Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of Parallelewelten.
The Sale of the Goods Act 1957 is an Act which defines and amends the law relating to the sale of goods. This Act is the main piece of legislation helps buyers to obtain redress when their purchases go wrong. It is crucial for sellers to understand the implications of the Act for them and the responsibilities they have under it. Aside from legal issues, it makes sense to comply with the requirements of the Act in order to build customer relationships. The sale of the goods act generally applies to protect individual consumers, and also applies to the sale of goods between businesses. In general, when your business purchases goods or services from another business, you also have the same implied right as a consumer would have when buying from you if there is no contract to the contrary. Subject to the provisions of this Act and of any Act in that behalf there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale except as follows :
(1) Where the buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are required, so as to show that the buyer relies on the seller’s skill or judgment, and the goods are of a description which it is in the course of the seller’s business to supply (whether he is the manufacturer or producer or not), there is an implied condition that the goods shall be reasonably fit for such purpose; but in the case of a contract for the sale of a specified article under its patent or other trade name, there is no implied conditions to its fitness for any particularly purpose;
(2) Where goods are bought by description from a seller who deals in goods of that description (whether he is the manufacturer or producer or not), there is an implied condition that the goods shall be of merchantable quality; but in the case if the buyer has examined the goods, there shall be no implied conditions as regards defects which such examination ought to have revealed;
(3) An implied warranty or condition as to quality or fitness for a particular purpose may be annexed by the usage of trade;
(4) An express warranty or condition does not negative a warranty or condition implied by this Act unless inconsistent therewith.
REVEEX INTERNATIONAL, S.A.
MACLAINE WATSON TRADING (M) SDN. BHD.
HIGH COURT MALAYA, KUALA LUMPUR
VC GEORGE J
[CIVIL SUIT NO. C 1355 OF 1980]
21 FEBRUARY 1991
The plaintiffs, a Spanish corporation, are manufacturers of pharmaceutical products for veterinary use. The defendants, a Malaysian company, inter alia trade in such veterinary pharmaceutical products supplying retailers as well as the farmer consumers.
In 1979, the defendants, a Malaysian company placed a number of orders for various pharmaceutical veterinary products from the plaintiffs, a Spanish company.
These products were delivered in eight consignments and the agreed purchase price for the last consignment was to be by as Bill of Exchange, the Malaysian company did not honour the Bill of Exchange.
The plaintiffs claimed to be holders in due course of the bill and by this action sued the defendants for the Malaysian ringgit equivalent of the value of the said bill and for interest thereon at 8% per annum from 28 April 1980 to date of payment, as well as for the costs of protesting the bill and for party and party costs.
The Malaysian company was counterclaimed against the plaintiff.
The main contention of Malaysian company was that the consignments were not reasonably fit for the purpose for which they were intended and were not merchantable; therefore breaching a condition of the contract as statutorily implied by section 16 of the Sale of Goods Act 1957 (the Act).
Plaintiff contended that since their claim had been in relation to the last consignment, a counterclaim based on lack of merchantability of goods contained in the earlier consignment was not tenable.
There will be the judgment for the defendant for the aggregate of the said amounts of RM375, 768.41 which amount shall be set off against the judgment sum of RM384, 765.30 obtained by the plaintiffs. The defendants will pay interest on the balance amount after the set-off to be calculated from 28 April 1980, until payment at 8% per annum. The costs of and incidental to the counterclaim as taxed by the proper officer of the Court will be paid by the plaintiffs to the defendants.
Based on the counterclaims, employee of defendant identified the products might spoil in matter of month, in respect of the sales of the defective products. There is evidence to corroborate that this actually happened and cannot be said the goods were substandard and no requirement in the law that defendant must provide defective products to sue the Spanish company as a condition precedent to invoking breach of section 16 as a counterclaim. There was lack of contemporaneous provision of detail information to plaintiff about the defective product, the evidence of defendant might arise suspicion of lack of bona fide.
Point of view:
Our group agrees with the judgment as prayed was entered against the defendant. However, the defendants had counterclaimed for an amount substantially in excess of the plaintiff’ claim. It is because defendant clearly the contention some of the goods were substandard cannot be said that it will made after a period of inordinate delay. Beside that, submission which full particulars of the goods alleged to have been defective will never provided to the plaintiff. Defendant agreed the purchase price for last consignment was to be by as Bill of Exchange but finally defendant did not honour the Bill of Exchange.
In opinion, the defendant was breach of condition under section 31 Sale of Goods Act 1957. Based on the information the plaintiff has delivered the goods to the buyer, while the buyer was accepted but he did not pay for them. Therefore, this is one of the points that threaten to defendant.
Based on the fact, some of the drugs suggested by the employee of defendant whose in respect in the sale of the defective products being sold as defective products at discounted prices. In opinion, under this situation the defendant was breaching a condition of contract as statutorily implied by section 24 Sale of Goods Act 1957. Under this section, if the buyer receive the good on approval or on sale or return, or some other similar terms, property will only pass to the buyer when the buyer does some other act which shows he has adopted the transaction, for example re-selling them.
Out of Court Settlement
ReNu brand is a complete line of soft lenses care product for Bausch & Lomb. In 20 February 2006, Bausch & Lomb voluntarily suspended sales of ReNu with MoistureLoc lens solution in Hong Kong, Singapore and Malaysia after 29 cases of Fusarium keratitis were found since November 2005  . The Hong Kong Medical Device Control Office noted that an increase in hospital admissions due to -lens-related keratitis problem from June to September 2005 which was linked to the use of ReNu with MoistureLoc solution. At the same time, Singapore government’s Health Ministry alerted the public that 18 of 22 patients presenting with fusarium fungal corneal infection had used a Renu with MoistureLoc solution. Fusarium keratitis has been proven to cause eye pain, infection and scarring of the cornea, blurry vision, glaucoma and even blindness. On 15 May 2006, Bausch & Lomb announced a worldwide ReNu recall. On 31 October 2006, the Food and Drug Administration (FDA) issued a warning letter to Bausch & Lomb concerning its ReNu with MoistureLoc lens solution. Under Section 16(1) (b) Sales of Goods Act 1957, there is an implied condition that the goods which are sold in the course of business must be of merchantable quality. This subsection also reveals that quality of goods must correspond with description and fit for the purpose for which they are commonly used. B&L’s did not follow this section because the Renu with MoistureLoc lens solution was not under merchantable quality which caused the fusarium keratitis.
Bausch & Lomb suspended sales of Renu with MoistureLoc in Malaysia to avoid increase the number of victim of fungal eye infection in May 15, 2006. Thus, optometrist centers and retail pharmacies in Malaysia perish the B&L lens solution from the shelves when the recall was announced. B&L’s spokespersons have repeatedly apologized to those victims who used Renu with MoistureLoc solution and recommended those users switch to different brand’s lens solution for the time being. Lastly, in June 2009, news reports indicated that Bausch & Lomb had settled about 600 lawsuits related to the lens solution by paying approximately $250 million in claims  .
View of the case
Although Bausch & Lomb was notified of fusarium infections among ReNu users in November 2005, the company did not take immediate action until a worldwide recall was announced at May 2006. As a result, more products’ user had infected unnecessarily and the company had incurred a loss of $250 million in claims. Bausch & Lomb failed to establish a plan for auditing its quality control system which includes complaint handling system and did not ensure the safety of the products.
Based on both cases discussed, Section 16 of the Sales of Goods Act 1957 is an act to protect right of buyer, ensuring the seller to provide goods that are merchantable good in quality, and fit for the purpose as for the buyer’s expectation. On the other hand, it is important to ensure that this section will not be misused by the buyers who are not in good faith. In conclusion, there are still a lot of flaws in section 16 that should be amended. There are a lot of factors and other section that should be considered together such as good faith of both buyer and seller, and whether the buyer accepts the goods or not. Section 16 of the Sales of Goods Act 1957 gives more equal right to both seller and buyer as long as they are in good faith.
Legislation referred to:
Rules of the High Court 1980, O. 15 r. 2(1)
Sale of Goods (Malaya State) Ordinance 1957, s. 16
Other source referred to:
Halsbury’s Vol. 41 paras. 681, 682, 883
For the plaintiffs – J.A. Yeoh, (C.K. Ong with him); M/s. Ng. & Ong
For the defendants – James Puthucheary; M/s. Skrine & Co.
Out of Court Settlement
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