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SALE OF GOODS

Prepared for: LAW 251 Prepared by:. SALE OF GOODS. Miss. Norazuan Binti Amiruddin Madam Norazla Abddul Wahab. THE LAW OF SALE OF GOODS. Introduction The contract of sale of goods is governed by the Sale of Goods Act 1957 (hereinafter refers as SOGA)

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SALE OF GOODS

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  1. Prepared for: LAW 251 Prepared by: SALE OF GOODS Miss. NorazuanBintiAmiruddin Madam NorazlaAbddulWahab

  2. THE LAW OF SALE OF GOODS • Introduction • The contract of sale of goods is governed by the Sale of Goods Act 1957 (hereinafter refers as SOGA) • SOGA operates against the background of contract law that are not inconsistent with its express provisions. • Sale of Goods Act 1957 (SOGA)‏ - It applies to contract for the sale of all types of goods, including second-hand goods.

  3. Section 3 SOGA The Contracts Act 1965, in so far as they are not inconsistent with the express provisions of this Act shall continue to apply to contracts of the sale of goods

  4. Contract of SaleSale and Agreement to Sell • S.4 (1) SOGA: • ‘A contract of sale of goods’ “a contract whereby the seller transfer the property in goodsto the buyer for a price”... • Seller------Buyer---------Price • E.g: A agrees to transfer the ownership of his car to B. B then pay RM10000 for a price of the car.

  5. Continue….. • three (3) main elements in a contract of sale of goods: • There must be goods which are to be transferred to the buyer • The seller transfers or agreesto transfer the property in goods to the buyer • There is a price for the said transfer

  6. Continue…. • Objectives of the contract of sale: • The transfer of ownership of the goods to the buyer for money consideration • Sale occurs when the ownership or property in goods passes to the buyer

  7. Parties to the contract are known as : • buyer ; and • seller

  8. Continue…. • Section 4(3) An agreement to sell is a contract under which the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled • Section 4(4) An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods to be transferred

  9. Definition of goods 1.‘Goods’ : Section 2 of SOGA • every kind of ‘movable property’ other than money • include stock and shares,

  10. Continue… • Growing crops, grass and things attached to or forming part of the land which are agreed to be severed before the sale or under the contract of sale

  11. Continue…. • The followings are EXCLUDED from being goods under a sale of goods of contract: • Land (houses & building on the land are part of the land) • Actionable claims (right to sue for debt/other reasons) • Money ( current currency)

  12. Continue…. • Morgan v Russel The vendor was the lessee of certain land which was composed of slag and cinders. He then sold the purchasers all the slag on his premises so much as the purchasers should desire to remove. It was held by the Court : that the sale of cinders and slag was not a sale of goods but a sale of “an interest in the land”. The vendor did not sell any definite quantity of mineral, which could be said to be a separate thing.

  13. Mills v Stockman • There was a contract to sell a heap of slate which have been left on the ground for many years by a quarrying business. • The contract gave the buyer a right to enter the land and to remove the heap of slate. • It was held that the contract was not for the sale of goods. • The slate had been left in such circumstances that they had become part of the land and further, there was no term in the contract that they be severed under the contract of sale.

  14. Types/Categories of Goods Section 6(1) the goods which form the subject of a contract of sale may be either existing goods, owned or possessed by the seller, or future goods • There are 5 categories of goods: • Existing goods (goods already owned by the seller)‏

  15. Continue…. • Specific goods Section 2 sale of goods Act Goods identified and agreed upon at that time a contract of sale is made (example: Khair sells his motorcycle bearing registration number BCD 4994)

  16. Continue…. • Unascertained: The goods exists but it is not ascertained yet at that time of the contract is made. • Goods to be manufactured @grown by the seller • Generic goods e.g. 1000 tones of wheat • An unidentified part of a specific whole Example: 100 kg of wheat out of 200 kg of wheat

  17. Continue…. • Ascertained goods Unascertained goods which have been identified and appropriated to the contract after the contract has been made Example: Upon selection of the 5 dress from the 10 boxes of dresses.

  18. Continue… • Future goods Section 2 Goods to be manufactured or produced or acquired by the seller after the making of the contract of sale Example: Agreement to buy Mitsubishi Evolution yet to be manufactured by the seller.

  19. Please Identify • Eon is now discussing the possibility of manufacturing a new car called Proton Wardina. Izham enters into an agreement with EON to purchase Proton Wardina. Proton Wardina belongs to the category of ______________ goods? future goods

  20. Halim has signed an agreement with Ali to sell his one and only car; a red Proton Wira. Halim’s red Proton Wira belongs to the category of ________ goods? EXISTING GOODS

  21. Siti wanted to buy 2 kg sugar from Pak Mat. In the shop, she saw a sack full of sugar which weighed about 5kg. Therefore, Siti’s 2kg sugar belonged to the category of ____________ goods? UNASCERTAINED GOODS

  22. Ownership/property in goods • In a contract of sale of goods, the seller transfers or agrees to transfer property in goods. Property in goods Ownership (Having legal title/rights over the goods)

  23. Continue…. A person may be an owner of the goods although not in the possession of the goods A possessor of the goods may not be the owner event though he has physical control over the goods BUT

  24. ONLY THE OWNER WHO HAS THE PROPERTY IN GOODS IS ENTITLED TO SELL/TRANSFER THE TITLE TO THE BUYER. THE POSSESSOR WHO IS NOT THE OWNER IS NOT ENTITLED TO DO SO Continue….

  25. PRICE THE MONEY CONSIDERATION FOR A SALE OF GOODS

  26. CONTINUE….. s.9 (1)SOGA - It may:- • Be fixed by the contract. • Be left to be fixed in a manner agreed in the contract. • Be determined by the course of dealing between parties.

  27. Where the price is not determined The buyer shall pay the seller the reasonable price Section 9(2) Of SOGA

  28. Formation Of The Contract

  29. continue…. 1. CAPACITY SECTION 11 Contract Act SECTION 69 Contract Act

  30. 2. Formalities A contract of sale may be made: • in writing,

  31. by word of mouth/ Verbally, • both - partly in writing & partly by word of mouth, or • may be implied from the conduct of the parties - (s 5 (2) SGA) -

  32. Continue…. Section 5(1) A contract of sale is made by an offer to buy or sell goods for a price and the acceptance of such offer. 1. Immediate OR OR BOTH OR 2. Delivery or payments by Installment Delivery of goods Delivery of payments Delivery or payments postponement

  33. Continue…. 3. TIME OF PAYMENT • Stipulation as to the time of payment are not deemed to be the essence of a contract of sale. • It is depend to the term of the contract • SECTION 11 SALE OF GOODS ACT

  34. TERMS OF THE CONTRACT

  35. A. CONDITIONS • A term which is essentialto contract; breach of it would allow the other party to treat the contract as repudiated. (s. 12(2) SOGA)‏ • If the condition is breached, the party not in default entitled to repudiate the contract because the contract can be deemed to be VOID

  36. B. WARRANTIES ‘Warranty’ – a less vital termof a contract (collateral to the main purpose) , breach of it would give rise to a claim for damages,not a right to discharge/reject the goods. (s.12(3) SOGA)‏ If the warranty is breached, the party not in default is not entitled to repudiate the contract because it is not voidable HOWEVER Party in default is entitled for damages

  37. EXCEPTION…. Circumstances where contract cannot be repudiated event though there is a breach of condition: Generally, Section 13(1): Buyers may waive the condition or elect to treat the breach of the condition as the breach of warranty and do not want to repudiate the contract

  38. Continue….. • (Section 13(2) ) (situations) a. Where a contract of sale is not severable and the buyer has accepted the goods or part thereof; b. The contract is a specific goods the property in which has passed to the buyer;

  39. CONTINUE… SECTION 42 “ “buyer has accepted the goods” • The buyer told the seller that he had accepted the goods • When the goods has been delivered to the buyer and the buyer has done something which against the ownership of the seller • After the expiry of a reasonable time, the buyer keep the goods without informing the seller that he rejected the goods

  40. The breached of any condition to be full filled by seller can only be treated as a breach of warranty and not the ground of rejecting the goods or repudiate the contract • UNLESS THERE IS A TERM OF THE CONTRACT EXPRESS OR IMPLIED

  41. Implied Terms • The SOGA implies a number of stipulations (implied terms) in every contract for the sale of goods • The stipulations applicable only if the parties did not exclude or modified the terms/stipulation • (s.62 SOGA)‏ “ where any right, duty, or liability would arise under a contract of sale by implication of law, it may be negatived or varied by express agreement or by the course of dealing between parties, or by usage, if the usage is such as to bind both parties to the contract”.

  42. cont... • 1. implied warranty as to “time” • s.11 of SOGA • Time of payment are NOT deemed to be of the essence. • Meaning that, if a buyer fails to pay by an agreed time, the seller does not automatically repudiate the contract.

  43. But whether time is of essence of the contract / not , it depends on intention of the parties in the terms of the contract e.g. : When time (for delivery)is the essence of the contract which has been determined & agreed by the parties, if the seller fails to perform according to the term, it would entitle the buyer to repudiate the contract. e.g. : commercial transaction involving livestock e.g. :if goods are to be shipped within particular time.

  44. Harrington v. Browne (1917) 23 CLR 297 • Held: • in commercial transaction involving livestock, time of delivery is the essence of the contract. • If the goods are to be shipped within a particular time then time of shipment is important & should be strictly adhered to.

  45. 2. Implied condition as to “title”:- • S.14 (a) SOGA: “In the case of sale, the seller must have a right to sell the goods & in the case of agreement to sell, he must have a right to sell at the time when the property is to pass”

  46. Continue…. • Seller must be the owner of the goods Seller has the ownership/title over the goods Presumed to have a right to sell

  47. Rowland v Divall [1923] 2 KB 500 • P bought a car from the seller (D) & after using it for several months, then he discovered that it was stolen. He had to return it to true owner. • Court held: Defendant had breach the implied condition as to title. • Therefore, the P was allowed to rescind the contract and claim for the return of the full price of the car paid to the Defendant.

  48. Sometimes, seller need not be the owner of the goods (S. 14 (a) of SOGA BUT the law requires at least able to create the appropriate rights in the buyer. i.e. causing third party to transfer ownership directly to the buyer. • i.e. the car that still hired to the bank. • Thus, seller with no title to sell the goods at the time of the agreement to sell but later acquires title, can hold the buyer to the bargain provided the title is acquired before the buyer repudiates on discovery.

  49. Butterworth v Kingsway Motors Ltd • The D sold a car taken on hire-purchase and it was resold a number of times before it was discovered that the hirer had no right to sell while the car was on the hire- purchase. • The P who was the last buyer rescind the contract on being informed about the fact and demanded the return of the purchase price from the defendant. • Court held: P was entitled to rescind the contract of purchasing the car and could recover the money paid from the D since the D had no right to sell the car.

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