BUSINESS LAW 299

(LAW 299)

ESSAY QUESTION

PREPARED BY :

NAME OF GROUP MEMBERS CLASS NO MATRICS

HAFIZAH BINTI SUBRAY DBS 4A 2020170861

NURUL AZLIN BINTI AZMAN DBS 4A 2020189497

NUR AZIERA BINTI SUHAIMI DBS 4A 2020344389

NUR ASMA DANISH BINTI FAUZI DBS 4A 2020140741

NUR ANIS SYUHADAH BINTI MOHD YUSOP DBS 4A 2020502385

PREPARED FOR :

MADAM SITI JUNAIDAH

SUBMITTED DATE :

04 FEBRUARY 2022
 A) DIRECT ESSAY QUESTION : -

QUESTION 1

In the present case, there are several issues to be discussed. They are ;
1. Whether Ernie can sell the laptop to Syamel?
2. Whether Syamel has obtained a good title to the laptop?
3. Whether Ziana can claim ownership from Syamel?

According to the General Rule, no one can give what he doesn't even have. Which
means that the seller who does not own the goods may not transfer the title to the buyer.
However, if the seller does not have ownership of the goods, the buyer who purchased the
goods from that seller also does not have ownership or title to the goods. Such a buyer would
not be able to obtain a better title than the seller. This general rule is based on the maxim
'Nemo Dat Quod Non Habet,' which states that no one can transfer a better title than the one he
already holds. As a result, even if the buyer has paid for value in good faith, the buyer does not
receive a title if the products are purchased from someone who is not the owner.

Section 27 SoGA 1957

When goods are sold by a person who is not the owner of the goods and who does not
sell them under the authority or with the consent of the owner, the buyer gains no better title to
the goods than the seller, subject to this Act and any other law in force at the time of the goods,
and the buyer is precluded from denying the seller's authority to sell because 'when a person
sells goods that belong to someone else, the buyer cannot get a good title to the goods'. Even if
the buyer had paid the seller for the goods, the true owner can still recover them at law without
having to compensate the buyer.'

The principle of Law that relates to the cases is in Lim Chui Lai v Zeno Ltd
‘Lim Chui Lai Appellants and Zeno Ltd is the respondent’
 The Respondent made an agreement with the contractor, Ahmad. Ahmad held a culvert
construction contract with the city of Petaling Jaya. It was agreed that the respondent would
provide to Ahmad all the materials for construction of culverts. The respondent bought the
materials and delivered them to the construction site. The materials were then sold to the
Appellants by Ahmad. When Ahmad sold the materials to the appellant, the judge determined
that he was only a bailee and not the owner of the goods. Ahmad was not the owner of the
chattel just because it was provided to him. They were delivered to the site for the purpose of
the contracts and constructions of culverts of the Petaling Jaya Authority. Ahmad had no titles to
the chattels or authority to sell them. As a result, Ahmad was unable to provide the appellant a
title.

Under a certain situation, the 'nemo dat' rule does not apply. It means that, under
certain circumstances, even if the seller is not the owner or has no authority to sell, the buyer
will receive a good title to the items. There are several exceptions which are Estoppel.This
occurs when the owner of the products, via his own actions, gives the impression to a buyer that
the person selling the items has the owner's authority to sell, and the buyer acts on it. The
owner will be estoppel from refusing the seller's authority to sell in this case. By estoppel, the
buyer who buys in good faith and at fair value will acquire a solid title. '...unless the owner of the
goods is prevented by his conduct from denying the seller's authority to sell...', according to
Section 27 of the SoGA, 1957.` In N.Z SECURITIES v WRIGHTCARS LTD, A agreed to sell
an automobile to B, and B was handed custody of the vehicle in exchange for a check. They
agreed that title to the car would not be transferred to B until the price had been paid (the check
had been honored / cashed). The automobile was then sold to C by B. C had called A's office
before the transaction to C was completed. In response to C's query, A's employee informed C
that B had paid for the car. The cheque that B has handed to A was dishonored. Therefore, A
repossessed the car from C.C filed a lawsuit against A for conversion. It was held that C was
successful in claiming that A was precluded/estopped by his conduct from denying B`s authority
to sell. As a result, C has received the title.

Apart from that, Sale By A Mercantile Agent. According to Section.2`...a mercantile

agent with the authorization to sell commodities, consign items for the purpose of sale, or raise
money on the security of goods in the ordinary course of business. To be a mercantile agent,' a
person must obtain permission from the genuine owner of the commodities to deal with them.
An example is such as a broker, an auctioneer, a dealer of goods for commission, and others. A
mercantile agent is not the owner of the goods at first. If the mercantile agent sells the items to a
buyer, however, the buyer will get a good title of the goods. According to proviso in Section 27
“... where a mercantile agent has the consent of the goods with the owner's approval... each
sale performed by him... should be valid as if he had been expressly permitted to do so by the
owner of the goods;..” A number of requirements must be met under the proviso. One of the first
is that the mercantile agent must have possession of the goods or the document of title to the
goods at the moment of sale. The second requirement is that possession must be with the
owner's consent. The third is the mercantile agent sells the goods in the ordinary course of his
business as a mercantile agent. Last but not least, the buyer acted in good faith and must not
have knowledge of the agent’s lack of authority to sell.

Other than that, the exceptions of Nemo Dat Quod Non Habet rule are Sale By One
Joint Of Joint Owners. "If one of several joint owners of goods has sole possession of them
with the permission of the other co-owners, the property in the goods is approved to anyone
who buys them... in good faith and has not at the time of the contract that the seller has no
authority of sale," according to Section 28. This is what happens when goods are owned jointly
by numerous people. A sale by one of the joint-owners could effectively transfer ownership to
the buyer. This occurs in the condition of goods owned jointly by several persons. A sale by one
of the joint-owners may effectively transfer ownership to the buyer. There are two conditions
that must be met under this section. The first of these conditions is that one of the owners has
sole possession of the items with the co-owner's permission. The buyer, last but not least, acts
in good faith and has no knowledge of the seller's lack of authority to sell.

Meanwhile, Sale Under A Voidable Contract is under Section 29. "Under a voidable
contract, the buyer receives a good when the seller of goods obtains possession... but the
contract is not canceled at the time of sale, title to the goods if he purchases them in good faith
and without notice of the seller's defect title." The buyer will receive a good title to the goods if
these conditions are met. The seller got possession of the goods under a voidable contract,
which is the first of the condition. The second condition is the voidable contract has not been
canceled, and the buyer purchased the goods in good faith without knowledge of the fact the
seller lacked a valid title to pass.
 Moreover, Sale By A Seller In Possession After Sale which the principle is under
Section 30(1) “When a person who has sold goods continues to own or has possession of the
goods, the delivery or transfer of the goods by that person... to any person receiving the goods
in good faith and without notice of a previous sale has the same effect as if the person effecting
the delivery or transfer had been expressly permitted to do so by the owner of the goods." A
seller's holdover occurs when a seller transfers the property in goods to a buyer but retains
ownership of the goods. The vendor then sells the goods to another customer who makes a
faith purchase. Syamel will earn a decent title in this circumstance. Ernie has lost her title and
must seek remedy to Zarina. This case can be seen in the case of the (MOTOR CREDITS
FINANCE) LTD V and WORCESTER WORKS FINANCE LTD

Pacific Motor Pty Ltd v Motor Credits

The plaintiff owner of the cars placed them in the dealer's possession under ‘display’ (floor plan)
agreement. Subsequently, when the plaintiff discovered that the dealer was in financial
difficulties, they revoked the dealer’s authority to sell. Despite the revocation, the dealer went on
selling the cars to the defendant who was ignorant of authorisation. The court held that the word
‘continuous in possession’ refers to the continuity of physical possession, regardless of any
transaction between the seller and the first buyer which may change the legal title to which the
possession was formerly held.

Coolen Engineering Co. LTD

The case held: It makes no difference if the seller makes a private agreement with the buyer,
such as whether the seller remains bailee and trespasser or whether he is legitimately in
possession or not. It is sufficient if the vendor retains possession of the items he has sold to the
purchaser on a continuous basis.

Finally, a Buyer In Possession Sale After Sale in section 30(2) When a person who
has bought or agreed to buy goods obtains possession of the goods or the documents of title to
the goods with the seller's consent, the delivery or transfer of the goods or documents of title by
that person or by a mercantile agent acting for him under any sale, pledge, or other disposition
thereof to any person receiving the same in good faith and without notice of any lien or other
right in relation to the products. The hire purchase deals are exempt from this transaction.
 The delivery of the goods under any sale to any person receiving the same in good faith
and without notice of any lien or other right of the original seller in respect of the goods shall
have effect as if such lien or right did not exist, according to Section of the Sale of Goods Act
1957.

On 15 June 1962, the plaintiffs sold a car to one Andrew, who gave them a cheque in payment.
On the 18th of June, they learned that the check would not be cashed, so they canceled the
contract, but they couldn't find the car. Andrew sold the car to one Biss on Warren Street,
London, in July 1962, which was a well-known street market for used autos. Biss purchased the
automobile in good faith and sold it to the defendant. The plaintiff claimed the car from him. The
defendant claimed that he had a good title because Biss had acquired a good title under the
equivalent of s 30(2) of the sale of goods act 1957. Since Andrew had acted in the way which
he would have been expected to act if he had been a mercantile agent, and must be regarded
as having done so in view of the fact that the sale had taken place in a recognised street
market. In this case, Syamel gets a good title under section 30(2).

Newtons of Wembley Ltd v Williams

Plaintiff sold a car to A, who paid with a check, and it was agreed that title would not be
transferred until the check was honored. The car was given to A, but the check was later
returned as unpaid. The contract with A was then canceled by Plaintiff. A, on the other hand,
had sold the car to B, who had purchased it without being aware of the fact. B then resold it to
the plaintiff. The plaintiff tried to reclaim the vehicle from the defendant. It was held with the
plaintiff's permission, and the first buyer was in possession. As a result, he could provide B with
a good title, and B could then transfer the car to the defendant. Defendant possessed a good
title to the car he had purchased, notwithstanding a previous title fault.

As we can refer to the case of Syamel, we may say that Syamel has an exception in
general rule, so Syamel has obtained a good title for the laptop. Under an exception, the buyer
who buys in good faith, and for value, will get a good title by estoppel. We can apply the
decision of the court in the case of N.Z SECURITIES v WRIGHTCARS LTD whereby the court
held that C was successful in claiming that A was precluded/estopped by his conduct from
denying B authority to sell. Therefore, the title has passed to C. Thus, this case shows that
Ziana will lose to get or claim ownership from Syamel.
 As to conclude this case, we can say that Syamel has owned the title of goods because
Ernie, as the buyer from Zarina, already took off the title of goods (laptop). Ernie has become
the seller and she sold the laptop to Syamel and in this case Syamel obtains possession with
the consent of Ernie. However, the property in the goods of the laptop is still subject to some
rights or interest of Ernie.
QUESTION 2

In the present case, there are several issues to be discussed. They are :
- Whether the agreement is valid or not.
- Whether Besah is liable to pay the price of the goods.
- Whether Besah can be prosecuted or not.

According to Section 45(1) Sales of Goods Act, 1957 an under the unpaid seller .This
part of the 'unpaid vendor' section is when the entire amount has not been paid or when a bill of
exchange or other negotiable instrument received by the seller as a conditional payment is
dishonored, Section 45(1) applies.. An unpaid seller has two kinds of rights or remedies, that is
rights in personam and right in rem.

The standard remedies available to an unpaid seller against a buyer is the right in
personam. The unpaid seller has the right to sue the buyer for the price under this type of
remedy s.55 (1) "Where...the property in the goods has passed to the buyer and the buyer
wrongfully is irresponsible or unwilling to pay ...the seller may sue the buyer for the price..." or
to sue the buyer for damages for non-acceptance (s.56) Failure of Buyer To Accept The Good
“The seller may sue the buyer for damages for non-acceptance if the buyer improperly fails or
refuses to accept and pay for the products.”

In relation to the goods themselves, rights in rem are a type of remedy for the underpaid
seller. It is provided under the Right of lien s.46(1)(a) , Right of stoppage in transit s.46 (1)(b)
and Right of resell s.46(1)(c). Right Of Lien s.46(1)(a) allows an unpaid seller who is in
possession of the goods to keep possession until agreement on the price of tender.This
privilege persists even if the buyer has acquired ownership of the items but has yet to receive
delivery. In addition to his other remedies, the seller may withhold delivery if property in the
goods has not passed to the buyer 46.S(2). “"Where the property in goods has not been
delivered to the buyer, the unpaid seller has a right of withholding delivery equal to his rights of
lien and stoppage in transit where the property has passed to the buyer, in addition to his other
remedies." In the instances described in s.47(1). The situation where the goods have sold not
have any stipulation to the credit ; s.47(1)(a),where the goods have been sold on credit, but the
term of credit has expired; s.47(1)(b) and where the buyer becomes insolvent s.47(1)(c). The
seller may utilize his right of lien even if he is in possession of the goods as the buyer's agent or
bailee.

The right of stoppage in transit enables an "unpaid seller" to interrupt the delivery and
reclaim possession of the goods while it is in movement, for example, while commodities are
still with the carrier. The seller has the right to keep the items until the price is paid."When a
buyer goes bankrupt, the unpaid seller who has ceded custody of the goods has the right to
arrest them in transit, which means he can regain ownership of the items while they are still in
transit and keep them until the price is paid." Only when the buyer becomes insolvent and the
goods are under the possession of a carrier may the seller use the right of halt in transport ( in
transit). Who has stopped paying his obligations in the usual course of business, or
cannot pay his debts as they fall due, whether he has committed bankruptcy or not,"
according to s.2. The time when the goods are given to a carrier for transmission to the buyer
is when transit begins s.51 (1). Transit is ended in the following circumstances when the buyer
takes delivery from the carrier s.51(1), when the buyer obtains delivery of the goods before their
arrival at the appointed destination s.51 (2) and when after the arrival, the carrier acknowledges
to the buyer that he holds goods on behalf of the buyer and continues in possession of the
goods. It is immaterial or not important that a further destination may have been indicated by the
buyer s.51(3). Because the buyer has requested that the products be sent on a new route to a
different location, transit cannot be resumed. If the carrier refuses to deliver the items to the
buyer on the basis of a mistake, s.51 applies (6). If some of the items have already been
delivered to the buyer and the other of the items are still in transit, the unpaid seller has the right
to stop the remainder of the goods from being delivered to the buyer. "If a portion of the items
has been accepted by the customer, the remaining products may be delayed in
shipment." Method for effecting stoppage by virtue of s.52(1) the unpaid seller may exercise
stoppage in transit by taking actual possession of the goods or giving notice to the carrier or his
principal.When the carrier gets the notice, the carrier is required to redeliver the materials to the
seller or in accordance with the seller's instructions. The expenses of redelivery shall be borne
by the seller s.52(2)

Right of resell S.54 gives a right of resell the unpaid seller in the following circumstances
where the goods are of a perishable nature s.54(2) and where the unpaid seller who has used
his right of lien or delay in transit and informed the buyer of his intention to resell, but the buyer
fails to purchase goods for the price within a reasonable time after receiving such notice s.54(2).
Besides this right of resale, the seller may also recover from the original buyer, damages for
any loss due to his breach of contract. The buyer shall not be entitled to any profit, which
may occur out of that resale.However, if the seller refuses to provide these information, the
seller is just not entitled to such damages, and the buyer has entitled to the profit out of the
agreement of the resale, if they s.54(2). Where the seller expressly in the contract, reserves a
right of resale in case the buyer failed to pay for the price s.54(4). The effect of such resale is
that the original contract with such a default buyer would terminate.As a result, the original
purchaser is no longer required to pay the price, and the seller gets any profit from the resale.
However, the seller is still entitled for damages from the original buyer for breach of contract and
for any loss suffered by the seller out of that breach s.54(4). Even if the seller did not provide
the initial buyer any notice of resale, the 2nd buyer would receive a good title to the goods if the
unpaid seller resells the goods after exercising his right of lien or stoppage in transit. s.54 (3).

Lim Chui Lai v Zeno Ltd

Zeno Ltd signed a deal with a contractor named Ahmad, who had been hired by the Petaling
Jaya Authority to build culverts. Zeno was required to furnish all materials for the construction of
the culverts per the terms of the contract between Zeno and Ahmad. Zeno purchased the
project's materials and delivered them to the construction site. Ahmad's contract with the
Petaling Jaya Authority was subsequently terminated. The materials at the site belonged to
Zeno Ltd, according to the Petaling Jaya Authority. When Zeno attempted to sell the materials
later, they learned that Ahmad had sold them to Lim Chui Lai. As a result, Ahmad did not own
the products when he sold them to Lim Chui Lai. Ahmad could not convey any title to Lim Chui
Lai because he had no title to the products or authorisation to sell them. As a result, Lim Chui
Lai does not own the materials he purchased from Ahmad.

N.Z Securities v Wrightcars Ltd

A agreed to sell an automobile to B, and B was given custody of the vehicle in exchange for a
check. They agreed that title to the car would not be transferred to B until the payment was paid
(i.e the cheque has been honoured). The automobile was then sold to C by B. C had called A's
office before the transaction to C was completed. C was informed by A's employee that B had
paid for the car in answer to C's query. The cheque that B had handed to A was later returned
unpaid. As a result, A returned the car to C, and C sued A for conversion. C was successful in
arguing that A's actions made it impossible for him to refuse B's authority to sell. As a result, C
now holds the title.
Motor Credits (Hire Finance) Ltd v Pacific Motor Auctions Pty Ltd
Motor Credits Ltd, a vehicle dealer, sold multiple vehicles to the plaintiff under a 'display
arrangement,' in which Motor Credits retained ownership of the vehicles for display in their
shops. Motor Credits was paid 90% of the purchase price and was given the authority to sell the
vehicles as the plaintiff's representative. Although the plaintiff cancelled Motor Credits' licence to
sell the automobiles because of financial issues, Motor Credits sold some autos to the
defendants who were bona fide buyers for value. The defendants were given a favourable title.
Under s.30 (1), Motor Credits will be viewed as continuing in possession and will be able to
pass a good title.

Worcester Works Finance LTD v Coolen Engineering Co. LTD

It makes no difference if the seller makes a private agreement with the buyer, such as whether
the seller remains bailee and trespasser or whether he is legitimately in possession. It is
sufficient if the seller retains ownership of the things he has sold to the buyer on a continual
basis.

Newtons of Wembley LTD v Williams

Plaintiff sold a car to A, who paid with a check, and it was agreed that title would not be
transferred until the check was honoured. The car was given to A, but the check was later
returned as unpaid. The contract with A was then cancelled by Plaintiff. A, on the other hand,
had sold the car to B, who had purchased it without being aware of the fact. B then sold it to the
defendant. The plaintiff tried to reclaim the vehicle from the defendant. With the plaintiff's
permission, the first buyer was in possession. As a result, he could provide B a good title, and B
could then transfer the car to the defendant. Defendant possessed a clear title to the car he
purchased, notwithstanding a previous title fault.

Re Wait
Specific performance cannot be granted if the items are not specific or unknown. Because the
items were neither specific nor later ascertained, a contract for the sale of 500 tonnes of wheat
from a consignment of 1000 tonnes did not empower the buyer to seek a decree of specific
performance.
 When we refer to the case of Bacin’s Shop, we say that there is a contract between the
buyer and the seller. Besah is also bound to make a contract because half of the goods have
already been given by Bacin’s Shop. So the only thing that happens is that the payment process
of the item is blocked because the check given was fake.

According to a court decision in the case of Newtons Of Wembley LTD v. Williams where
the court ruled that the buyer was in possession with the consent of the plaintiff. Thus, the
plaintiff can give a good title to the seller, who in turn transfers the crate to the defendant. The
defendant gave good title to the crate purchased by the buyer before the defendant knew that
the check was counterfeit.

With this power, we can say that there is a contract between Bacin’s Shop and Besah
which is the buyer. Under s.55 (1), where the property in the goods has passed to the buyer and
the buyer refused to pay, the seller may sue the buyer for the price.

At the end of this case, we can say Besah has to pay the price of the goods because the
contract has happened and the cheque received by the seller has been dishonored. The only
action the Bacin’s Shop can take is to sue because half of the goods have already been taken
by the buyer.
B) MIND MAP

Question 1
Question 2