5.4 Privity of Contract

 Buyer have exclusive privacy and enjoyment with the goods. Seller cannot interfere in any manner unless with express consent from buyer.  The breach of this stipulation will not entitle the innocent party to repudiate the contract.  E.g.: Ali Baba is the owner of Ali Baba Carpets Sdn. Bhd. He needs a van for the business purposes. Ali Baba bought a van from his friend, Karim. Karim loves the van very much, he often persuaded Ali Baba to lend him the van.

Karim had a set of keys to the van and he used the van whenever he liked regardless of whether Ali Baba needed the van or not. Karim has breached the implied warranty that Mr. Ali Baba should have enjoy the quiet possession of the van.

Implied Warranty as to Goods Are Unencumbered – Section 14(c) SOGA 1957

 There is an implied warranty that the goods are free from any charge or encumbrance in favour of a third party who is unknown to the buyer; for example, storage charges which have to be paid before the goods can be collected.  E.g.: XYZ Enterprise sold a machine to Meng Electrical. But Meng Electrical did not know that XYZ Enterprise had charged the machine to Bank Kerjasama. XYZ Enterprise has breached the warranty. However, if Meng Electrical knew about the charged and still decided to go ahead with the sale, there would be no breach.

5.4 PRIVITY OF CONTRACT

 As any type of contract, the general rule is that terms of a contract are only binding on the parties to such a contract.  The terms implied in a contract of sale are only between the contracting parties, which is buyer and seller  If a third party uses goods purchased by another and is injured as a result of some defects in the goods, he cannot sue the seller in an action under contract.  His remedy would be to sue the manufacturer under tort – Donoghue v

Stevenson.