Implied Obligations Under Sale Of Goods Act 1957 And The Liability Of Principal For Agent's Actions Under Contracts Act 1950 In Malaysia Essay.

It is common for vendors to put up disclaimers on the goods on sale. Whenever there is any defect found on such goods that we have recently purchased, the main issue  that needs to be considered is whether it is still possible to claim any refund against such vendors. Discuss this issue. The discussion should refer to relevant provisions of the Act and decided cases. It is common for vendors to put up disclaimers on the goods on sale. Whenever there is any defect found on such goods that we have recently purchased, the main issue that needs to be considered is whether it is still possible to claim any refund against such vendors. Discuss this issue. The discussion should refer to relevant provisions of the Act and decided cases.

While it is highly recommended for any business entity to officially appoint their agents, there are situations where such an entity bears liabilty for actions done by a person as an agent despite the absence of any formal appointment. Discuss. The discussion should refer to relevant provisions and decided cases.

Sale of Goods Act 1957 and Implied Obligations

This section of the report analyses the various provisions of the sale of goods in Malaysia as defined as Sale of Goods Act 1957. It must be noted that consumers are always considered as parties with weaker bargaining power, and because of this there is need to protect the consumers through effective laws. However, present provisions of the sales of goods Act 1957 are outdated because it does not recognize the importance of consumer protection and does not impose necessary responsibilities on seller. It is necessary to reframe the provisions of the sales of goods Act 1957 for the purpose of ensuring consumer protection and also more uniform and modernized approach. Presently, provisions of this Act do not provide adequate protection to the consumers when they entered in the transaction of sale of goods.

This paper mainly defines the protection of consumers in case of disclaimers of warranty used by sellers while transacting goods under the Sales of Goods Act 1957 (SOGA). The main issue in this context is that whether it is still possible to claim any refund against vendors in case of disclaimers. For this purpose, provisions of SOGA 1957 and related case laws are stated.

Section 12 of SOGA divides the terms of the contract in two parts that are conditions and Warranty. Conditions are considered as important term of the contract, and in case of breach of condition party gets the right to cancel the contract. On the other hand, warranty considered as the condition related to the main purpose of the contract, and the breach of warranty provides the right to the injured party to claim for damages but it does not provide any right the party to cancel the contract.

Section 13 of the SOGA provides that, injured party can treat the breach of condition as a breach of warranty. This can be understood through case law Associated Metal Smelters Ltd v. Tham Cheow Toh(1972) 1 MLJ 171. In this case, Federal Court allowed the purchaser or the defender to treat the infringement of conditions as infringement of warranty beneath the portion 13 about the SOGA 1957.  

The main threat to the protection of consumer is the Disclaimer of warranty; it means an oral or written statement which mainly aims at limiting the liability of the seller in case of defects of the goods sold. It may be general or specific in nature. However, in particular situations, it is necessary that disclaimers of Warranty must be effective and for this purpose published words must be actual and noticeable.

Disclaimers of Warranty and Consumer Protection

By including disclaimers in the contract vendors mainly try to reduce their responsibility towards the consumers and also limit their liabilities. In case of defective goods, customers bear all the loss because vendors limit their liability by putting disclaimers related to warranty. There are numbers of provisions of the SOGA 1957 which saves the interest of the customers, and all these provisions are stated in detail below (Yusoff, S. Ismail, R. et. al. 2015).

SOGA mainly focus on the protection of the concerned parties in the transaction of the sales of goods and also in the delivery of title of goods from seller to buyer.

There are number of implied terms are incorporated in the SOGA 1957, and the main aim of these implied terms is to protect the interest of the consumers. These terms are described in Section 14-17 of the SOGA 1957.

Section 14 of the SOGA is categorized into three parts. First part of this section imposed the implied responsibility on the seller to ensure that ownership and possession of the goods stated under contract of sale is properly transferred to the buyer, and seller is also responsible to ensure that buyer will enjoy the use of goods. In case seller fails to fulfill his obligation, then buyer will get the right to reject the contract by considering it as breach of condition. In this no disclaimers will be effective. Second part of this section states that the implied warranty is present in which Purchaser need good to appreciate those very much ownership of the products and in case of seller fails to fulfill this obligation then buyer get the right to claim for damages. Last and third part of this section provides the implied warranty to the buyer that the merchandise must be free from any charge alternately encumbrance energetic about at whatever outsider, and in case of breach of this warranty buyer gets the right to claim for damages.

Section 15 of the Act states the provisions related to the sales of goods by description. This section states when contract include the terms related to sale of goods by description than there is implied condition that the goods send by seller must be related to the description. This can be understood through case law Purshotumdas and Co. v Mitsui Bussan Kaisha Ltd. (1911) 12 SSLR 67. In this case, Court decided that the goods did not comply with the description.

Liability of Principal for Actions Done by Agent under Contracts Act 1950

It must be noted that section 15 does not apply to breaches of all the descriptions, and it only includes those descriptive words which result in conditions of the contract. In case Law, Ashington Piggeries Ltd v Christopher Hill Ltd. (1972; AC 441). In this case, Lord Diplock stated that most important element to section 15 is the identification. Judge also proposed to include this test in SOGA 1957.

Section 16 of the SOGA states that no implied condition or warranties exist related to the quality or fitness of the goods for particular purpose, unless buyer specifically asks that the related goods must be reasonable for particular purpose. This can be understood through case law Baldry v Marshall [1925] 1 KB 260. In this case, plaintiff requests the litigant to advice an auto which might make suitableness for the reason for touring. On this request, defendant recommended Bugatti to the plaintiff, and this car was purchased by plaintiff. The written contract excludes the liability of the defendant related to any condition or warranty. Later, plaintiff discovered that car was not suitable for the purpose of touring and rejects the car and file claim against the defendant to recover the paid amount. In this case, Court decided that requirement of buyer that car must be suitable for the purpose of touring was considered as condition. Section 16 impose implied obligation on seller to comply with the stated condition. Therefore, plaintiff had right to cancel the contract.

Section 17 of SOGA 1957 states, while dealing with goods by sample, then it is necessary for seller to ensure that goods must be complied with the sample. In case seller fails to fulfill this obligation then buyer gets the right to cancel the contract.

 Above stated section are the implied obligations imposed on seller of the goods and these obligations are statutory in nature which cannot be excluded by seller by incorporating any disclaimer in the contract of sales of goods. These implied warranties protect the interest of the consumers by imposing statutory obligations on seller.

After considering the above facts, it can be said that law introduce various statutory provisions which imposed compulsory obligations on seller while transacting the goods under SOGA 1957. These obligations are incorporated under section 14, 15, 16, and 17 of the SOGA 1957, and these provisions protect the interest of the consumers.

After considering the above facts, it can be said that implied provisions provide rights to buyer to claim for refund or other compensation in case of breach of any implied condition and warranty stated in SOGA.

Conclusion

In Malaysia, law of agency is governed by the Part X of the Contracts Act 1950. Provisions of this Act state that agent is the person who is working to do any performance for alternative person or signifies another person while dealing with the third party. The person for whom agent done the work or to whom agent represents is known as principal.

Agency is considered as the relationship which exists between the agent and the principal, and in this relationship agent is authorized to act on behalf of the principal and represent the principal while making any deal with the third party (Singh, 2007). In agency there are two contracts in effect and these contracts are stated below:

• Principal and the agent entered into contract, and from this agreement agent gets the power to act on behalf of the principal.
• principal and the third party also entered into contract for the purpose of dealing done by the agent with the third party.

This paper defines the provisions of law of agency in the Malaysia, and mainly discusses the situations in which principal bears the liability for the actions done by the agent notwithstanding absence of any formal appointment. Lastly, paper is concluded with the brief conclusion.

Section 136 of the Contract act 1950 states, any person who attain the age of 18 years and above and the person who is sound of can become the principal under this section.

This section further states that, any person can act as the agent between the principal and third person, but any person who does not attain the age of 18 years and who is of unsound mind bear the liability towards the principal for any act done by that person in the capacity of the agent.

This can be understood through example, in case B (a minor) is employed by A for the purpose of purchasing some goods from C on the behalf of A, and goods are supplied by C. In this case, A does not sates that he is not liable to pay for the goods just because B does not attain the age of majority. In this, A is liable to make payment to C for the goods supplied by C.

Creation of Agency:
Section 139 of the Contract Act 1950 deals with the creation of agency and it state the provisions related to express and implied authority of the agent. As per this section, authority of agent under law of agency may be express or implied.

Contract of agency can also be express contract or implied contract and it depends on the situations and conduct of the parties. In other words, principal can give authority to the agent either in express form or in implied form. Express form includes the power which is given by words, spoken or in written form, and implied authority includes the authority which is concluded from things spoken or written or from the ordinary course of dealings.

However, part X of the Contract Act 1950 does not state any requirement in which appointment made by principal of agent or sub-agent must be made in writing or to be evidenced in writing. 
This can be understood through case law KGN Jaya Sdn Bhd v Pan Reliance Sdn Bhd [1996] 1 MLJ 233, and in this case court of Appeal held that law does not introduce any requirement which states that agreement of agency or sub-agency must be in writing.

This section of the paper defines the types of agency in law of agency of Malaysia, and details of agency are stated below:

By express appointment- parties can create the relationship of agency by making the express appointment and such appointment must be in written or oral form. This can be understood through example; express appointment made in writing is power of attorney.

By implied agreement- law also introduce the provision that agency can also be created by implication, which means person can appoint another person as agent by his words or conduct. This can be understood through case law, Chan Yin Tee v William Jacks & Co (Malaya) Ltd [1964] MLJ 290. In this case, appellant and Yong (a minor) was registered as partners in the firm. A meeting with the representative of the respondent company, appellant represents himself as the partner of the yong. Goods were supplied by the company to the Yong but were not paid for. Respondent company file case against the appellant and Yong, and also get judgment against the appellant and Yong. Later, appellant made appeal to FC which state that since the time appellant held yong as agent and yong did things on behalf of the appellant, from that time appellant held liable for the acts done by Yong.

Ostensible Authority- it must be noted that actual authority arises from the agreement, apparent authority is the authority which is provided by law to the agent, and principal may not have consented to the agent that he has such authority. There are two types of situations in which apparent authority can happen:

1. Firstly, when agent makes it believes by his words/conduct to the third party that agent has authority to act on behalf of the principal.
2. When agent previously enjoy the authority to act on behalf of the principal, but later such authority was terminated by the principal and this was not informed by the principal to the third parties.

By necessity- the origins of the doctrine of necessitous intervention by any person who is in a legal relationship with the defendant falls in the principle of agency of necessity, and in this agent goes beyond his or her authority by making the intervention on behalf of the principal in an situation of emergency. Because of the situations of necessity, especially the unworkability of the agent for making communication with the principal, and in this Courts were prepared to treat the agent as he holds the necessary authority to do anything which is reasonable to save the property of the principal. In case agency of necessity was established, then agent has right to reimburse the expenses incurred in rescuing the property of the principle. It is necessary to fulfill these below stated conditions for establishing the agency of necessity:

1. It is not possible for agent to receive the instructions of the principal.
2. Agent must take the action in such particular situation, for the purpose of preventing loss to the principal from decaying.
3. Agent must take his actions in good faith.

It can be said that, agent has authority to act in the best interest of the principal in urgent situations for preventing the principal from bearing the loss. This can be understood through case law Great Northern Railway Co v Swaffield. In this case, court held that plaintiff acted reasonably in placing the horse in the stable and also entitled to recover the expenses from the swaffield.

By Estoppel- it must be noted that person cannot be bound by any contract which was made on his behalf without his authority, but if person by his words or conduct shown before the third party that another person has authority to act on behalf of the person then such person is liable for the act done by another person.

Conclusion:

After considering the above facts it can be said that, it is not necessary that agreement of agency must be in writing, and parties can bind itself even without written agreement under law of agency.

References:

Ashington Piggeries Ltd v Christopher Hill Ltd. (1972; AC 441).

Associated Metal Smelters Ltd v. Tham Cheow Toh(1972) 1 MLJ 171.

Baldry v Marshall [1925] 1 KB 260.

Chan Yin Tee v William Jacks & Co (Malaya) Ltd [1964] MLJ 290.

Contract Act 1950- Section 135.

Contract Act 1950- Section 136.

Contract Act 1950- Section 139.

Great Northern Railway Co v Swaffield.

KGN Jaya Sdn Bhd v Pan Reliance Sdn Bhd [1996] 1 MLJ 233.

Purshotumdas and Co. v Mitsui Bussan Kaisha Ltd. (1911) 12 SSLR 67.

Sales of Goods Act 1957- Section 12.

Sales of Goods Act 1957- Section 13.

Sales of Goods Act 1957- Section 14.

Sales of Goods Act 1957- Section 15.

Sales of Goods Act 1957- Section 16.

Sales of Goods Act 1957- Section 17.

Singh, B. (2007). Whose Agent. Retrieved on 28^th December 2017 from: https://www.malaysianbar.org.my/members_opinions_and_comments/whose_agent_.html.

Yusoff, S. Ismail, R. et. al. (2015). Consumer Protection and the Malaysian Sales of goods Act 1957. International Business Management, Volume 9(4). Pp- 452-459.