Friday, April 9, 2010

Sales of good

Exercise

1. What is ‘sale of goods’ contract?

ANSWER
 A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in good to the buyer for a price (s.4(1)).
 In other words, a sale occurs when the ownership or property in goods passes to the buyer.


2. Discuss the elements necessary to exist in a sale of goods contract.

ANSWER
Goods which form the subject of a contract of sale may either be existing goods or future goods under section 6, Sale of goods Act 1957. Existing goods are goods are goods already owned or possessed by the seller and may be either specified or agreed upon at the time a contract of sale is made.
Elements necessary to exist in a sale of goods contract are specific goods and unascertained goods. Specific goods means goods identified and agreed upon at the time a contract of sale is made. For example, if Ali agree to buy Mahmud’s car bearing registering number WPP 888 this is contract for the sale of specific goods. On other hand, unascertained goods are those identified by description only. An example is Ah Ling buys from Muthu two Rolex gold watches, the goods would be ascertained goods only when they have been appropriate to the contract, as when two Rolex gold watches have been sat aside for Ah Ling in accordance with the contract.


3. What is ‘goods’ under the SOGA?

ANSWER
Every kind of movable property other than actionable 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


4. Explain and illustrate the difference between movable and immovable property?

ANSWER


5. Price in an important feature in a sale of goods contract. How is price being fixed?

ANSWER
A contract of sale is made by an offer to buy and sell goods at a price and by the acceptance of such an offer: section 5(1), sales of goods Act 1957.The contract may provide for the immediate delivery of the goods or the immediate payments of the price or both. Delivery or payments may even be by installments: Section 5(1), sale of goods Act 1957. Price means the money consideration for the sale of goods. Price may be fixed in the following manner:
1) It may be fixed by the contract.
2) It may be left to be fixed in a manner agreed in the contract.
3) It may determined by the course of dealing between the parties.
4) Where the price is not determined in any one of the aforesaid ways, the
Buyer must pay a reasonable price.


6. What is ‘term of contract’? Who determines it?

ANSWER
Terms of contract are either express or implied. There are some implied terms under the SOGA 1957 for the purpose of protecting the consumers. Terms of contract can be in the form of ‘CONDITION’ or ‘WARRANTY’ – s12 (1)


7. What is ‘warranty’? What rights may arise if warranty is breached?

ANSWER
A 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 : section 12(3),sale of goods act 1957.


8. What is ‘condition’? What rights may arise if warranty is breached?

ANSWER
A 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: Section 12(2), Sale of goods act 1957.As a general rule, a breach of condition entitles the innocents party to repudiate the contract. However, in the following circumstances, the innocents’ party cannot repudiate the contract but can merely claim damages:


a. where the buyer waives the condition;
b. where the buyer elects to treat the breach of condition as a breach of warranty and claim damages only;
c. where the contract of sale is not severable and the buyer has accepted the goods or part thereof, the breach of any condition must be accepted as a breach of warranty unless otherwise provided in the contract;
d. Where the contract is for specific goods the property in which has passed to the buyer, the breach of any condition must be accepted as a breach of warranty unless otherwise provided in the contract.



9. Who determine whether a term of contract is warranty or condition?

ANSWER
The parties involved are Seller and Buyer. However, the contract is made by an offer to buy or sell goods at a price + acceptance of such an offer (s.5(1)). Meanwhile, the offer & acceptance may be made in writing or/and by word of mouth, or implied from conduct (s.5 (2))

10. What is meant by ‘time is of essence in the contract’?

ANSWER
Stipulations as to time of payments are not deemed to be of the essence with respect to the contract of sale: Section 11, Sale of goods Act 1957. This means that unless the contract specifically states that the time of payments shall be the essence of the contract, if a buyer fails to pay by an agreed date, it does not entitles the seller to repudiate the contract.


11. Terms of contract can be either express or implied, explain.

ANSWER
An implied warranty or condition as to quality or fitness for a particular purpose may be annexed by the usage of trade.
An express warranty or condition does not negative a warranty or condition implied by this Act unless inconsistent there with.









12. SOGA imposes certain implied terms in a sale of goods contract, what is the purpose of this? Can parties to contract modify those implied terms?

ANSWER

These implied terms will only apply in so long the parties have not excluded or modified them.




13. It is an implied term that a seller must have had a title over the goods sold. Explain and illustrate.

ANSWER
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.
As a illustrate, Marry sold to jean a piano and jean paid Mary the purchase price. After one year, Jean discovered that the piano actually belonged to john and that Mary was actually looking after john possession and house while john was overseas. Jean can recover the price in full even though she had used the piano for one year.




14. It is an implied term that a seller must have released the goods from any charges or encumbrances. Explain and illustrate.

ANSWER

In a contract of sale, unless the circumstances of the contract are such as to show a different intention, there is an implied warranty that the goods shall be free from any charge or encumbrance in favor of any third party not declared or known to the buyer before or at the time when the contract is made.











15. What can buyer do if he/she finds the goods do not match with the description or sample earlier shown?

ANSWER
Where there is a contract for the sale of goods by description, there is an implied condition that the goods shall correspond with the description. However, where the sale is by sample as well as by description, it is not sufficient that the bulk of the goods correspond with the sample if the goods do not also correspond with the description.



16. It is an implied term that a seller must provide a good that is fit for the purpose wanted by the buyers. What are the requirements to have this implied term applicable?

ANSWER
In short, as general rule is no implied rule warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale. There two exceptions to this rule are goods must be reasonably fit for purpose for which the buyer wants them; Goods must be of merchantability quality. Where the buyer, express or implied, makes known to the seller the particular purpose for which the goods are required so as to show that he relies on the seller’s skill or judgment, and, the goods are of a description which is in the course of the seller’s business to supply, there is an implied condition that the goods shall reasonably fit for such purpose.



17. What is meant by ‘merchantable quality’?

ANSWER

Merchantable quality which means subject to the provisions of this Act and of any other law for the time being in force, there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale, except. Besides that, where goods are bought by description from a seller who deals in goods of that description… there is an implied condition that the goods shall be of merchantable quality.










18. What can buyer do if he/she finds the goods must be correspond with the sample shown?

ANSWER

The bulk of the goods must correspond with the sample. If the bulk is totally inferior to the sample, the buyer may effect to reject all the goods. However, if the bulk is only party inferior to the sample, the buyer may either elect to accept all the goods and claim damages for those which are inferior or reject all the goods and sue for damages. The buyer does not have the alternative to accept part of the bulk and reject the rest if the contract of sale is not severable.


19. Distinguish ‘property’ from ‘possession’.

ANSWER
In a sale of goods contract, the two must pass from the seller to the buyer. The passing of property determines who to bear the risks of such property. Only when the property passes to the buyer, the risk will also pass to him. Irrespective whether or not the good has been physically delivered to the buyer.
(sec. 26) Risk prima facie passes with property where by unless otherwise agreed, the goods remain at the seller’s risk until the property therein is transferred to the buyer. But when the property therein is transferred to the buyer, the goods are the buyer’s risk whether delivery has been made or not. Provided that where delivery has been delayed through the fault of either the buyer or seller, the goods are at the risk of the party in fault as regards any loss which might not have occurred but for such fault.
Unless the unascertained goods which the property passes to the buyer only after the goods are ascertained (s.18).E.g. when A buys from B the latest Honda car to be consigned from Japan. Only when B has set aside the car for A, the property passes to A. Besides that ascertained/specific goods where the property in goods passes to the buyer at such time as the parties to the contract intend it to be transferred (s.19) mean while this intention can be identified by looking at: TERM of contract and/or the CONDUCT of parties & CIRCUMSTANCES of the case.


20. What is meant by the rule of ‘nemo dat quod non habet’?

ANSWER
Section 27 of the sale of goods Act 1957 codifies the ‘nemo dat quod non habet’ which means ‘no one can give a better title than he has himself’. This means that if goods are bought from a person who is not owner’s authority, the buyer does not acquire any title Lim chui lai v. Zeno Ltd and Ng Ngat Siang v. Arab Malaysian Finance bhd& Anor





21. In which section under SOGA is the above rule provided?

ANSWER
Under section 2 of the SOGA


22. Is there any exception(s) to the above rule?

ANSWER

YES…
a. estoppel
b. Sale by a mercantile agents
c. Sale by one of joint owners
d. Sale under a voidable title
e. Sale by a smaller in possession after sale
f. Sale by a buyer in possession

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