APT2033

BUSINESS LAW

GROUP ASSIGNMENT

SEMESTER SEPTEMBER

SESSION 2022/2023

LECTURE’S NAME: DR. ADI AIZAT BIN YAJID

CLASS: L3

GROUP: GROUP 8

NO. NAME MATRIX NO.

1. AINUL HIDAYAH BINTI ZAKARIA A20B1253
2. NUR FATIHAH BINTI ABDULLAH A20A1720
3. TENGKU SHARIFAH NORMADIHA BINTI KU MAT AZAHA A20A2033
4. TIVYA BARATHI A/P SELVAN A21B3475
5. TUAN NUR ATIKAH SHAHIRA BINTI TUAN DIN A20A2047

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 TABLE OF CONTENT

NO CONTENT PAGES
1 INTRODCUTION 3

2 CASE SUMMARY OF LAW 4

3 CONDITION OF AGENCY NECESSITY. 5

(PRINCIPLE OF LAW)

4 APPLICATION OF LAW (ADVISE) 7

5 CONCLUSION 8

6 REFERENCES 9

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1.0 INTRODUCTION

The contract for the sale of goods is based on the Section 4(1) in the Sale of Goods Act 1957.
The meaning of the Sale of Goods Act 1957 is a contract in which there is a seller who wishes
to transfer ownership or agrees to transfer ownership of a property exchanged for goods and
sold to the buyer for a quoted price. Contracts for the sale of goods usually cover all types of
property except immovable property such as real estate, as well as some movable property,
for example, money, instruments, business, and others. Vehicles, electrical appliances,
machines, stationery, communication, clothing, food, and other movable property are
examples of buying and selling goods that are subject to the Sale of Goods Act 1957.

The categories of goods subject to sales contracts can be divided into classifications
under the law of sale of goods, among which are, existing, future, specific, certain and
uncertain. In the Sale of Goods Act 1957, existing goods are under section 6(1) which states
that “goods that form the basis of a contract of sale whether they are existing goods, owned
by the seller or future goods”. This means goods that have been owned by the seller and may
have been determined or agreed upon by both parties when the sales contract was made.

Next, According to Section 2 of the Sale of Goods Act 1957, future goods can be
defined as those produced or acquired or manufactured by the seller after entering into a
contract of sale with a third party. For example, an agreement to sell 200 unissued school
shirts. This is an example of the sale of future goods because the goods are not yet clear and
there is no evidence to show the buyer according to the sales contract. The third category is
specific goods, Section 2 of the Sale of Goods Act 1957 states that this sale is for specific
goods. This means that the goods have been identified and agreed by both parties to be sold
and bought when the sales contract is made.

In the case of Lars and Mick, they should have enjoyed safe ownership of the art they
had bought through Instagram, this according to section 14(b) of the Sale of Goods Act 1957
but the opposite happened because the seller was dishonest in selling the art because the art
was the result of theft. Therefore, Nita, the seller, does not have ownership rights over the art
because according to section 14(a) of the Sale of Goods Act 1957, the owner must have legal
ownership rights to an item before making a decision to sell it.

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2.0 CASE SUMMARY OF LAW

In this case, Lars and Mick were good friends who became an artist, especially
painters. Come the day of the lottery results, Mick found that the ticket that Lars bought won
the main price of RM5 million. With that, they found an Instagram account with ART guru_
name claiming to be an authorized art seller without first investigating the seller's background.
The amount they paid, respectively, are RM120,000 and RM150,000. If they agreed, Nita
promised to personally deliver those works to them. The sale was finished within a week, and
Nita sent the art to Lars and Mick's personal gallery. After the transaction was made with a
two-sided agreement, Nita asked Lars for her phone number because she wanted to send a
picture of the art sold. After a few months, two of their art, "Portfolio" and "I Wish" have been
confiscated since they were reported stolen from a collector in France. Lars and Mick are
being held for investigation.
According to the Sale of Goods Act 1957 which is an Act relating to the sale of goods.
In Sale of Goods Act 1957 under Section 14 refers to provide that there is an implied condition
on the part of the seller that he is entitled to sell the goods in the case of sale while the seller
has the right to sell the goods at the time the property will be transferred to the buyer in the
case of an agreement to sell. For under Section 4 (1) which 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 price. There may be a contract of sale between one part owner and another. It is contract
where the seller transfers or agrees to transfer the property in goods to the buyer for a price.
Other than that, formalities of the contract how sale made under Section 5 (2) which is subject
to any law for the time being in force, a contract of sale may be made writing 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. A contract of sale can be made by writing, word of mouth or partly either writing or
word.
Furthermore, through Section 17 of the Contracts Act 1950, it is explained that fraud
occurs when a person knowingly conceals information that gives him an advantage without
the other party knowing that the information is harmful to the party and encourages the other
party to enter into a contract. If the intentional act gives the scammer an advantage or results
in a loss to the other party in the contract, whether the loss is financial, loss or injury, then it is
considered fraudulent. Although the existence of a business platform such as Instagram, it
can change the lifestyle of today's users, users will be exposed to risk. Among the risks that
consumers often face is the risk of fraud committed by merchants when shopping online. For
example in that case, Lars and Mick stated that they bought art from Nita. When they tried to
contact Nita, all the contacts they had could not connect them to Nita. They claim that they
bought art legally and also showed evidence of transactions to police officers.

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3.0 CONDITION OF AGENCY NECESSITY (PRINCIPLE OF LAW)
Since Nita could not be reached when Lars and Mick wanted to confirm the
legitimacy of their purchase of the paintings, they were unable to confirm whether the paintings
they bought were theirs or not. As stated in Section 14(a) Sale of Goods Act 1957 which is,
“when the time comes, the seller has the authority to sell the products and transfer the
property. Even if the buyer has utilized the product, a conditional breach of the contract gives
the buyer the ability to renege on the agreement and collect the full amount”. This means that
there has been a sale and purchase transaction between Nita, Lars and Mick. This is because
both parties have agreed to transfer ownership of the paintings using money as the medium
of contract, which is payment. With that, when the time is right, the seller has the power to
pass the property and sell the products. Thus, the contract between Mick, Lars and Nita was
made.

What happened to Lars and Mick is similar to what happened in the case of
Rowland v Divall. The defendant sold the plaintiff an automobile, which she drove for several
months. It was understood that the defendant does not own a title to the vehicle and that the
plaintiff must return it to the rightful owner. He filed a lawsuit against the defendant to demand
the return of the purchase money he had paid due to a complete lack of regard. The court
determined that he is entitled to receive his full purchase price back because the agreement
for the use of the car had totally fallen through.

Section 17 says that “non-compliance by traders in disclosing details of goods can

be categorized as fraud. This will happen if the dealer hides the facts from the buyer's
knowledge. However, it is not considered fraud if a party is willing to enter into a contract”.
Unfortunately, Nita and the owner of the paintings do not have any agreement because the
paintings were stolen, not taken willingly. Lars and Mick bought the paintings from Instagram,
where the account owner and seller is Nita. Therefore, the matter can be counted as fraud
because the goods taken by Nita are the result of theft. This was unknown to both of them
until the police came to raid their gallery.

Although the paintings were exhibited by them in the gallery without the permission
of the owner of the paintings, a collector from France, the two paintings have become the
property of Mick and Lars. In the exception to the nemo dat quod non habet rule. If one of the
joint owners takes full ownership of the objects with the approval of the other owners, it is
claimed that custody of the items is transferred to the buyer. All that is allowed if they buy the
goods with faith and at the time of the purchase, the buyer knows nothing about the seller. So,
owners do not have authority to sell the goods. Lars and Mick have received the paintings in

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good shape and condition. It can be said that Lars and Mick did not know that the painting
they bought was stolen from another party.

Because Lars and Mick have found out that the paintings are stolen from the police
after the purchase process, they will not be able to feel the enjoyment and pleasure in using
the goods. This has been stated in Section 4(b). The section say ”the buyer should enjoy the
goods in complete isolation. Except with the buyer's express permission, the seller is not
permitted to interfere in any way”. This means that buyers can use the goods they buy with
peace of mind if they know that the goods are from a good source. In the case of Mick and
Lars, they will not be able to experience all that after they found out that the paintings they
bought were stolen. This has been stated in the case of Microbreads A.G.V. Vinhurst Road
Markings. The patentee, a third party had brought an action against the buyer alleging the use
of certain road marking machines was in breach of their patent two years after the sale of the
machines by the Plaintiff to the Defendant. There was a breach of implied terms because the
buyer did not enjoy future quiet enjoyment of the goods.

Therefore, it cannot be denied anymore. Naturally, the one who is guilty here is Nita
because she does not try to take responsibility for the mistakes that have been made, in fact,
she prefers to run away rather than take responsibility for the problem. This also proves that
Lars, Mick and the owner of the paintings are innocent. However, the ownership of the
paintings fell to Lars and Mick since they had bought the paintings without knowing that they
were stolen.

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4.0 APPLICATION OF LAW (ADVISE)
In this situation, Lars and Mick are entitled to claim ownership of the arts. This issue
encouraged Lars and Mick to demand justice from the seller by making claims. The claims
aim to reflect consumer displeasure brought on by unfair practices. This predicament is an
illustration of one that purchasers in the age of globalisation and trade liberalisation may
encounter. In order to protect the interests of the buyers, adequate substantive law should
also be provided. Assets that are agreed to be severed from the land before sale or under the
terms of the sale contract are considered goods, along with stock and shares, growing crops,
grass, and other items. Cash and assertible claims are not considered goods. It refers to
anything that can be legally pursued other than money, property, and claims. There are many
different products. Differentiating the products is essential for the sale of goods. This is
because the passing of property in a sale contract is necessary for all goods, regardless of
how specific, certain, or future they are.

When Nita sells the items that she stole from a collector in France, it is thought that
she is not authorised to sell the items. Lars and Mick won't be able to demand the items if Nita,
who has not yet transferred ownership, runs out of money after they have already paid for the
item. Lars and Mick will have to make an effort to recover his funds in this circumstance, which
may prove to be very challenging in reality as an unsecured creditor. Lars and Mick will no
longer have ownership rights to the arts if Nita has transferred title and they get into financial
trouble before paying for them. Nita is not in a position to demand any of the commodities she
has already given to Lars and Mick in this circumstance. As a seller, Nita will have to file a
claim for payment of the artwork, which could be unsuccessful.

When anything is stated to have real rights in it, it means that the owner has the
authority to decide who will use it, how it will be used, and what it will be used for. Therefore,
ownership is the exercise of power. If someone isn't the legal owner of the goods, they only
have personal rights regarding them, which often equate to the ability to bring a claim for
damages as part of a breach of contract action. Personal rights may grant the party the ability
to bring a lawsuit, but they do not grant him the authority to own or manage the goods. owner
from seeking to assert that the buyer still retains ownership of the items. In other words, the
facts of the transaction prevent or personally prohibit the seller from asserting that ownership
has not been transferred to the buyer.

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5.0 CONCLUSION

To sum up, Section 14(a) of the Sale of Goods Act of 1957 indicates that giving ownership to
a portion of the seller is impliedly contingent. When the sale is over, the seller has the right to
sell the goods. If there is an agreement to sell the property, the seller has the right to sell the
products when it is transferred. Since Nita stole the item and resold it, the seller's claim that
the right of sale was breached. Although the item was sold legally and was accepted by the
buyer, Nita's actions were illegal because it was against his or her right to profit from the theft.
Mick and Lars, however, were unable to acquire the painting because it needed to be returned
to its rightful owner. They won't even be able to claim ownership of the artwork because the
original owner will return the stolen piece, negating their ability to do so. Mick and Lars only
receive the money that Nita misappropriated back. As a result, Nita committed fraud in order
to defraud Mick and Lars and profit from their vulnerability. As a result, the sale occurred but
the things sold did not.

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6.0 REFERENCES

1. Visu Sinadurai (2003). “Law of Contract.” 3rd Edition. Volume 2. Malaysia: Butterworth,
LexisNexis
2. Lee Yee Long, Akta Jualan Barangan 1957, 17 Dec 2015.
https://prezi.com/fh8lt5hxpdbx/akta-jualan-barangan-1957/
3. Dr Seow Hock Peng, Busines&Corporate Law- Sale of Goods.
https://www.academia.edu/36846602/Business_and_Corporate_Law_Sale_of_Good
s
4. Lee M. P. (2018). Business law (Third). Oxford Fajar Sdn. Bhd
5. Sale of Goods Act 1957 (Revised 1989). (n.d.). Retrieved from
http://www.commonlii.org/my/legis/consol_act/soga19571989203/
6. Teacher, Law. (November 2013). Buyer and Seller Duties Under the Sale of Goods
Act. Retrieved from https://www.lawteacher.net/free-law-essays/commercial-law/law-
has-imposed-more-responsibility-on-the-seller-to-protect-buyers-commercial-law-
essay.php?vref=1
7. Zati Zuryani et.el. (2022), Protection of Buyers for Goods Purchased by Description
under the Sale of Goods Act 1957, Malaysian Journal of Social Sciences and
Humanities (MJSSH)(e-ISSN :2504-8562)2022, Volume 7, Issue 8, e00169. Retrieved
from https://www.msocialsciences.com/index.php/mjssh/article/view/1697/1198