer after their return has been demanded by
the buyer. For example, where the property in goods
has passed to the buyer and the seller withholds the
goods although the buyer demands for them.
Conversion.
Conversion occurs when the seller dealing with the goods
in a manner inconsistent with the ownership of the buyer.
For example, the seller wrongfully sells the goods to a
third party although the property in the goods has
passed to the buyer.