Sale of Goods

in Malaysia
Business Law
LAW1014
Chapter 21
Law For Business 2022
What is a sale of goods
contract?
• In Malaysia the contract for a sale of goods is
governed under the Sale of Goods Act 1957

• Section 2 defines what are goods. Key points

are:
• Every kind of movable property (excluding
actionable claims and money)
• Includes stocks of goods, share in the goods,
• Things attached or forming part of the land
• must be capable of being severed from land
for sale (e.g. vegetable, fruit, wood etc)
Definition of a contract of
sale
• Section 4 SOGA (Malaysia) defines a contract of sale as:
• A contract (i.e. offer, acceptance, capacity, certainty etc
exist)
• Seller transfers property in goods to buyer (purpose of
the contract)
• For price (consideration)
• Section 5(1) SOGA (Malaysia) provides that when must
be acceptance of such terms to create a contract of sale.
• 6(1) SOGA (Malaysia) – goods forming the subject matter
of contract can either be
• Existing goods;
• Future goods
Other key provisions
When must transfer of property in
goods must take place?
• In the future (section 4(3) SOGA
(Malaysia))
• Or when time for return of the goods lapses
(4(4) SOGA (Malaysia))
Type of Goods
• Specific Goods (specific characteristics,
identifiable and measurable)
• Unascertained Goods (even if it has specific
characteristics, identifiable but not yet measurable)
• Ascertained Goods (goods initially unascertained
but steps have been taken to make them
ascertained. Steps should be taken by the seller)
• Future Goods – Goods which even if having
specific characteristics will only come into
existence in the future at a specific time and date)
Is SOGA Applicable to all
commercial contracts
• Take note of section 62 SOGA (Malaysia)
- where rights and liabilities provided by
SOGA can be excluded by terms in the
contract (notably exclusion clauses)
• If there is a term in the contract with the
abovementioned effect, then the term must
be challenged and argued inoperative
before SOGA can apply.
• See discussion (lecture slides and remember
workshop on exclusion clauses)
 Sale of Goods
in Malaysia
Implied Terms Under
SOGA (Malaysia)
Contract for the Sale of Goods-
Some important terms implied if
SOGA is applicable to the contract
• Section 15 SOGA (Malaysia) – goods
must correspond with description
• Section 16(1)(a) SOGA (Malaysia) –
goods must be fit for purpose
• Section 16(1)(b) SOGA (Malaysia) –
goods must be of merchantable quality

• See page 463 of Law For Business 2022.

 Section 15 SOGA (Malaysia) -
Description
• Wasco Lindung Sdn Bhd v Lustre Metals &
Minerals Sdn Bhd [2015] 9 MLJ 610 (HC)– held
there was a breach of s 15 because the goods delivered
by the seller did not correspond with defendant’s
proforma invoice.
• Abdul Malik Ishak JCA in the Court of Appeal case of
Wee Lian Construction Sdn Bhd v Ingersoll-Jati
Malaysia Sdn Bhd [2010] 3 MLJ 425 (CA), (at pp
434–435) stated that the provision covers two types of
situation:
• Failure to secure exact conformity with the full
contractual description of goods (discrepancy in the
characteristic of the goods); and
• Total failure to perform (goods delivered substantially
different from the contract)
 Section 15 SOGA (Malaysia) -
Description
• Union Alloy (M) Sdn Bhd v Sykt
Pembenaan Yeoh Tiong Lay Sdn Bhd
[1993] 3 MLJ 167 – there must be evidence
to show the goods do not correspond with
description. If the discrepancy is de minimis
then it is not sufficient.

• If breach of the implied term for description is

proved then the buyer has the implied right
to reject. However this depends on whether
description is a condition or warranty – see
section 12(1) SOGA (Malaysia)
 Sale by Description
(English Case Law)
• Arcos v Ranaason [1933] AC 470 (HL)
• A contract for the sale of a quantity of wooden
staves for making barrels described the staves
as being 1/2 an inch thick. Some of the staves
delivered were not 1/2 an inch thick but very
slightly out.
• Buyer had the right to reject.
• If goods do not correspond with description there
is a right to reject because description was a
condition in the contract. (similar to see section
12(1) SOGA (Malaysia)
• See also Beale v Taylor [1967] 3 All ER 253
Section 16(1)(a) SOGA
(Malaysia) – fit for purpose
• Perfect Kam Hung Sdn Bhd v Cheah Tai
Hoe [2011] 9 MLJ 593 (HC)– a lorry bought by
the buyer was found to be unfit for purpose due
to the inherent defects it had.
• The judge took into account that the buyer:
• Made known to the seller the purpose for
which the lorry was to be used;
• Relied on the skill and judgment of the
seller in making the purchase;
• The sellers had experience in dealing with
such goods (i.e. lorry)
Section 16(1)(a) SOGA
(Malaysia) – fit for purpose
• Fiman Plastics Industries Sdn Bhd v Zaitun
Industries Sdn Bhd [2003] 4 MLJ 258 (CA) it
was held:
• If purpose is made known to the seller;
• The seller responds by highlighting the
limitation of the product to fulfill the purpose
• The Buyer proceeds to contract
• The buyer is estopped from claiming under
section 16(1)(a) SOGA (Malaysia)
• The principle applies even if the seller
highlight the limitation to the buyer’s agent
Fitness for Purpose
(English Case Law)
• Griffiths v Peter Conway Ltd [1939] 1
All ER 685
• Griffiths bought a coat from Peter
Conway. Griffiths developed dermatitis
caused by wearing the coat and this was
because Griffiths had unusually sensitive
skin.
• Griffiths claim failed because the fact that
she had sensitive skin was not
communicated to the seller. Therefore
there was no breach of fit for purpose
implied condition.
Fitness for Purpose
(English Case Law)
Other cases to consider:
1. Priest v Last [1903] 2 KB 148
2. Spencer Trading Co. Ltd v Devon [ 1947] 1
All ER 284
Section 16(1)(b) SOGA (Malaysia)
– merchantable quality
• Perfect Kam Hung Sdn Bhd v Cheah Tai Hoe
[2011] 9 MLJ 593 (HC) – the lorry was also
found to be in breach of section 16(1)(b) SOGA
(Malaysia)
• Sunrise Bhd v L & M Agencies Sdn Bhd
[1999] 3 MLJ 544 (HC) – the buyers bought two
China made Potain tower cranes from the
defendant. The buyers relied on the quality of the
Potain brand and expected the China made ones
would be as reliable and be of similar quality as
that of the French-made Potain tower cranes.
• Such expectation can be the basis of
merchantable quality.
Merchantable Quality
(English Case Law)
• Thornett & Fehr v Beer & Sons (1919) 1 KB 846:
• There is no case for merchantable quality if buyer
did not inspect the goods when he/she should have.
• This applies to a case where the product generally
does what it ought and that by contract there was
some special request for the manufacture of the
product.
• The burden lies with the buyer to inspect and
discover the defect. An action will still arise if the
defect cannot be discovered even after ‘reasonable
inspection’
• See also Wren v Holt [1903] 1 KB 610
Duties of the Seller
• Section 31 SOGA 1957 - It is the duty of the
seller to deliver the goods and it is the buyer’s
duty to accept with payment in accordance
with the terms of the contract.
• Flexi Homes Sdn Bhd v Atea
Environmental Technology (M) Sdn Bhd
[2017] 7 MLJ 197 – the plaintiff and
defendant had a contract for the supply and
installations of Toli carpets by the plaintiff to
the defendant. The defendant refused to
accept delivery of the carpets. The defendant
was held to be in breach of s 31 SOGA and
therefore liable for damages under section
44 and 56, Contracts Act 1950.
 Sale of Goods
in Malaysia
Duties of Seller
Duties of the Seller
• Section 33 SOGA 1957 – delivery
determined according to the intention of the
parties OR an act which passes possession
of the goods to buyer.

• Section 57 SOGA 1957 – Buyer can sue

seller for damages for wrongful non-delivery
of the goods.
Duties of the Seller
• Section 36(2) SOGA 1957 – where the
time for delivery is not fixed the seller must
deliver the goods within reasonable time.
• What is reasonable time is not clear – this
has to be decided by considering:
• The nature of the contract (terms);
• The goods in question;
• Consequence of delayed delivery –
serious/not serious
 Sale of Goods
in Malaysia
Duties of Buyer
Duties of the Buyer
• Section 36(1) SOGA 1957 – when the
seller delivers the goods, the buyer must
accept deliver subject to contrary intention

• Section 37(1) SOGA 1957 – where the

seller has made a short delivery then the
buyer is entitled to reject or accept. If
accepted, then the buyer pays for goods
delivered at the contract rate.
Duties of the Buyer
Section 37(2) SOGA 1957 – where the
seller delivers goods more than contracted
for, the buyer is entitled to:
a) accept the contractual amount and reject
the rest;
b) Reject all of the goods delivered;
c) Accept the whole and pay for all of it at
the contract rate
Duties of the Buyer
Section 42 SOGA 1957 – Buyer is deemed
to have accepted the goods if:
a) Intimates to the seller that he has
accepted them;
b) Or does anything inconsistent with the
ownership of the seller;
c) Or after lapse of reasonable time within
which the buyer should inform the seller
whether he accepts the goods or rejects
them
Duties of the Buyer
• Nanyang Union Sdn Bhd v Gloveline
Industries (M) Sdn Bhd [2006] 2 MLJ 485:
section 42 creates a presumption which can be
rebutted.

• Mukand Ltd v Malaysia Steel Works (KL) Sdn

Bhd [2011] 5 MLJ 578: In this case section 42
applied to the buyer because the buyer had made
use of the good after delivery and only complained
about defect after the warranty period was over.
As such the seller had no further obligation to
remedy/correct the defect by virtue of section 42.
 Sale of Goods
in Malaysia
Remedies
Remedies – buyer v seller
1. Damages for non-delivery under section 57 of the
Sale of Goods Act 1957 - seller neglects or refuses to
deliver, the buyer is entitled to sue the seller for
damages for non-delivery.
2. Claim for specific performance under section 58 of
the Sale of Goods Act 1957 - In limited circumstances,
the buyer may apply to the courts for a grant of a
decree directing the seller to complete the contract
subject to Chapter II of the Specific Relief Act 1950.
3. Remedy for breach of warranty under section 59 of
the Sale of Goods Act 1957 - Whenever a breach of
warranty occurs, the buyer is not entitled to reject the
goods but can only claim damages
Remedies – seller v buyer
1. The buyer will be liable to the seller for any
loss occasioned by the buyer’s neglect or
failure to take delivery of the goods (See
section 44, SOGA 1957)
2. (2) The seller is entitled to damages where
the buyer has wrongfully neglected or
refuses to accept and pay for the goods
(See Section 56, SOGA 1957)
3. (3) Where the buyer has failed to pay for
the goods, the seller may sue for the price
(See section 55, SOGA 1957)