LAW ON SALE OF GOODs

Cases of

LIM CHUI LAI v. ZENO LTD. [1964] 30M.L.J 314

 Nemo dat quod non habet literally meaning that "no one can give what he/she doesn't have". In an easier way to explain it, any sale of possession from someone who doesn't have the ownership, unless there is a permission of the right owner to sale. "Sale by person not the owner"  

Let's look at the case study, LIM CHUI LAI v. ZENO LTD to see what was happened previously in "Sale by person not the owner" situation and what were the judgments based on the issue.

Zeno LTD (Z) entered a contract to supply raw materials to Ahmad (3rd party) and delivered it to the site. Ahmad did not pay for the materials to Z. Later on he sold the materials to Lim and took the money for himself. Z brought an action to the court as they claimed they were the owner of the materials and did not authorize any transaction between Ahmad and Lim.

     Facts: 

      The chairman of the respondent company's board of directors entered into an agreement with a contractor, named Ahmad.  Ahmad also declared to the Authority of Petaling Jaya that the respondent company was the company to supply the construction material; thereby he also entered in a secured contract with the authority that to carrying out financing of his company's project. Thereafter, the respondent company bought the material and sent it to the construction site.

   

     Not so far from the time after contract, the respondent company realized that the Ahmad had some troubles with the authority of Petaling Jaya, and it caused to stop the contract. The respondent company told the authority that the material on the construction site was belonging to them and they also would sell them. 

   

     Somehow, the respondent company found out that the material delivered to Ahmad was no longer in the construction site, and Ahmad was the person who sold the material to the appellant for RM14,000 of which Ahmad get half of it as the payment.

    

The respondent company then requires the costs of material from the appellant.

Appellant argued that:

1. The respondent had delivered the material to Ahmad. So, Ahmad had to be deserved the name for the owner of the material. 

2. The material were the property of the partnership of the respondent and Ahmad. Therefore, Ahmad has the right to sell them.

    Held: 

      Ahmad was not the owner of the property, because the respondent was merely placing the material for the purpose of proceeding construction. Therefore, Ahmad was merely a bailer, but not the owner when the time he sold to the appellant.  Since, Ahmad was not the owner, he had neither the title nor the authority to sell the property. 

      unless According to Sale of Good Acts 1957, section 27, where goods are sold by a person who is not the owner thereof or 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, unless the owner of the goods is by his conduct precluded from denying the authority to sell.

Review to the historical case, Farquharson Brother & Co. v. C.King [1920] A.C.325

     Although, Ahmad insured the good, but it doesn't mean that he was the owner. So, there was nothing a bailer could to do with the material. Therefore, appeal dismissed. 

Opinion

The appellant should take serious on buy the goods from second or third person in the industry because them was not the owner of the goods. Written contract should be file or in others word is a receipt of the payment to the goods.  Because the sales will take advantage and counterfeit the payment and take a half of the payment. That is what Ahmad does with the Zeno companies. Based on the law Appellant cannot appeal because the contract is not illegal. Zeno can take their own goods from the appellant.