PREPARED BY

MR NORMAN BIN ZAMRI

JP PSIS
Explain clearly the position of law
regarding sale of goods
 DEFINITION
- s.4(1) Sale of Goods Act, 1957

a contract whereby the seller

transfer @ agrees to transfer the
property in goods to the buyer for a
price
 3 main element

1. There must be goods available

2. The seller transfer @ agrees to
transfer the property in goods
3. There is a price
 OBJECTIVE

TRANSFER OF OWNERSHIP OF THE

GOODS TO THE BUYER FOR A MONEY
CONSIDERATION.

SALE OCCURS WHEN

OWNERSHIP/PROPERTY IN GOODS
PASSES TO THE BUYER
 DEFINITION s.2 (SGA, 1957)

BUYER - a person who buys or agrees

to
buy goods
SELLER - a person who sells or agrees
to sell goods
 Elements of sales of goods
1. Subject matter (goods)
2. Consideration (price)
3. Formation (offer & acceptance)
4. Formalities
5. Capacity
6. Terms of contract
7. Transfer of property
8. Transfer of title
1. GOODS

S.2 every kind of

movable property other than actionabl
e claims and money
; and includes stock and shares,
growing crops, grass and
things attached to or forming part of th
e land
which are agreed to be severed before
sale or under the contract of sale
 E.g. bankruptcy property (actionable
claims referred to as chooses in
action, an intangible property which
can be enforced not by taking
physical possession but taking legal
proceeding)
 Examples:
1. Logs (severed from the land)
2. Fixtures if there is an obligation to
severe under the contract of sale
3. Energy (electricity and gas) provided
all problems of severance from the
soil have been solved
4. Minerals, gravel, soil and
subterranean water (provided they
could be taken out of the land)
 It follows from the definition that
sales of land are not sales of goods
However, fixtures & things that
attached to land which form part of
land can be classified as goods if
they have been @ will be severed
from the land under the contract of
sale
MORGAN v RUSSEL
Facts: The vendor was the lessee of certain
land, which was composed of slag &
cinders. He then sold to the purchasers
all the slag on his premises so much as
the purchasers should desire to remove.
Court Held: Sale of cinders & slag was not
a sale of goods, but a sale of an interest
in land
Vendor did not sell any definite quantity of
mineral, which could be said to be a
separate thing.
 It would appear that certain chattels
deposited @ abandoned on the land
become part of land. They become
goods only if they are agreed to be
severed before sale @ under a
contract of sale
MILLS v STOCKMAN
Facts: There was a contract to sell a
heap of slate, which had been left on
the ground for many years by a
quarrying business. The contract
gave the buyer a right to enter a land
and to remove the heap of slate.
Court Held: The contract was for the
sale of land and not the sale of goods.
 The contract could be one for the
sale of goods, so long as there was
an agreement to severe before sale
or agreed to be severed under the
contract of sale.
AMCO ENT PTY LTD v WADE
Facts: A contractor agreed to remove
from a river bed all gravel, sand &
stone which could be used
commercially in construction and
which were capable of being
recovered by ordinary methods.
Court Held: The contract was for the
sale of goods.
 Money is not goods, but coins @
ancient/old currency may be treated
as goods
MOSS v HANCOCK
Court Held: A jubilee five pound piece,
bought as a curiosity, may be treated
as goods and not as money
 Types of goods:
1. Existing goods
2. Specific goods
3. Unascertained goods
4. Ascertained goods
5. Future goods
 Existing goods
s.6(1) goods owned or possessed by
the seller
e.g. rice at shop.
 Specific goods
s.2 goods identified and agreed at
the time the contract is made
e.g. specific model of car in usage car
shop.
 Unascertained goods
- Goods exist but not ascertained yet at
the time of the contract is made.
- 3 categories
i. Goods to be manufactured @ grown by
seller
ii. Generic goods. (1000 tons of wheat)
iii.An unidentified part of a specified whole.
(100 tons out of 2000 tons wheat)
Ascertained goods
Goods not ascertained at the time of
contract, but become ascertained
after selection by the buyer/seller

e.g. 4 meters of fabric

 Future goods
s.2 goods which are to be
manufactured @ produced @
acquired by the seller after the
making of the contract

e.g. furniture produce according to the

consumer preferences.
2. SELLER TRANSFERS @ AGREES TO
TRANSFER PROPERTY IN GOODS
property in goods ownership
(distinguished from possession)
A person may be the owner although
not in possession of the goods
Conversely, possessor of goods may
not be the owner
 S.4(1), a seller must have property in
goods to be transferred to the buyer.
Otherwise, the contract may be
invalid
Therefore only the owner has the
property in goods is entitled to
sell/transfer it to the buyer.
Possessor who is not the owner is not
entitled to do so.
 Distinction of sale & agreement to sell
- Term of Contract of sale under s.4(1)
includes both sale & agreement to sell.
- These 2 terms must be distinguished.
S.4(3) the property in the goods is
transferred from the seller to the buyer,
the contract is called a sale;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
 agreement to sell may become
sale when the time ended @
stipulation has been fulfilled s.4(4)
3. PRICE
- s.4(1) provide that a contract of sale
is for a price
- S.2 defined PRICE as the money
consideration for a sale of goods.
- Therefore, there must be an
exchange between goods and money.
- Otherwise it is not contract of sale of
goods.
 Price may be ascertained by - s.9(1)
& (2)
i. Fixed by the contract itself
ii. Fixed according to certain manner
agreed
iii.Determined by the course of dealing
between the parties
iv.Reasonable price
 FORMATION OF THE CONTRACT OF
SALE OF GOODS
a. Capacity
b. Formalities
c. Time of payment
 CAPACITY
- SOG Act 1957 has no specific
provisions dealing with capacity
- However according to s.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.
 S.11 Contracts Act 1950
- Of the age of majority (adult)
- Sound mind
- Not bankrupt

S.69 C.A 1950 has to be considered

in respect of necessaries supplied
to a person incapable of entering into
a contract.
 FORMALITIES
s.5(2): may be made:
In writing @
By word of mouth @
Partly in writing & partly by word of
mouth @
Implied from the conduct of the
parties.
 S.5(1) A contract of sale is made by an offer
to buy @ sell goods for a price and there is
acceptance to such offer. (OFFER &
ACCEPTANCE)
The contract may provide for:
Immediate delivery of the goods @
Immediate payment of the price @
Immediate payment & delivery @
Delivery @ payment by installments @
Delivery @ payment @ both shall be
postponed.
 TIME OF PAYMENT
S.11 : STIPULATIONS AS TO TIME OF
PAYMENT ARE NOT IMPORTANT
WHETHER IT IS IMPORTANT OR NOT
DEPENDS ON THE TERMS OF THE
CONTRACT
 TERMS OF THE CONTRACT

Classified into 2:
a. Condition & warranties
b. Implied terms
 The contracting parties are free to put in
any terms/stipulations in their contract
of sale. (in the form of condition @
warranty) s.12(1)
It depends on the construction of the
contract, which has been made s.12(4)
Condition @ warranty may be made by
expressly @ implied from the conduct or
by operation of law.
 CONDITION
s.12(2) it is a stipulation essential to
the main purpose of the contract.

If the condition is breached, the party

not in default entitle to repudiate the
contract because the contract can be
deemed to be VOID
 WARRANTY
s.12(3) it is a stipulation collateral to the
main purpose of the contract.

If the warranty is breached, the party not

in default is not entitled to repudiate the
contract because it is NOT VOIDABLE.
However, the party not in default entitled
for damages.
 EXCEPTION (when breach of condition
can be treated as breach of warranty)
S.13(1)
When the buyer waives the condition or
elects to treat the breach of the
condition as the breach of warranty and
do not want to repudiate the contract.
(customer agreed to claim damages
only)
 S.13(2) when the contract is not severable and
the buyer has accepted the goods or part
thereof.
buyer has accepted the goods means s24:
a. Buyer told seller he had accepted the goods @
b. Goods has been delivered & buyer has done
something which is against the ownership of the
seller
c. When after the expiry of a reasonable time, the
buyer keep the goods without informing the seller
that he rejected the goods.
 S.13(2) where the contract is for
specific goods and the property
(ownership) of the goods has
transferred to the buyer.
 Therefore if any of those
circumstances exists, the buyer
should treat the breach of condition
as a breach of warranty. (cant
repudiate but can claim
damages/compensation)
IMPLIED TERMS

1. IMPLIED CONDITION AS TO TITLE

s.14(a)
- Seller is presumed to have a right to
sell (as the owner)
- Remedy rescission of the contract
by the buyer
ROWLAND v DIVALL
Facts: P bought a car, and after using it
for 4 months, he discovered that it was
actually stolen from someone else. P
had to returned it to the owner.
Court Held: D had breached the
condition as to title and P is allowed to
rescind it by claiming full price from D.
2. IMPLIED WARRANTY AS TO QUIET
POSSESSION s.14(b)
- Unless the contrary shows in the
contract, there is an implied warranty
that the buyer shall have and enjoy
quiet possession of the goods.
(without any wrongful interference by
a stranger or 3rd party or by seller
himself, claiming a right.
MICROBEADS A.G v VINHURST ROAD
MARKING LTD
Facts: The patentee, a 3rd party, had
brought an action against the buyer
alleging the use of certain road marking
machines (breach of their patent) 2 years
after the sale by P to D.
Court Held: There had been a breach
because the buyer did not enjoy the
future quiet enjoyment of the goods.
3. IMPLIED WARRANTY THAT THE GOODS
ARE FREE FROM
ENCUMBRANCES/CHARGE
- Goods must be free from any
charge/encumbrance, which is in
favour of any 3rd party.
- If any, and such fact is not
declared/made known to the buyer, the
seller is liable for breach of warranty.
STEINKE v EDWARDS
Facts: P bought a car, had to pay off
the tax, which still owes from the
government. P sought to recover the
amount he had paid for the tax from
D (seller)
Court Held: P was entitled for damages
because D had breached the implied
warranty.
4. IMPLIED CONDITION THAT THE GOODS
MUST CORRESPOND WITH THE
DESCRIPTION s.15
- If the sale by description
- If the sale is by sample as well as
description, the bulk of the goods shall
correspond with the sample as well
- If the goods do not correspond, the
buyer entitled to reject and rescind
contract
VARLEY v WHIPP
Facts: Seller agreed to sell a secondhand
reaping machine described as new the
previous year. Buyer did not look at the
machine but relied on the description.
When delivered, machine was found very
old, which had been repaired.
Court Held: Seller had breached the
implied condition as it was not
correspond with the description.
 Other references cases
1. Beale v Taylor
2. Nagurdas Purshotumdas & Co. v
Mitsui Bussan Kaisah Ltd.
 5.IMPLIED CONDITION AS TO FITNESS
FOR PARTICULAR PURPOSE s.16(1)
- General Rule Common Law, the buyer
expected to exercise care in making
purchase
- caveat emptor buyer must beware
- If careless, he must bear consequences
- Seller would not be liable, if the goods is
not fit or having no quality as required.
 EXCEPTION
- S.16(1)(a) - there is an implied condition
that the goods must reasonably fit for a
particular purpose of the buyer
- If the goods are not fit for particular
purpose of the buyer, the seller would
be liable for breaching condition and
buyer entitled to damages or rescind
contract.
 In order to invoke s.16(1)(a), 4
conditions must be fulfilled
a. DISCLOSURE OF PURPOSE
- The buyer must make known/disclose
to the seller the particular purpose for
which the goods are required/bought
- Otherwise, the implied condition
would not apply.
- Buyer has to take the risk. Seller not
liable.
GRIFFITHS v PETER CONWAY LTD.
Court Held: A woman with an usually
sensitive skin who bought a harris
tweed coat without disclosing her
sensitivity to the seller, did not
succeed under this s.16(1)(a)
because the coat would not harm a
normal person.
 However, if the description of the
goods shows that it has only one
purpose, no disclosure is required.
It is implied that the goods is fit for
particular purpose.
PRIEST v LAST
Facts : P purchased a hot water bottle
from D, a retail chemist. Some days
later, the bottle, while in used by the
plaintiffs wide burst. Therefore she was
scalded.
Court Held: If the description of the goods
by which they were sold pointed to one
particular only, then the requirement of
disclosure of purpose is deemed fulfilled.
b. RELIANCE ON THE SELLERS SKILL &
JUDGEMENT
- Buyer must also establish that he had
relied on the sellers skill & judgment
before purchasing the goods.
GRANT v AUSTRALIAN KNITTING MILLS
Court Held: The reliance usually arise by
implication from the circumstances. For
instance; of a purchase from a retailer,
the reliance will be inferred from the fact
that a buyer goes to the shop in the
confidence that the seller has selected
his stock with skill & judgement.
 CAMMEL LAIRD & CO v MANGANESE BRONZE &
BRASS CO LTD
Facts: contract by A to build a propeller for B in
accordance with Bs specification & design, and to
fit a particular ship & its engine. However the
details as to the thickness of the blades were left
to the sellers skill and judgment. The propeller
supplied but did not suit the ships engine.
Court Held: A was liable for breach an implied
condition because buyer had informed the seller
of the purpose of propeller & relied on the A skill
to provide them.
c. THE GOODS SUPPLIED ARE OF THE
DESCRIPTION WHICH THE SELLERS
BUSINESS TO SUPPLY
- The goods bought by the buyer must
be the kind, which it is in the course
of the sellers business to supply.
- E.g. buy medicine at the pharmacy
rather than at pet shop.
 SPENCER TRADING CO LTD v DEVON
Facts: The manufacturer had previously supplied to the
P on a special order, an adhesive substance made
from gum resin for making flypapers. The following
year, P ordered a further supply for the same
purpose from the manufacturer, who on this occasion
used synthetic raw materials in place of the natural
material previously used. Consequently, the
flypapers were unsatisfactory for the purpose.
Court Held: The goods are of a description which it is in
the course of the sellers business to supply. So the
manufacturer was liable for breach the implied
condition.
 ASHINGTON PIGGERIES LTD. V CHRISTOPHER HILL
LTD
Facts: The seller was the manufacturer & dealer in
animal feed. However, it had never made feed for
mink. Buyer made it clear, but the seller agreed by
make up such compound from formula provided by
buyer. However it is not fit for the mink.
Court Held: The product was a feeding compound.
Although the seller had never previously supplied
that particular feeding compound, but it was of the
kind which it was the sellers business to supply.
d. NOT BOUGHT UNDER PATENT OR
TRADE NAME
- If buyer bought the goods under a
patent or a trade name, it gives the
impression that he is not relying on
the sellers skill & judgment.
- Therefore, he cannot later complain
that the goods are not fit for the
particular purpose he required.
 WILSON v RICKETT
Facts: P ordered from D, a firm of coal
merchants, 1 ton of Coalite, a household
fuel. However, when the fuel was put on the
fire, an explosion occurred & caused
damage to P. the explosion was due to a
detonator, which contain in the Coalite
Court Held: D is not liable for breach of
implied condition as to fitness for particular
purpose because it was bought under the
trade name of coalite
 However, if the goods is not bought
under the patent or trade name, or if
the buyer did buy under a trade
name but relies on the sellers skill &
judgment, the implied condition
apply.
 BALDRY v MARSHALL
Facts: The buyer had asked the dealer for a
car suitable for touring. The dealer
recommended a Bugatti car. A contract for
the sale of a Bugatti car was made. It was
later foud that the car was not suitable for
touring.

Court Held: The dealer was liable because the

buyer had relied on his skill & judgment
even though it was sold under a trade name.
6. IMPLIED CONDITION AS TO
MERCHANTABLE QUALITY s.16(1)(b)
- Another exception to the caveat
emptor rule
- Goods must have a merchantable
quality goods sold must fit for the
particular use to which they were sold.
- If the goods are defective for their
purpose, they are unmerchantable.
 To determine whether the goods is
having merchantable quality or not, it
depends on the description of the
goods.
HENRY KENDALL & SONS v WILLIAM
LILLICO & SONS LTD.
Court Held: If the description was so
limited for only one purpose, the goods
would be unmerchantable if they were
no use for that purpose. But if it were so
general, used for several purposes,
them the goods would be merchantable
if they were fit for only one of those
purposes.
- If the goods are unmerchantable, the seller
would be liable for breach of implied
condition, even though they are sold under
their patent or trade name.
- WILSON v RICKETT, COCKERELL & CO LTD.
Facts: The goods were contaminated with
detonator, resulting an explosion when
used.
Court Held: The goods were unmerchantable
for having defects making it unfit for
burning.
 EXCEPTION
s.16(1)(b) does not apply if the buyer has
examined the goods, by which through
that examination, the buyer might
discover defects.
However, if the defects could not be
discovered by any reasonable
examination, then the implied condition
as to merchantable quality apply. (goods
are unmerchantable)
WREN v HOLT
Court Held: P recovered damages for
breach of condition of
merchantability of beer which was
contaminated by arsenic.
The exception was not applicable
because the defect was not
discoverable on reasonable
examination
7. IMPLIED CONDITION IN A SALE BY SAMPLE
- In a contract of sale by sample, the goods
sold must correspond with the sample.
- If the goods are bought in bulk, the bulk
must correspond with sample.
- If certain part of the goods correspond with
the sample, but the other was not, the buyer
has right to reject whole bulk.
- If the bulk correspond with the sample but
there is a latent defect, rendering the goods
unmerchantable, buyer is entitled to reject.
DRUMMOND v VAN INGEN
Facts: the cloth supplied by the seller
was equal to the samples, which was
previously examined by the buyer.
However, there was a latent (hidden)
defect, which was not discoverable
by a reasonable examination.
Court Held: The seller was in breach of
the implied condition.
7. TRANSFER OF PROPERTY
- Important to ascertain the time, as to
when property in goods passes to
the buyer because of the following
consequences:
1. Once property passes to the buyer,
buyer would bear the risk even
though the goods has not been
delivered to the buyer s.26

However, if the delivery has been

delayed due to the fault of the
seller, then the seller has to bear
the risk even the property has
passed to buyer proviso to s.26
2. If any party sought to claim to any
right over the property from a 3rd
party, only the person who has the
property in goods may claim

3. The seller would only entitle to claim

for the price if the property in goods
has passed to the buyer.
 SoGA 1957 provides several
provisions in order to ascertain the
time, when the property in goods is
transferred to the buyer
In order to determine when the
property in goods is transferred to
the buyer, it is necessary to look at
the types of goods being sold.
1. SALE OF UNASCERTAINED GOODS s.18
The property in goods will not pass to the
buyer until it is ascertained
Once it has been ascertained, then only the
property in goods passed to the buyer.
E.g. A contract to buy a new car which forms
part of a larger consignment. No property
passes until the seller has ascertained the
car to be sold to A, by setting aside a
particular car for the purpose of the sale.
2. Sale of Specific @ Ascertained Goods
s.19
The property in goods is transferred to
the buyer at such time as the parties to
the contract intend it to be transferred
s.19(1)
To determine such intention, the terms
of the contract, the conduct of the
parties and the circumstances of the
case should be taken into consideration.
3. SALE OF SPECIFIC GOODS IN A
DELIVERABLE STATE s.20
deliverable state when there is nothing
else to be done by the seller on the goods
for the buyer
The property passes to the buyer at the
time the contract is made
It is immaterial (not important) whether
the time of payment for the price @ the
time of delivery @ both is postponed
 Cont
The property in goods passes to the
buyer immediately upon the time when
the contract is made.
E.g. Buyer agrees to buy a particular
book on credit. The property in the
book passes immediately to the buyer
when the contract of sale is made, even
though the payment is postponed.
 S.20 would only apply in the situation
where the goods is in a deliverable
state.
If it is not in a deliverable state, s.20
does not apply (property will not pass
to the buyer at the time when the
contract is made)
 UNDERWOOD LTD v BURGH CASTLE BRICK & CEMENT
Facts: Contract for the sale of a condensing engine to
be delivered on rail in London. At the time of
contract, the engine was affixed to the sellers
premise and it had to be separated from concrete
floor and to be dismantled before it could be
delivered. While the main engine was being loaded,
it was partially broken by accident.
Issue: Who has to bear the risk of the damage?
Court Held: the property of goods had not passed yet
during the accident. It was sellers risk. S.20 cant be
applied.
4. SALE OF SPECIFIC GOODS TO BE PUT
INTO A DELIVERABLE STATE s.21
For specific goods
However, seller is bound to do
something on the goods for the purpose
of putting them into a deliverable state
Property does not pass to buyer until
such thing is done by the seller, and the
buyer has notice of it.
Example
Seller agrees to sell a particular 2nd
hand motorcycle to the buyer. The
agreement is the seller would change
the tyres before delivered it. The
property in the motorcycle does not
pass to the buyer until the seller
changed the tyres. Once change,
then the property passed.
5. SALE OF SPECIFIC GOODS IN A
DELIVERABLE STATE; BUT THE SELLER
HAS TO DO SOMETHING IN ORDER TO
ASCERTAIN THE PRICE s.22
- Goods are specific and in a
deliverable state.
- However, seller is bound to weigh,
measure, test or do something for the
purpose of ascertaining the price of
the goods.
 The property does not pass to the buyer
until such act is done by the seller, and the
buyer has notice of it.
One the seller has done such act, and the
price has been ascertained, the property
passes to the buyer.
E.g. seller agrees to sell all the remaining
sugar contained in a particular bag for
RM2/kg. The property does not pass to the
buyer until the seller weighs the sugar &
ascertained the price.
6.SALE OF UNASCERTAINED@FUTURE
GOODS BY DESCRIPTION; AND
APPROPRIATION s.23
unascertained goods by description
goods which cannot be specifically
identified at the time of the contract,
but are referred to by description.
 future goods by description goods
to be manufactured or produced or
acquired by the seller according to
certain description
Furniture by catalogue
 If these goods has been ascertained, or
been made ready, in a deliverable state and
unconditionally appropriated to the
contract, the property thereupon passes to
the buyer.
unconditionally appropriated to the
contract any act showing an intention to
identify certain goods without any further
condition.
The process of appropriation selection,
separation, weighing from a bulk
 If the contract involves delivery to a
carrier; once the seller delivers the
goods to the buyer or to the carrier for
the purpose of delivery, the seller is
deemed to have unconditionally
appropriated the goods to the contract
Therefore, the property in goods passes
to the buyer at the moment the goods
are handed over to a carrier. s.23(2)
7. GOODS SENT ON APPROVAL @ ON SALE
OR RETURN s.24
Situation where goods are sent to the
buyer on trial, giving the buyer the option
to purchase
If the buyer choose to buy, he may signify
his acceptance or approval to the seller.
E.g. buyer take the goods or keep it by not
returning it to the seller.
 The buyer may also does any other
act adopting the transaction the
buyer does any act by which it can be
implied from such act that the buyer
is accepting the goods.
E.g. the buyer used the goods for
himself.
 In this situation, the property in
goods passes to the buyer..

a. When the buyer signifies his

approval @ does any other act
adopting the transaction.
KIRKHAM v ATTENBOROUGH
Facts: The buyer received some
jewellery from the seller, which was
subject to on sale or return. The
buyer then pledged the jewellery to a
3rd party.
Court Held: the buyer has adopted the
transaction. The property has passed
to the buyer.
b. If the buyer does not signify his
approval but retains goods without
giving notice of rejection, then if the
time has been fixed for the return; the
property passes on the expiration of
such time. If no time is fixed, the
property passes on the expiration of a
reasonable time.
What is reasonable time depends on
circumstances@facts of each case.
 POOLE v SMITHS CAR SALES (BALHAM)LTD
Facts: A car dealer supplied 2 cars on sale or
return to another dealer. 1 lf the cars was
sold, but the unsold 2nd car was returned
about 3 months later in poor condition. It
was rejected by the 1st dealer, who then
claimed for the price from the 2nd dealer.
Court Held: A reasonable time has expired.
Therefore, the property in goods passed to
the 2nd dealer and he has to pay the car price
to 1st dealer.
 If the goods are lost or destructed
without default of the buyer, the
buyer is not liable upon the goods so
long as the loss or the destruction
occurs before the due date or before
the reasonable time lapses.
8. TRANSFER OF TITLE
General Rule: NO ONE CAN GIVE WHAT
HE DOES NOT HAVE
Seller who does not own the goods,
CANNOT transfer the title to the buyer.
It means the seller would also do not
get the ownership.
Example: A stole car and sold to B.
WHAT IS THE STATUS OF THE GOODS?
 S.27 SoGA 1957 provides;

where goods are sold by a person

who is not the owner thereof, and
who does not sell them under the
authority or with the consent of the
owner, the buyer acquires no better
title to the goods than the seller had,

 Nemo Dat Quod Non Habet Maxim
No one can transfer a better title
than he has himself
If the goods are purchased from a
person who is not the owner, the
buyer does not get a title even if he
has paid for value in good faith.
 LIM CHUI LAI v ZENO LTD
Facts: Zeno Ltd. Enter agreement with a contractor
named Ahmad who had contracted with the PJ
Authority for construction of culvert. Under contract
Zeno Ahmad, Zeno provide Ahmad with all the
materials for the construction. Zeno bought materials
and delivered the materials to the construction site.
Then contract Ahmad-PJ Authority was cancelled.
Zeno informed PJA that the materials at the side
belonged to Zeno Ltd. Later, Zeno discovered that
Ahmad sold the material to Lim Chui Lai.
Court Held: Ahmad was not the owner when he sold the
goods to LCL. Nemo Dat Quod Non Habet apply here.
 Exception
Under certain circumstances, the
nemo dat rule does not apply

It means the buyer will get a good

title to the goods even though the
seller was not the owner.
a. ESTOPPEL
Happen when the owner, by his own conduct,
makes it appear to a buyer that the person who
sells the goods has the owners authority to sell,
and the buyer acts in reliance to it.
If happen, the owner will be estopped from
denying the sellers authority to sell.
Buyer buy in good faith and for value, will get
a good title by estoppel.
S.27 unless the owner of the goods is by his
conduct precluded from denying the sellers
authority to sell
 N.Z SECURITIES v WRIGHTCARS LTD
Facts: A agreed to sell a car to B and B was given
possession of the car upon the tender of a cheque
as payment. It was agreed between them that title
to the car was not to pass to B until the price had
been received (until cheque has been
honoured/cashed). B then sold to C. Before the
sale to C finalized, C had contacted As office about
the matter and was told by As employee that B
had paid the car. Later, the cheque from B was
dishonoured. Therefore A repossessed car from C.
Court Held: A was estopped from repossessed from C.
b. SALE BY A MERCANTILE AGENT
- who?
s.2 to be a mercantile agent, the person
must have the authority to sell the
goods, or consignment them for sale or
buy them or raise money on their
security

Example: a broker, an auctioneer, a

dealer of goods for commission etc.
 Initially, a mercantile agent is not the
owner of the goods.
However, if they sells the goods to a
buyer, buyer will get a good title over
the goods.
 Proviso to s.27

where a mercantile agent is, with

the consent of the owner, in
possession of the goodsany sale
made by him shall be valid as if he
were expressly authorized by the
owner of the goods to make the
same;
 Under the proviso, a number of requirement must
be satisfied:
i. At the time of the sale, the mercantile agent must
be in possession of the goods or the document of
title to the goods.
ii. The possession must be with the consent of the
owner
iii. The mercantile agent sells the goods in the
ordinary course of his business as mercantile
agent
iv. The buyer has acted in good faith and has no
knowledge of the sellers lack of authority to sell.
c. SALE BY ONE OF JOINT OWNERS s.28
This happens in the situation of goods,
which owned jointly by several persons.
Sale by 1 of those joint owners, may
effectively transfer title to the buyer.
2 conditions:
i. 1 of the owners has the sole
possession of the goods by
permission of the co-owners.
ii. The buyer acts in good faith and has
no knowledge of the sellers lack of
authority to sell.
d. SALE UNDER A VOIDABLE CONTRACT s.29
Conditions:
i. The seller obtained possession of the goods
under a voidable contract.
ii. The voidable contract has not been
rescinded
iii. The buyer bought the goods in good faith
without knowledge of the fact that the seller
has no good title to pass.
If the conditions are satisfied, the buyer will
get a good title to the goods.
e. SALE BY A SELLER IN POSSESSION AFTER
SALE s.30(1)
Seller transferred the property in goods to
a buyer but remains possession of the
goods.
Then seller sale to another buyer (who buy
the goods in good faith)
2nd buyer get a good title.
1st buyer loses title & get his remedy
against seller.
MOTOR CREDITS (HIRE FINANCE) LTD v PACIFIC
MOTOR AUCTIONS PTY LTD
Facts: Motor Credits (dealers in vehicle), sold a
number of vehicles to the P under a display
agreement, whereby MC remained in possession
of the car to be display in their showroom. MC
were paid 90% of the price & were authorized to
sell the vehicles as agent for the P. MC got into
financial difficulties & P revoked the MC authority,
but MC nevertheless sold number of cars to D.
Court Held: D obtained a good title. MC is to be
treated as continuing possession and is able to
pass a good title under s.30(1)
f. SALE BY A BUYER IN POSSESSION AFTER
SALE s.30(2)
Buyer obtains possession with the consent
of the seller.
However, the property in goods is still
subject to some rights or interest of the
seller.
Buyer can pass a good title to another bona
fide buyer who has no knowledge about the
rights or interest of the original seller.
 NEWTONS OF WEMBLEY LTD v WILLIAMS
Facts: P sold a car to A (who paid by cheque & it was
agreed that title would not pass until the cheque
was honoured). A was given possesion of the car
but the cheque was dishonoured. P rescinded the
contract with A. However, A has sold the car to B
(who bought with bona fide). B in turn resold to D. P
attempted to recover the car from D.
Court Held: A was in possesion with the consent of
the P. So he could pass title to B. D had a good title
to the car that he had bought from B although
there was a prior defect in title.
 Under Sale of Goods, there are 2
categories of breach of contract

1. BREACH BY THE BUYER

2. BREACH BY THE SELLER
 BREACH BY THE BUYER
Buyer may breach the contract in 3
situations :
1. Failure of buyer to take delivery
2. Failure of buyer to pay for the goods
3. Failure of the buyer to accept the
goods
 1. FAILURE TO TAKE DELIVERY s.44
When seller ready to deliver goods and
request buyer to take it, the buyer must
take the delivery within a reasonable time
after the request of the seller
If refused/neglect to take, the buyer would
be liable for any loss due to his own
refusal/negligence
Buyer also liable for a reasonable charge for
the care & custody of the goods by seller.
2.FAILURE TO PAY s.55
If failed to pay the price, seller may
sue buyer for the price when:
1. The property in goods has passed to
the buyer (s.55(1)) or,
2. The price is payable on a certain day
but the buyer failed to pay on that
day, irrespective of delivery, or the
property in the goods has not passed
to the buyer (s.55(2))
3. FAILURE TO ACCEPT s.56

if the buyer wrongfully neglects or

refuses to accept & pay for the
goods, the seller may sue the buyer
for damages for non-acceptance.
 RIGHT OF UNPAID SELLER AGAINST
THE GOODS
unpaid seller s.45(1)
I. When the seller has not been paid
with the whole price; or
II. When the bill of exchange or other
negotiable instrument, which has
been received by the seller as a
conditional payment, is dishonoured.
2 kind of right:

a. RIGHTS IN PERSONAM
b. RIGHTS IN REM
RIGHT IN PERSONAM
common remedies available for the
unpaid seller against buyer.
Unpaid seller has the right to:
- To sue the buyer for the price s.55
- To sue the buyer for damages for non
acceptance s.56
RIGHTS IN REM
Kind of remedies for the unpaid seller
in respect of the goods themselves.
S.46 (1)
i. Right of lien s.46(1)(a)
ii. Right of stoppage in transit s.46(1)
(b)
iii.Right of resell s.46(1)(b)
1.Right Of Lien
What it is?
- The unpaid seller who in possession of the goods
is entitled to retain possession until payment or
tender of the price
- This right exists even where the property in
goods has passed to the buyer but no delivery
has been made.
- If property in goods has not passed to the buyer,
the seller may withhold delivery in addition to
his remedies s.46(2)
When?
S.47(1) the situations are:
1. Where the goods have been sold without any
stipulation as to credit s.47(1)(a);
2. Where the goods have been sold on credit,
but the term of credit has expired s.47(1)(b)
3. Where the buyer becomes insolvent s.47(1)
(c)
Seller may exercise his right of lien even
though that he is in possession of the goods
as agent or bailee for the buyer. s.47(2)
2. Right of Stoppage In Transit
What it is?
- Right of an unpaid seller to stop the
good in transit the goods are still
with the carrier.
- Resume possession of the goods.
- Retain the goods until payment of the
price.
When?
- Only when:
1. The buyer becomes insolvent
2. The goods are in the control of a
carrier (in transit)
Duration of transit
- Transit starts from the time when the
goods are delivered to a carrier for
the purpose of transmission to the
buyer s.51(1)
Duration of transit
- Transit is at end in the following
circumstances:
i. When the buyer takes delivery from the
carrier s.51(1)
ii. When the buyer obtains delivery of the
goods before their arrival at the appointed
destination.-s.51(2)
iii. When after arrival, the carrier
acknowledged to the buyer that he holds
goods on behalf of the buyer and continues
in possession of the goods.
- It is immaterial that a further destination
may have been indicated by the buyer
s.51(3)
- transit cannot recommence merely
because the buyer has instructed that the
goods be sent on a further journey to
another destination.
iv. Where the carrier wrongfully refuses to
deliver the goods to the buyer. s.51(6)

If part of goods has been delivered to

the buyer, and the remainder are still in
transit, the unpaid seller has the right of
stoppage in transit for such remainder
which are still with the carrier. S.51(7)
 METHOD FOR EFFECTING STOPPAGE
Unpaid seller may exercise stoppage in transit by
s.52(1)
1. Taking actual possession of the goods, or
2. Giving notice to the carrier or his principal.

When notice given to the carrier, the carrier shall

redeliver the goods to the seller or according to
the sellers direction. Expenses of redelivery shall
be borne by the seller s.52(2)
3. RIGHT OF RESELL
- S.54 gives right of resell to the unpaid seller in the
following circumstances:
1. Where the goods are of a perishable nature s.54(2)
2. Where the unpaid seller who had exercised his right
of lien or stoppage in transit, but the buyer fails to
pay for the price within a reasonable time after
receiving such notice s.54(2)
- Seller may also recover damages for loss due to the
breach.
- The buyer shall not be entitled to any profit
- However, if the seller failed to give such notice, the
seller shall not be entitled to recover damage, and
buyer shall entitled to the profit.
iii. Where the seller expressly in the contract,
reserves a right of resale in case the buyer failed
to pay for the price s.54(4)
- The original contract with such default buyer
would terminate.
- Therefore, the original buyer is no longer required
to pay for the price, and the seller is entitled to
keep any profit out of that resale.
- However, the seller is still entitled for damages
from the original buyer for breach of contract and
for any loss suffered by the seller out of that
breach s.54(4)
 When the unpaid seller resell the
goods, after exercising his right of lien
or stoppage in transit, the 2nd buyer
would get a good title over the goods
even though the seller did not give
any notice of resale to the original
buyer s.54(3)
2. BREACH BY THE SELLER

When the seller is in breach of the

contract of sale of goods, the buyer is
entitled to a number of remedies.
a. DAMAGES FOR NON-DELIVERY OF
THE GOODS
- The buyer is entitled to damages if
the seller neglects or refuses to
deliver the goods to the buyer s.57
- Buyer may entitled for special
damages recoverable by law
s.61(1)
 If then buyer has paid for the price,
the buyer is entitled to recover the
money paid. s.61(1)
The buyer is also entitled for interest
at such rate as the courts thinks fit,
on the amount of the price paid, from
the date on which the payment was
made. s.61(2)(b)
b. SPECIFIC PERFORMANCE S.58
- In certain circumstances, (subject to
CHAPTER II of the Specific Relief Act
1950) buyer may apply to the court
to grant a decree, directing the seller
to perform the contract specifically,
without giving the seller the option of
retaining the goods by paying
damages to the buyer.
- The SP may be granted if the court
think fit to do so
- This remedy is available only if the
contract is to deliver specific or
ascertained goods.
Example : Ali contract with Abu to sell a
painting which was painted by an
artist who is already dead. Ali refused
to deliver. SP can be granted. Court
can direct Ali to deliver goods to Abu.
 If the goods are not specific or
unascertained goods, SP cant be
granted
RE WAIT
Court Held: A contract for the sale of 500
tons of wheat from a consignment of
1000 tons, did not entitle the buyer to
seek a decree of SP, on the ground that
the goods were neither specific nor later
ascertained.
c. ACTION IN TORT
- If property in goods has passed to the
buyer, the buyer is entitled to the
delivery of the goods.
- Thus seller is under a duty to deliver the
goods to buyer.
- If seller refused/failed buyer entitled to
bring an action under Law Of Tort against
the seller for wrongful interference with
the ownership of the buyer.
- This remedy entitled the buyer to get
a kind of damages because the seller
had infringed the buyers right of
ownership over the goods.
- Action in tort is another remedy for
the buyer, in addition to his remedy
under s.57 SoGA.
d. DAMAGES FOR BREACH OF
WARRANTY
- Whenever there is breach of warranty
by the seller, the buyer is not entitled
to reject the goods.
- However, the buyer is entitled to sue
the seller for damages because of
breach of warranty s.59(1)(b)
 breach of warranty refers to:
i. Any breach by the seller of a
stipulation which is collateral to the
main purpose of the contract; or
ii. Where the buyer elects or is compelled
to treat any breach of a condition by
the seller as breach of warranty; or
iii.Any breach of implied warranty by the
seller under s.14(b) & (c).