LE/Lecture 9
Lecture 9
Contract for the Sale of Goods (2)
1.0 Transfer of property
a. Property (產權) 指貨品的一般產權，而不單指某一項特殊產權；
b. When does the ownership of the goods pass from seller to buyer?
c. It depends on the parties’ intention.
1.1 Intention to pass the ownership (property)
s19 SOGO:
As regards the contract for sales of goods, the passing of property depends on the (presumptive)
intention of the parties. Transfer at the time the parties intend it to be transferred. E.g.
a. terms of the contract
b. the conduct of the parties
c. the circumstances of the case
s20 SOGO
a. For sale of specific goods (指定貨品) in a deliverable state, → ownership of the
property/(ownership) passes to buyer when the contract is made.
b. Irrespective of the time of payment, time of delivery or both. (Rule 1)
c. Deliverable state means that the goods are ready for delivery.
d. However, if some conditions need to be complied with before the goods can be delivered, it
is not in a deliverable state. (e.g. fine tuning of a piano.)
Kursell v Timber Operators & Contractors Ltd (1927)
a. P sold D the timber growing in a forest conforming to certain measurement.
b. A law was passed to confiscate the forest
Held
The contract was not a contract for specific goods in a deliverable state.
Underwood Ltd v Burgh Castle Brick & Cement Syndicate (1922)
a. P agreed to sell a large machine to D on the terms of “free on rail”.
b. When the machine was mounting on a truck, it was damaged.
c. D refused to accept the machine.
Held
The property (machine) did not pass to D until the machine was placed safely on the railway.
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1.2 Examples of specific goods and non-specific goods
a. a specific item identified by the contracting parties (in a deliverable state)
b. Display items selling for a bargain price
c. Goods sold by sample are not specific goods
1.3 Five rules for ascertaining intention (s20 Cap. 26)
Implied intention as to when the property of the goods is to pass to the buyer:
Rule 1
For sale of specific goods in a deliverable state, property in the goods passes to the buyer when
the contract is made.
Rule 2
If the specific goods is not in completely deliverable state, the property does not pass until
a. things done; and
b. the buyer has notice thereof.
Rule 3
If the seller is bound to do something, e.g. weigh, measure etc. (for specific goods in a deliverable
state) for the purpose of ascertaining the price, the property does not pass until. (Until Rule 2)
Rule 4
For goods on sale or return, the buy
a. signifies his approval or acceptance; or
b. keeps the goods for a period of time agreed in the contract, or expiration of a reasonable
time.
Rule 5
a. For the sale of unascertained or future goods by description, if the goods are unconditionally
appropriated to the contract, (as agreed by the buyer and seller) the property in the goods
thereupon passes to the buyer.
b. The seller delivers the goods to the buyer or to a carrier or other bailee, and does not reserve
the right of disposal, the seller is deemed to have unconditionally appropriated the goods to
the contract.
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1.4 Reservation of Ownership
s21(1) SOGO
a. Romalpa clause
b. provides that the seller of goods has the power to reserve ownership in goods
c. then the buyer will need to fulfil the condition before he can actually become the owner of
the goods
d. putting a Romalpa clause in the contract → intention clear that ownership of goods remains
with the seller until full payment of purchase price
e. The buyer has only the possession of the goods but not the ownership.
2.0 Transfer of title by a Non-Owner
a. If a non-owner sells the goods to a third party buyer, there will be two conflicting victims -
the original owner and the buyer.
b. SOGO in general supports that the goods should be returned to the original owner.
c. however, in some very exceptional cases, the buyer can obtain the title and retain the goods.
2.1 The General Rule --Nemo Dat rule
s23(1) SOGO
a. provides that where goods are sold by a non-owner (i.e. he does not have the owner’s
authority to sell), the buyer does not become the owner of the goods - nemo dat rule.
b. a person cannot sell what he does not have - Nemo dat quod non habet. (No one can give
better title than he himself has.)
2.2 Exceptions to the Nemo Dat Rule (the 3red party becomes the buyer)
The following are the exceptions to Nemo Dat Rule:
a. Estoppel - s23(1) SOGO
The owner has, by his words or conduct, represented to the buyer that the seller is the true
owner or has the owner’s authority to sell.
b. Market overt rule - s24 SOGO
Where goods are openly sold in a shop or market, the buyer acquires a good title to the
goods, provided he buys them in good faith and without knowledge of the ownership of
goods.
c. Sale under voidable title – s25 SOGO
When the seller of goods has a voidable title to the goods, but his title has not been avoided
at the time of the sale, the buyer acquires a good title to the goods.
→ provided the buyer is in good faith and without notice of the seller's defect of title.
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Car & Universal Finance Co. Ltd v Caldwell (1965)
a. C sold a car to N and received a cheque from N as part payment of the purchase price.
b. However, the cheque was bounced and he reported the matter to the police.
c. The car was found being driven by X who obtained the car from C&UF under a hire-
purchase agreement.
Held:
The ownership of the car belonged to C because C had taken prompt action to report the
matter to the police before N sold the car to C& UF.
d. Seller in possession – s27(1) SOGO
1. Where a goods is already sold to Buyer 1 but still kept by the seller (or a mercantile
agent acting for him) who mistakenly sell the same goods to Buyer 2.
2. Buyer 2 in good faith and without notice of the previous sale, shall have the good title
to the goods.
3. Buyer 1 will lose his title on the goods but he is entitled to sue the seller who would be
liable to him.
Pacific Motor Auctions Pty Ltd v Motor Credits (Hire Finance) Ltd (1965)
a. A car dealer sold the cars to Motor Credits but retained the cars for display purposes.
b. Later, the dealer by mistake, sold his stock to Pacific Motor Auctions.
c. Pacific Motor Auctions was unaware of the previous sales.
Held
Pacific Motor Auctions had the title to the cars as they bought the cars in good faith and had
no awareness of the previous agreement between the dealer and Motor Credits.
e. Buyer in possession – s27(2) SOGO
1. Buyer 1 agreed to buy or bought the goods and had obtained possession of them.
2. the title will be passed to the Buyer 2 who buys it from this Buyer 1 who sells it.
3. Although, under the original agreement, Buyer 1 did not get a good title of the goods.
Newtons of Wembley Ltd v Williams (1964)
a. A car was sold by the plaintiffs (seller) to A who paid by cheque.
b. A took possession of the car but the property of the car was not conveyed until the
cheque was honored.
c. The cheque was dishonored but A already sold the car to B who bought it in good faith.
d. B then resold it to the defendant.
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Held
a. A possessed the car with consent of the plaintiffs (seller)
b. A’s title of the car was passed to B which was then passed to the defendant.
c. The defendant was entitled to keep the car for he had a good title of the car.
3.0 Remedies Available to the Buyer and the Seller
a. The remedies available depend on the status of the term which is broken.
b. SOGO provides that if the term broken is a condition, the innocent party may either:
1. waive the condition, s13(1); OR
2. reject the goods and treat the contract as repudiated, s13(2); OR,
3. treat the term broken as a warranty and not as a ground for treating the contract as
repudiated. s13(1).
c. s13(2) SOGO provides that if the term broken is a warranty, the innocent party can claim
damages only.
3.1 Remedies available to the buyer for non-delivery
a. s53(1) SOGO provides that if the seller fails to deliver the goods, the buyer may bring an
action against the seller for damages for non-delivery.
b. s54 SOGO provides that in the event of non-delivery of specific goods, the court may, if it
thinks fit, direct specific performance of the contract.
3.2 Remedies available to the Unpaid Seller
s40 SOGO provides that a seller is “unpaid” when the whole contract price has not been paid or
not fully paid.
3.2.1 An unpaid seller can claim against the buyer:
(a) Action for price
s51 SOGO provides that the unpaid seller may bring an action against the buyer for the price
of the goods if
i. the ownership of the goods has passed to the buyer or
ii. the agreed payment day has passed.
(b) Damages for non-acceptance
s52(1) SOGO provides that the unpaid seller may bring an action against buyer for damages
for non-acceptance if the buyer wrongfully refuses to accept and pay for the goods
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3.2.2 An unpaid seller can seek to recover the goods:
a. Lien (s41 SOGO) 留置權
If ownership of the goods has passed to the buyer but the unpaid seller is still in possession
of the goods, seller has a lien on the goods (a right to retain goods for the price).
b. Stoppage in transit (s46 SOGO) 途中停運權
s46 SOGO provides that in insolvency of the buyer, a seller has a right of stopping the goods
in transit (i.e. stopping the goods under transportation to the buyer) after seller has parted
possession of the goods.
c. Re-sale (s41 SOGO) 另售權
The unpaid seller has a right to re-sell the goods.
d. Withholding delivery 扣貨不交付
s42 SOGO provides that if title to the goods has not passed to the buyer, the unpaid seller
also has a right to withhold delivery.