Contract – Whether there was contract of sale & privity of contract between car purchaser and car seller.

Ong Siew Hwa v UMW Toyota Motor Sdn Bhd [2016] 1 MLJ 132

• The appellant (“Ong”) bought a car from the 1st respondent (“Toyota”) for RM151,706.45.
• Ong paid RM71,706.45 towards the purchase price and the balance of RM80,000 was financed by the 2nd respondent (“the Bank”), a finance company under a hire purchase agreement.
• Ong subsequently found the new car to be defective and made numerous complaints to Toyota.
• Toyota’s attempts to resolve the problems were unsuccessful.
• This led to Ong leaving the car at Toyota’s service centre.
• Ong then filed an action against both the Bank and Toyota for termination of the sale and purchase agreement (“SPA”) for the car.
• Ong claimed that the Bank and Toyota have breached the implied guarantees as to acceptable quality under the Consumer Protection Act 1999 (“the CPA”) and the Sale of Goods Act 1957 (“the SGA”).
• The trial judge found that once the hire purchase agreement came into effect, there ceased to be any contractual relationship between Ong and Toyota.
• Thus, the trial judge allowed the Ong’s claim against the Bank but dismissed Ong’s claim against Toyota.
• Hence the present appeal wherein Ong argued that the trial judge had erred in his finding that he had no claim against Toyota.

• Ong’s claim against Toyota was unsustainable.
• Basically, once a hire-purchase agreement has been entered into between the customer and the finance company (i.e. the Bank), the contractual relationship between the customer (i.e. Ong) and the dealer (i.e. Toyota) no longer exists.
• The only contract that exists is between the customer and the finance company.
• This was because the “buyer” of the motorcar is technically the Bank and Ong is just a “hirer” until and unless Ong has paid off the balance loan amount for the motorcar in full.
• The hire-purchase agreement has superseded the documents evidencing the sale of the motorcar by Toyota once it came into effect.
• Hence the only valid existing contract would be the hire-purchase agreement between the Bank and Ong.