Definitions – Types of Goods (Always refer here as the starting point as they are the basis of

Sale of Goods analysis) – always in s2 except in long sections

KEY: • ‘Goods’ includes all chattels personal other than things in action and money. The term
includes emblements(庄稼), industrial growing crops … (s2(1) SOGO)
- Categorization of the goods (starting point)
- Transfer of property o The word “includes” is always non-exhaustive because it keeps the flexibility to
- Transfer of risk add more things in the future
- Implied terms • E.g. Chose in possession
- Duties of sellers and buyers • Not including money: coins are chose in possession but its excluded because it is
- Resolution of rival claims to ownership covered in other ordinances
- Remedies of the sellers
- Remedies of the buyers
Existing goods and future goods (affecting the transfer of the property in goods)

Introduction Distinguishing between existing goods and future goods

Sale of Goods Ordinance (SOGO) Criterion: THE EXISTANCE OF THE GOODS

- Codifies Lex Mercatoria à rules governing trade between merchants

- Flexible ordinance Whether the good has already been manufactured or acquired by the seller at the time of
- Retains common law rules: the contract?
o S.63(2) SOGO
“The rules of the common law, including the law merchant, save in so far as
they are inconsistent with the express provisions of this Ordinance, and in Ordinances to look at:
particular the rules relating to the law of principal and agent, and the effect
• Future goods mean (exhaustive) goods to be manufactured or acquired by the seller
of fraud, misrepresentation, duress or coercion, mistake, or other
after the making of the contract of sale (s2(1) SOGO)
invalidating cause, shall continue to apply to contracts for the sale of
• The goods which form the subject of a contract of sale may be either existing goods,
goods.” owned or possessed by the seller, or goods to be manufactured or acquired by the
seller after the making of the contract of sale, in this Ordinance called “future
goods” (s7(1) SOGO)
• Bank of England v Vagliano Brothers [1891] - purpose of codification
• Facts • Not a sale of good case, but one involving bill of exchange Existing Goods Future Goods
• Key • Purpose of codification is to consolidate the law in a particular area in • AT THE TIME OF THE • The goods are to be manufactured
order to promote accessibility of the law CONTRACT OF SALE, the goods (not yet manufactured), or to be
• Reasoning • The interpretation of a codifying statute is no different from any other are manufactured already and, owned acquired by the seller (not yet
• Lord enactment. The statute must in the first place be construed according to its or possessed by the seller acquired) AFTER THE MAKING
Herschell natural meaning, unaided by reference to prior case law OF THE CONTRACT OF SALE
• Only if the statutory provisions are unclear is it permissible to infer that the
Act did not intend to change the law, and to resort to the earlier case law in
Specific Goods
order to establish what the law was previously.
• This applies equally to an enactment consolidating earlier legislation even Focus: Identification of the goods for the contract of sale at the time of the contract
where the enactment is a ‘pure’ consolidation measure.
Statute: (s2(1) SOGO) – Goods identified and agreed upon at the time of contract
Elements:
• Identified – not about the existence but the identification
o Are you able to tell what is the specific good subject to this contract of sale?
• Agreed upon
o Agreement
 • At the time of the contract (what happens after does not matter) Contract of sale of goods
SOGO only applies to ‘contracts of sale of goods’
E.g. A agrees to sell B the iPad she is holding on hand at the time of the contract ð The contract which does not fall into the definition of s3(1) SOGO will not be
=> iPad is the specific good here considered as a contract of sale of goods and therefore not applicable to use
SOGO
E.g. Supermarket, bringing the goods to the cashier
=> the groceries are specific goods too because they are identified, agreed to sell to you at
MUST FULFILL ALL ELEMENTS
the time of the contract
“A contract of sale of goods is a contract whereby the seller transfers (or agrees to transfer)
the property in goods to the buyer for a money consideration, called the price…” (s3(1)
Unascertained goods vs Ascertained goods SOGO)
• Not defined in the statute A contract of sale S2(1): an agreement to sell as well as a sale
o Not in definition statute
Goods S2(1): includes all chattels personal other than things
o Look at case law then, at last dictionary
in action and money. The term includes emblements,
o They are ordinary words
industrial growing crops, and things attached to or
Ascertained 確定的: Goods are identified forming part of the land which are agreed to be
severed before sale or under the contract of sale
Unascertained 不確定的: Goods are not identified
Seller S2(1): A person who sells or agrees to sell goods
Transfer Immediate sale
o S18: Goods cannot be transferred to the buyer unless and until the goods are
ascertained Or agrees to transfer Before executed (just agree in the future in time or
§ Generic goods sold by description; goods not yet in existence; goods as yet subject to particular condition or time
unidentified out of a specific bulk
ð If conditions not fulfilled then there will
not be a transfer (very common to have
conditions in contracts)
The PROPERTY in goods Not just goods itself but property 產權
*Depends on Situations – Types of goods can be a mixture of different types
(future unascertained goods, existing specific goods)
It’s a Mix and Match. S2(1): means the general property in goods, and not
merely a special property
Buyer S2(1): a person who buys or agrees to buy the goods
For a money consideration Cannot be exchange of goods
(called the price)

A ‘contract of sale’ includes an agreement to sell as well as a sale (s2 SOGO) and may be
absolute or conditional (s3(2) SOGO)
(REPEATED)
Agreement to transfer = agreement to sale
Transfer = sale
absolute = no condition
 Conditional = subject to condition • Because it is just a hire purchase, not immediately
transferring the property in goods to the buyer
Agreement to transfer? Likely NO
Where under a contract of sale the property in the goods is transferred from the seller to the
• The agreement is not an agreement to transfer
buyer, the contract is called a sale; but where the transfer of the property in the goods is to
• One party has the legal RIGHT but not the legal
take place at a future time or subject to some condition thereafter to be fulfilled, the
OBLIGATION to buy the piano
contract is called an agreement to sell (s3(3) SOGO)
ð SOGO is irrelevant to hire purchase agreement – changing fact may change the
(REPEATED) rule

Agreement to sell becomes a sale on fulfillment of conditions/lapse of time (s3(4) SOGO)

Agreement to sell becomes sale – when time or conditions has fulfilled

Formality of the contract

S5 SOGO
Subject to the provisions of this Ordinance and of any enactment in that behalf, a contract
of sale may be made in writing (either with or without seal), or by word of mouth, or partly
in writing and partly by word of mouth, or may be implied from the conduct of the parties:

Provided that nothing in this section shall affect the law relating to corporations.
Can be oral, in writing or both

Can hire purchase agreement a contract of sale of goods? – likely NO

What is a hire purchase agreement?
• 租購是一種信貸購物的形式，買方可以用分期付款的方式先取得貨品，待付清
貨款後便可正式擁有貨品。有些貨品比較昂貴，例如家具、汽車等，賣方通常
容許買方以租購方式購買。現在一般租購的運作形式，是由賣方替買方安排財
務機構先購買該貨品，然後財務機構與買方簽訂租購合約，在租購合約，會列
明買方須在指定期內,定時分期付清貨款。在供款期內,買方只是租用貨品，待租
約期滿後，買方有權根據租購合約上訂明的售價選擇是否購買該貨品。當買方
選擇購買並付清貨款後，便得到貨品的擁有權。

• Helby v Matthews [1895] AC 471 – Hire purchase agreement of a piano

• Whether not sure, look at the fundamental rule – s3(1) of SOGO to see whether it is a
contract of sale of goods
Contract, buyer, seller, Yes
property in goods…
Transfer? NO
Price Sale of goods or supply of service
S3(1) SOGO – money consideration called the price • There must be scenarios where it is difficult to determine whether it is sale of goods or
supply of services
• E.g., Jeans, altered in length – whether its sale of goods or supply of services
S10 SOGO – ascertainment of price (provision of services)?

“(1) The price in a contract of sale may be fixed by the contract, or may be left to be fixed Old way: Substance test
in manner thereby agreed, or may be determined by the course of dealing between the
parties. • What is the substance of the contract?
• If it’s about work, skills, labour, it is contract of supply of services
(2) Where the price is not determined in accordance with the foregoing provisions, the
• If its for ultimate product then it is a sale of goods contract
buyer must pay a reasonable price… is a question of fact dependent on the circumstances
• Not ideal test because it is too broad
of each particular case.”

Lee v Griffin • Making dentures and the old man passed away before
Logic: Sometimes contract are made orally, allow the flexibility to fix the price later by
paying
agreement or course of dealing
• The estate tries to argue that it is not sale of goods
If price not determined in (1), buyer pay reasonable price (question of fact) contract and it is supply of services, contract has not
been fulfilled if it is supply of services
• Court uses the test – held it is sale of goods – dentures
S11 SOGO – price to be fixed by third party’s valuation are important and they are the substances of the contract
(Rare occasion)
• If apply to modern days, it is likely to be supply of
services
Where there is an agreement to sell goods on the terms that the price is to be fixed by the • Involve skills like measuring the mouth and high skill
valuation of a third party, and such third party cannot or does not make such valuation, the needed
agreement is avoided: • Can be argued to be a kind of service
Provided that if the goods or any part thereof have been delivered to and appropriated by
the buyer, he must pay a reasonable price therefor. • So the test is too broad and unsatisfying
Robinson v Graves • About a contract to paint a portrait
Where such third party is prevented from making the valuation by the fault of the seller or
buyer, the party not in fault may maintain an action for damages against the party in fault.
• Service contract – skill of the artists more important,
• When both parties cannot agree the price, they can ask third party to set the price but still can be argued in another way
after the valuation at agreement
• Usually at antique or rare goods as there is not such market, so can cal third party
• Both can adopt the same test but coming with a
expert to do the valuation
different result

Void or Voidable?
Recent test: Mak Ping Kui v Milionice Ltd
“the agreement is avoided” – Meaning voidable
“…A contract of sale is a contract the main object of which is the transfer of the property in,
• Parties can agree otherwise even if the third party cannot do the valuation and the delivery of the possession of, a chattel as such to the buyer. Where the main object of
• Void means cannot be saved work undertaken by the payee of the price is not the transfer of a chattel as such, the contract
is one for work and labour.
• If either party prevent the valuation by fault, then the party not in fault can maintain
an action for damages
The test is whether or not the work and labour bestowed end in anything that can properly Transfer of property
become the subject of sale. Neither the ownership of the materials, nor the value of the skill
Definition of transferring and passing of property
and labour as compared with the value of the materials, is conclusive, although such matters
may be taken into consideration in determining in the circumstances of a particular case - [Why is property important] it is used to determine who the owner is. Timing when
whether the contract is in substance one for work and labour or one for the sale of a chattel." seller ceases to be, and the buyer becomes, the owner of the goods
- “Property” means general property (not legally) in goods, not merely a special
property (s2(1) SOGO)
Considerations: ALL Factors (balancing exercise) o No particular definition
o General: all or absolute interest
Ownership Value of materials
o Special: certain limited interest
Quality of the services … o E.g., thief can have possessory interest (because he was having the good), can
Value of skills pass his all interest (i.e. possessory interest) to another, the good will be
counted as property here
Labour - Where there is a contract of sale of unascertained goods, no property in goods is
(Can have border line cases) transfer to the buyer unless and until the goods are ascertained (s18 SOGO)
o Starting point
o Goods not specific, cannot be identified to be specific (can be taken from any
Why does it matter to determine sale of goods or supply of services stock)
o No goods can be pinpointed and transferred
Price • If its supply of services, even if the goods have been passed
but the service not yet completed, arguably the price is not
payable on assumption if there is only one lump sum for the
- For specific or ascertained goods, property passes when the parties intended it to be
whole thing
passed (s19(1) SOGO)
o Intention of the parties (autonomy to freely decide when the property to be
• Lawyers should avoid contract that involve partly sale of passed)
goods and partly supply of services [should separate the item - For ascertaining such intention, regard to be had to the terms of the contract, the
and service – which part belong to sale and which part belong conduct of the parties, and the circumstances of the case (s19(2) SOGO)
to service o Look at objective facts: conduct, terms, circumstances
o Subject to intention of the parties, can be changed as what it is stipulated in the
• NEED TO SEPARATE (CANNOT BE BOTH) ordinance
Protection • Sale of goods enjoy SOGO protection - Illustration: Re Anchor Line Ltd
• Services no SOGO but have other kind • Intention of the parties inferred from terms of contract
• Deferred payment for the purchase of a crane
• Specific clause placing risk on buyer?
- Concept of risk – usually the risk will passes through the property
- I.e. If the property has passed to the other side, the risk will follow

Case details:
- INTENTION HAS INFERRED FROM THE TERMS OF THE CONTRACT
- Seller sell crane (big machinery) to the buyer by instalment
- Seller bear the credit risk of the buyer as it is payment over a period of time while
the buyer already using the crane (has possession already)
- Buyer later went bankrupt and insolvent (no money to pay) – seller want to have
the crane back
 - Liquidator claims that the seller must have real right and personal right but here
seller only has personal right (seller can only get the crane if have real right when
Specific goods
property of the crane hasn’t passed to the buyer yet)
- Need prove debt insolvency - Must be specific
- Cannot be unascertained
ISSUE: whether the property has passed
Deliverable state (s2(4) SOGO
- Court say placing the risk on buyer the clause -> risk has passed -> then no need
this clause - Goods are in a deliverable when they are in such a state that the buyer would, under
- The intention of the clause is for property not to pass – property does not pass and the contract, be bound to take delivery of them
risk sits with the seller
- So the clause is to specify the risk allocation, intention nto to have the property
At the time of contract
passed
- Seller has the real right - Property passed

S20 SOGO - Presumptive Rules of Ascertaining Intention (if no contract terms) Time of payment / time of delivery
• Starting point always about (s18 SOGO) – determination of the goods at the time of - Immaterial
the contract – (originally cannot be transferred – but now ascertained)
• Inferring the intention • Seller no obligation to deliver
- Buyer has the duty to instruct delivery
• Presumptive rules can be rebutted - Cause property can be notional - can charge the fee for delivery
• Where parties fail to make clear their intention:
o Rule 1 – unconditional contract for sale of specific goods in a deliverable state
o Rule 2 – contract for sale of specific goods not in a deliverable state Rule 2
o Rule 3 – contract for sale of specific goods in a deliverable state but seller • “Where there is a contract for the sale of specific goods and the seller is bound to do
must do some act to ascertain price something to the goods, for the purpose of putting them into a deliverable state, the
property does not pass until such thing be done, and the buyer has notice thereof.”
o Rule 4 – sale on approval dealing with specific goods
o Rule 5 – sale of unascertained or future goods by description
Starting point: specific goods

- Rule 1 – 4 are specific goods, 5 is unascertained goods

Seller is bound to do something to the goods
- BOUND to do to the GOODS
Rule 1
Property passes until the thing is done
“Where there is an unconditional contract for the sale of specific goods in a deliverable
state, the property in the goods passes to the buyer when the contract is made, and it is Buyer has notice
immaterial whether the time of payment or the time of delivery, or both, be postponed.”

E.g. city super – buy boneless fish

Unconditional contract
* do something to the fish to remove the bones
- Passing of property is not subject to the change or condition
- If have condition, no property can be passed here Once they done that – notify the buyer – passed property
Even not yet paid – property still pass E.g. I have baked 10 cakes – not sure which one is mine

Rule 3 (similar to rule 2) Need to UNCONDITIONALLY APPROPRIATE – to set aside the cake specifically (this
action is appropriation)
• Where there is a contract for the sale of specific goods in a deliverable state, but the
seller is bound to weigh, measure, test, or do some other act or thing with reference • Unconditionally meaning seller cannot supplement and cannot make any changes
to the goods for the purpose of ascertaining the price, the property does not pass
until such act or thing be done, and the buyer has notice thereof.
Goods can pass

Starting point: specific goods

Consent = assent (can be express or implied) + may be given either before or after the
appropriation is made
Not doing to the goods because they are already in deliverable state
But here seller is bound to weigh, measure… to ascertain the price
AFTER APPROPRIATION – PROPERTY PASSED
確定價錢
PAYMENT DOES NOT MATTER + DELVIERY DOES NOT MATTER
Part 2:
e.g. rice weighing
Seller delivers the goods to the buyer or to the carrier or other bailee (whether named by
the buyer or not) for the purpose of transmission to the buyer)
pass when weighing / measuring done + notice ð Pass the goods to another person - for delivery to the buyer - appropriation by
nature

Does not reserve the right of disposal

Rule 5 ð Seller
1) Where there is a contract for the sale of unascertained or future goods by description, ð Means unconditionally appropriated the goods to the contract
and goods of that description, and in a deliverable state, are unconditionally appropriated to
the contract, either by the seller with the assent of the buyer, or by the buyer with the assent
of the seller, the property in the goods thereupon passes to the buyer. Such assent may be
express or implied, and may be given either before or after the appropriation is made. Appropriation
• The act which shows the common intention to attach the contract irrevocably to the
subject goods so that those goods and no others become the property of the buyer
2) Where, in pursuance of the contract, the seller delivers the goods to the buyer or to a
o Infer from contract that show the property is attached to the contract
carrier or other bailee (whether named by the buyer or not) for the purpose of transmission
o Goods cannot be substituted
to the buyer, and does not reserve the right of disposal, he is deemed to have
o 有一點點像確定關係嘿嘿
unconditionally appropriated the goods to the contract.
• Intenriaonl organisation (e.g. setting aside of goods) by the seller may not be sufficient
/ may be difficult to constitute unconditional appropriation
Unascertained or future goods by description (by definition is not ascertained – still need to o E.g., e.g. packages of bottles - if selling 10 bottles and have 100 in warehouse -
undergo manufacture) put 10 aside does not really count as appropriation
o It’s the intention that matters - does it mean that 10 bottles must be to buyer?
o Must be UNCONDITITONALLY APPROPROATION
MUST BE unascertained o MATTER OF FACT (can be difficult because cannot tell exactly which 10
bottles are the ones)
 • Healy v Howlett & Sons – earmarking of boxes of mackerel on arrival 抵達時指定鯖 • Passing of property – identified in bulk situation
魚箱的指定用途 Re London Wine • Buyers can buy the wine but will not keep them, instead they
o Setting aside the goods - set of boxes of mackerel - transported by rail - sellers Co (Shippers) Ltd treat it like investment to sell for profits. Sellers can store the
has sold many to buyer - that point of time - appropriate the separate the stock to wine for the buyers and take instructions (e.g. ship, manage)
buyers - buyer is the last one here - the appropriation has not been made - the • Buyers do not have the wine physically but they will have
documents with description of how many wines are being
train does not arrive and the fish turn bad
stored
o Risk passes with the property
• Seller become insolvent, not enough to satisfy the customers
o Issue: whether the property has passed to the buyer before arrival (if yes then
buyer need bear the risk) (if no then seller bear risk – i.e. seller need to find
another fish to supplement this contract)? • A single purchaser of a particular win by generic description
o Appropriation has not been made before arrival purchased what was in fact the seller’s total stock of a
o Fish turn bad already before coming to the destination particular win at the day of the purchase

- Single purchaser – involves a invoice of a particular wine with

******Appropriation of unascertained goods -> ascertained goods (MUST) certain year of its generic description – did not pinpoint which
place in the warehouse, should identify at the time of the
contract, only have personal claim
Appropriation by exhaustion (first identify the bulk -> appropriation)
• Two or more purchaser who had bought quantities of a
- In case of identified bulk situation, can have appropriation by exhaustion (shrinkage particular wine which taken together, exhausted the whole of
of the bulk to a quantity no greater than the stipulated in the contract) seller’s stock of the wine of that description, which stocks
- Meaning: have certain goods that are subject to contract, the quantity is larger than were held by different warehousemen
what we have bought. By exhaustion / shrinkage of goods, the bulk will reduce, so no - Property in target is the same as the first one, at the time of
greater than what is stipulated in the contract the contract did not identify the goods – cannot have trust
- What is wrong? The prerequisite is that we need identified bulk situation – related to (need certainty of the subject matter) – cannot have
appropriation problem, no positive can be contemplated exhaustion
- at the time of the contract, seller and buyer agreed that the goods will come from this
bulk (e.g. telling that one of the ipads will come from this 2 ipads) – identified bulk • Purchaser did not exhaust the seller’s stocks and, although
known by both parties – possible to have appropriation by exhaustion (because know there was no act of appropriation, there was an
acknowledgement given by the warehouseman that appropriate
which bulk the goods come from)
quantity of the particular wine was being held to the
purchaser’s order
- No appropriation, meaningless acknowledgement, left with
- Appropriation by exhaustion does not follow rule 5
personal claim only
- Starting point is intention of the parties (can directly infer that allow appropriation by
exhaustion (not under rule 5 because it is something extra)
- Depends on the intention of both parties
Core question: HAS THE PROPERTY BEEN PASSED YET?
Wait & James v • Both parties agree to sell and buy a bulk of wheat (buy a
Midland Bank particular identified bulk)
• Mistakenly delivery the wrong amount
• Remaining second batch in the warehouse

• Bank is involved because the buyer pledge the goods to goods,

buyer later become insolvent
• Property has passed, still able to get the goods, so seller only
has personal claim in bankruptcy
Sale of Goods – Transfer of Risk and Title (presumptive rules, show the intention of parties – Cause seller has notified already, appropriation has been
can be rebuttable) made, property passed to the buyer, failure to pick up (risk
passed to buyer already) – buyer bear the loss (because seller
Transfer of risk
already willing to give up possession)
What type of risk we are transferring?(usually the risk will follow the transfer of property)
• Risk of theft, loss or damage to the contract of goods
Transfer of risk: Contrary intention shown (risk to pass before the property)
• Not the risk of non-payment or non-conforming goods (to the contract terms) (covered
by other provisions already) • Risk can be contracted out
• Buyer accepted the delivery warrant
Sterns Ltd v Vickers Ltd • A tank sitting in warehouse
Issue: Which party is to bear the loss? (related to insurance esp in commercial business sale
• Buyer need to take in warehouse
context) + The effect of loss-making event on the contract (may have effect on the contract –
• Seller give delivery warrant (the purpose : tandem)
void?)
• Buyer has accepted the risk even property hasn’t passed
– court said: appropriation lies with the buyer
Transfer of Risk
S22 SOGO Transfer of risk: provisos (exceptions)

“Unless otherwise agreed, the goods remain at the seller’s risk until the property therein is First proviso: Provided that where delivery has been delayed through the fault of either
transferred to the buyer, but when the property therein is transferred to the buyer the goods seller or buyer, the goods are at the risk of the party in fault (s22 SOGO)
are at the buyer’s risk, whether delivery has been made or not …”
Fault: wrongful act or default (s2(1) SOGO)
S2(1) SOGO • The party at fault delay the delivery
Delivery: means voluntary transfer of possession from one person to another • The party bear the risk
• (the longer you wait, the higher cost)

例子：A bought ipad from B, transfer of property (and risk) to A but ipad still at B Case: Demby Hamilton v Barden
(delivery immaterial)
• Buy tons of apple juice
Unless otherwise agreed: can be contracted out by terms • Buyer delayed the delivery and apply turn black
The goods remain at seller’s risk until the property therein is transferred to the buyer: • Buyer refuse to take the apply juice
property transferred then risk also followed normally (delivery is not important) • Court: buyer was at fault, buyer delayed in taking the delivery, buyer bear risk, need
to pay, even if the apple juice is not delivered
• Risk is linked with the transfer of property
Delivery: Seller has no obligation to deliver – voluntary delivery
Second proviso: Provided, also, that nothing in this section shall affect the duties or
liabilities of either seller or buyer as a bailee of the goods of the other party (s22 SOGO)
Transfer of risk: Risk in unascertained goods – Implied appropriation from failure to reply to • Duty of care
note of appropriation • Risk is still on seller side (bailee owe duty to the bailor)
• Duty did not switch
Pignataro v Gilroy • Seller has appropriated goods, buyer did not answer
• Notified buyer that the goods are ready to get from one
particular place Perishing of Goods (both physical and commercial losses)
• Stolen later
S8 SOGO

Issue: has property passed?

 Where there is a contract for the sale of specific goods, and the goods, without the Necessarily incident: e.g. perishable goods like vegetables – if you want to deliver if far
knowledge of the seller, have perished at the time when the contract is made, the contract is places, notice them its perishable – if buyer insist the seller to sell, the buyer has to bear the
void risk because of the long transit
Specific goods: only applies to sale of specific goods, not on unascertained goods
Must be without the knowledge of the seller Perishable – seller still need to freeze the goods (this is the responsibility and risk seller
need to bear)
At the time of the contract – seller not aware

Q: does it cover commercial losses like stolen goods as well? Transfer of title

A: Yes • Owner has the indivisible title of the goods

• Title is an aspect of the ownership (possession is another example, but possession is
Barrow, Lane & Ballard ltd v Philip Philips & Co case not determinative
- Still counted as perished if stolen • Title is another indicator
- Court: because it is specific – perished – no longer fulfil the requirement of the
contract – goods are considered as perished – contract is void
Used in what situation?

Agreement to sale on specific goods (executory agreement with certain conditions e.g. time) – • Sale of goods – transfer of property (transfer of property interest and title?)
• When the sale is initiative by a non-seller
wait for the completion of the conditions
• E.g. thief, can enter a sale of goods contract with third parties but he has no title to
S9 SOGO pass under SOGO)
Where there is an agreement to sell specific goods, and subsequently the goods, without • If transfer by a true owner there is no title problem (e.g. thief here can only transfer
any fault on the part of the seller or buyer, perish before the risk passes the buyer, the the property interest but not the title)
agreement is thereby avoided.
Agreement to sell Common law Nemo Dat Rule
Specific goods ‘… [I]n the development of our law, two principles have striven for mastery. The first is
Perish before risk passes the buyer for the protection of property: no one can give a better title than he himself possesses. The
second is for the protection of commercial transactions: the one who takes in good faith
Avoid: if both parties could not agree otherwise. Free to keep the contract, but …
and for value without notice should get a good title. The first principle has held sway for a
long time, but has been modified by the common law and by statute so as to meet the need
A bit like frustration of our own times’ (per Lord Denning, Bishopgate Motor Finance v Transport Brakes)

1) Protection of property – no one can give a better title than he himself possess
Risk relating to transit (not very useful lol)
(can only give whatever you have)
S35 SOGO a. If you have a particular title then you can only give that title
2) For protection of commercial transactions
Where the seller of goods agrees to deliver them at his own risk at a place other than that
a. To protect innocent third party (between original owner and innocent third
where they are when sold, the buyer must, nevertheless, unless otherwise agreed, take any party interest conflict)
risk of deterioration in the goods necessarily incident to the course of transit. b. Only one side will win (all or nothing approach) because need to keep the
goods flowing for transactions (in commercial sense)
• Seller agree to deliver at his own risk (responsible for physically deliver the goods) Codified statutory nemo dat rule (restatement of the common law)
• Buyer must take the risk of deterioration in the goods “Subject to the provisions of this Ordinance, where goods are sold by a person who is not
the owner thereof, and who does not sell them under the authority or with the consent of
 the owner, the buyer acquires no better title to the goods than the seller had…” (S23
SOGO)
Farquaharson Brothers & Co v King & Co
• Estoppel by putting someone as the position who appears to have the ownership but
• That is, the general rule is subject to exceptions. If an exception applies, the actually not the owner (apparent ownership)
practical effect is that the owner will be divested of his/her ownership. (所有者 • Employed a clerk but the clerk’s authority is only to delivery instructions, did not
將被剝奪其所有權。) have the authority to buy and sell
• He committed a fraud and pretend to be the owner of the property by using fake
name
Subject to the provisions: subject to the exceptions • Court: no representation, first element is not satisfied (owner did not know the
Act: goods are sold by a person who is not owner + does not sell under authority or consent existence of the transaction)
• Even if the person is holding the good does not mean its okay
Buyer: acquires no better title to the goods than the seller had • NEED CERTAIN REPRESENTATION FROM THE TRUE OWNER

i.e. if representing third party then see exceptions – so long as one applies, third party will Central Newbury Car Auctions v unity Finance
have good title – divest owners title • Car case – handing over of car and registration document
• Person handed car and registration document to Rogue
(can have multiple arguments)
• Rouge sell to another third party
• Central issue: no physical possession of the car but does that amount to
representation from the original owner?
Exception 1: Estoppel (codified common law rule) • Court: even though the middle person has the possession of the car by having the
Proviso in s23 SOGO documents, registration documents are not title documents (transfer of document =
transfer of title). No transfer of apparent ownership, does not amount of
“… unless the owner of the goods is by his conduct precluded from denying the seller’s representation
authority to sell…” • It is difficult to prove estoppel

• Representation and detrimental reliance Mercantile Credit v Hamblin – does the owner have a duty of care as of taking care of the
• Seller here: not the owner own goods to third party?
• Owner by his conduct is precluded from denying that seller to sell the property of • Car owner has past dealings with the middleman (trusted)
goods • Get hire purchase agreement to get financing
• Trusted the dealer, past car and registration documents not in the view to seller the
Cases: car
• But dealer sell to the third party
Shaw v commissioner of police of metropolis • Court: owner owe duty of care to the third party (i.e. lady should be more careful)
• Initial owner not sure • BUT no breach of this case because of the past dealings (not stranger but a dealer
• Mr N give the car to Mr L (to sell for Mr N to find the buyer) who she trusted)
• Mr L is a broker – Mr N passes everything to him • Proved proximity before duty of care?
• Mr L seller to Mr S and later Mr L did not pay (fraud)
• Mr N reported to the police Moorgate Mercantile Co v Twitching
• Now it becomes the competition between Mr N and Mr S
• Mr S is also a broker (bought the car and did not pay) • No duty of care – hire purchase finance company enter hire purchase agreement to
• Mr S’s argument: Mr N is estopped from denying Mr L to sell even though he did someone
not pay • The person also sold to third party in breach of the hire purchase agreement
• Court: rely s23 SOGO Mr L is not the owner, but here is not a sale, just an • Competition between the true owner and the third party
agreement to sale because it is not sold (Mr S cannot rely on the exception) • Registrar hold the documents but this is voluntary. Owner in this case did not
• Mr N can get back the car register
• Better explanation: Mr S did not suffer detrimental reliance • Third party did asked whether have the hire purchase agreement but registrar said
no
 • Owner owe duty of care? Breach the duty? • Transaction initiated by a mercantile agent (not the buyer, has to be the seller who
• Lord Denning: no duty of care to anyone – can do whatever they like on their own is a mercantile agent)
property – no duty of care – no breach • MA must be in possession of the goods, or the document of title to the goods at the
• CANNOT HAVE ESTOPPEL IN NEGLIGENCE BECAUSE NO DUTY OF time of the transaction
CARE • Beverley Acceptance Ltd v Oakley (not previously has been in
possession
• Rogue pledging 2 cars with documents (registration document) with Mr
Green to get money and loan
Exception 2: Sale by mercantile agent • Rogue tries to sell the cars to other people to get money
• He told Mr Green “take the car key for one day”
Proviso in s23(2)(a) SOGO • Mr Green released the cars, the person show to third party and bought
Provided, also, that nothing in this Ordinance shall affect the provisions of the Factors the car
Ordinance (Cap. 48), or any enactment enabling the apparent owner of goods to dispose of • Immediately return the car to Mr Green
them as if he were the true owner thereof…” • Enter the contract with the third party
• The third party tries to claim the car but Mr Green refuse to give out car
• Third party tries to argue that rogue is mercantile agent
• Assuming rogue is mercantile agent, have consent from the Mr Green,
[ORDINANCE CROSS-REFERENCING] – Read 2 ordinances together – See factors
but at the time of the sale, the rogue no longer has the possession of the
ordinance too
car, does not apply this when entering into contract
• MA must obtain the possession with the consent of the owner
• Even if the consent is obtained by deception, still obtained consent
S2(1) Factors ordinance (“FO”) “mercantile agent means a mercantile agent having, in the
• MA must receive the goods in the capacity as MA
customary course of his business as such agent, authority either to sell goods, or to consign • Pearson v Rose & Young (MA instructed to obtain offers but with no
goods for the purpose of sale, or to buy goods, or to raise money on the security of goods” authority to sell)
Mercantile agent • Owner wants to sell the car, instructed MA to solicit office, see potential
buyers (not to sell the cars)
- Not just an ad hoc agent, has to be in the business of sale • MA try to get registration documents, owner forgot to take back the
- If just like one-off agent then it’s not fulfilling the requirement documents after showing to the MA
• Sale to third party -
S3(1) FO • “The owner must consent to the agent having them for a purpose which
is in some way or other connected with his business as a mercantile
“(requirement) Where a mercantile agent is, with the consent of the owner, in possession of agent. It may not actually be for sale. If may be for display, or to get
goods or of the documents of title to goods, any sale, pledge, or other disposition of the offers, or merely to put in his showroom; but there must be a consent to
goods, made by him when acting in the ordinary course of business of mercantile agent, something of that kind before the owner can be deprived of his goods”
shall, subject to the provision of this Ordinance, (effect) be as valid as if he were expressly (dicta) per Lord Denning
authorised by the owner of the goods to make the same: • Dicta because there is no consent
• May argue that the consent is related to seller, and arguably related to
sale
Provided that the person taking under the disposition acts in good faith (has to be bona • Owner can get back the car
fide), and has not, at the time of the disposition (timing), noticed that the person making • Sale must take place in the ordinary course of business
the disposition has no authority to make the same” • Oppenheimer v Attenborough & Son case
• “…‘acting in such a way as a mercantile agent acting in the ordinary
ð Protects common law bona fide purchaser course of business of a mercantile agent would act’; that is to say, within
business hours, at a proper place of business, and in other respects the in
Mercantile agent at the time of sale did not have the authority to sell but if satisfy all the ordinary way in which a mercantile agent would act so that there is
nothing to lead the [buyer] to suppose that anything wrong is being
requirements in the first four lines, then can be treated as expressly authorised by the owner
done, or to give him notice that the disposition is one which the
mercantile agent had no authority to make.”
• Buyer must take goods in good faith and without notice that the sale was made
Elements:
without the owner’s authority (bona fide)
 making the delivery or transfer were expressly authorised by the owner of the goods to
make the same.
• Seller in first contract sells to first buyer
Exception 3: Sale under voidable title • Seller continues in possession of the goods (holding the physical goods) [must be
S25 SOGO continuous possession - Pacific Motor Auctions Pty Ltd v Motor Credits (Hire
Finance) Ltd [1965] AC 867 (at S&H p382)
“When the seller of goods has a voidable title thereto, but his title has not been avoided at • But the contract entered already
the time of the sale, the buyer acquires a good title to the goods, provided he buys them in • Third party taken delivery – goods have been delivered to B2 already
good faith and without notice of the seller’s defect of title • The third party must be a bona fide purchaser without notice
Meaning: did get the title at the time of the contract, contract no1 seller and buyer, no2 • B2 can have good title
seller (buyer in first contract) and third party = get title from the first title, but such title is
voidable. Seller in the first contract can possibly void the title • Sells the same goods to buyer no2
• Delivery or transfer (in second contract)

When the title is voidable? Under law whether avoided?

Problem: cannot satisfy both customers because seller is selling the same types of goods
Mistake, misrepresentation… seller can avoid the contract = title potentially avoidable
• Buyer 1 landed contract first, buyer 1 has title (transfer of property passed
Fraud = unravels everything – if seller not to avoid the contract – still valid already but seller still holding the goods)
• Seller in breach of the 1st contract due to selling to buyer 2
• Seller no longer have title to pass to buyer 2 (composition between Buyer 1
If want to avoid the title need to avoid it before the contract no2 and Buyer 2)
• Competition between buyer 1 and buyer 2
Third party cannot get the title
• If buyer 2 can rely, will divest B1 of the title
Title not avoided under second contract, buyer in second contract (third party) can gain • If buyer 2 cannot rely on this exception then B1 still get the title
good title (when hes bona fide and without notice of seller defect of title) • Assume buyer 2 acting in good faith without notice

• B2 can rely on section 27

Car & Universal Finance Co Ltd v Caldwell case
• Seller in first contract sell the car with the frauster Exception 5: Sale by buyer in possession
• Paid by check (check is bounced)
S27(2) SOGO
• Seller has the right to avoid the contract and buyer sells to the innocent third party
• Becaust frauster would run away – how can I locate the frauster and void the Where a person having bought or agreed to buy goods obtains, with the consent of the
contract? seller, possession of the goods…, the delivery or transfer by that person, or by a mercantile
• No need to communicate the avoidance – can do something to manifest the agent acting for him, of the goods …, under any sale, pledge, or other disposition thereof,
avoidance – in this case went to the police to any person receiving the same in good faith and without notice of any lien or other right
• Sufficient to void the first contract – so long as the party has not been sold, then of the original seller in respect of the goods, shall have the same effect as if the person
third party would not get good title
making the delivery or transfer were a mercantile agent in possession of the goods or
• Avoidance is done before the entering of the second contract (cannot rely on s25)
documents of title with the consent of the owner.
Situation
Exception 4: Sale by seller in possession (focus on the first contract)
• Contract no1 (seller to buyer)
S27(1) SOGO • Property hasn’t passed, title still sit with seller, but the possession of goods are with
Where a person having sold goods continues or is in possession of the goods, … the the buyers
delivery or transfer by that person, or by a mercantile agent acting for him, of the goods …, • Create risk of the seller because the buyer has it
under any sale, pledge, or other disposition thereof, to any person receiving the same in
good faith and without notice of previous sale, shall have the same effect as if the person • Buyer 1 sell to buyer 2
• Buyer 2 want to say have title (want to defeat the title of the seller)
 • Buyer 1 likely did not pay - If no then all other connections will be broken

Elements:
• First buyer having bought or agreed to buy the goods
• Consent by fraud is still consent
• Get possession of goods
• Third party has good title
• … Exception 6: Sale in Market Overt
Cases: S24(1) SOGO
• Helby v Matthews (Hire Purchase Agreement of piano) Where goods are openly sold in a shop or market in Hong Kong, in the ordinary course of
• If third party got piano under hire purchase agreement piano the business of such shop or market, the buyer acquires a good title to the goods, provided
• Better title than seller?
he buys them in good faith and without notice of any defect or want of title on the part of
• Hire purchase is not a sale nor agreement to sale because no legal
the seller.
oligation to buy
• This section does not apply to hire purchase agreement Any shop cover on street – can rely on this (open shop)
• Newtons of Wembley Ltd v Williams (Voidable title applicable?) Commented [s1]: ???
Even if its stolen goods – still can get good title for third party
• First buyer fraudster
• If seller is not able to avoid the contract in time, then the seller cannot
get good title
• Even if the seller can avoid the contract in time, but third party still can
Elements (Au Muk Shun v Cho Chuen Yau):
get title under buyer’s possession - Must be openly sold in the shop (need public access, no need password), floor or
• National Employers’ Mutual General insurance Association Ltd v Jones ground floro does not matter
• Meaning of the “consent of seller” - The sale must take place in shop or market in HK
• As if has sold to the owner - The sale must be in the ordinary course of business of that shop or market; and
(owner – original seller – thief) - The buyer must act in good faith without notice of any defect or want of title of
No sale – thief then sold to innocent third party (passed many hands) seller
then landed the insurance company
ð First buyer argument? – possession of goods with consent of the seller (thief)
– like obtain consent of the owner – but theres actually no consent for theif to
take the possession
ð The goods cannot be passed to the first buyer
ð Second buyer – first buyer becomes the seller (obtain the consent from the
thief)
ð Buyer in possession has consent of the seller (who was the thief)
ð Its like money laundering as the people are cleaning the title
ð Send to someone and ask for on-sale
ð If just take the literal meaning can defeat the title of the owner (just the first
buyer cannot)

PROBLEM
- To make a logical conclusion
- Prepositive approach – cannot take the literal approach
- The seller and owner must be same person
- Break of the sale needs to trace back the original seller (owner)
- Need to get owner / initial owner consent
Sale of goods – Implied Terms • If anyone who has a security interest over the sold goods, sellers should disclose it
• Conditions (rescind the contract) and warranty (damages) to the buyer
• If the seller did not, buyer can sue to seller for breach of warranty
• Difficulty – not sure what is remedy under
• buyer can enjoy quiet possession
• Conditions – not a term but a condition to be fulfilled before contract become effective
(e.g. condition precedents)
Case:
• Buyer has two claims (disturbed by the third party, can also argue that did not have
Implied condition in commercial law – the right to sell the goods quiet possession)
S14(1) SOGO
“in every contract of sale … there is (a) an implied condition on the part of the seller that in Implied condition (to protect the buyer) – cannot be contracted out
the case of the sale, he has a right to sell the goods, and in the case an agreement to sell, he S11(1) CECO (Cap.71)
will have a right to sell the goods at the time when the property is to pass …”
Liability for breach of obligation arisings from section 14 of SOGO (seller’s implied
- Right to transfer only, not entitle undertaking as to title, etc) cannot be excluded or restricted by reference to any contract
term.
Case: • Sections always apply
- Rowland v Divall – seller had no title to the car
o Because its owned by the third party
Implied conditions (mainly about the quality the buyer is getting)
o The buyer used the car already
o Third party appeared and got back the car • Problem of students: too eager to find the breach (don’t be too keen)
o Breach of condition (the fundamental term), buyer can still sue the whole • Have something wrong but still does not mean to breach of commercial law
purchase price • Still have contract law…
• Now just satisfy the fine details
- Niblett v Confectioners’ Materials Co Ltd • Not this claim on this law only
o Sale of condensed milk with label
o No dispute that the seller owns the milk (seller has title over the goods)
o But Nestle sue the buyer, saying that the labelling infringed the IP right
o Seller does not have the right to sell Sale by description
o Seller or buyer has to remove all the labels because its infringement before S15(1) SOGO
they can use
o Breach of the condition Where there is a contract for the sale of goods by description, there is an implied condition
o i.e. No legal right to sale the goods even with possession because infringe that the goods shall correspond with the description
third party right •Implied condition that goods shall correspond with the description in a contract of
sale of goods by description
• Trap: students should not just focus on the last part
Implied warranty that the goods are free from undisclosed charge and encumbrance (not a
• Difficult part: how do we determine the contract is a sale of goods by description
condition) Sale by • Sales by description may … be divided into sales
S14(1)(b) SOGO description (1) of unascertained or future goods, as being of a certain kind or
class, or to which otherwise a ‘description’ in the contract is
An implied warranty that the goods are free, and will remain free until the time when the
applied;
property is to pass, from any charge or encumbrance not disclosed or known to the buyer
=> because you cannot see the goods, need to rely on the
before the contract is made and that the buyer will enjoy quiet possession of the goods
description
except so far as it may be disturbed by the owner or other person entitled to the benefit of
(2) of specific goods, bought by the buyer in reliance, at least in
any charge or encumbrance so disclosed or known.
part, upon the description given, or to be tacitly inferred from the
circumstances, and which identifies the goods
=> can see the goods
 => if extra descriptive words to describe the words is used (e.g. ð KEY: Identification
hold hot water) ð Go to the identity of the goods
(passage from Benjamin’s Sale of Personal property (7th ed p641)
cited in Joesph Travers & Son Ltd v Longel Ltd Description constitutes a substantial ingredient of the identity of the
S15(2) SOGO goods
A sale of goods shall not be prevented from being a sale by description by reason only that, • Reardon Smith Line Ltd v Yngvar Hansen Tnagen – Vessel
being exposed for sale or hire, they are selected by the buyer being constructed in another yard with a different yard number
• Yaht number difference in the invoice
• Built in another yard
• Maybe want to go out of the contract (to reject the
contract)
Sale by • E.g. buy the bottle • Buyer argues that does not fall into the description of
description • If more descriptive words are being used the contract with the yard number
even if the • Can still be a sale of goods by description even if its displayed • Irrelevant consideration of the number (sale is not
buyer before the buyer done because of this number description)
physically see • No breach
the goods • “.. there is a sale by description even though the buyer is buying
something displayed before him on the counter: a thing is sold by Intention of the • Terms of the contracts that goods that corresponds on the
description, though it is specific, so long as it is sold not merely parties contract (pre-contractual representation)
as the specific thing but as a thing corresponding to a description, • If presentation not incorporated into main contract, does not fall
e.g. woollen under-garments, a hot-water bottle, a second-hand into this section
reaping machine…” per Lord Wright in Grant v Australian
Knitting Mills • Lee Yuk Shing v Dianoor International Ltd (in liq) - a common
intention that that the description is a term of the contract and
ð For it not to fall into the meaning, taking the goods AS IT that the goods will correspond with the description
• Action of diamonds, booklet to know the types of
IS
ð Cannot get any description to fall into this section goods
• Turns out the wrong good
• Buyer want to sue for breach of the condition
What type of Distinction between goods’ identity and attributes / quality • (exemption clauses in contract law matter)
words will fall • Essential to the parties
• “The ‘description’ by which an ascertained goods are sold is, in
into this section • If have pre-representation then would not fall into this
my view, confined to those words in the contract which were
as a sale by section
intended by the parties to identify the kind of goods which were
description? to be supplied. It is open to the parties to use a description as
• Harlingdon & Leinster Enterprise Ltd v Christopher Hull Fine
broad or as narrow as they choose but ultimately the test is
Art – no reliance on description by the buyer
whether the buyer could fairly and reasonably refused to accept
• Sale by description
the physical goods proffered to him on the ground that their
• Rely on the descriptive words to enter the contract
failure to correspond with what was said about them makes them
• Reliance is a must by the buyer
good of a different kind from those he had agreed to buy. The
• Painters (art dealers)
key… is identification.” per Lord Diplock in Ashington Piggeries
• Buyer has more expertise, did not ask about the
v Christopher Hill Ltd
painter information when buying from another art
dealer
ð The words used to identify the kind of goods will be fall • Turn out its not authentic – cannot sue the seller
into the section because did not say description
ð Distinguish identity and attributes / quality (quality is • Because plaintiff did have expertise, did not ask , no
governed by other statute) reliance, not a sale by description
ð HERE JUST IDENTITY Applies to the • 16(2) and 16(3) if seller is selling the goods in the course of
ð Can be broad or narrow goods not sold business
 “in the course • Here is silence on the timing of the contract (e) as durable,
of business” • “when there is a contract”
as it is reasonable to expect having regard to any description applied to them, the
price (if relevant) and all the other relevant circumstances; and any reference in
• Must consider seller this Ordinance to unmerchantable goods shall be construed accordingly.”
(no limitation
on time) • E.g. Varley v Whipp – sale of second-hand reaping machine by a
Silence – did person not dealer in the agricultural industry (not elements but factors, just pick the ones which are applicable)
not specify / • The buyer is new, turn out is second-hand. This section does not
apply Single purpose goods – whereas can be used for multiple purposes…
demand course
of business • Silence on the time

Correspondence • Arcos Ltd v EA Ronaasen & Son – thickness of wood (timber ONLY NEED TO SATISFY THE FEATURE WHICH IS COMMONLY USED (i.e. how
with the thickness difference need to be minimal) reasonable people use it)
description - E.g. bucket – turn it as something else and break – cannot say this is not of
must be exact • Re Moore & Co Ltd and Landauer & Co’s Arbitration Ltd – merchantable quality
packaging of canned fruits (order of the packaging of boxes of 30 - Used to contain the water compound
oranges – but reality is boxes of 24 oranges – total amount still
same, but because don’t following the description of the contract, CONTEXT IS IMPORTANT – weigh all the factors and consider (depends on the
need to re-packaging, non-correspondence is a breach
situation)

Implied undertaking as to the quality and fitness

To be assessed objectively!! Cehave v Bremer:
S16(2) SOGO
‘Merchantable…. is a composite quality comprising elements of description, purpose,
Where the seller sells goods in the course of a business, there is an implied condition that condition and price. The relative significance of each of these elements will vary from
the goods supplied under the contract are of merchantable quality… case to case according to the nature of the goods in question and the characteristics of the
• Implied condition that the goods supplied under contract are of merchantable market which exists for them.’
quality (s16(2) SOGO) ð Whether the market have reasonably people taking in account into the defect
• Note that the term of ‘merchantable quality’ has been changed to ‘satisfactory
ð If yes still buy then its merchantable quality
quality’ in UK
In the course of business: one-off sale?
Rogers v Parish – sale of new car with minor defects
• Stevenson v Rogers – in the course of business includes one-off sale in the course
of business and habitual dealings in the goods sold is not required • Minor defects
• Sale can be a one-off sale? Yes • The obvious one is minor defect
• So long as relates to the business – yes • (analylse in context) Range Rover, new car -> such minor defect is not acceptable ->
unmerchantable
Definition of mercantile quality:
EXCEPTION (no implied condition on merchantable quality)
• (S2(5) SOGO) “Goods of any kind are of merchantable quality within the meaning of
this Ordinance if they are— ð Implied condition of merchantable quality to protect the buyer that principle
(a) as fit for the purpose or purposes for which goods of that kind are commonly (CAVEAT EMPTOR) – cannot sell the goods as it is
bought (Aswan Engineering Establishment Co v Lupdine Ltd – stacking of pails ð If have defects need to tell the buyers
containing waterproofing compound in intense heat - buckets);
(b) of such standard of appearance and finish; • (S16(2) SOGO) “… except that there is no such condition—
• (a) as regards defects specifically drawn to the buyer’s attention before the contract is
(c) as free from defects (including minor defects); made; or
(d) as safe; and
Q: how much details? Need to general indicator / nation of the defects so the buyer has
 the informed consent If expressly mentioned the purpose to the seller, even using it is not a purpose commonly
supplied – supplier still need to fit for the purpose
• (b) if the buyer examines the goods before the contract is made, as regards defects
(told you already and you continue to do to supply the good – implication where the goods
which that examination ought to reveal;
will be able to perform the function and fit for the purpose
• (c) if the contract is a contract for sale by sample, as regards defects which would have
been apparent on a reasonable examination of the sample.” ð If not made known to the seller then no responsibility
ð Can be express or implication

What does it mean by implication?

EXAMINATION – seller allow examination of the goods before the contract is made – as
regard the defects – examination ought to reveal A: happens in single purpose goods
- By implication it has to make known
Implied condition that the goods supplied under contract are reasonably fit for a particular - The industry (course of dealings) – supplier know that the buyer will use this good
purpose for certain purpose

EXCEPTION:
(s16(3) SOGO) “Where the seller sells goods in the course of a business and the buyer,
expressly or by implication, makes known to the seller any particular purpose for which the “where the circumstances show that the buyer does not rely, or that it is unreasonable for
goods are being bought, there is an implied condition that the goods supplied under the him to rely, on the seller’s skill or judgment
contract are reasonably fit for that purpose, whether or not that is a purpose for which such ð Because if you tell the seller a specific purpose
goods are commonly supplied, except where the circumstances show that the buyer does ð Nartrually tell the supplier to rely on the suppler’s judgment and skills to
not rely, or that it is unreasonable for him to rely, on the seller’s skill or judgment.” source the good for the buyer that fit for the particular purpose
ð Did not rely on the judgemnt
ð Limit as to how detailed the examination should be
ð Then this section does not apply
ð Do we need to dissect the defect?
ð No reliance
ð Depends on circumstances
ð What normal people will do in the industry to examine the goods
ð The examination has to take place • Requirements:
o Seller sells subject goods in the course of business
If buyer did not have examaitnion – then this exception does not apply
o Buyer makes known to seller the particular purpose

• Henry Kendall v William Lilico – groundnut extracts poisonous for

If supplier ask buyer to do the eamiantion but the buyer refuse? feeding pheasants
A: can argue that the buyer has waive the right of the examination (buyer cannot sue under ð Groundnuts alright, fed for pheasant (poison)
this section) ð Whether the purpose: using grounutes for feeding pheasant has been made
known to the seller or not
Subsection 3 – only applies to business sale – particular purpose ð This case: this has been made known, to the seller
ð Seller know that condition
ð Breach of condition
(s16(3) SOGO) “Where the seller sells goods in the course of a business and the buyer,
expressly or by implication, makes known to the seller any particular purpose for which the • Ashington Piggeries v Christopher Hill Ltd – sale of herring meal
goods are being bought, there is an implied condition that the goods supplied under the which was suitable for inclusion in foodstuffs in small quantities for
contract are reasonably fit for that purpose, whether or not that is a purpose for which such most animals but seriously poisonous to minks
goods are commonly supplied, except where the circumstances show that the buyer does ð Minks
not rely, or that it is unreasonable for him to rely, on the seller’s skill or judgment.” ð Buyer argue for 2 claims:
ð Sale by description – they are still fit into the description
 ð Quality and fitness – fit for particular purpose – not fit for purpose of feeding (2) In the case of a contract for sale by sample—
minks

o Buyer’s (reasonable) reliance on seller’s skill or judgment (a) there is an implied condition that the bulk shall correspond with the sample in
• Cammell Laird & Co Ltd v Manganese Bronze & Brass Co Ltd – quality;
construction of propellers => in same quality

[sensitivity] (b) there is an implied condition that the buyer shall have a reasonable opportunity of
comparing the bulk with the sample; [Note: this implied condition (b) has been
repealed in UK]
Does not apply where damage caused by goods due to sensitivity or particular unusual => ignore in meantime (compare) – ignore because its redundant – always have the
characteristics of the buyer that was unknown to the seller right to examine goods – in another section – repealed in UK already
• Griffiths v Peter Conway Ltd – buyer contracted dermatitis after wearing a
bought tweed coat (c) there is an implied condition that the goods shall be free from any defect,
ð Buyer has dermatistics because of the sensitivity to the tweed material rendering them unmerchantable, which would not be apparent on reasonable
ð Ordinary people will not contract dermatistics – no examination of the sample. ”
ð Need to tell the seller about this sensitivity issue
ð Seller not breach the condition => free from defects
=> latent defects
•
Slater v Finning Ltd – failure of camshafts on a vessel
ð Machinery part to be inserted into vessel
ð Ordinary veseel not a problem Function of a sample
ð Resiance - ? – not told to seller – so no breach

• Drummond v Van Ingen

Relationship between s16(2) and s16(3) SOGO “The office of a sample is to present to the eye the real meaning and intention of the
All about purposes – parties with regard to the subject matter of the contract which, owing to the
imperfections of language, it may be difficult or impossible to express in words.” per
(objective) Mercantable quality is a general standard of the quality of the goods – does not
Lord Macnaghten
matter what you use – whether in general meet the quality
(sample is to show you the quality which you cannot put in words)
(e.g. colour)
In particular purpose need to make kwown to seller – function of s16(3)
• ‘Sale by sample’ – the bulk to be delivered will correspond to the sample in quality
=> if the intention is not for the buyer to compare the bulk / goods to be delivered with
If goods only be use single purpose goods – likely 16(2) – also breach 16(3) the sample
=> this is not a sale by sample
17 SOGO (sale by sample) => it is just a sample
• You are being shown a sample does not mean that you are sale by sample => both parties have to intend that the later goods will match the sample
• If such type of contract -> usually is a bulk sale situation => buyer should keep the sample so they can compare
• 3 implied condition
• Implied conditions in s17 SOGO Zara is not sale by sample
“(1) A contract of sale is a contract for sale by sample where there is a term in the
contract, express or implied, to that effect.
Q: what if sample bulk same quality, but theres latent defect
 ð Defects cannot be seen by physical exmaiantion “Where any right, duty or liability would arise under a contract of sale of goods by
ð What © intended for implication of law, it may (subject to [CECO]) be negatived or varied by express agreement,
or by the course of dealing between the parties, or by usage if the usage is such as to bind
both parties to the contract.”

• Free from latent defect (which renders the goods unmerchantable, and which would
not be apparent on reasonable examination of the sample – s17(2)(c)) • S11 CECO
(2) As against a person dealing as consumer, liability for breach of the obligations arising
è Whether the defect will be apparent on reasonable examination from section 15, 16 or 17 of the Sale of Goods Ordinance (Cap. 26) (seller’s implied
è What kind of examination is expected? undertakings as to conformity of goods with description or sample, or as to their quality or
è Test: depends on industry fitness for a particular purpose) cannot be excluded or restricted by reference to any contract
è Normal practice of the trade term.
è Visual seeing touching – defect could not be apparent / such reasonable
(3) As against a person dealing otherwise than as consumer, the liability specified in
examination => it’s a latent defect
subsection (2) can be excluded or restricted by reference to a contract term, but only in so far
è Just because have latent defect does not mean the section is breached as the term satisfies the requirement of reasonableness.
è That latent defect needs to render goods unmerchantable
è Unmerchantbale -> go back to s2 (same as merchantable quality)
Most sogo clauses can be contracted out – need to provide other stuff

• Steels & Busks Ltd v Bleecker Bik & Co Subject to CECO (reasonableness)
15 16 17 – as consumers – cannot be excluded …
• “The extent to which a sample may be held to ‘speak’ must depend on the contract and B2B – only insofar as they satisfy the reasonableness
what was contemplated by the parties in regard to it. A sample may be analysed, X-
rayed-tested to destruction. In the present case the parties were content, in accordance
with the normal practice of the trade, to rely on a visual examination.” per Sellers J Don’t try too keen to apply the implied terms
If cannot still can seek common law claims

Relationship of s17 with s15 and s16 SOGO

• • S15(1) “… and if the sale is by sample, as well as by description, it is not sufficient
that the bulk of the goods corresponds with the sample if the goods do not also
correspond with the description.”
ð If have same, need to satisfy both
• • S16(2)(c) “…if the contract is a contract for sale by sample, as regards defects which
would have been apparent on a reasonable examination of the sample.” – one of the
exclusions
ð Exception to merchantable quality …
ð In contract by sale of sample, defect will apparent on reasonable examination –
excluded – cannot say they are unmerchantable –
ð Requirement is have examined the samples
ð Already see the defect and buy – then means they are merchanted

Exclusion . restriction on liability (can I contract out)

• S57 SOGO
Sale of goods – Duties and Remedies of seller and buyer ð At the time of sale, the goods are in possession of the third
party, constructive delivery when third person tell buyer
General duties of seller and buyer that he holds the goods on his behalf
S29 SOGO It is the duty of the seller to deliver the goods, and of the buyer to accept ð Like attornment (bailee, third party agrees to hold the goods
and pay for goods, in accordance with contract no longer for the seller but for the buyer – constructive
possession shift from seller to buyer
ð Here only ask for conforming goods, whether the goods ð Transfer of possession by third party
confirm to the contract would be governed by the implied ð If bailee refuses to delivery – no delivery
terms
ð The duty is to deliver the goods and buyer to accept and pay
in accordance with the contract Place of delivery
ð Both parties S31(1) SOGO
S30 SOGO Unless otherwise agreed, delivery of goods and payment of price are
concurrent conditions, the seller must be ready and willing to give “Apart from any such contract, express or implied, the place of delivery is the seller’s place
possession of goods to buyer in exchange for price, and buyer must be of business, if he has one, and if not, his residence:
ready and willing to pay price for possession of goods.
ð Can contract out Provided that, if the contract is for the sale of specific goods, which, to the knowledge of
ð Concurrent: both parties are ready for the transaction the parties when the contract is made, are in some other place, then that place is the place
of delivery.
Specific duties of the seller • Usually the contract will offer the place of delivery
S29 SOGO It is the duty of the seller to deliver the goods … in accordance with the • Contract is silent, implied place of delivery is seller place of business / residence
terms of the contract of sale • Sale of specific goods – to the knowledge of parties when some other place -> that
place is the place of delivery (only for specific goods, not on ascertained goods)
ð Does not mean physical delivery
• Can change the place in contract
ð Transferring is legal one
ð May not be physically transfer
ð Buyer has duty to pick up the goods Time of delivery
S2(1) SOGO Meaning of delivery: s2(1) SOGO: Voluntary transfer of possession
S12(1) SOGO
from one person to another
Unless a different intention appears from the terms of the contract, stipulations as to time
S31(1) SOGO Whether it is for the buyer to take possession of the goods or for the
of payment are not deemed to be of the essence of the contract of sale (irrelevant) .
seller to send them to the buyer is a question depending in each case on
Whether any other stipulation as to time is of the essence of the contract or not
the contract, express or implied, between the parties
depends on the terms of the contract
ð Once seller to transfer legal – agree in contract or how to
package / transfer – or is it for seller
ð Entitle to have charge • Usually the contract will stipulate the time
• is the time of essence? – meaning that if you don’t deliver this at the specific time then
ill treat you as repudiated?
Modes of delivery
• Depends on the party in the terms of contract
Actual delivery • Physically passing the goods to the buyer • What if the contract is silent?
Constructive • Where the goods at the time of sale are in the possession of a third • General presumption law in case law under commercial law: time of performing the
delivery person, there is no delivery by seller to buyer unless and until such contract is of the essence
third person acknowledges to the buyer that he holds the goods on • Reason: [T]he enormous practical advantages in certainty, not least in regard to string
his behalf (s31(3) SOGO) contracts where today’s buyer may be tomorrow’s seller. Most members of the string
(works like will have many ongoing contracts simultaneously and they must be able to do
business with confidence in the legal results of their actions’ (per Lord Lowry,
constructive
Bunge Corp v Tradax Export SA)
possession)
ð Not buying the goods for themselves
 ð Instead its for resale and business When the delivery is not by seller on his own but with third party (carrier / middleman) to do
ð String contracts (series of contracts) the physical delivery
ð If delivery not in essence – will impact on the next contract
ð Should be of essence, can treat as repudiated S34(1) SOGO
“Where, in pursuance of a contract of sale, the seller is authorised or required to send the
• Presumption can be rebuttable goods to the buyer, delivery of the goods to a carrier, whether named by the buyer or not,
for the purpose of transmission to the buyer is prima facie deemed to be a delivery of the
goods to the buyer.
ð Usually in reality can allow delay
ð
Can we waive the time is of essence clause? ð Parties have agreed
• Charles Rickards Ltd v Oppenheim ð Delivery to carrier – does not matter whether the carrier is chosen by the buyer
• Deadline stated in the contract (certain date) - but the date has arrived – the seller not ð Delivery of the purpose – transmission to tbe buyer
ready and ask for more time – buyer allow one more day and give notice to seller – ð When give to buyer then prima facie is deemed to be a delivery of goods to the
(postponement), give seller notice buyer
• Second date – still fail
• Buyer claim for the price Like rule 5 under section 28
- Passing property
COURT: by giving sufficient notice, even if waived the first specific date of delivery, but - Pass to the carrier – for transmission – property will pass
make the time essence again for the second one - Delivery also pass because follow the transfer of property
Seller fail to deliver on the expiry of the date, contract can be treated as repudiated – even
have waive – can still make it in essence under reasonable notice S34(2) SOGO
Unless otherwise authorised by the buyer, the seller must make such contract with the
carrier on behalf of the buyer s may be reasonable having regard to the nature of the goods
What if the contract is silent on the delivery?
and the other circumstances of the case. If the seller omits to do so, and the goods are lost
or damaged in the course of transit, the buyer may decline to treat the delivery to the carrier
ð S31(2) SOGO “Where under the contract of sale the seller is bound to send the as a delivery to himself, or may hold the seller responsible in damages.
goods to the buyer, but no time for sending them is fixed, the seller is bound to
send them within a reasonable time.” Seller has the delivery under the
agreement ð A contract is needed between seller and carrier – reasonable and make sure
ð Seller bound to send within reasonable time goods are not lost or damages
ð Usually have insurance (proper arrangement is made)

• s58 SOGO “Where …any reference is made to a reasonable time, the question what
is a reasonable time is a question of fact.”

• S31(4) SOGO “Demand or tender of delivery may be treated as ineffectual unless

made at a reasonable hour. What is a reasonable hour is a question of fact.” Expenses of the delivery – who should be responable for the expenses?
S31(5) SOGO
Within the reasonable time (hours) need to deliver
Unless otherwise agreed, the expenses of and incidental to putting the goods into a
deliverable state must be borne by the seller

• To be distinguished from expenses of delivery itself which is to be agreed between the

seller and the buyer
 ð Can be contracted out
ð Borne by seller: not delivery but putting it into deliverable state
ð Delivery itself is the agreement of the seller and buyer – seller does not need
to pay for delivery – can incur charges Both subjects to be common law of minimis exception
ð Seller only responsible for putting the goods into deliverable state
Ignore minor deviation
– Shipton, Anderson & Co v Weil Bros
Duties of buyer
Depends on the industry and types of goods
Duty to accept and pay
1kg of rice -> minor?
PAYMENT
FACTUAL CONSIDERATION
S29 SOGO
è If under this exception buyer cannot reject the goods
It is the duty of the buyer to accept and pay for the goods, in accordance with the terms of
the contract of sale
S12(1) SOGO Acceptance – delivery of mixed goods
Unless a different intention appears from the terms of the contract, stipulations as to time S32(3) SOGO “Where the seller delivers to the buyer the goods he contracted to sell mixed
of payment are not deemed to be the essence of a contract of sale with goods of a different description not included in the contract the buyer may accept the
goods which are in accordance with the contract and reject the rest, or he may reject the
ð If want the payment to be essence then need write in contract
whole.”
ð Payment is just money
ð Court think can be easily compensated through damages
ð Does not have to be in essence
ð Buyer can accept and reject the rest
ð But other performance, cannot be really compensated fully
ð Or reject the whole
ð Same rationale 32(1)(2)
Acceptance – delivery of the wrong quantity S32(4) SOGO “The provisions of this section are subject to any usage of trade, special
agreement, or course of dealing between the parties.”
S32(1) SOGO
ð Subject to usage of trade, special agreement
Where the seller delivers to the buyer a quantity of goods less than he contracted to sell, the
buyer may reject them, but if the buyer accepts the goods so delivered, he must pay for
them at the contract rate Acceptance – delivery by instalment
S33(1)
ð Either reject the whole thing Unless otherwise agreed, the buyer of goods is not bound to accept delivery thereof by
ð Or accept what we have – 90kg – price stated in the contract instalments
ð Why cant wait for the 10 kg? – see s33
ð Deliver less – effectively to deliver the goods by instalments
S32(2) SOGO ð Buyer not bound, does not have duty to accept by instalments
Where the seller delivers to the buyer a quantity of goods larger than he contracted to sell, ð Need buyer prior consent
the buyer may accept the goods included in the contract and reject the rest, or he may reject
the whole. If the buyer accepts the whole of the goods so delivered he must pay for them at ð Cost is the main rationale – buyer needfurther arrangement to take the goods
contract rate Behrend & Co v Produce Brokers Co case
ð Arrive in London – just offload some goods – dk why and left – and came
ð Either accept the goods included in contract and reject the rest back the second time to unload – buyer refuse to take the rest
ð Or reject the whole ð According to 33 – if hasn’t agreed – buyer not bound to accept
ð If accept then accept in contract rate
S33(2) “Where there is a contract for the sale of goods to be delivered by stated ð Like Clegg v Anderson (asking for information to see whether up to standard
instalments, which are to be separately paid for, and the seller makes defective deliveries in – “purely asking question to make an informed consent” – does not amount to
respect of one or more instalments, or the buyer neglects or refuses to take delivery of or accepting – the intimation has to be clear therefore, not just for accepting the
pay for one or more instalments, it is a question in each case depending on the terms of the goods / making information
contract and the circumstances of the case, whether the breach of contract is a repudiation
of the whole contract or whether it is a severable breach giving rise to a claim for ð Delivered of something – buyer do any act inconsistent with the ownership of
compensation but not to a right to treat the whole contract as repudiated.” the seller – non rejection of goods (e.g. not passing the property back the seller
ð Consistent – then is returning
ð Act of reselling is inconsistent with the ownership of the seller
ð Contract has been contemplated
ð Separately paid for (deliver one batch then pay one) - S37(6) SOGO “The buyer is not by virtue of this section deemed to have accepted the
ð Seller makes defective delivery in respect of one or more instalemnt goods merely because the goods are delivered to another under a sub-sale or other
disposition.”
ð Issue: while several breach or repudiation of the whole contract (one whole
contract or separate tiny contract within the main contract?)
ð Exception: just deliver the goods to sub-buyer (second buyer) – this is not
ð Can depend, matter of interpretation deemed acceptance (JUST DELIVERY) – back to back sales – first time does
not take delivery – ask the seller to deliver the second buyer – NEVER WITH
FIRST BUYER – not deemd to be accepted yet
Maple Flock Co case ð Usually wont say anything after sale – deemed acceptance
Wrong in 16th batch out of 18th batch ð Rationale: certainty – seller be certained the goods

Seller deliver the rest – only one is wrong

NEED:
Buyer want to get out of the contract and claim the whole contract is repudiated
S36(2) SOGO
Seller argue that its separatble – does not render whole contract to be repudiated – contract
still here – shall only claim damages Unless otherwise agreed, when the seller tenders delivery of goods to the buyer, he is
bound, on request, to afford the buyer a reasonable opportunity of examining the goods for
the purpose of ascertaining whether they are in conformity with the contract
COURT: in favour of seller – test: quantitative ratio which the breach bears to the contract
as a whole + The degree of probability that such a breach will be repeated
ð Buyers right under s37(2)
S37(2) “Where goods are delivered to the buyer, and he has not previously examined them,
Court: does not lead to repudiation – just a separable breach – just treat that as ineffective – he is not deemed to have accepted them … until he has had a reasonable opportunity of
ask for damages for that one contract (instalment) examining them for the purpose—

(a) of ascertaining whether they are in conformity with the contract; and
Deemed acceptance
(b) in the case of a contract for sale by sample, of comparing the bulk with the sample”
S37(1) SOGO Subject to subsection (2), the buyer is deemed to have accepted the goods—
(a) when he intimates to the seller that he has accepted them;
- Clegg v Anderson – asking for further information ð Check physical goods – or examine sale by sample
or
Imply condition – overlap with here – buyer has the right to compare the bulk and the
(b) when the goods have been delivered to him and he does any act in relation to them sample
which is inconsistent with the ownership of the seller.
ð Tell the seller that he has accepted the goods – signature of the acceptance – Meaningless to have it as implied condition
does not
 ð Depends on facts (assume the contract is still here - subsisting) – claim damages under contract – charge
ð Goods go to first buyer – have the opportunity to examine the godos – to buyer with fee
decide whether or not accept the goods after examination
ð examination done by the first buyer
• Provided that nothing in this section shall affect the rights of the seller where the neglect or
ð goods directly to sub-buyer – i.e. first buyer never see the goods refusal of the buyer to take delivery amounts to a repudiation of the contract.”
(contract will be gone – delay – amounts to a repudation – buyer does not want to have the
ð the second buyer does the examination contract) – contract will be terminated

NEED THE EXCEPTION – by the time deliver – act inconsistent with the right of seller TWO DIFFERENT SITUATIONS
already
Does not mean already accepted - may needto examine the goods
Right of cure / request for repair
• No general right to cure – buyer has the discretion to either repudiate the contract or
• S37(4) SOGO “The buyer is also deemed to have accepted the goods when after the reject or cure
lapse of a reasonable time (s58) he retains the goods without intimating to the seller
that he has rejected them.” • If the time of delivery has not yet expired, seller entitled to make a fresh (as long as the
delivery period has not expired)
ð Just keep the goods – after lapse of reasonable time – deemed to accept the
goods for certainty J&H Richie Ltd
ð How to determine – usually depends on the complexity of the goods
• The question of whether requesting for repairing amounts to acceptance of the goods
• S37(5) SOGO “The questions that are material in determining for the purposes of • Subject to the repair – second chance to examine?
subsection (4) whether a reasonable time has elapsed include whether the buyer has
• Machinery defective – seller offer repair – redeliver to the buyer
had a reasonable opportunity of examining the goods ….
• Buyer was sus – want know whether the problem will come back later – asking question
ð Not saying another – reasonable opportunity … but do not know whether the good is good – can requesting for repair amounts to
acceptance

Neglect or refusal to delivery • Is repairing = acceptance of the goods?

• Seller request the buyer to take the delivery • COURT: not a sale of goods problem? It’s a supply of service issue

• Buyer not within reasonable time take delivery of goods (buyer fail to take the goods as • Requesting repair is a service – a separate agreement of repair – since seller refuse offer
in time) information – implied term that they should offer information to the buyer – does not
complete the service agreement
• Seller liable for any loss + reasonable charge for care and custody of the goods
• Buyer can reject the good under service contract, not under this original good contract
• Seller can ask for storage fee
• Request for repair will not amount to acceptance of the goods
• Subject to provisal – where refusal of take delivery amounts to repudation of contract
• HK not yet have equivalent provision
S39 SOGO “When the seller is ready and willing to deliver the goods and requests the
buyer to take delivery, and the buyer does not within a reasonable time after such
request take delivery of the goods, he is liable to the seller for any loss occasioned by Duty is performance obligation – pay & pay and accept
his neglect or refusal to take delivery, and also for a reasonable charge for the care and
When does not perform the obligation
custody of the goods:
Remedies
Remedies of seller (seller want good) ð Only when the price is outstanding
S40(1) SOGO “The seller of goods is deemed to be an unpaid seller within the meaning of
this Ordinance — (Lien)
when the whole of the price has not been paid or tendered;
when a bill of exchange (cheque) or other negotiable instrument has been received as •S43 SOGO“(1) Subject to the provisions of this Ordinance, the unpaid seller of
conditional payment, and the condition on which it was received has not been fulfilled by goods who is in possession of them is entitled to retain possession of them until
reason of the dishonour of the instrument or otherwise.” payment or tender of the price in the following cases, namely—
(a) where the goods have been sold without any stipulation as to credit;
(b) where the goods have been sold on credit, but the term of credit has expired; (OR)
Did not pay / paid through cheque but it is dishonoured
(c) where the buyer becomes insolvent.
(2) The seller may exercise his right of lien notwithstanding that he is in possession of the
goods as agent or bailee for the buyer.”
Real right of the unpaid seller
S41 SOGO “Subject to the provisions of this Ordinance and of any enactment in that ð Security interest (lien) over asset – create security over the property
behalf, notwithstanding that the property in the goods may have passed to the buyer, the ð Can only create security interest if youre the owner
unpaid seller of goods as such, has by implication of law—
(a) a lien on the goods or right to retain them for the price while he is in possession of ð Granted security interest – have real right – can create seucirty interest if
them; youre owner

(b) in case of the insolvency of the buyer, a right of stopping the goods in transitu after he ð Take security – take it over something else
has parted with the possession of them;
(c) a right of re-sale as limited by this Ordinance.” Before say can hold on the goods – lien is just possessory interest (just to retain and keep
it) – keep until payment

3 real remedies – assume property passed to buyer already

Payment due -

S42 SOGO “Where the property in goods has not passed to the buyer, the unpaid seller has, • S2(3) SOGO “A person is deemed to be insolvent who either has ceased to pay his
in addition to his other remedies, a right of withholding delivery similar to and co- debts in the ordinary course of business or cannot pay his debts as they become
due, whether he has been adjudged bankrupt or not.”
extensive with his rights of lien and stoppage in transitu where the property has passed to
the buyer.”
So long as prove cease to pay – can pay due debt
No need to be judged bankrupt (already deem insolvency)
ð Right of withholding – coextensive – exist in parallel with other 3 real rights
ð For clarification • S44 SOGO “Where an unpaid seller has made part delivery of the goods, he may
ð Assume property not yet passed – exercise his right of lien or retention on the remainder, unless such part delivery has
ð Prorepty still with seller – buyer is just holding the goods – seller has the right been made in such circumstances as to show an agreement to waive the lien or right
to retain payment of price of retention.”

ð Different charges --

ð Only delivery charges are outstanding but not the right – no

 Exception - such part delivery has been made Ito show an agreement to waive the lien of transit (on the way of delivery) – resume the possession – retain until the payment of
goods

e.g. at the time to make the first delivery - three deliveries in total - already know the buyer
is not going to pay - continue to make first delivery - can say waive lien for the rest 2 Can still have a second change of getting the legal possession – can have back the right of
deliveries (can already assume – if continue to delivery – deem to waive) lien again
Protection of the seller because only applies when the buyer of goods becomes insolvent
• S45 SOGO “The unpaid seller of goods loses his lien or right of retention thereon—
(a) when he delivers the goods to a carrier or other bailee for the purpose of transmission
Real rememdies – duration of transit
to the buyer, without reserving the right of disposal of the goods; -- reserving title
(retention of title on goods – just delivery goods – then the right of lien / retention will be • S47(1) SOGO “Goods are deemed to be in course of transit from the time when
lost) they are delivered to a carrier by land or water, or other bailee for the purpose of
transmission to the buyer, until the buyer, or his agent in that behalf, takes delivery
(b) when the buyer or his agent lawfully obtains possession of the goods; of them from such carrier or other bailee.”
(c) by waiver thereof. • Refer to sub-sections (2) – (5) of s47 in Lecture Outline for examples
The unpaid seller of goods, having a lien or right of retention thereon, does not lose his lien
or right of retention by reason only that he has obtained judgment for the price of the ð Transmission – to the carrier – until buyer takes the delivery from such carrier
goods.” ð Pass the good to the carrier – until actually get delivery by the seller – still are
under transit
ð
Presumption: seller has possession of the goods • S47(6) SOGO “Where part delivery of the goods has been made to the buyer or his
agent in that behalf, the remainder of the goods may be stopped in transitu, unless
such part delivery has been made in such circumstances as to show an agreement to
When seller lose lien or right of retention (withholding) give up possession of the whole of the goods.”

????????
Security interest in other goods – whether property pass does not matter – end when things
happen:
Effecting stoppage in transit

Three situations (waivers) S48(1) SOGO

- Passes the possession to buyer voluntarily (lost lien because give up possession) The unpaid seller may exercise his right of stopping in transitu either by taking actual
- Judgment – creation of debt? – no – still have the right to hold until debt discharged possession of the goods or by giving notice of his claim to the carrier or other bailee in
whose possession the goods are. Such notice may be given either to the person in actual
possession of the goods or to his principal. In the latter case the notice, to be effectual,
REAL REMEMDIES – STOPPAGE in TRANSIT
must be given at such time and in such circumstances that the principal, by the exercise of
If lost possession – can stop in between (only apply in one situation) reasonable diligence, may communicate it to his servant or agent in time to prevent a
delivery to the buyer
S46 SOGO “Subject to the provisions of this Ordinance, when the buyer of goods becomes
insolvent, the unpaid seller who has parted with the possession of the goods has the right of Taking actual possession / give notice to the truck driver – stop the goods
stopping them in transit, that is to say, he may resume possession of the goods as long as
they are in course of transit, and may retain them until payment or tender of the price.”
Notice can give to the actual driver – but more likely you wont know – e.g. SF – can tell
SF (principal) to the agent –
Stoppage in transit – when buyer become insolvent – unpaid seller – lost possession – has
the right to stop the transit – resume the possession of goods – so long as they are in course
Need reasonable time – reasonable diligence
 S48(2) SOGO “When notice of stoppage in transitu is given by the seller to the carrier or What if silent
other bailee in possession of the goods, he must re-deliver the goods to, or according to the
• S50(2) SOGO “Where an unpaid seller who has exercised his right of lien or
directions of, the seller. The expenses of such re-delivery must be borne by the seller.” retention or stoppage in 56ransit re-sells the goods, the buyer acquires a good title
thereto as against the original buyer.”
= second buyer under resale contract acquires good title against original buyer
- Protect the carrier
- Both seller and buyer in fault
- Must re-delivered the goods according to directions to seller PERSONAL REMEDIES (if no real remedy) – action for price
• s51(1) SOGO “Where, under a contract of sale, the property in the goods has
“im performing my legal duty under the alw im required to do that … passed to the buyer, and the buyer wrongfully neglects or refuses to pay for the
Expenses brone by the seller goods according to the terms of the contract, the seller may maintain an action
against him for the price of the goods.”

To avoid gap into the akward situation between seller and buyer • s51(2) SOGO “Where, under a contract of sale, the price is payable on a day
certain irrespective of delivery, and the buyer wrongfully neglects or refuses to pay
such price, the seller may maintain an action for the price, although the property in
Real remedies – Resale by seller (after getting the right of lien / retention of title) the goods has not passed, and the goods have not been appropriated to the
• S50(1) SOGO “Subject to the provisions of this section, a contract of sale is not contract.”
rescinded by the mere exercise by an unpaid seller of his right of lien or retention or
stoppage in transitu.” Differences between this and common law – common law needs mitigation – here claim
for what it is
ð The contract is subsisting • 51(1)
ð Keep contract alive and going
• Property has to be passed to the buyer
ð Seller has the right of resale (see next)
• Buyer wrongfully neglct – maintain terms – action against him for price
• *differences from common law – common law sue for damages – see mitigation
• S50(3) SOGO “Where the goods are of a perishable nature, or where the unpaid
seller gives notice to the buyer of his intention to re- sell, and the buyer does not • Here – price is a debt – no need mitigate –
within a reasonable time pay or tender the price, the unpaid seller may re-sell the • 51(1)
goods and recover from the original buyer damages for any loss occasioned by his • Where the contract – specify the date – e.g. due on a date / on or before a date
breach of contract.” • Totally unrelated to delivery – if property not yet passed – if that day not come – sue
ð When the goods are of perishable nature for the price

TO PROTECT THE SECOND BUYER (INNOCENT THIRD PARTY) – not trying to solve
the dispute between first buyer and seller PERSONAL REMEDIES – DAMAGES
• S50(4) SOGO “Where the seller expressly reserves a right of re-sale in case the • s52(1) SOGO
buyer should make default, and on the buyer making default, re-sells the goods, the
original contract of sale is thereby rescinded, but without prejudice to any claim the
seller may have for damages.” “Where the buyer wrongfully neglects or refuses to accept and pay for the goods, the seller
ð Where contract expressly provides for right of resale may maintain an action against him for damages for non-acceptance.
ð Resale by seller pursuing
ð Contract is resinded
ð Because title passed (2) The measure of damages is the estimated loss directly and naturally resulting, in the
ð Title property will go back to the seller, seller have good title to pass to the ordinary course of events, from the buyer’s breach of contract….”
reselling buyer
 ð Does not accept (goods cannot be passed – go back to seller) • S54 SOGO “In any action for breach of contract to deliver specific or ascertained
goods, the court may, if it thinks fit, on the application of the plaintiff, by its
judgment direct that the contract shall be performed specifically, without giving the
No need exam exact damages market price… contract price …
defendant the option of retaining the goods on payment of damages….”
ð Specific performance
ð Any breach of ascertained or specific goods
Hedley and rexandale rule
ð Court direct contract to be performed specifically without giving the discretion
of court

Remedies of buyer (buyer did not deliver / deliver non-conforming goods)

ð Not as of right but on the discretion of the court
RIGHT TO REJECT
S13(2) Breach of condition Breach of warranty
Whether a stipulation in a contract of sale is a condition, the breach of which may give rise • S2 SOGO “[Warranty] means an agreement with reference to goods which are the
to a right to treat the contract as repudiated, or a warranty, the breach of which may give subject of a contract of sale, but collateral to the main purpose of such contract, the
rise to a claim for damages but not a right to reject the goods and treat the contract as breach of which gives rise to a claim for damages, but not to a right to reject the
repudiated, depends in each case on the construction of the contract. A stipulation may be a goods and treat the contract as repudiated.”
condition, though called a warranty in the contract.
ð Condition (repudiated) or warranty (only claim damages) ð Warranty – lost the right to reject – treat the breach of condition as a breach of
warranty
• S32 Delivery of wrong quantity – see above
• S33 Delivery by instalments – see above • S13(1) SOGO “Where a contract of sale is subject to any condition to be fulfilled
• S38 Buyer not bound to return rejected goods: by the seller, the buyer may waive the condition, or may elect to treat the breach of
“Unless otherwise agreed, where goods are delivered to the buyer, and he refuses to accept such condition as a breach of warranty, and not as a ground for treating the contract
them, having the right to do so, he is not bound to return them to the seller, but it is as repudiated.”
sufficient if he intimates to the seller that he refuses to accept them.”
ð Buyer may waive condition – treat it as breach of warranty
ð Want to keep the goods
ð Just say reject the goods ð Just want to claim damages – then can treat it as breach of warranty
ð Buyer not bound to return the rejected goods
ð Seller come and get the rejected goods
ð No need to return unless otherwise stated • S55(1) “Where there is a breach of warranty by the seller, or where the buyer
elects, or is compelled, to treat any breach of a condition on the part of the seller as
a breach of warranty, the buyer is not, by reason only of such breach of warranty,
WHAT IF CANNOT REJECT – e.g. already deemed acceptance – the rememdies change – entitled to reject the goods; but he may—
can only claim damages (a) set up against the seller the breach of warranty in diminution or extinction of the price;
DAMAGES FOR NON-DELIVERY vs SPECIFIC PERFORMANCE (if buyer hasn’t paid yet) – can pay less or
• S53(1) SOGO “Where the seller wrongfully neglects or refuses to deliver the goods (b) maintain an action against the seller for damages for the breach of warranty.
to the buyer, the buyer may maintain an action against the seller for damages for (2) The measure of damages for breach of warranty is the estimated loss directly and
non-delivery. naturally resulting, in the ordinary course of events, from the breach of warranty.
(2) The measure of damages is the estimated loss directly and naturally resulting, in the
ordinary course of events, from the seller’s breach of contract….” (3) In the case of breach of warranty of quality, such loss is prima facie (presumptive) the
difference between the value of the goods at the time of delivery to the buyer and the value
they would have had if they had answered to the warranty….”
No delivery at all – buyer may maintain the action against the seller for damages for non-
delivery
ð Breach of warranty
ð S13(1) – compelled / lost under law as breach of warranty Sale of goods – Retention of Title Clause (REMEMBER IT’S A CLAUSE)
ð Buyer not entitled to reject the goods – can set up … • Also known as reservation of title clause / romalpa clause
• Meaning that the parties expressly provide this clause in the agreement – why seller want
this requiremtn
• For benefit for the SELLER
• Made on deferred payment, allow credit period for the buyers. Make sure they get
payment before they pay the seller - credit risk on seller – in hopes of minimixing the
creditor risk during the credit period
• Voluntary or self-help protection (no need this clause when theres no credit period – or
theres a gap between delivery of goods)
• Retention of title clause – seller retain title (does not want property to pass until full
payment is received) – passing of property does not depend on delivery –
• Can have different versions of ROT (simple – just the goods or extended – new objects
that have been manufactured you have supplied)

LAW:
• S21(1) SOGO “Where there is a contract for the sale of specific goods, or
where goods are subsequently appropriated to the contract (貨物隨後分配給
合約), the seller may, by the terms of the contract or appropriation, reserve the
right of disposal of the goods until certain conditions are fulfilled. In such case,
notwithstanding the delivery of the goods to the buyer, or to a carrier or other
bailee for the purpose of transmission to the buyer, the property in the goods
does not pass to the buyer until the conditions imposed by the seller are
fulfilled.”

• YES allow ROT in contract

• Property of the goods does not pass to the buyer until the conditions imposed by
the seller are fulfilled (can impose any conditions – but usually payment)
• S20 preusmptive rules – subject to contract
• S19 inferred contract
• This is one of them – parties do not want presumptive rules in s20 to apply
(despite appropriation)

• S3(1) “A contract of sale of goods is a contract whereby the seller transfers or

agrees to transfer the property in goods to the buyer for a money consideration,
called the price. There may be a contract of sale between one part owner and
another.”
• S51(1) “Where, under a contract of sale, the property in the goods has passed to the
buyer, and the buyer wrongfully neglects or refuses to pay for the goods according
to the terms of the contract, the seller may maintain an action against him for the
price of the goods.”
 Rare cases – ROT clause – retain property ð Extended ROT -
Potential effect of taking out the whole property of the contract – if did not intend to pass
ð Simple => buy in supply – mix goods

S51(1) – action for price – suing for debt – prerequisite, property in goods has passed – ð Meaningless to separate (impose obligation to keep them separate)
cannot
ð Green part (create legal problem)

Cannot sue for price here – rerequisite did not fulfil ð in the new goods – create interest – can potentially create security interest
when its involving buyer
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ð potentially creating security interest when the good was originally from buyer

Effect of ROT clause ð charge needs to be registered – don’t register – charge void
FG Wilson v John Holt & Co
ð unused aluminium belonging to seller – sold already – holding proceeds –
Could not claim price independently of s51 SOGO buyer is insolvent – seller get to the unused alluminum – two claism here –
ð Could seller claim? extended version – simple version relied because the left alumnium still
ð Because have ROT clause, property hasn’t passed yet, seller still holding unused (idle)
unless buyer pay
ð Cant claim because property hasn’t paid while can only use the clause when • Armour v Thyssen Edelstahlwerke AG – an all liabilities clause
the goods has passed to the buyer • Lord Keith: “Such a [retention of title] provision does in a sense give the
PST Energy 7 Shipping LLC seller security for the unpaid debts of the buyer. But it does so by way of a
ð Shipping vessels – terms of contract allows vessels to use the bumpers – what legitimate retention of title, not by virtue of any right over his own property
left in destrination will be transferred too – conferred by the buyer.”
ð Only one lump sum (consumption of field, final field, field using on the way)
ð One party got insolvent – ultimate buyer did not pay – seller want to claim for ð Any liability owe under the buyer to the seller (esp with multiple seller) so
price – field has been used up – ROT not really useful cause goods are gone long as owe by buyer not yet paid – seller can retain title – can interprete it as
mostly – during voltgage – because of the existance of ROT – does it take the credit interest
whole contract out ? With reference to SOGO? – the parties did not intend ð Still simple ROT clause – not creating credit interest
property to be passed – when vessels using field – actually no property passed ð Does so with legitimate retaining right
– never intended property to be passed – has to be transferred – court say : one ð Not ridding over buyer’s right
of a kind contract – the ROT clause takes the whole contract out of SOGO ð Simple ROT
ð If split price (one is for field at destination, one at during …. ) still okay = but • Re Peachdart Ltd – supply of leather to make handbags
here is one lump sum – supply of one - not sale of goods contract – only ð Extended version of ROT
license to use the ð Seller want to rely on ROT
ð Don’t take it out of SOGO ð Have retained property in leather – made into handbags already – not looking
ð Obiter: doubt the case here – whether can only sue for price – can it be sued as into leather but handbags
debt – yes if have expressed in the clause of the contract (in case no payment – ð No longer just retaining property in own goods – getting security over new
can use in debt) goods
ð New goods – belongs to buyer
ð Because create a charge over new goods
ð Hasn’t been registered – void (seller cannot claim handbags) even if the
ROT Clause characterisation handbags are made – cannot tell exactly which part is yours
• Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd (the Romalpa case) • Clough Mill Ltd v Martin – sale of yarn to make fabrics
ð Court surprised that top firms come from small firm
ð Set a precedent ð Unused yarn can rely on simple ROT to claim back – because just retaining
the own goods
 ð Made fabrics – creating charge over the buyer – voided

• Modelboard Ltd v Outer Box Ltd – sale of cardboard sheets to make cardboard
boxes

ð Even though only used – new goods already belong to buyer

ð If want to claim boxes – again claim under a charge, not under simple ROT

• Borden (UK) Ltd v Scottish Timber Products Ltd – sale of resin in manufacturing
process

ð What if can tell which part of the new goods is sellers?

ð Claim property in resin, don’t claim new property
ð Cannot separate in this way
ð Simple ROT
ð Cannot claim resin – used up and consumed by the manufacturing already –
cease not to identify the goods
ð Nothing can do
• Hendy Lennox (Industrial Engines) Ltd v Grahame Puttick Ltd – sale of engines

ð Supply engines – engines under simple ROT

ð Can
ð Because engines remain identifiable
ð Can dismantle without significant damage
ð Cannot destroy idenitifable and take it out from the original machine
ð Can claim under simple ROT

**whether goods can identified + retriveved or dismantle without damage