Introduction To Sale Of Goods 1

INTRODUCTION TO SALE OF GOODS Sales of goods is a type of contract. Its is one of major activities involve in commercial world.

The "sale of goods" as defined by section 4 (1) of Sale of Goods Act 1957 is a contract whereby the seller transfers or agrees to transfer the property in the goods to the buyer for a price.

The aim of sale of goods is for the buyer to get the ownership over the goods and for the seller to get the payment of price of the goods.

Definition of Goods Section 2 of Sale of Goods Act 1957: 

"Goods is defined as moveable 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 contract of sale."

From the above definition "goods" may refer to 5 things: 1. 2. 3. 4. 5.

Moveable property Stock and shares Growing crops Grass Thing attached to or forming part of the land which are agreed to be severed.

There are also things not included under this definition. In other words, these listed things are not considered as goods under the Sale of Goods Act 1957 and commercial contract on sale and purchase of these things is not governed by the law of sale of goods. They are: 1. Immoveable property - such as land, buildings and houses 2. Actionable claims - the right to sue someone for any reason 3. Money

Differences Between Contract of Sale of Goods and Agreement to Sell

A CONTRACT OF SALE

AN AGREEMENT TO SELL

Section 4(1) of Sale of Goods act 1957

Section 4(3) of Sale of Goods act 1957

The ownership in the goods passes to the buyer at the time of the sale

The ownership in the goods passes to the buyer in future

If buyer breaches the contract by falling to pay, the seller can sue for the price.

If buyer fails to accept the goods when the time is come, the seller may sue for unliquidated damages

Types of Goods

Types of Goods

Ascertained

Ascertained

Unascertained

Unascertained

Future goods Existing goods Goods already owned or possessed by the seller

Ascertained existing goods Existing goods identified and agreed upon at the time of the contract. Example: Waheeda agrees to sell to Beinda 2 units out of 30 units of her computer, Dell PRO 6110 serial no my111000 and my 111001

Unascertained existing goods Existing goods not identified and agreed upon at the time of the contract and appropriated after the contract. Example: Waheeda agrees to sell to Beinda 2 units out of 30 units of her computer, Dell PRO 6110

Goods to be manufactured or produced or acquired by the seller after the making of the contract of sale.

Ascertained future goods Goods in existence but not yet acquired or possessed by the seller. Example: Ali would like to sell his Proton Wira, plate number JDC 2020 to Ah Chong. Ah Chong agrees to sell the car to muthu after he acquires it from Ali next month.

Unascertained future goods Goods yet to be manufactured. Example: Syarikat Kuan Lee Motor Sdn Bhd agrees to sell to Nora 2 units Honda City car yet to be manufactured in Alor Gajah, Melaka.

Privity of Contract

In a contract of sale, the persons bound by the contract are the seller and the buyer themselves. It means, only the seller and buyer can sue and be sued for any breach of terms of contract of sale. Third party has no right to take legal action for breach of contract of sale this is because there is no contractual relationship between the third party and the seller or the buyer.

However, the third party is still available to take legal action to claim remedy under the law of tort for any loss or injury suffered by him resulting from the contract entered by the buyer and seller. In the case of DONOGUE v STEVENSON, the plaintiff became ill after drinking a bottle of ginger beer. It was proven that the ginger beer contained a decomposed snail in the opaque bottle. The ginger beer was purchased by the plaintiff’s friend. The plaintiff had to bring legal action under the law of tort and not contract because there is no privity of contract between the plaintiff and the manufacturer. The manufacturer of the drink was liable to pay damages to the plaintiff for negligence.