Introduction to Sales of Goods

Definition:
- Sec. 4(1): Contract of sale of goods is where the seller transfers or agrees to transfer
the property in goods to the buyer for a price.
- Seller agrees upon a transfer of ownership.
- Sec. 2: Price is money consideration for a sale of goods.
- Sec. 4(2): Contract of sale may be absolute or conditional.
- Sec. 4(3): Sale is where the property in the goods is transferred from seller to buyer.
Agreement to sell is where the transfer of the property in the goods is to take place
at a future time or subject to a condition to be fulfilled.
- Sec. 4(4): Agreement to sell becomes a sale when the time elapses or the
conditions are fulfilled subject to which the property in the goods is to be
transferred.
Types of goods:
- Sec. 2: Goods are:
- Every kind of movable property other than actionable claims and money; and
includes stock and shares, growing crops, grass
- Actionable claims: Rights to sue are not considered as goods
- Money: Money denotes currency, which is not considered as goods
- Moss v Hancock: Money is that which passes freely from hand
to hand throughout the community in final discharge of debts
and full payment for commodities.
- However, commemorative coins or antique coins are
considered as goods.
- Things attached to or forming part of the land which are agreed to be
severed before sale or under the contract of sale.
- Goods which fail to be severed will render the transaction
inapplicable under the Act.

- Sec. 6(1): In a contract of sale, goods may either be existing goods or future goods.
- Existing goods: Goods which are owned or possessed by the seller at the time
of the contract.
- Existing goods can be divided into:
Specific goods: Goods identified and agreed upon at the time a
contract of sale is made.
Unascertained goods: Existing goods not yet identified and agreed
upon at the time the contract of sale is made.
- Sec. 18: In a contract for the sale of unascertained goods, no
property in the goods is transferred to the buyer unless and
until the goods are ascertained.
- Future goods: Goods to be manufactured or produced or acquired by the
seller after the making of the contract of sale; goods not yet in existence.
- Sec. 6(3): In a contract of sale for future goods, the contract will
operate as an agreement to sell the goods.
- Specific goods can also be future goods.
Implied Terms
Classification of terms:
- Sec. 12(2): Condition is a stipulation essential to the main purpose of the
contract, the breach of which gives rise to a right to treat the contract as
repudiated.
- Sec. 12(3): Warranty is a stipulation collateral to the main purpose of the
contract, the breach of which gives rise to a claim for damages, but not to a right
to reject the goods and treat the contract as repudiated.
- Innominate term: Where the nature and consequence are serious enough as to
deprive the innocent party of the benefits under the contract, the breach of the
innominate term will allow for the contract to be discharged.
To distinguish between a condition and a warranty:
- Sec. 12(4): To determine whether a term is a condition or a warranty depends on
the construction of the contract.
- Test of Essentiality: Whether the term is of such importance to the innocent
party, that he would not have entered into the contract unless that promise was
made. (Tramways Advertising v Luna Park)
Remedy for breach of condition:
- Sec. 13(1): Buyer may elect to treat the breach of condition as a breach of
warranty.
- However, once the buyer exercises such option, he cannot later insist on
the fulfilment of the condition.
- Tham Cheow Toh v Associated Metal Smelters Ltd: Where there was a
breach of express condition by the appellant, the respondent could
decide to waive it and choose to treat the breach as a breach of warranty,
thereby allowing him to carry on with the contract and only claim for
damages.

- Sec. 13(2): A breach of condition must be treated as a breach of warranty where:

- The contract is not severable and the buyer has accepted the goods or
part thereof.
- In a contract for sale of specific goods, the property has passed to the
buyer.
Stipulations as to time:
- Sec. 11: Time is not deemed to be of the essence of the contract of sale.
- Unless a different intention appears from the terms of the contract.
- Whether time is of the essence, depends on the terms of the contract.
Duties of the seller:
- Sec. 14(a): Implied condition that the seller has a right to sell the goods
- Rowland v Divall: The plaintiff sued the defendant for the money paid for
the car. The plaintiff only used the car for 6 months and had to surrender
it to the true owner as it was a stolen car.
Held: There was a breach of implied warranty by the defendant. The
plaintiff was entitled to recover the purchase price for failure of the
defendant to provide consideration for the contract that is the legal
ownership of the car and the legal right to possession of it.

- Where a seller, having no title to the goods, acquires a valid title to the
goods after the sale, but before the buyer seeks to terminate the
contract, the implied condition is considered to have been complied with.
- A later acquisition of the title by the seller cures (‘feeds’) the title.
- Butterworth v Kingsway Motors: A car on hire purchase was sold by the
defendant and resold a few times. The plaintiff, the last buyer, rescinded
the contract and demanded the return of the purchase price from the
defendant. Eight days later, the defendant paid the outstanding balance
to the finance company.
Held: The plaintiff was entitled to recover the purchase price as at the
time he terminated the contract the hirer did not have title to the car.

- When a person sells the goods by infringing the copyright or trademark

of others, he is considered as not having the right to sell the goods.
- Niblett Ltd v Confectioners’ Materials Co Ltd: The defendants had sold
3000 cases of condensed milk to the plaintiffs who, upon finding that
1000 cases infringed a registered trademark, had to remove the labels
and sell at a discount and as a result, suffered losses.
Held: The defendants had breached the implied condition that they had a
right to sell, as the goods were in breach of a trademark held by a third
party.

- Sec. 14(b): Implied warranty that the buyer shall have and enjoy quiet
possession of the goods.
- Where a title is defective at the time of sale, or where there is a
subsequent future disturbance of possession of the goods, not limited to
physical disturbance.
- Microbeads A.G v Vinhurst Road Markings Ltd: The patentee, a third
party, brought an action against the buyer alleging the use of certain road
marking machines that was in breach of their patent, two years after the
sale of the machines to the buyer. Thus, the buyer did not enjoy the
future quiet enjoyment of the goods.
 - Where there is a wrongful interference by a stranger claiming a lawful
right by virtue of a better title than the seller.
- Healing (Sales) Pty Ltd v Inglis Electrix Pty Ltd: An unlawful seizure of the
goods sold, but not paid for, and that which is still subject to the contract
of sale, was a breach of the implied warranty. Such seizure is a wrongful
exertion by the seller of a claim to goods of which possession has been
given and in respect of which the seller has warranted that the buyer shall
enjoy quiet possession.

- Sec. 14(c): Implied warranty that the goods are free from any charge or
encumbrance in favour of any third party not made known to the buyer.
- There is no breach if the encumbrance is disclosed to the buyer before
the contract is entered into.
- Steinke v Edwards: The right of the government to levy a tax on a vehicle
coupled with a right to seize the car to enforce collection was a ‘charge or
encumbrance’ within the meaning of the provision. The buyer who had
bought the car paid off the tax owed and sought to recover it from the
seller as there was a breach of the implied warranty.

- Sec. 15: Implied condition that goods correspond with description.

- Joseph Travers & Sons Ltd v Longel Ltd: Sale by description may be divided
into:
- Future or unascertained goods
- Specific goods which have not been seen by buyer
- Specific goods which have been seen by buyer

- Future or unascertained goods:

- Exact conformity with the description is required even though the goods
delivered are of the same quantity and quality (strict application)
- ReMoore v Landauer: A sale of canned goods had to be packed 30 tins per
box. The correct quantity was delivered by the vendor but half of the
boxes only contained 24 tins. The buyer rejected the goods and refused
to pay.
Held: The buyer had the right to reject the goods because the goods
supplied did not correspond with the description. Thus, there was a
breach of the implied condition relating to description.
- Conditions of weight, measurement and the like, specified in the contract
must be complied with. (Arcos Ltd v EA Ronaasen & Son)

- In a later development: Only those descriptions that identify the subject

matter are material when the sale involves unascertained goods. (HOL in
Ashington Piggeries v Christopher Hill Ltd)
- Test: Whether the buyer could fairly and reasonably refuse to accept the
physical goods proffered to him on the ground that their failure to
correspond with what was said about them makes the goods of a
different kind from those he had agreed to buy.
- Confined only to specifications intended to identify the goods.
 - Reardon Smith Line Ltd v Hansen-Tangen: The sub-charterers of a vessel
refused to take delivery on the ground that the vessel did not correspond
with the contractual description that stated Osaka 354, but instead
Oshima 004. The issue was whether the specification pertaining to the
yard number was a material description that is whether the words
provided a means of identifying the vessel.
- Whether a particular item in a description constitutes a
substantial ingredient of the identity of the goods sold, and only if
it does will it be treated as a condition.

- Specific goods which have not been seen by the buyer

- Existing or future goods identified and agreed upon at the time the
contract of sale is made.
- E.g: Sale based on advertisement, sale from catalogue, mail order
- Varley v Whipp: The defendant bought a reaping machine which he had
never seen. The plaintiff described it to have been “new the previous year
and used to cut only 50 to 60 acres”. However, after purchasing the
reaping machine, the defendant found it to be extremely old.
Held: In applying the test in Ashington Piggeries, the defendant could
return the machine as it did not answer to the description.

- Specific goods which have been seen by the buyer

- Grant v Australian Knitting Mills Ltd: Where specific goods have been
seen, there can still be a sale by description.
- Privy Council: As long as the item is sold not merely as the specific
thing, but as an item corresponding to a description.
- E.g: A hot water bottle
- The sale can only be a sale by description if:
- There is a description relating to the goods
- Description has to be influential in the sale so as to
become a term or a condition of the contract.
- There is reliance by the buyer upon such description
- Harlingdon & Leinster Ent v Christopher Hull Fine Art:
Where there has been no reliance, there can be no breach.

- Beale v Taylor
The description stated that the vehicle was a 1961 model Triumph Herald
1200 c.c. motor car. However, the car did not correspond to the
description advertised as the front part of the car was a 948 c.c. model.
Held: The buyer, when he came along to see his car, was coming along to
see a car advertised, that is a car described as a Herald convertible, white
1961. It was a sale by description even though the sale was of a car that
had been seen, tried and approved.

- A sale in a self-service shop where goods are selected and examined is

also a sale by description provided that they are described through their
label or packaging.
 - Where goods are sold under a trademark or brand:
- Nagurdas Purshotumdas v Mitsui Bussan Kaisha Ltd: Where there
was a sale of flour in bags bearing a well-known trademark, the
flour delivered was identical in quality, but it did not bear the
same well-known trademark, there has been a breach of sale by
description. Thus, the seller must deliver the same goods with the
same brand.

- In proving a breach, the buyer must show that the deviation of the goods
from the description was not apparent. Upon examination by the buyer,
the defect must have been a latent defect.

- Sec.16(1): Implied condition as to fitness for purpose and merchantable quality

- Caveat emptor rule: 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.
- The buyer himself must exercise care in making a purchase. If he
does not, he must bear the consequences.

- Sec. 16(1)(a): Implied condition that goods shall be reasonably fit for such
purpose.
- Inapplicable to private sales or transactions
- To invoke this provision, there are four requirements that must be
fulfilled: When all four requirements are fulfilled, the caveat emptor rule
does not apply.

- Buyer must make known, either expressly or impliedly to the seller at or before
the time the contract is made, the particular purpose for which the goods are
required
- Where the goods have only one purpose, no further indication is
required.
- Wallis v Stone: Where a loaf of bread contains a stone, the
purpose for which the bread is required is only to eat.
- If goods are suitable for any purpose reasonably foreseeable, buyer must
disclose if it is to be used for a special purpose.
- Lord Denning in Ingham v Emes: The implied term as to fitness is
dependent on proper disclosure by the customer of any relevant
peculiarities known to her.
- Griffiths v Peter Conway: A woman with unusually sensitive skin
who bought a Harris Tweed coat without disclosing that fact to
the seller could not succeed as the coat would not harm a normal
person.

- Buyer must establish reliance upon seller’s skill, knowledge or judgment, either
expressly or impliedly
- Buyer must prove that he made the purchase based on the seller’s skill
and judgment.
 - Khong Seng v Ng Teong Biscuit Factory: Defendants bought a certain
amount of tallow from the plaintiff to whom they disclosed that it was
required for making biscuits. However, it was found to be unsuitable.
Thus, there had been a breach of sec. 16(1)(a).

- Goods are of a description which is in the course of the seller’s business to

supply
- The seller’s business must match the goods.
- Ashington Piggeries v Christopher Hill: Action was taken by a food
compounder against the plaintiff for non-payment under a contract to
supply a quantity of mink feed which was ‘Norwegian Herring meal fair
average quality of the season’. The food was contaminated and killed the
mink. The plaintiff breached the implied condition of fitness as the
defendant was in the business of supplying mink food.

- If the goods are specific, they must not be bought under their patent or trade
name
- If a buyer requests for a specific goods under a patent or trade name, no
implied condition is invoked.
- The buyer is not relying on the seller’s skill or judgment, but is
instead relying on the manufacturer’s skill or judgment.
- However, if the buyer buys under a trade name and relies on the seller to
select a suitable item, sec. 16(a) can be invoked.
- Test: Whether the buyer specified it under its trade name in such
a way as to indicate that he is satisfied, rightly or wrongly, that it
will answer to his purpose, and that he is not relying on the skill or
judgment of the seller, however great that skill or judgment may
be.
- Baldry v Marshall: Buyer asked for a car suitable for touring and
the seller recommended a Bugatti.
- A seller may avoid liability if it is clear that the buyer is relying on the
patent or trade name as a guarantee of the quality of the goods and not
the skill and judgment of the seller.

- Sec. 16(1)(b): Implied condition that goods shall be of merchantable quality

- Inapplicable to private sales or transactions
- Only applicable where:
- Goods are sold by description
- Seller deals with such goods

- ‘Merchantable quality’: Where the goods are fit for the purpose for
which goods of that kind are commonly bought as it is reasonable to
expect having regard to any description which applies to them, the price
and all other relevant circumstances.
- If both parties have agreed upon the quality, the goods are said to
be of merchantable quality.
- Bernstein v Pamson Motors: Though the car is repairable, it is
unreasonable for the buyer of a new car of this type (Nissan) and price
(£8000) to expect to sustain a major breakdown in the first 140 miles
after only 3 weeks. Thus, the car was not merchantable.

- Latent or apparent defects: If the buyer has examined the goods, there
shall be no implied condition as to defects which such examination ought
to have revealed.
- Thornett & Fehr v Beers & Sons: Only the outer surface of the
barrels of glue was inspected, but not the inside which would have
revealed the defects. Thus, there was no breach.
- However, where the goods suffer from latent defects which
reasonable examination would not have revealed, the implied
condition may be invoked.

- The state or condition of the goods: The packaging or labelling of the

goods.
- Morelli v Fitch & Gibbons: The buyer bought a bottle of wine from
the seller. While drawing the cork, the bottle broke and the buyer
was injured.
Held: The sale was by description and the buyer was entitled to
recover damages as the bottle was not of merchantable quality.

- Goods sold under their patent or trade name:

- Only sec. 16(1)(b) and NOT sec. 16(1)(a) can be invoked.
- Wilson v Ricket, Cockerall & Co: Fuel by the trade name ‘coalite’
was sold. However, its consignment was contaminated, causing it
to explode when used. As it had defects which made it unfit for
burning, the fuel was not merchantable.

- Period of merchantability:
- Perishable goods:
- Lord Diplock in Mash and Murrell v Joseph Emmanuel: Goods must
be merchantable at the time they are put in transit and the goods
shall be in a state that they can endure normal journey and still be
in a merchantable state upon arrival.
- Seller bears the risk, unless the deterioration of merchantability is
due to abnormal conditions during the course of transit, then
buyers would bear the risk.
- Non-perishable goods:
- Bernstein v Pamson Motors: Although the car was not
merchantable, the plaintiff had had it for 3 weeks, which was a
reasonable amount of time to examine and try it out. Thus, he had
lost his right to reject the car.
 - Right to reject non-merchantable goods:
- Must be exercised within reasonable time.
- Sec. 24 & 42: If the buyer retains the goods after lapse of
reasonable time, he is deemed to have accepted it.

- Sec. 17(1): Sale by sample

- Parker v Parker: A sale whereby the seller promises that the goods sold
should answer the description of a small parcel exhibited at the time of
sale.
- The sample must form an integral part of the contract.

- Sec. 17(2): Implied conditions as to contract of sale by sample

- (a): Bulk shall correspond with sample in quality
- Ruben v Faire Bros: In a contract for a supply of a certain amount
of rubber in accordance with a certain flat and soft sample, the
sample did not correspond with the bulks and the bulk was found
to be ‘crinkly and folded’. As the bulk can actually be put right by
the simple process of warming them, it did not render the sample
as corresponding with the bulk.
- (b): Buyer shall have a reasonable opportunity of comparing the bulk
with the sample
- Lorymer v Smith: In a contract of sale of wheat by sample, the
buyer was enabled to compare only some of the wheat with the
sample, but was not allowed to compare the rest of it, and was
only given such opportunity later. Thus, the buyer can rescind the
contract.
- (c): Goods are free from any defect rendering them unmerchantable
which would not be apparent on reasonable examination of the sample
(latent defect)
- Drummond v Van Inger: The cloth supplied by the seller was equal
to samples previously examined, but because of a latent defect
not discoverable upon reasonable examination, the court found
the seller in breach of the implied condition.
- Davis J: The process of reasonable examination is the common
sense standard of everyday life, and if the presence of a defect
could not be detected without unreasonable trouble, the seller
will be held liable.

Exclusion of implied terms and conditions:

- Sec.62: Implied terms and conditions may be negatived through express

agreement or previous course of dealings between the parties, or by usage.
Privity of Contract
The doctrine of privity as in Tweddle v Atkinson: No one is entitled to take any action or be
bound by the contract if he is not an original party to the contract.
- The operation of privity in sales of goods can be illustrated through a distribution
chain where there are two types of privity of contract in sales of goods:
- Vertical privity: Concerns the buyer in the distribution chain who did not
purchase directly from the manufacturer.
- Buyer  Seller  Manufacturer
- Horizontal privity: Concerns whoever might reasonably make use of the
goods. The non-buyer consumer or third party could vary from a family
member to a person of who the buyer resold or gave the goods to.
- Buyer  Non-buyer Consumer or Third Party  Seller

- Only a buyer that suffers personal injury or loss because of the defective state of
goods can claim damages against the seller, and only a seller that suffers similar
loss can claim against the manufacturer.

- A party not privy to the contract generally cannot enforce a contract of sale, nor
can a party to a contract enforce it against a non-privy of the contract.
- Only a buyer and a seller of goods are privy to the contract of sale. A non-
buyer consumer or third party who is not a party to the contract of sale
would not be able to enforce the contract.

- Daniels & Daniels v R White & Sons Ltd. & Tabard: Where the plaintiff bought
lemonade from the defendant. Both the plaintiff and his wife consumed the
lemonade and suffered internal injuries. The plaintiff succeeded in his claim for
damages. However, the wife failed in her claim as she was not privy to the
contract of sale. Alternatively, she sought to claim under the law of torts.
Unfortunately, her claim also failed as she was unable to prove negligence on the
part of the seller.
Exceptions to the doctrine of privity under Consumer Protection Act 1999:
- Sec. 50, Part VII: Consumers have a right of redress against a manufacturer for
the breach of the implied guarantees listed under Part V.
- The implied guarantees covers the acceptable quality of the goods; its
correspondence with description; its repairs and spare parts, as well as
the manufacturer’s express guarantee.
- Although a breach of the implied terms under the Sale of Goods Act by
the manufacturer would not enable the buyer or non-buyer to claim for
damages, instead they are able to claim for the breach of implied
guarantees through the Consumer Protection Act.

- Sec. 39, Part VI: Consumers have a right of redress against suppliers where the
goods have failed to comply with any of the implied guarantees.

- These exceptions have resulted in the abolishment of privity in sales of goods.

Transfer of Title

Sec. 27(1): The general rule is that there is no transfer of title to the buyer where goods are
sold by a person who is not the owner, and who does not sell them under the authority nor
with the consent of the owner.

- Nemo dat quod non habet: No one gives what he doesn’t have.
- Rationale: To protect the right of ownership.
- When a person sells goods which belong to someone else, the buyer
cannot get a good title. The true owner can still recover the goods at law
without paying any compensation to the buyer, even if the buyer had
paid the seller for the goods. Buying the goods from someone who has no
rights of ownership over it denies the buyer any title to ownership.

- Exceptions to the general rule:

- Estoppel
- Sec. 27(1): Where the owner has made a representation that the seller is
entitled to sell the goods and the buyer relies on that representation and
obtains a good title, the owner is estopped by his representation from
denying the seller’s authority to sell.
- This may occur under two circumstances:
- Where the owner by his words or conduct represented to the
buyer that the seller is the true owner or has the authority to sell
- Where the owner by his negligent failure to act allows the seller
to appear as the owner or as having the authority to sell
- Eastern Distributors v Goldring: The owner of a van, Murphy, allowed a
car salesman to represent to the plaintiff that he was the owner and
could sell it. The plaintiff, in relying on the representation, purchased the
van from the salesman. However, at the same time, Murphy sold it to the
defendant. The plaintiff then claimed for repossession of the van.
Held: Plaintiff had a good title to the van as Murphy had permitted the
salesman to act as the owner and was therefore, estopped from denying
the salesman’s authority to sell.

- Sale by mercantile agent

- Proviso of Sec. 27: Where a mercantile agent is, with consent of the
owner, in possession of the goods or of a document of title to the
goods, any sale made by him when acting in the ordinary course of
business of a mercantile agent shall be valid as if he were expressly
authorised by the owner of the goods to make the same. However, the
buyer must have acted in good faith, and at the time of the contract of
sale, had not received notice that the seller has no authority to sell.

- ‘Mercantile agent’: An agent having in the customary course of business

the authority to sell goods, or to consign goods for the purposes of sale…
- E.g: Second hand car dealer, broker or auctioneer
- Consent of the owner:
- The fact that consent may have been obtained by fraud or other unlawful
means is immaterial
- Mercantile agent must have consent to possess the goods NOT consent
to sell the goods
- Pearson v Rose & Young: Pearson left his car with Hunt, a mercantile
agent; to see what offers for it were made. He had not authorized Hunt to
sell the car nor did he intend to pass the property in the car. After Hunt
obtained the car, he sold it to a third party. It was argued that a good title
cannot pass, as Pearson did not consent to Hunt having possession of the
car.
Held: Although possession was obtained by trick, it was considered as
sufficient consent.

- Sale in ordinary course of business:

- The buyer would not be protected if the goods were entrusted to the
mercantile agent for a purpose unrelated to his course of business.
- He must have acted in the ordinary course of business.
- Lord Denning: For a purpose which is in some way or another,
connected with his business… It may not actually be for sale. It
may be for display, or to get offers or merely to put in his
showroom.
- He is expected to act from trade premises during normal business hours
and consistent with the norms and practices of business behaviour.
- Oppenheimer v Attenborough: The plaintiff, a diamond merchant was
induced by Schwabacher, a diamond broker, to let him have some
diamonds so that he could show them to potential customers. Instead of
selling them, Schwabacher pledged the diamonds to the defendant, a
firm of pawnbrokers, as security for an advance to himself. The
defendant, with good faith, took the diamonds, not knowing that in the
diamond trade, a broker has no authority to pledge diamonds.
Held: The pledge was valid as the mercantile agent was acting in the
ordinary course of his business, even though he had no authority to
pledge the diamonds.
- As long as the owner trusted the seller (Schwabacher) with the
goods in his capacity as a mercantile agent.

- Good faith:
- Buyer must prove that he is a bona fide purchaser and acted without
notice of the mercantile agent’s lack of authority.

- Seller must be acting in the capacity of a mercantile agent:

- Budberg v Jerwood and Ward: A necklace entrusted to a lawyer’s friend
for valuation was sold to the buyer.
Held: The exception does not apply as the seller possessed the necklace
in his capacity as a friend NOT as a mercantile agent.
- Sale by one of joint owners
- Sec. 28: If one of several joint owners of goods has the sole possession of
them by permission of the co-owners, the property in goods is
transferred to any person who buys them from such joint owner in good
faith and did not, at the time of the contract of sale notice that the seller
has no authority to sell.
- E.g: A and B are co-owners of a car, and A, with B’s consent, uses
the car. However, without B’s consent, A sells the car to C. C will
get a good title to the car even though B did not give his consent,
provided that C acted in good faith and did not know that A has no
authority to sell.
- There is a transfer of both, possession AND title to the buyer.

- Sale under a voidable title

- Sec. 29: Seller may derive his title from an earlier sale, which may have
been voidable, by the true owner. But if the earlier sale was not
rescinded at the time of the second sale, the buyer acquires good title
provided that he purchased in good faith and without notice of any
defect in the title.

- A contract is voidable when consent of the original owner is obtained

through coercion, fraud, misrepresentation or undue influence.
- Lewis v Avery: The seller sold his car to a buyer who represented
that he was “Richard Green”. The contract was voidable for
fraudulent misrepresentation.

- Two conditions to be fulfilled:

- Owner has not rescinded the contract with the seller at the time of the
contract of sale
- Any rescission made by the owner must be informed to the seller.
If the seller has disappeared, owner must communicate in an open
and competent manner.
- Sufficient if the owner has shown an intention to rescind.
- Cars & Universal Finance v Caldwell: The seller of a car was
induced by the buyer to accept a cheque in part payment of the
price. The cheque was then dishonoured, and the seller
immediately told the police. The buyer then sold the car to a third
party.
Held: The seller can rescind the contract by showing an intention
to do so and taking all steps available to him where he is unable to
communicate with the fraudulent party.

- The buyer is a bona fide purchaser

- Whitehorn Bros v Davison: The onus of proving that the buyer is
not a bona fide purchaser lies upon the owner.
- Sale by a seller in possession after sale
- Sec. 30(1): A purchaser can obtain a good title when he purchases from a
seller who has already sold the goods to a previous buyer, but still retains
possession of the goods or document of title to them.

- Five conditions to be fulfilled by the seller:

- Title has passed from the seller to Buyer 1

- After the sale, the seller still retains possession of the goods or
document of title to the goods.
- Where there has been a break in the continuity of physical possession,
exception is inapplicable.
- Pacific Motor Auctions v Motor Credits: The defendants bought a number
of cars from a car dealer, Motordom, for the purpose of letting them out
under hire purchase agreements to Motordom’s customers. Motordom
continued to be in possession of the cars as bailee with authority to sell.
The defendants later revoked the authority. However, on the same day,
Motordom sold the cars to the plaintiff, who bought in good faith. The
defendants then claimed for the return of the car.
Held: The action failed as the plaintiff had obtained a better title to the
goods because Motordom continued to be in possession of the cars.
- It is sufficient if the goods were in the possession of the seller’s
agent.
- City Fur Manufacturing v Fureenbond London: Where the goods remained
in the brokers’ warehouse, the exception remained applicable and there
was a transfer of title to Buyer 2 as it is not necessary for the seller to be
in personal possession of the goods.

- Goods must be delivered or transferred to Buyer 2 for him to obtain a

better title
- ‘Constructive delivery’: Where physical possession may remain
unaltered, but the right to possession has been transferred.
- If the seller sells the goods to Buyer 1, but retains possession of
them, and sells them again to Buyer 2, although he may retain
physical possession of the goods, there may be constructive
delivery to Buyer 2.

- Buyer 2 must obtain the goods either through sale, pledge or other
disposition
- ‘Pledge’: The goods are given as security for the fulfilment of a
contract or the payment of a debt.
- ‘Disposition’: Must involve some transfer of an interest in
property.

- Buyer 2 must be a bona fide purchaser who does not know of the
previous sale
- Sale by a buyer in possession
- Sec. 30(2): If a buyer, having bought or agreed to buy the goods, obtained
possession of or document of title to the goods with the consent of the
seller, he can pass a good title to a subsequent buyer acting in good faith,
even if he had not obtained a good title under the first transaction.
- Buyer 1, in selling the goods, does not have ownership or title to
the goods, but only has possession of the goods.
- Buyer 1 is not the legal owner; he cannot transfer the title to the
goods.

- Six conditions to be fulfilled by Buyer 2:

- Buyer 1 must be a person having bought or agreed to buy the goods
from the owner
- Applies when the property (title) has not passed to Buyer 1, but he has
possession of the goods

- Buyer 1 must be in possession of or document of title to the goods

- Four Point Garage v. Carter: Carter, a bona fide purchaser, agreed to buy
a car from X, a car dealer. Since X did not have an existing stock, he
entered into a contract to buy the car from the plaintiff. It was agreed
that no property would pass to X until payment has been made. Carter
paid to X. On X’s request, the car was delivered directly to Carter who
believed that he took delivery from X. X became insolvent before he could
make payment to the plaintiff.
Held: Carter had obtained a good title as X had ‘constructive possession’
of the goods.
- Actual possession would mean that X actually had the car.
- However, constructive possession is sufficient to fulfil the
condition.

- Buyer 1 must obtain possession with the owner’s consent

- Immaterial whether or not the consent was obtained unlawfully
- Buyer 1 must deliver or transfer the goods to Buyer 2
- Buyer 2 must receive the goods through sale, pledge or other
disposition

- Buyer 2 must be a bona fide purchaser and without notice

- Newton of Wembley v Williams: The plaintiff (owner) sold a car to A who
paid by cheques. Although he was given possession of the car, it was
agreed that the property would not pass until the cheque was honoured.
The cheque was dishonoured, but A had resold the car to B who bought it
without knowledge of the earlier transaction. B then resold the car to the
defendant, whom the plaintiff tried to recover the car from.
Held: A was in possession of the car with the consent of the plaintiff and
could pass a good title to B, who then transferred it to the defendant.
Thus, the plaintiff’s claim failed as the defendant had obtained a good
title to the car.
Transfer of Property
Transfer of property from the seller to the buyer depends on the type of goods.
Specific and ascertained goods:
- Sec. 19(1): Property is transferred to the buyer at such time as the parties to the
contract intend it to be transferred.
- Intention is important in order to determine when the property is to be
passed.
- Sec. 19(2): In determining intention, the terms of the contract, conduct of the
parties and circumstances of the case must be considered.
- Re Anchor Line (Henderson Brothers) Ltd: The property had not passed as the
terms of the contract showed an intention that the property was not to pass until
the completion of the purchase.

- Sec. 20: Specific goods in a deliverable state

- Property is to pass at the time the contract is made even if payment or
delivery has not been made.
- Conditions to be fulfilled:
- Goods must be specific and ascertained
- Contract must be unconditional: Absolute and not subject to any
conditions to be fulfilled
- Goods must be in a deliverable state
- ‘Deliverable state’: Where goods are in the state in which
they are to be delivered by the terms of the contract.
- Mohamed Mydin v Ramiah: Where the registration book, which is not a
document of title, of the lorry was not handed to the plaintiff, the sale of
the lorry is still said to have been completed as the lorry was in a
deliverable state at the time the contract was made.
- Underwood v Burgh Castle Brick & Cements: Where the condensing
engine upon being loaded onto a railway wagon was accidentally
damaged, the goods were said to not be in a deliverable state, thus
resulting in no transfer of property.

- Sec. 21: Conditional sale of specific goods

- Where the seller is bound to do something to the goods for the purpose
of putting the goods in a deliverable state.
- Property will not be said to have passed until such act is done.
- An act directly material to the goods, which is necessary to put
the goods into a deliverable state.
- The buyer must have notice of the act
- Seller is not required to serve a notice to the buyer, but it is
sufficient if the buyer has actual knowledge that the act has been
completed.
- E.g: A condition agreed upon is for the car to be painted from blue to
green. Thus, property in the car will only pass after the car has been
painted and when the buyer has been notified.
 - Sec. 22: Conditional sale of specific goods
- Where the seller is bound to measure, weigh, test, or do some other act
to the goods for the purpose of ascertaining the price.
- Property will not be said to have passed until such act is done and the
buyer has notice of the act.
- E.g: A condition agreed upon is for the vegetables to be sold at RM8 per
kg. Thus, property in the vegetables will only pass after they have been
weighed and when the buyer has been notified.
Unascertained goods:
- Goods to be manufactured or grown by the seller (future goods)
- Goods which are available under many brands (generic goods)
- Unidentified portion of goods of a specified bulk or whole

- Sec. 18: No property can pass to the buyer until the goods are ascertained.
- Laurie and Morewood v Dudin & Sons: Where 200 out of 618 quarters of
maize was to be delivered; the property would not pass to the buyer until
ascertainment had taken place.
- Once ascertained, the passing of property depends upon the intention of
the parties and the circumstances of the case: Sec. 19.

- Sec. 23: Sale of unascertained goods and appropriation

- Where there is a contract of sale of unascertained or future goods by
description, and goods of that description and in a deliverable state are
unconditionally appropriated to the contract, either by seller with the
assent of the buyer, or by the buyer with the assent of the seller, the
property in the goods thereupon passes to the buyer.

- ‘Appropriation’: An act intended and agreed, in the terms of the contract,

to transfer ownership of specific goods to the buyer, and nothing else
remains to be done in order for the property to pass. (Wait v Baker)
- ‘Unconditional appropriation’: Some ascertained and identified goods
must be irrevocably attached for the particular contract in question.
- E.g: Where the seller delivers the goods to the carrier/bailee for
the purpose of transmission to the buyer, the seller is said to have
unconditionally appropriated the goods to the contract.
- If the seller delivers the goods not for the purpose of transmission
to the buyer, unconditional appropriation cannot be said to have
taken place.

- Healey v Howlett & Sons: Where the boxes that were delivered were not
labelled with the buyer’s name as to distinguish them from the remaining
boxes, the goods had not been ascertained and unconditionally
appropriated. Thus, property had not passed.
 - Pignataro v Gilroy & Sons: The buyer had been informed that the
remaining 15 bags of rice were available for collection at a different place,
but did not come to collect them until 3 weeks later when they had
already been stolen. The seller cannot be held liable for non-delivery as
the goods had been appropriated with the buyer’s implied assent, thus
the property had passed.

- When goods are in the possession of a third party, they are said to be
unconditionally appropriated when the third party acknowledges that he
holds them on the buyer’s behalf.
- Wardar’s (Import & Export) v Norwood & Sons: Where the buyer’s agent
(third party) had been informed of the delivery and had in fact collected
the goods, unconditional appropriation can be said to have taken place,
even though they were not in the personal possession of the buyer.
Therefore, property had passed to the buyer.

- ‘Deliverable state’: For unascertained or future goods, the deliverable

state of the goods depends on what has been agreed upon in the
contract, as well as the factual circumstances.
- Philip Head & Sons v Show Fronts: Where the plaintiff contracted to sell
and lay carpets to the buyer, the carpets were delivered, but were stolen
before they could be laid. Thus, the carpets are said to not have been in a
deliverable state. Until the carpets were laid, property would not pass to
the buyer.

- Sec. 24: Goods sent on approval or “on sale or return”

- A person receives the goods with an option of becoming the owner.
- When goods are delivered to the buyer on approval or “on sale or
return”, the property passes to the buyer:
- (a): When he signifies his approval or acceptance to the seller or does
any other act adopting the transaction (act inconsistent with ownership)
- Kirkham v Attenborough: Where the plaintiff had delivered a large
quantity of jewellery on sale or return to Winter, and some was
pledged with the defendant, the plaintiff could not then recover
the goods. In pledging the jewellery, Winter had performed an act
adopting the transaction, thus, causing the property to have
passed to him.

- (b): If he does not signify his approval or acceptance to the seller, but
retains the goods without giving notice of rejection, then, if a time has
been fixed for the return of the goods, on the expiration of such time,
and if no time has been fixed, on the expiration of a reasonable time.
- E.g: Where books have been delivered on approval and are to be
returned within 5 days if not satisfied, property will pass if the
buyer accepts the books, or if the buyer keeps the books for an
unreasonable amount of time, by which time she will then be
liable for non-payment.
Reservation of title
- The ownership of the goods supplied to the buyer shall remain with the seller
until full payment is made.
- If such payment is overdue in whole or in part, the seller may recover or
re-sell the goods or any part of it and may enter the buyer’s premises for
such purpose.
- Risk of loss and damage passes to the buyer upon delivery, but title
passes to the buyer upon making payment in full.

- The use of a ‘Reservation of title’ OR Romalpa clause:

- If a seller has successfully used an ROT clause, the goods will still belong
to him, allowing him to take them back upon insolvency.
- It will help prevent the goods from falling into the hands of liquidators
(buyers) who will sell the goods to pay other secured creditors.

- The Romalpa clause originated from:

- Aluminium Industrie Vaasen BV v Romalpa Aluminium: In a contract of
sale between the parties, it was stated that ownership of the aluminium
foil would only be transferred to Romalpa when the purchase price had
been paid in full and products made from the aluminium foil should be
kept by the buyers as bailees.
Held: The ROT clause was effective. The plaintiff remained the owner of
the aluminium foil and could trace the price due to them into the
proceeds of the sale of finished goods ahead of Romalpa’s unsecured and
secure creditors.

- A seller may not be able to rely on the ROT clause if:

- Title is not actually reserved
- ROT clause was not incorporated into the contract
- The goods supplied under the ROT clause have been sold, causing the
exceptions of nemo dat quod non habet to apply.
- E.g: Where buyer has sold the goods to someone else, transfer of
title falls under the exceptions, thus the clause cannot be relied
on.
Transfer of Risk
Res perit domino: “Things perish at the disadvantage of the owner.”
- All losses caused by natural causes or disasters must be borne by the owner of
the goods.
Sec. 26: Risk follows property. Whoever has the title to the goods, he bears the risk.
- Exceptions:
- Proviso 1: Where delivery has been delayed through the fault of either the buyer
or seller, the goods are at the risk of the party at fault as regards to any loss,
which might not have occurred had it not been for such fault.
- E.g: Property has passed, but the risk does not need to be borne by the
buyer.
- Demby Hamilton v Barden: Where the buyer was late in taking delivery of
30 tons of apple juice and caused the juice to go bad, the buyer was held
liable even if property had not passed to the buyer.
- The party at fault will only be liable for what might not have occurred if it
was not due to delayed delivery, not for all risks.

- Proviso 2: The mere fact that one party is at fault does not discharge the other
from his obligation to take due care as a bailee.
- The fact that the buyer is late in taking delivery does not mean that the
seller is no longer bound to take all reasonable care of the goods.
- If the seller is also at fault, the damage will be apportioned between the
seller and buyer.

- Proviso 3: Parties to the contract can either expressly or impliedly agree who is
to bear the risk even though that person has no property: “Unless otherwise
agreed.”
- Stern v Vickers: Where the risk had transferred to the buyer through
implied consent when he received the delivery order and served it to the
third party.
Risk and Frustration
Where the contract has been discharged by frustration, the buyer is not liable for the price,
and the seller is not liable for non-delivery. Parties are discharged from their obligations.
- Where the specific goods have perished, and neither property nor risk has
passed.
- Barrow Lane & Ballard v Phillip Phillips: If the contract is unseverable, it is
frustrated by the perishing of part of the goods. If the contract is severable, it is
frustrated only as to the part which has perished.
Doctrine of frustration:
- TEST for frustration as in Davis Contractors Ltd v Fareham UDC:
- Lord Radcliffe: Frustration occurs when without default of either party a
contractual obligation becomes incapable of being performed because if it
were performed, it would render it a thing radically different than that
which was contracted.

Frustration in regards to specific goods:

Sec. 7: Applicable for a contract for specific goods
- The contract is rendered void if the goods without knowledge of the seller have
at the time the contract was made, perished or damaged as to no longer answer
to their description.
- Couturier v Hastie: Where the subject matter of the contract no longer exists.
Sec. 8: Applicable for an agreement to sell specific goods
- The agreement may be avoided if the goods have perished or damaged as to no
longer answer to their description before property has passed to the buyer.
- Taylor v Caldwell: Where a hall had been hired out, the destruction of the hall
had occurred without fault of either party, and thus, both were excused from
their obligations.

Frustration in regards to unascertained goods:

- There can be no frustration for the sale of unascertained goods.
Performance of Contract
Sec. 31: It is the duty of the seller to deliver the goods and of the buyer to accept.
Delivery:
- Sec. 2: Delivery is the voluntary transfer of possession from one person to
another.
- Sec. 33: Delivery may be any method which the parties agree upon.
- Forms of delivery (actual or constructive):
- Physical transfer of the goods
- Transfer of possession by handing over to the buyer the means of control
over the goods
- Delivery of documents of title
- Delivery to a carrier who is not the seller’s agent or servant
- Constructive delivery:
- Agreement for the seller to hold the goods as the buyer’s agent
- Delivery to the buyer’s agent
- A third party, such as a warehouseman, is in possession of the
goods and consents to hold the goods for the buyer

- Sec. 32: Payment by the buyer and delivery by the seller are concurrent
conditions (both seller and buyer must be ready at the same time)

- Sec. 36(1): The place of delivery may be the seller’s place of business, his
residence, or the place where the parties know the specific goods to be in.

- Time of delivery:
- Where no time of delivery has been fixed, the seller must send the goods
within reasonable time and at a reasonable hour.
- Sec. 36(4): Delivery may be treated as ineffectual unless made at a
reasonable hour.
- If time is made of the essence, failure to deliver in accordance with the
time fixed amounts to a breach of condition which entitles the buyer to
refuse to accept the goods.
- Bowes v Shand: Where the seller agreed to ship a quantity of Madras rice
during March and/or April, but the bulk of the rice was shipped at the end
of February and only one-eighth was shipped during March, the buyers
were entitled to reject the goods.

- Sec. 36(5): Any expenses needed to put the goods into a deliverable state must
be borne by the seller.

- Delivery of wrong quantity:

- Sec. 37(1): If the seller delivers the goods at a quantity lesser than that
contracted, the buyer can reject the goods, but if the buyer accepts them,
he must then pay for the goods at the contract rate.
- A buyer loses his right to reject when he accepts the goods.
 - Acceptance of document of goods:
- If the buyer knows of the defects on the document, but still
accepts the document, the buyer has waived his right to reject.
- However, if the defects are not apparent on the face of the
document, and the buyer has accepted it, the buyer retains his
right to reject within reasonable time.
- Ganda Edible Oils v Transgrain BV: The contract of sale was for
500 metric tons of palm oil, but on 29th March, the respondents
shipped only 481.40 metric tons. The tender document stated that
the quantity was only for 481.40 metric tons. The appellant
rejected the shipment on 13th April.
Held: The appellants had a right to reject, but 15 days was an
unreasonable delay which caused them to lose such right.

- Sec. 37(2): If the seller delivers more than the quantity contracted for, the
buyer may accept the contracted quantity and reject the rest, reject the
whole quantity, or accept the whole quantity delivered and pay for the
excess goods.
- This is however, subject to the de minimis rule: Where the wrong
quantity of goods delivered is of negligible proportion when
compared to the total quantity, the buyer cannot reject the goods,
but can only claim for damages.
- Shipton, Anderson & Co v Weil Brothers & Co: The cargo of wheat agreed
to be delivered was 4950 tons, but the sellers tendered 4950 tons 55lbs
and did not charge for the surplus.
Held: The difference in quantity was so trivial, thus applying the de
minimis rule the buyers were not entitled to reject the goods.

- Sec. 37(3): If the seller delivers in addition to the contracted quantity,

goods of a different description, the buyer can reject the whole quantity
or accept the contracted goods and reject the excess.

- Delivery by instalments:
- When a contract neither makes a provision for delivery of goods by
instalments nor for a separate payment of the price as instalments are
delivered, the buyer is not bound to accept delivery by instalments.
- A seller cannot make a short delivery on the ground that he will
deliver the remaining goods at a later time.
- Behrend & Co v Produce Brokers Co: The sellers agreed to sell a quantity
of cotton seed under two separate contracts. The ship discharged a small
part of the cargo in London, and then left for Hull to discharge other
goods. 14 days later, they returned to London to discharge the remainder
of the cotton seed.
Held: The buyers were entitled to reject the later delivery and retain the
earlier one.
 - Sec. 38(2): When delivery in separate instalments is permissible under the
contract, a shortfall in quantity does not entitle the buyer to reject the
whole contract unless it is sufficiently serious as to go to the root of it.
- Regent OHG Aisentadt v Francesco of Jermyn Street: Where 62 suits were
meant to be delivered, but the seller only delivered 61 suits, the court
held that 1 suit short was not sufficiently serious as to entitle the buyer to
repudiate the contract.

- Sec. 38(2): Where delivery in instalments which are to be separately paid

for is permissible under the contract, and the seller makes no delivery, or
makes a defective delivery in respect of one or more instalments,
whether or not the buyer can reject the goods depends on the facts of
the case.
- Test: i) The ratio quantitatively which the breach bears to the
contract as a whole.
ii) The degree of probability or improbability that the breach
will be repeated.
- Maple Flock v Universal Furniture Products: The seller agreed to supply
100 tons of flock by instalments. The 16th delivery of flock was defective.
However, there was no reasonable probability that future deliveries
would be defective and four later deliveries were satisfactory. The buyers
sought to repudiate the contract.
Held: The breach amounted to no more than 1.5 tons out of 100. The
chance of the breach repeating again was negligible. The breach was
isolated and the sellers’ business was carefully conducted, thus the
possibility of it recurring was too remote.
Acceptance:
- Sec. 41: The right to examine the goods.
- Unless otherwise agreed upon, when the seller delivers the goods, the
buyer must be given a reasonable opportunity of examining the goods.
- Until and unless such reasonable opportunity has been given, the buyer is
not deemed to have accepted the goods (Bragg v Villanova)
- Usually the place of delivery is where the buyer must examine the goods.

- Sec. 42: A buyer is deemed to have accepted the goods when

- He intimates to the seller that he has accepted them
- The goods have been delivered to him and he does any act inconsistent
with the seller’s ownership of the goods
- He retains the goods after a lapse of reasonable time within intimating to
the seller that he has rejected them
- Eastern Supply v Kerr: The buyer purchased a second hand car, which was then
used by his wife for two weeks during which minor defects came to light.
Held: The buyer had not rejected the car within reasonable time, and is thus
deemed to have accepted the car. The buyer is only entitled to claim for
damages.
Remedies
Seller:
- Personal remedies against the buyer (in personam) under different grounds
- Sec. 55: The seller has a right to sue the buyer for the price of the goods if the
buyer fails to pay for the goods after the property has passed, or the price is to
be paid on a certain day regardless of the passing of property.
- “Price of the goods”: Price of the contract
- If the property has not passed, the seller’s remedy will only be an action
for damages, which is dependent on the amount of loss suffered, and not
for the price of the contract.

- Sec. 56: Where the buyer wrongfully neglects or wrongfully refuses to accept and
pay for the goods, the seller may sue him for damages for non-acceptance.

- Sec. 11, SRA: Where damages are inadequate, the seller may sue the buyer for
specific performance of the contract.
Unpaid seller:
- An unpaid seller falls within the definitions under Sec. 45(1).

- Rights of an unpaid seller against the goods (in rem):

- Sec. 46(1)(a), Lien: Right to retain possession of the goods until the whole
purchase price has been paid.
- Only enforceable against the goods for which the price is owed, not for
any other debt due by the buyer.
- The right will arise if three conditions are fulfilled:
- Seller must be an unpaid seller under Sec. 45(1)
- Goods must not be sold on credit (in debt); must be sold in cash
- Lien may be claimed where the goods have been sold on
credit, but the term of the credit has expired OR when the
buyer becomes insolvent
- Unpaid seller must be in possession of the goods, if not the right
cannot be exercised entirely
- Sec. 49: Termination of lien
- When the price is paid
- When the goods have been delivered, but have yet to reach the
buyer and the unpaid seller fails to reserve his right of disposal
- When the buyer lawfully obtains possession of the goods
- By waiver: Through a notification that lien will not be exercised

- Sec. 46(1)(b), Stoppage in transit

- In order to exercise such right, three conditions must be fulfilled:
- Seller must be an unpaid seller
- Buyer must have been declared insolvent
- Goods must be in the course of transit: In the possession of the
carrier, but has not yet reached the buyer (Sec. 51(1)
 - The right arises when the seller no longer has possession of the goods
and exists for as long as the goods are in the possession of the carrier.
- The carrier must be an independent contractor and not the seller’s agent.
- The seller may exercise the right at any time before the goods reach the
buyer (when transit ends) or before the carrier acknowledges to the
buyer that the goods are being held on his behalf.
- However, if the buyer intercepts the goods in the course of transit,
the seller can no longer exercise the right.
- If only part of the goods have been delivered to the buyer, the
right may be exercised to the remainder of the goods in transit.

- Methods to stop the goods:

- By taking actual possession of the goods
- By giving notice through any means to the carrier in possession of
the goods
- If notice is given, the carrier must redeliver the goods to,
or according to the directions of, the seller
- The expenses must be borne by the seller
- If goods have reached the buyer through any means, the
right cannot be exercised

- Sec. 46(1)(c), Right of resale

- Goods which have been retained by the seller may be resold
- Where the unpaid seller may resell the goods to a second buyer, who
then obtains a good title, and the original buyer’s right to the goods is
defeated.
- Circumstances in which the unpaid seller may resell the goods:
- Where the goods are perishable in nature, a notice to resell is
unnecessary.
- Non-perishable goods do not cause the right to exist
automatically: The unpaid seller must give a notice to
resell
- Where the unpaid seller gives a notice of his intention to resell if
the buyer does not, within reasonable time, pay the price, and the
buyer does not do so.
- Where in the contract, the seller has reserved his right to dispose
the goods if the buyer does not pay, and the buyer does not do so,
the unpaid seller may resell the goods without giving a notice.
- Where the right to dispose is not stated in the contract,
the unpaid seller must give a notice to resell the goods.

- Sec. 54: Where the seller resells the goods under the 2nd or 3rd situation
- If the goods are sold at a higher price, the seller can retain any
profit made
- If the goods are sold at a lower price, the seller is entitled to claim
for damages for the loss suffered as a result of the buyer’s breach
Buyer:
- A buyer’s right to reject: When the seller has breached the contract, the buyer is
entitled to repudiate the contract and reject the goods.
- However, a buyer’s right to reject must be exercised within reasonable
time.
- ‘Reasonable time’: When the defect manifests itself and comes to the
knowledge of the buyer, the right to reject must immediately be
exercised.
- As long as the buyer is unaware of the defects, it is still considered
to be ‘within reasonable time’.
- A buyer will lose his right to reject if the buyer accepts the goods despite the
breach by
- Treating the goods as his own
- Selling the goods to another person
- In such circumstances, the buyer may only claim for damages.
- MG Sheth v Lam Thye Co: Where the seller had breach Sec. 15, but the
buyer took delivery of the goods, the buyer was only entitled to a claim
for damages and could not terminate the contract.
- The buyer can only repudiate the contract if the seller was in breach of a
condition.
- Accepting the goods amounts to treating the breach of condition
as a breach of warranty.

- Other remedies:
- Sec. 57: Where the seller wrongfully neglect or refuses to deliver the
goods to the buyer, the buyer may sue the seller for damages for non-
delivery (provided that the property has not passed to the buyer)
- If the property has passed, the buyer may have a claim in
conversion under the law of tort, as well as for damages under
Sec. 57.

- Sec. 58: In a contract for delivery of specific goods, the buyer may sue the
seller for specific performance.

- Sec. 59: Where there is a breach of warranty by the seller OR where the
buyer elects to treat the breach of condition as a breach of warranty, the
buyer may sue the seller for damages.