Sale Of Goods In Malaysia

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 states1. 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 English statue applied is the Sale of Goods Act 1979, which is a revision of the Sales of Goods Act 1893.As a result Sabah and Sarawak are bound by statute to continue to apply principles of English law relating to the sale of goods. The contrast between the laws West and East Malaysia has the potential to raise unwarranted legal problems, even though English statue is the principle source of law for both parts of Malaysia.

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.

Buyer 

a person who buys or agrees to buy goods.

Seller 

a person who sells or agrees to sell goods.

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.

specific goods 

means goods identified and agreed upon at the time a contract of sale is made; and any expression used but not defined in this Act which is defined in the Contracts Act 1950 [Act 136], shall have the meaning assigned to it in that Act.

Future goods 

means goods to be manufacture or produced or acquired by the seller after the making of the contract of sale.

Implied Terms Of The Sale Of Goods Act, 1957

The statutory of implied terms main function is to protect the rights to every buyer or consumer. These statutory implied terms are in Section 14- 17 of the Sales of Goods Act, 1957 and are the implied terms in every contract of sale of goods.

Section 14 of the SOGA is divided into three parts. The first part states that 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. This in short means that it is 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 (Razman and Shukor, 2001). The next part 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. Paragraph c, the last part of Section 14 of SOGA, states that 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. If the seller fails to comply, the buyer is entitled to claim for damages since the matter is being constituted as an implied warranty.

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. 

In this case, the party’s previous contracts entailed the sale goods being flour, which was sold in bags bearing a recognized trademark. Later the previous contract description of flour was used to order and flour of identical quality was delivered but, short of the same well-known trade mark. The court held that the goods did not comply with the description.

Section 16 of SOGA, in a nutshell 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. The last section of implied terms is Section 17 of SOGA, and in summary points out that, 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. If the seller fails to comply, the buyer is entitled to reject the contract since the matter is being constituted as an implied condition.

Transfer of Property and Risks

The property in the goods is said, to be transferred from the seller to the buyer when the latter acquires the proprietary rights over the goods and the obligations linked thereto. 'Property in Goods' which means the ownership of goods, is different from ' possession of goods' which means the physical custody or control of the goods.

The transfer of property in the goods from the seller to the buyer is the essence of a contract of sale. Therefore, the moment when the property in goods passes from the seller to the buyer is significant for following reasons:

a.  Ownership 

b.  Risk follows ownership -The general rule is that the risk follows the ownership, irrespective of whether the delivery has been made or not. If the goods are damaged or destroyed, the loss shall be borne by the person who was the owner of the goods at the time of damage or destruction. Thus the risk of loss prima facie is in the person in whom the property is.

c.  Action Against Third parties 

d.  Suit for Price - The seller can sue the buyer for the price, unless otherwise agreed, only after the gods have become the property of the buyer.

e.  Insolvency - insolvency of either the seller or the buyer, the question whether the goods can be taken over by the Official Receiver or Assignee, will depend on whether the property in goods is with the party who has become insolvent.

Essentials for Transfer of Property 

The two essentials requirements for transfer of property in the goods are:

     Goods must be ascertained

Unless the goods are ascertained, they (or the property therein) cannot pass from the seller to the buyer. Thus, where there is a contract for the sale of ascertained goods, no property in the goods is transferred to the buyer unless and until the goods are ascertained.

     Intention to PASS Property in Goods must be there

In a sale of specific or ascertained goods the property in them is transferred to the buyer at such time as the parties to the contract intend it to be regard shall be had to the terms of the contract, the conduct of the parties and the circumstances of the case.