LES AFFRETEURS REUNIS SOCIETE ANONYME V WALFORD ( 1919 )

AC 801

1) FACTS

a) Leopold Walford (Walford) acted as brokers for a charterparty. Les

Affreteurs were owners of a ship.
b) A time charterparty was effected between the shipowners and the Lubricating
and Fuel Oils Company as charters.
c) Walford charged a 3% commission which was specified in the charterparty
contract which was agreed to in 1916 and was a continuation of an early
agreement on similar terms.
d) In 1917, after Les Affreteurs’ ship was recommissioned, the charterparty
expired. Les Affreteurs refused to pay Walford’s commission, holding that
commission was only payable in respect of hire duly earned under the
charterparty.

2) ISSUE

a) Whether Walford could claim commission from the contract which had
expired and after the ship was recommissioned.

3) HELD

a) The appeal by Les Affreteurs was dismissed. Les Affreteurs were found have
been relying on custom, in that the brokerage was payable only out of the
hire as earned.
b) The French agreement was held to be incorporated in the charterparty and
thus, the agreements were not separate and to be read and interpreted as one.
c) The charterparty contract between the owners and the charters was relevant
to the brokers (which had also long been custom).
d) The case of Harley & Co v Nagata (1917) 23 Com Cas 121, was applied.
Charters were entitled to bring action as trustees of the brokers where they
were directly party to the contract.
e) Therefore, allowing a third party to sue for an entitled commission.
CHENG KENG HONG V GOV OF THE FEDERATION OF MALAYA ( 1966 )

1) FACTS

a) This was an appeal from a decision of the High Court ( [1966] 2 MLJ 33) on
a reference of a special case stated under an arbitration award.
b) The award in this case was published on November 26, 1964.
c) Neither party applied to court to set dowm the case which the arbitrator
agreed to submit to court in the form of the special case stated for hearing
within the six weeks or for extension of time.
d) On February 23, 1965 the appellant took out originating summons to hear the
case stated.
e) Counsel for the appellant submitted that the question as to whether the
proceedings before the High Court were valid or not should not be raised at
this stage as the respondents by submitting to the exercise of jurisdiction by
the learned judge to hear the special case stated, must be deemed to have
waived their right to object to the setting down of the application for hearing
out of time; and that besides, they had consented in writing to the extension
of time up to January 30, 1965 for the application to be made.

2) HELD

a) Under its own terms the award in the final and conclusive form came into
effect on January 8, 1965. In the result, the right of the parties to refer the
case stated abated on that day;
b) Once the award in its final and conclusive form had become effective, there
was nothing more that an aggrieved party could do, except, if so advised, to
apply to the court to set aside the award under the provisions of section 12(2)
of the Arbitration Ordinance, 1950, and in accordance with O. 64 r. 14 of the
Rules of the Supreme Court, 1957;
c) Consent or waiver cannot confer jurisdiction or power to the court to hear
and determine an issue or a cause of action which is non-existent.
 PRESTON CORPORATION SDN BHD V EDWARD LEONG ( 1982 )

1) FACTS

a) Where the appellants were a company carrying on the business of publishing

books.
b) The respondents were a firm of printers.
c) The parties entered into a business relationship regarding the printing of
school textbooks.
d) The business relationship started when the respondents submitting quotations
for printing of the books.
e) The appellants then issued the printing orders.

2) ISSUE

a) Whether the respondents’ quotations constituted offer?

3) HELD

a) The court held that the quotations were never intended to be a binding offer
but was amere supply of information.
b) An offer is an intimation of willingness by an offeror to enter into a legally
binding contract.
c) Its terms must indicate that it is to become binding on the offeror as soon as it
has been accepted by the offeree.
d) It is absent here
 CUNLIFFE - OWEN V TEATHER & GREENWOOD ( 1967 )

1) FACTS

a) Authority in agency may be implied where there is customary authority.

Customary authority will only be found where an act is notorious, certain and
reasonable.

b) The act must not be illegal.

 LYNCH V THORNE ( 1956 ) 1 ALL 744

1) FACTS

a) LORD EVERSHED MR. The question in this case is whether the defendant,
who was the builder of the house now belonging to the plaintiff, is liable on
an implied covenant for the loss or damage suffered by the plaintiff because
one of the rooms on the first floor, as it turns out, is not weather-proof; it has
admitted damp to such an extent that the plaintiff has been unable to use it as
his sons bedroom.
b) The plaintiff, therefore, may say (and for the purposes of this judgment I will
say) that quoad that room the house has turned out to be uninhabitable or not
fit for human habitation.
c) The law of England has been, for many generations, well settled that, prima
facie, on a contract for sale of a piece of land with a house on it, and
similarly on a contract for the demise of land with a house on it, there is no
warranty as to the habitability of the house.
d) The law, so settled, is illustrated in Hart v Windsor 1844 (12) MW 68), and
by the judgment in that case of Parke B. The rule is, or has been said
sometimes to be, a hard one for the purchaser or lessee who has to console
himself with the Latin maxim caveat emptor.
e) To the general rule, however, there are, undoubtedly, exceptions: for example,
when the subject-matter of a contract of letting is a furnished flat or house,
then there is implied a covenant or warranty that the subject-matter is fit for
habitation: see the judgment of Parke B, in Smith v Marrable 1843 (11) MW
5).
f) Another exception arises where the contract is not merely a contract for the
sale of a piece of land with a house on it, but is a contract for the sale of a
piece of land with a house, plus a covenant or obligation on the part of the
vendor to build or complete the house.
g) That last mentioned exception has been illustrated in several cases which
have been cited to us, and it will suffice if I refer to one of them, namely,
Perry v Sharon Development Co Ltd (1937 (4) AllER 390).
REIGATE V UNION MANUFACTURING CO ( RAMSBOTTOM ) LTD ( 1918 )
1 KB 592

1) FACTS

a) An agreement was made between the plaintiff, and a limited company on

Decemeber 27th 1915, which carried on business in Lancashire, the plain+,
subscribed for 1000l in the shares of the named company and his role was to
introduce new classes of good to be manufactured by them.
b) The company made him their sole agent in the UK, India and the Colonies for
seven years. All orders obtained were to be at once communicated to the
company who upon accepting or rejecting the order he was to carry out such
orders without delay.
c) The company would then pay the agent a commission upon the invoiced price of
all the goods delivered. A few months later, the company required fresh capital
and asked the plaintiff, to assist them in which he failed.
d) The company then asked him to give up the agency for the Manchester district,
telling him that he would have to stand down, but he refused. The company went
on to voluntary wind their assets and ceased to do business through the plaintiff,
and sold their business.
e) Liable to damages for breach of contract because the ini+al agreement was the
employ the plainiff, for seven years and a term could not be implied to the e,ect
that the company could terminate the agency at any time, thus the voluntary
winding showed a repudia+on by the company and therefore liable for charges
for the breach

2) HELD

a) The Plainiff, bought his agency agreement as he paid 1000 for shares
b) The company were unable to get the capital necessary to enable them to carry
on their business and they became insolvent, insolvency coupled with
voluntary liquidation consisted a breach of contract, even if insolvency
wasn’t the reason for liquidation, if the goal was to sell the business, it would
still put an end to the agreement and would amount to a breach of contract
and the plainiff, would therefore be entitled to damages.(pg.596)
c) Plaintiff, was not entitled to have his orders executed at loss to the company,
if the company could show that there was little prospect of any large quantity
of business done then it would have been a reason to refuse to execute that
set of orders, on the other hand, if they could be executed at profit, these
observations can be ignored.
 TANG CHIOK SING V LIAN FATT SAWMILL CO ( 1976 ) 1 LNS 155

1) FACTS

a) For instance, cases of Tan Chiok Sing v Llian Fatt’s Sawmill Co. the case
stated principal still has to pay the agent even of the contract between the
principal and the third party had failed.
b) This is because the agent had fulfilled his duties to the principal.
c) However, there are exceptions on this section. Section 172 of Contracts Act
1950 states agent will be liable and entitled to the commission when he / she
had fully fulfill the duties that been given by the principal.
d) Not only that, section 173 of Contracts Act 1950 states also the agent not
only entitled to the commission if he is found guilty in misconduct, for
example, doing a fraud or have or received a secret profits from the last
duties, for example, in the case of Andrew v Ramsay.
 THE MOORCOCK ( 1889 )

1) FACTS

a) The owners of the ship called The Moorcock contracted for space at a wharf
owner's jetty in order to unload The Moorcock's cargo.
b) While docked, the tide went down to a point where the hull of the ship hit a
ridge, causing damage to the ship.
c) The plaintiff argued that the wharfingers were responsible to ensure that his
vessel would remain safe while docked.
d) The wharf owners, in their defense, claimed that there were no provisions in
the contract to ensure the vessel's safety and that they could not have
foreseen the damage caused to the vessel.
e) The issue before the Court was whether there can be any implied warranty
given the circumstances. The trial court found that there was an implied
warranty.

2) HELD

a) The Court held for the ship owner, ruling that there was an implied term that
the wharfingers had taken reasonable steps to ascertain the state of the
riverbed adjacent to the jetty (not, as often stated, an implied term that the
jetty would be a safe place to dock).
b) If the wharfingers had taken such responsibility, then they would have
discovered the ridge of rock and would have been under the duty to warn the
shipowners of the potential hazard. Failure to warn would have been
actionable in tort. Therefore, this very restricted term was sufficient to
provide protection to the shipowners as it would have been necessary to give
the contracted business efficacy.
c) Bowen LJ stated that any implied warranties must be based on the presumed
intentions of the parties. An implied warranty may be read into a contract for
reasons of "business efficacy," and in order to maintain the presumed
intention of the parties. As Bown LJ said:
d) In business transactions such as this, what the law desires to effect by the
implication is to give such business efficacy to the transaction as must have
been intended at all events by both parties who are business men; not to
impose on one side all perils of the transaction, or to emancipate one side
from all the chances of failure, but to make each party promise in law as
much, at all events as it must have been in the contemplation of both parties
that he should be responsible for in respect to those perils or chances.
e) Bowen LJ looked at the presumed risks of the agreement and who was
expected to bear them.
f) The wharfingers were in such a position that they could have discovered
there was a risk of damage to the ship, and would have been in the best
position to judge the safety of the vessel.
 DATIN PEGGY TAYLOR V UDACHIN DEVELOPMENT ( 1984 )

1) FACTS

a) It was held that an architect was entitled for payment for work done even
though the project was not commenced and abandoned by him.
b) The proof for trade usage in this case was from Pertubuhan Akitek Malaysia
guidelines where parties have dealt with each other over a course of time, the
court may imply a term into their contract based on their previous conduct in
dealing with each other in previous transactions
 SHIRLAW V SOUTHERN FOUNDRIES ( 1940 ) AC 701

1) FACTS

a) Shirlaw was appointed managing director of Southern Foundries (SF) for a

fixed term of ten years. SF was taken over by another company who altered
the pre-existing articles of association empowering two directors and a
secretary to remove a director, irrespective of the terms of his contract.
b) Shirlaw was sacked prior to the expiration of the fixed term, and he brought a
claim to recover damages for breach of contract.

2) ISSUES

a) The company contended they were empowered to amend their articles of

association under s10 Companies Act 1929.
b) The new articles had been appropriately adopted, and the new procedures
correctly followed. Given the statutory right to alter articles, it would be
inappropriate for a court to interfere with the company’s right to do so.
Shirlaw argued his employment contract was for a fixed term of 10 years,
and the articles could not amend that contract.
c) He argued there was an implied term of the contract that the company would
not amend its articles in a way which would be detrimental to him.

3) HELD

a) Shirlaw successfully recovered damages for breach of contract. It was an

implied term of his employment contract that he would not be removed from
his role during the fixed ten year period.
b) The company could not be prevented from altering its articles of association,
but it may be liable in damages if it amends the articles so as to prejudice a
contract validly made prior to the amendments.
 YONG UNG KAI V ENTING ( 1965 )

1) FACTS

a) The defendant entered into a written agreement with the plaintiff for the sale
of timber on land in which a tribe had communal customary rights.
b) In order to cut the timber a licence from the forests department was required.
c) The written agreement did not refer to the necessity of obtaining a licence.
d) The defendant did his best to get a licence but this was refused. The plaintiff
claimed for breach of Contract.

2) HELD

a) There was an implied term that the sale of the timber was to be subject to the
obtaining of the necessary licence.
b) As the contract became impossible to perform because of frustration the
plaintiff entitled to the return of moneys advanced to the defendant.
SABABUMI ( SANDAKAN ) SDN BHD V DATUK YAP PAK LEONG ( 1998 )

1) FACTS

a) As reference to the case of Sababumi SB v Datuk Yap Pak Leong, there are 3
ways in which term can be implied which are by customs or trade usage, by
law and by the courts.
b) Custom and trade usage is implied based on the fact that it is well- known
and identifiable thus parties have not deemed to include it in the express term.
To classify a term to be implied by custom or trade usage, there are 3 basic
requirements.
c) Firstly, the term must not inconsistent with the express term of the contract
itself. Section 92(e) of Evidence Act 1950 also allows extrinsic evidence of
custom and trade usage as an exception of the parol evidence rule as long it
does not contradict with the written contract.
d) Secondly, before the custom could be implied it must be established of a
reasonable practice. The custom must be notorious, certain and reasonable.
e) Thirdly, the knowledge of the custom and trade is also vital. If a practise is
reasonable, notorious and certain, then the party will be bound even if he is
not aware and have no knowledge of it.
f) However, if the practise is unreasonable but certain and notorious, it cannot
constitute a practise but if the party itself agree to it, then it will bind him.
 REIGATE V UNION MANUFACTURING COMPANY ( 1918 )

1) FACTS

a) Scrutton LJ said that ‘[a] term can only be implied if it is necessary in the
business sense to give efficacy to the contract’.

b) He added that a term would only be implied if ‘it is such a term that it can
confidently be said that if at the time the contract was being negotiated’ the
parties had been asked what would happen in a certain event, they would
both have replied ”Of course, so and so will happen; we did not trouble to
say that; it is too clear”.
 BP REFINERY ( WESTERNPORT ) 1977

1) FACTS

a) In 1963 BP Refinery (Westernport) Pty Ltd reached an agreement

with Henry Bolte, the then Premier of Victoria for the establishment of an oil
refinery and construction of port facilities at Crib Point, in Western
Port, Victoria ("the Refinery Agreement").
b) The Parliament of Victoria, on the same day it ratified the Refinery
Agreement, amended the Local Government Act 1958 to allow local councils
to agree on the rates payable for industrial land.
c) In 1964 the Shire of Hastings and BP Refinery entered into a Rating
Agreement, which set out the rates payable for the following 40 years, and
was approved by the Governor ("the Rating Agreement").
d) BP decided to restructure its Australian operations and on 15 December 1969
wrote to the Shire of Hastings stating "I hope I may assume that there will be
no difficulty over transferring" the rights and privileges including the Rating
Agreement to BP Australia Ltd.
e) That the Rating Agreement would transfer was apparently so obvious to BP
that it did not wait to hear the position of the Shire of Hastings before
transferring the assets to BP Australia Ltd. Under the Rating Agreement the
rates would have been $50,000 however the Shire of Hastings said the Rating
Agreement no longer applied and assessed the rates in excess of $150,000.

2) HELD

a) The majority decision

b) The majority of the Privy Council, Viscount Dilhorne, Lord Simon and Lord
Keith, cited with approval a passage from the judgement in Prenn v
Simmonds in which Lord Wilberforce said "In order for the agreement ... to
be understood, it must be placed in its context. The time has long passed
when agreements, even those under seal, were isolated from the matrix of
facts in which they were set and interpreted purely on internal linguistic
considerations."
c) Their Lordships do not think it necessary to review exhaustively the
authorities on the implication of a term in a contract which the parties have
not thought fit to express. In their view, for a term to be implied, the
following conditions (which may overlap) must be satisfied:
i. it must be reasonable and equitable;
ii. it must be necessary to give business efficacy to the contract, so that
no term will be implied if the contract is effective without it;
iii. it must be so obvious that "it goes without saying";
iv. it must be capable of clear expression;
v. it must not contradict any express term of the contract.
d) The test for the implications of terms was not controversial, citing three well
known cases for its authority
i. The Moorcock
ii. Reigate v Union Manufacturing Co
iii. Shirlaw v Southern Foundries (1926) Ltd
e) In applying these principles, the majority took into account the surrounding
circumstances, including that:
i. The investment by BP was irrevocable in that once the refinery was
built, it was not practical to move it.
ii. The Rating Agreement was set within the framework of the Refinery
Agreement, not only by implication but also by express reference.
iii. The Refinery Agreement contained provision for assignment within
the BP group in Australia.
f) The majority held that the term found by the Supreme Court of Victoria, that
the agreement would end once BP Refinery ceased to be liable to pay rates
on the property, was not necessary to give business efficacy to the Rating
Agreement and that it was wholly unreasonable and inequitable to limit the
ability of the BP group to make changes in its corporate structure. The
identity of the particular member of the BP group could not have been of the
least importance to the Shire of Hastings.
g) Instead they found that an entirely different term, said to make the Rating
Agreement accord with the Refinery Agreement to permit the assignment of
the rights within the BP group.
h) That the majority found that what was obvious to the County Court, the
judges of the Supreme Court and indeed two of their colleagues, was wrong
and that those judges had missed what should have been obvious.
 LIVERPOOL CITY COUNCIL V IRWIN ( 1977 )

1) FACTS

a) The Irwins were council tenants of a flat in a high rise building owned by
Liverpool City Council (LCC).
b) They withheld their rent in protest regarding conditions in the common parts
and in their maisonette.
c) The conditions included defective lifts, unlit staircases and an overflowing
water cistern. LCC sought possession, and the Irwins counterclaimed for
breach of duty to maintain the common parts of the building.

2) ISSUES

a) LCC denied the existence of a duty because there was no formal written
tenancy agreement in place containing a term regarding a duty to maintain
the common parts.
b) As there was only a document detailing the obligations of the tenants under
the agreement, LCC contended there were no obligations incumbent upon
them in relation to the common parts.
c) The Irwins argued that where a tenancy agreement is silent as to the
maintenance of the common parts of a multi storey tower block, there is an
implied term that the landlord should maintain them.
d) The tenants argued the contract would be wholly unreasonable without such
a term and, therefore, the duty should be implied into the tenancy agreement.

3) HELD

a) The tenancy agreement was held to be incomplete because it only contained

unilateral obligations of the tenants.
b) Where a demise is silent as to the maintenance of the common parts, there is
an implied term that the landlord should take reasonable steps to keep the
common parts in a state of repair.
c) The council had discharged their duty in this case, however, because they had
taken reasonable steps to maintain the common parts, and it was incessant
vandalism despite LCC’s considerable efforts, which caused the poor
conditions of the common parts.
 YAP NYO NYOK V BATH PHARMACY SDN BHD ( 1993 )

1) FACTS

a) A shophouse was sublet to the defendant by one Joseph Chong who was the
administrator of the estate of the deceased owner.
b) The tenancy was for nine years and three months from 15 May 1989 to 15
August 1998.
c) Clause 2 of Pt IV of the sublease permitted the sublessor to determine the
sublease by notice on the happening of certain events. Clause 4 provided for
compensation to the sublessee by the sublessor in a situation of
pre-termination by the latter when the sublessee is not at fault or in breach of
the covenants.
d) The sublease was registered at the Land Office with the consent of the
plaintiff who had lodged a caveat against the shophouse. On 30 May 1989,
the said Joseph Chong sold the shophouse to the plaintiff subject to the
defendant’s tenancy.
e) The plaintiff also gave an undertaking not to terminate the tenancy until its
expiry. However, a three-month notice to quit dated 27 December 1989 was
later served on the defendant.
f) The plaintiff claimed for possession of the shophouse and for damages for
alleged trespass. None of the clauses of the sublease were pleaded.
g) The issues before the High Court were:
i. Whether the plaintiff was entitled to prematurely terminate the sublease
before its expiration; and
ii. Whether the notice to quit was reasonable and good in law. The
magistrate’s court had answered the two issues in the negative.
h) The plaintiff appealed against the decision.

2) HELD

a) Held, dismissing the appeal

b) The plaintiff had not pleaded material facts necessary to support the claim for
possession and trespass and hence should not have been allowed to adduce
any evidence of such unpleaded matter
c) Counterclaims for declaratory relief were beyond the jurisdiction of the
magistrate’s court. As there was no indication that the defendant would not
subsequently transfer the counterclaim to the High Court, it is another ground
that the application ought not to have been allowed to proceed
d) The terms of the sublease must be construed according to the intent of the
parties which means the intention which is expressed by the meaning of the
words used and not what it may be supposed that the parties wished to effect.
The express words used must be given their natural ordinary meaning unless
the context shows that by so doing they would be different from that which
the parties intended to use them or a manifest inconsistency results which
could not have been the parties’ intention
e) Although cl 9 provides for the ‘sooner determination of this sublease’, this
only covers situations where the covenants or conditions of the sublease
provide for its determination during its currency, and does not create an
 implied covenant permitting the sublessor to prematurely determine the fixed
term lease
f) For a fixed term lease, an option to terminate the lease before its expiry is
normally expressly provided
g) Where an agreement already contains terms for termination, the onus lies on
the person who contends that a further such term ought to be implied
h) The courts will not imply covenants which might and ought to have been
expressed if intended by the parties unless it is necessary to give business
efficacy to the contract and obvious
i) Clause 4 stipulates compensatory provision to the sublessee where the
sublessor terminates the sublease before its expiry without specifying the
circumstances where he might do so whilst cl 2 sets out these situations
without providing for the remedies. Clauses 2 and 4 therefore complement
each other and are to be read together. It was thus not necessary to imply an
option for the sublessor to determine the sublease during its currency
j) As there was no option to prematurely terminate the sublease, the notice to
quit was inoperative in law
k) The three-month notice to quit was inadequate and incapable of determining
the lease as the sublease was for a fixed term of nine years and three months,
and the defendant had expended a considerable sum of money in renovating
the shophouse.
METROPOLIS SECURITY SERVICES SDN BHD V ANSELL INDUSTRIAL
& SPECIALTY GLOVES ( M ) SDN BHD ( 2015 )

1) FACTS

a) In the case of Metropolis Security Services SDN BHD v Ansell Industrial

&Speciality gloves (M) SDN BHD & ANOR, the appellant entered into an
agreementwith the respondent to provide services of unarmed static guards as
specified underthe schedule of service of the agreement.
b) There was an incident of break-in causingtwo main substations at the factory
being severely damaged and copper wiring stolenfrom the both substation.
c) The court held that the word static in the agreement meansthere is no implied
term will apply.
d) The word static was used and agreed by bothparties as the word is in the
agreement.
e) Since the parties have made it clear in theagreement, there was no need to
imply any additional terms to the agreement.
f) Same goes to the situation given as the word “static” is also applied is the
question given.
 DESIREE COUTURE SDN BHD V ANNE F CO LTD [2016] 10 MLJ 315

1) FACTS

a) The second plaintiff and the second defendant entered into discussions to
establish a joint venture. Following that, the second plaintiff incorporated the
first plaintiff.
b) The parties then intended for the first plaintiff to sell clothes that were
manufactured by the first defendant, a company which was incorporated in
Hong Kong.
c) The price for the clothes were not determined by the parties. The joint
venture was, however, terminated and by that time, two shipments of goods
were delivered by the first defendant to the first plaintiff along with a
packing list. In the packing list, wholesale prices for each item were set out.
d) The financial controller of the first defendant (‘the third defendant’)
demanded for the return of the unsold goods within a reasonable period of
time such as seven days. The unsold goods still remained in the possession of
the plaintiffs. The second plaintiff decided to send the unsold goods back to
the first defendant in Hong Kong.
e) The unsold goods arrived in Hong Kong but since delivery was not accepted
by the defendants, the goods were returned to Malaysia and remained in
storage. The first defendant then appointed Hup Lik Debt Collection
(M) Sdn Bhd (‘Hup Lik’) to recover the amounts allegedly owed by the
plaintiffs.
f) The second plaintiff initiated an action and claimed that she had been
defamed by the circulation of certain flyers by Hup Lik which contained the
photograph of the second plaintiff; and alleged that certain emails from the
third defendant and Hup Lik amounted to harassment.
g) The defendants counterclaimed against the plaintiffs that upon termination of
the joint venture, the first plaintiff was obligated to return the unsold goods
to the first defendant.
h) Since the first plaintiff failed to do so, the first and second plaintiffs were
deemed to have appropriated the goods.
i) The issues that arose for determination were the determination of the
appropriate price that the first plaintiff ought to pay the first defendant for the
goods sold; whether the plaintiffs had returned the unsold goods within a
reasonable time; and whether the parties agreed for the goods to be deemed
appropriated by the plaintiffs.

2) HELD

a) Held, dismissing the claim and the counterclaim:

b) There was no evidence to show that the parties had addressed their minds to
the applicable price in the event that the joint venture did not proceed. There
was no express agreement between the parties as to the applicable price in
the circumstances where the joint venture had fallen through, it falls to the
court to infer from the evidence to determine the applicable price. There was
also no credible evidence that the parties had agreed that, in the event that the
goods were not returned to the defendant within a reasonable period, the
goods would be deemed to have been appropriated by the plaintiffs. It was
 not open to the first defendant to unilaterally impose such a term on the
plaintiffs. Nor was it open to the first defendant to unilaterally impose a time
within which such goods were to have been returned, when no such time had
been agreed between the parties.
c) Although there was evidence that the first defendant had ‘employed and
authorised’ a Malaysian agent, there was no credible contemporaneous
evidence that the plaintiffs had relied upon such representation, or that such
reliance was the reason why the goods were not re-delivered earlier. The
plaintiffs had taken eight weeks rather than four weeks to return the goods.
Therefore, first plaintiff was liable to the diminution in value of the returned
goods .
d) The first defendant had acted unreasonably in not accepting the returned
goods once the goods had reached Hong Kong. In refusing to accept
re-delivery of the returned goods, the first defendant became the author of a
substantial proportion of its own loss. The first defendant was also liable to
the first plaintiff for the freight and related charges incurred in re-shipping
the goods back to Malaysia and for storage charges incurred by the latter in
connection with the returned goods .
e) The first defendant and Hup Lik entered into an agreement to govern the
provision of debt collection services by the latter to the former. Hup Lik was
described as an independent contractor. An employer or principal was liable
for the acts of its employees, servants and agents, but not for the acts of an
independent contractor. The first defendant did not specifically authorise
Hup Lik to publish the defamatory statements. Since Hup Lik was an
independent contractor, the first defendant was not liable for the acts of the
former by reason of the application of the principles of vicarious liability
f) The giving of a photograph did not of itself amount to libel. The situation
would have been different had the defendants provided the text to be
included in the flyers, in which case both the provider and publisher of the
statements would be liable for libel. The emails from the third defendant
were simply emails given to the plaintiffs to update them on the status of the
amounts that the defendants regarded as being owed to the first defendant.
The sending of emails over the course of slightly more than one year could
not be construed to constitute acts of harassment by the defendants
 ROWLAND V DIVALL ( 1923 ) 2 KB 500

1) FACTS

a) The claimant, a car dealer, bought a car from the defendant for £334. He
painted the car and put it in his showroom and sold it to a customer for £400.
b) Two months later the car was impounded by the police as it had been stolen.
It was then returned to the original owner.
c) Both the claimant and defendant were unaware that the car had been stolen.
d) The claimant returned the £400 to the customer and brought a claim against
the defendant under the Sale of Goods Act.

2) HELD

a) The defendant did not have the right to sell the goods as he did not obtain
good title from the thief.
b) Ownership remained with the original owner.
c) The defendant had 2 months use of the car which he did not have to pay for
and the claimant was not entitled to any compensation for the work carried
out on the car.
 NIBLETT V CONFECTIONERS’ CO ( 1921 ) 3 KB 387 Court of Appeal

1) FACTS

a) The claimant purchased 1,000 tins of condensed milk from the defendant.
The tins were labelled 'Nissly'.
b) Nestle told the claimant that if they attempted to sell these on, they would
apply for an injunction to prevent the sale as the label was very similar to
Nestle's labels for their condensed milk.
c) The claimants agreed not to sell them and brought an action against the
sellers.

2) HELD

a) The sellers did not have the right to sell the goods and therefore the buyers
were entitled to repudiate the contract.
 MICROBEADS A.G. V VINHURST ROAD MARKINGS LTD ( 1975 )

1) FACTS

a) The claimant purchased some road marking machines from the defendant.
After the purchase a third party was granted a patent right in the machines.
b) This meant the claimant could not use the machines unless they were granted
a licence to do so.
c) There was no breach of s.12(1) as at the time of the sale the seller had the
right to sell the goods.
d) However, there was a breach of s.12(2) in that the buyer could not enjoy
quiet possession of the goods.
 STEINKE V EDWARDS ( 1935 ) 8 ALJ 368

1) FACTS

a) C purchased a car from B and then sold to D.

b) Without the knowledge of the parties involved, the car’s road tax had not
been paid yet by the previous owner, A.
c) The car was forfeited by Government.
d) D had to pay the road tax to get the car back and he claimed the money of the
road tax.

2) HELD

a) There was a breach of implied warranty that the car must free from
encumbrances.
b) Therefore D could get his money from C who also entitled to get from B and
B also entitled to claim from A.
 WALLIS V PRAT ( 1911 ) AC 394

1) HELD

a) Fletcher Moulton L.J considered that the first sense of the term ‘condition’ is
‘There are some [obligations] which go so directly to the substance of the
contract or, in other words, are so essential to its very nature that their
non-performance may fairly be considered by the other party as a substantial
failure to perform the contract at all.
b) On the other hand there are other obligations which, though they must be
performed, are not so vital that a failure to perform them goes to the
substance of the contract . . . later usage has consecrated the term ‘ condition’
to describe an obligation of the former class and ”warranty’ to describe an
obligation of the latter class.’
 RE MOORE AND LANDAUER ( 1921 ) ALL ER 466

1) FACTS

a) A contract for the sale of 3,100 tins of peaches described the tins as being
packed in cases of 30.
b) When they arrived the tins were packed in cases of 24 although the agreed
overall number of tins was supplied.

2) HELD

a) The purchaser was entitled to reject the goods as they were not as described.
 ARCOS LTD V EA RONAASEN & SON ( 1933 ) ALL ER 466

1) FACTS

a) English purchasers concluded a contract for the sale of staves of timber wood
from the English agents of a Russian company for the purposes of making
cement barrels, specifying staves of Russian redwood and whitewood to be
of half-an-inch in thickness.
b) A large proportion of the staves delivered were over half-an-inch and the
buyer rejected them on the grounds that they did not conform to the
contract’s requirement.
c) An arbitration found that the staves were still commercially within and
merchantable under the contract as they remained fit for the purposes of
making cement barrels, thus the buyer could not reject them.

2) ISSUES

a) The question arose as to whether the buyer had the right to reject goods that
do not conform to specifications within the contract for sale, yet are
commercially within and merchantable under the contract’s description.

3) HELD

a) The Court held that a buyer in a contract for sale has the right to demand
goods of certain specifications and is not, accordingly, bound to accept goods
that do not conform to contractual specifications merely due to them being
merchantable or commercially equivalent to that specification.
b) Rather, the goods must conform to the specifications to which the parties
have agreed and the contract cannot be constructed as to add a qualification
of commercial equivalence that is not otherwise stipulated.
c) On the facts, the contract for timber wood provided no elasticity in its terms
and expressly specified the thickness of the wood.
d) As the staves of wood did not conform to the contractual requirements,
despite the possibility of their commercial equivalence and merchantability
under the contract, the buyer had the right to reject the goods.
 VARLEY V WHIPP ( 1990 ) 1 QB 513

1) FACTS

a) Varley and Whipp met in the town of Huddersfield. Varley offered to sell a
second-hand reaping machine to Whipp for £21.
b) Varley said the machine was in the town of Upjohn. He said the machine was
a year old and had only been used to cut 50 or so acres of crops. Whipp had
not seen the machine, but agreed to buy it.
c) When delivered, the machine proved to be a very old one which had
obviously been broken and mended.
d) Whipp returned it and refused to pay the price.

2) ISSUE

a) Had the seller delivered what was promised, so that he was entitled to be paid
the agreed price?

3) HELD

a) The seller had not delivered what had been promised.

b) The thing sold was a specified machine, but it was bought unseen and it was
identified by description.
c) The description was 'a nearly new reaping machine then in Upjohn'.
d) The machine delivered was not 'a nearly new machine' and the court held that
it was not in the same class or category of goods as had been described.
e) The seller had therefore failed to deliver the particular goods as identified in
the contract.
f) This was a breach of the condition, implied into sale contracts by law, that a
seller must deliver the goods as identified by description in the contract.
g) Failure to deliver goods as identified meant that the buyer did not become the
owner of what had been delivered.
h) Whipp was therefore entitled to reject the machine and was not obliged to
pay for it.
UNION ALLOY ( M ) SDN BHD V SYARIKAT PEMBENAAN YEOH TIONG
LAY [1993] 3 MLJ 167; [1993] MLJU 553

1) FACTS

a) The plaintiff sold one set of a machine to the defendant.

b) The machine was used to transport two workmen to the 21st storey of a
building under construction when it failed to stop at the intended height and
subsequently crashed to the ground.
c) As a result, one workman died while the other workman was hospitalized.
d) The plaintiff then claimed against the defendant for, inter alia, the balance
sum due to the plaintiff under the sale contract for the sale of the machine.
e) The defendant counterclaimed for, inter alia, loss and damage suffered as a
result of the plaintiff’s breach of the conditions on fitness for the purpose and
merchantabilty under ss 15 and 16(1) of the Sale of Goods Act 1957 (‘the
Act’).
f) The evidence relied on by the defendant to suggest the breach was:
i. A coroner’s report on an accident in Hong Kong
ii. The fact that accidents involving similar machines occurred in other
places
iii. The few instances when the machine stopped at various levels of the
building under construction.

2) HELD

a) Held, allowing the plaintiff’s claim

b) There was no evidence that the machine did not correspond with the
description in the sales contract and the brochure under s 15 of the Act
c) (2) s 16(1)(a) of the Act sets out four pre-conditions:
i. The buyer must make known to the seller the particular purpose for
which the goods are required
ii. This must show reliance by the buyer on the seller’s skill and judgment
and there must have been actual reliance
iii. The goods must be of a description which is in the course of the seller’s
business to supply; and
iv. If the goods are specific, they must not be sold under their patent or trade
name
d) Applying s16(1)(a) of the Act, the particular purpose for which the goods
were required may be implied. Here, the machine was for the only purpose of
vertical transportation of men and materials at a worksite. ‘Reliance’ may be
inferred and it is assumed whenever the seller knows the particular purpose.
The mere fact that the machine sold had a trade name and was described in
the contract by its trade name would not exclude the operation of the implied
condition of its fitness for any particular purpose
e) With regards to the evidence relied on by the defendant to suggest the breach,
the coroner’s report was not admissible. The fact that accidents involving
similar machines occurred in Hong Kong and other places did not prove that
the machine in Kuala Lumpur was not fit for its purpose. Besides, it was not
possible to determine the cause of the accident in Hong Kong from the
evidence. Although the British standard in relation to the machine, whether
 in draft or in completed form, served only as a guide and was not enforceable,
at the material time, it was in draft form and the machine complied with it.
There was, therefore, no evidence to show that the machine was not fit for its
purpose
f) The machinery inspector reported the cause of the accident as being the
direct result of a lack of routine maintenance which should have been carried
out by the defendant. However, it could also be caused by an improper
installation of the machine from the height of 30m, which the plaintiff
installed it up to, to 55m where the accident occurred. However, it was
unclear who actually installed the machine up to 55m. It was, however, not
disputed that the defendant did not report the use and operation of the
machine to the Factories and Machinery Department and no certificate of
fitness had been issued. This was the defendant’s responsibility which they
failed to carry out.
 GRANT V AUSTRALIAN KNITTING MILLS LTD ( 1936 ) AC 85

1) FACTS

a) In June 1931 Dr Grant purchased two pairs of woollen underwear and two
singlets from John Martin & Co.
b) There was nothing to say the underwear should be washed before wearing
and Dr Grant did not do so.
c) He suffered a skin irritation within nine hours of first wearing them. Dr Grant
applied calamine lotion, but continued to wear the underwear for the rest of
the week. He then wore the second pair for the next week and washed the
first pair.
d) This was in an era when changing his underwear only once a week was "the
ordinary custom of ordinary people".
e) The skin irritation got worse and developed into a severe case of dermatitis.
Dr Grant blamed the underwear and sued John Martin & Co. for breach of
contract, being the statutory warranties that the goods were fit for the purpose
and were of merchantable quality.
f) Dr Grant also sued the manufacturer, Australian Knitting Mills, alleging that
they had been negligent in failing to take reasonable care in the preparation
of the garments.
g) The garments in question were alleged to contain an excess of sulphur
compounds, variously described as sulphur dioxide and sulphites.

2) HELD

a) At the time there was no provision for dissent or separate judgments in

the Privy Council. Instead the advice to the King was determined by a
majority of judges who heard the appeal and one judge would be chosen to
write the judgment. Decisions of the Privy Council tended to be expressed on
narrow grounds, a tendency attributed to the need to reflect the agreement of
the majority of judges. Lord Wright delivered the judgment of the Privy
Council and identified the aspects of the decision in Donoghue v
Stevenson in which the majority, Lord Thankerton, Lord Macmillan and
Lord Atkin had agreed as being the statement by Lord Atkin that:
b) A manufacturer of products, which he sells in such a form as to show that he
intends them to reach the ultimate consumer in the form in which they left
him with no reasonable possibility of intermediate examination, and with the
knowledge that the absence of reasonable care in the preparation or putting
up of the products will result in an injury to the consumer's life or property,
owes a duty to the consumer to take that reasonable care.
c) The Privy Council rejected the attempts to distinguish Donoghue v Stevenson,
stating "No distinction however, can be logically drawn for this purpose
between a noxious thing taken internally and a noxious thing applied
externally", and that "The decision in Donoghue's Case did not depend on the
bottle being stoppered and sealed: the essential point in this regard was that
the article should reach the consumer or user subject to the same defect as it
had when it left the manufacturer."
d) The judgment took a narrow approach to its expression of the duty of
care, limiting it to
 i. (1) manufacturers of goods,
ii. (2) the presence of deleterious chemicals could not be detected by
any examination that could reasonably be made by the consumer,
iii. (3) the risk is known to the manufacturer and unknown to the
consumer.
e) An appellant who seeks to disturb a decision as to the facts must show the
decision was wrong, having regard to the advantage of the trial judge of
seeing and hearing the witnesses. In this case the Privy Council was not
satisfied that the trial Judge was wrong. In relation to the manufacturers
breach of the duty, the Privy Council held that "According to the evidence,
the method of manufacture was correct: The danger of excess sulphites being
left was recognized and guarded against: the process was intended to be fool
proof. If excess sulphites were left in the garment, that could only be because
someone was at fault".
f) Dr Grant was held to have relied upon the skill and judgment of the retailer
that the garments were fit for wearing, with the Privy Council saying:
g) It is clear that the reliance must be brought home to the mind of the seller,
expressly or by implication. The reliance will seldom be express: it will
usually arise by implication from the circumstances: thus to take a case like
that in question, of a purchase from a retailer, the reliance will be in general
inferred from the fact that a buyer goes to the shop in the confidence that the
tradesman has selected his stock with skill and judgment: the retailer need
know nothing about the process of manufacture: it is immaterial whether he
be manufacturer or not: the main inducement to deal with a good retail shop
is the expectation that the tradesman will have bought the right goods of a
good make: the goods sold must be, as they were in the present case, goods
of a description which it is in the course of the seller's business to supply:
there is no need to specify in terms the particular purpose for which the buyer
requires the goods, which is none the less the particular purpose within the
meaning of the section, because it is the only purpose for which any one
would ordinarily want the goods. In this case the garments were naturally
intended, and only intended, to be worn next the skin.
h) Thus the Privy Council upheld the appeal, finding that the decision of the
Supreme Court of South Australia was correct in finding that both the
manufacturer, Australian Knitting Mills, and the retailer, James Martin & Co,
were liable to the plaintiff.
 BEALE V TAYLOR ( 1967 ) 1 WLR 1193

1) ISSUE

a) Whether the transaction was sale by description?

2) FACTS

a) Taylor published an advertisement to sell a car describing it as “white, 1961,

herald convertible….” Relying on that description Beale came to see the car.
Since he did not have a licence, he did not actually take a test drive, but just
sat on the passenger side.
b) After the test run he also saw a metallic disc on the rear of the car with the
figure 1200 on it.
c) He bought the car believing it to be the 1961 model. When he got the license
he found the car unsatisfactory.
d) On examination, the mechanic told him that the car was made up of two cars
welded together, the front portion was one 948 model while the rear portion
was the 1200 model.
e) Further the car was found to be in unroadworthy and unsafe. Beale filed a
suit claiming damages.

3) HELD

a) Trial Court: The sale was not a sale by description as B had seen, tried and
approved the said car.
b) COURT OF APPEAL (SELLERS, J) :
i. Both the parties are innocent because no one could see from an ordinary
examination that it was made of two cars welded together.
ii. There is a sale by description even though the buyer saw the car before
purchasing it. A thing is sold by description as long as it is not sold
merely as a specific thing but as something corresponding to a particular
description. The buyer relied in part on that particular description in
buying the car.
iii. Ideally the buyer should have returned the car to the seller, but since this
is not the case, B is only entitled to the price difference(actual
price-scrap value).
 NAGURDAS PURSHOTUMDAS V MITSUI BUSSAN KAISHA LTD ( 1911 )
12 SSLR 67

1) FACTS

a) Previously they had a sale of flour bearing a well-known trademark.

b) Later on, flour was ordered based on the description as “the same as our
previous contract”, which identical in quality.
c) However, it failed to bear the same well-known trademark when it was
delivered to the buyer.
WEE LIAN CONSTRUCTION SDN BHD V INGERSOLL JATI MALAYSIA
SDN BHD ( 2010 ) 4 CLJ

1) FACTS

a) On 28 May 1996, the plaintiff/appellant and the defendant/respondent

entered into an agreement for the sale and purchase of a used machine, an
'Ingersoll-Rand CM351 Crawler Drill c/w VL140 Drifter Serial No V93415'
('the machine') at RM130,000, subject to the terms and conditions contained
in the purchase order No BW 3755 signed and accepted by the plaintiff
which, at the bottom left thereof, stated 'we have read and agreed to the Sales
Conditions stated overleaf' ('the caption').
b) In line with the defendant’s industry practice, the defendant had through its
employees, conducted checks on the machine so as to ensure that it
corresponded with the description that was contracted for.
c) The machine was confirmed to be fitted with a VL140 drifter prior to
delivery to the plaintiff.
d) The machine was used by the plaintiff for a period of 22 months from 15 July
1996 to May 1998, at the IJM site and then at another place known as the
PPH site.
e) No written complaint was ever issued by the plaintiff to the defendant within
the agreed six-month warranty period.
f) The defendant had continued to provide goods, after-sale service and repair
works on the used machine, as and when requested by the plaintiff
amounting to RM31,338.41.
g) On 8 April 1998, the machine was repaired due to drifter piston failure.
h) It was during this time that the plaintiff was informed by an employee of the
defendant that the machine was not equipped with a VL140 drifter but
instead a VL120 drifter was fitted.
i) The learned trial judge found as a fact that the VL140 Drifter was attached to
the machine.
j) The learned trial judge therefore dismissed the plaintiff's claim and allowed
the defendant's counterclaim on its invoices.
k) The plaintiff appealed against both decisions.

2) HELD

a) Held, dismissing the plaintiffs appeal with costs

b) (per Low Hop Bing JCA) There was credible evidence to support the learned
trial judges finding of facts. The learned trial judge had meticulously
embarked upon a careful appreciation of the evidence adduced at the trial,
and assessed, weighed and, for good reasons, accepted the evidence adduced
for the defendant as credible. An appellate court will not, generally speaking,
intervene and interfere unless the trial court is shown to be plainly wrong in
arriving at its conclusion. The finding of primary facts here were unassailable
and should neither be overruled nor supplemented by an appellate court
c) (per Low Hop Bing JCA) The plaintiff failed to make payment on the
defendants invoices. The defendants counterclaim was a simple and
straightforward demand to recover the price of goods and services rendered
as stated in the defendants invoices delivered to the plaintiff
d) (per Abdul Malik Ishak JCA) The purchase order was signed and accepted by
the plaintiff and the caption at the bottom sealed the plaintiffs fate. A person
who signs a contractual document is bound by its terms even though he has
not read it
e) (per Abdul Malik Ishak JCA) The defendant had conducted a pre-delivery
inspection by using the visual test in confirming that the drifter was VL140.
The visual test used since 1975 was said to be a reliable test
f) (per Abdul Malik Ishak JCA) The plaintiff had been given the opportunity to
inspect the machine prior to delivery. Even after the delivery of the machine
to the IJM site, the plaintiff had ample time to examine it during the first few
days to see whether the machine was fitted with a VL140 drifter and, at the
same time, to seek an experts opinion. Instead of adopting all these measures,
the plaintiff accepted the machine and used it for 22 months
 PRIEST V LAST ( 1903 )

1) FACTS

a) This case is demonstrates the principle if the buyer told the seller the
particular purpose which he/she is purchasing the goods, then it is an implied
condition that the goods are reasonable to for the purpose.
b) From this case, the buyer who bought a hot-water bottle from the seller was a
chemist.
c) His wife uses the hot-water bottle and then after 5 times, the bottle burst and
the wife was scalded.
d) Evidence shows that, the bottle was not fit for use as a hot-water bottle.
e) The buyer claimed for breach of section 14(3).
f) The seller stated that, the buyer had not made known the purpose for the
hot-water bottle would be used.
g) However, this was rejected by the court.

2) HELD

a) The court held that, the seller has entitled to recover the expenses in the
treatment of the buyer’s wife injuries.
b) It is because the buyer relied on the seller’s judgment and he had in fact used
the hot-water bottle for the usual purpose.
 MANCHESTER LINERS V REA ( 1922 ) 2 AC 74

1) FACTS

a) The seller supplied coal to be used in a ship.

b) The coal delivered by the sellerwas unsuitable for the steamer for which the
buyer intended it to be used.

2) HELD

a) Held – By Lord Green, Ships differed in their types and requirements, and
coal merchants knew this, there was a breach of the implied condition.
b) The question then becomes, if the seller knows of the purpose is it assumed
that the buyer is relying on the seller?
 GRIFFITHS V PETER CONWAY LTD ( 1939 ) 1 ALL ER 685

1) FACTS

a) The plaintiff bought a Harris Tweed, tailor-made coat from the defendants.
b) Due to her abnormally sensitive skin, she contracted dermatitis from wearing
the coat.
c) Only someone who had a similar skin type would have suffered from this
problem

2) HELD

a) Held – Plaintiff failed.

b) The defendants did not know of the plaintiff’s sensitive skin and could not be
expected to assume its existence.
c) The coat was fit for most people. s14 (3) of the Sale of Goods Act did not apply
d) There is a suggestion that the seller should, in certain circumstances, know that a
particular type of thing is required and so provide for it such that, if it is not
provided the seller will be in breach of the section
 FIMAN PLASTICS INDUSTRIES SDN BHD V ZAITUN INDUSTRIES SDN
BHD ( 2003 ) 4 MLJ 258

1) FACTS

a) The plaintiff was the sole supplier and manufacturer of plastic bottles used by
the defendant in packaging their products which included baby syampoo
bottles.
b) There were latent defects on the bottles when shampoo was filled into the
bottles and buyers had complained verbally of the leakage to SD5, the
salesman of the plaintiff.
c) The bottles were also found to be defective with cracks appearing at the neck.
d) These latent defects were not discovered at the time of receipt of the goods.
e) The defendant made demands to the plaintiff to credit the sum of
RM150,681.02 to the defendant’s account as the plaintiff had failed to rectify
the defects.
f) The issue to be determined was whether, on a sale of goods by virtue of s
16(1)(a) of the Sale of Goods Act 1957, the defendant had made known to
the plaintiff the purpose for which the bottles were required so as to show
that he relied on the seller’s skill or judgment was one of fact depending on
the circumstances of the particular case.

2) HELD

a) Held, estopping the plaintiff from denying that the bottles were defective and
allowing the defendant’s counterclaim to an extent of RM30,784.64 for
special damages
b) Looking at the representation by SD5, who was the plaintiff’s salesman, the
plaintiff was estopped from denying that the bottles were defective. On the
facts, SD5 had admitted that the bottles supplied to the defendant suffered
from many defects including breakage and leaking.
c) The defendant had counterclaimed amongst other things, for loss of profits
for baby shampoo in the sum of RM119.897.02.
d) This was based on 79,402 bottles @ RM1.51 normal profit margin of 55%
for shampoo products.
e) No tangible evidence was put forth to support this claim.
f) It was therefore disallowed.
g) For similar reason, the defendant’s claim for RM1m as damages sustained to
their goodwill and reputation was also disallowed as loss of reputation had
not been proved and also remote
 KHONG SENG V NG TEONG BISCUIT FACTORY ( 1963 ) 29 MLJ 388

1) FACTS

a) The plaintiffs claim $2,956.50 being the cost of 219 tins of tallow supplied to
the defendant company at $13.50 per tin at their request on February 14,
1961.
b) The defendants deny the claim stating that firstly they only ordered 100 tins
of tallow and secondly that the tallow supplied was of inferior quality and not
fit for the purposes for which it was supplied, although the plaintiff had by a
verbal agreement on February 10, 1961 expressly warranted that the tallow
would be of a quality fit for the manufacture of biscuits and free from faults
and defects.
c) The defendants used 15 of the tins supplied to manufacture 242 tins
of biscuits and found the biscuits wholly unsaleable.
d) The plaintiff was informed of the unsuitability of the tallow and asked to
remove the balance of 85 tins together with the 119 tins supplied in excess
which the plaintiff failed or neglected to do.
e) The defendants further counterclaim damages for loss of 242 tins
of biscuits at $2.20 per tin less the value of 15 tins used in the manufacture
of biscuits – leaving a balance of $329.90.

2) HELD

a) There was an implied condition (within the meaning of section 16(1)(a) of

the Sale of Goods Ordinance) in the contract between the parties that the
tallow supplied would be reasonably fit for the manufacture of biscuits;
b) There was a breach of condition and there was no bar to the defendants
repudiating the contract.
 SUNRISE BHD & ANOR V L & M AGENCIES SDN BHD [1999] 3 MLJ 544;
[1999] MLJU 257

1) FACTS

a) The first plaintiff was a developer and was responsible for the development
of a mixed condominium and commercial development. The second plaintiff
was a related company of the first plaintiff and was engaged by the first
plaintiff as the main contractor for the construction of the condominium. The
second plaintiff acquired two new tower cranes from the defendant to
facilitate the construction of two condominium towers.
b) The tower cranes were manufactured in China under licence from the French
Potain Company.
c) The defendant admitted both in the pre-agreement negotiations and in court
that the tower cranes sold were new.
d) The second plaintiff claimed that the two tower cranes frequently broke
down and were inoperable for long periods of time causing loss and delay in
the completion of the project. The plaintiffs also contended that in breach of
the sale and purchase agreement, the tower cranes were not reasonably fit for
the said purpose nor were they of merchantable quality, relying on s 16(1)(a)
of the Sale of Goods Act 1957 (‘the Act’).
e) The second plaintiff also rested its case upon a breach of the preventive
maintenance service contract for failing to provide trained and experienced
technicians to service and repair the defects in the cranes. The second
plaintiffs contended that because of the delay in completing the project, it
had to extend the services of its main sub-contractor (‘Mivan’) and claimed
the sums it had paid to Mivan. Alternatively, the second plaintiff argued its
case based on negligence and breach of statutory duty on the part of the
defendant. In its pleadings, the first plaintiff based its claim for loss and
damages suffered by it consequent to the delay and prayed for general
damages to be assessed.
f) However, in its submission, the first plaintiff argued for a claim based on
pure economic loss. The defence pleaded that the cranes were sold as
second-hand used cranes of Chinese make and that there was no condition or
warranty as to fitness as alleged or at all.

2) HELD

a) A defendant must know the case he has to face. By merely pleading 'general
damages to be assessed in respect of loss and damages suffered by the first
plaintiff company' did not entitle the first plaintiff to launch a claim for pure
economic loss, by way of submission. The only plea in negligence as found
in the pleadings was a claim in the alternative made on behalf of the second
plaintiff in negligence/breach of duty as against the defendant. There was no
plea in negligence made by the first plaintiff as against the defendant. In its
submission, the first plaintiff relied on 'breach of the duty by the defendant'
but there was nothing pleaded as against the defendant in respect of this
alleged breach of duty. On this ground alone, this claim by the first plaintiff
must fail .
b) The first plaintiff's claim also failed on the principle of remoteness. There
was no evidence that the first plaintiff suffered any loss. There was no claim
instituted against the second plaintiff by the first plaintiff for late delivery
and there was no way in which the court can consider the eligibility of the
first plaintiff to launch this claim by way of economic loss. Therefore, the
first plaintiff's claim against the defendant was dismissed
c) In s 16(1)(a), there would be an implied condition that the goods purchased
shall be reasonably fit for the purpose for which it was acquired. The
particular purpose for which the goods were required could be implied by the
plaintiffs making known to the defendant either expressly or by implication
the particular purpose for which the cranes were needed. The court accepted
the evidence of the plaintiffs' witnesses that they had at all times during the
negotiations informed the defendant that the tower cranes were required for
the construction of the condominium towers at the project
d) If the defendant knew the purpose for which the plaintiff needed the
particular goods, then it was clear that the plaintiff was relying on the seller's
skill and judgment to supply the suitable goods to cater for the particular
purpose for which the cranes were required. There was no doubt that the
defendant well knew that the second plaintiff wanted the tower cranes to
facilitate the construction of the condominium tower blocks at the project
e) It was clear from the pre-sale negotiations and the brochure from the
defendant that the tower cranes fitted the description of the goods which
were sought for and supplied by the defendant. Further, the mere fact that the
tower cranes sold had a trade name and the fact that it as described in the
contract by its trade name would not exclude the operation of the implied
condition
f) In so far as the second plaintiff was concerned, it was well content and rest
assured that the defendant had bought the right goods and of good quality.
Since the plaintiff were familiar with the French-made Potain tower cranes
and since they were informed that those Chinese-made cranes were made in
China under licence, the plaintiffs were entitled to assume that the cranes
were of similar merchantable quality
g) The second plaintiff had failed to establish the precise number of days of
delay that could be attributable to the defendant's breach. The court was
therefore unable to ascertain the actual number of days of delay caused
directly by the defendant's fault and further the court was unable to accept the
plaintiff's quantification of the sum of RM523,843.47 in the absence of
satisfactory proof of how they arrived at that figure. Having considered the
case of the second plaintiff, the court was unable to make any award of
damages, notwithstanding the fact that the second plaintiff had proved its
case against the defendant under s 16(1)(a) of the Act
CAMMELL LAIRD & CO V MANGANESE BRONZE AND BRASS CO LTD
( 1934 ) AC 402

1) FACTS

a) Shipbuilders agreed to build two ships to carry heavy liquids.

b) They were to have propellers of special construction and diameter according
to certain specifications.
c) One proved unsatisfactory because it caused too much noise.

2) HELD

a) If the defect in goods sold which renders them unfit for their purpose is due
to a characteristic which it lay within the sphere of expertise of the seller to
detect and avoid, the responsibility for their unfitness lies with the seller.
Since the facts came within the first exception to section 14 of the Act, the
seller fell into breach of the implied condition that it should be reasonably fit
for that purpose.
b) Lord Wright said: ‘ What subsection (2) now means by ‘merchantable
quality’ is that the goods in the form in which they were tendered were of no
use for any purpose for which such goods would normally be used and hence
were not saleable under that description and ‘ . . it has been laid down that
where a manufacturer or builder undertakes to produce a finished result
according to a design or plan, he may be still bound by his bargain even
though he can show an unanticipated difficulty or even impossibility in
achieving the result desired with the plans or specification’.
 ASHINGTON PIGGERIES LTD V CHRISTOPHER HILL LTD ( 1972 ) AC
441

1) FACTS

a) Ashington Piggeries devised a recipe for mink feed, contracting in 1960 with
Christopher Hill to supply ingredients and compound them. The food was
marketed under the name "King Size".
b) At first, there were no problems, but in February 1961 Christopher Hill
entered into a contract with Norwegian company Sildemelutvalget to supply
Norwegian herring meal rather than the herring meal previously used.
c) In July 1961, mink fed "King Size" began to die in large numbers of liver
disease. Unbeknownst to the parties, the sodium nitrite preservative used in
the Norwegian herring meal produced a
substance, dimethylnitrosamine (DMNA), toxic to many animals, highly so
to mink. None of the parties were aware that DMNA (the potential dangers
of which were known, although lethal dosages were not) was present in the
meal.
d) When Ashington Piggeries withheld payment for the feed, Christopher Hill
sued, and Ashington Piggeries counterclaimed for damages which they
claimed were caused by violation of contract. According to them,
Christopher Hill had supplied an ingredient not sanctioned by contract:
herring meal plus DMNA.
e) The defendants in turn sued Norsildmel (into which Sildemelutvalget had
evolved) under the claim that the words "fair average quality of the season"
included in the contract for the herring meal were part of the identification of
the ingredient, which the herring meal in question did not meet.
f) The claims were based on the Sale of Goods Act of 1893, specifically with
references to sections 13, 14(1) and 14(2). Section 13 requires that goods
sold match the description of any contract of sale. Section 14(1) and 14(2)
concern the quality of the goods and the degree to which the buyer purchases
the expertise of the seller in determining that quality.
g) In 1968, the trial court found for Ashington Piggeries against Christopher
Hill and for Christopher Hill against Norsildmel.
h) The Court of Appeal in 1969 reversed the decision, and the matter was
subsequently brought before the House of Lords in 1971.

2) HELD

a) The House of Lords dismissed the section 13 concerns because the DMNA
was a defect in the herring meal, and not a different ingredient. The problem,
they found, was in the quality or condition of the ingredient, and not in its
correct identification.
b) The House of Lords also considered section 14(1), by which a buyer relying
on the judgment or skill of a seller to provide goods for a particular purpose
enters into an implicit contract that the goods are suitable for the purpose. In
this case, the House affirmed that Ashington Piggeries was relying on its own
expertise in determining what ingredients were appropriate, but relying on
Christopher Hill to obtain suitable quality ingredients to complete the recipe.
Since the potential toxicity of DMNA to all animals was known and since
 partial reliance on a seller’s skill and judgment qualified under 14(1), the
defendant—who knew the purpose of the meal in animal feed—was
responsible to provide quality ingredients that were not toxic to animals.
c) In regards to the defendants' suit against Norsildmel, the Court of Appeal had
found that the words "fair average quality of the season" were not part of the
identification of the ingredient but instead a warranty as to quality.
d) They found, too, that Norsildmel had not been retained with reliance on their
judgment or skill in assessing meal for feed purposes. While Christopher Hill,
Inc., would have been within its rights to reject the faulty goods, they were
not able to recover compensation because the accepted goods provided to be
defective.
e) The House of Lords affirmed the former, but agreed with the trial court that
Norsildmel had knowledge of the purpose of the meal and should have had
knowledge of the potential toxicity of it for that purpose.
f) While neither Christopher Hill or Norsildmel were primarily in the business
of feeding mink, the potential toxicity of the substance to animals in general
was already known. Whether the agencies had dealt in Norwegian herring
meal for the purpose of feeding mink in the past was immaterial.
 BALDRY V MARSHALL ( 1925 ) 1 KB 260

1) FACTS

a) The plaintiff asked the defendants, who were motor dealers, to supply a car
that would be suitable for touring purposes.
b) The defendants recommended a Bugatti, which the plaintiff bought.
c) The written contract excluded the defendant’s liability for any “guarantee or
warranty, statutory or otherwise”.
d) The car turned out to be unsuitable for the plaintiff’s purposes, so he rejected
it and sued to recover what he had paid.

2) HELD

a) The Court of Appeal held that the requirement that the car be suitable for
touring was a condition.
b) Since the clause did not exclude liability for breach of a condition, the
plaintiff was not bound by it.
 THORNETT & FEHR V BEERS & SONS ( 1919 ) 1 KB 486

1) FACTS

a) B went to T’s warehouse to buy some glue. The glue was stored in barrels
and every facility was given to B for its inspection.
b) B did not have any of the barrels opened, but only looked at the outside.
c) He then purchase the glue but later found that the glue was defective.

2) HELD

a) The court held that B could not complain of the defect or breach of
merchantable quality because he had all the time and opportunity to inspect
and test the glue but had chosen not to do so.
b) In such a case, the buyer cannot later complain that the goods were bad and
not what he wanted.
 SENG HIN V ARATHOON & SONS LTD ( 1968 ) 2 MLJ 123

1) FACTS

a) This was an appeal against the decision of the High Court which had
awarded the plaintiffs the sum of S$2,369.90 as damages for breach
of contract in respect of the sale by the defendants to the plaintiffs of tapioca
flour.
b) On appeal it was argued that the plaintiffs had not, on the facts discharged
the onus of proving that the goods were of unmerchantable quality. The
evidence showed that a portion of the flour had been discoloured.
c) The sacks in which the tapioca was kept had been painted with Chinese
letters in red ink and this red ink had penetrated the jute cover with the result
that some of the tapioca flour was discoloured.
d) As a result, the flour (which was to be delivered to a German firm) was
declared under the German regulations to be unfit for human consumption.
e) There was no evidence that the part of the flour which was said to be
contaminated by the red colour was insanitary or contained any deleterious
ingredient.

2) HELD

a) Held, allowing the appeal

b) In order to show that the goods were not of a merchantable quality it had to
be shown that the goods were of no use for any purpose for which such
goods would normally be used and were therefore not saleable under that
description
c) In this case, the plaintiffs had failed to show that the tapioca flour was of
unmerchantable quality under English law, as although the flour may not
have been in perfect condition it was on the evidence at least unsaleable as
starch; nor had it been satisfactorily found that it was unfit for human
consumption under the law of Singapore
d) The learned trial judge had erred in law in deciding that the tapioca flour was
not of a merchantable quality.
 WILSON V RICKET , COCKERALL & CO ( 1954 ) 1 ALL ER 868

1) FACTS

a) Plaintiff who is a housewife has ordered a trade name ‘Coalite’ coal from the
defendant, coal merchants.
b) When the coal was put on fire in an open grate in plaintiff’s house, plaintiff
was injured due to the explosion that occurred in plaintiff’s house.
c) So, plaintiff want to claim for the damages that caused by the breach of
warranty in the Sale of Goods Act 1893(c71)(repealed) s 14.

2) HELD

a) Therefore, the court was held that the defendant was liable for this
consignment where by the whole consignment including the explosive piece
are not of merchantable quality as required by Section 16(1)(b).
 LORYMER V SMITH ( 1822 )

1) FACTS

a) In Lorymer V Smith (1822)Two parcels of wheat were sold by sample. The

buyer went toexamine the bulk a week after.
b) One parcel was shown to him but the seller refused to show theother parcel
that was not there in the warehouse.

2) HELD

a) The buyer was entitled to rescind the contract (i.e. to treat the contract as not
having any legaleffect/power/or binding)
 GODLEY V PERRY ( 1960 ) 1 ALL ER 36

1) FACTS

a) A sixpence catapult made from plastic that was unsuitable for toys broke,
blinding the claimant. The defendant was found liable for damages of £2,500.
There are two further relevant factors when framing this test.
b) First, that claimants will have placed reliance on the defendant’s skill and
judgment in choosing which implants to offer.
c) Second, the existence of a regulatory system which aims to deliver the
highest possible levels of safety.
d) If goods are of unsatisfactory quality, the consumer is entitled, within a
reasonable time, to a repair or replacement (s 11M, SGSA 1982), unless this
would be disproportionate.
e) This right stems from the 1999 Consumer Sales Directive (1999/44/EC) and
the choice is the consumer’s. Here, claimants would be seeking the cost of
replacement implants and surgery. It is irrelevant that the implants have not
ruptured. If the goods are of unsatisfactory quality the consumer is entitled to
a repair or replacement.