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Commercial Law

Commercial Law. Sale of Goods. Introduction. Focus is on the commercial and contractual arrangements for the sale of goods (SOG) entered into by businesses and private party Based on the provisions of SOGA 1957 SOGA applies in Malay States only.

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Commercial Law

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  1. Commercial Law Sale of Goods

  2. Introduction • Focus is on the commercial and contractual arrangements for the sale of goods (SOG) entered into by businesses and private party • Based on the provisions of SOGA 1957 • SOGA applies in Malay States only. • Melaka, Pulau Pinang, Sabah and Sarawak is governed by the English SOGA 1893

  3. Definition of Goods • S.2 SOGA – goods include every kind of movable property other than actionable claims and money and include 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 contract of sale. • Thus, based on the above, land is excluded • See also S.6 SOGA

  4. Classification of Goods • S.6 SOGA – goods which form subject matter of a contract of sale may either be existing goods or future goods. • Existing goods – are goods already owned or possessed by seller, and may either specified or agreed upon at the time a contract is made. • Specified goods – means goods identified and agreed upon at the time a COS is made (S.2 SOGA) • Unascertained goods – goods identified by description only (Not defined in SOGA) • Future goods – goods to be manufactured or produced or acquired by the seller after the making of COS under S.2 SOGA.

  5. Classification of Goods • Examples: • If A agrees to buy B’s motorcycle bearing registration number XYZ123. It is a COS of specific goods. • A sale of a new Proton Persona 2014 model. It is a COS of unascertained goods • A sale of a BMW sports car model Z3 yet to be manufactured by seller. It is a COS of future goods and unascertained. • A sale of a BMW sports car model Z3 owned by A who is is selling it to B. B as A’s car dealer sell to C. It is a COS of future goods and specified.

  6. Contract of Sale • S.4(1) SOGA – a COS is a contract where the seller transfers or agrees to transfer the property in goods to the buyer for a price. • Note: Distinguish between a sale and an agreement to sell. A sale is a contract under which the property in the goods is transferred from seller to buyer. • Agreement to sell (ATS) is a contract under which the transfer of property in the goods is to take place at a future time or subject to some condition to be fulfilled later. See S.4(3) SOGA. • Under S.4(4) ATS becomes a sale when time elapses or conditions fulfilled.

  7. Formation of COS • S.5(1) a COS is made by an offer to buy or sell at a price and by acceptance of that offer. • The COS may provide for: • Immediate delivery of the goods; or • Immediate payment of the price; or BOTH. • Delivery or payment may also be done by installments. • S.5(2) a COS may be made in writing and partly by word of mouth or may be implied from party’s conduct.

  8. Terms of Contract • There are various standard TOC in a COS. It can be express or implied. • S.12(1) SOGA – in the COS there can be condition or warranty. (express) • S.12(4) – whether a stipulation is a condition or warranty depends in each case on the construction of the COS. • The stipulation may be a condition though called a warranty in the contract.

  9. TOC: Conditions • Conditions: S.12(2) – it is a stipulation essential to the main purpose of the contract. • Breach of Conditions – entitle the innocent party to repudiate the contract and claim damages. • There are circumstances where innocent party can claim damages only but cannot repudiate contract: • Where buyer waives condition • Where buyer elects to treat the breach of condition as a breach of warranty and claim damages only • Where COS is not severable and buyer has accepted the goods or part of it, the breach of any conditions must be accepted as breach of warranty unless COS says otherwise • Where the COS is for specific goods, and it has passed to buyer, (See 3).

  10. TOC: Warranty • S.12(3) – a warranty is a stipulation collateral to the main purpose of the contract. BOW give rise to claim for damages but not a right to reject the goods and cannot treat the COS as repudiated.

  11. TOC: Time • S.11 SOGA – unless different intention appears from the TOC, stipulations as to time of payment are not deemed to be essence with respect to COS • If COS don’t say that time is of the essence, then if buyer don’t pay on the agreed date, it does not entitle seller to repudiate the COS.

  12. Implied Terms • SOGA implies a number of stipulations in every contract of sale of goods a.k.a implied terms • When apply? • Applies when parties of the COS have not excluded or implied to exclude them. • What are the implied terms? • Those provided under Ss. 14-17 SOGA

  13. Implied condition as to title • S.14(a) SOGA • In a contract of sale, unless the circumstances of the contract are such as to show a different intention, there is 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.

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