Question 3 (Individual Assignment)
Individual Question
Jamal agreed to buy 15 paintings from Ramli for RM150,000, payable in cash. Ramli agreed to Jamal’s
request for payment and delivery to be made in the following month. The paintings were burnt in a fire at
the shop because of a short circuit and the shop was badly damaged. Advise Jamal as to who should be
responsible for the losses under the Sale of Goods Act 1957.
Issue: Whether Jamal or Ramli should be responsible for the losses.
Law: According to Section 2 of the Sale of Good Act 1957 (SOGA), ‘Seller’ means a person
who sells or agrees to sell; ‘Buyer’ means a person who buys or agrees to buy; A contract of sale
takes place only when the buyer is bound to buy and the seller is bound to buy. The contract to
sell must be in relation to goods; ‘Every kind of movable property other than actionable claims
and money. Price is the consideration of the contract of sale of goods; Section 2 defines ‘price’
as the money consideration for a sale of goods, But if the contract of sale is part goods and part
money then it is still a contract of sale of goods. The term ‘deliverable state’ in Section 2 states
that when the goods are in such state that the buyer would under the contract be bound to take
delivery of them.
According to Section 4(1) of the Sale of Good Act 1957 (SOGA), a contract of sale of goods is a
contract whereby the seller transfer or agrees to transfer the property in goods to the buyer for a
price.
http://www.commonlii.org/my/legis/consol_act/soga19571989203/
According to Section 20 of the Sale of Good Act 1957 (SOGA), where there is a sale of specific
goods in a deliverable state, the property in the goods passes to the buyer at the time when the
contract is made, not when there is payment or delivery.
Referring to the case Turling v Baxter, the plaintiff brought a haystack which is in a deliverable
state. However, it was destroyed by fire. The plaintiff sued that the defendant should be responsible
for the loss caused. It was held that the loss belonged to the buyer because the property passed at
the time the contract was made.
https://uniten.weebly.com/uploads/5/3/7/3/53736891/topic_3_law_of_sale_of_goods.pdf
According to Section 26 of the Sale of Good Act 1957 (SOGA), unless otherwise agreed, the goods
remain at the seller's risk until the property therein is transferred to the buyer, but when the property
therein is transferred to the buyer, the goods are at the buyer's risk whether delivery has been made
or not.
Application: Based on the scenario, Jamal (Buyer) agreed to pay RM150,000 to Ramli (Seller)
for 15 paintings (Goods). The contract of sale between Jamal and Ramli is for specific goods which
are the paintings and it is already in the deliverable state. Ramli agreed to Jamal’s request for
payment and delivery to take place in the following month. This shows that there is a contract
between Jamal and Ramli. According to Section 20 of the SOGA 1957, for the sale of specific
goods which are paintings and in a deliverable state, the ownership of the paintings is transferred
immediately to Jamal when the contract was made. According to Section 26 of the SOGA 1957,
when the ownership of the paintings is transferred to Jamal, the goods are at the buyer’s risk
whether the delivery has been made or not.
Conclusion: Since the ownership is transferred to Jamal, therefore Jamal should bear the
responsibility for the losses.
Would your answer be different if Ramli agreed to Jamal’s request for new frames for the paintings to be
changed before delivery and the paintings were destroyed by fire at Ramli’s shop before they could be
delivered to Jamal?
(10 marks)
Issue: Whether Jamal should be responsible for the losses.
Law: According to Section 21 of the Sale of Good Act 1957 (SOGA), where there is a contract
for the sale of specific goods; and the seller is bound to do something to the goods for the
purpose of putting the goods into a deliverable state, the property does not pass until such thing
is done, and the buyer has notice of it.
According to Section 26 of the Sale of Good Act 1957 (SOGA), unless otherwise agreed, the goods
remain at the seller's risk until the property therein is transferred to the buyer, but when the property
therein is transferred to the buyer, the goods are at the buyer's risk whether delivery has been made
or not.
In the case of Sterns Ltd v Vickers Ltd [1923] 1 KB 78, the plaintiffs bought from the defendants
120,000 gallons of spirit from a total quantity of 200,000 gallons in a storage tank held by a third
party. The spirit was left in the tank for the convenience of the plaintiffs. Between the time of sale
and actual delivery, the spirit deteriorated. There was no appropriation at that stage, so clearly, the
property had not passed to the plaintiffs.
Application: Based on the scenario, Jamal asks for new frames for the paintings to be changed
before delivery. Ramli approve Jamal’s request and this means that the specific goods had yet to
be put into a deliverable condition. According to Section 21 of the SOGA 1957, Ramli must
change the frames of the paintings as requested for Jamal to put them into a deliverable state, the
ownership of the paintings will not be transferred to Jamal until the changes of frames are done by
Ramli. According to Section 26 of the SOGA 1957, Ramli should bear the risk if the paintings are
destroyed in a fire, the seller is liable for the goods until ownership of the goods passes to the
buyer.
Conclusion: Jamal doesn’t have to bear the responsibility for the losses as Ramli still owns the
ownership of the goods.