Commercial Law Note by MK Yong

Chapter 1 : Sales of Goods
Statutes
1) Sale of Goods Act (SOGA): Section 1(2)
Short title and application
1. (2) This Act shall apply to the States of *Penisular Malaysia.
Section 1(2) : SOGA is only applicable in West Malaysia.

- SOGA can be used for all transactions, be it personal sales or company sales
- The weakness of SOGA is, it can be excluded.
2) Contract Act: (refer to Section 3 of SOGA)

Application of Contracts Act 1950
3. The Contracts Act 1950, in so far as they are not inconsistent with the express provisions of this Act
shall continue to apply to contracts for the sale of goods.
Section 3 (SOGA): The Contract Act is only applicable if it is consistent with SOGA or there is lacuna
in SOGA. (Contact Act will not be provided in exam and it‘s assumed that all elements of forming a
Contract is already fulfilled.
3) Consumer Protection Act : Section 2(1)
Application
2. (1) Subject to subsection (2), this Act shall apply in respect of all goods and services that are offered or
supplied to one or more consumers in trade including any trade transaction conducted through electronic
means.
Section 2(1): Consumer Protection Act is only applicable to consumers in trades. (Only limited to trades
of goods or services, provide in exam)
1) Application of Statutes
A) Sale of Goods Act
 This Act is only applicable in West Malaysia. (Though it is only adopted by Mecca and Penang on 23
Feb 1990 through amendment A756/90)
 There is no specific statute in Sabah and Sarawak. Section 5 (2) Civil Law Act states that if there is no
local law then the law to be used is ―the law to be administered in England in the like case at the
corresponding period.‖ So what Act to use in Sabah & Sarawak?
[Heng Long v Osman Abdullah]

Held: This case ruled that English law can be used in Sabah & Sarawak. However, the question
whether the UK Act is suitable for local conditions was not discussed. (try to relate to Section 5(2) of
Civil Law Act)
However, according to Profesor P Balan, even though S5(2) of Civil Law Act provides for the usage of
English law, it must only be adopted to the extent of it suits the ―local position.‖
(When answering the examination questions candidates may assume that the transactions specified in
the questions occurred in West Malaysia.)
In what matters SOGA is applicable?
SOGA can only be used for matters which fall under these categories:
Prepared by : Mk Yong LIA 160064

1) The sales of goods happen in West Malaysia (S 1(1) SOGA)
Section 1(2): This Act shall apply to the States of Penisular Malaysia.
2) SOGA is only applicable for CONTRACT OF SALE OF GOODS (S4(1)).
Section 4(1) A contract of sale of goods is a contract whereby the seller transfers or
agrees to transfer the property in goods to the buyer for a price. There may be a contract
of sale between one part-owner and another.
p/s: this must be discussed in every question as it doesn‘t apply, SOGA can‘t be used.
Things that needed to be ascertained:

a) Existence of goods (―goods‖ must be as defined in SOGA)
Definition of ―goods‖:
Section 2 : 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;
b) There is a transfer of ownership. (Not merely transfer of possessionship but ownership. If you
lend something to someone, there is a transfer of possessionship but not ownership)
c) There must be a price for the sales of goods.
P/s:
1) Some provions in SOGA are already outdated. Such as shares, it is cusually ontrolled by other
act, not SOGA. People seldom use SOGA for share disputes.
2) In exam, we wont talk about elements in contracts but we will talk abt what are relevant to
SOGA.
B) Consumer Protection Act

 This Act shall apply to a business of supplying goods in trade to a consumer.
 Section 3:
“goods”:―goods‖ means goods which are primarily purchased, used or consumed for personal,
domestic or household purposes, and includes—
(a) goods attached to, or incorporated in, any real or personal property;
(b) animals, including fish;
(c) vessels and vehicles;
(d) utilities; and
(e) trees, plants and crops whether on, under or attached to land or not,
but does not include choses in action, including negotiable instruments, shares, debentures and
money
“trade” : any trade, business, industry, profession, occupation, activity of commerce or

undertaking relating to the supply or acquisition of goods or services;

“consumer” : a person who—
(a) acquires or uses goods or services of a kind ordinarily acquired for personal, domestic or
household purpose, use or consumption; and
(b) does not acquire or use the goods or services, or hold himself out as acquiring or using the
goods or services, primarily for the purpose of—
(i) resupplying them in trade;
(ii) consuming them in the course of a manufacturing process; or
(iii) in the case of goods, repairing or treating, in trade, other goods or fixtures on land;
2) Formation of Contracts
 Sales of goods is a contract but how contracts can be formed?
 S4(1): A contract of sale of goods is a contract where the seller transfers or agrees to transfer the
ownership of the goods to the buyer for a price. There may be a contract of sale between one
partowner (co-owner) and another.
Section 4(1): A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer
the property in goods to the buyer for a price. There may be a contract of sale between one partowner
and another.
 Accordingly, there are 3 elements under S4(1) for a contract of sales of goods:
i) it must be a sale of goods (we will look at what is a ―goods‖)
ii) it is done for a price
iii) there is an intention of transferring property (property here means ownership)(refer chapter 4)
 S4(2): A Sale of goods can be written or oral.

Section 4(2) : A contract of sale may be absolute or conditional.
 S4(3): The difference between sale and agreement to sell :
Sale = When the property in the goods is trasnferred to the seller to the buyer under a contract of
sale
Agremment to sell = When the trasnfer of the property in the goods will only take place at a
afuture time or subejct to some conditions being fulfilled.
Section 4(3): Where under a contract of sale the property in the goods is transferred from the seller to
the buyer, the contract is called a sale, but where 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, the contract is called an agreement
to sell.
2.1) Element 1: It must be a sale of goods

 Definition of ―goods‖:
Section 2 :
Every kind of movable property other than actionable claims and money, which includes
a) stock and shares,
b) growing crops, grass and things attached to or forming part of the land which are agreed to be
severed (the question is not whether the thing is severable but whether both parties have agreed to sever)
before sale or under the contract of sale.
2.1.1) General priniple on goods

 All movable things are goods except
a) Actionable claims (because the value is not fixed), like :
- cheques
- promissory note
- insurance policy
- bill of exchange
- post-money
b) Living things
c) Money
d) Things that don‘t exist yet (―Transaction: doesn‘t happen yet when the ―good‖ to be sold doesn‘t
exist yet, meaning that there is no passing of ownership. However, there can be an agreement to sell
(which is a contract but not a transaction yet.)
 Money or banknotes are note goods too. However, money is a good if it has curio value (Same
goes to a cheque, if a cheque, though remins valid, is signed by the PM or it has no current value,
the cheque itself is a good).
[Moss v Hancock]
: Money is generally not goods but a coin or note sold as a curio or as a collector items would be
goods.
: the court also ruled that cheque is claimable.
P/s: Curio value can be subjective. A thing can be meaningful or important to someone but not to
others.
 Extra (for assignment maybe), definition of money:
[Moss v Hancock]: "Money ... (is) that which passes freely from hand to hand throughout the
community in final discharge of debts and full payment for commodities, being accepted equally
without reference to the character or credit of the person who offers it and without the intention
of the person who receives it to consume it or apply it to any other use than in turn to tender it to
others in discharge of debts or payment of commodities."
[Re Alberta Statutes] : ―Any medium which by practice fulfills the function of money and which
everyone will accept as payment of a debt is money in the ordinary sense of the word even
though it may not be legal tender.‖
 Actionable claims like cheaque, post-money itself is also no a good unless the cheque or slip
itself is alredy invalid and yu are taking the cheque or slip itself.
 Stock and shares thouhg not abstrack, are also a good because it is clearly satted in SOGA.
 Genrally, immovable properties are not goods such as things that are atttached to the land.
- However, crops that are agreeded to be severed before sale or under the contract of sale, though
attached to the land, are goods under SOGA, provided that the intention to detach the things
from the land can be proven.
[Morgan Russell] & [Mills v Stockman] : The pricniple in these cases is that, if something is
attached to the land, and it is severed from the land to be sold, we must prove that there is an

intention to sever the thing from the land for the purpose of selling it, for that thing to be
regarded as a ‖good‖ .
[Morgan v Russell] : sale of ―cinders and slag‖, which is not collected, but abandoned on the
ground is not goods)
[Mills v Stockman] : This case involves ―slate‖ that is abandoned on the ground as waste.
The court referred to this material as ―unwanted dross cast on one side with the intention that
it should remain on the land indefinitely, and by implication, that it should form part of the
land
- Likewise, houses are not a good unless you can detach it from the land., like the Malay stilt
house.
 Things that can‘t be separated or detached from another good also can‘t be a good itself, for
example: Sawdust attached on a wooden board (not a good itself) vs Sawdust that you got from
processing woods.
2.2) Element 2: The transfer of property must be done for a price

 Section 4(1) (SOGA) : A sale of goods must be done for a price
 Section 2 (SOGA): ―Price‖ means the money consideration for a sale of goods. (This means that as
long as there is a price, it is sufficient, not necessarily that the price must be reasonable)
 The court has decided that the element of price must be fulfilled in order to constitute a sale of good.
 However, in the situation where A agreed to buy something from B but the price will only be fixed
later or by a third party? Is there any contract? Distinguish the cases below:
[May & Butcher v The King]

Facts: The Gov agreed to sell some tents to May and Butcher Ltd who left £1,000 as a security
deposit for their purchases. According to the written agreement between the disposals board and
the company, the price for the tents, and the dates on which payment was to be made were to
be agreed between the parties, as and when the tents became available. In 1923 a new disposal’s
board took over and refused to sell the tents. They stated that they no longer considered
themselves bound by the contract.
Issue: Were the terms of the agreement sufficiently certain to constitute a legally binding
agreement between the parties?
Held: There was no agreement between the parties. A contract for the sale of the tents had never
in fact been concluded. This was because a fundamental term of the agreement that was
necessary for the sale to be completed had not been agreed. As such, there could not be a
contract. Whilst s8 of the English Sale of Goods Act 1893 provided that a price could be fixed in the
future, s9 of the English Sale of Goods Act 1893 also provided that if that price could not be fixed
by a third party, then no agreement could be made. No third party could set the price for the
tents, and the court could not imply a price into the agreement. Therefore, no agreement had
been made. The agreement between the claimants and defendant therefore was simply an
agreement to agree, and not enforceable.

[Foley v Classique Coaches Ltd]
Facts: Foley owned some land and a petrol station. He sold part of the land adjoining the station to
Classique Coaches Ltd, a coach company. One of the conditions of the agreement was that the
company purchase all of their fuel for the coaches from Foley’s filling station as long as it could
be provided by him. The agreement also contained an arbitration clause. It did not, however,
provide a price for the agreement. Classique complied with the terms of this agreement for three
years until one of their lawyers advised them that as a price had not been indicated, it was unlikely
in his opinion that there was a binding agreement. After this, Classique stopped buying fuel from
Foley, who sued them for breach of contract.
Issues: Whether or not the agreement was void for uncertainty because a price had not been
mentioned in the agreement.
Held: There was an agreement. The agreement was not void for uncertainty simply because the
price for the fuel had not been mentioned in the agreement. Classique had performed their
agreement for several years, and this obligation could not simply be repudiated. Where the
parties had acted as though an agreement had been created and performed their obligations in
this way, there was instead an implied term that the price of the fuel to be purchased under the
agreement was to be reasonable. Furthermore, if agreement could not be reached on what was a
reasonable or fair price, the agreement contained an arbitration clause specifically designed to
resolve disputes of this nature. Classique coaches were therefore in breach of contract by failing to
purchase fuel from Foley, as required by the agreement.
 S 8(SOGA): However, if a third party gotta make evaluation, and he can‘t make a price at the end,
the contract can be avoided (avoid = you cn choose wither to proceed or void it).
Section 8: Goods perishing before sale but after agreement to sell
Where is an agreement to sell specific goods, and subsequently the good, without any fault on
the part of the seller or buyer, perish, or become so damaged as no longer to answer to their
description in the agreement, before the risk passes to the buyer, the agreement is thereby
avoided.
 S 9 (SOGA):
(1) : The price in a contract of sale can be determined by the contract or can be decided later in
anyway the parties agreed upon.
(2) : If the price is not fixed based on certain mechanism, the buyer must pay seller a reasonable
amount. (Section 9(2) is important fo cases where a contract exists but the price is not agreed upon,
how then will the price be determined?)
Section 9: Ascertainment of price
(1) The price in a contract of sale may be fixed by the contract or may be left to be fixed in
manner thereby agreed or may be determined by the course of dealing between the parties.
(2) Where the price is not determined in accordance with the foregoing provisions, the buyer
shall pay the seller a reasonable price. What is a reasonable price is a question of fact dependent
 S10 (SOGA):
(1) : If there is an agreement to sell goods on the terms that the price is to be fixed by the valuation
of a third party and such third party cannot or does not make such valuation, the agreement can be
avoided. (Provided that if the goods or any part thereof have been appropriated and delivered to the
buyer, he shall pay a reasonable price)
(2) Where such third party is prevented from making the valuation by the fault of the seller or buyer,
the party not in fault may maintain a suit for damages against the party in fault.
Section 10: Agreement to sell at valuation

(1) Where there is an agreement to sell goods on the terms that the price is to be fixed by the
valuation of a third party and such third party cannot or does not make such valuation, the
agreement is thereby avoided: Provided that if the goods or any part thereof have been delivered
to, and appropriated by, the buyer, he shall pay a reasonable price therefor.
(2) Where such third party is prevented from making the valuation by the fault of the seller or
buyer, the party not in fault may maintain a suit for damages against the party in fault.
P/s
: The condition to fulfill this is firstly, there must be an agreement to sell, secondly, the price is
to be fixed by a third party.
: Under section 10, you can choose to avoid the contract (avoid means u cn choose to either void
or proceed)
 What if the thing in question is a free gift?
[Esso v Commissioners of Customs & Excise]

Facts: It was world cup and Esso was giving out special coins as a free gift upon purchasing certain
amount of petrol. The issue was whether the coins were taxable since it can be obtained only in that
Fifa period, hence possess value, thus they are goods and therefore should be taxable.
Held: The tokens are not goods since they are not exchanged for money consideration (―for a price‖
as required by S4 of SOGA).
P/s: Things could have been different if you sell the coins for a ―lower price‖. In this case, the coins
were given to promote the petrol rather than ―sold for a lower price‖ which is done for money
consideration, hence fall under SOGA. Also, since a sale must be done for a price, barter is not a sale
either.
2.3) Element 3: Intention to transfer property

 Refer Chapter 4
3) Difference Between A Contract of Sale of Goods From The Contract To Provide Services
 A contract of sale must be separated from other commercial contracts, such as a contract to provide services.
This is because the SOGA and its provisions only apply to a contract of sale of goods.
 To distinguish between a contract of sale of goods and services, the rule is ―which is more important?
Good or service?‖ If the contract of sales of goods is more important, then it is a contract of sales of
contract, if no, it is a contract for sale of service, unless both the good and service can be separated.
[Robinson v Graves]
Held: A contract to paint a portrait was held to a contract ―for work and materials‖ as ―the substance of
the contract is the skill and experience of the artist in producing a picture‖. Such contract is a contract
where the artist would be paid for his work upon delivery of the paint. Hence, such contract is not a
contract of sales of goods but for service.
[Perlmutter v Beth David Hospital]

Held : This case concerns transfusion of contaminated blood for a price. To determine whether is sale
is sale of goods or service, the whole transaction must be seen as a whole and the essence or main
objective of the transaction must be scrutinized. The court held when services are rendered
predominantly and incidentally for a transfer of personal property, that is a contract of sales of service,
not good. Hence, the Court ruled that the "transfusing of 'bad' blood, supplied by a hospital for a price
as part of the customary services rendered by the hospital to its patients" was not a "sale" of the blood
for purposes of the Sales Act's implied warranties of fitness.

P/s: Fotr Perlmutter‘s case, can we take action under S16(1) of SOGA?
Section 16: Implied condition as to quality or fitness

(1) Subject to this Act and of any other law for the time being in force, 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:
(a) Where the buyer, expressly or by implication makes known to the seller the particular
purpose for which the goods are required, so as to show that the buyer relies on the
seller’s skill or judgment, and the goods are of a description which it is in the course of the
seller‘s business to supply (whether he is the manufacturer or producer or not) there is an
implied condition that the goods shall be reasonably fit for such purpose:
Provided that, in the case of a contract for the sale of a specified article under its patent or other
trade name there is no implied condition as to its fitness for any particular purpose
Answer: We see the transaction, as in is it a ―sale‖? Exp: after A cut his hair B offered to sell him hair
oil compare to situation where ―hair cut + hair oil‖ comes in package.
4) Application of SOGA and Types of Goods Under SOGA

 Under SOGA, the type of goods are important because the application of some provisions of the SOGA
(e.g. sections 7, 8 and 20-23) are subjected to the types of goods, ie. whether the goods are specific,
unascertained or future goods.
 Types of goods is important when it comes to transfer of property as well as bearing the risks of the
goods.
 Relevant provisions:
Section Provision Meaning
18 Goods must be When there is a contract for the sale of unascertained goods, no
ascertained transfer of property will happen until and unless the good is
ascertained.
7 Goods perishing In a contract of sale of specific good, the contract will become
before making of void if the good has been damaged ―as no longer to answer to
contract their description in the contract‖, without the knowledge of the
seller, at the time when the contract was made.
8 Goods perishing When there is an agreement to sell a specific good, the good
before sale but perishes or become so damaged as no longer to answer to their
after agreement to description in the agreement, without any fault on the part of the
sell seller or buyer, the agreement can be avoided.
20 Specific goods in a When there is a contract for the sale of specific goods, and that
deliverable state good is in the course of delivery, the property of the good passes
to the buyer when the contract is made, even if the time of
payment or the time of delivery is postponed.
21 Specific goods to be When there is a contract for the sale of specific goods and the
put into a seller is obligated to ―do something‖ deliver the good, the
deliverable state property will only pass to the buyer until such ―action‖ has been
taken and the buyer is notified of such delivery.
22 Specific goods in a When there is a contract for the sale of specific goods in a
deliverable state deliverable state, and the seller has to ―do something‖ such as
when the seller has measure, weigh, test etc to ascertain the price, the property does
to do not pass to the buyer until such act or thing is done and the buyer
anything thereto in has notice thereof
order to ascertain
price
23(1) Sale of When there is a contract for the sale of unascertained or future
unascertained goods and that good is in a deliverable state and is
goods and unconditionally appropriated to the contract, the property in the
appropriation goods passes to the buyer upon consent from either party.
Such assent may be express or implied, and may be given either

before or after the appropriation is made.
23(2) Delivery to carrier The seller is deemed to have unconditionally appropriated the
goods to the contract when he delivers the goods to the buyer or
to a carrier or other bailee, in pursuance of the contract, and does
not reserve the right of disposal.
5) Category of Goods
 There are generally 2 categories of goods, ascertained and unascertained goods:
Ascertained good
- Under this category, it can further be divided into specific good and non-specific goods.
- The legal effect of these goods are a little bit different.
- Specific goods are ascertained goods but ascertained goods are not necessarily specific goods.
Unascertained good: (highly relatable to S23)

- For unascertained goods, it can too be divided into 2 types:
i) unascertained goods that are already existed
ii) unascertained goods that are not yet existed (Future goods)
- However, the legal effect these goods are the same. (For either case, if the good is perish, you usually
replace that good with another one)
Ascertained good
 There is no definition in SOGA but it refers to goods that are already identified (as in it is
appropriated) but have not been agreed upon by both parties usually after a contract of sale is made.
Exp: Buying 5 out of 100 units of rice that is available in a store. At this stage, it is ascertained good
(but not yet specific) if it is appropriated upon agreement. If no appropriation, they are unascertained
goods.
 Refer to section 23
Specific good (S20, 21 & 22)

 Section 2(SOGA): definition of ―specific goods‖ :
“goods identified and agreed upon at the time a contract of sale is made; and any expression used
but not defined in this Act which is defined in the Contracts Act 1950 [Act 136], shall have the
meaning assigned to it in that Act.”
 Accordingly, there are 2 elements for a good to be a specific good:
1) It must be identified
2) Agreed by both parties at the time the contract is made (Agreed upon means both parties have a
common mind to sell or buy the SAME EXACT thing)
P/s: whether such good is specific or not can only be determined at the time the contract is made.

 What‘s important to render a good specific is that both parties can identify and agree upon at the
time the contract is made, not necessarily that the buyer must have seen the good itself:
Exp 1: In a store, if there are 100 eggs and A wants to buy that 100 eggs (without having seen
them before), that 100 eggs are specific goods.
Exp 2: In a store, if there are 110 eggs and A wants to buy 100 eggs, that 100 eggs are
unascertained goods before any 100 eggs out of that 110 eggs can be sold.
 However, what‘s ―identified‖ is not established , compare:

Sale of all trees in a forest that fulfills a Sale of all “millable hardwood or
certain size on a certain date is not a sale of marketable timber” in a particular place
specific goods: was held as a sale of specific goods.
[Kursell v Timber Operators ] [Reid Joseph Pty Ltd v Schultz ]
Fact: The plaintiff and the defendants Fact: The parties entered into a contract for
entered into a contract to sell “all trunks and all the malleable timber on a plot of land. The
branches of trees but not seedlings and young timber was already cut and awaited
trees less than 15cm in diameter at a height collection.
of 4 feet from the ground”
Held: The timbers were specific goods as
Held : The merchantable timbers were not there was no identifying to be done after the
specific goods. It is impossible at time of contract was made (also in a deliverable
contract (hence insufficiently identified) to state)
identify which trees would reach the
required size to be cut and included at
merchantable under the contract. So, the
court held that the timbers were not specific
goods as the goods are insufficiently
identified. In this case, the timbers were
ascertained but not specific goods.
 Section 20 (SOGA) : When there is a contract for the sale of specific goods, and that good is in
the course of delivery, the property of the good passes to the buyer when the contract is made,
even if the time of payment or the time of delivery is postponed.
Section 26 (SOGA) : Risk prima facie passes with property
: Unless otherwise agreed, the goods remain at the seller‘s risk until the property of the good is
transferred to the buyer. Once the property of the good is transferred to the buyer, the goods are
at the buyer‘s risk regardless of delivery has been made or not.
: Unless if the delivery has been delayed through the fault of either buyer or seller, the goods are
at the risk of the party in fault as regards any loss which might not have occurred but for such
fault:
P/s: under this section, it says that when the property of a good is passed, it is passed together
with the risk therein, so it determine the liability of the parties (use this together with other
sections regarding property)
Unascertained good
 There is no definition of unascertained goods in the Act. It refers to goods that exists at the time
of sale, but not identified at that time.
[Re Wait]
Fact: Wait bought 1000 tons of grains loaded on a ship and subsequently sold 500 tons to X. Later,
dispute arose and the question was which 500 tons of grains belongs to X?
Held: The grains were unascertained goods because there was no appropriation. The 500 tons of grains
were not appropriated from the 1000 tons of grains.
 Without appropriation, a good is not ascertained good, there must be appropriation.
 The most relevant provision of SOGA for unascertained good would be section 23. Section 23
governs unascertained goods (note at the word ―appropriated‖):
Section 23
(1) : When there is a contract for the sale of unascertained or future goods and that good is in a
deliverable state and is unconditionally appropriated to the contract, the property in the
goods passes to the buyer upon consent from either party.
(2) : The seller is deemed to have unconditionally appropriated the goods to the contract when he
delivers the goods to the buyer or to a carrier or other bailee, in pursuance of the contract, and
does not reserve the right of disposal.
Future goods
 Section 2(SOGA) : ―Future goods‖ means ―goods to be manufactured or produced or acquired by
the seller after the making of the contract.‖
 If the seller has to manufacture the goods or to acquire it from another person the goods are
future goods.
6) Perish of Goods
a) Before Contract (S7)
 This will be governed by section 7 of SOGA.
 Section 7: Where there is a contract for the sale of specific goods, and if the goods without the
knowledge of the seller have, at the time when the contract was made, perished or become so
damaged as no longer to answer to their description in the contract, the contract will be VOID.
 2 elements in section 7 :
a) the good is a specific good
b) the good has been perished without the seller knowing it when the contract is made.
 So, when the contract is void, the remedies under Contract Act applies (to put back the parties to the
original positions before the contract), they can‘t bring actions against each other.
[Couturier v Hastie]
Fact: A cargo of corn was in transit to London. The owner of the cargo sold the corn to a buyer in
London. The cargo had however, perished and been disposed of before the contract was made. The
seller sought to enforce payment for the goods on the grounds that the purchaser had attained title to
the goods and therefore bore the risk of the goods being damaged, lost or stolen.
Held: The contract was void because the subject matter of the contract did not exist at the time the
contract was made.
b) After contract (S8)
 Section 8: When there is an agreement to sell specific goods, and subsequently the good, without
any fault of either party, perish or has become so damaged as no longer to answer to their
description in the agreement, before the risk passes to the buyer, the agreement can be AVOIDED.
 3 elements under s8:
1) The good must be specific good.
2) The perish happens without either party‘s fault.
3) The risk hasn‘t passed to the buyer
c) Meaning of "perish”
 Perish means when the good is dead, not existing anymore and it has severely broken down until it
can‘t be a specific good anymore.
[Barrow, Lane & Ballard Ltd v Philip Philip & Co]
Fact: A contracted to sell certain amount of goods to B but when the contract is made, unknown to
A, some goods had actually been stolen thus could not supply the amount as contracted.
Held: It was held that the contract was void. Therefore no duty or liability on the part of either
party shall accrue in this case. The seller is not entitled to the price and the goods accepted by the
buyer shall be returned.
[Mc Rae v Commonwealth Disposals Commission]
Facts: The Commonwealth and the McRaes entered into a contract for a shipwreck (via tender). It
turned out the shipwreck had never existed. Can the plaintiffs claim for thee expenditure for buying
the tanker that had never existed (the seller said it existed merely because he heard it)? Could the
contract void for common mistake.
Held
: The court laid down that principle that in circumstances where the parties have equal knowledge
as to the existence of the subject matter, and it turned out to be false, then it would justify the
implication of a condition (that the ship must exist). In that case, the contract would be void for the
failure of the condition precedent, and parties would be restored to their original position. However,
in a case where only one party has knowledge of the subject matter (such as the present
circumstances), and the other simply relies on what the first party intimates, then there could be no
condition precedent. The first party promises or guarantees the existence of the subject matter and
will be in breach if it does not exist.
: A party cannot rely on mutual mistake where the mistake consists of a belief which is, on the one
hand, entertained by him without any reasonable ground, and, on the other hand, deliberately
induced by him in the mind of the other party.The buyers relied upon, and acted upon, the
assertion of the seller that there was a tanker in existence. It is not a case in which the parties
can be seen to have proceeded on the basis of a common assumption of fact so as to justify the
conclusion that the correctness of the assumption was intended by both parties to be a
condition precedent to the creation of contractual obligations. The officers of the Commission
made an assumption, but the plaintiffs did not make an assumption in the same sense. They knew
nothing except what the Commission had told them.The only proper construction of the contract is
that it included a promise by the Commission that there was a tanker in the position specified. The
Commission contracted that there was a tanker there.
: So, the complainant was entitled for damages from the defendant. The contract was not null and
void because of a common mistake. A contract did exist between the complainant and the defendant
and since this oil tanker did not exist, this was a breach of contract. Thus, the complainant was
entitled to damages for breach of contract and for the purchase price amount of the oil tanker, as
well as the expenses paid out for the salvage operation.
 Hence, section 8 is rarely used but it can be effected in situtions where it is stated that risk will not
be trasnferred to the buyer until the buyer comes and takess it. So, section 8 will only be used in
special circumstances where risk is agreend on by both parties.
How to answer question in exam:

1) Determine the type of goods (specific etc)
2) Whether there is a transfer of risk?
3) If yes, who bear the risk ? And what‘s they can do?

Chapter 2: The Terms Of The Contract Of Sale Of Goods
1) Conditions & warranty
 Terms can be divided into expressed terms and implied terms.
 Express and implied terms can be further divided into:
Express terms Implied terms (under the Act)
i. condition i. condition
ii. warranty ii. warranty
iii. nominate terms
Section 12: Condition and warranty

(1) A stipulation in a contract of sale with reference to goods which are the subject thereof may
be a condition or warranty.
(2) A condition is a stipulation essential to the main purpose of the contract, which will confer
the aggrieved party to repudiate the contract if breached.
(3) A warranty is a stipulation collateral to the main purpose of the contract, if breached, the
aggrieved party may seek for damages but not repudiate the contract.
(4) Whether a stipulation in a contract of sale is a condition or a warranty depends in each case
on the construction of the contract.
The stipulation may be a condition, though called a warranty in the contract.
 Effect of breaching conditions or warranty :

S12(2) : The contract MAY by repudiated (Meaning that you can choose to enforce the contract but
seek for damages only)
S12(3) : The contract cant be repudiated but the aggrieved party can only seek for damages.
Unser s12(2), one can still enforce the contract and treat it as a breach of warranty and seek fot damages:
[Associated Metal Smelters v Tham Theow Toh]
Fact: The defendant agreed to sell a metal melting furnace to the plaintiff. The condition of the contract
sated that the furnance would reach a temperature of 2600F but it was not fulfilled.
Held: The Court held that there was a breach of condition but instead of repudiating the contract, the
court allowed the plaintiff to treat it as a breach of warranty and allowed the plaintiff to seek for
damages only while keeping the furnance.
2) Stipulation of time under SOGA (s. 11)

Section 11: Stipulations as to time
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 of the contract of sale. Whether any other stipulation as to time is of the essence of
the contract or not depends on the terms of the contract.
 Hence, time to payment is not the essence of the contract unless stipulated so in the contract. Also, whether
stipulation as to time for other matters is a condition or not depends on the terms of the contract and the
intention of the parties.
[Thames Sack and Bag Co Ltd v Knowles & Co Ltd ]

Fact: The seller agreed to sell to the buyer certain goods, to be delivered by certain date. This
"spot" contract further required prompt delivery and provided for storage and insurance at the
seller's expense up to certain date.

Held: The judged construed the contract and ruled that the object of the contract is that the
buyer should pay on time so that every deal is done before the stipulated date. Hence, time is of
the essence in this case.
 However, delivery time is the essence of contract because it is a condition. So, the buyer can repudiate the
contract if the seller failed to deliver the goods on time but if you still accept the goods despite it arrived late,
it means you have waived your right to repudiate the contract, though you can still seek for damages.
 Also, if the goods are delivered by installments under a the same contract, the property of the goods pass to
the buyer upon delivery and acceptance but if the seller failed to deliver the total amount of goods
contracted, the buyer‘s property to the goods is defeasible. [ McDougall v Aeromarine Ltd etc ]
 If you waved your right to make time of an essence, and after that you wish to make time of an essence
again, you can do so as long as you give a notice within a reasonable time to the other party.
[Charles Richards Ltd v Oppenheim ]
Fact: The parties contracted that certain good was to be delivered to the buyer by certain date. Then
good could not be completed and delivered on time, the buyer accepted agreed to extend the delivery
date but said that he would not accept the good if it can‘t be delivered by the newly agreed date. Later,
the good still could not be delivered to the buyer where the buyer refused to accept the good.
Held: The buyer is entitled to do so so long as the notice is reasonable. Adequate protection has been
given to the seller by requiring the notice has to be reasonable. The reasonableness will be determined
by the court.
3) Instances where breach of condition to be treated as a breach of a warranty (s13)

Section 13: When condition to be treated as warranty
(1) Where a contract of sale is subject to any condition to be fulfilled by the seller the buyer may waive
the condition or elect to treat the breach of the condition as a breach of warranty and not as a ground
for treating the contract as repudiated.
(2) Where a contract of sale is not severable and the buyer has accepted the goods or part thereof, or
where the contract is for specific goods the property in which has passed to the buyer, the breach of any
condition to be fulfilled by the seller can only be treated as a breach of warranty, and not as a ground
for rejecting the goods and treating the contract as repudiated, unless there is a term of the contract
express or implied to that effect.
(3) Nothing in this section shall affect the case of any condition or warranty the fulfilment of which is
excused by law by reason of impossibility or otherwise.
 Section 13: Although the term breached is a condition, s.13 provides that there are 3 situations where the
buyer may not claim a remedy for breach of condition. In these 3 situations, the conditions may/must be
treated as warranty where he may only claim for damages only. The situations are:
(1) When the buyer make the contract subject to certain conditions to be fulfilled by the seller, the buyer
MAY treat the breach of condition as a breach of warranty
[Associated Metal Smelters v Tham Theow Toh]

Fact: The defendant agreed to sell a metal melting furnace to the plaintiff. The condition of the
contract sated that the furnance would reach a temperature of 2600F but it was not fulfilled.
Held: The Court held that there was a breach of condition but instead of repudiating the contract,
the court allowed the plaintiff to treat it as a breach of warranty and allowed the plaintiff to seek
for damages only while keeping the furnance.

(2) In these situations, breach of any condition to be fulfilled by the seller MUST be treated only as a
breach of warranty
2.1: When the buyer has accepted the goods or part of the goods under a contract that is not severable,
 Acceptance will only be valid if it is within s42
Section 42: 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.
 Reasonableness is a question of fact
Section 63: Reasonable time a question of fact

Where in this Act any reference is made to a reasonable time, the question what is a reasonable
time is a question of fact.
 Example where contract is not severable :
Exp: A bought 100 packs of sugar which will be paid by instalments and delivered by 1000 times
but the price will be paid once all the sugar has been delivered
Exp: Taking the example above, if the price will be paid every time it is delivered (i.e, for every
1pack you delivered, I pay you RM1). In this situation, this is a severable contract, thus, if the
first 2 delivery has no problem but something goes wrong to the third delivery, the buyer can‘t
reject the first 2 packs of sugar but he can only seek for damages for the third delivery which
goes wrong.
OR,
2.2: When the contract is to sell specific goods AND the property in the goods has passed to the buyer.
(This does not usually exist. This is because usually the property in the goods is only transferred in a
sale of specific goods if it is an unconditional contract. Refer to s. 20.)
Section 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
[Dennant v Skinner and Collom]

Fact: The plaintiff sold a car to Mr. X by auction. Mr. X was a swindler and gave a false name
and address and he asked the auctioneer to allow him to take the car (goods) away in return for
his cheque. The Plaintiff allowed Mr. X to take away the goods without paying and the
auctioneer was left with a cheque but before the Swindler Mr. X took the goods away, the
Plaintiff required him to sign a document, which stated that the title to the vehicle would not
pass until the cheque cleared. Mr. X upon receiving the goods sold the car to the Defendant and
what went to court was the dispute as between the auctioneer (plaintiff) and the defendant
(buyer) as to who had the better title. The issue was whether the property in the car had passed
from the auctioneer to the fraudster since you cannot transfer that which you don‘t own and if X
had no property in the car, (the intention of the parties was that the property would not pass
until the cheque was cleared).
Held: Property passed to the fraudster when the hammer fell and by the time the parties signed
the document, property had already passed. Since the document was signed after the hammer
had fallen and therefore X had property in the goods and could pass a good title to the buyer.
(This is contrary to section 20 since by that section, you arrive to the conclusion that property
would pass after the payment was done)
4) Conditions and Warranties Implied Under SOGA

SOGA create certain implied conditions and warranties:
4.1) The right to sell (S14(a) - condition)
4.2) Quiet possession of the goods (S14(b) - warranty)
4.3) Free from any charge or encumbrance (S14(c) - warranty)
4.4) Description (S15 - conditions)
4.5) Fitness (S16 (1)(a) - condition)
4.6) Merchantable quality (S16(1)(b) - condition)
4.7) Sale by sample (S17 (2) - conditions)
P/s : in exam, s16(1)(a) & (b) can discuss together

: if the question is ―advice: give suggestion as to what the client should do from the legal
perspective (with sections etc, like the party should not ―accept‖ the good etc)
Section 14: Implied undertaking as to title, etc.
In a contract of sale, unless the circumstances of the contract are such as to show a different
intention, there is—
(a) 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
(b) an implied warranty that the buyer shall have and enjoy quiet possession of the goods
(c) 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.
Section 15: Sale by description
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.
Section 16: Implied condition as to quality or fitness
(1) Subject to this Act and of any other law for the time being in force, 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:
(a) Where the buyer, expressly or by implication makes known to the seller the particular purpose for
which the goods are required, so as to show that the buyer relies on the seller’s skill or judgment, and
the goods are of a description which it is in the course of the seller’s business to supply (whether he is
the manufacturer or producer or not) there is an implied condition that the goods shall be reasonably fit
for such purpose: Provided that, in the case of a contract for the sale of a specified article under its
patent or other trade name there is no implied condition as to its fitness for any particular purpose.
(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 defects which such examined ought to have revealed.
(2) An implied warranty or condition as to quality or fitness for a particular purpose may be annexed by the
usage of trade.
(3) An express warranty or condition does not negative a warranty or condition implied by this Act unless
inconsistent therewith.
Section 17: Sale by sample
(1) A contract of sale is a contract for sale by sample where there is a term in the contract express or implied
to that effect.
(2) In the case of a contract for sale by sample there is an implied condition—
(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 shall be free from any defect rendering them unmerchantable which would not be
apparent on reasonable examination of the sample.
4.1) The right to sell (S 14 (a))

 This is an implied condition. S14(a) provided that, at the time the contract of sale is made, the seller is
presumed to have the right to sell the goods concerned.
 This means that whether or not the seller is the owner of the goods, he is assumed to have permission from
the rightful owner to sell the good.. Thus, if at the time the contract of sale is made, the seller doesn‘t have
the right to sell the goods concerned, he will breach S14(a).
 Since s14(a) provided that such right is a ―condition‖, the buyer has the right to return the good and recover
his money if such implied condition is breached.. (but there are contradicting judgments, saufi says the right
to sell is not conclusive because of this case):
[Roland v Divall] – this case receive many criticisms

Fact: The claimant, a car dealer bought a car from the defendant. He painted the car and put it in
his showroom and sold it to a customer. Two months later the car was impounded by the police
as it had been stolen. It was then returned to the original owner. Both the claimant and
defendant were unaware that the car had been stolen. The claimant returned the money to the
customer and brought a claim against the defendant under the Sale of Goods Act.
Held: The defendant did not have the right to sell the goods as he did not obtain good title from
the thief. Ownership remained with the original owner. The defendant had 2 months use of the
car which he did not have to pay for and the claimant was not entitled to any compensation for
the work carried out on the car.
[Butterworth v Kingsway Motors]

Fact: A hire purchase finance company let a car to X on hire purchase. X mistakenly, thought
that she had ‗a right to sell the car‘ provided she continued to pay the hire purchase installments,
and she purportedly to sell it to Y. The car passed through several hands and to the defendant
where he sold it to the claimant. After the claimant had used the car for nearly a year, he received
a notification from the finance company claiming the delivery up to them of the vehicle. The
plaintiff therefore claimed from the defendant the whole purchase price for the breach of s12(1).
Within a week however, A paid the final installment, so the title passed to her and this fed the
defective titles of all the subsequent purchasers.
Held: The claimant could recover the whole purchase price from the defendant‘s breach of s12(1)
of English SOGA (para materia with S14). The reason being that X had paid the full payment of
the car hence had good title of the car, so he could sell the car to a third party. A buyer could
only rescind the contract if the seller doesn‘t have a good title, once the seller‘s defective title is
cured, the buyer could not rescind the contract on the basis that S12(1) is breached.

[Lian Lee Motor Sdn Bhd v Azizuddin]
Fact: (Similar to Roland)
Held: The defendant did not have the right of possession to the said Toyota and could not
consequently give it to the plaintiff. The plaintiff has a right to sue for the price paid as money
had and received on a total failure of the consideration (saufi: there was actually a
consideration).
P/s: S3 of SOGA is can be brought in to say that contract act will apply as long as it is consistent
with SOGA, since there is a contract, the contract shall prevail.
 Meaning of ―the right to sell‖ (This case shows that even seller may violate s. 14 (a) even though he is the owner of
the goods sold):
[Niblett v Confectioners’ Materials Co Ltd]
Facts: The seller sold to the buyer some tins of condensed milk which labelled ―Nestles Condensed
Milk Co.‖ Nestles then complained and threatened with legal action for infringing their patent (due to
the label). The tins were detained in customs and buyer was compelled to remove the labels in order
to secure the release of the goods. The tins then could be sold at a reduced price.
Held: Under a contact of sale, the seller was only obligated to pass good title to the buyer but
also to ensure that the goods did not infringe the right of a third party so as to enable the third
party to restrain the sale (in this case it was the trademark of Nestle). A person who can sell goods
only by infringing a trade mark has no right to sell, even though he may be the owner of the goods.
The buyer was entitled to damages for breach of s12(1) by the seller, even though the seller had
passed the property in the goods to the buyer.
 When the breach of the implied condition of right to sell is not occasioned by the owner of the good
(exp: finance company in the context of hire purchase), the seller can‘t be liable.
[Ahmad Ismail v Malayan Motors]
Fact: The claimant bought a car from the defendant but the car was seized by the police because the
police suspected that the car was stolen, thus rendered the contract impossible to be performed.
Held: The seller is not liable since the breach of the condition wasn‘t caused by the seller itself. The
allegation of breaching of S14(a) must be supported with evidence, mere suspicious is not sufficient.
4.2) Quiet possession under SOGA (S 14 (b))

 This is an implied warranty. It means that the buyer can enjoy the item purchased and his peaceful
possession will not be interrupted by a third party.
 This section is usually invoked in a dispute where the seller doesn‘t have the right to sell. It must also be
noted that s14(a) and (b) are interrelated. A seller may not breach s14(a) but he may breach s14(b) .
[Microbeads AG v Vinhust ]
Fact: The claimant purchased some road marking machines from the defendant. After the
purchase, a third party was granted a patent right in the machines. This meant that the claimant
could not use the machines unless they were granted a licence to do so.
Held: There was no breach of s.12(1) (S14(a)) as at the time of the sale the seller had the right to
sell the goods. However, there was a breach of s.12(2) (S14(b)) in that the buyer could not enjoy
quiet possession of the goods.
[Heng Long Motor Trading Co v Osman Abdullah ]

Held: S14(b) can still be enforced even if the goods are seized by the authority (in the case, the
custom) under a a valid law. What‘s important is that the buyer is derpived of his right to quite
enjoyment of the good since the buyer could not enjoy the good peacefully without interruption
from a third party

4.3) Free from any charge or encumbrance under SOGA (s. 14 (c))
 This is an implied warranty. The goods must be free from any encumbrance, mortgage or charge unless
the charge or charges have be communicated to or known by the buyer when the contract is made.
4.4) Description under SOGA (s. 15)

 Section 15 is an implied condition. It provided that the goods delivered must comply with the description
specified in the contract.
i) To what extend such ―:deception‖ rule apply?
[Beale v Taylor] – Description must be complied with, even if the seller is innocent as to the non-
compliance.
Fact: Taylor published an advertisement to sell a car describing it as ―white, 1961, herald
convertible….‖ Relying on that description Beale came to see the car. Since he did not
have a licence, he did not actually take a test drive, but just sat on the passenger side.
After the test run he also saw a metallic disc on the rear of the car with the figure 1200 on
it. He bought the car believing it to be the 1961 model. When he got the license he found
the car unsatisfactory. On examination, the mechanic told him that the car was made up
of two cars welded together, the front portion was one 948 model while the rear portion
was the 1200 model. Further the car was found to be in unroadworthy and unsafe. Beale
filed a suit claiming damages.
Held: The description must be complied with as it is stated in the advertisement even if
both parties were innocent because no one could see from an ordinary examination that it
was made of two cars welded together. The reason here being that the buyer relied on the
description of the car and bought it.
[Arcos v Ronaasen] - When it comes to measurements, it is very strict

Facts: The parties entered into a contract, the buyer ordered some timbers from the
seller, specified the timbers to be ―half-an-inch in thickness‖. However, when the buyer
received the timbers, 85% of them was found to be between 1 / 2 inch and 9 / 16 inches
and 9% of the goods are between 9 / 16 inch and 5 / 8 inches. The issue was whether the
buyer had the right to reject goods that do not conform to specifications within the
contract for sale, yet are commercially within and merchantable under the contract‘s
description.
Held: If the written contract specifies conditions of weight, measurement and the
like, those conditions must be complied with. A ton does not mean about a ton or a
yard about a yard. Still less when you descend to minute measurements does 1 / 2 inch
mean about 1 / 2 inch. If the seller wants a margin he must and in my experience does
stipulate for it.
ii) Meaning of ―description‖ :

[Re Moore and Landauer] - This case has given a broad meaning to ―description‖ which includes
the way a good is packed.
Fact: The seller sold 3100 tins of canned fruit to the buyer. It was agreed that the tins
would be put into boxes with 3o tins each. However when the goods were delivered, 50%
of the boxes had only 24 tins, though the total amount supplied was correct, which was
3100 tins.
Held: The seller has breached the implied condition under s.15. Notwithstanding that
there was no loss to the buyer, he could reject the whole consignment because of the
breach of s15 of the Sale of Goods Act (goods must correspond with the description).
P./s: Lord Wilberforce in the case of Reardon Smith Lines v Hansen Tangen did not agree with
the decision in Re Moore.
[Reardon Smith Lines v Hansen Tangen] – The ―description‖ must have significant effect on the
good orders as oppose to Re Moore, it can‘t be something technical.
Fact: A charterparty (A transportation contract) described the ship concerned as "called
Yard no 354 at Osaka". Osaka was the name of the yard responsible for building the
ship, although the building was subcontracted to another yard, Oshima. The Osaka yard
could not handle a tankship of that size. Both parties knew this. But the buyers, wanting
to get out of the contract for another reason, argued that the ship did not correspond with
the description under s 13 of the Sale of Goods Act 1979. (s15 in the Malaysian SOGA)
Held: The words used did not fall under s 13, because they were merely labeling which
vessel was involved. The Court must ―place itself in thought in the same factual matrix as
that in which the parties were‖. The hull number and yard had no particular significance.
The description needs to focus on the goods not excessively technical arguments.
[Harlingdon etc etc Ltd v Christopher Hull Ltd] - This case has a modern approach to the
construction of the implied term of description in s. 15.
Fact: The claimant purchased a painting from the defendant for £6,000. The painting
was described in an auction catalogue as drawn by a popular German artist. Both the
buyers and the sellers were London art dealers. The sellers were not experts on German
paintings whilst the buyers specialised in German paintings. The seller also admitted
that they knew nothing much about the German artist. The purchasers also sent their
experts to inspect the painting before agreeing to purchase. After the sale, the buyers
discovered that the painting was a fake and worth less than £100. They brought an
action based on s.13 Sale of Goods Act in that the painting was not as described.
Held: Section 15 does not make all the descriptions in a contract a condition. It is only a
condition if the description has influenced the buyer and the buyer relied on the description
when entering into the contract. In this case, since the seller admitted that they did not
know much about the German artists and the buyer had sent their experts to inspect the
painting, the allegation that the painting was drawn by the German artist was no longer a
description since it did not influence the buyer much nor the buyer ―relied‖ on the
statement. So, S.15 only applies to goods sold by ―description‖ and therefore the buyers
had no protection.
4.5) Fitness under SOGA (S16(1)(a))

 Under s16(1)(a), the goods sold must be ‖suitable‖ for the purpose it was purchased, whether or not
that is a purpose for which such goods are commonly supplied.
 However, this implied condition will not be ―effected‖ automatically like other implied
conditions/warranty.
 This section will only be ―effected‖ once its 4 elements are fulfilled. This is based on the principle of
caveat emptor or ―let the buyer beware‖, which means the burden is on the buyer to be careful when
making choices.
 The 4 elements are [Union Alloy (M) Sdn Bhd v Syarikat Pembinaan Yeoh Tiong Lay Sdn Bhd]:
(i) The buyer, expressly or by implication, makes known to the seller the particular purpose for
buying the goods.
- The term ―particular purpose‖ is wide because it is not foreseeable which particular
purpose the buyer is buying the goods and sometime it happens that goods seem
suitable for one purpose and unsuitable for the other.

- In such a situation it would not be wrong to assume that goods sold by the seller are
required for a normal purpose or one of normal purposes.
- In a situation where a buyer ordered goods to be made according to his specification
and is required for a particular purpose then the buyer need to communicate it properly
to the seller then the seller's duty is limited to using all the reasonable care and skill in
selecting the material or making the goods.
- Hence, not in every case, the buyer is required to tell the seller his purpose of buying
the good:
[Grant v Australian Knitting Mills Ltd]

Fact: The plaintiff bought some underwear from the defendant. There was
nothing indicating that the underwear should be washed before wearing which
later led to the plaintiff contracted some fundamental infections. The issue was
whether the plaintiff relied on the salesman's skill & judgment, giving rise to the
statutory warranty the underwear was fit for its purpose.
Held: There is no need to specify in terms the particular purpose of the buyer
buying the goods, if in that situation, that is the only purpose for which anyone
would ordinarily want the goods. Since in this case, the goods concerned were
underwear, the plaintiff need not to tell the seller his purpose of buying those
underwear since ―to wear it‖ was the ―ordinary purpose anyone would want the
good‖, so in this case, the seller was held liable for failing to warn the plaintiff to
wash the underwear before wearing them.
- However, under s16(1)(a), it doesn‘t mean the good must be suitable for all purposes. It
must only be fit for an ordinary purpose. If the buyer uses it for other purposes or
vulnerable to certain things that ordinary people don‘t, the onus is on him to tell the
seller.
[Griffiths v Peter Conway Ltd]
Fact: The purchaser bought a coat specially made for the purchaser. The coat
was apparently fit for its purpose except that, because the purchaser had
abnormally sensitive skin, the wearing of the coat caused the purchaser to
contract dermatitis, a consequence that would not have been suffered by a
purchaser who did not have such sensitive skin.
Held: Since the purchaser had not made the seller aware of its sensitivity, the
seller was not in breach of the implied term as to fitness for purpose because he
did not know that he had to cater for the needs of a person of such sensitivity.
- Goods supplied must be suitable for the purpose it was purchased.:
[Priest v Last ]
Fact: The buyer bought a hot-water bottle from the seller, a chemist.The buyer‘s
wife used the hot-water bottle and after 5th times, the bottle burst and hurt the
wife. Evidence showed that the bottle was not fit for use as a hot-water bottle.
Held: If the buyer told the seller the particular purpose which he/she is
purchasing the goods, then it is an implied condition that the goods are reasonable
to for the purpose. So,the seller was liable for the damage.
[Zaitun Industries v Fiman Plastics Sdn Bhd]

Fact: The plaintiff was the sole supplier and manufacturer of plastic bottles used
by the defendant in packaging their products which included baby syampoo
bottles. There were latent defects on the bottles when shampoo was filled into the
bottles. These latent defects were not discovered at the time of receipt of the
goods. The issue to be determined was whether the defendant had made known to
the plaintiff the purpose for which the bottles were required so as to show that he
relied on the seller's skill or judgment was one of fact depending on the
circumstances of the particular case.
Held: From the facts of this case, the defendant had when purchasing the said
bottles, made known, to the salesman of the plaintiff that they were meant to
contain baby shampoo and that the said bottles should be fit for that purpose. So,
the court held that there was a breach of s16(1)(a) due to the defects of the bottles.
(ii) ―……so as to show the buyer relies on the seller‘s skill and judgment.‖
- In order to show reliance on the seller‘s judgement, the buyer need not to do more than
showing that he made known to the seller the purpose for which he was buying the
goods. [Khong Seng v Ng Teong Kiat Buscuit Factory Ltd]
- As discussed in Grant’s case, the buyer needs not to show that he relied on the seller‘s
skill and judgement in ordinary cases.
- This will only apply in special cases like when the buyer needs advice from the seller to
make choices.
- It must be noted that this element is crucial in the sense that if the customer bought
something because he ―trust/relied on the brand‖ (rather than the ―seller‖) , this element
can‘t be proven and thus s16(1)(a) will not be applicable.
(iii) ―the goods are of a description which it is in the course of the seller‘s business to supply.‖
- Basically, it means that the seller must be someone who regularly supplies the good
(whether he is the manufacturer or producer or not)
- Thus, if something is sold under a private sale, it doesn‘t come under this section
-
[Spencer Trading Co Ltd v Devon ]
Fact: The manufactured had previously supplied to the Plaintiff on a special
order, an adhesive substance made from gum resin for making flypapers. The
following year, the Plaintiff ordered a further supply for the same purpose from
the manufacturer, but this time, the manufacturer replaced the natural material
used previously with synthetic raw materials instead. Consequently, the
flypapers were unsatisfactory for its purpose.
Held: The goods are of a description which it is in the course of the sellers
business to supply. Therefore the manufacturer was liable for breach of an
implied condition that the goods were supposed to be fit for the purpose for
which they were required. (saufi: this may even apply in situations where a car
seller sells a van)
[Ashington Piggeries Ltd v Christopher Hill]

Fact: The buyers relied on the sellers to make up goods for the buyers
specifications but the seller failed to ensure that the ingredient of the good is of
suitable quality. In this case, X, who seems to be an expert in mink (貂) nutrition
approached the defendants on the plaintiff‘s behalf asking them to compound a
food which was expressly made known that it was for mink which was to be

made up with X‘s formula. It was later found, after heavy losses of mink, that
the hearing (鲱鱼) meal used by the defendants contained highly toxic to the
mink. This was unknown to the parties. The defendants had customary
supplied food for animals but not for mink before. The herring meal had been
taken from a third party, who had stipulated that the food were to be taken" with
all faults and defects, damaged or inferior, if any, to be arranged mutually or by
arbitration".
Held: The mink food in its contaminated form did not comply with the
description, which the direct, foreseeable and natural consequences of it would
be death of the mink. Therefore, the defendant was liable for the damage.
(iv) ―the sale is not under the patent or other trade name.‖ (note: this has been repealed in the UK)
 As stated in the proviso to s. 16 (1) (a), the implied condition does not arise if the sale is
made under a patent or trade name.
[Daniels v White]
Fact: The plaintiff purchased a bottle of lemonade from the defendant and mixed
it with beer which later was contaminated with carbolic acid. He consumed some
of it with his spouse and they both suffered illness.
Held: The implied condition of fitness did not apply as the sale of the lemonade was
made under the trade name/ patent name .
 The principle above is subject to two exceptions:

(a) When the seller is a manufacturer of the goods (exp: buying straight from the factory)
(b) when the buyer relied (expressly or by implication) on the skills of the seller even if
the seller was not the manufacturer
[Baldry v Marshall]
Fact: The buyer bought a car of the type ―Fiat‖ and told the seller that he wanted
to use the car as a taxi. After that, it was found out that the car was not suitable for
such purpose (touring) but the buyer had bought the car under the trade name
―Fiat‖. However, the buyer had shown that he relied on the skills on the seller.
Held: The seller would be liable since the buyer shown reliance on him, so the
seller could not escape from his liability even if the cars were bought under a
trade name.
[Union Alloy (M) Sdn Bhd v Yeoh Tiong Lay Construction Company Sdn Bhd] – This case
applied Baldry‘s case.
Fact: The buyer bought an elevator machine from the seller with the trade name
―Skyrack‖ and one day, some labours ride on that elevator. The elevator fell and
caused death of the labours. The buyer invoked S16(a) and sued the seller.
Held: Even the sale was made under the trade name ―skyrack‖, it doesn‘t mean
s16(1)(a) is not applicable at all. However, the plaintiff‘s claim failed on the basis
that there was no evidence which showed that the machine was unfit.
[Medicon Plastic Industries Sdn Bhd v Cosa Company Sdn Bhd] – Applied Baldry‘s case.
Fact: The plaintiff sued the defendant for the damages that they suffered as a result of their
purchase of two machineries namely Alpha and Boe-Therm. The plaintiff alleged that the
Alpha failed to meet the specifications, thus was not merchantable and was not fit for the
purpose for which it was bought. The plaintiff also alleged that the Boe-Therm was
supplied without a heating element and as such was not fit for the purpose for which it was

bought.
Held: The plaintiffs relied on the seller’s skill resulting in there being an implied
condition that the machines would be reasonably fit for the purposes for which
THEY were required. The situation here was a far cry from a purchase of a
bottle of patent medicine or some common article like an electric iron or even a
television set, sold under a popular brand name where you pick it off the shelf as
it were, which is the sort of situation where the proviso could be invoked
successfully. I pause to note that in England, in 1973, as a result of the test
Suggested in Baldry v Marshall, the proviso was removed by an amendment to
the Act.
 S16(1)(a) says ―Goods supplied under the contract of sale‖, the ―goods‖ here includes the package of the
good. Thus, not only the good but he package must be fit as well:
[Geddling v Marsh]
Fact: The buyer bought a bottle of mineral water from a supermarket. The bottle exploded even
though nothing was wrong with the water itself, the bottle even indicated that the bottle belongs to
the seller which had to be returned.. When the buyer sued the seller, the seller argued that he was
only selling the water, not the bottle.
Held: The condition of fitness for the buyer‘s purpose doesn‘t only apply to the good itself but
everything that is supplied in the performance of the contract which include the containers or
package of the goods.
 The liability of the seller under s. 16 (1) (a) is strict. It means that as long as the elements are fulfilled, the
liability of the seller is strict.
[Frost v Aylesbury Diary Co Ltd]
Held: Once the elements of s16(1)(a) have been fulfilled, the liability of the seller is strict. Whether
the seller was negligent or not is immaterial.
 The Buyer must comply with the instruction/ warning about the use of the goods, otherwise, the buyer
can‘t bring an action under s16(1)(a).
[Wormell v RHM Agriculture (East) Ltd]
Held: Whenever there is warning or instruction about the use of the good, the buyer must comply
with it. Otherwise, the buyer can‘t bring an action under s16(1)(a).
4.6) Merchantable quality under SOGA (s16 (1) (b))

 Section 16(1)(b) provided an implied condition that the goods must be of merchantable quality.
 Under S2, ―quality‖ means ―the state or condition.‖
Section 2: Interpretation
―quality of goods‖ includes their state or condition
 However, there is no definition of the term ―merchantable‖ in the Act.

 Refer to the words ―Where goods are bought by description from a seller who deals in goods of that
description‖ in s. 16(1)(b). This means that, this condition would only arise if the seller sold the goods in
his ordinary business. At the same time, the buyer is not required to show that he relied on the skills of
the seller.
4.6.1) Test to determine merchantable-ness

There are two types of tests used often to determine whether the goods comply with the requirements
of ―merchantable quality‖, which much depends on the fact of the case:
a) Acceptability test
b) Usability test
a) Acceptability test
 This essence of the test if to see whether the buyer would buy the good without asking
for abatement (降价) of the price if he was aware of the defects in the goods. If no, the
good is considered acceptable.
[Henry Kendall & Sons v William Lillico & Sons Ltd ]

Held: The test is that the goods ―should be in such a state that a buyer fully
acquainted with the facts, and therefore knowing what hidden defects exist and not
being limited to their apparent condition would buy them without abatement of the
price.‖
 Under this test, the court has also ruled that several factors have to be taken into account:
1) The price paid for the goods:

If the price is lower than normal price, it is expected that the quality of the good
may not be as high as a normal good.
[Thain v Annisland Trade Centre]

Fact: The plaintiff bought a car from the defendant. It was between five to
six years old and had done approximately 80,000 miles at the time of
purchase. It developed a fault in the gearbox after 2 weeks use. The issue
was whether the car was merchantable. To obtain the price of £2,995 , the
defendant declined a three-month warranty that was on offer. At the time,
a new car of this type would have cost between £10,000 and £11,000. The
cost of replacing the gearbox with a new one, given the value of the car,
was uneconomic. Ms Thain continued to use the car for some weeks but,
as the condition of the bearing deteriorated, the car began to suffer power
loss and she put it off the road. She then formally rejected the car and
brought proceedings.
Held: People who buy second-hand cars get them at less than their
original selling price in a large part because the second-hand cars have
attached to them an increased risk of expensive repairs. Given the age of
the car when the car purchased, it is expected that the car may be
malfunction anytime, its durability was just a matter of luck. Hence, the
price of a Renault, £2,995, was considered reasonable because there was
the risk of expensive repairs attached to the Renault
[Beecham & Co Pty Ltd v Francis Howard & Co Pty Ltd]

Fact: The defendant bought ―Spruce Timber‖ for making piano‘s, the
defendant selected the timber himself from the plaintiffs stock, it was later
found to have ―dry rot‖ which could not be noticed on a reasonable
external examination. The sellers argued it is still merchantable because it
could still be used for making boxes, a common use for Spruce. But the
buyer paid 80 shillings per hundred feet of timber while spruce timber for
box making was only worth 30.

Held: The timber was not of merchantable quality because ―no
businessman, having a contract to buy spruce timber whether for resale or
for purposes of manufacture, would think for a moment of accepting this
timber, its condition being known without a very large reduction upon
current market prices‖
2) The description given to the goods

 If the good is a second-hand good, it can‘t be expected to have the quality of a
new good.
[Bartlett v Sydney Marcus Ltd]

Fact: The defendant sold to the plaintiff a second –hand car, which had
defects in the clutch. The plaintiff thought it could be put right by a minor
repair. The price was reached on the understanding that the plaintiff would
have the clutch repaired at his own garage. The plaintiff drove it for about 200
to 300 miles over a period of four weeks and then took it to his garage, where
it was found that the defect was far more serious and that the engine would
have to be dismantled to repair the clutch system.
Held: A second-hand car is “reasonably fit for the purpose” if it is in

roadworthy condition, fit to be driven along the road in safety, even though
not as perfect as a new car. Applying those tests here, the car was far from
perfect, it required a good deal of work to be done on it but so do many second-
hand cars. A buyer should realise that when he buys a second-hand car, defects
may appear sooner or later. The plaintiff knew how the clutch behaved on the
road, but only to discover later that the condition of the clutch was graver than had
been anticipated and would cost more than estimated to put in order. In those
circumstances, no reasonable man could go back to the seller and return the
car, having been warned about the condition of the clutch.
 Based, on the description given in the case, if the good can still be used for other
purposes, the good will be still merchantable.
[Brown v Craiks]
Fact: The buyer entered into a contract to buy some fabric from the seller. The
buyers doesn‘t clearly show their purpose to the sellers . Later, when the buyer
received the goods, it was discovered that the fabric supplied was ―industrial
fabric‖. The buyer rejected to accept the fabric on the ground that it is not suitable
for making dresses while the seller argued that the fabric is still suitable for other
industrial purposes, hence was still commercially saleable, though at a slightly
reduced price. The issue was whether the goods were of merchantable quality?
Held: The goods were of merchantable quality. The goods could be used for
some other purposes and it had commercial value. Therefore it meets the
demand of merchantable quality. If the goods supplied are useless for any purpose
for which goods of that description are usually used then they are probably not of
merchantable quality. On the other hand, if they are still suitable for some of the
purposes for which goods of that description are usually used and could be re-sold
for the same or very nearly the same price as if they were suitable for every
purpose, they will remain of merchantable quality.
 If part of the goods supplied do not comply with the requirement of
merchantable quality, the buyer may reject the whole. Not even if the defects
can be easily fixed:
[Jackson v Rotax Motor and Cycle Co Ltd]

Fact: The buyer bought motor horns from the seller where 50% of the motor
horns were found to be defective. The defendant argued that the detects are just
minor defects which could be fixed easily and quickly.
Held: The motor horns are not merchantable. The fact that the defects can be
fixed easily and quickly without much energy and expenses is not an excuse.
b) Usability test
Under this test, the goods is not of merchantable quality if it can‘t be used for the purpose
which it is normally used for, therefore not saleable under the description.
[Cammell Laird & Co Ltd v Manganese Bronze & Brass Co Ltd]

Held: The goods is not of merchantable quality if it is ―of no use for any purpose
for which goods which complied with the description under which those goods were
sold would normally be used‖.
This test was applied in the Singaporean case. (Note that what‘s the ―normal use‖ of a
good depends much on the fact of the case.
[Seng Hin v Arathoon & Sons Ltd ]
Fact: The parties entered into a contract where the defendant would supply the
plaintiff certain amount of tapioca flour which was to be delivered to Germany.
The sacks in which the tapioca was kept had been painted with Chinese letters in
red ink and this red ink had penetrated the jute cover with the result that some of
the tapioca flour was discoloured. As a result the flour (which was to be delivered
to a German firm) was declared under the German regulations to be unfit for
human consumption. Evidence also showed that the contaminated part did not
contain any injurious ingredient. Thus, the plaintiff brought an action under
s16(1)(b), contending that the said flour was of unmerchantable quality because it
was not saleable as tapioca flour for the normal uses of tapioca flour, namely,
food for human consumption AND starch.
Held: The plaintiffs failed to show that the tapioca flour was of unmerchantable
quality. This is because even if there was discoloration of a small portion of the
flour but the contaminated part did not contain any injurious ingredient.
Accordingly, although the flour was determined as unfit for human consumption
under the German regulations, in the absence of evidence to the contrary, the
flour was at least usable as starch. Moreover, it has not been satisfactorily
proved that it was unfit for human consumption under the Singaporean Law.
4.6.2) Situation where the buyer had examined the goods

 S 16 (1) (b) provided that “if the buyer has examined the goods, there shall be no implied
condition as regards defects which such examination ought to have revealed.”. This means once
the buyer has done the examination of the goods, he can‘t bring an action on the grounds of
those defects which should have been revealed in the examination.
 This proviso applies only if the buyer had examined the goods. The buyer is bound only to
obvious defects. If such defects could have discovered by ―such examination‖ , than the
buyer is not proteted.
 What is the position if the buyer makes a cursory (随便) examination?
[Thornett & Fehr v Beers & Sons]
Fact: The buyer bought barrel of glue from the seller. The buyer only did some external examination, only to
discover later that the goods are not suitable for his purpose. Based on the fact, if the buyer looked into the
inside of the barrel, he could have discovered that the glue was not merchantable.
Held: Buyers who makes a cursory examination, where full examination is possible, is
deemed to have made a full examination. Whether or not the buyer has done thorough
examination, this proviso still applies.
[Frank v Grosvenor Motor Auctions]
Held: The word ―examination‖ under this proviso means thorough or full examination. Thus,
if the buyer merely did a cursory examination, he is still protected under s16(1)(b). The
implied condition of merchantable quality will not apply to latent defects which could not
have been discovered by reasonable. Whether such defect could have beeen reasonably
discovered depends on the examination took place. )
 Additional:
Section 16(2): An implied warranty or condition as to quality or fitness for a particular purpose may be
annexed (附加) by the usage of trade. (in other words, such warranty or condition for quality or fitness
for a particular purpose may arise due to the usage of trade)
Section 16(3): An express warranty or condition does not negative a warranty or condition implied by
this Act unless inconsistent therewith.
4.7) ) Sale by sample (s17)

 Section 17(1) : A contract of sale by sample means a contract for sale where its terms, whether
express or implied, provided for such effect.
 However, the fact that the sale is provided with samples alone doesn‘t mean that the sale is a sale by
sample. The determining factor here is there is an intention or evidence that the sale is intended to be a
sale by sample.
 Section 17(2): Once it is determined that the contract is a contract of sale by sample, there will be
implied conditions as below:
a) the goods supplied must have the same quality with the sample.
 A seller will not have a defence just because the good supplied can easily be made to correspond
with the sample.
[ES Ruben Ltd v faire Bros Ltd]

Fact: The seller sold some rubber sold by sample to the buyer, a shoe manufacturer. The sample
was flat and soft while the goods delivered were crinkly and unsuitable for use in the buyer's
machines.
Held: The seller has breached the implied condition under s 17(2)(a). It was no defence that the
crinkly material supplied could have been made soft as per the sample by a simple process of
warming.
b) that the buyer shall have a reasonable opportunity of comparing the goods supplied with the sample
 This usually happens in C.I.F contracts (CIF = "cost, insurance and freight") where the seller
would payfor the cost of the insurance and delivery of the goods to the destination.
[Polenghi Bros v Dried Milk Co Ltd ]
Fact: The sellers sold a quantity of dried milk powder to the buyers. The contract of sale was a
sale by sample and stated that payment would be made in cash in London upon the arrival of the
powder for shipping or railway documents. The buyers refused to pay on delivery of the
shipping documents and contended that they had a right under the equivalent of s 17(2)(b) of the
SOGA to a reasonable opportunity to compare the good supplied with the sample.
Held: The buyers were entitled to have such an opportunity.
c) the goods shall be free from any defect that would render them unmerchantable, which can‘t be
spotted on reasonable examination of the sample.
[Godley v Perry ]
Fact: The buyer, bought a supply of catapults from the seller under a contract of sale by sample.
The buyer merely pulled back the elastic when examining the catapult. The buyer sold the
catapult to a boy , when the boy used the catapults, it broke and injured his eye. The buyer was
held liable for the damage which then the buyer later sue the seller for supplying defected
catapults. The seller argued that reasonable examination of the sample catapult would have
revealed the defect and the examination of the buyer of merely pulling back the elastic was
unreasonable.
Held: The examination is reasonable as that was all that could be expected from a potential
purchaser. Thus, since the examination could not reveal the defect in the catapult, the seller is
liable for the buyer‘s claim.
Chapter 3: Guarantee In Respect of The Supply of Goods Under The Consumer Protection Act
1) Intro
• Apart from SOGA, another Act enacted to protect consumers is the Consumer Protection Act, effected
from 15 November 1999.
• CPA is important to protect to consmers because the Contract Act is drfated baded on the principle of
freedom to enter into contracts while SOGA is not protecting cosumers wide enough as implied terms
(conditions and warranties) can be excluded especailly by the seller. (this is because usualy sellers
would draft a contract in a way that facour them more). For example, the contract can exclude ‖right to
sell‖ under a contract so as to exlcude the seller‘s liability.
2) Scope of CPA
• CPA is applicabl to all trassactions including hire prchase, normal sales etc. CPA is not only for
transaction of goods, it also includes a trasncation involving services, hence, is wider than SOGA.
• However, there are still exceptions under section 2:
Section 2 : Application
(1) CPA shall apply for all transactions that trade goods and services including any trade
transaction conducted through electronic means.
(2) However, this Act shall not apply to:
(a) securities as defined in the Securities Industry Act
(b) futures contracts as defined in the Futures Industry Act
(c) contracts made before the date on which this Act comes into operation
(d) land or interests in land except as may be expressly provided in this Act
(e) services provided by professionals who are regulated by any written law; and
(f) to healthcare services provided or to be provided by healthcare professionals or
healthcare facilitie
(4) The application of this Act shall be supplemental in nature and without prejudice to any other
law regulating contractual relations.
• The preamble of the CPA itself stated that the Act is to protect consuemrs. Thus is it pertinent to look at
definiton of ‖consumer‖ under section 3. Basically, whether CPA is applicbale or not depends on
whether a person is ‖consumer‖ under the Act which in turn depends on the purpose of him buying the
good/service:
Secion 3: Interpreatation
I. Consumers
“consumer” means
(a) A persson who acquires or uses goods or services which are ordinarily acquired for personal,
domestic or household purpose, use or consumption; and
(b) A person who
(i) buy goods or services to resupplying them in trade;
(ii) consuming goods or services in the course of a manufacturing process; or
(iii) in the case of goods, repairing or treating, in trade, other goods or fixtures on land;
Example 1: Sales can‘t be for business purposes

- Ali, a shop owner sold a tong gas to Raju. Raju uses that tong gas in his restaurant to
cook. This transaction doesn‘t fall under CPA as Raju is not a ‖consuemer‖ under the Act,
becasue he uses that tong as for his business. However, if Raju buys that tong gas for
domiestic purposes (like foir cooking at home) , CPA will be applicable.
Example 2: Personal sales doesn‘t fall under CPA
- Ali sold a used car to Abu . This doesnt fall under CPA becasue the sale is not is in the
course of the seller‘s business. (in the course here means one is regualrly supplying the
goods). Like section 16 of SOGA, personal sales are not under CPA.
Example 3: CPA includes services
This may include a person who rent a house, depending on its usage
II. Trade
“trade” = any trade, business, industry, profession, occupation, activity of commerce or
undertaking relating to the supply or acquisition of goods or services
3) Difference between CPA and SOGA

CPA SOGA
 Under CAP, ―price‖ doesn‘t necessarily must be in  Under SOGA, ―price‖ only refers to money
cash form. consideration
Section 3: Section 2:
“price” includes consideration in any form (direct or “price” means the money consideration for a sale of
indirect), including any consideration that in effect goods
relates to the acquisition or supply of a good or
service, although it may seem to be related to any
other matter or thing
 Under CPA, it also applies to goods which are  Under SOGA, it uses the word ―seller‖ and sell
supplied to suppliers. Thus, a supplier is referred rather than ―supply‖
to as a seller while the buyer is called a consumer
Section 3:
“supplier” means a person who, in trade— Section 2:
(a) supplies goods to a consumer by transferring the “seller” means a person who sells or agrees to sell
ownership or the possession of the goods under a goods
contract of sale, exchange, lease, hire or hire-
purchase to which that person is a party; or
(b) supplies services to a consumer
 Under CPA, implied terms are known as guarantee  Under SOGA, implied terms are known as
and not conditions or warranty. implied conditions or warranty.
 The consequences of breaching a guarantee is
provided in Part 6 (section 39 – 49)
 None of the guarantees can be excluded as  Implied terms under SOGA can be waived with
provided under section 6(1). the consent of the parties under section 62.
Section 6: No contracting out Section 62: Exclusion of implied terms and

(1) The provisions of this Act shall have effect conditions
notwithstanding anything to the contrary in any Where any right, duty or liability would arise under a
agreement. contract of sale by implication of law, it may be
(2) Every supplier or manufacturer who contract our negatived or varied by express agreement or by the
of any provision of CPA commit an offence course of dealing between the parties, or by usage, if
(3) However, subsection (1) shall not prevent a the usage is such as to bind both parties to the
consumer who has a claim under CPA from agreeing contract.
to settle or compromise that claim
 Under CPA, if a guarantee is breach, you can  Under SOGA, the buyer has no right to choose,
choose the remedies available depending on the remedies all depends on whether it is a breach
whether the defects can be remedied or not of condition or warranty.
4) Guarantee in respect of the supply of goods under the CPA

 The guarantees are set out in sections 31-38
 This sections are applicable for goods only, guarantees for services are under section 53 – 56
4.1) Section 31 – Right to sell, goods to free from charges and right to quite possession
Section 31: Implied guarantee as to title
(1) Subject to subsection (5), the following guarantees shall be implied where goods are supplied to a
consumer:
(a) that the supplier has a right to sell the goods;
(b) that the goods are free from any undisclosed security. and
(c) that the consumer has a right to quiet possession of the goods, except in so far as that right is
varied by—
(i) a term of the agreement for supply where that agreement is a hire-purchase agreement
(ii) a disclosed security; or
(iii) a term of the agreement for supply.
 Under s. 31 (1), the following guarantees shall be implied if the goods are supplied to a consumer:
(a) that the supplier has the right to sell the goods
(b) that the goods are free from any hidden charge
(c) that the consumer has the right to quiet possession of the goods (subject to exceptions (i) – (iii))
S 31(1)(a) Supplier has the Section 31(1)(a) : The supplier shall have the right to sell the
right to sell the goods
goods Section 31(6) : ―right to sell‖ means a right to dispose of the
ownership of the goods to the consumer at the time when that
ownership is to pass
 ―right to sell‖ is almost identical to ―right to sell‖ under
section 14(a) of SOGA. Hence, in every transaction, the
supplier is presumed to have the right to sell (for, if he
doesn‘t, he wouldn‘t have the right to transfer the
ownership to the buyer‖.
 The effect of this right would be, if A contracted with B,
then A, without B knowing it, sold the good to C, C
would still be entitled to the good, though A will be
liable for breaching of contract with B.
 Since the these 2 provisions are almost the same, case
law under s 14(a) will be applicable for s 31(1)(a) too.
(refer below)
 If a buyer is both a ―buyer‖ and ―consumer‖ under
SOGA and CPA respectively, both Acts are applicable
to him. (though, under SOGA, such implied terms can
be excluded but not for CPA because of section 6(1))
Since s14(a) provided that such right is a ―condition‖, the buyer
has the right to return the good and recover his money if such
implied condition is breached.. (but there are contradicting
judgments, saufi says the right to sell is not conclusive because of
this case):
[Roland v Divall] – this case receive many criticisms

Fact: The claimant, a car dealer bought a car from the
defendant. He painted the car and put it in his
showroom and sold it to a customer. Two months later
the car was impounded by the police as it had been
stolen. It was then returned to the original owner. Both
the claimant and defendant were unaware that the
car had been stolen. The claimant returned the money
to the customer and brought a claim against the
defendant under the Sale of Goods Act.
Held: The defendant did not have the right to sell the
goods as he did not obtain good title from the thief.
Ownership remained with the original owner. The
defendant had 2 months use of the car which he did not
have to pay for and the claimant was not entitled to any
compensation for the work carried out on the car.
[Butterworth v Kingsway Motors]

Fact: A hire purchase finance company let a car to X on
hire purchase. X mistakenly, thought that she had ‗a
right to sell the car‘ provided she continued to pay the
hire purchase installments, and she purportedly to sell it
to Y. The car passed through several hands and to the
defendant where he sold it to the claimant. After the
claimant had used the car for nearly a year, he received a
notification from the finance company claiming the
delivery up to them of the vehicle. The plaintiff
therefore claimed from the defendant the whole purchase
price for the breach of s12(1). Within a week however,
A paid the final installment, so the title passed to her and
this fed the defective titles of all the subsequent
purchasers.

Held: The claimant could recover the whole purchase
price from the defendant‘s breach of s12(1) of English
SOGA (para materia with S14). The reason being that X
had paid the full payment of the car hence had good title
of the car, so he could sell the car to a third party. A
buyer could only rescind the contract if the seller doesn‘t
have a good title, once the seller‘s defective title is
cured, the buyer could not rescind the contract on the
basis that S12(1) is breached.
[Lian Lee Motor Sdn Bhd v Azizuddin]

Fact: (Similar to Roland)
Held: The defendant did not have the right of possession
to the said Toyota and could not consequently give it to
the plaintiff. The plaintiff has a right to sue for the price
paid as money had and received on a total failure of the
consideration (saufi: there was actually a
consideration).
P/s: S3 of SOGA is can be brought in to say that
contract act will apply as long as it is consistent with
SOGA, since there is a contract, the contract shall
prevail.
Meaning of ―the right to sell‖ (This case shows that even seller may
violate s. 14 (a) even though he is the owner of the goods sold):
[Niblett v Confectioners’ Materials Co Ltd]
Facts: The seller sold to the buyer some tins of
condensed milk which labelled ―Nestles Condensed
Milk Co.‖ Nestles then complained and threatened with
legal action for infringing their patent (due to the label).
The tins were detained in customs and buyer was
compelled to remove the labels to secure the release of
the goods. The tins then could be sold at a reduced price.
Held: Under a contact of sale, the seller was only
obligated to pass good title to the buyer but also to
ensure that the goods did not infringe the right of a
third party so as to enable the third party to restrain
the sale (in this case it was the trademark of Nestle). A
person who can sell goods only by infringing a trade
mark has no right to sell, even though he may be the
owner of the goods. The buyer was entitled to damages
for breach of s12(1) by the seller, even though the seller
had passed the property in the goods to the buyer.
When the breach of the implied condition of right to sell is not

occasioned by the owner of the good (exp: finance company in
the context of hire purchase), the seller can‘t be liable.
[Ahmad Ismail v Malayan Motors]

Fact: The claimant bought a car from the defendant but
the car was seized by the police because the police
suspected that the car was stolen, thus rendered the
contract impossible to be performed.
Held: The seller is not liable since the breach of the
condition wasn‘t caused by the seller itself. The
allegation of breaching of S14(a) must be supported with
evidence, mere suspicious is not sufficient.
S 31(1)(b) The goods are free  Section 31(1)(b): The goods supplied must be free
from any hidden from any hidden charge.
charge  This provision is identical to section 14(c) of SOGA but
under SOGA, the remedy for such implied terms is
warranty (aka you can only claim for compensation).
But under s31(1)(b), this is an implied guarantee.
 Section 31(6):
―undisclosed security‖ means any security which is
(a) not disclosed to the consumer in writing before he
agrees to the supply; and
(b) not expressly agreed with by the consumer
 Hence, under section 31(6), a security must be disclosed
to the consumer with writing (can‘t be verbally) and
such security must be consented by the consumer
expressly too, otherwise, it won‘t be recognized as a
security.
S 31(1)(c) The consumer has  Section 31(1)(c) : The consumer has the right to quiet
the right to quiet possession of the goods except such right is altered
possession of the through:
goods (i) a term of a hire-purchase agreement,
(ii) a term of a security disclosed to the consumer, OR
(iii) a term of an agreement for supply
 However, alteration doesn‘t mean exclusion. In any
case, the alteration can‘t have the effect of excluding the
guarantees because such alteration is permitted to make
a transaction smoother as if it must be followed strictly,
it may cause difficulties sometimes.
 Alteration of guarantee under para (ii) & (iii):
- It is submitted that under situation in para (ii) & (iii),
the supplier must verbally advise the consumer that his
right to quit possession will be altered.
- Also, it is submitted that such advise must be adequate
as to make a reasonable consumer understand the
consequence of such alteration.
- Once the consumer consented to the alteration, the
consumer must give a hard copy of the security or
agreement for the alteration.
4.2) Section 32(1) - goods are of acceptable quality

S 32(1) Goods are of Section 32 (1) : If the goods are supplied to a consumer, there shall
acceptable quality be implied a guarantee that goods are of acceptable quality.
(almost same with s 16(1)(b))
(If breached, S 44(d) applies)

S 32 (2) Definition of Section 32(2) : It provides for what is considered ―acceptable
―acceptable quality‖ :
quality‖
(a) Goods are of acceptable quality if (all 5 must be fulfilled):
(i) they fit for all the purposes for which goods of the type
in question are commonly supplied
(ii) acceptable in appearance and finish
(iii) free from minor defects
(iv) safe
(v) durable
(b) a reasonable consumer who have known the state and

condition of the goods ( including any hidden defects) would
deem the good as acceptable , judging from the criteria below :
(i) the nature of the goods (exp: new or used item)
(ii) the price (exp: higher or lower than normal price)
(iii) any statements made about the goods on any packaging

or label on the goods;
(iv) any representation made about the goods by the supplier

or the manufacturer; and
(v) all other relevant circumstances of the supply of the

goods.
S 32 (3) Section 32(3) : When such defects of the goods have been made
known to the consumers, such good can‘t be regarded as not of
―acceptable quality‖
S 32 (6): ―defect‖ here means any defects would render
the goods to be of unacceptable quality as stipulated
under s 32(2)
S 32 (4) Under CPA, the Section 32(4) : If the goods is displayed, the supplier must list
supplier has the out all the defects and display the list together with displayed
obligation to write good.
out the defects and S 32 (6): ―defect‖ here means any defects would render
display it with the the goods to be of unacceptable quality as stipulated
displayed goods. under s 32(2)
Unlike under
SOGA where seller
can keep quite.
S 32 (5) In any case, in Section 32(5): Goods shall not be deemed as not of acceptable
section 32(1), the quality if
good must be used (a) the goods have been used in a manner or to an extent
in a reasonable which a reasonable consumer would not use or expect to
way. (there are 2 obtain from the goods, AND
elements) (b) the goods would have been of acceptable quality if they
had not been used in that manner or to that extent.
S 40 Exceptions to this Section 40:

section There shall be no right of redress against the supplier under this
Act in respect of the failure of the goods to be of acceptable
quality (under s 32) where—
(a) the manufacturer makes a representation about the goods

other than what has been stated on any packaging or label;
and
(b) the goods would have been of acceptable quality if that

representation had not been made.
4.3) Section 33 - Fitness for a particular purpose

 Section 33 creates an implied guarantee of fitness for a particular purpose. (similar to section 16(1)(a)
under SOGA)
S 33 (1) Fitness for Section 33
particular (1) The following guarantees shall be implied on goods
purpose supplied to consumers:
(a) the goods are reasonably fit for any particular purpose
made known (expressly or impliedly) by the consumer to
the supplier as the purpose of the goods acquired by the
consumer, AND
(b) the goods are reasonably fit for any particular purpose as
stated by the supplier that the goods will be suitable or
appropriate for the consumer.
(If breached, S 44(c)(ii) applies)

S 33(2) Exceptions for ―fit (2) Implied guarantee mentioned in (a) shall not apply where
for any particular the circumstances indicate that
purpose‖ told by (a) the consumer does not rely on the supplier‘s skills or
consumers judgments, or
(b) that it is not reasonable for the consumer to rely on the

skill or judgment of the supplier. (for exp: whether you are
relying on the manager or a new staff, and whether it is
reasonable to rely on them for such information)
S 33(3) S 33 is applicable (3) Section 33 shall apply whether or not that purpose is the
even if the good is purpose for which such goods are commonly supplied.
supplied for an
unusual purpose
S 43(2) (d) Right of consumer  Similar to S42 of SOGA
to reject goods is  Section 43(1)(a) : Right of consumers to reject goods is not
excisable within a exercisable if it is not exercised within a reasonable time.
reasonable time  Section 43(2)(d) : ―reasonable time‖ include reasonable
time for the defect to become apparent.

4.4) Section 34 - Goods shall correspond with that description
S 34 (1) Goods shall  Similar to section 15 of SOGA
correspond with  Section 34(1): If the goods supplied is by description to the
that description consumer there shall be implied a guarantee that the goods
shall correspond with that description.
 Description is factual, for example if u display a similar
model and sell a different good, it is a breach of this section
too.
S 34 (2) The fact that the  Section 34 (2) : The fact that the consumer has seen or
consumer has seen selected the good doesn‘t make this section inapplicable, be
or selected the it for sale or hire.
good doesn‘t make
this section
inapplicable
S 34 (3) If a good is  Section 34(3) : If the goods are supplied by reference to a
supplied by sample or demonstration model as well as by description,
reference to a the implied guarantees in this section and section 35 shall
sample or apply:
demonstration and - reasonable opportunity to compare actual goods with
by description, S sample (s 35(1)(b))
34 & 35 can be
used together.
4.5) Section 35 - Goods must comply with sample or demonstration model

S 35 (1) Goods supplied  Similar to section 17 of SOGA
must comply with  Section 35(1): When goods are supplied by reference to a
the sample and sample or demonstration model,
demonstration (a) the goods must correspond with the sample or
model demonstration model in quality
(b) the consumer must have a reasonable opportunity to
compare the goods with the sample or demonstration model.
S 35 (2) S 34 & 35 can be  Section 35 (2): If the goods are supplied by reference to a
applied together in description as well as by a sample or demonstration model, the
each other‘s cases implied guarantees in this section and section 34 shall apply:
- The fact that the consumer has seen or selected the good
doesn‘t make this section inapplicable, be it for sale or hire
(S 34 (2))
4.6) Section 36 – Situations where consumer need not pay more than what is reasonable
S 36 (1) Consumers only  Section 36 (1) : The consumer only need to pay the supplier
need not pay a the reasonable price or less if the price is
reasonable price (a) Not determined by the contract;
in some (b) Not left to be determined in a manner agreed to by
circumstances contract; or
(c) Not left to be determined by the course of business (in
the future while they are negotiating) between the
parties. (It gives the parties to determine the price later)
 This is not available under SOGA, thus, it is said that CPA

has everything what SOGA has but not the other way round.
 Section 36 (4): For the purposes of this section, what is a
―reasonable price‖ shall be a question of fact depending on
the circumstances of each particular case, and where the
price has been fixed under any written law, the reasonable
price shall be as may be specified under that written law.
(Exp: controlled price like for cooking oil and chicken)
S 36 (2) No remedies  Section 36(2): Where there is a failure to comply with the
available for the subsection (1), the consumer‘s only right of redress shall be
consumer other to refuse to pay more than the reasonable price.
than refusing to pay
S 36 (3) Consumer can‘t  Section 36 (3): Part VI (rights against suppliers in respect
take another other of guarantees) is not applicable for breach of this section
actions against the
supplier for
breaching s36(1)
4.7) Section 37 – repairs and spare parts

 Can be used in situations like where you bought a car but you have to buy the spare parts yourself
S 37(1) Implied guarantee  Section 37 (1): If the goods are supplied to a consumer, the
on repairs and manufacturers and suppliers must take reasonable action
spare parts. to ensure that there are facilities to repair the goods and
supply of spare parts for a reasonable period within a
reasonable time after the goods are so supplied.
This section doesn’t apply in the following situations: (consumers are deemed to have taken risk to
buy the thing at their own accord, thus the supplier won‘t be liable)
S 37(2) When the supplier  Section 37(2): This implied guarantee does not apply if
or manufacturer reasonable action had been taken to inform the
has told so during consumers, at or before the time the goods are supplied.
or before supplying
the goods to the
consumer.
S 37(3) Upon expiration of  Section 37(3): This implied guarantee is also not available
the period told by if the manufacturer or supplier has taken reasonable action
supplier or to tell (during or before supplying the good) the consumer
manufacturer that they will not repair or provide spare parts upon
expiration of a certain period.
4.8) Section 38 – Manufacturer’s express guarantee (It is manufacturer, NOT supplier)

S 38 (1) Whenever an  Section 38 (1): An express guarantee given by a
express guarantee manufacturer of goods which are supplied to a consumer
is given by a shall bind the manufacturer to the extent specified in
manufacturer, subsections (2), (3) and (4).
section 38(2)–(5)  ―express guarantee‖ here must only be confined to what has
shall be binding on been defined in section 38(5).
the manufacturer.
Section 38(1) will only apply when there is proof that the manufacturer has really given such express
guarantee, hence section 38(2)-(4) will step in to govern this issue:
S 38 (2) Document given by  Section 38(2): When an express guarantee given by a
manufacturer manufacturer in a document, and that document is given by
passed by supplier the supplier to the customer (by apparent or actual
to consumers with authority), that document would bind the manufacturer as
authority well.
S 38 (3) Every guarantee in  Section 38(3): An express guarantee in a document, which

a document shall be appears to have been made (refer to the guarantee, not the
presumed to be document) by the manufacturer, shall, in the absence of
made by the proof to the contrary, be presumed to have been made by
manufacturer the manufacturer.
unless rebutted.
S 38 (4) Unless rebutted the  Section 38(4): The proof that a consumer was given by the
document given by manufacturer a document containing express guarantees,
the manufacturer shall, in the absence of proof to the contrary, be the proof
shall always be that the document was given to the consumer with the
presumed to be authority of the manufacturer.
given with
authority by the
manufacturer.
S 38 (5) Meaning of  Section 38(5): ―Express guarantee‖ under this section n,
―express means an undertaking, assertion or representation, made
guarantee‖ during supplying or promoting by any means (such as
advertisement), of the goods, in relation to—
(a) the quality, performance or characteristics of the
goods
(b) the provision of services that are or may at any
time be required in respect of the goods;
(c) the supply of parts that are or may at any time be
required for the goods;
(d) the future availability of identical goods, or part
of it in relation to which the undertaking, assertion or
representation is given or made form part of; or
(e) the return of money or other consideration should
the goods not meet any undertaking by the guarantor.
Exp: A bough a box of detergent powder, which indicated on a document, such as the box, that money
will be refunded if it can‘t clear the stain. That document (or box) will be a prove that such guarantee
has been given to the consumer. The manufacturer can‘t deny it and say thing like the consumer has
faked the expressed guarantee on the box.

5) Rights Of Consumers Against Suppliers And Manufacturers For Breaching Guarantees
 The CPA has given such rights to the consumers in the following manner and provision: (you have to see
who‘s fault is it first then only apply accordingly)
Part of CPA Sections Party Against Applicable situation
Part VI (6) S 39 - 49 Supplier If the goods supplied had failed to comply with
any implied guarantee.
Part VII (7) S 50 – 52 Manufacturer Breaching certain guarantees in the supply of
goods.
5.1) Part VI - Rights Against Suppliers

S 39 Consumer’s Section 39 : This part (s 39 -49) is only applicable against a supplier for
right of redress breaching implied guarantees under s 31 -37.
against suppliers
S 40 Exception in Section 40:
respect of There shall be no right of redress against the supplier under this Act in
implied respect of the failure of the goods to be of acceptable quality (under s 32)
guarantee as to where—
acceptable
quality (a) the manufacturer makes a representation about the goods other than
what has been stated on any packaging or label; and
(b) the goods would have been of acceptable quality if that representation
had not been made.
 This is because additional statement has been made by the manufacturer,

not the supplier.
5.1.1) Actions available against suppliers for failing to comply with guarantees (section 41)
 Section 41(1) divided the failures to comply with guarantees into two types, the one that can be
remedied and the ones that can‘t be remedied. The actions that a consumer can take will be different
depending on the type of failure.
 How to apply this section (read the full section first if find it confusing).:

S 41 (1) Section 41(1): Whenever there is a failure to comply with a guarantee, the consumer may exercise the following remedies:
If the failure (a) If the failure is one If the supplier plans to Section 42: How to remedy a failure
can be that can be remedied, remedy the failure (1) A supplier may remedy a failure to comply with a guarantee by—
remedied the consumer may (a) repairing the goods, if the failure does not relate to title (as in
require the supplier to ownership)
remedy the failure
within a reasonable (b) curing any defect in title, if the failure relates to title,;
time in accordance
with section 42; and (c) replacing the goods with goods of identical type; or
S42(2): Once the consumer obtains another goods to replace defective

goods, the guarantees and obligations under this Act shall apply to the
replacement goods.
(d) providing a refund of any money paid or other consideration provided

by the consumer, if none of the above options can be done
S42(3): Refund = a refund in cash of the money paid or the value of

any other consideration provided, or both, as the case may require.
If the supplier failed to Section 41(3): If the supplier refuses or neglects to remedy the failure, or
remedy the failure refuses or neglects to do so within a reasonable time, the consumer may—
(a) have the failure remedied elsewhere and obtain from the supplier all
reasonable costs incurred in having the failure remedied; or
(b) reject the goods (S45,46 & 43 apply) (refer below, under s41(b)(i))
What else can the Section 41(2): The consumer may claim damages from the supplier for any
consumer claim? loss or damage suffered by the consumer, except for losses which they
(applicable to both cases, consumer suffers due to the reduction in value of the good.
whether or not the
supplier willing or not to
remedy the failure)

If the failure (b) where the failure is (i) reject the goods (in  How a consumer can legally reject the goods?
can‘t be one that cannot be accordance with S45,
remedied remedied OR is of a subject to S43, S46 Section 45: Manner of rejecting goods
substantial character applies too); OR (1) If the consumer decided to reject the goods, he must notify the supplier of
(within the meaning of such decision and the reason of rejecting.
section 44), the
consumer may— (2) If the consumer rejected the goods, the consumer shall return the rejected
goods to the supplier, unless—
(a) the goods cannot be returned without a significant cost, in which case
the supplier shall collect the goods at its own expense, because of:
(i) the consumer has the right to reject the goods due to the nature of
the failure to comply with the guarantee
(ii) the size or height or method of attachment of the goods to

something,
(b) because of the method of attachment, the goods cannot be returned

without significant damage to the real or personal property to which they
are attached, in which case the supplier shall compensate the consumer for
any loss or damage resulting from or consequent upon such removal; or
(c) the goods have already been returned to, or retrieved by, the supplier.
(3) If the ownership in the goods has passed to the consumer before the
consumer rejects it, the ownership of the goods will be reserved to the supplier
upon notification of rejection.
 Remedies after rejecting the goods
Section 46: Consumer’s option of refund or replacement

(1) Where the consumer exercises the right to reject goods, the consumer may
choose to —
(a) get refund of any money paid or other consideration provided by the
consumer for the rejected goods, OR

S46(2): Refund = A refund in cash for the money paid or the
value of any other consideration provided, or both, as the case
may require.
S46(3): Such obligation to refund cannot be satisfied by

permitting the consumer to get other goods from the supplier.
(b) replace the rejected goods with a goods of the same type and of similar
value, if such goods are reasonably available to the supplier as part of the
stocks,
S46(4): If the consumer obtains goods to replace the rejected

goods, the guarantees and obligations of the supplier under this
Act shall apply to the replacement goods
and the supplier shall make provision accordingly.
 However, the consumer will lose his right to reject the good in
some circumstances :
Section 43: Loss of right to reject goods

(1) The right to reject goods shall not apply where—
(a) the right is not exercised within a reasonable time
S43 (2): ―reasonable time‖ means a period of time where it is

reasonable to expect the defects to become apparent, having regard
the facts below—
(a) the type of goods;
(b) the way the consumer uses the good
(c) the length of time for which it is reasonable for the goods to be
used; and
(d) the amount of using the goods, which it is reasonable for the
defect to become apparent.
(b) the goods have been disposed of by the consumer;
(c) the goods have been lost or destroyed while in the possession of a
person other than the supplier;
(d) the goods were damaged after delivery to the consumer for reasons not
related to their state or condition at the time of supply; or
(e) the goods have been attached to or incorporated in any real or personal
property and the goods cannot be detached or isolated without damaging
them.
(ii)obtain compensation -
from the supplier for
any damages suffered
from the reduction in
value of the goods
 Meaning of ―Failure of substantial character‖ :
Section 44: Failure of substantial character

Failure of substantial character means—
(a) the goods would not have been accepted by a reasonable consumer, if they fully aware of the nature and extent of the failure;
(b) the goods don‘t conform with one or more significant descriptions of the goods, be it a usual supply of goods supply by
reference to a sample or demonstration model
(c) the goods are—
(i) substantially unfit for a purpose for which goods are commonly supplied for; or
(ii) where section 33(1) applies, unfit for a particular purpose made known to the supplier or represented by the supplier
to be fit for that purpose
and the goods cannot be easily and within a reasonable time, be remedied to make them fit for such purpose; or
(d) the goods are not of acceptable quality (within the meaning of section 32, subject to s40) because they are unsafe.
P/s: S 47 & 49 are for hire-purchase agreements while S 48 is for assignments of goods, hence are not important for this chapter.

5.2) Part VII - Rights Against Manufacturer
 Part 7 of the CPA provided the remedies for consumers if the supplier can‘t compensate the consumers
(sometimes, the supplier just can‘t afford the compensation)
 How to apply this section:
S 50: When do customers can take remedy against the manufacturer
S 52: What remedy can consumers take if they have the right to do so, subject to s51
S 51: Exceptions under S 50(a)(b)
S 50: When a consumer can take remedy against a manufacturer

(a) the goods are not of acceptable quality Refer to : S 32 S51: Exceptions to right of
under section 32 redress against
manufacturers
(b) the goods don’t comply with the Refer to : S 34
descriptions under section 34, (such No right of redress against
description must be a material the manufacturer for
description given by or on behalf of the breaching guarantees under
manufacturer, whether with express or S32 or 34 shall arise if the
implied consent of the manufacturer) failure is due to—
(a) an act, default or

omission of, or any
representation made by, a
person other than the
manufacturer; or
(b) a cause independent of

human control, occurring
after the goods have left the
control of the manufacturer.
(c) the goods fail to comply with the Refer to : S 37

guarantee as to repairs and spare parts
under section 37
(d) the goods fail to comply with any express Refer to : S 38, subject to S 52(2)
guarantee (while it is valid) given by the
manufacturer that is binding on the
manufacturer in accordance with section
38.
S 52: Options against manufacturers where goods do not comply with guarantees (Similar to S59:
Remedy for breach of warranty under SOGA)
(1) Once a manufacturer has breach a S 52(2):

guarantee, the consumer may claim If the consumer is entitled by an express
damages from the manufacturer (subject to guarantee by the manufacturer, that the
S 52(2))— manufacturer would
(a) for the reduction in the price of the (a) repairing the goods; or

goods resulting from the
manufacturer‘s failure, namely, (b) replacing the goods with goods of
whichever price is lower: identical type,
(i) the reduction below the price no action shall be taken under paragraph (1)(a)
paid or payable by the consumer unless the the manufacturer has refused,
for the goods; OR neglected, or not succeeded in remedying, the
failure within a reasonable time.
(ii) the reduction below the
average retail price of the goods at
the time of supply,
(b) for any loss or damage to the -

consumer resulting from the
manufacturer‘s failure, other than loss
or damage through a reduction in the
value of the goods
Chapter 4: Transfer of property under SOGA
1) Transfer of property under SOGA

 In a sale of goods, transfer of property occurs. The question is when does it happen? Thus, it is important to
determine when the transfer occurs because
1) The risk passes with the property. Whoever owns the goods, bear the risk and losses if the goods go lost,
damaged or perished. (section 26)
Section 26: Risk prima facie passes with property

Unless otherwise agreed, the goods remain at the seller‘s risk until the property therein is
transferred to the buyer. Once the property therein is transferred to the buyer, the goods are at the
buyer‘s risk whether delivery has been made or not:
Provided that if the delivery has been delayed through the fault of either party, the goods
are at the risk of the party in fault, and has to be responsible for any losses occurring from
such fault:
Provided also that nothing in this section shall affect the duties or liabilities of either
party as a bailee of the goods of the other party.
(Baile = a person or party to whom goods are delivered for a purpose, such as custody or
repair, without transfer of ownership.)
2) Only the person who has the property of the goods has the right to sue a third party who damages the
good.
3) The seller can only sue the buyer for the price if the property has passed to the buyer (section 55(1))
Section 55: Suit for price

(1) If the property in the goods has passed to the buyer and the buyer wrongfully neglects or refuses
to pay for the goods according to the terms of the contract, the seller may sue him for the price of
the goods.
(2) If the price is payable on a day certain irrespective of delivery and the buyer wrongfully neglects
or refuses to pay such price, the seller may sue him for the price although the property in the goods
has not passed and the goods have not been appropriated to the contract.
2) Time for property to pass.

 The time for property to pass depends on whether the intention of the parties can be determined.
If their S 19: Section 19: Property passes when intended to pass
intention can Property is to pass (1) Where there is a sale of specific or ascertained goods, the property of
be determined in accordance with the goods is transferred to the buyer at such time as the parties intended in
the intention of the the contract.
parties under the
contract (2) To ascertain the intention of the parties, the terms of the contract, the
conduct of the parties and the circumstances of the case shall be considered.
(3) Unless a different intention appears, sections 20 to 24 shall apply to

ascertain the intention of the parties as to the time the property of the goods
is transferred to the buyer.
If their S 20 - 24 : (refer below)
intention can‘t The property is
be determined transferred
pursuant to these
sections
3) Application of S 20 – 24
Section Title Principle Condition to Apply
Section 20 Specific goods in a As long as the 3 conditions in this 1) Specific good
deliverable state section are fulfilled, the property of 2) Unconditional contract
the goods would immediately passed 3) In a deliverable state
to the buyer, no matter what.
Section 21 Specific goods to be In a sale of specific goods, the seller 1) Specific good
put into a deliverable is obligated to put the goods in a
state deliverable state.
Section 22 Specific goods in a In a sale of specific goods and in a 1) Specific good
deliverable state deliverable state, if the price of the 2) In a deliverable state
when the seller has to goods is yet to be ascertained, the
do anything thereto property of the goods will not be
in order to ascertain passed to the buyer until the seller
price has ascertained the price
Section 23 Sale of unascertained For unascertained goods and future 1) unascertained/ future good
and future goods and goods, property would be passed 2) there is appropriation
appropriation with the goods that have been 3) such appropriation is assented
appropriated, with assent of either 4) In a deliverable state
party and in a delivery state.
Delivery to carrier Unconditionally appropriation means: -
i) the seller has delivered the goods to
the buyer, OR
ii) to a third party (carrier (运送者) or
other bailee, whether named by the
buyer or not)
unless the seller reserves the right of

disposal under s25
Section 24 Goods sent on There are 4 situations where the 1) When the buyer signifies his
approval or “on sale property of goods ―on sale or return‖ approval or acceptance to the
or return” will be passed to the buyer. seller
2) When the buyer ―does any

other act adopting the
transaction‖
3) When a time has been fixed

for the return of the goods and
the time has expired
4) When no time has been fixed

for its return, on the expiration of
a reasonable time.
3.1) Section 20: Specific goods in a deliverable state
 Section 20: 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, regardless of whether the
time of payment or the time of delivery of the goods, is postponed.
No Elements Elaboration
1 Unconditional contract  This section is only applicable if it is a unconditional contract for
a sale specific goods, in a deliverable state. ―Condition‖ here
refers to condition precedent or conditions that must be fulfilled
before the contract can be effected.
 In the context of commercial transaction, this is usually related to
the intention of the parties as to when the property shall transfer
to the buyer.
[BSNC Leasing Sdn Bhd v Sabah Shipyard Sdn Bhd]

Held
: Section 19 and 20, when read together, the effect can be
summarized as followed. In a contract for the sale for
specific or ascertained goods, property in them passes from
the seller to the buyer according to the intention of the parties.
That intention is to be gathered from the terms of the contract,
the conduct of the parties and all the circumstances of the
case.
: In the absence of a contrary intention, property in specific
goods passes to the buyer at the time the contract is made,
regardless of whether the parties have postponed either
payment for, or the delivery of, the goods.
: In this case, both parties did not express any intention as to
when property in the turbine (which comes within the
category of 'specific goods') will pass from the one to the

other. Neither is there any form of conduct or circumstances
from which such intention is to be deduced. Hence, the rule
expressed in s 20 of the SPGA therefore applies with full
force. Accordingly, the property in the goods passed to the
buyer when the contract was made.
 There are cases where the parties by words or conduct evince a

clear intention that the property in specific goods is not to pass at
the time the contract is made. In such a case, property in the
goods will remain in the vendor until the event specified by the
contract occurs.
[Au Yong Kun Min v Tractors Malaysia]

Held: In this case, the seller, stated in the contract that they
would retain ownership of the good even after having passing
the goods to the buyer. The seller reserved the right to take
possession of the goods if there was any default in payment of
any of the sums due under the agreement. Thus, the property
in the goods remained with the vendor until the payment is
fully made.
2 Specific goods  Depends on the fact
3 Deliverable state  (refer to section 2 & 21, what is counted as ―deliverable state‖)
Situations related to this section
1 Delay of payment and  Deferment of payment by the buyer or delay in the delivery by
delivery the seller is not relevant:
[Dennant v Skinner]
Fact: At auction, a van was bought by cheque. When paying,
the buyer signed a statement stating that ownership would not
pass to him until the cheque was
cleared. The buyer then sold the car to a third party and there
was a dispute regarding ownership of the car
Held: The contract was complete when the auctioneers hammer
fell, the third
party therefore had good title to the car. Under section 20, as
long as the elements are fulfilled, the property passes to the
buyer immediately, the fact that the payment has not been
cleared is not relevant. (note: in this case, s19 couldn‘t be
applied because the buyer signed the statement after the
hammer fell in the auction, thing might be different if the
statement was signed before the auction)
2 Sale in a Store/Shop  For sales in stores or shops, property does not pass until mode
of payment agreed upon (so, the parties have to agree on what
mode of payment is agreed first. :

[Ingram v Little]
Fact: The sellers wanted to sell a car where the buyer answered
their advertisement. The buyer wanted to pay by cheque which
was rejected by the sellers because they would only accept
cash. The buyer then purported himself as a reputable business
man and somehow convinced the sellers to accept the cheque
which was later discovered as dishonored.. The car at the same
time has been sold to an innocent third party which the sellers
took action to claim back the car.
Held: The contract was void for mistake, inter alia, for the
reason that the mode of payment was not agreed upon. (this
case has received much criticism)
4 Sale at supermarkets/ self-  For sales at supermarkets, the property is not transferred until
service shops/ cash and the price is paid:
carry shops
[Lacis v Cashmarts]
Fact: The buyer was undercharged. He knew the error but still
decided to walk away. The issue is whether he could be guilty
of theft for taking away the goods without a full payment.
Held: In a cash and carry shop, there is a common practice and
presumed intention that the property shall not be passed until
the payment has been made by the buyers. Thus, the property of
the goods didn‘t pass to the buyer since the full payment was
not made but he could not be guilty since the good was taken
away with consent at the material time.
p/s: So if one pay using credit cards, the credit card company
has to bear the lose if the customer defaults.
5 Vehicle registration of  In sale of motor vehicles, the absence of vehicle registration of

property book property book doesn‘t prevent the property of a vehicle from
being passed to the buyer.
[Mohamed Mydin v Ramiaj]

Fact: The seller sold his business to the buyer including a lorry
concerned. However, later, it appeared that a vehicle repairer
had taken the lorry for repair on behalf of the buyer. The
registration book of the lorry was however not handed to the
buyer. The trial judge held that the lorry had not been delivered
to the buyer hence the property in the lorry had not passed to
the buyer either.
Held: The sale of a lorry can be complete though the
registration book is not made available to the buyer because it
is not a document of title.
 The legal position of the registration book has been considered in
several cases:
[Sajan Singh v Ali Sardara]

Held: The fact that someone remained the registered owner of
a vehicle and didn‘t give permission for the sale of the vehicle

don‘t not prevent the property in it passing to someone else. The
registration book is not a document of title. The absence of
registration would of course put the buyer in difficulty if he had
to prove his title, but it would not invalidate it, It is clear that the
sale of a vehicle can be completed though the registration
book is not made available to the buyer.
3.2) Section 21: Specific goods to be put into a deliverable state

Section 21: In 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.
Deliverable state  This section is applicable as long as it is a sale of specific good.
 In such sale, the property is not transferred until
(i) goods are in a deliverable state; and
(ii) the buyer is given notice of such delivery
Meaning of ‗in a deliverable state‘:

Section 2: ―delivery‖ means voluntary transfer of possession from one person to
another; goods are said to be in a ―deliverable state‖ when they are in such state
that the buyer would under the contract be bound to take delivery of them.
[Underwood Ltd v Burgh Castle & Cement Syndicate]

Fact: The seller contracted to sell an engine to the buyer, where the engine
was fixed to the ground. When the seller wanted to detach the engine from
the floor (so that it could be delivered to the buyer), the engine accidentally
damaged by the seller. The buyer rejected the good where the seller argued
that the property passed to the buyer when contract was made, hence the
buyer couldn‘t reject the good.
Held: The property was still with the seller because at the time of the
contract was made, the goods were not in a delivery state, it was still fixed
to the ground.
[Philip Head & Sons Ltd v Showfronts Ltd]

Fact: Sellers contracted to sell some carpet to the buyers which the carpet
was to be laid in the buyer‘s showroom. The carpet was delivered to the
buyer's premises and some of the rooms were then carpeted. But in order to
cover a large showroom, various lengths of the carpet had to be stitched
together. The carpets were then sent off to be stitched together but dome of
the carpets were stolen before it could be laid. The buyer refused to pay
where the sellers claimed that the property had been passed to the buyer
and so did the risks.
Held: The carpet was not in a deliverable state though they were at buyer's
premises because they needed to be laid.
3.3) Section 22: Specific goods in a deliverable state when the seller has to do anything thereto in
order to ascertain price
Section 22: In a contract for the sale of specific goods in a deliverable state, if the seller is bound to do
anything (to weigh, measure, test etc) to ascertaining the price of the goods, the property will not pass
until such act or thing is done and the buyer has notice thereof.

Obligation of the  This section is only applicable if these 2 elements are fulfilled:
buyer to determine i) It is a sale of specific goods
the price ii) The goods is in a deliverable state
 In such sale, the property will not pass until

i) the seller has determined the price; and
ii) the buyer is given notice of such price.
 The act to determine the price must be to ascertain the price not to satisfy the
customer etc.
 The act must also be done by the seller himself.
[Nanka Bruce v Commonwealth Trust Ltd]

Fact: A contracted to sell the cocoas to B at certain amount for certain price
but they weren‘t really sure if the amount was correct so they agreed that when
B resell the goods to C, where C would weigh the goods later, A & B would
see if the amount was correct.. Later, when sold the goods to C, it was
discovered that A supposed to collect more money from B because the amount
agreed earlier was wrong. A thus took action against C.
Held: Section 22 is not applicable in this case, because such act of weighing is
only to check if A & B contracted the right amount of cocoa, it wasn‘t used to
ascertain the price. The transaction between A & B had completed when A
agreed to sell the goods to B where it were specific goods and in deliverable
state, hence the property of the goods had been transferred to B. Hence, A can‘t
take action under section 22 against C, contending that the transaction between
B & C was void because ―the price was not ascertained‖. It was already
ascertained when A agreed to sell the cocoa to B at that ―certain price‖ for
every unit of cocoa. A also failed his action on the ground that the weighing
must be done by himself, not any third party.
3.4) Section 23: Sale of unascertained goods and appropriation
Section 23 : Sale of unascertained goods and appropriation

(1) In a contract for the sale of unascertained or future goods by description, if the goods are in a
deliverable state and unconditionally appropriated to the contract, either by the seller with the assent of
the buyer or vice versa, the property in the goods will pass to the buyer.
Such assent may be express or implied, and may be given either before or after the appropriation is
made.
Delivery to carrier
(2) Where, in pursuance of the contract, the seller delivers the goods to the buyer or to a carrier or other
bailee (whether named by the buyer or not) for the purpose of transmission to the buyer, and does not
reserve the right of disposal (under section 25), he is deemed to have unconditionally appropriated the
goods to the contract.
 Section 23 relates to transfer of property for unascertained and future goods.

 Anything which don‘t fall under a specific goods will fall under ascertained goods because only
these 2 types of goods are defined in SOGA.
 If the goods are bought online, no appropriation has to be made, unless the buyer had visited the
warehouse ordered the good later via phone or email etc
S 23(1) Transfer of  The property of an unascertained or future good will be
property for transferred when:
unascertained and i) the goods are in a deliverable state.
future goods.
ii) the goods have been unconditionally appropriated to the
contract.
- appropriation can happen after contract is made, exp:
 A have 10 radios, B wanted 5. C later came and took 5,
since there are 5 left, there is appropriation .
 A have 10 radios, B wanted 5. C later came and took 4,
since there are 6 left, there is no appropriation .
iii) the buyer (or seller if the buyer is the party to do the
appropriation) expressly or implicitly consents to the
appropriation.
Meaning of unconditionally appropriation

 There is no appropriation until it is beyond the power of the seller
to substitute goods.
[Carlos Federspiel v Charles Twigg & Co]

Fact: The seller agreed to sell some bicycles to the buyer. The
seller packed the bicycles and put them away with the buyer‘s
name. The seller then went into liquidation. The buyers argued
that the bicycles were theirs.
Held: Mere segregation the goods was not a sufficient

unconditional appropriation. If the buyer can still withdraw or
replace the goods then they are not unconditionally
appropriated to the contract, for otherwise, the seller can
always use the ―segregated goods‖ for other contracts and
repack the same items for the current contract.
 Examples:
[Healey v Howlett & Sons]
Fact: The contract was for 20 boxes of fish. The seller put 190
boxes onto a train, with instructions that 20 were to be delivered
to the buyer.
Held: In this case, that delivery to the carrier did not amount to an
unconditional appropriation. Such appropriation could only occur
when the defendant's 20 boxes were separated from the rest of the
190.
[John Laurie and Morewood v Dudin & Sons]

Held: The mere fact that that an order for the delivery is given by
the seller to his warehouseman, who holds the specified larger

stock out of which the goods sold are to be taken, doesn‘t amount
to appropriation of goods.
Assent for the  Such assent must be given to the appropriation,
appropriation of  It can be given (by both seller or buyer):
goods i) before or after unconditional appropriation (refer to s23(2) for
meaing)
ii) expressly or impliedly
Example of implied consent:
[Marcello Pignataro v Gilroy]

Fact: The seller sold to the buyer 140 bags of rice. At the time of
the contract, the rice bags were unascertained. It was agreed that
125 bags would be delivered to the buyer and 15 bags were to be
collected by the buyer himself. The seller put that 15 bags
separately for collection without the buyer asking him to do so.
The seller notified the buyer a few times that the 15 bags of rice
were ready for collection but the buyer didn‘t do so. The bags
were subsequently stolen, hence the issue was whether property
had been transferred to the buyer, given that no express assent has
been given to appropriate the goods.
Held: The principle is that once an appropriation has been
assented to, the property would transfer to the buyer immediately.
In this case, based facts (that the buyer sent a cheque and asked
for delivery of the 125 bags), it is the duty of the seller to
appropriate the 15 bags as well, since these 140 and 15 bags of
rice came under the same contract. Thus, due to the cheque the
request for delivery, the buyer was deemed to have assented to the
appropriation. Thus, property and risks in the goods would be
transferred to the buyer.
S 23(2) Meaning of  Meaning of unconditionally appropriation:

unconditionally The general principle is, pursuant to the a contract, when,
appropriation/ i) the seller delivers the goods to the buyer, OR
Delivery to carrier ii) to a third party (carrier (运送者) or other bailee, whether
named by the buyer or not) for the purpose of delivering the
goods to the buyer,
the seller is deemed to have unconditionally appropriated the
goods to the contract, unless he reserves the right of disposal.
 Exception is, when the goods are yet to be ascertained:
[Carlos Federspiel v Charles Twigg & Co]

Held: Mere segregation the goods was not a sufficient
unconditional appropriation. If the buyer can still withdraw or
replace the goods then they are not unconditionally appropriated
to the contract, for otherwise, the seller can always use the
―segregated goods‖ for other contracts and repack the same items
for the current contract.
[Healey v Howlett & Sons]

Fact: The contract was for 20 boxes of fish. The seller put 190
boxes onto a train, with instructions that 20 were to be delivered
to the buyer.
Held: In this case, that delivery to the carrier did not amount to an
unconditional appropriation. Such appropriation could only occur
when the defendant's 20 boxes were separated from the rest of the
190.
[John Laurie and Morewood v Dudin & Sons]

Held: The mere fact that that an order for the delivery is given by
the seller to his warehouseman, who holds the specified larger
stock out of which the goods sold are to be taken, doesn‘t amount
to appropriation of goods.
3.5) Section 24: Goods sent on approval or “on sale or return”

Section 24: 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 the buyer signifies his approval or acceptance to the seller or does any other act adopting
the transaction;
(b) if the buyer does not signify his approval or acceptance to the seller but retains the goods
without giving notice of rejection,
Upon the expiration of such time to return the goods, if a time has been fixed for the return of
goods, OR
Upon the expiration of a reasonable time, if no time has been fixed.
 This section is designated to allow prospective buyers an opportunity to try the goods before making the
decision to buy or to return to the seller.
 Hence, there are 4 situations where the property of a good in the case of ―sale or return‖ would transfer
from the seller to the buyer:
Section Situation Elaboration

S24(a) When the buyer signifies Such approval or acceptance can be implied
his approval or acceptance
to the seller  However, handing the goods to a third party doesn't
necessarily mean that one is adopting the
transaction.
[Genn v Winkel]
Issue: Whether a buyer, passing goods to a second
buyer for approval was another act adopting the
transaction under a ―14 day approval contract‖.
Held: If and when the sub-buyer accepts the goods,

only the buyer would be considered as adopted the
transaction and property passes to the buyer. If the
sub-buyer does not accept the goods and returns
them to the first buyer within the 14 day approval
period, property will not have passed to the first
prospective buyer.
When the buyer ―does any It means the buyer does something which will end his
other act adopting the ability to return the goods to the seller, for example,

transaction‖ treating the goods like one‘s own property or sell the
goods;
[Kirkham v Attenborough]
Fact: A jewel manufacturer delivered jewels on sale
or returned basis to the buyer but the buyer pawned
the jewels to a pawnbroker. The jewel then tried to
recover the jewel.
Held: The act of pawning the jewel is an act of
accepting the transaction therefore the property of the
goods has passed to the buyer. Therefore the seller
can‘t recover the jewel from the pawnbroker though
he can sue the buyer for the price.
S24(b) When a time has been The exception to this rule is when the failure to return
fixed for the return of the the goods is caused by some reasons not within the
goods and the time has buyer‘s control, the property remains with the seller .
expired
[Re Ferrier]
Held : Buyer will not be deemed to have adopted the
transaction if he is prevented to return to goods by
forces outside his control. If goods are lost or
destroyed, before fixed for their return, then property
does not pass to the buyer.
When no time has been [Poole v Smith’s Car Sales (Balham) Ltd]
fixed for its return, on the Fact: The plaintiff and the defendant entered into a
expiration of a reasonable contract that the defendant would keep the plaintiff‘s
time. car and sell and if they could. The car was left with the
defendant with a ―sale or return‖ basis.
Later, the plaintiff repeatedly asked the defendants to
return the car, but only after 2 months, it was returned
in a badly damaged condition, and the plaintiff refused
to accept it.
Held: Since the contract was one of delivery ―on sale
or return‖ and there was no rejection of the property it
passed to the defendants after a reasonable time. In all
the circumstances, the property had passed to the
defendant so, he was liable for the loss.
 What if the seller includes a term stating that the property will not pass until the sale price has been
paid? Apparently it will be effective but subjected to the principle of nemo dat (more on this in the next
chapter):
[Weiner v Gill]
Held: Such terms will be effective. However, such terms are subjected to the principle of nemo
dat. Meaning that, if the seller doesn‘t have the property in the goods, technically he couldn‘t
transfer the property to the buyer (since there is no property for him to transfer). In such case,
the property will remain with the rightful owner.

[Weiner v Harris]
Held: Even if such terms are included in the contract, such terms are subjected to the
exceptions under the principle of nemo dat. Thus, if the case falls under any of the exceptions,
the property will still be transferred to the buyer despite such terms.
[Weiner v Smith ]
Held: buyers agreed that property wasn't passed until payment was made. so the seller could get
the goods back again.
4) Passing of risk under SOGA

Section 26: Risk prima facie passes with property
Unless otherwise agreed, the goods remain at the seller‘s risk until the property therein is transferred to the
buyer. Once the property is transferred, the goods are at the buyer‘s risk, regardless of whether delivery has
been made or not, provided that:
If delivery has been delayed through the fault of either buyer or seller, the goods are at the risk of the
party in fault as regards any loss which might not have occurred but for such fault.
Nothing in this section shall affect the duties or liabilities of either seller or buyer as a bailee of the
goods of the other party.
 In a sale of goods it is important to determine when the risk has passed from seller to buyer.
 Section 26: Generally, the risk will be passed together with the property. But there are 3 exceptions:
Exception Situation Elaboration
1 If delivery is In this situation, , the party at fault will bear the risk
delayed/postponed [Demby Hamilton & Co Ltd v Barden]
through the fault Fact: The seller agreed with the buyer to supply apple juice to a third
of either the seller party in weekly installments. The seller crushed all the apples at once to
or buyer ensure that they taste same as the samples. The third party then refused
(stated in the to take further delivery then asked for delay for some deliveries. The
provision) seller followed suit and the juice later turned bad.
Held: Although the property in the juice remained in the seller, the
court held that the risk has passed to the buyer since he is liable to the
delay.
2 When either party  Bailee means a person who holds another person‘s things for a purpose,
becomes the bailee such as custody or repair, without transfer of ownership.
for the other party  This provision is relevant in cases where the property has been passed
and subsequently to thee buyer, but the seller keeps possession of the good (hence a
did something ―bailee‖ of the good)
wrong
(stated in the [Wiehe v Dennis Bros]
provision) Fact: The buyer contracted to buy a pony from the seller, to be
delivered in a month. While the pony was in the seller's possession, it
was taken to an event, mishandled and injured.
Held: The seller was liable for failing to take reasonable care as bailees
of the goods
3 If the parties  For example, when both parties agreed that the risks to be transferred
show (expressedly first before the property of the goods.
or impliedly) a

different intention. [Stern Ltd v Vickers Ltd]
(laid down in Fact: The buyer contracted with the seller where he bought 120.000
Sterns Ltd v gallons of white spirit (aka mineral turpentine) out of a larger bulk of
Vickers Ltd) 200.000 gallons lying in tanks belonging to a storage company (hence a
unascertained good). The seller obtained a warrant issued by the storage
company and delivered it to the buyer (so as to enable them to collect
the white spirit) At that time, the property in the goods could not pass
as they were still not appropriated. Some months later it was found that
the spirit had deteriorated in quality (partly through natural
evaporation). The buyers claimed damages for breach of warranty that
the oil should be of the
contract quality when delivered.
Held: It was held that the risk had passed to the buyer despite the
property of the 120.000 gallons was not transferred yet (since it had not
been appropriated). The reason being that:
i) The seller had done what was necessary to enable the buyer to collect
the goods, by handing over the delivery warrant
ii) After the buyer had accepted the delivery warrant, the seller had no
further control over the goods and could do nothing to prevent the
goods‘ deterioration.
Hence, the risk had been transferred to the buyer from the moment he
obtained the means to obtain the goods.
Chapter 5: The principle of “Nemo Dat” and the exceptions under SOGA
1) The Nemo Dat rule.
 In a sale of goods, the property in the goods will pass to the buyer in 2 situations:
i) The seller is the owner of the goods
ii) The seller who is not the owner but sells the goods under the authority or with the consent of the
owner.
 However, Section 27 provided for the principle of Nemo dat or (Nemo dat quod non habet).
Section 27: Sale by person not the owner

Where goods are sold by a person who is not the owner and who does not sell them under the authority
or with the consent of the owner, the buyer acquires no better title of the goods than the seller had.
 Basically, the idea is that if a person does not own a goods or does not have permission to sell the goods, he
cannot pass the property of the goods to another person. Therefore, the owner of the goods may claim the
goods from the buyer and the buyer is obligated to give the goods back to the rightful owner. This is called
the nemo dat rule.
1.2) Exceptions:
 However, SOGA laid down some exceptions under the principle:
No Section Exception
1 Section 27 (1) Estoppel
2 Proviso to Sale by a merchantile agent
S27
 I 3 Section 28 Sale by one of the joint owners
f 4 Section 29 Sale under voidable contract
5 Section 30(1) Sale by a seller who still possesses the goods after sale
a 6 Section 30(2) Buyer in possession after sale
n
 If any transaction falls within any of the exceptions above, a buyer may obtain the property in goods
even though initially the seller has no property to the goods.
 Also, under SOGA, being a bona fide purchaser is not a reason to get a good title from a non-owner.
To be exempted from the Nemo Dat rule, one can only prove that the transaction falls under any of
the exceptions above.
 The law and application of these exceptions will be explained in the table below:
No Section Law and application
1 Estoppel: Section Section 27:
27(1) Nemo Dat rules applies, unless the owner of the goods is by his conduct
precluded (estopped) from denying the seller’s authority to sell.
 Estoppel may arise in 3 situations:

i) Estoppel by words
ii) Estoppel by conduct
iii) Estoppel by way of negligence of the owner of the goods.
(3 elements of negligence must be proved)
a) Estoppel by words
If the owner of the goods makes a representation which makes the
buyer to believe that the seller has the authority to sell the goods, the
owner will be precluded from denying the seller‘s authority to sell.
[Henderson & Co. Williams]

Fact: The owner of goods was induced by a cheater‘s fraud to
instruct the warehouseman to transfer the goods to the cheater.
The cheater then sold the goods to a bona fide purchaser, where
the warehouseman made a statement to the purchaser that he
would be holding the goods at the purchaser‘s order. When the
cheater‘s fraud was discovered, the warehouseman refused to
deliver the goods to the purchaser. The purchaser sued.
Held: The warehouseman, having formally acknowledged the

transfer of title to the purchaser, was estopped from impeaching
the purchaser‘s title.
b) Estoppel by conduct
When, by conduct, you induced someone to believe that they can sell
the goods, you will be estopped from saying no later, especially when
it is because of your negligence.
[Syarikat Batu Sinar S/B v UMBC Finance Bhd]- Malaysian

case
Fact: In this case, there was a negligent failure of a finance
company to endorse its claim to ownership of a tractor on the

Vehicle Registration Card and the issue was whether such
negligence forfeits its claim.
Held: Failure by owner of the car to register its ownership with

the Registrar estops him from denying the seller‘s authority to
sell because 3rd party always relies on the registration card.
Compare: (different position)
[Industrial Resources Bhd v United National Finance

Ltd] - Brunei Case
Fact: One Martin Loh suceeded to persuade the
defendant (the first finacial company) to finacne him to
buy a car on hire-purchase basis. Later, for some
reasons, he fraudlently persaded the plaintiff (the second
financial company) to finance him for the same car on
hire-purchase basis as well. Later, the Martin Loh sold
the car to a third party (a bona-fide purchaser). So, the
issue was whether the first financial company can assert
ownership of the car since it applied to register as the
absolute owner of the case but had by negligent, not
ensured that registration had been effected in poursuat to
relevant act.
Held: Negligence cannot constitute an estoppel or

"conduct precluding," unless there is a legal duty though
there can be a representation by omission which is
sufficient to give rise to an estoppel where there is a duty
to act. It must, however, be a legal duty to act and not
merely a social or moral duty.
[Central Newbury Car Auctions Ltd v Unity Finance

Ltd]
Fact: The owner gave his car to a crook, and also
handed him the registration documents . The car was
then sold to an innocent 3rd party
Held: The mere fact that the true owner is careless in

the custody of his goods is not sufficient to prevent him
afterwards asserting his title to them. It cannot be that
ownership is lost on the basis of enduring punishment
for carelessness.
 But, if you yourself use this exception as a trick for your

own benefit, the notion that ― you must come to the court with
clean hands‖ applies:
[Eastern Distributors Ltd v Goldring]

Fact: In pursuance of a plan to deceive a finance
company, A signed and delivered forms to B which
enabled B to represent that he had A‘s authority to sell a
car belonging to A. Later, B really sold the car but A
wanted to get his car back .
Held: A was estopped from setting up his title against

the buy who had bought the car from B. Estoppel
operated to pass a good title to the plaintiffs not only
against A himself, but also against a buyer in good faith
from A. The effect of estoppel in sale of goods is to
pass title.
Exceptions
1) However, it must be noted that giving possession of the goods to
another alone will not give rise to estoppel, such as when you lend
your car to someone for 4 days.
[Merchantile Bank of India v Central Bank of India]

Fact: In this case, merchants pledged some railway receipts
with the Central Bank of India in return for a cash advance, the
receipts being documents which enabled their holder to obtain
delivery of goods which had been dispatched by rail. In
accordance with its usual practice, the bank returned the receipts
to the merchants to enable them to get clearance of the goods.
The merchants fraudulently pledged them to the Mercantile
Bank of India. The merchants were subsequently declared
insolvent and an action was brought by the Central Bank for
conversion. The Mercantile Bank argued that the Central Bank
was estopped by its conduct from denying that the merchants
had the right to pledge the goods.
Held: The mere delivery by the true owner to another person of

the possession of documents of the goods, does not at common
law estops him from asserting his title against one who has
purchased the goods from that person.
2) When the employee of a company sold the goods without

permission :
[Farquharson Bros v C. King & Co Ltd]

Fact: An employee of a timber company sold timber to innocent
buyer without permission. Later, the timber company wanted the
timbers back from the buyers. The buyers argued that since the
employee didn‘t control the employee and allowed the fraud to
happen, the company should bear the loss.
Held: The timber company had not made any kind of

representation to the ultimate buyers of the timber, the buyers
had never heard of the timber company so there was never any
holding out by that the employee that he had the right to sell the
timber company's wood. (compared to Henderson & Co.
Williams, the case was the company itself instructed the
employee to sell the item)
c) Estoppel by way of negligence
 This may arise when due to the negligence of the owner, it results in
a 3rd party to believe that the purported seller has ownership of the
goods or has the authority of the owner to sell them.
 However, negligence per se is not enough, all 3 elements must be
fulfilled :
i) The owner has a duty of care
ii) There is a breach of duty
iii) The negligence has caused the buyer to suffer losses or
damages.
[Coventry Shepherd & Co v Great Eastern Railways Co.]

Fact: Defendants negligently issued two delivery orders to t2
different people in respect of the same goods. So, both the people who
received the orders were able to sell the same goods which later lead
to a dispute.
Held: Estoppel by negligence was applied. This is because the
delivery order had a mercantile meaning attached to them and
therefore the defendants owed a duty to buyers.
 Without any of the elements, no estoppel would arise:

[Merchantile Credit Co. Ltd v Hamblin]
Held: For estoppel by negligence to apply, there must be more
than just carelessness on part of the owner. The person alleged
to be stopped must owe some duty of care to the person who
has been misled, there is a breach of the duty and the breach is
the proximate cause of the loss. In this case, the defendant did
owe a duty of care sufficient to raise an estoppel, but she had
not failed to take care. She has not breach of the duty.
[Moorgate Merchantile Co ltd v Hamblin]

Fact: Plaintiff omits to register hire purchase agreement with
Hire Purchase Information (HPI). The hirer sold the vehicle to
the defendant. Defendant had inquired from HPI if the
agreement was registered but were told that it was not. The
issue is whether the plaintiff was under a duty to take
reasonable care to register?
Held: There was no duty on the part of the plaintiff. The
plaintiff was under no such duty to register the agreement.
Estoppel by negligence does not arise.
2 Sale by Mercantile Section 27 (Provision):

Agent When a mercantile agent possesses the goods or document of title to the
(Proviso to S27) goods with consent of the owner, any sale made by him when acting in the
ordinary course of business shall be as valid as if he were expressly
authorized by the owner to make the same, provided that the buyer must act
in good faith and has not at the time of the contract of sale, notice that the
seller has no authority to sell.

Things to take note:
1) The seller must be a mercantile agent

Section 2: Definition of mercantile agent
A mercantile agent (wakil peniaga) having in the customary course of

business as such agent authority either to sell goods, or to consign
goods for the purposes of sale, or to buy goods, or to raise money on
the security of goods
 A mercantile agent can have 1 or multiple principles

[Lowther v Harris]
Held: A person can still be a mercantile agent even though he acts
for one principal (the ―boss‖ which the agent represents) only. This
is because mercantile agent will act for few principals.
 As long as the goods is possessed by a ―mercantile agent‖ , he can

sell the goods even without the owner‘s permission:
[Kedai Pajak Gadai Ngien Fah v PP]

Fact: The complainants had, pursuant to an oral agreement
between the complainants and the accused, surrendered and
entrusted various items of jewelry to the accused to assist in selling
them, at a commission. The accused, however, did not sell the
jewelry but instead had pawned them to 4 pawnbrokers. The
question was could the accused sell the jewelry since it was done
without the owner‘s permission:
Held: Since the accused falls under the definition of ―mercantile

agent‖ under section 2, and since he holds the jewelry on the
owner‘s behalf and the pawn was made in ordinary business hour
with the pawnbrokers, he could pawn the jewelry.
2) The seller must be in possession of the goods with the consent of

the owner
The seller must have possession at the time of the sale. The possession
cannot be at another time. [Bexerley Acceptance Ltd v Oakley]
What if the permission is obtained by fraud?
[Pearson v Rose & Young Ltd]

Held:, A mercantile agent is deemed in possession of the goods
with the consent of the owner even if the permission is obtained by
fraud. (So, the way of giving permission is not important)
[Du Jardin v Beadman]

Fact: A gives bad cheque and a car as security to B, who lets A
take a new car and the log book. Later, A sneaks back and takes
back the car (which he gave as security). A later sold the new car to
a third party. Was there consent from B to let A take the new car?
Held: Yes, even if it was by fraud.
3) The mercantile agent must be in possession of goods in his capacity

as a mercantile agent and not in any other capacities.
For example, a mercantile agent worker borrows his friend‘s car after
work. At this time, the worker is not holding the car as a ―mercantile
agent‖.
4) The mercantile agent must act in the ―ordinary course of business.‖
This means that the mercantile agent must sell the car in an ―ordinary
business hour and at ordinary place‖. If the sale takes place in any way,
time or place which is not ―ordinary‖, this exception cannot be used.
―Ordinary course of business‖ includes any ―ordinary business rule‖:

[Stadium Finance Co. v Robbins]
Fact: A left his car with a motor dealer, B, to put in his showroom
on the understanding that any inquiries would be referred to A,
who would control the sale of the car. A took away the ignition key
and left the registration book locked in a glove compartment.
Despite the agreement, B obtained another key, unlocked the
registration book and sold the car to a hire-purchase finance
company.
Held: A still owned the car. The sale was not in the ordinary
course of B's business because without the book and the key,
selling a car without its registration document would not be in
accordance with ―ordinary course of business rule‖. So, B was not
in possession of the car.
5) The buyer must act in good faith without notice that the seller has no
authority to sell
If the buyer knows that the seller cannot sell the goods or even doubts
that he has to right to sell the goods, this exception cannot be used too.
[Oppenheimer v Attenborough]
Fact: The defendant acted in good faith as he did not know the
―normal practice/ custom‖ in the diamond trade. So, the pledge
was valid even though he had no authority to pledge according to
the custom of diamond trade.
3 Sale by one of the Section 28:

joint owners If one of several joint owners of goods has the sole possession of them by
(Section 28) 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.
 Sometimes, a goods may be owned by multiple owners (under joint

purchase). Under section 28, even if one owner sold the goods, it is
considered that other owners have consented to the sale.
 To invoke section 28, there are 3 elements to fulfill:
i) The seller has the sole possession of the goods.
ii) The seller hold the goods with the permission of other
owners.
iii) The buyer bought the goods in good faith.
- Buyer didn‘t know that the seller has no authority to sell at
the time of the contract was made.
4 Sale under voidable Section 29:

contract (Section Where the seller of goods has obtained possession thereof under a contract
29) 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.
 Under section 19 or 20 of the Contract Act, a contract can become
voidable in the event of duress, fraud, undue influence and
misrepresentation.
 Under section 29, if a seller possesses a goods under a voidable contract,
and sell it to a bona fide purchaser before the rightful owner rescind the
voidable contract, the title of the goods would pass to the buyer. 3
elements:
1) Seller obtained possession under a voidable contract Section 19
(coercion, fraud, misrepresentation) or Section 20 (undue influence)
Contracts Act.
2) Contract has not been rescinded at time of the sale
3) Buyer bought in good faith without notice that the seller has no
authority to sell
Meaning of “rescinded:
[Car and Universal Finance Co Ltd v Caldwell]
Fact: The seller (D) was induced by the buyer to accept a cheque. The
cheque was dishonored on presentation. The seller informed the
police and asked the Automobile Association to trace the vehicle but
discovered that the buyer had sold the car to a 3rd party. The buyer do
all he could to evade any communication being made to prevent the
seller from rescinding the contract. The issue is whether the contract
has been rescinded.
Held: The owner has to establish clearly & unequivocally that he

terminates the contract and is no longer to be bound by it. So, it has to
be communicate to the buyer. However, if he cannot communicate his
decision, the owner can still avoid the voidable contract by informing
to the relevant authority (e.g. making police report) to effectively
show his intention to do so.
In this case, the seller had effectively shown his intention to rescind
the contract of sale even though he had not communicated his
rescission to the fraudulent buyer.

5 Disposition by seller Section 30(1):
in possession after When a seller sold the goods to a buyer but still in possession of the goods
sale S30(1) after sale, if he subsequently sells the same goods to a subsequent bona fide
buyer (2nd buyer), the subsequent buyer will have good title of the goods.
(such rule applies to cases where the goods was sold by a mercantile agent)
Elements under section 30(1):

1) The seller sold the goods to the 1st buyer, where the property would
pass to the 1st buyer.
2) The seller continues to be in possession of the goods (or document of
title) after the sale which it caused others to believe that the seller has
property of the goods or has authority to sell the goods.
 Possession by the seller‘s agent is sufficient:

[City Fur Manufacturing v Fureenbond (Brokers) London]
Held: Possesion of goods does not mean that the seller has to
be in personal possession of the goods. Another person may
have the actual possession of the goods provided that the sale
is done on behalf of the seller.
 Type of possession of the property (whether as bailee, etc.)

are not taken into account.
[Pacific Motor Auctions v Motor Credits]
Held:: The seller who acts as a bailee to the original buyer
still has the actual possession of the cars. The 3rd party had
obtained a good title because the seller ‗continued in
possession‘ of the cars.
 Possession must be ―continuous‖.

[Mitchell v Jones]
Fact: Bagge sold a horse to Mitchell, who then leased the
horse back to Bagge. Then Bagge sold the horse to Jones.
Jones acted in good faith and had no prior knowledge of the
previous sale. Mitchell wanted the horse back and Jones
invoked s 27 as a defence.
Held: The seller must continue in possession of the goods

and the words ―continue…in possession‖ means continuity of
physical possession regardless of any private transactions
between the seller and the original buyer which might alter
the legal title of the goods.
The legal quality of possession (title) is immaterial because

before the sale, the seller is in possession as an owner,
whereas after the sale, he is in possession as a bailee holdings
goods for the new owner. The possession continues
unchanged, but the title under which he possess has changed.
So, in this case, section 27 is inapplicable. Otherwise

situations like where a person buys a watch from a jeweller

and takes lawful possession of the watch, hands it back to the
jeweller on condition that he repair the watch, the jeweller
would be able to give good title. Which of course would be
absurd.
(So, The bona fide purchaser will not be protected by Section

30(1) if there is a break in the possession.)
3) The seller resells or deliver the goods to a 3rd party who buys in good
faith without knowing the previous sale.
4) The seller had delivered/ transferred the goods to the 3rd party. (under
any sale, pledge (pawn) or other disposition)
 .Delivery must be made to the buyer.
[Nicholson v Harper]
Held: There must be some delivery to the second buyer after
the original sale. constructive delivery is not enough.
(constructive delivery = refers to an act amounting to a
transfer of title by operation of law when actual transfer is
impossible)
 Meaning of ―or other disposition

[Worcester Works Finance v Cooden Engineering]
Held: ―Other disposition‖ has a wide meaning and it can
extend to ―all acts by which a new interest (legal or equitable)
in the property is effectively created‖
In this case, it was extended to situation where the seller,

having parted with the possession of the goods, regain
possession of them, provided that he did so as seller and not
in some other capacity.
6 Disposition by Section 30(2):

buyer in possession When the goods have been sold (or agreed to be sold) and delivered to the
after sale :Section buyer but the property hasn‘t passed to the buyer, if the buyer sold the goods
30(2) to another bona fide buyer, the bona fide buyer will have good title of the
goods as long as the buyer acted in good faith and the goods have been
delivered to him.
3 elements under section 30(2):

1) The 1st buyer has possession of the goods with consent of the seller.
 One must be a legitimate ―buyer‖ to fall under the meaning of

―bought or agreed to buy‖
[Helby v Mathews] & [Lee v Butler]
Fact: In these cases, the goods in question was bought on a
hire purchase basis. There was an agreement where the hirer

would only become the owner after he had fully repaid the
price of the goods in instalments and make option to purchase
it from the hire purchase company. The hirer then sold it to a
3rd party.
Held: S30(2) only applies to a person having bought/ agreed
to buy the goods. It does not apply to a hirer who is not a
buyer at the time of the sale since the agreement itself says
that the hirer would only ―own‖ the good after tendering full
payment.
2) The buyer had delivered/ transferred the goods to a 3rd party
3) The 3rd party acted in good faith without notice of liens/ other rights
of the original seller.
Chapter 6 – Delivery Under The SOGA

1) Delivery
Section 2: Definition of “Delivery”
Delivery means voluntary transfer of possession from one person to another.
(Basically means change of possession of goods from the seller to the buyer)
Section 33: How delivery can be made?

Delivery of goods sold may be made by doing anything
1) Which the parties agree to be treated as delivery, OR
2) Which has the effect of putting the goods in the possession of the buyer/ any person authorized to
hold on his behalf. (Having said that, If the mode of delivery is not stated in the contract, the seller can
deliver the goods in any way so long it has effect of putting the goods in buyer’s possession.)
Section 39(1): Delivery to carrier or wharfinger

When in pursuant to a contract of sale, the seller is authorized or required to send the goods to the buyer,
the delivery of the goods to a
Carrier (whether named by the buyer or not, for the purpose of sending them to the buyer),
OR
Wharfinger (a store keeper) (for safe custody)
is prima facie deemed to be a delivery of the goods to the buyer.
Section 36(3): No delivery until third party acknowledge it (agrees to deliver it to the buyer)
When the goods are in the possession of the third party at the time of sale, there is no delivery unless and
until such third party acknowledges to the buyer that he holds the goods on his behalf.
Provided that nothing in this section shall affect the operation of the issue or transfer of any document of
title to goods.
2) Duties of the Seller and buyer
Section 31: Duty of seller and buyer
It is the duty of the seller to deliver the goods and it is the duty of the buyer to accept the delivery and
pay for the goods in accordance with the terms of the contract of sale
Section 35:

However under section 35, subject to any express contract, the seller is not bound to deliver the goods until
the buyer applies for delivery.
P/s: This would mean that the duty of the seller to deliver under Section 31 is discharged by merely making
goods available for collection, unless the parties have agreed otherwise.
Section 32: Payment and delivery are concurrent conditions

Unless otherwise agreed, the delivery and payment for the goods are concurrent conditions. (In other words,
the seller shall be ready and willing to give possession of the goods to the buyer in exchange for the price,
and the buyer shall be ready and willing to pay the price in exchange for possession of the goods.)
p/s: Section 31 and 32 are always subject to the terms and conditions of the contract of sale and the practice
or custom.
3) Rules as to Delivery (section 36)
3.1) Place of delivery (section 36(1))

Section 36(1):
Whether seller is required to send goods to buyer or buyer has to take possession of goods depends on
what has been agreed between them (expressly or impliedly).
However, if the contract did not say anything about delivery, the goods are to be delivered to place
1) where the goods are at the time of sale/agreement to sell, OR
2) for future goods, to the place where it is manufactured.
3.2) Time of delivery (section 36(2) & (4))

Section 36(2):
When under the contract, the seller is bound to send goods to the buyer, but no time for sending is
stipulated, the seller is bound to send them within a reasonable time.
Section 36(4) :
A delivery may be treated as ineffectual unless it is made within a reasonable time. What is a reasonable
hour is a question of fact.
 The Act does not provide whether time of delivery is a condition or warranty but Section 11
provides that:
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 of a contract of sale. Whether any other stipulation
as to time is of the essence of the contract or not depends on the terms of the contract.
 However, under common law, time of delivery is usually an essence of the contract.
[Hartley v Hymans]
Held: In ordinary commercial contract for sale of goods, the stipulation as to time of delivery is
prima facie of the essence. Therefore, if time is provided in the contract for delivery of goods, it
should be obeyed or followed. Failure to do so would render the buyer to repudiate the contract.
3.2.1) So, in what circumstances can a seller repudiate a contract ?
a) When a notice has been given in a reasonable time

[Charles Richards Ltd v Oppenheim]
Fact: Buyer agreed to buy some goods, to be delivered by 20 March. But it was not
available by that date. So, the buyer gave notice in June that if it was not delivered in 4
weeks he would not accept. Later, the seller deliver the goods in October and the buyer
refused to accept the goods.
Held: In this case, time is essential because the seller was given a reasonable notice
requiring the performance by a specified date. The delay to deliver the goods amounted
to breach of condition and the consumer was entitled to terminate the contract.
b) When the goods is not in being/ damaged when the payment is made
[McDougall v Aeromarine Ltd]

Fact: In this case, there was a clause saying that once payment has been made, the
property shall be becomes the buyer‘s property. Payment was made but the buyer later
discovered that the goods are already damaged and sought for a return of the money. So,
in this situation, can the clause be effected to compel the buyer to accept the goods?
Held: No, if the goods is not in being at the time of payment, the goods cannot be
accepted.
4) Delivery of Wrong Quantity (section 37)

 This can happen in 2 situations, when you order a certain quantity of goods, say 5000 kg of fruits, but you
receive either less or more than you have ordered or received the goods with other goods which you did not
order.
4.1) When you receive less than what you ordered (Section 37(1))
Section 37(1): Where the seller delivers to the buyer a quantity of goods less than what he contracted to sell,
the buyer may:
1) reject them but within a reasonable time, OR
[Gandar Edible Oils Sdn Bhd v Trangrain BV]

Fact: In this case, the buyer received goods which are less than what he ordered. He chose to
reject them but he only did so after 15 days since he received the goods.
Held: The fact that he rejected the goods after 15 days is unreasonable, so he is deemed to have
accepted the goods and he has to pay for them.
2) accepts the goods but he has to pay for them at the contract rate.
4.2) When you receive more than what you ordered (Section 37(2))
Section 37(2): Where the seller delivers to the buyer a quantity of goods larger than he contracted to sell,
the buyer may:
1) accept the amount of goods as contracted and reject the rest, OR

2) reject all the goods, OR
3) accepts all the goods but has to pay for all the goods at the contract rate.
4.3) When you receive the goods which other goods which you did not order. (Section 37(3))

Section 37(3): Where the seller delivers to the buyer the goods he contract to sell mixed with goods of a
different description not included in the contract, the buyer may:
1) Accept the goods that he contracted/ordered and reject the rest, OR

2) Reject all the goods.
[ Ebrahim Dawood Ltd v Heath Ltd]

Fact: The parties contracted to sell 50 tons of galvanized steel sheets ―assorted over 6,7,8,9,10 ft
long‖. The buyer paid the whole purchase price in advance. It was discovered after delivery that
the whole of the 50 tons consist only goods of 6 ft long. (So only 1/5 of the goods received were
correct)
Held: The buyer rejected all the goods and the court allowed so.
 Note: Can also claim under Section 15 on description. But if involve only delivery of wrong quantity,
Section 37 is more appropriate.
Section 15: Sale by description

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
4.4) The De Minimus Rule

 Be that as it may, all the situations above are subject to the rule of De Minimus.
 This rule means that the law won‘t pay attention to trivial matters.
 This applies when the shortfall/ access of goods is too slight that it would be unreasonable or unjust to
allow the buyer to reject the goods. Having said that, if the variation from the contract quantity is
“microscopic” and is not capable of influencing the mind of the buyer, the buyer will not be entitled to
reject. What is ―microscopic‖ depends on the facts of the case.
Exp:
A buyer bought 2000 bottles but there was only a shortage of 1 bottle when delivery is made. De
Minimus principle can be invoked but subject to the court‘s discretion on whether to apply it or not.
[Shipton Anderson v Weil Bros Co Ltd]

Fact: The parties contracted to sell 4500 tons of wheat but it was agreed that any variation of the weight
within 10% (more or less) shall be acceptable. Later, the seller delivered 4950 tons & 55 pounds of
wheat but the seller did not claim for the price for the excessive wheat.
Held: It was held that the excessive weight was a too trivial in this case (since the amount ordered was
very large, there was only about 1 pound more for every 100 tons ordered. So, the De Minimus Rule
applies. Buyer was not entitled to reject the goods.
 However, physical measurement was a matter of description and compliance with description meant
exact and not approximate compliance. [Ebrahim Dawood Ltd v Health Ltd]
Having said that, if the goods delivered are different in measurements from what was agreed, the
De Minimus Rule does not apply:

[Wilensko Slaski v Fenwick Co Ltd]
Fact: The seller sold timber of specified measurements to the buyers but when the buyer
received the timbers, it was found that some timbers don‘t conform the measurements. However,
the differences from the agreed measurements were about than 1%.
Held: The seller‘s argument on De Minimus Rule was rejected. Buyer was entitled to reject the
goods.
Same goes to situation where you order the goods but some are merchantable, some are not
(order 100 apples, 99 are good, 1 is spoiled) or you receive things which are completely different
from what you ordered (order 100 apple, receive 99 apple and 1 orange). This are ―matters of
description‖, so it must be exact compliance.
5) Delivery in Installments (Section 38)
Section 38(1): Unless otherwise agreed, the buyer is not bound to accept delivery by instalments.
[Behrend v Produce Brokers Co Lte]

Fact: There were 2 contracts in similar terms for delivery of cotton seeds between the parties. However,
the seller only delivered the seed under one contract and forgot to deliver the goods under another
contract. The seller knew this and quickly did the delivery but this was done only after 2 weeks of the
first delivery. The buyer accepted the seeds delivered earlier and demanded repayment of price of
undelivered seeds.
Held: Once delivery had begun, the buyer is entitled to receive the whole quantity before ship left the
port. Buyer entitled to regard it as failure to deliver and reject the undelivered goods.
Section 38(2): Where there is a contract of sale of goods to be delivered in instalments which are to be
separately paid for, whether the breach of contract amounts to
1) repudiation of the whole contract or

2) Is a severable breach giving rise to a claim for compensation but not to a right to repudiation of whole
contract
due to non-delivery/ defective delivery/ buyer neglect or refuse the delivery, is a question of fact depending on
terms of the contract & circumstances
6) Acceptance (Section 42)

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 sales.
Section 42: The buyer is deemed to have ACCEPTED the goods when:
1) he intimates to the seller that he has accepted them, OR
2) he does any act which is inconsistent with the ownership of the seller, OR
[Hardy v Hillerns and Fowler]

Fact: After the wheat was delivered, the buyer resold part of the goods and dispatched them to
sub-buyers. However, later the 1st buyer found that the goods did not conform to the contract.
Held: By reselling a portion of the wheat and sending it to the sub-purchasers, this has
constituted an act which is "inconsistent with the ownership of the sellers," and so the buyer
must therefore be deemed to have accepted it. So, the buyer had lost his right of rejection.
[M.G. Sheth v Lam Thye Co Ltd ] – Malaysian case
Fact: In this case, the goods sent were not in conformity with the size which the parties have
agreed earlier in the contract. The buyer took the goods from the consignments and sent then to
other sub-buyers in different places.
Held: Such act of dealing with the consignment has amounted to an act of acceptance (this case
followed Hardy)
3) after the lapse of a reasonable time, he retains the goods without intimating to the seller that he has
rejected them.
[Eastern Supply v Kerr]

Fact: In this case, the buyer bought a defective car. The car was tested by the buyer‘s wife
before the buyer agreed to but it. However, it was later that the buyer discovered the car was not
in roadworthy condition. But he did not reject it within the reasonable time (he did not reject
until when he sent the car to an expect and confirmed that the car is in bad condition)
Held: The buyer did not rejected the car within a reasonable time and must therefore be deemed
to have accepted the car.
 Section 63: What is a reasonable time is a question of fact.
[Ganda Edible Oils v Transgrain BV]

Fact: Parties contract to sell 500 metric tons of palm oil. Seller shipped only 481.41 metric tons
of palm oil. Buyer communicated rejection only after 15 days.
Held: It was clear on the shipping documents that there was an unacceptable shortage. However,
the buyer must reject the goods without unreasonable delay if they intended to exercise their
right to reject. By waiting, there was implied acceptance of the tender and/ or waiver of the right
to reject after such unreasonable and inordinate delay.
p/s: ―reasonable time‖ here refers to the time after you discovered the defect. For example, if the
buyer discovered the defects after a month, then the reasonable period of time (e.g. 1 month)
commence from the date of discovery of the defects.
[Bernstein v Pamson Motors (Golders Green) Ltd] – Similar case as above, the buyer bought a
car but did not reject it within a reasonable time so he cannot reject the car.
Section 41: However, until the buyer has had a reasonable opportunity to examine the goods, he would
not be deemed to have accepted the goods.
Section 13(2): When condition to be treated as warranty

When a contract of sale is not severable and the buyer has accepted the goods, or when goods are specific
goods and the property has passed to the buyer, any breach of condition by the seller can only be treated as
a breach of warranty and the buyer cannot reject the goods afterward. (though his right to claim damages
are not affected.)
7) Expenses of Delivery
Section 36(5): Unless the parties agree otherwise, the expenses of and incidental to putting the goods into a
deliverable state shall be paid by the seller.

Chapter 7: Rights of unpaid seller under SOGA
1) Definition of Unpaid Seller (Section 45)
Section 45 Definition of Unpaid Seller

(1): A seller is deemed to be an unpaid seller when
(a): the whole of the price has not been paid/ tendered.
(b): A bill of exchange or other negotiable instrument has been received as conditional payment, but the
instrument was dishonored.
(2): A ―Seller‖ in the context of ―unpaid sellers‖ includes any PERSON who is IN THE POSITION of a
SELLER. Exp: an agent/ consignor who has himself paid or is responsible for, the price.
2) Right of unpaid seller

 There are 2 types of remedies for the unpaid seller:
a) Right over goods sold (real remedy) (section 46 – lien, stoppage & resale)
b) Right against buyer (personal remedy) (section 55 & 56)
2.1) Right over goods sold

Section 46: Even if the property in goods may have passed to the buyer, the unpaid seller shall by implication
of law, has:
(a) A Lien on goods for the price while he is in possession of them
(b) If the buyer becomes insolvent, a right of stoppage in transit after he had parted with the possession
(c) A right of resale
(A) Lien (抵押权) (Section 47 – 49)

 This refers to the right of an unpaid seller to withhold the delivery of the goods UNTIL full purchase
price is paid by the buyer.
 Buyer cannot sue if the seller retains possession of the goods as a result of not being paid by the buyer.
When is the seller entitled to a Lien? When is the seller NOT entitled to a Lien?
(section 47 & 48) (Section 49)
Section 47 Section 49: Lien is terminated when :
(1): The unpaid seller who is in possession of a) The seller delivers the goods to a carrier/
goods is entitled to retain possession of them until bailee for transmission to the buyer without
payment or tender of the price is made, in the reserving the right of disposal (melupuskan)
following cases: of the goods
(a) the goods are sold without stipulation as to b) The buyer or the buyer‘s agent lawfully
credit, OR obtain possession of goods (so, if the buyer
(b) the goods are sold on credit, but the term of takes the goods from the seller‘s warehouse
credit has expired, OR without seller‘s consent, the lien continue to
(c) When the buyer becomes insolvent (bankrupt exist.)
or has no money to pay) c) The seller waivered his right of lien
p/s: it says ―unpaid seller who is in

possession of goods‖, so a unpaid seller who
has no long possessing the goods can no
longer use his right of lien to the goods.
(2): A seller may exercise his right of lien

notwithstanding that he is in possession of the
goods as an agent/ bailee for the buyer.
When the seller makes part delivery (deliver the
goods little by little):
Section 48: Where an unpaid seller made part
delivery of the goods, he may exercise his right of
lien on the REMAINDER, UNLESS the part
delivery was made under circumstances showing
an agreement to waive the lien. ( Exp : Buyer
insolvent + seller accepts the part delivery)
 Even if the buyer sold the goods to a 3rd party, the seller‘s right of lien would not be affected unless the
seller has assented to it.
Section 53(1):
An unpaid seller‘s right to lien/ stoppage in transit is not affected by any sale or other disposition
of the goods which the buyer may have made UNLESS the seller has assented to it.
 A seller can only be said to have assented to the re-sale of the goods when it can be shown that
the seller has intended to renounce his rights against the goods:
[Mordaunt Bros v British Oil & Cake Mills Ltd]

Held: An assent which affects the unpaid seller‘s right of lien must be such an assent as
in the circumstances shows that the seller intends to renounce his rights against the goods.
The fact that the seller has known that the buyer is going to sell the goods to another
buyer is not sufficient to show ―assent‖.
Different position:
[DF Mount Ltd v Jay & Jay Co Ltd]

Fact: The buyer approached the seller and said that he (the buyer) had a customer which
would buy 250 cartons of tin peaches. However, the buyer could only pay the seller by
using the money he got from his customer (the subsequent buyer). The seller agreed and
supplied the buyer with the goods. The buyer sold the goods to the subsequent buyer and
was paid with the money. The buyer defaulted and the unpaid seller claimed possession
of the goods.
Held: The seller had assented to the sale. The seller knew that the buyer could only pay
him after he gets the money from his customer and he assented to the buyer reselling the
goods. By this, the seller has intended to renounce their rights against the goods and to
take risk of the buyer‘s honesty.
Proviso to Section 53(1): If the title of goods was transferred to subsequent buyer in GOOD
FAITH and for CONSIDERATION
1) by way of sale, the seller‘s right to lien is defeated
2) by way of pledge/ other disposition for value, the seller‘s right to lien can be exercised subject
to rights of the transferee.
P/s: This has to be distinguished from the Nemo Dat Principle because in that case, the purchaser has
possession but in the case of a Lien, the seller has possession of the goods.
(B) Right of stoppage in transit (section 50 -52)
 This refers to the right of the seller to stop the goods from being transported to the buyer.
When is the seller entitled to a stoppage in transit?
Section 50: The unpaid seller who has parted with the possession of goods has the right of stopping the
goods in transit when (3 elements)
1) the buyer has not paid for the goods
2) the goods are still in the course of transit, AND
Section 51(1): Goods are deemed to be in the course of transit from the time when they are
delivered to a carrier/ bailee for transmission to buyer UNTIL the buyer/ his agent collect the
goods from such carrier/ bailee.
3) the buyer becomes insolvent
Section 2: ‗Insolvent‘ refers to who has ceased to pay his debts in the ordinary course of
business, or cannot pay his debts as they become due, whether he has committed an act or
bankruptcy or not.
 When seller make part delivery:
Section 51(7):
Where an unpaid seller made part delivery of the goods, he may exercise his right of stoppage in
transit on the REMAINDER, UNLESS the part delivery was made under circumstances showing an
agreement to give up possession of the whole of the goods.
How to effect stoppage in transit?

 Section 52: The unpaid seller may exercise right of stoppage in transit by either :
1) Taking actual possession of the goods, OR
2) Giving notice of his claim to the carrier/ other bailee
- Such notice can be directed to person in actual possession/ his principal

- Such notice shall be given at such time, in such circumstances where the PRINCIPAL may
communicate to his servant/ agent in time to PREVENT a delivery to the buyer.
(C) Right of Resale (Section 54)

Section 54(2) provides for the right of resale
Section 54
(1): A contract of sale is not rescinded by the mere exercise by unpaid seller of his right of lien or
stoppage in transit.
(2): Unpaid seller is entitled to right to resell as long as he is in the possession of the goods1.
 Under section 42, there are 2 situations where such right can arise depending on the types of goods:
1) Where the goods are of perishable nature:
1
S54(2): Where the goods are of a 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.
Section 54(2): ―Where the goods are of a perishable nature ….the seller may, … if the buyer hasn‘t
paid in a reasonable time, resale it to a third party‖
- If the goods are of perishable nature and if the buyer hasn‘t paid in a reasonable time, the seller may
resale the goods in a reasonable time. (what‘s reasonable is a question of fact)
- The seller needs not give notice to the original buyer about the resale.
- If due to the resale, the seller was incurred lose, the seller can claim for damages from the original
buyer.
- But if the seller gained profit from the resale, the original buyer shall not be entitled to the profit.
2) Where the goods are NOT of perishable nature:

Section 54(2): ―…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 seller may, … if the buyer hasn‘t paid in a
reasonable time, resale it to a third party‖
- ―not perishable‖ refers to situation where the seller exercised his right of lien/ stoppage in transit.
- Same as above, this can only be done if the buyer hasn‘t paid in a reasonable time and the the unpaid
seller may resell the goods within reasonable time. (which is a question of fact too).
- However, in this situation, the seller must give notice to the buyer.
- Same as above, if due to the resale, the seller was incurred lose, the seller can claim for damages from
the original buyer. But if the seller gained profit from the resale, the original buyer shall not be entitled
to the profit.
What if notice is not given ?:

 If loss was incurred in the resale, the seller will not be entitled to recover for any loss from the
original buyer.
 However, if the seller gat any profit, the buyer shall be entitled to the profit.
What is the status of a third party (the new buyer)?

- Section 54(3): Whether the notice is given to the original buyer or not, the new buyer will still get a
good title against the original buyer.
What if there is a ―title reservation clause‖

 This refers to clause where the contract says the buyer would only be entitled to the property of the
goods when full payment has been made.
[Aluminium Industrie v Romalpa Aluminium Ltd]

Fact: In this situation, the parties contracted on a sale of aluminum. The contract says that the
property of the aluminum would only be passed to the buyer if full payment has been made, so long
as the payment has not been made, any of the products made from the aluminum would belong to the
seller. However, the buyer is entitled to sell the products to his customers (subsequent buyers)
pending the payment for the aluminum. Later the buyer in this case went insolvent but he has
contracted to sell some aluminum product to his customer (a third party cum subsequent purchaser).
So, who owns the product?
Held: Due to the title reservation clause, the seller would have the property of the product.
 However, if once the goods are perished/ processed into another form which is irreversible to its original
form, the clause will be ―destroyed‖ together with the goods themselves.
[Borden (UK) Ltd v Scottish Timber Products Ltd]

Fact: The seller sold some goods (timbers) to the buyer on credit where the seller knew that the timbers
would be processed into something else (it will be mixed with other materials to form a new product,

which can‘t be reversed). Later the buyer went insolvent and the seller sought for ownership of the
goods under the reservation of title clause in their contract.
Held: The reason why merchants would ―trace‖ the title of the goods by using a reservation of title
clause is because they want to reserve the rights of property to the goods in the event the buyer could not
pay them. So, the onus is on the buyer to realize that once the goods are processed into something else
which cannot be reserved back to their original form, the purpose of ―reserving the goods until full
payment‖ would be defeated. So, in this case, the clause is ―destroyed‖ together with the timbers.
2.2) Right against the buyer

 There are 2 rights, right to sue for price (section 55) and non-acceptance (section 56).
1. Right to Sue for Price (section 55)

Section 55
(1) : In a contract of sales where the date of payment is not stipulated, the seller may sue the buyer for
the price of the goods, if the buyer wrongfully neglects/ refuses to pay for goods, when the property in
the goods has passed to buyer.
(2) : However, in cases where the date of payment has been stipulated in the contract, the seller may
sue the buyer for the price of the goods, if the buyer wrongfully neglects/ refuses to pay for goods, even
if the property in the goods has not passed and appropriated to the contract.
What if the buyer pays by credit card?

[Re Charge Card Service Ltd]
Held: In this situation, once the seller accepted the credit card, the buyer‘s obligation ended. Any
payment in default will be claimable from the credit card company and it is the credit card
company that has to claim back the money from the card holder.
2. Right to Sue for damages for Non- Acceptance

Section 56: When the buyer wrongfully (unreasonably) neglects or refuses to accept and pay for the
goods, the seller may sue buyer for damages for non-acceptance
[Akas Jamal v Moola Dawood Sons]

Held: Since section 56 doesn‘t provide for how damages should be awarded, so section 74 of the
Contract Act would be used to determine the damages to be awarded.
How to calculate damages?

[Lee Sau Kong v Leow Cheng Chiang]
Held:
1) If the contract price is higher than the market price. The way to calculate the damage is by
minusing the contract price with the market price. This is because the due to the non-
acceptance of the buyer, the seller will have to resale the items at market price to other buyers.
So, because of this, the buyer has to pay for the loss (the price difference the seller suffers when
he resale at market price) to compensate the seller as though the contract was performed.
2) If the contract price is same or less than the market price, the seller cannot claim for
damages as there is no loss suffered.

 Meaning of ―available market‖ and ―market price‖:
[Thompson v Robinson (Gunmakers) Ltd] & [Charter v Sullivan]
Held:
"market" = the situation in the particular trade in the particular area was such that
the particular goods could freely be sold, and that there was a demand
sufficient to absorb readily all the goods that were thrust on it, so that if a
purchaser defaulted, the goods in question could readily be disposed of.
―Market price‖ = the market price of the goods at the date the goods is delivered to or
received by the buyer. If the delivery date is not fixed, the market price is
the market price of the goods when the buyer refuses to accept the goods.
 Since ―market price‖ is the market price of the goods at the date the goods is delivered to or
refused to be accepted by the buyer, fluctuation of market price at any other dates are immaterial.
[Pagnan v Corbissa]
 What if the market price is higher than the contract price? Seller can still get damages.
[Campbell Mostyn (Provisions) Ltd v Barnett Trading]

Fact: The buyer refused to accept the goods. The seller did not resell the goods immediately in
the market. The seller sold the goods when there is a good price in the market and he made a
profit. However, the seller sued the buyer for damages.
Held: The seller is entitled to the damages despite the seller suffered no loss. It is immaterial on
the time the seller resells the goods. (However, this is contradictory with S74 of Contract Act
1950. Under S74, it provides that there is no claim if no loss is suffered.)
 What if there is no ―market‖ for the goods (since no market, no market price)?
[Harlow & Jones v Panex (International)]

Held: The damages will be calculated by the contract price deduct the value of the goods which
the buyer refused to accept.
[Malaysian Rubber Dev v Glove Seal ]

Held: However, in this case, the Supreme Court of Malaysia has taken a different approach.
Based on the facts of the case, the Court calculated damages based on the difference of contract
price deduct the costs of production. That is the loss which flows directly and naturally from
the breach.

Chapter 8: Rights of buyers under SOGA
1) Right to Examine Goods (Section 41)

Section 41
(1): When goods are delivered to buyer which he has not previously examined, he is not deemed to have
accepted them unless & until he has had a reasonable opportunity of examining them for the purpose of
ascertaining whether they are in conformity with the contract.
(2): Unless otherwise agreed, when the seller tenders delivery of goods to the buyer, he is bound, on request,
to afford the buyer a reasonable opportunity of examining the goods for the purpose of ascertaining
whether they are in conformity with the contract.
2) Right to Reject Goods Due To Breach of Contract

A buyer is entitled to reject goods delivered if the seller breached any express or implied condition or if the seller
does not comply with the rules of delivery (for example Section 37: Delivery of wrong quantity).
2.1) How to reject?

Intimates to seller that he refuses to accept
Section 43 SOGA:
Unless otherwise agreed, when goods are delivered to buyer and he refuses to accept them, it is
sufficient if he intimates to seller that he refuses to accept them. He is not bound to return the goods
to seller.
2.2) When a buyer would lose/ waive his rights to reject a good? (Section 13 & 42)
 A buyer would lose/ waive his rights to reject a good when he accepted the good:
Section 42 SOGA : Buyer is deemed to have ACCEPTED the goods when:

i) Intimates to seller that he has accepted them,
ii) does any act inconsistent with seller‘s ownership
[Hardy v Hillerns & Fowler]
iii) after lapse of a reasonable time, retains the goods without intimating to seller that he has
rejected.
 Section 63 SOGA: What is a reasonable time is a question of fact.

[Ganda Edible Oils v Transgrain BV]
Held: However, if the buyer discovered the defects after a month, then the reasonable
period of time (e.g. 1 month) commence from date of discovery of the defects.
 Section 41: However, until the buyer has had a reasonable opportunity to examine the
goods, he would not be deemed to have accepted the goods.
Section 13(2): When condition to be treated as warranty

When a contract of sale is not severable and the buyer has accepted the goods, or when goods are
specific goods and the property has passed to the buyer, any breach of condition by the seller can only
be treated as a breach of warranty and the buyer cannot reject the goods afterward. (though his right to
claim damages are not affected.)
3) Right to Reject Goods under Voidable Contract

 A buyer can also reject the goods when the contract is voidable under s19 & 20 of the contract act:
Section 19 Contracts Act: Coercion, fraud, misrepresentation

Section 20 Contracts Act: Undue influence
P/s: Same as the previous right, this has to be done within a reasonable time (provided in the contract itself)
4) Right to Damages for Non-Delivery
Section 57 SOGA: When seller wrongfully neglects/ refuses to deliver goods to buyer, buyer may sue for
damages for non-delivery.
How to calculate damages?

 To calculate the damages, Section 74 Contracts Act can be used:
Section 74 Contracts Act: When a contract has been broken, if the contract provided the liquidated
damages/ penalty, the injured party is entitled, whether or not actual damage/ loss is proved to have
been caused thereby, to receive from the defaulting party, reasonable compensation not exceeding
the amount so stated. (If the things are too remote, cannot claim)
 The amount of damages if calculated based on the deference of the market price and (minus) the contract
price. (Damages = market price - contract price). If the marker price and contract price is that same,
then the buyer cannot claim damages since he suffers no loss.
[Eikobina v Mensa Merchantile]
 What if the buyer buys the goods for the purpose of reselling them to other people. Can he claim damages
for the profit we would have earned if the contract was performed?
[William v Agius]
Held: Generally, the buyer is not entitled to claim damages from seller based on the contract price of
reselling the goods.
BUT, in some circumstances, the court may take into account of resale price:
[Re Hall v Pims Arbitration]

Held: Price of resale can be taken into account under special circumstances but only when the
conditions below are fulfilled:
1. Contract for the resale is only for the same goods (in terms of types, quantity & quality)
2. The seller has knowledge of the resale because it was provided in their contract for sale.
3. If it was not provided in their contract for sale, the seller has knowledge of the resale or it is
reasonably foreseeable that the buyer would resell the goods. (the mere fact that the buyer MAY
resale the goods is not sufficient)
4. Even if all the conditions above are satisfied, the price of resale cannot be too high, it must be
reasonable.
5. Besides, it shall be the duty of both buyer and seller to mitigate the losses suffered.
[Popular Industries Ltd v Eastern Garment Manufacturing Sdn Bhd]

Held: The normal measure of damages for non-delivery of goods sold is the difference between the
market price and the contract price but this rule applies only where there is an ―available market‖,
that is to say that the buyer should be able to go out and buy equivalent goods.
In cases where the goods concerned are not immediately available or are not near at hand, the
question whether the buyer should wait or buy from afar is to be determined by what is reasonable.
In this case, there was no available alternative source from which the buyer could have obtained
replacement goods to mitigate their loss.
So, in cases where the buyer is a trader and the seller knew or ought to have known that the
buyer bought the goods with a view to resale, the buyer is entitled to his loss of profits on the
resale, upon non-delivery of the goods by the seller.
 Is time of delivery an essence of the contract?
Section 11 (SOGA) : Whether any other stipulation as to time is of the essence of the contract or not
depends on the terms of contract
However, under common law, time of delivery is usually an essence of the contract.
[Hartley v Hymans]
Held: In ordinary commercial contract for sale of goods, the stipulation as to time of delivery is prima
facie of the essence. Therefore, if time is provided in the contract for delivery of goods, it should be
obeyed or followed. Failure to do so would render the buyer to repudiate the contract.
5) Right to Damages for Breach of Warranty
Section 59
(1): In cases where is a breach of warranty/ breach of condition treated as breach of warranty, a buyer is not
entitled to reject the goods but he may claim for:
(a) reduction or waive of price
(b) Damages for breach of warranty
(2): A buyer who has set up a breach of warranty in dimunition of price can still sue for further damage.
[Lee Heng v Melchers] & [Chop Chin Leong v Ban Hoe Hin]
Held: Generally, damages can be determined through the difference between the market price of ordered
goods and the goods provided. (market price of ordered goods – market price of goods provided)
6) Right to Seek For Specific Performance

 Sometimes, there may be situations where the damages is too low or the goods are too important for the
buyer. In this situation, the buyer may apply for specific performance.
Section 58 SOGA: Buyer may apply to court for the grant of specific performance for delivery of the
goods, But only limited to specific/ ascertained goods.
Conditions to use this specific performance:

1) Application for the grant of specific performance must be for the delivery of specific/ ascertained
goods. [Re Wait] (In this case, the action failed as it involves unascertained goods)
2) Specific Performance won‘t be granted if damages is an adequate remedy
Section 20(1)(a) Specific Relief Act:

Specific Performance will not be granted if compensation in money is an adequate relief.

Normally, the court is more ready to grant specific performance if the goods concerned are
unique/ special goods (goods which have no alternatives in the market), which depends on the facts
of each case.
This can be seen in :

[Behnke v Bede Shipping]
Held: In this case, the goods was a custom-made ship. Specific performance was granted.
[Mensa Mercantile v Eikobina]

Held: In this case, the goods was a heavy construction machinery. Specific performance was not
granted.

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Chapter 1 : Sales of Goods

Section 1(2) : SOGA is only applicable in West Malaysia.

2) Contract Act: (refer to Section 3 of SOGA)

3) Consumer Protection Act : Section 2(1)

[Heng Long v Osman Abdullah]

In what matters SOGA is applicable?

Prepared by : Mk Yong LIA 160064

2) SOGA is only applicable for CONTRACT OF SALE OF GOODS (S4(1)).

Things that needed to be ascertained:

c) There must be a price for the sales of goods.

B) Consumer Protection Act

“trade” : any trade, business, industry, profession, occupation, activity of commerce or

Prepared by : Mk Yong LIA 160064

 S4(2): A Sale of goods can be written or oral.

 S4(3): The difference between sale and agreement to sell :

2.1) Element 1: It must be a sale of goods

2.1.1) General priniple on goods

 Extra (for assignment maybe), definition of money:

Prepared by : Mk Yong LIA 160064

2.2) Element 2: The transfer of property must be done for a price

[May & Butcher v The King]

Prepared by : Mk Yong LIA 160064

Prepared by : Mk Yong LIA 160064

[Esso v Commissioners of Customs & Excise]

2.3) Element 3: Intention to transfer property

[Perlmutter v Beth David Hospital]

Prepared by : Mk Yong LIA 160064

Section 16: Implied condition as to quality or fitness

4) Application of SOGA and Types of Goods Under SOGA

Such assent may be express or implied, and may be given either

Unascertained good: (highly relatable to S23)

Specific good (S20, 21 & 22)

Prepared by : Mk Yong LIA 160064

 However, what‘s ―identified‖ is not established , compare:

[Kursell v Timber Operators ] [Reid Joseph Pty Ltd v Schultz ]

How to answer question in exam:

Prepared by : Mk Yong LIA 160064

Section 12: Condition and warranty

The stipulation may be a condition, though called a warranty in the contract.

 Effect of breaching conditions or warranty :

2) Stipulation of time under SOGA (s. 11)

[Thames Sack and Bag Co Ltd v Knowles & Co Ltd ]

Prepared by : Mk Yong LIA 160064

3) Instances where breach of condition to be treated as a breach of a warranty (s13)

[Associated Metal Smelters v Tham Theow Toh]

Prepared by : Mk Yong LIA 160064

 Acceptance will only be valid if it is within s42

Section 42: Acceptance

 Reasonableness is a question of fact

Section 63: Reasonable time a question of fact

 Example where contract is not severable :

Section 20: Specific goods in a deliverable state.

[Dennant v Skinner and Collom]

4) Conditions and Warranties Implied Under SOGA

P/s : in exam, s16(1)(a) & (b) can discuss together

Prepared by : Mk Yong LIA 160064

4.1) The right to sell (S 14 (a))

[Roland v Divall] – this case receive many criticisms

[Butterworth v Kingsway Motors]

Prepared by : Mk Yong LIA 160064

4.2) Quiet possession under SOGA (S 14 (b))

[Heng Long Motor Trading Co v Osman Abdullah ]