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Law of Sale of Goods (Part I)
By the end of this topic, you should be able to: Define the meaning of goods; Describe the classification of goods; Differentiate a contract of sale and an agreement to sell; Explain the implied terms in a contract of sale of goods; and Identify the importance of transfer of property in the goods.
The Sale of Goods Act 1957 (Revised 1989) is the statute applicable to sale of goods in Peninsular Malaysia. For Sabah and Sarawak, the law of sale of goods is governed by Section 5(2) of the Civil Law Act 1956. It provides that: „The law to be administered shall be the same as would be administered in England in the like case at the corresponding period.‰ In effect, Sabah and Sarawak continue to apply principles of English law relating to the sale of goods. The Sale of Goods Act 1957 was enacted based on the English Sale of Goods Act 1893 (which was replaced by the Sale of Goods Act 1979). The Sale of Goods Act 1957 applies to contracts for the sale of all types of goods including second-hand goods, and to commercial and private sales, wholesale and retail. The general law of contract will continue to apply to contracts for the sale of goods as Section 3 of the Sale of Goods Act 1957 expressly provides for the continual application to contracts for the sale of goods of the
LAW OF SALE OF GOODS (PART I)
provisions of the Contracts Act 1950 „in so far as they are not inconsistent with the express provision of this Act‰.
DEFINITION OF GOODS
Goods under Section 2 of the Sale of Goods Act, 1957 means „every kind of movable property other than actionable claims and money and includes stocks and shares, growing crops, grass, and things attached to or forming part of the land which agreed to be severed before sale or under the contract of sale.‰ In Section 6 of the Sale of Goods Act 1957, goods which form the subject of a contract of sale may be either existing goods or future goods. Existing goods are goods already owned or possessed by the seller and may comprise specific or unascertained goods. Goods are specific if they are identified and agreed upon at the time a contract of sale is made. Unascertained goods are goods not identified and agreed upon at the time a contract of sale is made. Ascertained goods are those unascertained goods which have been identified and appropriated to the contract after the contract has been made. Future goods consist of goods to be manufactured or produced or acquired by the seller after the making of the contract of sale.
CONTRACT OF SALE
A contract of sale is the transfer of ownership of the goods to the buyer for a money consideration. Section 4(1) of the Sale of Goods Act 1957 defines a contract of sale of goods as: „A contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price.‰ A contract of sale includes a sale and an agreement to sell. What is the difference between a sale and an agreement to sell? According to Section 4(3) of the Sale of Goods Act 1957: „Where under a contract of sale the property in the goods is transferred from the seller to the buyer, the contract is called a sale, but where the transfer of the
LAW OF SALE OF GOODS (PART I)
property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell.‰ Under Section 4(4): „An 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.‰ The above provisions distinguished a sale from an agreement to sell in terms of ownership or „the property in the goods‰. A contract is a sale when the ownership or the property in the goods passes to the buyer and it is an agreement to sell where the transfer of the property in the goods is to take...