1.
0 INTRODUCTION
In a contract of sale ofgoods,boththebuyerand thesellerhavetheirownrespective
rightsandliabilities.Thesellerisobligatedtodeliverthegoodstothebuyerinaccordancewith
thetime,methodandquantityspecifiedinthecontract.Thebuyerisboundtoacceptandpayfor
the goods, the presumption being that delivery and payment are mutual and concurrent
conditions. According toSection2ofSalesofGoodsAct19571,asellerisdefinedasaperson
whosellsoragreestosellgoodswhileabuyerisdefinedasapersonwhobuysoragreestobuy
goods. Therefore,“delivery” refers solely to the actions the seller must take to ensure that the
buyer receives the possession of the goods.
As a general rule, the seller can fulfill the delivery obligation unilaterally without
requiring the buyer’s cooperation. This obligation may be performedevenifthebuyerhasnot
physically taken possession of the goods or if no transportation has been arranged. Moreover,
contractualremediesarealsoopenandavailabletothebuyerorsellerwhoareaggrievedbythe
other parties in case of breach. Such as, the buyer who isaggrievedbytheseller'sdeliveryof
defective goods in qualityorthesellerwhoisaggrievedandsufferedbythebreachofcontract
bythebuyer.Thesellerhasthedutyofdeliveringthegoodstothebuyerwhilethebuyerhasthe
duty of accepting and paying for said goods according to the terms and conditions of the
contract.Theseremediessafeguardtherightsofbothparties.Thus,therightsandobligationsof
thesellerandbuyerinacontractofsaleofgoodsareestablishedthroughthedeliveryofgoods,
acceptance, payment and the available remedies in the event of breach.
1
Section 2 of Sales of Goods Act 1957
2
2.0 RIGHTS AND OBLIGATIONS OF BUYER AND SELLER
2.1 DELIVERY
According to Section 2 Sales of Goods Act 1957, defined as voluntary transfer of
possession from one person to another, goods aresaidtobeina“deliverablestate”whenthey
are in such a state that the buyer would under the contract beboundtotakedeliveryofthem.
Thus,itcouldbeseenthatdeliveryisthestepsthatthesellermusttakeinordertoensurethatthe
buyer obtains possession of the goods.Itisalsotobenotedthatthedeliveryobligationcanbe
made without involving physical transfer of handing over of the goods from the seller to the
buyer.Thus,aslongasthegoodsaredeliveredandthebuyertakespossessionofit,theseller’s
duty is completely fulfilled. It is said that the legal definition of delivery is different from its
common understanding. In legal terms, delivery refers to the voluntary transfer of possession,
whichisdifferentfromhandlingthegoodsitself.Infact,thereisnogeneralruleforthesellerto
sendthegoodstothebuyer2.Section323 oftheSalesofGoodsAct1957,alsoprovidedwhere
paymentsanddeliveryareconcurrentconditions,thesellershallbereadyandwillingtogivethe
possessionofthegoodstothebuyerandthebuyermustbereadytopaythepriceinexchangefor
possession of the goods.
WhileSection314 ofAct,providedonthedutyofthesellerandthebuyerwhereitisthe
dutyofthesellertodeliverthegoodsandofthebuyertoacceptandpayfortheminaccordance
withthetermsofthecontractofsale.InthecaseofWascoLindungSdnBhdvLustreMetals
& Minerals Sdn Bhd5, stated the importance of thedutyofthesellerandthebuyer.Thecase
also cited the case of Popular Industries Limited v Eastern Garment Manufacturing Sdn Bhd
[1989]3MLJ360,whereitdiscussed,"Inordinarycontractsforthesaleofgoods,deliveryand
payment are concurrent obligations." The court held that the defendant and not the Chinese
supplier was the seller of the aluminium ingots based on undisputed documents. Additionally,
sincetheplaintiffpaidthedefendantdirectlyforthefirstbatch,thedefendantwasfoundtohave
2
Atiyah, P.S., J.N. Adams, and H.L. MacQueen. 2001.The Sale of Goods. 10th ed.: Pearson/Longman.
3
ection 32 of Sales of Goods Act 1957
S
4
Section 31 of Sales of Goods Act 1957
5
[2015] 9 MLJ 610
3
the obligation to deliver the ingots to the plaintiff under Section 31 of the Sale of GoodsAct
(SGA).
Moreover,itcouldbeseenthatnotonlythesellermustdeliverthegoodstothebuyer,the
latter must also receive them. Moreover, Section 336 of the Act also stated on three
circumstances that amount to delivery where delivery of goods sold may be made by doing
anythingwhichthepartiesagreeshallbetreatedasdeliveryorwhichhastheeffectofputtingthe
goodsinthepossessionofthebuyerofanyactwhereanypersonauthorisedtoholdthemonhis
behalf. Thus, where the goods are delivered at the buyer’s premises, it will be effectiveifthe
sellerhandsoverthegoodstosomeoneapparentlyhavingauthoritytoreceivethem.Therefore,
the mainobligationsofthesellerarethedeliveryofthegoodsandthetransferofownershipof
the goods. Additionally, the seller must ensure that the buyer obtains possessionofthegoods.
WhiletheplaceofdeliveryisstatedinSection36(1)7 ofSOGA1957,wherewhethertheseller
is required to send the goods to the buyerorthebuyerhastotakethepossessionofthegoods
depends on what has been agreed upon by them. The general rule isthatgoodssoldaretobe
deliveredattheplaceandtimeofthesale.Goodsthatareagreedtobesoldshouldbedelivered
tothelocationwheretheyareatthetimeoftheagreementorinthecaseofgoodsthatdonotyet
exist at the place of manufacture or production.
Therefore, it is to be delivered in accordance to the parties agreement where it can be
satisfied by delivering the buyer’s goods in a deliverable state and the parties agreed that the
seller should deliver it to the buyer according to Section 36. Itcanalsobesatisfiedbyathird
party’s acknowledgement where he holds the goods on the behalf of the buyer as stated in
Section 36(3)8. Moreover, the seller is obligated to send the goods to the buyer but is not
required to specify the exact time to deliver. Whether the seller isobligatedtosendthegoods
within a reasonable time is amatteroffact9.Ademandorofferofdeliverymaybeconsidered
ineffectiveunlessitismadeatareasonablehour10.Theterm“reasonable”hourisaquestionof
fact. Where it is according to the goods to be delivered.
6
ection 33 of Sales of Goods Act 1957
S
7
Section 36(1) of Sales of Goods Act 1957
8
Section 36(3) of Sales of Goods Act 1957
9
Detta, Lee Mie Pheng . Ivan Jeron. 2011. CommercialLaw: Oxford Fajar sdn. Bhd.
10
Section 36(4) of Sales of Goods Act 1957
4
It couldbeseenthatwhenandhowthetradersshoulddeliverthegoodsdependsonthe
buyerswhereitisstatedintheexpresstermbetweentheparties.Therefore,failureoftheseller
to deliver the goods to the buyer as agreed will amount to breach of contract. Moreover, in
Section 36(5)11, it provides that unless the parties agree otherwise, the expenses and goods
incidental to puttingthegoodsintoadeliverablestateshallbebornebytheseller.Theselleris
alsoboundtosendthegoodstothebuyerhoweverifthereisnospecifictimegivenormentioned
inthetermsofthecontractforthedeliveryofthegoodstothebuyer,thenthesellerisboundto
send within reasonable time12. The word, “reasonable” is also a question of fact, but it is
according tothegoodswhetheritinvolvesperishablegoodsorfurniture,thenthedeliverymay
take place on the samedayorevenlateraccordingtothegoods.Inasituationwheretheseller
delivers fewer goods than agreed upon in the contract, the buyer may reject all the goods
delivered. However, if the buyer accepts the goods delivered in the correct quantity, they are
requiredtopayforthematthecontractrate,asstatedinSection37(1)13.Therefore,iftheseller
delivers alargerquantityofgoodsthanagreed,thebuyerhasseveraloptions,whethertheycan
acceptthequantityasperthecontractandrejecttheexcess,rejectallgoodsoraccepttheentire
quantity.Ifthebuyerchoosestoacceptallthegoods,theymustpayforthematthecontractrate,
as stated inSection 37(2)14.
Thus,theprovisionsunderSection37oftheSalesofGoodsAct1957provideguidelines
onhowtohandlesituationsinvolvingthedeliveryofgoodsthatdifferfromtheagreedquantity.
Ithelpsthebuyerinsituationswherethedeliverydoesnotalignwiththecontract,thus,itallows
themtomakedecisionsaboutwhethertoaccept,rejectorpayforthegoodsdelivered.Moreover,
thedeliveryofgoodsinasalesofgoodscontractisoneoftheimportantaspectswheretheyare
responsible to ensure the goods are delivered to the buyer in a deliverable state within a
reasonabletimewhichalsoprotectsthebuyerandhighlightstheobligationofthesellertofulfill
the contract.
11
ection 36(5) of Sales of Goods Act 1957
S
12
Section 36(2) of Sales of Goods Act 1957
13
Section 37(1) of Sales of Goods Act 1957
14
Section 37(2) of Sales of Goods Act 1957
5
2.2 SELLER’S RIGHTS
The seller holds few rights where remedies will be given to them in some situations.
Some of the remedies are rights of unpaid sellers where underSalesofGoodsAct1957,non-
payment by the buyer gives the seller right to certain remedies, provided the seller retains
possession of the goods and thebuyerholdstitletothembuthasnotyetpaid.Inthiscase,the
sellercanexercisealienonthegoodsorexercisetherightofstoppingthegoodsintransitwhere
theycanhalttheirshipmentifthebuyerbecomesinsolventaccordingtoSection4615.Therefore,
thesellerhasspecificrightsandremediesintheeventofthebuyer’sfailuretoacceptdeliveryor
pay for goods. Section 4416 provides that ifthesellerisreadyandwillingtodeliverthegoods
andrequestthebuyertotakedelivery,butthebuyerrefusesorneglectstosowithinreasonable
time, the buyer liable for any loss incurred by the seller due to this refusal, as well as any
reasonable charges for the care and custody of the goods. In such cases, the seller may claim
damages for any losses arising from the buyer’s refusal totakedelivery.Additionally,Section
5617, provides the seller with the right to sue the buyer for damages if the buyer wrongfully
neglects or refuses to accept and pay for the goods.
While to ensures that the seller is compensated for the buyer’s failure to fulfill their
obligations under the contract in cases where there are breach of contract, Section 7418 of
Contracts Act entitles the seller to compensation for any loss or damagecausedbythebreach
including losses that naturally result fromthebreachorwereforeseeablebybothpartiesatthe
time the contract was made. This includes financial damage caused by the seller’sinabilityto
resell the goods elsewhere. In assessing the damages, courts have considered themarketprice
differential, as seen in the case of Scandinavian Bunkering (Singapore) Pte Ltd v MISC
Berhad19,wherethedamageswerecalculatedbasedonthedifferencebetweenthecontractprice
and the market price at the time of breach. Similarly, in the case of Autokit Design
Technologies (M) Sdn Bhd v Hyundai-Sime Darby Motors Sdn Bhd20 The court applied
15
ection 46 of Sales of Goods Act 1957
S
16
Section 44 of Sales of Goods Act 1957
17
Section 56 of Sales of Goods Act 1957
18
Section 74 of Contracts Act 1950
19
[2011] MLJU 1261
20
[2023] MLJU 1273
6
Section44and56oftheSalesofGoodsActtodeterminethedamagesresultingfromthebuyer’s
refusal totakedeliveryandpayforthegoods.Thus,thesellercanclaimdamagesbasedonthe
difference between the agreed contract price and the market price at the time of the breach.
Section4721 oftheActgrantsanunpaidsellertherighttoretainpossessionofthegoods
until payment or tender ofthepriceundercertainconditions,thisrightapplieswhenthegoods
were sold without any stipulation for credit, when thegoodsweresoldoncreditbutthecredit
term has expired, or whenthebuyerbecomesinsolvent.Theprovisionfurtherclarifiesthatthe
sellermayexercisethisrightoflienevenifthegoodsareintheseller’spossessionasanagentor
baileeforthebuyer,meaningthesellercanretainthegoodsevenwhileholdingthemonbehalf
of the buyer, as long as the buyer has not paid for them. While in cases where the buyer is
insolvent, Section 5022 gives the seller the right to stop the goodsintransit,regainpossession
and retain them until payment is made. Goods in transit are definedasthoseintheprocessof
being delivered to the buyer but not yet accepted. The seller can exercise this right by taking
physical possession of the goods or by notifying the carrier, who must returnthegoodsatthe
seller’sexpense23.Additionally,underSection5424,anunpaidsellerwhohasexercisedalienor
stoppageintransithastheauthoritytoresellthegoods,transferringgoodtitletothenewbuyer,
and can claim damages from the original buyer for breach of contract. The right of resale is
applicableifexpresslyreservedinthecontract,ifthegoodsareperishable,orifnoticeisgivento
the buyer and they fail to pay within a reasonable time.
However,itistobenotedthatacontractofsaleisnotrescindedbythemereexerciseby
an unpaidsellerofhisrightsoflienorstoppageintransit,asstatedinSection54(1).Thus,the
sellerisnotallowedtoresellthegoods.UndertheSalesofGoodsAct1957,sellersareprovided
with several remedies ifabuyerfailstopayoracceptgoods.Someoftheprovisionsallowthe
sellertoclaimdamagesandgrantsthesellerrighttoretainpossessionofgoodsuntilpaymentis
made.Therefore,theseprovisionsprotectthesellerfromlossesandensuretheycanenforcetheir
rights when the buyer breaches the contract.
21
ection 47 of Sales of Goods Act 1957
S
22
Section 50 of Sales of Goods Act 1957
23
Section 52 of Sales of Goods Act 1957
24
Section 54 of Sales of Goods Act 1957
7
2.3 ACCEPTANCE
The SalesofGoodsAct1958establishesacceptanceasacrucialcomponentindefining
the rights and responsibilities of both purchasers and sellers within a contract. Section 37(3)25
permits the buyer to reject products that fail to conform to thecontract’sdescription,eitherin
partorinfull,dependingupontheextentofthenon-conformity.Goodssoldbydescriptionmust
strictly align with the contract terms and failure to do so constitutes a breach. However, the
buyer’s right to reject maybewaivedifthedefectisminororremediable.Section4226 further
elaborates onhowacceptanceisdeemed.Acceptanceoccurswhenthebuyerexplicitlyconveys
acceptance,performsactsthatassertownershipinconsistentwiththeseller’srights,orretainsthe
goods beyond a reasonable period without notifying rejection.
InthecasesofFLSystemSdnBhdvPLEEngineering&ConstructionSdnBhd27 the
plaintiff,asupplierofelectricalgoods,allegedthattheDefendantfailedtomakefullpaymentfor
the goods delivered and accepted. The Defendant claimed it was merely a subcontractor and
deniedorderingthegoodsorhavingadirectcontractualrelationshipwiththePlaintiff.However,
the court found that the Defendant’s conduct, including receiving andusingthegoodswithout
objectionorattemptstoreturnthem,wasinconsistentwithrejectionordisputeoverownership.
The lack of any complaints or evidence of refusal to accept the goods established that the
Defendant had effectively accepted the goods. Similarly, in the HQC Engineering Malaysia
Sdn Bhd v Mac Piping Materials Sdn Bhd28, the Plaintiff contended that certain fittings
deliveredbytheDefendantdidnotconformtospecifications.Despitethis,thePlaintiffusedthe
fittingsinitsprojectandmadepayment.TheyalsohadendorsedMillTestReportsandraisedno
immediate rejection. The court held that the Plaintiff’s actions amounted to acceptance under
Section42.Thishasemphasizedthatusingthegoodsandengaginginactivitieslikepaymentor
certifications implied acknowledgement ofconformity,evenifthegoodslaterproveddefective
or non-compliant with the agreement.
25
Sales of Goods Act 1957
26
ales of Goods Act 1957
S
27
[2021] MLJU 2481
28
[2023] MLJU 1305
8
Section 42 outlines specific situations in which a buyer is considered to haveacceptedgoods,
thus losing the right to reject them. The second criterion, relating toactsinconsistentwiththe
seller’sownership,hascausedsomeconfusion.Thisarisesbecauseownershipofthegoodsoften
transfers to the buyer upon delivery. Once ownership has passed, the notion of acting
inconsistentlywiththeseller’sownershipbecomesunclear.Toaddressthisambiguity,ithasbeen
suggested that practical examples ofsuchactsshouldbeincludedinthelegislationtoguideits
application.29 The Sales of Goods Act 1979 in England provides a useful framework for
amending the Malaysian provision, as it elaborates on similar scenarios of deemed acceptance.
The English Act clarifies that a buyer is deemed to accept goods if they explicitly
indicate acceptance, act in a way inconsistent with the seller's ownership, or retain the goods
beyond a reasonable time without rejection. However, the Act also introduces safeguards for
buyers. For instance, a buyer is not deemed to accept goods iftheyhavenothadareasonable
opportunitytoinspectthemtoensuretheymeetcontractualterms.Thisisparticularlyrelevantin
contracts involvingbulksamples,whereconformitymustbecompared.Additionally,consumer
protection provisions prevent buyers from losing their right to reject through waivers or
agreements in consumer contracts. A reasonablelengthoftimeisanimportantpartoffiguring
outifacceptancehashappened.Factorssuchaswhetherthebuyerhadsufficientopportunityto
inspect the goodsareconsidered.Importantly,requestingrepairsordeliveringgoodstoanother
party under a sub-sale does not necessarily constitute acceptance. For commercial units,
acceptance of a portion of the goods can imply acceptance of the entire unit, particularly if
dividing the unit would diminish its value or integrity.
The ambiguity surrounding "acts inconsistent with the seller’s ownership" persists,
especially in cases where ownership has already transferred to the buyer upon delivery. This
createsatheoreticalchallenge,asthebuyer’srightsandobligationsarealreadydefinedbytheir
ownership. Addressing these gaps through amendments and adopting clear examples from
comparative legislation would enhance clarity and practical application of Section 42 in the
Malaysian context.
29
Yusoff et al., 2015. Consumer Protection and the Malaysian Sale of Goods Act 1957.
9
2.4 BUYER’S RIGHTS
UnderSection12(2)30,aconditionisdeemedessentialtothecontract'sprimarypurpose,
and its breach allows the buyer to repudiate the contract. This stipulation is closely related to
Section1531,whichemphasizesthatgoodssoldbydescriptionorbybothsampleanddescription
mustcorrespondwiththesecriteria.Ifthegoodsfailtoconform,thebuyercaninitiallytreatthe
breach as a condition. However, Section 13(2)32 modifies this principle when the buyer has
acceptedthegoods,orthecontractisnon-severable.Insuchinstances,anybreachofconditionis
downgradedtoabreachofwarrantyunlessexplicitlystatedotherwiseinthecontract.Awarranty
breach limits the buyer’s remedies, as outlined in Section 59(1)33, which entitles the buyer to
either reduce or extinguish the price or sue for damages but does not permit rejection of the
goods.Thisdistinctionensuresthatthebuyer'sacceptanceofgoodsaltersthelegalconsequences
of a seller's non-performance.
The significance of Sections 41(1) and Section 42 lies in defining when goods are
deemed accepted. Section 41(1)34 provides buyers the right to inspect goods upon delivery to
confirm their conformity with the contract before being considered as having accepted them.
Conversely, Section 4235 states that acceptance occurs when the buyer explicitly or implicitly
indicatesacceptance,performsactsinconsistentwiththeseller'sownership,orretainsthegoods
beyondareasonableperiodwithoutnotifyingrejection.However,theinadequaciesoftheActin
protecting consumer rights are evident in Section 13(2). This provision states that when the
contract involves specific goods and ownership has passed to the buyer, a breach of any
conditionbythesellerisreducedtoabreachofwarranty.Asaresult,thebuyerlosestherightto
reject the goods and terminate the contract. The implications of Section 13(2) are significant.
Oncethepropertyinthegoodspassestothebuyer,typicallyunderSection2036,whichdictates
thatownershiptransferswhenthecontractismade,thebuyer’srightsarerestricted.Evenifthe
buyer has not hadtheopportunitytoinspectorusethegoodstoidentifypotentialdefects,they
30
ales of Goods Act 1957
S
31
Sales of Goods Act 1957
32
Sales of Goods Act 1957
33
Sales of Goods Act 1957
34
Sales of Goods Act 1957
35
Sales of Goods Act 1957
36
Sales of Goods Act 1957
10
are precluded from rejecting them. This framework can leadtounjustoutcomes,asbuyersare
compelledtoacceptgoodswithoutachancetoascertaintheircompliancewithcontractualterms.
AnotablecontrastexistswiththeEnglishSaleofGoodsAct1979,wheresuchprovisionshave
been removed37. The absence of a similar rule in the English Act provides greater consumer
protection by ensuring buyers retain their right to reject non-conforming goods despite the
passage of property.
The case of Clariant Masterbatches (M) Sdn Bhd v Prestige Dynamics Industries
Sdn Bhd38 exemplifies the application of these provisions.Prestige,thebuyer,specifiedinthe
purchaseorderthatthegoods,acolorant,mustbefreeofhazardoussubstances.Thisconstituted
asalebydescriptionunderSection15.Theseller,Clariant,breachedthisconditionbydelivering
goods that did not meet the criteria. Despite the breach, Prestige accepted the goods, made
payments, and failed to test their conformity. Consequently, the court ruled thatunderSection
13(2), the breach of condition had to be treated as a breach of warranty. As per Section 59,
Prestige retained the right to sue for damages butcouldnotrejectthegoods.Whileconditions
address significant contract breaches enabling repudiation, their treatment as warranties after
acceptance underscores the importance of a buyer's diligence in inspecting and addressing
non-conformance promptly.
Thereisasetwaytohandleconditionsandguaranteesinsalescontractsthatisbasedon
theSaleofGoodsActof1957.Itstresseshowimportantitistofollowtherulesofthecontract.
The buyer can only get adjustments to prices or damages, as shown in Section 13(2). This is
becausetheconditionturnsintoawarrantywhenthecustomertakespossessionofthegoodsor
accepts them. For buyers, thisframeworkmaybeunpleasantbecauseitmakesithardertoturn
down things that fail to meet the standards. This framework makes sure that deals are
predictable.FindingsimilaritiesbetweenMalaysianlawandtheEnglishSaleofGoodsAct1979
showsthatMalaysianlawneedstohavemuchbettercustomerprotectionsinordertoresolvethe
problems with the current laws.
37
Masum et al., 2015. Consumer Protection for Saleof Goods.
38
[ 2019] 3 MLJ
11
3.0 CONCLUSION
The Sale of Goods Act 1957 defines a comprehensive framework regulating the rights
and obligations of purchasers and sellers in a sales contract. Transferring the goods from the
seller to the buyer is an important part of this relationship. It is the buyer's job to accept the
goods and pay according to the terms that were agreed upon. The provisions ensure that both
parties fulfill their contractual obligations, with remedies available for breaches to safeguard
their interests.
Seller rights to maintain possession or halt goods in transit are balanced against buyer
rights to inspect, accept, or reject non-conforming items. In spite of the fact that acceptance
renders a buyer legally accountable, the Act acknowledges the fact that this process can be
exceptionally problematic by giving provisions for dealing with issues such as faults, delays, or
changes in the amount that was requested. Although it is functional, there are some aspects of it
that are not clear. As an illustration, the concept of acceptance and the interpretation of Section
13(2) demonstrate that laws need to be clarified in order to better protect purchasers, particularly
with regard to consumers.
Ultimately, the Sale of Goods Act 1957 is a significant component of commercial law as
it ensures uniform rights for all parties engaged in business transactions. It ensures that both
parties are accountable for their respective obligations under an agreement and safeguards their
legal rights and interests. The Act promotes equitable and transparent business conduct, which is
essential for economic development and stability. It accomplishes this by resolving potential
conflicts and establishing trust. Its flexible framework ensures compliance with regulations while
facilitating harmonious commercial interactions, benefiting all parties involved. This is because
honesty and responsibility in selling things are good for everyone.
12
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