LAW OF SALE OF

GOODS
 The law is governed by the SALE OF GOODS
ACT 1957 (SOGA)
 It provides a frameworks, for:-
-the relationship between the buyer (B)
and seller (S)
- the right and duties of the parties and
their remedies in the event of a breach.

 In order to have a valid contract for the sale

of goods, it is similar as having a
contract/agreement where the parties must
possess all the essential elements.
Section 2 of the Sale of Goods
1. “Goods”
 Any goods which are moveable covered by SOGA
1957

 S.2=“Goods” :-
 -means 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;
 Eg:
A bag of soil = goods

A hectare of land = does x fall under the

definition of “goods” for the purpose of
SOGA
 Section 6(1) There are 2 category of goods:
i. Existing goods
ii. Future goods
i. Existing goods
 Under the possession of the seller
 Specific goods – specific at the time the contract
is made, i.e. goods that can be identified & agreed
upon at the time the contract is made
Eg : Amir sold his white BMX bicycle.

 Unascertained goods – is not yet specified but it

is through description only.
Eg: Aminah wants to buy 3 kg rice. Before it is weighed
and packed, it is unascertained. After it has been
weighed and packed by the seller, it becomes specific
goods.
ii. Future goods
 Yet to exist when contract entered into.
 will be produced in the future
2. “Contract sale of goods”
• S4 (1) – sale of goods is contract where the seller
transfer or agreed to transfer the property
(ownership) in goods to the buyer with certain price.

• Lee vs Griffin
 A test to determine whether the transaction is
under the sale of goods or contract of hiring by
referring to the objective of the contract
 If it is to transfer the property in the goods – it is
sale of goods

3. “Price”
• Money consideration – if exchange of goods – it does x
comes under SOGA
• But if it is a combination of money and goods – still
under SOGA
 TERMS

CONDITIONS WARRANTIES

Express and Implied Express and Implied

 S.12(2) – 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.

 Theparty may reject the goods or cancel

the contract.
 S.12(3) – a stipulation collateral to the main
purpose of the contract, the breach of which
give rise to claim for damages but NOT a right to
reject the goods and treat the contract as
repudiated.

 The party may only claim for DAMAGES and they

are not entitled to reject the goods and claim
for damages.
 S13(1) – permits/allows the buyer to treat a breach of conditions
as a breach of warranty (i.e. B waive the condition)
 S13(2) – the breach of condition must be treated as breach of
warranty namely:
1. Where the contract is not severable and the buyer has
accepted the goods or part
2. Where it is for specific goods, the property has passed to
buyer.

 Once the buyer choose to treat the breach of condition as breach

of WARRANTY – B cannot set aside the contract because the
right has been set aside.
 The party entitled to claim for damages and not to cancel the
contract
 IMPLIED TERMS AS
TO
TIME OF PAYMENT

IMPLIED TERMS AS
TO TITLE

IMPLIED TERMS
IMPLIED WARRANTY
AS
TO QUIET
POSSESSION

IMPLIED WARRANTY
AS THE GOODS
ARE FREE FROM
ENCUMBRANCES
1. Implied terms as to time of payment– s11

 Section 11= “unless different intention appears from

the terms of the contract, stipulation as to time of
payment are not deemed to be of the essence of a
contract of sale. Whether any other stipulations as to
time is of the essence of the contract or not depend on
the terms of the contract”

 It does not entitle the seller to repudiate the

contract unless the contract allows.

 Eg: Min bought furniture from Mun and stated the date
of payment on 1 December 2014. If Min failed to pay on
the date, Mun cannot repudiate the contract.(Since
generally, implied term states that time is not an
essence of the contract)

 Unless in their contract already stated that the date of

payment is important and should be strictly followed.
Here, if Min failed to pay on that date, Mun can
repudiate the contract.
Cases:
 Bunge Corp v Tradax Export
 Buyer was entitled to a remedy from the
seller and to refuse the delivery because
of the lapse of time where time was
essential to the contract.

 Harrington v Brown
 Time of delivery was an essence in this
contract because it involved livestock
2. Implied terms as to title – s14(a)
• S14(a) “there is an implied condition on the part of
the seller, that, in the case of a sale, he has 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”

• :-The seller has right to sell, and he has a right as to

the ownership when the goods is to be transferred to
the buyer.

• Rowland v Divall
 Pff bought a stolen car from Def
 Pff had to return the car to the real owner bcs
Def didn’t hv the right to sell the car to the Pff
 Held: Def had breached the implied terms as to
title and Pff could claim for the purchase price
from the Def
3. Implied warranty as to quiet possession – s14(b)
 Section 14(b) =there is an implied warranty that the
buyer shall have and enjoy quiet possession of the
goods”
 Buyer has the right to enjoy the goods free from any
interference from anyone including stranger that claim
ownership to the goods.
Cases:
 Microbeads AG v Vinhurst Road Markings Ltd
 Ct held: interferences from the third party includes
interferences at the time the contract is made and
after.

 Healing (sales) Pty Ltd v Inglis Electrix Pty Ltd

 Although the payment is yet to be settled, the
buyer is entitled to quiet possession
4. Implied warranty that the goods are free from
encumbrances/burden
 S14(3) “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”

Eg= Charge, tax

 Steinki v Edwards
 The car that was involved in the transaction was still
under tax
 The seller paid the tax and he was entitled to claim
from the buyer because tax is an encumbrances
that need to be settled by the seller not the buyer.
Effect: Breach of warranty will entitle the buyer to
claim the compensation/damages only.
 S15 -“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 correspond with
the sample if the goods do not also correspond with the
description”
 The buyer only rely on the catalogue / advertisement
/brand without seeing it. There is an implied
condition that the goods must correspond with the
description.
 Cases:
 Nagurdas Purshotumdas & Co v Mitsui Kaisha Ltd
 The seller and the buyer were under the
normal transaction to have a contract of buying
flour under a famous brand
 Flour was ordered by B described as “the same
as our previous contracts’. Flour identical to
quality was delivered but did not bear the
same well-known trade mark. Held: the goods
did not correspond with the description
 Beale v Taylor
 A car brand ‘Herald Convertible’ in white
colour year 1961 has been advertised
 After the buyer agreed to buy after having a
look – then he realized the back of the car
was not 1961 model
 Held: although the buyer had a look before
agreed to buy, the buyer still entitled to claim
for remedy because the seller had breach the
implied terms as to description

 Re Moore & Co Landauer & Co

 Associated Metal Smelters Ltd v Tham Cheow
Toh
General Principle
“Caveat emptor”:- let the buyer beware

 Expect the buyer to exercise care in making

purchases
 They will bear the consequences after the
purchase themselves.
 S16(1) “ there is no implied warranty or
condition as to the quality or fitness for any
particular purpose of goods supplied under a
contract of sale”, EXCEPT as follows:
 There are 4 requirements for exception under s 16(1)(a):

a) The buyer must make known , either expressly or

impliedly to the seller at or before the time when the
contract is made, the particular purpose for which the
goods are required.

b) The buyer is relying on the seller’s skill or judgment

c) The goods are of the description which it is in the

course of the seller’s business to supply

d) If the goods are specific, they must not be bought

under their patent or trade name

-Under these EXCEPTIONS, if goods not having quality, then

the seller will be liable.
Cases:
• Griffiths v Peter Conway Rimmer

 a woman bought a coat made of sheep skin

without informing the seller that she was
allergic to it.
 -Buyer claimed compensation from the seller.

 Held – The woman failed. The seller did not

know of the plaintiff’s allergic skin and
could not be expected to assume its
existence. The coat was fit for most people.
The seller was not liable.
 If the goods are bought through description, there must be
an implied condition that the goods are of merchantable
quality.
 It must fit for the particular use to which they were sold
 If the are defective for the purpose, they are not
merchantable

 EXCEPTION:
 when the buyer purchases the goods, if there is any
defects at the time of purchasing – no implied condition
applied.
 S16(1)(b) “where goods are bought by
description from a seller who deals in goods of
that description (whether he is the
manufacturer 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 defect which such examination ought to
have revealed.
 Cases:
 Bristol Tramways v Fiat Motor Ltd
 Ct defined merchantable quality as when the
goods in such a condition or quality that the
buyer would reasonably buy after having
checked it in a reasonable way.

 Wilson v Ricket Cockerall & Co Ltd

 Oil under ‘Coalite’ brand was bought from
the dealer
 After using, it caused explosion

 Held: the oil was not under merchantable

quality
 David Jones v Willis
 - the sole of the shoes damaged after 3rd
time of using it.
 Held : No merchantable quality

 Deutz Far East (Pte) Ltd lwn Pacific

Navigation Co Pte Ltd
 Def refused to pay on the reason that the
there was the defect in the engine spare part
for the ship supplied by the Plaintiff.
 Pff breached S. 16 (1) (a) and (b) as there was
no quality in the goods.
 S17(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”

 Samples are usually used in the sale of bulk goods like

rice, wheat, flour or even household item such as tiles,
floor covering, carpets etc.even though samples were
produced to the buyer.
 S17(2) – the following conditions are implied in a sale
by sample:
a) That the bulk shall correspond with the sample in
quality
b) That the buyer shall have a reasonable
opportunity of comparing the bulk with the
sample
c) That the goods are free from any defect
rendering them not merchantable which would
not be apparent on reasonable examination of
the sample

A breach of any three conditions entitles the buyer

to reject the goods and treat the contract as at an
end.
 Cases:
 Drummand v Van Ingen
 the clothes supplied by the seller was equal

to samples previously examined but because

of latent defect not discoverable by a
reasonable examination the ct found the
seller in breach of the sub section 17(1)

 Lau Yaw Seng v Cooperative Ceramica

D’Imola
 Buyer has right to refuse the delivery coz of

low quality which is not similar with the

sample produced.
 S14 – implied condition of ownership where the
seller should remain legal ownership of the goods
before it can be transferred to the buyer.
 It is a fundamental rule that no one can give
what he has not got

 Refer to the maxim “nemo dat quod non habet”

meaning that “no one can transfer a better title
than he has himself”.

 S27 “…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 reason is to protect the right of ownership

 Case: Lim Chui Lai v Zeno Ltd

 Ahmad, a contractor had been provided by

Zeno Ltd a material for his project with MPPJ
which later has been cancelled
 Ahmad sold the materials to Lim Chui Lai
 Issue: who has the right for the material?
 Held: Ahmad has no right to the materials as
it was still under Zeno Ltd, therefore he
cldn’t pass a good title/ownership to Lim
Chui Lai.
 EXCEPTION TO THE NEMO DAT RULE

ESTOPPEL

SALE BY MERCANTILE AGENT

SALE BY ONE OF JOINT OWNER

SALE UNDER VOIDABLE CONTRACT

SALE BY SELLER IN POSSESSSION

SALE BY A BUYER IN POSSESSION

 May arise when the owner of the goods is by his
conduct precluded from denying the seller’s
authority to sell when the buyer had believed on
it.

 The owner will be estopped from denying the

seller’s authority

 The buyer who takes in good faith and for value

will acquire a good title by estoppel.
Case: Sykt. Batu Sinar Bhd v UMBC Finance Bhd

 Supreme Leasing Co had bought a tractor from the

seller in 1984 and hired it to the Pff
 But 5 month prior to the sale – UMBC Finance had
bought the same tractor and hired it to another party
(but UMBC failed to register its title to the tractor)
 Hirer failed to pay the installment and UMBC had
repossessed the tractor. Tractor physically left to the
possession of the dealer and then the dealer sold to
Supreme Leasing (who later hired it to Pff)
 Issue: Who has the right over the tractor?
 UMBC had failed to register the ownership, this
failure had estopped UMBC from denying the
ownership of Supreme Leasing Co to claim as to
their ownership
 Definition under s2
 “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 to raise money on
the security of goods”

 The proviso under s27;

 Must be an agent
 The mercantile agent must be in possession of the goods
 The possession must under the consent of the owner
 Acting in the ordinary course of business
 The BUYER must have acted in good faith and at the time
of the contract of sale, the BUYER must not have any
knowledge or notice that the agent has lack capacity as
an agent.
 Folkes v King

 F, owner of the car had transferred his car to

H, his agent to sell the car not below than 575
pound
 H then sold the car at 340 pound to a buyer
who bought in good faith and H had gone
missing
 The buyer had the right to the possession of
the car –since he bought it in good faith
 Two conditions laid down in section 28 must
be met:

1. One of the several joint owners has the sole

possession of the goods by permission of
the co-owners
2. The buyer acts in goods faith and has not
at the time of the contract of sale notice
that the seller lacks authority to sell.
3. The buyer will have the full ownership
although the other joint owner do not give
their authority to sell
 According to s29:
 Where the seller of goods has obtained
possession under a contract voidable under
section 19 or 20 of the Contracts 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.
 Section 19 of the Contract Act 1950 – refers to voidable
contract caused by coercion, undue influence, fraud or
misrepresentation
 The contract has yet to be cancelled by the third party
 The buyer purchased in good faith without any knowledge
about the defect of the ownership
 Car & Universal Finance Co Ltd v Caldwell
 Mr Caldwell sold his Jaguar car to Norris. He had been given some
cash and a cheque as payment. He later discovered that the
cheque was fraudulent. Mr Caldwell reported the incident to the
police and used his best endeavours to co-operate with the police
to rescind the contract of sale. He also contacted the Automobile
Association to try to locate the car. Norris in fact had later sold
the car to a third party.
 Issue: Whether the actions taken by Mr Caldwell were sufficient
to avoid the contract.
Held:

Mr Caldwell had successfully rescinded the contract. He had taken

all steps possible to demonstrate that he no longer wished to be
bound by the contract.
 The condition as under S30(1): If:

 The seller sold the goods and passed the good’s

title to the buyer (i.e.1st B)
 But the goods are still under the possession of
the seller
 Then the same goods are sold to the 2nd Buyer
by the seller
 The 2nd Buyer bought the good in good faith
without the knowledge of the first transaction.
 Then, the 2nd Buyer will have the ownership to
the goods.
Case: Pacific Motor Auction Pty Ltd v
Motor Credits (Hire Finance) Ltd

 Pff had delivered a few cars to the dealer.

Dealer had the right to sell the cars.
 Then, the dealer sold the car to the Def due to
some financial matters although at that time
Pff had already gave a notice not to sell the
cars.
 Held: the Def entitled to the legal ownership
because he bought the car in good faith.
 According to s30(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 (but full
title has not yet transferred to the buyer)
 The buyer then sell the goods to the third
party who purchase it in good faith
 The third party has the
possession/ownership on the purchased
good from the buyer.
Case: Newtons of Wembley Ltd v Williams

 Pff sold a car to A who paid it by cheque under

the condition that the OWNERSHIP of the car
would be transferred after the cheque was
cashed.
 The cheque was not valid (so, was unable to be
cashed) but A had already sold the car to B and
B sold the car to Def. (Even though possession
of car is in the hands of first buyer, but the
title had not yet transferred to him)
 Pff claimed the possession of the car from the
Def
 HELD: Def bought the car in good faith from B
and B bought the car in good faith from C. Def
had the ownership.
 45. (1) The seller of goods is deemed to be an
“unpaid seller” —
 (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.
 S46(1) - The unpaid seller possesses 3 rights:-

a) A lien of the goods for the price while he is

in possession of them
b) In the event of insolvency of the buyer, a
right of stopping the good in transit after
he has parted with the possession of them
c) A right to resale (subject to limit imposed
by laws)
 - as given in S. 46 (1) (a)
 -Right to hold the goods until payment made

 S47(1) - The right of lien imposed in the following

case listed:

a) Where the goods has been sold without any

stipulation as to credit
b) Where the good has been sold on credit, but
the term of credit has expired ; or
c) Where the buyer becomes insolvent
 s49(1) – the unpaid seller of the good loses
the right to lien ;

a) When he deliver the goods to the carrier or

other bailee for the purpose of transmission
to the buyer without reserving the right of
disposal of the goods

b) When the buyer or his agent lawfully

obtains possession of the goods

c) When he waives his right such as agreeing

to a sub sale by the buyer
 -As given in S. 46 (1)(b)

 Stated in S50 – unpaid seller who has parted

his possession of the goods has the right of
stopping goods in transit when the buyer of
goods becomes insolvent

 S. 52 -How stoppage in transit is effected?

 -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 who
possesses the goods.
 -As given in S. 46 (1)(c)

 S. 54 = if goods of perishable nature, or seller

gives notice to the buyer of his intention to
resell, but the buyer does not pay within a
reasonable time, seller may sell the goods.
-Where the seller expressly reserves a right of
resale in case the buyer should make default,
seller may exercise such right and contract is
rescinded.
 Ifthere is breach of contract by the seller,
there can be no clauses in their contract to
prevent the buyer from rejecting the goods

 Lim Khiam Soon v The Straits Lumber

 -There was a clause in their contract that the
buyer must check the goods upon delivery
and after that, the seller has no liability
 Clause not valid.