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Law of Sale of Goods

Business Law
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LAW OF SALE OF GOODS

Sale of Goods Act only applies to sale of goods
(Eg: Does not apply if pertaining to contract of hire / lease/ gift)
Goods: Not sale of land, houses, shares or the provision of services.

Pertaining to the SGA, there must be a sale and goods must be involved. It can also apply
to web-based transactions, provided both the buyer and seller are based in Singapore, or other
countries where Singapore Law governs the transaction.

IMPLIED TERMS
Imposes various obligations on the seller. Might have another obligations such as Consumer
Protectino (Fair Trading) Act. SOGA are automatically implied into every contract of sale.

SECTION 12 GIVE THE GOOD TITLE, OWNERSHIP IS PASS TO THE BUYER
SECTION 12(1):
Seller has the right to sell the goods (when property or ownership is to pass to the
buyer in the case of an agreement to sell)
CONDITION If breached, the buyer can repudiate the contract, reject the goods
and in addition, sue for damages if any.
Case: Rowland v Divall (1923) [Pg 137]
- Rowland entitled to have his purchase price back as the car was stolen
from the true owner
Case: Adani Wilmar Ltd v Cooperative Centrale Raiffeisen-Boerenleenbank
BA (2002)
- Bank was liable to the buyer as the title was alrd passed to someone else

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SECTION 12(2):
Implied warranty that the goods will be free from any charges or encumbrances not
made known to the buyer before the contract.
Buyer must enjoy quiet possession of the goods buyer must be able to deal with the
goods in a way he wants to, w/o any lawful interference from a 3
rd
party / from the
seller
Case: Microbeads v Vinhurst Road Markings Ltd (1975) [Pg138]
- Patent rights in the machines belonged to a 3
rd
party who then tried to
enforce patent rights on buyer
- Buyer sued sellers as there were no quiet possession

IMPLIED WARRANTY Breach of it will give rise only to damages

SECTION 13 GOODS SOLD BASED ON DESCRIPTION MUST MATCH IT
Applies for online transaction
Goods ordered by merely looking at a catalogue or an advertisement. However, what if goods
were selected / inspected by the buyer?
Case: Beale v Taylor (1967) [Pg 138]
- Even though plaintiff had inspected the car, defendant was still held liable for
breach as it was a contract of sale by description
Buyer must have relied on the description for Section 13 to be successfully
invoked.
Case: Harlington & Leinster Enterprises Ltd v Christopher Hull Fine Art Ltd (1991)
- Buyer did not rely on the sellers description but on his own; Not breached

Unclear if Section 13 is capable of applying to all sorts of description or only ones that is vital
or important
Case: Re Moore & Co Ltd and Landauer & Co Ltd (1921) [Pg 139]
- Over technical approach; No diff between 24 & 30 tins but still breach

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Only important or vital descriptions that do not correspond would result in a breach of contract.
Such as in the case of:
Case: Ashington Piggeries v Christoper Hill Ltd (1972)



CONDITION If breached, the buyer can repudiate the contract, reject the goods
and in addition, sue for damages if any.
Refer to Section 15! (For the quote above!)

SECTION 14
(Only applies when seller is selling in the course of business)
Example: Garage Sale Wont be protected under Section 14 & general rule is buyer beware
SECTION 14(2) SATISFACTORY QUALITY
SECTION 14(2A) Goods would be deemed to be unsatisfactory if a reasonable
person would regard the goods as satisfactory considering the description, price and
all other relevant circumstances.
Case: National Foods Ltd v Pars Ram Brothers (Pte) Ltd (2007)
- Breached has the food was heavily contaminated
Not the mere functionality of the goods
All relevant factors must be taken into account, breach even if it works!
Case: Rogers v Parish (Scarborough) Ltd (1987) [Pg 140]
- Owner must be able to take pride in the car & drive with appropriate comfort, ease
of handling and reliability
- Car could still be driven but still breach

Ultimately the test is whether the buyer could fairly and
reasonably refuse to accept the physical goods
proffered to him on the ground that their failure to
correspond with what was said about them makes
them goods of a difference kind from those he agreed to
buy
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Factors that may make a good unsatisfactory:
Case: National Foods Ltd v Pars Ram Brothers (Pte) Ltd (2007)
Fitness for all the purpose for which goods in question are commonly supplied
Eg: Commonly used for two purpose but only fit one

Appearance and finish
Eg: Designer watch but visible scratch

Freedom from minor defects
Although problem may be easily rectify, a reasonable person would expect it to be in
perfect condition

Safety
Pre-warn the customers with labels etc

Durability
Not durable suggest that goods were unsatisfactory at the time they were sold
Case: Mash & Murrell v Joseph Emmanuel (1961) [Pg 141]

OTHER ASPECTS OF SECTION 14(2)
Not only covers the goods themselves but also extends to the packaging.
Case: Geddling v Marsh (1920) [Pg 142]
- Bottle exploded though nothing was wrong with the water still breach
Where many goods are purchases, ALL GOODS must be of satisfactory quality
Case: Jackson v Rotax Motor and Cycle Co (1910)
- Large quantities of horns & some were scratched (though can be make
good by polishing)
- Buyer entitled to reject the whole lot
EXCEPTIONS TO SECTION 14(2C)
SECTION 14(2C) Provides that Section 14(2) does not apply if the defects were
either:
Drawn to the buyers attention before the contract was made
If the buyer examined the goods before the contract & that examination ought
to have revealed the defects

Buyer is under NO duty to examine the goods
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But if he does, the question is whether someone else carrying out a similar
examination would have discovered the defect if affirmative, valid defence
SECTION 14(3) FITNESS FOR PURPOSE
When buyer expressly or by implication makes known to the seller any particular
purpose for which the goods are being bought, there is an implied term that the goods
must be reasonably fit for that purpose.
Implied Purpose Obvious or common purpose
Case: Grant v Australian Knitting Mills Ltd (1936) [Pg 143]
- Underpants that resulted into rash and dermatitis
- Breach of Section 14(2) & 14(3) even though the purpose was not
expressly made

Case: National Foods Ltd v Pars Ram Brothers (Pte) Ltd (2007)
- Sold ginger slices that were heavily contaminated with mould
- Breach Section 14(2) & 14(3)
If buyer wants the goods for a particular purpose that is not obvious, he should made it
known to the seller so that he can benefit from this Section
- If he does not, Section 14(3) WILL NOT be applicable
Case: Griffiths v Peter Conway Ltd (1939)
- Buyer had abnormally sensitive skin & a normal person would not have
develop dermatitis; reasonably fit for normal persons
- Did not expressly inform seller that coat must be fit for someone with
abnormally sensitive skin; Not breached
EXCEPTIONS TO SECTION 14(2C)
Does NOT apply if the buyer does NOT RELY or if it is UNREASONABLE for the
buyer to rely on the sellers skill & judgement.
Whether it would be reasonable to rely would depend on various factors:
Expertise of seller & buyer
If buyer had much more expertise on the subject in question as compared to
the seller, less reasonable to rely on sellers judgement
Whether buyer gave specifications for the manufacture of the good
Whether the buyer asked for a particular brand
CONDITION If breached, the buyer can repudiate the contract, reject the goods
and in addition, sue for damages if any.
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SECTION 15
In a contract of sale by sample, it is implied that the bulk will correspond with the sample in
quality.
Case: Ceramic Brickworks (S) Pte Ltd v Asia-Tech Construction & Engineering Pte Ltd
(1996)
- Contract describe the goods as per sample but goods did not correspond with it
- Buyers were right in rejecting the bricks on account of Section 15 although there
was no breach of Setion 14(2)

CONDITION If breached, the buyer can repudiate the contract, reject the goods
and in addition, sue for damages if any.
(Subject to the following points below!)
Section 13, 14 & 15 are NOT mutually exclusive and may overlap in some circumstances!!!
LOSS OF RIGHTS TO REJECT
The right to reject may be lost if he is deemed to have accepted the goods
SECTION 35 of the SOGA provides that buyer would be deemed to have accepted
the goods if:
He does any act in relations to the goods which is inconsistent with the
ownership of the seller
He intimated to the seller that he has so accepted the goods
He keeps the goods for more than a reasonable period of time without
informing the seller that he has rejected them
What reasonable period of time would depends on the actual circumstances
Case: Clegg v Olle Anderson (2003) [Pg 145]
- Yacht not in accordance to manufacturers standard specifications was
delivered on Aug 2000 but buyers rejected the yacht 6 months aft the
purchase (During which he sought the seller if it would give rise to safety
consequences)
- Seller had delayed in providing the information sought; rejection had taken
place within a reasonable period of time


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SECTION 15(A) In non-consumer sales, as when the goods are bought for re-
sale, if the breach of Section 13, 14 or 15 is so slight that it would be unreasonable
for the buyer to reject all the goods, then he cannot do so and can only sue for
damages, if any

SECTION 15 can be overridden by agreement between the parties such as an
express provision to the contrary in the contract!


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Besides damages and/or recission, if the buyer is dealing as a consumer, he has additional
remedies for breach of sections 13/14/15 of the SGA under the CONSUMER PROTECTION
(FAIR TRADING) ACT [Pg 164]
He can request a:
Repair (subject to exceptions like impossibility/disproportionality),
Replacement (subject to exceptions like impossibility/disproportionality) or
Reduction in price
EXCLUDING LIABILITY IMPOSED BY SOGA
Goods sold cannot be returned
- If it is contained in a receipt, it may not be part of the contract [Exclusion Clause]
UNFAIR CONTRACT TERMS ACT
SECTION 6(1)
Any clause trying to exclude liability for breach of Section 12 of SOGA is totally
invalid
SECTION 6(2)
In consumer sales, any attempt to exclude liability for breach of Section 13, 14 or 15
would be invalid
SECTION 6(2)
In non-consumer sales, liability for breach of Section 13, 14 or 15 may be excluded if
it is reasonable [Refer to Exclusion Clause Reasonableness]
CONSUMER VS NON-CONSUMER SALE
Non-consumer Sale: Buying of goods for re-sale
What if business buy goods for its own use;
Whether goods are required in for an integral part of the business
Contract is one of the regular kinds of contract made by the buyer
If either of these two conditions are satisfied, than it is likely to be considered to be a
non-consumer sale


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LIABILITY OF THE MANUFACTURING & OTHERS
Contract of sale between retailer & manufacturer
Case: Britestone Pte Ltd v Smith & Associates Far East, Ltd (2007)
- Breach of Section 13 SOGA; Distributor had to pay damages to the 3
rd
party & it
was held that the distributor could in turn claim those damages from the sourcing
company
In some circumstances, consumers may be able to deal directly with the manufacturers
Guarantee or Warranty
Consumers suffer certain types of losses such as physical injury as a result of the
negligence of the manufacturer.
Possible to sue manufacturer in negligence even if there is no contract between
them (Law of Torts)
Collateral or Indirect contact between them

Case: Shanklin Pier Ltd v Detel Products Ltd (1951) [Pg147]
- Paint bought by 3
rd
party turned out to be unsatisfactory
- Plaintiffs entered into a contract with a 3
rd
party, defendants induced
plaintiffs to recommend their paint
- Bought actions against defendants and court upheld it
If manufacturer gives some assurance to the consumer about the product & as
a result of that the consumer buys it from the retailer collateral contract
between manufacturer & consumer

Case: TV Media Pte Ltd v De Cruz Andrea Heidi (2004)
- Distributor and importer were liable in negligence