SALE OF GOODS

What you will learn?

• Introduction
• Applicable Law
• Goods
• Formation of Contract of Sale
• Terms of Contract of Sale – Implied Terms
• Transfer of Title – nemo dat quod non habet
rule
• Delivery and Acceptance
• Remedies
 Introduction
• The most common type of contract
• Types of contract of sale of goods:
– Commercial sales; transaction between a seller and
a commercial buyer for business purposes. (Sale of
Goods Act 1957 - SOGA)

– Consumer sales: transaction between a seller and an

individual for personal, domestic or household
purposes. (Consumer Protection Act 1999 - CPA)
• Contracts for the sale of goods are basically
similar to other contracts.

• Principles of law of contract will be applied in

the contracts for the sale of goods.
 Applicable law

• Sale Of Goods Act 1957 (SOGA)

• SOGA is almost identical to the English Act

 Meaning of goods
Section 2: goods may refer to:

every kind of movable property other than actionable

可控告的 claims and money;
and includes:
i. stock and shares,
ii. growing crops,
iii. grass, and
iv. things attached to or forming part of the land
which are agreed to be severed before sale or
under the contract of sale.
• Meaning: goods under SOGA only refers to
movable property.

Thus exclude land, claim for debt or money or

intellectual property.

But it may include human blood or organs.

 Types of Goods
Existing goods Future goods
already owned and to be manufactured or produced or
possessed by the seller acquired by the seller after the making
of contract of sale (agreement to sell)

Specified
seen and identified by Specified
buyer
seen and identified by buyer

Unspecified
identified through description only
Unspecified
identified through description
only
 Contract of Sale of Goods
• Definition:
contract whereby the seller transfers or agrees to transfer
the property in goods to the buyer for a price

• When the contract involves existing goods, the contract is

called sale

• When the contract involves future goods, the contract is

called agreement to sell

• S.4(4) SOGA – an agreement to sell becomes a sale when

the time elapses 流逝 or the conditions are fulfilled subject
to which the property in the goods is to be transferred.
 Formation of contract(S.5)
• A contract of sale is made by an offer to buy or sell goods for
a price and by the acceptance of such an offer.

• Contract may state for the:

 immediate delivery of the goods but payment made later, or

 immediate payment of the price but delivery made later, or

 both payment and delivery made immediately, or

 Delivery and payment of the price by installments 分期付款

(certainty and consideration) See section 2 of the SOGA
• Formalities 手续:
contract may be made:
 in writing, or
 orally, or
 partly in writing and partly by word of mouth, or
 implied from the conduct of the parties. (e.g.
when a customer picks up goods from the shelf
and pays the price.)
 Ascertainment 探查 of price
• Section 9 & 10
• Price usually in the form of money
• Price may be fixed in the following manner:
– Fixed by the contract
– Fixed in a manner agreed in the contract
(eg. By a third party)
– Determined by the course of dealing between the parties.
– Reasonable price
(It is a question of fact, depends on the circumstances of
the case)
 Capacity to contract
• Similar with the requirement of the law of
contract as mentioned in the Contracts Act
1950.

• What ????
(can you recall what have you learned under law
of contract)
 Terms of the contract-S.12

Condition
• essential to the contract-give rise to a right
to repudiate 拒绝 the contract

Warranty
• Collateral 附属 to the contract-give rise to
right to claim for damages and not to reject
the goods or repudiate the contract
• Whether a stipulation 契约 is a condition
or warranty depends on the construction
of the contracts.

E.g. the time of payment shall be the

essence of the contract if it is stipulated 规
定 in the contract, thus failure to comply
may entitled the other party to repudiate
the contract.
 Effect of breach 违法 of condition
• General rule:
Innocent party has the right to treat the contract as
repudiated
• Exceptions: S.13
(where, he may only claim for damages)
i. the buyer waives 放弃 the condition;
ii. the buyer elect to treat the breach of condition as
breach of warranty;
iii. Contract of sale is not severable and the buyer has
accepted the goods / parts of the goods.
Unless the contract provides otherwise
 as to time
S 11
If through sample, as to title
goods must
correspond to 相当
于 the sample S14
quality
S.17
Implied
terms in
be of merchantable 适销
SOGA correspond with the
的 quality description-
S.16(1)(b) S 15

fit for intended purpose

S16(1)(a)
 Implied term as to time (S11)
• The time of payment is not essential of the
contract unless clearly stated in a contract of
sale.
• e.g: when the buyer fails to make payment
within the stipulated period, the seller cannot
automatically terminate the contract.
• Nevertheless, most of the contract of sale of
goods are emphasized on 强调 time and clearly
mention it in the contract. Thus in this
situation, time will be considered as a basic of
the contract.
 Implied term as to title (S14)
• The sellers must have legal title 权利证书 to
the goods when the goods are transferred to
the buyer
(so that the buyer will be able to utilise the
goods that he purchased) - S.14(a) – Rowland v
Divall

• Implied term that the buyer to enjoy quiet

possession 独自享用权 i.e no interference 干涉
from third party - S.14(b)
• Implied term that the goods free from any
encumbrances 产权负担 and charges that the
buyer do not know – S.14(c)
eg: buying a house tt has been charged to the
bank only. The house should not be subjected
to any other encumbrances unless have
earlier notice
 Implied conditions that goods correspond with
description (S15)
• The goods sold by description must conform with the
description made by the seller.

• This is applicable 适用于 to future and unascertained 未

确定 goods and when buyer has not seen the goods eg by
catalogue. Nowadays: purchase through website

Case: Nagurdas vs Mitsui Bussan Kaisha Ltd

purchase of flour by buyer bearing the well-known
trademark. Further was ordered and the same quality
flour was supplied but not bear the same trademark as
before. Held: the seller did not comply with the
description.
 Implied conditions as to fitness for particular
purpose and of merchantable quality (S16)

• General Rule:
principle of caveat emptor 货们出货概不退还 i.e the buyer
must be very careful in making purchases. If not he must
bear 承受 the consequences 后果. Therefore actually, there
is no implied condition as to fitness for particular purpose
and of merchantable quality.

• However, there are implied condition in the following

circumstances:
 (1) Fitness for particular purpose:
• S.16(1)(a) --- 4 conditions required:
(i) The buyer made known to the seller the
purpose for which the good are required
(expressly or impliedly) – where the purpose is
not mentioned, the goods are bought for the
normal purpose.
Eg: bread – to eat
So, when special purpose, must be informed to
the seller. If not, the seller will not be liable.
Case: Griffith vs Peter Conway
(ii) The buyer rely on the skills or judgment of the
seller
- the disclosure 信息披露 of purpose can be
considered as reliance 依靠 on the skill of the
seller

(iii) The goods are in the course of the seller’s

business
(iv) If the goods are specific, not bought under
patent or trade name.
- means that if the buyer bought the goods under
specific name, then the seller will not be liable
有 责 任 if the goods not correspond with
particular purpose.
eg: the seller bought panadol – of course for
headache. If the panadol does not release
headache, then cannot sue the seller.
 (2) Merchantable quality
• S.16(1)(b) Implied condition that goods sold are
with merchantable quality when the goods are
bought:
(i) by description
(ii) bought from a seller who deals with goods of
such description

• How to determine that goods is of

merchantable quality?
– it is a test of a reasonable man.
 The goods are fit for 合适 particular use they
were sold. If defective 有 缺 陷 , they are
unmerchantable 不适合出售的.

 Eg: A pair of shoes, usually can be used for

several times. But if in the first time already
cannot be used, then unmerchantable.

 Usually quality may also be known by the price. If

it can be sell by its usual/ normal price, then can
be considered as of merchantable quality
• In S.16(1)(b), there is exception when the
buyer already examine the goods prior to 之前
purchase and due to the examination, the
defects 缺陷 can be seen.

• In this case, the seller will not be liable

 Implied condition when purchase the goods by
sample – S.17
• 3 Conditions of S.17:
1) The quality of the goods should be similar with the
quality in the sample
2) A buyer has a reasonable opportunity to compare the
goods with the sample before accepting it.
3) The goods must be free from defects which would be
apparent on reasonable examination of the sample
• If not fulfilled all these 3 elements, the buyer may
reject the goods
 Exclusion of Implied Terms
• S.62 allows the exclusion of the implied terms
by express agreement.
 Transfer of Title 财权转移
• The seller must have title on the goods so
that he can transfer a good title to the
seller

• If no title then he cannot transfer

• This is known by the nemo dat quod non

habet 无人能给自己没有的 rule
 Nemo dat quod non habet rule
• Meaning: no one can transfer a better title than
he himself have

• S.27: where goods are sold by a person who is not

the owner, and does not sell them under authority
or with the consent of the owner, the buyer
acquires 取得 no better title to the goods than the
seller has
 Exception to the nemo dat quod non
habet rule:
In the following cases, the seller can transfer a good title to
a buyer:
1) Estoppel (S.27)
2) Sale by a mercantile agent 商业代理 ((proviso to S.27)
3) Sale by one of joint owners 共同业主 (S.28)
4) Sale under a voidable 失效 contract (S.29)
5) Sale by a seller in possession after sale S.30(1))
6) Sale by a buyer in possession after sale (S.30(2))
 (1) Estoppel
• S.27
• The owner by his conduct is precluded from denying 避免
否认 the authority of the seller to sell
• It appears to the buyer that the owner by his conduct
gives his authority to the seller to sell the goods and the
buyer relies on that
• The buyer who takes in good faith 诚意 and for value will
have good title
• Case: NZ Securities vs Wrightcars Ltd
 (2) Sale by a mercantile agent
• Proviso to S.27 – agent according to S.2 of SOGA
• 4 conditions to be fulfilled:
(i) At the time of sale, the agent must possess the
goods or title of the goods
(ii) The possession must be with the consent of
owner
(iii) The disposition was made in the ordinary course
of business of the agent
(iv) Buyer must act in good faith and no knowledge
of the seller’s lack of title
 (3) Sale by one of joint owners
• S.28
• The requirements:
(i) In possession of the goods with consent of
the other owner(s)
(ii) The buyer is in good faith and no knowledge
of the seller’s lack of title
 (4) Sale under a voidable contract
• S.29
• Voidable contract???
(5) Sale by a seller in possession after sale
• S.30(1)
• The seller who already sold the goods but still
possess the goods/ document of title can pass
a good title to innocent buyer

• The new buyer get a title whereas the original

buyer loses his title. He may claim remedy
from the seller.
(6) Sale by a buyer in possession after sale

• S.30(2)
• When the buyer has in his possession (with the
sellers consent) the goods or document of title,
then he may transfer a good title to the other
buyer
• The new buyer must in good faith and of no
knowledge that the buyer (who sell the good to
him) has no title
 Mode of delivery
• S.33: as agreed by the parties

• S.32: manner of delivery of goods and

payment of the purchased price should be
agreed by the parties.
 Time and venue of delivery
• S.36(1): 3 conditions to determine the venue of
delivery of goods;
– If the goods available at the venue of the sale, the
delivery to be made at the same place
– If the goods is in another place, it shall be delivered at
the place where the goods are stored
– If the good not yet in existence, it shall be delivered at
the place where the goods are manufactured or
produced.
• In absence of any clause on the time of
delivery, the goods shall be delivered within a
reasonable period.(s.36(2))
 Delivery by installments
• S.38: only when it is agreed by the buyer
 Acceptance of the goods
• S.41: buyer has a right to inspect the goods
before accepting it

• The seller must give a reasonable opportunity

to the buyer to inspect the goods in order to
ascertain 查 明 that the goods delivered
conform with the contract.
• Buyer is presumed 推测 to have accepted the
delivery if:

– Indirectly indicated to the seller that he accepts it;

– Assume his authority to deal with the goods

– still keeps the goods and does not take any steps
to redeliver it to the seller.
 Remedies for the breach of contract

• Breach by the buyer:

Rights of seller to make a claim for;
– Damages where the buyer fails to take delivery for any
loss and reasonable charge for the care and custody of
the goods (s.44)

– Price of the goods when the buyer fails to pay for the
goods. (s.55)

– Damages in the case where buyer fails to accept the

goods (s.56)
• Breach by seller:
• Right of buyer to make a claim for:

– Damages for non delivery of goods (s.57)

– Specific performance to deliver the goods (s.58)

– Reject the goods if there is a breach of warranty (s.59)

– Action in tort i.e. conversion

 Thank You
Any Question?