Malaysia Sale of Goods Act Summary with Case Studies

The Sale of Goods Act 1957 was originally enacted in 1957 and revised in 1990 to include the states of Malacca and Penang. The earlier laws were largely modelled on the United Kingdom Sale of Goods Act 1893.The Sale of Goods Act 1957 is the main piece of legislation serving consumers in obtaining remedy when their acquisition ‘go wrong’. It is in the concern of every person who sells goods or services to appreciate the repercussion of the Act for them and the tasks they have with it. This shows how by law, all descriptions, as well as those that are oral, written, indirect or set in an illustration have got to be precise and not deceptive. Portraying merchandise wrongly means the buyer may have a claim against the seller for infringement of agreement, and may put the seller in infringement of the law.

We will be looking at this act in this essay. We will be emphasizing on the case analysis of how this law has helped judges come to decisions, in the Malaysian courts. We will be looking at two cases; a) Interdeals Automation (M) Sdn Bhd vs Hong Hong Documents Sdn Bhd and b) Wilson VS Rickety, Cocketell & Co Ltd. Both the cases look at the different ways in which this law was used in court rulings. We will proceed and give analysis and application of the law on these cases.

Discussion

Section 16 of the sales of Goods Act 1957 refers to the standard of quality of goods. Goods must be reasonably fit for purposes for which the buyer wants them (section 16(1))Section 16(1) states that; In general, there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale. This rule, however, has two exceptions provided by subsections (a) and (b).

By section 16(1)(a), where goods are sold in the course of a business and the buyer expressly or by implication makes known to the seller the purpose for which he is buying the goods, then there is an implied condition that the goods supplied will be reasonably fit for that purpose, even if it is a purpose for which such goods are not commonly bought. This section does not apply if the buyer does not rely, or if it is unreasonable for him to rely, on the seller’s skill and judgment.Goods must be of merchantable quality (section 16(1)(b)) By section 16(1)(b), where goods are sold in the course of a business, there is an implied condition that the goods supplied must be of merchantable quality.

However, if the buyer has examined the goods, there shall be no such implied condition as regards defects which ought to be revealed by the examination. This section means that goods must be as fit for the purpose for which they are commonly used as it is reasonable to expect, taking into account any description attached to them, their price and all the other circumstances. Thus, food must be fit to eat, clothes must be fit to wear, and cars must be fit to drive.

Subject to this Act for the time being in force, there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale, except as follows:

(a) Where the buyer, expressly or by implication makes known to the seller the particular purpose for which the goods are required, so as to show that the buyer relies on the seller’s skill or judgment, and the goods are of a description which it is in the course of the seller’s business to supply (whether he is the manufacturer or producer or not) there

is an implied condition that the goods shall be reasonably fit for such purpose: Provided that, in the case of a contract for the sale of a specified article under its patent or other trade name there is no implied condition as to its fitness for any particular purpose.

(b) Where goods are bought by description from a seller who deals in goods of that description (whether he is the manufacturer or producer or not) there is an implied condition that the goods shall be of merchantable quality: Provided that if the buyer has examined the goods, there shall be no implied condition as regards defects which such examined ought to have revealed.

As you can clearly see before the enacting of the SALES OF GOODS ACT 1957 consumers were in an extremely vulnerable position, in a sense consumer protection was almost all legally “implied” and the consumer had to rely on the goodwill of the sellers. This not only gave the sellers considerable leverage but created inconsistencies and disparities in the quality of goods and the rights and protections of the consumer, which resulted more often then not in the consumer losing out . Thus the Malaysian Consumer affairs department set out with the SALES OF GOODS ACT 1957 to first of all provide a legal benchmark and consistency in the goods market and secondly provide a benchmark of consistency and minimum quality of goods in the market. This consequentially resulted in the improvement of the protection of consumer rights and made consumer rights a priority. Thus through out this assignment we will be analyzing Malaysian cases to see if the SALES OF GOODS ACT section 16 has lived up to the objectives and protections it set out to deliver from the onset.

Case Studies

DALAM MAHKAMAH RAYUAN MALAYSIA (BIDANGKUASA RAYUAN) RAYUAN SIVIL NO. P – 02 – 794 – 2004

Interdeals Automation (M) Sdn Bhd … Plaintiff vs Hong Hong Documents Sdn Bhd … Defendant)

Case Summary

Goods must be of merchantable quality section 16(1)(b)

The plaintiff and the defendant entered into an agreement for the sale and purchase of a unit of machinery called a Kern Page Mailer 18000 at a purchase price of RM190, 000.00 of which the defendant refused to pay the plaintiff the amount due to for the machinery.

The defendant raised a number of defences. First, the machine was not reasonably fit for its purpose or was not of merchantable quality. Second, the plaintiff had misrepresented to merchantable quality. Second, the plaintiff had misrepresented to the defendant, about the performance of the machine.

Evidence

It is in evidence that the defendant acknowledged delivery of the machine in good order and condition on 20 October 1993. It is also in evidence that the plaintiff’s personnel installed the machine, tested and commissioned it and trained the defendant’s personnel in the use of it.

Ruling

The judge ruled in favor of the plaintiff on the first two defences taken. He held that the goods were of merchantable quality and that there had been no misrepresentation, therefore the defendant had to pay the plaintiff.

Analysis

This case is a direct enacting and confrontation of section 16(a) and section 16(b) of the SOGA, because while section 16(a) dictates that there is an implied condition that the goods supplied will be reasonably fit for the purpose of which they are bought which was the claim of the defendant. Section 16(b) which states that if the buyer has examined the goods, there shall be no such implied condition as regards defects which ought to be revealed by the examination, which was the plaintiffs counterclaim, which was used to over rule section 16(a) thus delivering the ruling and ruling in favor of the plaintiff. So the observance is while the application here maybe contradictory, as seemingly section 16(a) and section 16(b) where in conflict, section 16(b) took eminence as the goods had been established as of “merchantable quality” hence nullifying the defences of the defendant thus protecting the plaintiff .So the act still fulfilled its fundamental obligation of giving a basis for legal clarity, when legal ambiguity arose as in this case.

SALE OF GOODS – CONDITIONS AND WARRANTIES – IMPLIED TERMS AS TO QUALITY OR FITNESS – MERCHANTABLE QUALITY – WHAT CONSTITUTES MERCHANTABLE QUALITY – PART OF GOODS ONLY MERCHANTABLE

WILSON VS RICKETY, COCKETELL & Co Ltd

Plaintiff, a housewife, ordered from defendants, coal merchants, ‘a ton of Coalite’ which was duly delivered to her by defendants. When part of the consignment was put on a fire in an open grate in plaintiff’s house an explosion occurred which caused damage. On a claim by plaintiff for damages for breach of warranty under Sale of Goods Act 1893 (c 71) (repealed) s 14: Held section 14 applied to all goods delivered in purported performance of a contract of sale, whether they conformed to the contract or not, and, therefore, the section applied to the whole consignment including the explosive piece, and, as the consignment was not of merchantable quality, being unfit for burning, defendants were liable under section 14 (2).

Analysis

This case is unique, because section 16 dictates that there is an implied condition that the goods supplied will be reasonably fit for the purpose of which they are bought and that if the buyer has examined the goods, there shall be no such implied condition as regards defects which ought to be revealed by the examination. The ruling was in favor of the plaintiff even though the plaintiff had examined the contents on completion of the contract which is the constituent of section 16(b), because while the consignment was examined and was used for the purpose of which it was bought. There was a breach of contract because the whole consignment was not of merchantable quality and hence when it was used for the purpose of which it was bought, it failed to fulfill this purpose with extremely disastrous consequences. So once again the SOGA has provided legal protection for the consumer and has provided legal clarity where before there would have been ambiguity and the defendant who is the seller would have probably won the case.

Conclusion

The sale of goods act was made with a main reason to protect the consumer. So the objective was to make sure that the consumer in protected in terms of usability of the product, quality of the merchandise. In the above cases we see how the act still fulfils its primary requirement of giving a basis for legal clarity, when legal vagueness arises. We also see in the second case; a ruling that was in support of the plaintiff even though the plaintiff had checked the contents at close of the contract which is the constituent of section 16(b), We see how there was a violation of contract because the whole delivery was not of merchantable value and hence when it was used for the intention of which it was bought for, it was unsuccessful to accomplish this use with tremendously grievous effect. So we note once again how the SOGA has provided legal security for the consumer. Both these cases are showing that the importance of the section 16 Sales of Goods Act in the rule of law. We have managed to discuss in the previous cases how the SOGA actually helped in the reaching of such decisions.