Breach of Contract

When related parties engaged in an agreement or contract, it is an obligation for both parties to follow the rules and regulations stated in the contract or agreement. However, things are not that perfect and in some cases, one party may revoke or breach the terms and conditions of the contract. In this case, another party can choose to sue and claim compensation for their damages. The Sales of Goods Act 1957 protects the rights of both parties in an agreement. There are several conditions of breach of contract which include;
Situation A (Price of goods)
When goods has passed to the buyer under a contract, if the buyer wrongfully neglects or refuses to pay for the goods according to the terms and conditions of the contract, the seller allow to sue the buyer for the price of the goods. So, the buyer has to pay the seller the amount said in the contract if the terms and conditions of contract are met.
Situation B (damages for non-acceptance)
The seller can to sue the buyer not only at the price of the goods, but damages for non-acceptance. According to Sales of Good Act 1957, if the buyer wrongfully neglects or refuses to accept and make payment to the goods, sellers have the right to sue buyers for the damages for non-acceptance.
Situation C (damages for non delivery)
On the buyer side, buyers have the rights to sue seller if the breach of contract is met. This means that if the seller wrongfully neglects or refuses to deliver the goods to the buyer, the buyer stand a right to sue the seller about the damages for non-delivery.

Ultra Vires Doctrine

Ultra Vires means “beyond the power of” in Latin. The Ultra Vires Doctrine is a policy in which the memorandum of Association must state the objects of the company. The purpose of the objects clause is to define and limit the activities which the company is permitted to undertake.

The effects of Section 20(1) are that the company is estopped from claiming a contract ultra vires when the ultra vires contract is fully performed. Thus, the creditors are protected by the said section.

Company may by special resultions alter the provision of its memorandum with respect to the objects of the company in order to authorize acts which otherwise would be ultra vires. [ection 28(1) Companies Act 1965]

Let’s Brain Storm

Let assumed that the case following happened.
“KK Storage is a supplier that runs in Puchong Housing Area. The nature of the business is to sells and provides grocery items to small mini mart and acts as a supplier. One of its clients, ABC Mart engaged into contract with KK Storage to get supply of grocery items such as food and beverages, household items from KK Storage. However, ABC Mart has breach the contract.”

What are the remedies available for KK Storage?
There are few remedies available for KK Storage. If ABC Mart haven’t pay for the goods they ordered and the goods is still in possession with KK Storage, the company has a lien on the goods for the price [section 46(1) (a), sale of goods act 1957]
If KK Storage only has a part of the possession of the goods, it has right to stop the goods in transit if the buyer is insolvent. [Section 46(1) (b), sale of goods act 1957]
Besides that, KK Storage can sue ABC Mart for the price of the goods where th buyer wrongfully neglects or refuses to accept and pay for the goods [Section 55, Sale of Goods Contract 1957]

Nemo dat quod non habet

By definition, nemo dat quod non habet means where goods are sold by person who is not owner and without the consent of original owner, the buyer acquires no better title than the seller had. It means that the seller will still owned the goods if the goods is sold by third party and the sale of goods is not acknowledged by the seller.
But, there are some exceptions to the rule such as;
- Estoppel
- Sale by merchantile agent in the ordinary course of business, the buyer will obtain good title
- Sale by joint owner
- Sale under voidable title
- Sale by seller in possession after sale
- Sale by buyer in possession