Dec 10, 2007

Business Law Tutorial 9

1. The General Rule states that the property in goods passes when the parties to a contract of sale intend that it should pass. Mere possession of goods does not mean the person has the title.

Section 18 of Sale of goods Act, 1957 states that the property in goods passes when the unascertained goods are ascertained.Section 19 of Sale of Goods Act, 1957 states that the property in goods passes when the specific or ascertained goods is intended to pass.


To find out the intention of the parties, you must look at the terms of the contract, the conduct of the parties, and the circumstances of the case.


Under Section 20 of Sale of Goods Act, 1957, for contract of sale for specific goods in a deliverable state, the property in goods passes when the contract is made.


According to Section 21 of Sale of Goods act, 1957, for contract of sale for specific goods and seller is bound to do something to put the goods in deliverable state, the property in goods passes when the seller has done it and the buyer has noticed of it.


Section 22 of Sale of Goods Act, 1957 states that for contract of sale for specific goods in deliverable state, but the seller is bound to weigh, measure, the property in goods passes when such act is done and the buyer has noticed of it.

Section 23 of Sale of GOods Act, 1957 provides that for contract of sale for unascertained of future goods by description and in a deliverable state, the property in goods passes when the contract is made. Under Section 24 of Sale of Goods Act, 1957, for goods are delivered to the buyer on approval or"sale on return", the property in goods passes when the buyer signifies his acceptance or the retains the goods without giving notice of rejection, on expiration of such fixed return time or reasonable time.



The significance of determining the time when property in goods passes to the buyer because the general rule says that the seller bears the risk-Section 26 of Sale of Goods Act,1957. However, there is exception. When the property in goods passes to the buyer, buyer bears the risk.



2. For Sale of Goods Act, 1957 to apply, it must be a goods. Goods is defined in Section 2 of Sale of Goods Act, 1957 as every kind of movable property other than auctionable 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. Land is excluded from the Sale of Goods Act, 1957. Here, Ahmad’s bicycle is a movable property, therefore Sale of Goods Act, 1957 can apply.

For Sale of Goods Act, 1957 to apply, it must be a contract of sale for a price. In Section 4(1) of Sale of Goods Act, 1957, contract of sale is defined as a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. Here, it is an agreement to sell for a price because Ahmad had agreed to sell his bicycle to bob. Therefore, Sale of Goods Act, 1957 can apply.

The General Rule in transfer of property in the goods states that title passes when the parties to a contract of sale intend that it should pass.

Under Section 19 of Sale of Goods Act, 1957, where there is a contract for the sale of specific or ascertained goods, the property in goods passes to the buyer when the parties to the contract intend it to pass. According to Section 21 of Sale of Goods Act, 1957, where there is a contract for the sale of specific goods and seller is bound to do something to the goods for the purpose of putting the goods in a deliverable state, the property in goods passes to the buyer when the seller has done it and the buyer has noticed of it. In this case, the title of the bicycle is with Ahmad, because he has not changed the battery.

Section 26 of Sale of Goods Act, 1957 states that seller always bears the risk. However there is exception: when the property passes to the buyer, buyer has to bear the risk. In this case, the property has not passed, therefore Ahmad, the seller, bears the risk.



3. According to Nemo dat quod non habet rule, the seller must have a good title in order to pass a good title. It is reaffirmed in Section 27 of Sale of Goods Act, 1957. However, there are 6 exceptions under this:

(a) Estoppel, which is governed by Section 27 of Sale of Goods Act, 1957, states that estoppel may arises when the owner of the goods is by his conduct precluded from denying the seller’s authority to sell. When the owner of goods give the buyer an impression that the seller has the authority to sell, and the buyer who takes in good faith and for value will get a good title by estoppel.

(b) Sale by Mercantile Agent is governed by the provision in Section 27 Sale of Goods Act, 1957. A mercantile agent is defined in Section 2 of Sale of Goods Act, 1957 as an agent who has authority to sell the goods in customary course of business. Examples of mercantile agent are auctioneer, and second hand car dealer.

The buyer can obtain good title, even though the mercantile agent has sold the goods without owner’s authority to sell, as long as 4 conditions below are satisfied:
(i) Mercantile Agent must possess the goods or document of title to goods
(ii) The possession must with consent of owner
(iii) Sales must made during ordinary course of business
(iv) The buyer must have acted in good faith and does not notice the Mercantile Agent has no authority to sell

(c) Sale by one of joint owners is governed in Section 28 of Sale of Goods Act, 1957. Joint owners are two or more person who owns a particular goods. This section provides a good title to the buyer if the seller (one of the joint owners) has the sole possession with the consent of another joint owner and the buyer has acted in good faith and does not notice the defect of title.

(d) Sale under a voidable title, which is governed by Section 29 Sale of Goods Act, 1957, provides that a buyer with good faith and have no notice of the defect of title will still require a good title, even if the goods is bought under a contract entered by coercion, fraud, misrepresentation or undue influence.

(e) Sale by a seller in possession after sale, which is governed by Section 30(1) of Sale of Goods Act, 1957, provides that the second buyer who has acted in good faith and does not notice the defect in title will still acquire a good title.

(f) Sale by a buyer in possession, which is governed by Section 30(2) of Sale of Goods Act, 1957, provides that a buyer who has acted in good faith and has no notice of the defect in title can obtain a good title even if the seller who has no title but merely possession of the goods with consent of the owner, sold it to the buyer



4. Under Section 45 of Sale of Goods Act, 1957, unpaid seller is defined as seller whom the whole price has not been paid or the payment by cheque has subsequently dishonored.

Unpaid seller has 3 rights under Section 46(1) of Sale of Goods Act, 1957, notwithstanding that the property may have passess to the buyers:

(i) Right of lien

Unpaid seller who has possession of goods is entitled to retain possession until payment by buyer; even the property has passed to the buyer.
Under Section 46(2) of Sale of Goods Act, 1957, if the property in goods has not passed to the buyer, the seller may withhold delivery in addition to his other remedies.


(ii) Right of stoppage in transit

Section 50 of Sale of Goods Act, 1957
provides that unpaid seller can stop goods in transit if he has no possession of the goods, when the buyer becomes insolvent. He can have a lien over them until the buyer pays.
Section 52 of Sale of Goods Act, 1957 provides that the seller can either take actual possession of goods or claim to the carrier and the carrier has the responsibility to redeliver the goods to the seller.


(iii Right of seller to resell

Under Section 54(3) of Sale of Goods Act, 1957, unpaid seller can resell after he has exercised his right of lien or stoppage in transit. A good title can be given to the second buyer as against the first buyer even though the property in goods may have passed to the first buyer.

Section 54(2) of Sale of Goods Act, 1957 gives seller the right to resell the goods provided that the seller continues to have a lien over the goods.

Section 54 of Sale of Goods Act, 1957 gives the seller a right to resell if
(i) the goods are of perishable nature – Section 54(2) of Sale of Goods Act, 1957 – the seller
can resell the goods without the notice of the buyer, as to reduce the losses; if the goods
are non perishable nature, the seller must give notice to the buyer of his intention to
resell of wait till the buyer pays off.
(ii) the seller who has exercised the right of lien or stoppage in transit gives notice to buyer
of his intention to resell and buyer fails to pay within a reasonable time – Section 54(2)
of Sale of Goods Act, 1957.
(iii) Seller has in the original contract “expressly reserved a right of resale in case buyer
defaults” – Section 54(4) Sale of Goods Act, 1957



5.(a) For Sale of Goods Act, 1957 to apply, it must be a goods. Goods is defined in Section 2 of Sale of Goods Act, 1957 as every kind of movable property other than auctionable claim and money, includes stock and shares, growing crops, grass, things attached to or forming part of the land which are agreed to be severed before sale or under contract of sale. Land is excluded from Sale of Goods Act, 1957. Here, Ginny’s car is a movable property, therefore Sale of Goods Act, 1957 can apply.

For Sale of Goods Act, 1957 to apply, it must be a contract of sale for a price. Contract of sale is defined in Section 4(1) of Sale of Goods Act, 1957 as a contract whereby seller transfers or agrees to transfer the property in goods for a price. Here, it is an agreement to sell for a price as Ginny agreed to sell her car to Joshua for RM40000. Therefore, Sale of Goods Act, 1957 can apply.

The General Rule in transfer of property in goods provides that the property in goods passes when the parties to a contract intend that it should pass.

Under Section 19 of Sale of Goods Act, 1957, where the contract for sale of specific or ascertained goods, the property in goods passes when the parties to the contract intend it to be passed.

Under Section 21 of Sale of Goods Act, 1957, for a contract for sale of specific goods, and the seller is bound to do something in order to put the goods in a deliverable state, the property in goods passes to the buyer when the seller has done it and the buyer has noticed of it. In this case, Ginny has not changed the air conditioning system of the car and resprayed it as the car was still at the workshop, so the property in goods has not passed to Joshua.

Section 26 of Sale of Goods Act, 1957 provides that seller bears the risk. However, there is exception, whereby the property in goods has passed to the buyer, the buyer bears the risk. In this case, the property in goods has not passed to Joshua, therefore, Ginny bears the loss.



5.(b) For Sale of Goods Act, 1957 to apply, it must be a goods. Goods is defined in Section 2 of Sale of Goods Act, 1957 as every kind of movable property other than auctionable claim and money, 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 contract of sale. Land is excluded from Sale of Goods Act, 1957. Here, Nalla’s tables is movable property, therefore Sale of Goods Act, 1957 can apply.

For Sale of Goods Act, 1957 to apply, it must be a contract of sale for a price. Contract of sale is defined in Section 4(1) of Sale of Goods Act, 1957, as a contract whereby the seller transfers or agrees to transfer the property in goods for a price. Here, it is a contract of sale because the tables are delivered to Anu , therefore Sale of Goods Act, 1957 can apply.

The General Rule in transfer of property in goods states that the property in goods passes when the parties to the contract intend that it should pass.

Under Section 18 of Sale of Goods Act, 1957, where the contract of sale for unascertained goods, the property in goods passes to the buyer when the goods are ascertained.

Under Section 23 of Sale of Goods Act, 1957, where contract of sale for unascertained of future goods bought in description, in a deliverable states are unconditional appropriated to the contract, either by the seller with the assent of the seller, the property in goods thereupon passes to the buyer. In this case, the property in goods passes to Anu when the contract is made, even though the payment is delayed.

Under Section 26 of Sale of Goods Act, 1957, the seller bears the risk. However, there is exception. When the property in goods passes to the buyer, the buyer bears the risk. Therefore, the loss should be borne by Anu.



6. For Sale of Goods Act, 1957 to apply, it must be a goods. Goods is defined in Section 2 of Sale of Goods Act, 1957 as every kind of movable property other than auctionable claim and money, 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 contract of sale. Land is excluded from Sale of Goods Act, 1957. Here, the piano is a movable property, therefore Sale of Goods Act, 1957 can apply.

For Sale of Goods Act, 1957 to apply, it must be a contract of sale for a price. Contract of sale is defined in Section 4(1) of Sale of Goods Act, 1957, as a contract whereby the seller transfers or agrees to transfer the property in goods for a price. In this case, it is a contract of sale, therefore Sale of Goods Act, 1957 can apply.

According to Nemo dat quod non habet rule, the seller must have a good title in order to pass a good title. It is reaffirmed in Section 27 of Sale of Goods Act, 1957. If under Section 27 of Sale of Goods Act, 1957, Macy cannot have good title because Richard has no title of the piano because Sing Sdn Bhd is an unpaid seller. However, there are 6exceptions.

Under Section 30(2) of Sale of Goods Act, 1957, sale by a buyer in possession, it provides that if a buyer who has acted in good faith and has no notice of the defect of title can obtain a good title, even if the seller who has no title but possession of the goods under the consent of the owner, sold it to the buyer. In this case, Macy has acted in good faith and has no notice of the defect of title, therefore she can get a good title. Therefore, Sing Sdn Bhd cannot claim the piano from Macy

4 comments:

  1. Hey,.. was looking for BL notes & it lead me here'
    Thanks for the lil' notes there.
    Cheers'

    ReplyDelete
  2. You are welcome ^^

    ReplyDelete
  3. Thanks it was really helpful !!!!

    ReplyDelete
  4. Thanks it was really helpful !!!!

    ReplyDelete

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