Sale of Goods and Services

The Sale of Good Act 1957 (SOGA herein forth) was enacted in 1957 and the statue was applicable to sale of goods in peninsular Malaysia (East Malaysia), excluding the states of Penang and Malacca. The Act was later revised in 1990 and it includes both states together. The states of Sabah and Sarawak (West Malaysia) are not governed by this act instead they are governed by section 5(2) of the Civil Law Act of 1956, which provides, among others, that the law to be administered in England in the like case at the correspondent period.The general principles that relate to contracts, for example, offer, acceptance, consideration and many more where it apply to a contract of sale of goods and the parties are free to agree on the terms which will govern their relationship.


The Act contains definitions or interpretations which clarify what the wording used in it refers to and the context. Below are some of the definitions of key terms in the SOGA :


(a) What is contract for the sale of goods?


Section 4(1) of SOGA 1957 stated that “A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price.” Price here means the money consideration for a sale of goods. Section 4 also states that the contract of sale may be absolute or conditional. The difference between the two is that an absolute contract of sale entails a seller transferring property in goods to the buyer, and the contract is known as a sale, where as in a conditional contract of sale the seller consents to transfer the property in goods to the buyer for a price pending the fulfillment of certain conditions and according to section 4 of SOGA the contract is known as, agreement to sell.


(b) Definition of Goods


Section 2 of SOGA 1957 explain “Goods” means 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. Goods can be classified into specific goods, future goods and contingent goods.


(c) Formation of the concept


Section 5 of the SOGA deals with the formation of, the contract of sale of goods. For the contract of sale of goods to exist, there has to be an offer to buy or an offer to sell for a price. Furthermore an acceptance of the offer has to follow and ultimately the contract may provide for immediate delivery or immediate payment or both or installments delivery or installments payment or both. The agreement to form a contract between the buyer and the seller may be in writing or partly in writing and partly by word of mouth or by word of mouth or may be implied from the conduct of the parties.


(d) Terms of a contract of Sale of Goods


The terms of a contract of sale of goods are based on section 12 of the SOGA and can be split into two parts which includes condition and warranty. Condition is the fundamental term of the contract, and the breach of the condition gives the injured party the right to reject the contract. Warranty refers to stipulation collateral to the main purpose of the contract, the breach of which gives the injured party the right to claim for damages but not to reject the goods and treat the contract as repudiated. According to section 13 of SOGA, the injured party can treat a breach of condition as a breach of warranty, which means that the injured party is entitled to claim for damages but not reject the contract. The case in point is the case of Associated Metal Smelters Ltd v. Tham Cheow Toh(1972)


(e) Implied terms of the Sale of Goods Act 1957


The main function of the statutory of implied terms is to protect the rights the buyer. These statutory implied terms are in Section 14 - 17 of the Sales of Goods Act 1957 as below :


Section 14 of the SOGA is divided into three parts :


(a) an implied condition to the seller to ensure that the buyer will enjoy the ownership as well as possession and use of the goods, failure to do so gives the buyer the right to reject the contract as the issue constitutes an implied condition
(b) states that there is an implied warranty that the buyer shall enjoy quit possession of the goods, and if the seller fails to comply, the buyer is entitled to claim for damages since the matter is being constituted as an implied warranty.
(c) 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

Section 15 of the SOGA is on the sale of goods by description. It states that 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; and, if the sale is by sample as well as by description, it is not sufficient that the bulk of the goods corresponds with the sample if the goods do not also correspond with the description as expressed in Purshotumdas and Co. v Mitsui Bussan Kaisha Ltd. (1911).

Section 16 of SOGA says that there is no implied condition or warranty as to the quality or fitness for any particular purpose of goods, unless the buyer requests the goods be reasonable for a purpose and the goods be of merchantable quality.


Based on Section 17 of SOGA, when dealing with goods by sample, it is required by the seller to ensure that the bulk of the goods must correspond with the sample.


(f) Nemo dat quod non habet Rule

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 as put forward in the case of Lim Chui Lai v. Zeno Ltd and Ng Ngat Siang v. Arab Malaysian Finance BHD & Anor. However there exception for this rule where it is exempted when :

• estoppel 
• sale by a mercantile agents 
• sale by one of joint owners 
• sale under a voidable title 
• sale by a smaller in possession after sale 
• sale by a buyer in possession 

Transfer of Ownership

A contract of sale of goods involves transfer of ownership from the seller to the buyer. Transfer of ownership or property in goods is in fact the main object of making a contract of sale. It is important to know the precise moment of time at which the property in goods passes from the seller to the buyer because In case of destruction of or damage to the goods, it is the owner who has to bear the loss because the general rule is ‘res perit domino’ risk follows ownership or whosoever is the owner must bear the loss.


Rules regarding transfer of ownership :

• Goods must be ascertained 
• Property passes when intended to pass 

Remedies of the buyer and seller


The Sale of Goods Act gives the following remedies to aseller and buyer for a breach of a contract of sale:

Seller’s suits :

• Suit for price(Sec. 55) 
• Suit for damages for non-acceptance of the goods(Sec.56) 
• Suit for interest 

Buyer's suits :

• Suit for damages for non-delivery of the goods(Sec.57) 
• Suit for specific performance(Sec.58) 
• Suit for breach of warranty(Sec.59) 
• Suit for interest