SALE OF GOODS

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SALE OF GOODS by Mind Map: SALE OF GOODS

1. Definition of Goods

1.1. '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' - section 2, SOGA 1957

1.1.1. It does not include : - land - things attached to land (though it does include timber and growing crops which are to be harvested before sale or under the contract of sale) - choses in action or rights, e.g debts, negotiable instruments and patents - services , such as work and labour or repair

1.2. Classiifications of goods

1.2.1. 1. Existing 2. Future 3. Specific 4. Unascertained 5. Ascertained

1.2.1.1. Existing goods

1.2.1.1.1. 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.

1.2.1.2. Specific goods

1.2.1.2.1. Goods identified and agreed upon at the time a contract of sale is made.

1.2.1.3. Ascertained goods

1.2.1.3.1. Goods which in a contract for the sale of uncertained goods , have become identified and agreed upon by the parties .

1.2.1.4. Unascertained goods

1.2.1.4.1. Those identified by description only

1.2.1.5. Future goods

1.2.1.5.1. Goods to be manufactured or produced or acquired by the seller after the making of the contract of sale : section 2 of SOGA 1957

1.2.2. Goods which form the subject of a contract of sale may either be existing goods or future goods - section 6 of SOGA 1957

2. The contract of sale

2.1. A contract whereby the seller transfers or agrees to transfer the property in goods (the ownership) to the buyer for a price (a money consideration) - section 4(1) of SOGA 1957

2.2. The must be: 1) goods 2) money consideration (price) 3) transfer of property

3. Agreement to sell

3.1. 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 there after to be fullfilled - section 4(3) SOGA 1957

3.2. An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred - section 4(4) SOGA 1957

3.3. New Topic

4. Formation of the contract

4.1. Formation

4.1.1. A contract of sale is made by an offer to buy or sell goods at a price and by the acceptance of such ab offer - sec 5(1) SOGA 1957

4.1.2. The contract may provide for the immediate delivery of the goods or the immediate payment of the price or both

4.1.3. Delivery or payment may even be by installments - sec 5(1) SOGA 1957

4.1.4. Price - the money consideration for the sale of goods

4.2. Formalities

4.2.1. A contract of sale may be made 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 - sec 5(2) SOGA 1957

4.3. Price

4.3.1. 1) it may be fixed by the contract. 2) it may be left to be fixed in a manner agreed in the contract. 3) it may be determined by the course of dealing between the parties. 4) where the price is not determined in any one the aforesaid ways, the buyer must pay a reasonable price. What is a reasonable price is a question of fact dependent on the circumtances of each particular case - sec 9 SOGA 1957

4.4. Capacity to contract

4.4.1. The legal principles and the law on contract governing capacity in ordinary contract law apply to contracts for the sale of goods

5. Conditions and warranties

5.1. Where it is possible to discover , by injection the quality and condition of the goods and their fitness for a particular purpose, the buyer will generally lose any legal rights that may have existed against the seller if the goods are not satisfactory.

5.2. A stipulation in a contract of sale with reference to goods which are the subject there of may be a condition or a warranty - sec 12(1) SOGA 1957

5.3. 1) condition - section 12(2) - a stipulation essential to the main purpose of the contract, the brench of which gives rise to a right to treat the contract as repudiated

5.4. A breach of condition entitles the innocent party ti repudiate the contract.

5.5. Where a stipulation is a condition or warranty depends in each case on the construction of the contract. The stipulation may be a condition, thought called a warranty in the contract - sec 12(4) SOGA 1957

5.6. However, in the following circumstances, the innocent party cannot repudiate the contract but can merely claim damages : - where the buyer waives the condition - where the buyer elects to treat the breach of conditions As breach of warranty and claims damages only - where the contract of sale is not severable and the buyer has accepted the goods or part thereof, the breach if any condition must be accepted As a breach of warranty unless otherwise provided in the contract

5.7. Warranty

5.7.1. A warranty is 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 contracts As repudiated - SOGA 1957

5.8. Stipulation as to time

5.8.1. Unless a different intention appears from the terms of the contract, stipulations as to time of payment are not deemed to be of the essence with respect to the contract of sale - sec 11 SOGA 1957

5.9. Implied terms

5.9.1. Sale of Goods Act 1957, sections 14 to 17: a) Implied condition as to title. b) Implied warranty that buyer shall have quiet possession of the goods. c) Implied warranty that the goods are unencumbered. d) Implied condition that in a sale of goods by description, the goods must correspond with the description. e) Goods must be reasonably fit for purposes for which the buyer wants them . f) Goods must be of merchantable quality

5.9.1.1. In a contract for the sale of goods by sample, implied conditions are as follows: - the bulk shall correspond with the sample in quality. - the buyer shall have a reasonable opportunity of comparing the bulk with the sample before acceptance. - the goods are free from the defect rendering them un merchantable which would not be apparent on reasonable examination of the sample

5.9.2. Implied Warranty that the Buyer shall have and Enjoy Quiet Possession of the Goods

5.9.2.1. in a contract 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 and enjoy quiet possession of the goods – section 14(b), SOGA 1957 - a breach of this stipulation will not entitle the innocent party to repudiate the contract

5.9.3. Implied Condition as to Title

5.9.3.1. there is an implied condition that the seller: has the right to sell the goods in the case of a sale . - In the case of an agreement to sell, will have the right to sell the goods when the time comes for the buyer to become the owner (that is, by the time property is to pass) a breach of this condition entitles the buyer to repudiate the contract – section 14(a) SOGA 1957

5.9.3.1.1. Case:Rowland v Divall [1923] 2 KB 500

5.9.4. Implied Warranty that the Goods are Unencumbered

5.9.4.1. there is an implied warranty that the goods are free from any charge in favour of a third party who is unknown to the buyer; for example, storage charges which have to be paid before the goods can be collected – section 14(c) of SOGA 1957

5.9.5. Condition that in a Sale of Goods by Description, the Goods Must Correspond with the Description

5.9.5.1. where the sale is by sample as well as by description, it is not sufficient that the bulk of the goods correspond with the sample if the goods do not also correspond with the description – section 15, SOGA 1957 - see Lau Yaw Seng v Cooperativa Ceramica D’Imola, Nagurdas Purshotumdas & Co v Mitsui Bussan Kaisha Ltd, Beale v Taylor

5.9.6. Goods Must be Reasonably Fit for Purposes for which the Buyer Wants Them

5.9.6.1. exceptions to this rule are: a) Goods must be reasonably fit for purposes for which the buyer wants them. b) Goods must be of merchantable quality

5.9.6.2. where the goods have only one purpose, the description of the goods is enough to indicate their purpose – see Grant v Australian Knitting Mills. however, even when goods may have only one obvious use, if the goods are required for a special purpose, the buyer must expressly notify the seller of that purpose and rely on the seller to provide him with a suitable article- see Griffiths v Peter Conway Ltd, Cammell Laird & Co. v Manganese Bronze and Brass Co Ltd

5.9.6.2.1. Griffiths v Peter Conway Ltd

5.9.6.2.2. Grant v Australian Knitting Mills

5.9.7. Goods Must be of Merchantable Quality

5.9.7.1. quality of goods refers to their state or condition factors to be taken into account to determine ‘merchantability’ include: price, the description applied to the goods, whether the purpose for the goods had been made known to the seller, any other circumstances relevant to the sale

5.9.7.1.1. David Jones Ltd v Willis

5.9.7.2. if the description in the contract is so general that goods sold under it can normally be used for several purposes, then goods would be merchantable under that description if they were fit for any one of those purposes – see Henry Kendall & Sons v William Lillico & Sons Ltd, Wren v Holt

5.9.7.3. sometimes there can be a breach of both of the conditions of fitness for purpose and merchantable quality on the same set of facts – Grant v Australian Knitting Mills, McWilliams Wines Ltd v Liaweena (NSW) Pty Ltd

5.9.8. Sale by Sample

5.9.8.1. a contract is a contract of sale by sample where there is an express or implied term to that effect in the contract the bulk of the goods must correspond with the sample – section 17, SOGA 1957. 3 implied conditions in contracts of sale by sample: the bulk shall correspond with the sample in quality. If the differences are only of a minor nature and the quality of the goods is still the same, this condition will not be breached the buyer shall have a reasonable opportunity of comparing the bulk with the sample. See Drummond v Van Ingen, Godley v Perry, Lau Yaw Seng v Cooperativa Ceramica D’Imola

5.9.9. Privity of Contract

5.9.9.1. terms implied in a contract of sale are only between the contracting parties, i.e. the buyer and the seller. If a third party uses goods purchased by another and is injured as a result of some defects in the goods, he cannot sue the seller in an action under contract. His remedy would be to sue the manufacturer under tort – see Donoghue v Stevenson

6. TRANSFER OF PROPERTY

6.1. when property passes to the buyer, the goods are at the buyer’s risk irrespective of whether the goods have been actually delivered to the buyer or not – section 26, SOGA 1957

6.2. the importance of transfer of ownership is that risk of loss of the goods goes with the person who has the ownership in the goods – section 26, SOGA 1957

6.3. unless the parties agree otherwise, risk is borne by the owner regardless of whether he is in possession or not – section 26, SOGA 195

6.4. in the case of a contract for the sale of unascertained goods, the property in the goods can only be transferred to the buyer after the goods are ascertained – section 18, SOGA 1957

6.5. in the case of a contract for the sale of specific or ascertained goods, the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred – section 19(1), SOGA 1957

6.6. in order to ascertain the intention of the parties, the following are to be considered: a) The terms of the contract . b) The conduct of the parties and the circumstances of the case

6.7. unless otherwise determined by the parties, the rules of ascertaining the intention of the parties as to the time at which the property in the goods is to pass to the buyer are those laid down in sections 20–24, SOGA 1957. They are:

6.7.1. where there is an unconditional contract for the sale of specific goods in a deliverable state, the property in goods passes to the buyer when the contract is made. It is immaterial whether the time of payment of the price, or the time of delivery of the goods, or both, is postponed – section 20, SOGA 1957

6.7.2. 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 of it – section 21, SOGA 1957

6.7.3. 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 passes after such act or thing is done and the buyer has notice of it – section 22, SOGA 1957

6.7.4. where there is a contract for the sale of unascertained or future goods by description and the 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 – section 23(1), SOGA 1957

6.7.5. when goods are delivered to the buyer on approval or ‘sale or return’ or other similar terms, the property in the goods passes to the buyer:

6.7.5.1. when he signifies his approval or acceptance to the seller or does any other act adopting that transaction

6.7.5.2. if he does not signify his approval or acceptance to the seller but retains the goods without giving notice of rejection upon expiration of the time fixed for the return of the goods, or where no time has been fixed for the return of the goods, upon expiration of a reasonable time

6.8. nemo dat quod non habet ( no one gives who possesses not) maxim under Common Law

6.9. As a general rule, a seller/a person who has no authority or not legal owner of that goods cannot gives title to the buyer.

6.10. according to section 27, SOGA 1957, when a person takes goods (e.g. a buyer), he or she gets only the same rights to the goods as the person from whom he or she took them (e.g. a seller) –

6.11. see Lim Chui Lai v Zeno Ltd, Ng Ngat Siang v Arab-Malaysian Finance Bhd & Anor

6.12. Ng Ngat Siang v Arab-Malaysian Finance Bhd & Anor [1988] 3 MLJ 319

6.13. exceptions to the nemo dat quod non habet rule:

6.13.1. 1) Estoppel

6.13.1.1. where the owner by his conduct makes it appear to the buyer that the person who sells the goods has his authority to do so and the 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 – section 27, SOGA 1957

6.13.1.2. Case: Sykt Batu Sinar Sdn Bhd & Ors v UMBC Finance Bhd [1990] 3 MLJ 468

6.13.2. 2) Sale by mercantile agent

6.13.2.1. 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 – section 27, SOGA 1957

6.13.2.2. Case: Folkes v King [1932] 1 KB 282

6.13.2.3. however, the buyer must have acted in good faith and, at the time of the contract of sale, had not received notice that the seller has no authority to sell.

6.13.2.4. ‘a mercantile agent having in the customary course of business as such agent authority either to sell goods, or to consign goods for the purpose of sale, or to buy goods, or raise money on the security of goods’ – section 2, SOGA 1957

6.13.3. 3) Sale by one of joint owners

6.13.3.1. 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 from 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 – section 28, SOGA 1957

6.13.4. 4) Sale under a voidable title

6.13.4.1. where the seller of goods has obtained possession thereof under a contract voidable under sections 19 or 20, Contracts Act 1950 (Revised 1974), 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 – sections 29, SOGA 1957

6.13.4.2. a contract is voidable under either section 19 or section 20 of the Contracts Act 1950 when the consent of the original owner is caused by coercion, fraud, misrepresentation or undue influence

6.13.5. 5) Sale by a seller in possession after sale

6.13.5.1. if a seller resells to a second buyer the goods sold by him previously to the first buyer, the second buyer will obtain good title to the goods if he has received the goods in good faith and without notice of the previous sale – section 30(1), SOGA 1957

6.13.5.2. Case: Pacific Motor Auctions Pty Ltd v Motor Credits ( Hire Finance) Ltd (1965)112 CLR 192

6.13.6. 6) Sale by a buyer in possession

6.13.6.1. if a buyer, having bought or agreed to buy goods, obtains possession of the goods or 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 – section 30(2), SOGA 1957

6.13.6.2. Case: Newtons of Wembley Ltd v Williams [1965] 1 QB 560

7. PERFORMANCE OF THE CONTRACT

7.1. Chapter IV, SOGA 1957 – the physical performance of the terms of the contract which includes:

7.1.1. Delivery

7.1.1.1. it is the duty of the seller to deliver the goods whilst the buyer’s duty is to accept and pay for them in accordance with the terms of the contract of sale – section 31

7.1.1.2. unless otherwise agreed, delivery of the goods and payment of the price are concurrent conditions – sections 32

7.1.1.3. 1) Definition of Delivery

7.1.1.3.1. voluntary transfer of possession from one person to another

7.1.1.3.2. delivery of goods 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 – section 33

7.1.1.3.3. 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

7.1.1.4. 2) Place of Delivery

7.1.1.4.1. 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 – section 36(1), SOGA 1957

7.1.1.4.2. 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, in the case of goods which are still non-existent, at the place of manufacture or production – section 36(1), SOGA 1957

7.1.1.4.3. unless the parties agree otherwise, the expenses of and goods incidental to putting the goods into a deliverable state shall be borne by the seller – section 36(5)

7.1.1.5. 3. Time of Delivery

7.1.1.5.1. 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

7.1.1.5.2. what is deemed ‘reasonable’ time is a question of fact

7.1.1.6. 4. Delivery of Wrong Quantity

7.1.1.6.1. where the seller delivers to the buyer a quantity of goods less than that which he contracted to sell, the buyer may reject all the goods so delivered. If the buyer accepts the goods so delivered, he is bound to pay for them at the contract rate – section 37(1)

7.1.1.6.2. if the seller delivers to the buyer a larger quantity of goods than that which was contracted, the buyer may:

7.1.1.6.3. where the seller delivers to the buyer the goods he contracted to sell mixed with goods of a different description not included in the contract, the buyer may:

7.1.1.7. 5. Installment Delivery

7.1.1.7.1. unless agreed by the parties, the buyer is not bound to accept delivery by instalments

7.1.1.8. 6. Delivery to Carrier or Wharfingers

7.1.1.8.1. where the seller is authorized or required to send goods sold to the buyer and the goods are delivered to a carrier for transmission to the buyer or to a wharfinger for safe custody, such delivery to the carrier or wharfinger is prima facie deemed to be a delivery of the goods to the buyer

7.1.1.8.2. however, unless otherwise authorized by the buyer, the seller shall make such contract with the carrier or wharfinger on behalf of the buyer as may be reasonable having regard to the nature of the goods and the other circumstances of the case

7.1.1.8.3. if the seller omits to do so, and if the goods are lost or damaged in the course of transit or whilst in the custody of the wharfinger, the buyer may:

7.1.2. Acceptance

7.1.2.1. performance of the contract and transfer of ownership

7.1.2.2. unless otherwise agreed, when the seller delivers the goods to the buyer, the seller is bound when requested by the buyer to allow the buyer a reasonable opportunity of examining the goods in order to ascertain whether they conform to the contract

7.1.2.3. the buyer is deemed to have accepted the goods in the following circumstances:

7.1.2.3.1. 1. When he intimates to the seller that he has accepted them

7.1.2.3.2. 2. When the goods have been delivered to him and he does any act in relation to them that is inconsistent with (or which would prejudice) the ownership of the goods by the seller

7.1.2.3.3. 3. When, after the lapse of a reasonable time, he retains the goods without intimating to the seller that he has rejected them general rule is that a buyer is not bound to return rejected goods since it is sufficient if he intimates to the seller that he is rejecting the goods

7.2. when a buyer neglects or refuses delivery of goods, he is liable to the seller for any loss caused by his neglect or refusal to take delivery. He is also liable to pay a reasonable charge for the care and custody of the goods – section 44, SOGA 1957

7.3. where the buyer wrongfully neglects or refuses to accept and pay for the goods, the seller may sue him for damages for non-acceptance – section 56, SOGA 1957

8. Remedies For Breach

8.1. Chapters V and VI of the Sale of Goods Act 1957 deal with the: Rights of the unpaid seller against the goods- Rights to sue for breach of the contract -Rights of the buyer to sue for damages for non-delivery -Rights of the buyer to bring an action for specific performance -Remedies available to the buyer for breach of warranty Buyer’s action in tort

9. Consumer Protection Legislation

9.1. The Consumer Protection Act 1999 provides for: The protection of consumers The establishment of the National Consumer Advisory Council and the Tribunal for Consumer Claims Matters connected to consumer protection

9.2. Protects consumers against misleading and deceptive conduct, false representation and unfair practice; ensures safety standards and requirement for goods and prohibits unsafe goods; provides guarantees in respect of supply of goods; such as: (1) Implied guarantee as to title – section 31 (2) Implied guarantee as to acceptable quality – section 32 (3) Implied guarantee as to fitness for particular purpose – section 33 (4) Implied guarantee that goods comply with description – section 34