SALE OF GOODS ACT

1957 (“SOGA”)
Readings: Slides 15, 16
A Majid and K. Arjunan , Sale of
Goods Law in Malaysia (2016: Sweet
& Maxwell) (abbreviated as “AK”)
 Slide 2: Origins of SOGA
• The Sale of Goods Act 1957 (“SOGA”) is based on the
Sale of Goods Act 1930 (India ) which is, in turn based
on English Sale of Goods Act 1893.
• That English statute codified the existing law relating to
the sale of goods. And, following it, so did the Indian
Act and subsequently, SOGA.
• The English statute was also transplanted to many
common law jurisdictions including Hong Kong, India,
Ceylon,the states of Australia, New Zealand and South
Africa.
• Because of the shared origin of the statute, decisions
of the English, Indian and other common law courts
continue to be relevant to the interpretation of the
SOGA.
 Slide 3: Scope of SOGA
• The SOGA deals with such matters as the
passing of ownership and the risk of goods
sold, and the remedies of the buyers and
sellers for breaches by the other party.
Slide 5 :Definition of “Goods” in SOGA
• SOGA applies to contracts for the sale of “goods”.
Goods are defined in s.2 as follows:
"goods" means every kind of moveable property
other than actionable claims and money; and
includes stocks 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;
• Words roughly synonymous with” goods” are “articles”,
“commodities” “movables” , “corporeal”, “tangible
movables” and “things”: Benjamin’s Sale of Goods,
para 1-078.
Slide 6: “Goods” include – “movables”
and “growing crops”
• Movable property: chattels moveable or
movables i.e. things which can be seen and
handled are classified as personal property.
This would include flowers, paintings,
sculptures, a car, a pet dog, a Honda Civic, a
TV set, an aeroplane and a ship.
• growing crops: crops grown by agricultural
labour
• Fixtures: agreed to severed from the earth
(see slide 8)
 Slide 7 : Goods excludes “land” and
“fixtures”
• SOGA does not deal with “real property” i.e.
land or with those chattels which have
become attached to land and which are
treated by law as being land
• Chattels which become fixed to land are called
“fixtures”. A flat, a building, a house, a
bungalow and a swimming pool are examples
of items not covered by SOGA because they
are “fixtures”.
 Slide 8:Fixtures may be treated as
“goods”
• SOGA also applies to those fixtures “which are
agreed to be severed before sale or under the
contract of sale” from the land: s 2, SOGA.
• A grove of trees would be fixtures. But if the
owner agrees to sell the trees to a buyer
provided the buyer cuts the trees and
removes them, the trees that are to be cut
become goods. The trees are also goods if
they are first cut and then sold.
 Slide 9 : SOGA excludes “actionable
claims”
• SOGA does not cover “actionable claims” or
“choses in action” or “things in action”.
• These are things that give a right to an interest
which can only be enforced by taking action in
the courts. Examples are rights under a
contract or intellectual property.
• But SOGA specifically treats “stocks and
shares” as “goods”
 Slide 10: SOGA and money
• SOGA does not cover money.
• “Money” = “legal tender” or the currency of
Malaysia. But collections of money (rare
coins, rare bills) which are not valid as
currency are covered by SOGA, s.2.
• FOREIGN CURRENCY?
 Slide 11: Services and SOGA
• The definition of goods in s 2 of SOGA does not
mention services.
• As a result, services (which are not goods) are not
covered by SOGA. Thus, contracts of carriage
whether by road as in a bus or taxi, or by train or
by air are not covered by SOGA.
• Similarly, the services of a lawyer, doctor,
engineer or beautician (hair colouring, facial,
manicure, pedicure) are not subject to the
provisions of SOGA.
 Slide 12: Contracts for the sale of
goods under SOGA
• Section 4(1) of SOGA reads:

“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.”
 Slide 13: Transfer of property
• Meaning of “property” in s.4(1) – right of
ownership or title to goods ‘Property’ here is
another word for ownership, which means the
right over the goods which is good and
enforceable against the whole world.
• The ultimate object of the contract of sale is to
transfer the property in the goods from the seller
to the buyer for a price. That is to say, the
purpose of the contract is for the seller to
transfer the ownership of goods to the buyer for
a price.
 Slide 14: A sale and an agreement to
sell
• Section 4(3) explains the difference between a “sale’ and
an “agreement to sell”:
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.
• Section 4(4) clarifies:
An agreement to sell becomes a sale when the time fixed for
the transfer of ownership elapses or the conditions are
fulfilled subject to which the transfer of property in the goods
is to be transferred
Slide 15: A contract for the sale of
goods

A CONTRACT FOR THE SALE OF GOODS

A SALE (OF GOODS) AN AGREEMENT TO SELL

(A present sale, as for example when A promise to sell in the
a loaf of bread is purchased and future or subject to some condition
taken away immediately by the buyer) to be satisfied
An executed contract An executory contract
 Slide 16:An agreement to sell
• Purchaser agrees to buy a car for an agreed price from
a second-hand dealer provided that the dealer replaces
the used tyres on the car with 4 brand new tyres. The
dealer agrees. This an agreement to sell. It will become
a contract of sale upon the seller fulfilling the
condition.
• Non-sale and non-agreement: Nylex Plastics Ltd v
Raneyko Enterprises [1971) HKLR 307; AK 40. P
manufactuer of plastic sandals . Agreement for sale of
plastic sandals to Somalia : P to sell 12,000 dozen
sandals within 3 months. Details including price not
specified. Was this an agreement?
Slide 17: Possession and ownership
• ‘Property’ in, or ownership of, goods must be
distinguished from ‘possession’ of goods.
• The term “possession” refers to control and
custody of goods as distinct from ownership.
• When I buy a car, I have ownership of ,or
property in the car. If I lend you the car, you
have ‘possession’ but the ownership is
undisturbed and remains with me.
 Slide 18: Price
• Under s.4(1), there must be a price which is
defined by s 2 as “a money consideration for a
sale of goods. So “price” by statutory
definition means “money”.
• The parties must agree on a price. Need not
be settled straightaway. Payment can be
postponed in future – on credit
• Payment need not be cash; may be by cheque
or by a debit card or bank transfer
 Slide 19: Sale and gift
• A gift is a one-way (i.e. “consideration-free”)
transfer of goods/services. No price is
involved.
• As a result, SOGA does not apply to GIFTS
because “price” is missing in a gift. Put that
differently, a gift is not a contract of the sale of
goods.
 Slide 20: Barter
• SOGA does not cover BARTER i.e. the
exchange of goods for goods.
• Consideration under s 4 of SOGA is the “price”
i.e. money.
• Hence, SOGA does not apply to exchange of
goods e.g. a rejected engagement ring
exchanged for a necklace at a jeweler’s. Or my
three goats for your cow.
SLIDE 23: TERMS IMPLIED INTO A SALE
OF GOODS CONTRACT

• SOGA has 4 sections which imply specific terms

into every contract of sale of goods.
(a) Section 14
(b) Section 15
(c) Section 16
(d) Section 17
• The term implied by each of the 4 sections is a
condition, not a warranty.
• Each of these is considered below.
 Slide 24: SOGA, s 14 - Seller’s title to sell and
warranties of quiet possession and freedom
from encumbrances
• Section 14 of SOGA has 3 sub-sections. The
relevant part of sub-section (1) reads:
(l) In every contract of sale, …, there is -
(a) an implied condition that the seller has a
right to sell the goods, and/or will have such
right 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;
Slide 25: SOGA, s14 Seller’s warranties of quiet
possession and freedom from encumbrances

(c) an implied warranty that the goods shall

be free from any charge or encumbrance in
favour of any third party not disclosed or
known to the buyer before or at the time the
when the contract is made.
• Rowland v Divall [1923] All ER Rep 270, CA; AK 82
(stolen car)
• Goh Hock Choy v Zaibi Motors Sdn Bhd [2015]
AMEJ 260 (see AK p 83) Quiet possession and
undisclosed encumbrances ( Imported “used”
Mercedes ; price RM820,000. Seized by Customs)
 Slide 26: SOGA, s 15 - Sale by
description
• The correspondence between the description and the
goods supplied must be exact.
• That is to say, if the goods supplied do not match
exactly their description, s 15 is breached.
– Varley v Whipp [1900] 1 QB 513; AK 88 (new machine)
– Samsung Hong Kong Ltd v Keen Time Trading Ltd [1999] 2
HKC 447; AK 91 (polyester fibres 1.5D in contract; those
supplied were 1.4D).
• There may be a sale by description even where the
buyer has seen the goods.
– Beale v Taylor [1967] 3 All ER 253, CA; AK 88. (“2-cars” car)
– Grant v Australian Knitting Mills Ltd. [1936] AC 85; AK 89
 Slide 27: SOGA, s 15- Sale by
description
• However, not all things said about a product
amount to a description:
– Harlington & Leinster Enterprises v. Christopher
Hull Fine Art Ltd. (1990) 3 WLR 13; AK 94 (Munter
painting)
• For more cases, see AK, pp 88-94.
 Slide 28: Background to s 16
• Before the enactment of SOGA 1893 (UK), buying and
selling took place in the local market. Buyers and sellers
knew each other. Goods were made or grown by the seller
and were not complex as are our computers and hand
phones. Buyer as competent as seller to assess whether a
pair of shoes or even a pie was well-made. So the buyer
had take care to ensure that he was not cheated. He could
tell the seller that he needed the goods for a particular
purpose but it was his job to make the goods were suitable
for his purpose. If he accepted the goods and subsequently
found them unsuitable, the law would not assist him.
Hence, the Latin caveat emptor i.e. “let the buyer beware”
at common law. It is against this background that s 16 was
enacted.
 Slide 29: Opening words of s 16
• Opening words of s 16 restates the principle of caveat
emptor i.e. “let the buyer beware” at common law.
• Having reiterated the supremacy of caveat emptor,
section 16 makes inroads into this principle by implying
into every contract for the sale of goods two terms.
Generally, these are that:
– where goods are sold in the course of a business and the
buyer has informed the seller that the goods are being
bought for a particular purpose, the goods supplied must
be reasonably fit for that purpose.
– where goods are sold in the course of business, those
supplied must be merchantable.
 Slide 30: SOGA, s 16(1)(a) -Fitness for Purpose and
merchantability – exception to caveat emptor
(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, (…Up to this point ,the provision simply enacts
the common law caveat emptor rule) … 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 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.
 Slide 31 : Proviso to s 16(1)(a)
• The proviso to 16(1)(a) reads:
• “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.”
• Medicon Plastic Industries Sdn Bhd v Syarikat Cosa
Sdn Bhd [1995] 2 MLJ 257, CA.[Plaintiffs purchased
Alpha blow moulding machine (the Alpha) and Boe-
Therm temperature controller (the Boe-Therm) to
make plastic medicine bottles]. Did not buy machines
as they were; specifications agreed upon by plaintiff
and defendant. Plaintiff sued because specification
not met , machines were not merchantable & not fit
for purpose. Defence inter alia: proviso to s 16(1)(a).
 Slide 32 : Proviso to s 16(1)(a)
• VC George JCA ruled that the purchase of
specially made to order of plaintiff “were a far
cry from the purchase of bottle medicine or
some common article like an electric iron
…sold under a popular brand where you pick it
off the shelf”. That was sort of situation in
which proviso could be successfully invoked.
Here, it did not apply.
Slide 33: Section 16(1)(b) –
Merchantable quality
(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.
 Slide 32: SOGA, s 16(2) Fitness for
Purpose and Merchantability
(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.
• The terms relating to fitness for purpose and
merchantable quality are implied where goods
are sold to an individual in the course of a
business. They are NOT implied into a sale
between private individuals.

• For example, if Amy, a schoolgirl, visits a bicycle

shop owned by Thomas and buys a bicycle from
him, s 16 will apply – as it will when Thomas sells
goods to any other customers who come into his
shop and make a purchase. However, if sometime
later, Amy sells the bicycle to Jessie, s 16 will not
apply as she will not be selling it in the course of
a business.
 Slide 36: Fitness for a particular
purpose [under s 16(1)(a)]
• Where a buyer has expressly or by implication makes
known to the seller any particular purpose for which
the goods are being bought, s 16(1)(a) implies into that
contract a condition that the goods supplied for that
purpose will be reasonably fit for that purpose.
• Once a purpose is specified by the seller and goods are
supplied by the seller for that purpose, it does not
matter whether or not that is a purpose for which such
goods are commonly supplied: Grant v Australian
Knitting Mills Ltd [1936] AC 85; and, Hip Shun Polybags
Manufactory Ltd v Kwong Fat Off-Set Printing Co Ltd
[2007] HKCU 1028.
 Slide 37:Fitness for a particular
purpose [under s 16(1)(a)]
• The buyer must have relied on the seller’s skill and judgment:
Cammell Laird & Co. v. Manganese Bronze & Brass Co. [1934] AC
402.
• There is no need for the buyer to specify the particular purpose for
which the goods are required when they have in the ordinary way
only one purpose: Frost v Aylesbury Dairy Co Ltd [1905] 1 KB 608
and, Grant v Australian Knitting Mills Ltd [1936] AC 85.
• The buyer must have relied on the seller’s skill and judgment (ie
expertise): Khong Seng v Ng Tiong Kiat Biscuit Factory Ltd [1963] 1
MLJ 388. D ordered 100 tins of tallow. D had orally informed P and
P had promised that the tallow would be fit for biscuit –making.
Tallow supplied - inferior quality – biscuits unsaleable. Judgment for
D – because D had relied on P’s skill and judgment to supply
appropriate tallow.
Slide 38: Pre-conditions to invoke
fitness for purpose.
• Section 16(1)(a) has four express (not implied) preconditions,
all of which must be fulfilled if a buyer wishes to invoke the
fitness for purpose provision.. These preconditions are:
(a)the buyer must make known to the seller the
particular purpose for which the goods are required;
(b) it must be shown that there was reliance by the buyer
on the seller’s skill and judgment, and the buyer must in
fact rely on the seller to supply suitable goods;
(c)the goods must be of a description which it is in the
course of the seller’s business to supply; and
(d)if the goods are specific, they must not be sold under
their patent or trade name.
Slide 39: Pre-conditions to invoke
fitness for purpose.
• Source: Union Alloy (M) Sdn Bhd v Syarikat
Pembenaan Yeoh Tiong Lay Sdn Bhd [1993] 3
MLJ 167 at 171, per Zakaria Yatim J (as His
Lordship then was).
Slide 40: Merchantable quality defined
• The rather archaic words ‘merchantable
quality’ have, in the past, been treated as
meaning ‘acceptable’ or ‘saleable’ or
‘commercially useable’.
• However, the British, in their Sale of Goods Act
1979, have replaced ‘merchantable quality’
with ‘satisfactory quality’. Thus,
‘merchantable quality’ is perhaps better
understood as meaning ‘satisfactory quality’.
• Slide 41: Section 16(1)(b) implies a term into every contract
for the sale of goods a condition that goods sold in the course
of business will be of a merchantable quality. For s 16(1)(b) to
apply:
(a) the buyer must have bought the goods by
description without having examined them or
without being given the opportunity to examine
them.
(b) the buyer must have bought them from a seller
whose business it is to deal in goods of that kind.
• The expression “in the course of business” applies where the
seller is in the business of selling goods of the kind sold to the
purchaser.
• United Building Material (Hong Kong) Ltd v E Man
Construction Co Ltd [2006] HKCU 166. Plaintiff – supplier of
glazed tiles for mounting on external surfaces of buildings.
Tiles became discolored when washed with chemical solution.
Were the tiles merchantable?
 Slide 42: Proviso to s 16(1)(b): the
implied condition will not apply if:
1. the buyer has examined the goods before the contract
and the defects ought to have revealed through the examination
2. Not stated expressly but must be implied – defects to
which the purchaser’s attention has been drawn before or at the
time of the sale.
• Global Asia Ltd v Lucky Forest Ltd (trading as Delta Printing
Company) [2001] 142 HKCU 1. [Second hand printing
machine. Before the contract of sale, the defendant
had inspected the machine and declared himself
satisfied by printing done by the machine. Two years
after the machine had been delivered, the buyer
claimed machine not merchantable. Defence :buyer
examined the goods at time of sale. Outcome?
Goods are of merchantable quality if they as fit
for the purpose or purposes for which goods of
that kind are commonly bought.
• If goods which are commonly used for only
one purpose, they are of merchantable quality
only if they are fit for that purpose: a nasal
inhaler .
• Beecham & Co Pty Ltd v. Francis Howard & Co
Pty Ltd [1921] VLR 428. Buyer paid 80 shillings
per 100 feet, whilst timber for boxes was sold
at 30 shillings.
• If goods have only one purpose, they are
unmerchantable if they have defects which
render them unfit for that purpose: see Grant
v Australian Knitting Mills Ltd [1936] AC 85,
PC.
• Where goods have a general purpose but
become unfit for that purpose because of
some special characteristic of the buyer, the
goods may still be fit for their purpose:
Griffiths v Peter Conway Ltd [1939] 1 All ER
685.
 Slide 45: Must goods with multiple
uses be fit for each and every use?
• Would an article be of merchantable quality if
it is not capable of performing any one of
these functions?
• Held in Aswan Engineering Establishment Co v
Lupdine Ltd [1987] 1 All ER 135 that the plural
‘purposes’ does not mean that that the goods
have to be fit all reasonable purposes.
• This decision seems to be at odds with the
express words of the provision.
To be of a merchantable, goods must be of such
standard of appearance and finish as would be
expected of it.
• A brand new smart mobile phone must be
sleek and slim in form and its surface must be
polished till its glistens. Any brand new smart
phone which is dented would not have
standard of appearance and finish that would
be expected of it.
Slide 47 Merchantable quality and freedom from
defects
To be of a merchantable or satisfactory quality,
goods must be ‘as free from defects (including
minor defects)” as is reasonable to expect
• Goods which are defective may be rejected as
being unmerchantable goods: Rogers v Parish
[1987] QB 933, CA; (AK115) new Range Rover
and, Hung Fa Plastic And Metal Manufactory
Ltd v Yip Shing Diesel Engineering Co Ltd
[2003] HKCU 417;(AK 114) (electricity
generator).
Slide 48: Mercantable quality and safety
To be of a merchantable quality, goods must be ‘as
safe
• as it is reasonable to expect having regard to the
description applied to the goods, the price (if
relevant) and all other relevant circumstances:
Frost v Aylesbury Dairy Co Ltd [1905] 1 KB 608.
• Hung Yin Mui v. Sun Power Electrical Co &
Another [2003] HKCU 96. A cooker hood should
be safe; a part of it should not fall and injure the
foot of a housewife who is engaged in wiping it
with a piece of cloth.
Slide 49: Merchantable quality and durability
To be of a merchantable quality, goods must be
durable for a reasonable period.
• Goods are ‘durable’ if they are not likely to
break down or wear out or deteriorate or
become defective for a reasonable period. .
Hung Yin Mui v. Sun Power Electrical Co &
Another [2003] HKCU 961 cooker hood was
not durable in that the hinges which attached
the glass panel to it should had given way a
mere 4 months after being installed.
 Slide 50: Section 17 - Sale by Sample
• What is a sample?
Perfect Kam Hung Sdn Bhd v Cheah Tai Hoe &
Anor [2011] 9 MLJ 593, para 22 : A sample is a
small part or quantity intended to show what
the whole or bulk is like. Applied to the context
of the sale of goods, a sample is representative
of the whole of which it is a part.
• Slide 51
• This function or “office” of a sample is
captured in Lord M’Naghten’s oft quoted
words in Drummond & Sons v. E. H. Van Ingen
& Co. (1887) 12 App Cas 284, 196:

“… the office of a sample is to present to the eye the

real meaning and intention of the parties with regard to
the subject-matter of the contract which, owing to the
imperfection of language, it may be difficult or
impossible to express in words. The sample speaks for
itself.”
• Slide 52
• By s. 17(1), a sale is not a sale by sample merely
because the buyer has seen only a part of the
bulk. There must be a term, express or implied,
that the sale is by sample.
• In Oracle Enterprise Ltd v The Gosho Co Ltd [1962]
HKCU 92, it was held that the mere showing of
material to the buyer during negotiations did not,
by itself, constitute a sale by sample.
• Wasco Lindung Sdn Bhd v Lustre Metals &
Minerals Sdn Bhd [2014] AMEJ 1307, buying a
quantity of aluminum.
 Slide 53: Sale by sample - s. 17(2)(a)
• It is through s. 17(2)(a) – (c) that specific
terms are implied into a sale by sample
• By s. 17(2)(a) there is an implied condition in a
sale by sample that the bulk shall correspond
with the sample in quality: Wasco Lindung
Sdn Bhd v Lustre Metals & Minerals Sdn Bhd
[2014] AMEJ 1307; and, E & S Ruben Ltd v
Faire Bros & Co Ltd [1949] 1 All ER 215
 Slide 54: Sale by sample s. 17(2)(b)
and s 17(2)(c)
• By s. 17(2)(b) there is an implied condition in a sale by
sample that the buyer shall have a reasonable
opportunity of comparing the bulk with the sample.:
Polenghi Brothers v Dried Milk Co Ltd [1904] 92 LT 64

• By s. 17(2)(c) there is an implied condition in a sale by

sample that the goods are free from any defects
(which are not apparent on a reasonable
examination) which would make them
unmerchantable: Godley v Perry (Burton & Sons
(Bermondsey) Ltd, (Third Party), Graham, (Fourth
Party) 1960 1 All ER 36
 PERFORMANCE OF THE CONTRACT
FOR SALE
• Under SOGA the performance of a contract
depends on three conditions: delivery,
acceptance and payment.
Concurrent duties of delivery and payment
• The respective duties of seller (to deliver the
goods) and buyer (to accept and pay for the
goods) under a contract of sale are laid out in
section 31 of SOGA.
• Unless there is an agreement to the contrary, s 32
makes the delivery of the goods and payment of
the price concurrent conditions, that is to say, the
seller must be ready and willing to give
possession of the goods to the buyer in exchange
for the price, and the buyer must be ready and
willing to pay the price in exchange for possession
of the goods.
 REMEDIES OF THE BUYER
• Seller breaches a contract for the sale of
goods by failing to deliver the goods or by
delivering goods that do not conform to the
contract.
Remedies of the Buyer
The remedies available to a buyer who is the victim of the
seller’s breach of contract are:
(a) The right to repudiate the contracts i.e. reject the
goods when the breach is of a condition : ss 13, 37, 38,
41,42 and 43 (AK pp 415 -422).
(b) A suit for damages – s 57for non-delivery; , 59 for
breach of warranty (AK pp-444)
(c) An application for an order of specific performance
(s 58)
(d) Repudiation/termination on anticipatory breach: s
60(AK 444- -449)
(e) Recover the price already paid in the event of non-
delivery. 456ff)

Taking each in turn.

(a) The right to repudiate the contract
and reject the goods
• Where the tender of non-conforming goods
amounts to a breach of a condition, the buyer
can repudiate the contract i.e. reject the
goods.
• Example:
The seller contracts to sell the buyer a Mercedes
Benz car but tenders a Mazda. This would be a
breach of condition.
Acceptance of previously unexamined goods
Section 41 provides:
(1) Where goods are delivered to a buyer who
has not previously examined them, he is not
deemed to have accepted them until he has had a
reasonable opportunity of examining them for the
purpose of of ascertaining whether they are in
conformity with the contract.
(2) Unless otherwise agreed, when the seller
renders delivery 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.
Acceptance of goods
• Buyer loses right to repudiate contract when he
has accepted them.
• Under s 42 the buyer is deemed to have accepted
the goods-
• when he intimates to the seller that he has accepted them:
Bragg v Villanova.(1923) $) TLR 154. ; 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: MG Seth v Lam Thye Co Ltd [1954]
MLJ 230, CA; or
• when , after the lapse of a reasonable time, he retains the
goods without intimating to the seller that he has rejected
them: Eastern Supply Co v Kerr [1974] 1 MLJ 10.
 (b) A suit for damages
• However, where the tender of goods amounts
only to the breach of a warranty, the buyer
cannot repudiate the contract by rejection the
goods; he has to accept the goods and claim
damages.
• Example:
The contract calls for a year 2017, lime green 2,000
cc Mazda. What is tendered is a year 2017, 2,000 cc
Mazda that is grasshopper green in colour. This
would normally amount to the breach of a
warranty.
 (b) A suit for damages
• Damages can also be sought for non-delivery
of goods
• The buyer can buy the goods not delivered
from another source in the market. If the price
of the goods exceed the price at which the
defaulting buyer had agreed to supply them
(“the original price”), the seller can claim the
difference between the price he finally paid
and the original price as damages.
(c) An order for specific performance
• Where the goods that the seller fails to deliver
are ascertained or specific, the buyer may sue for
specific performance: s 58. Note, however, that
specific performance is only available where the
item is unique (e.g. the Mona Lisa; a specially
out-fitted antique ship that is the only one of its
kind) or the goods are rare (e.g. a 1926 Mercedes
Benz Tourer; ).
• Condition precedent for grant of an order of
specific performance: damages not an adequate
remedy.
(d) Treat the breach of condition as
a breach of warranty and sue for
damages.
• Section 13(1) of the SOGA deals with the situation in
which the buyer may elect to treat a breach of a
condition as a breach of a warranty.
• Under s 13(1), where a contract of sale is subject to any
condition to be fulfilled by the seller, the buyer may
waive the condition or may elect to treat the breach of
the condition as a breach of warranty only. If he elects
to treat the breach of a condition as the breach of a
warranty, he may not treat the contract as repudiated.
• See Associated Metal Smelters Ltd v Tham Cheow Toh
[1971] 1 MLJ 271, HC
 (e) Recovery of price
• Where the seller fails to deliver, the buyer may
recover the price as money had and received
for a consideration which has failed: s 61(1).
 REMEDIES OF THE SELLER
• The unpaid seller comes into being either
when the of the price has not been paid or
tendered and when a cheque or other bill of
exchange fails to be realised. Non-payment is
obviously a breach of contract.
• Unpaid seller has two sets of remedies. He
can either act against the goods or he can act
against the buyer.
 Remedies of the seller against the
goods
• The SOGA confers upon the seller, several
rights against the goods. These include:
a) A lien
b) Stoppage in transitu
c) Resale
d) Withholding delivery
 (a) A Lien (see ss. 46 -49 SOGA)
• A lien is the right to retain the property of
another as security for the payment for goods or
for the performance of an obligation.
• A particular lien allows the lienee (creditor-
beneficiary) to keep possession of the lienor’s
(owner-debtor) goods until all claims in respect of
those goods are satisfied. A general lien allows
the lienee to keep possession of the lienor’s
property until all claims and accounts of the
lienor are satisfied.
 (a) A Lien (see ss. 46 -49 SOGA)
• The lien founded on possession. If seller has
parted with possession of the goods, he can't
exercise a lien.
• Lien itself does not empower seller to sell the
goods
• However section 46(2) of SOGA does
• Usually, power of sale is used after a lien is
exercised.
(b) Stoppage in transitu (sections 50 –
52 of SOGA)
• Where ownership of goods has passed to the
buyer and the seller has delivered the goods
to a shipping agents or a carrier for transport
to the buyer, and the buyer has become
insolvent, the unpaid seller can opt to stop the
goods while they are in transit. The SOGA
referes to this as “stoppage in transitu”.
• The right of stoppage is subject to three
conditions:
(a) The seller must be unpaid;
(b) The buyer must be insolvent;
(c) The goods must be in the course of
transit.
 (c) The seller's right of resale ( s
46(1)(c))
• The unpaid seller who has possession of the
goods can re-sell them.
 (d) Withholding delivery
• Where the property in the goods has not
passed to the buyer, the unpaid seller has the
right of withholding delivery. Section 46(2) of
SOGA confers this right in addition to any
other remedies the seller may have
 The Seller’s Remedies against the
Buyer
• The seller can either sue for the price of the
goods or for damages where the buyer
neglects or refuses to pay the price: s 55(1)
• The seller can also claim damages under s 56
if the buyer wrongfully neglects or refuses to
accept and pay for goods.