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The Sales of Goods

Act, 1930

Introduction

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The contract of sale :

A contract of sale of goods is a contract

whereby a seller transfers or agrees to

transfer the property in goods to thebuyer for price

Contract of sale is a generic term which

includes both a sale as well as anagreement to sell.

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Main features :

There must be at least two parties

Transfer or agreement to transfer the

ownership of goods The subject-matter of the contract must

necessarily be Goods

The consideration is price

A contract of sale may be absolute orconditional

All other essentials of a valid contract must bepresent

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SALE AGREE.TO SELL

It creates right in REM Right in Personam

It is Executed contract Executory contract

If the goods are destroyed the loss

falls on the buyer even if the goods

are in the possession of seller

Seller/buyer

Seller can sue for the price of the

goods

In case of breach by the buyer the

seller is entitled only to damages

The seller can not sell to third

parties

It can

The buyer is entitled to recover the

specific property from the assignee

if the seller becomes insolvent

Buyer can claim only ratable

dividend for the money paid

The seller is only entitled to the

ratable dividend of the price due if

the buyer becomes insolvent

The seller may refuse to sell the

goods to the buyer w/o payments if

the buyer becomes insolvent

Ownership passes to the buyer Ownership remains with the seller

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Subject matter of contract of sale-

Sec.6

GOODS

Existing Goods

Specific Goods

Ascertained Goods

Un ascertained Goods

Future

Goods

Contingent

Goods

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Conditions and Warranties

Representation: Statement made by the

seller before entering into a contract

Stipulation: If such representationforms an integral part of the contract

and other party relies upon it.

No Representation: CAVEAT EMPTOR

i,e, Let the Buyer Beware is applied

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CONDITION : Sec.12(2)

A condition is a stipulation essential to

the main purpose of the contract breach

of which gives rise to a right to treat thecontract as repudiated1

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Warranty : Sec.12(3)

A warranty is a stipulation collateral to

the main purpose of the contract the

breach of which gives rise to a claim fordamages but not right to reject the

goods and treat the contract as

repudiated2

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Difference b/w condition &

warranty : Difference as to value

Difference as to Importance

Difference as to Breach

Difference as to Treatment

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When condition is to be treated

as warranty: Sec.13(1)-13(3) Waiver of condition

Compulsory treatment of breach of

condition as breach of warranty

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Express Conditions : Expressely

provided in the contract

Implied conditions & warranty : whichthe law implies in a contract of sale

Implied condition & warranty may be

negatived or varied by an expressagreement or by the course of dealings

b/w parties or by the usage & customs

of trade.Sec.62

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Sec.62 is based upon two

maxims: Expression Facit Cessare Tacitum i,e,

what is expressed makes what is tacit

or implied to cease Modes et conventio vincent Legem i,e,

customs & agreements overrule

law(Implied condition & warranty)

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Implied conditions : Conditions as to title [Sec.14(a)] Sale by description:

A) Goods must correspond to description(Sec.15)

B) Conditions as to Merchandibility[Sec.16(2)]

C) Conditions as to wholesomeness

D) Conditions as to fitness for a particularpurpose (Sec.16)

Sale by Sample (Sec.17)

Sale by sample as well as by description

(Sec.15)

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Implied Warranties :

Warranty of Quiet possession-Sec.14(6)

Warranty against encumbrances-

Sec.14(c)

Warranty to disclose dangerous natures

of goods.

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CAVEAT EMPTOR

Let the Buyer Beware

The maxim Caveat Emptor does not apply & the

contract will be subject to the impliedconditions under the followingcircumstances :

1. Sale under fitness for buyers purpose

2. Sale under merchandable quality3. Sale under usage of trade

4. Consent by Fraud

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Transfer of Title/Property in

Goods

Sec.18-25 Property in Goods mean?

Property in goods Vs.Possession of

Goods When does the property in goods pass

from the seller to buyer ?

1.If the goods are lost or damaged 2.Damage to goods by third party

3.Insolvency

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from seller to the

buyer?(Sec.18-25)

Specific or Ascertained

Goods

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Rules as regards Ascertaining

Intention (Sec.20-24) 1) Specific goods in Deliverable State

(Sec.20)

Goods are said to be in D/S when theyare in such state that the buyer wouldunder the contract be bound to takedelivery of them

2) Specific goods not in a Deliverablestate (Sec.21)

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Where there is a contract for the sale ofspecific goods in a deliverable state but

the seller is bound to weigh, measure,test or to do some other thing withreference to them, for ascertaining theprice , the property does not pass till

such act or thing is done and the buyerhas notice of it.

Unascertained or future goods (Sec.18)

Sale On Approval or Sale or Returnbasis

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When he signifies his approval or acceptanceto the seller or does any other act, adoptingthe transaction

If he does not signify his approval oracceptance to the seller but retains the goodsw/o giving notice of rejection, then, if a timehas been fixed for the return of the goods, onthe expiration of such time, and if no time hasbeen fixed on the expiration of a reasonabletime.

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Transfer of Title by Non Owners

General rules as to transfer of title

(Sec.27)

Maxim : Nemo dat quod non habet

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EXCEPTIONS TO THE RULE:

Sale by mercantile agent (Sec.27)

Sale by a joint owner/coowner (Sec.28)

Sale by a person in possession under avoidable contract (Sec.29)

Sale by a seller in possession of goods

after sale (Sec.30) Sale by a buyer in possession of goods

Sale by an unpaid seller (Sec.54)

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Sale by Auction (Sec.64)

A sale by auction is a public sale inwhich goods are offered to the highest

bidder In above case following rules apply:

1) when the goods are put up for sale inlots, each lot is deemed, prima facie, tobe the subject matter of a separatecontract of sale.

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2) At an auction, the sale is completewhen the auctioneer announces its

completion by the fall of the hammer orin other customary manner; until suchcompletion any bidder may withdraw hisbid. It is also the practice to say 3 times.

3) A right to bid may be reservedexpressly by or on behalf of the seller &where such right is expressly so

reserved, but not otherwise, the seller orany person on his behalf may bid atAuction

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4) The sale may be notified to be

subject to a reserved or upset price

5) If the seller makes use of pretendedbidding to raise the price, sale is

voidable at the option of the buyer

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DELIVERY (Sec.2[2])

Voluntary transfer of possession of goods

from one person to another

1) Physical or Actual Delivery: Physicalpossession of the good is handed over by the

seller to the buyer

2) Constructive Delivery: When a third person

who is in possession of the goodsacknowledges that he holds the goods on

behalf of the buyer

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Symbolic Delivery: Delivery is made by

indicating or giving a symbol e.g:

Handing over the key of a godown tothe buyer

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Rules as to Delivery (Sec.39) :

Mode of delivery

Delivery & payment

Effect of part delivery Buyer to apply for delivery

Place of delivery

Goods in possession of a third party

Time of delivery

Expense of delivery

Instalment delivery

Delivery to a carrier or wharfinger

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Unpaid Seller (Sec.45) :

A seller is deemed to be an U/S when:

1) The whole of the price has not been paid

or tendered 2) A bill of exchange or other negotiable

instrument has been received as a

conditional payment & the condition on which

it was received has not been fulfilled byreason of dishonor of the instrument

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Rights of an U/S :

1) Right against goods:

a) Lien on goods

b) A right of stoppage-in-transit

c) A right of Re-sale

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A) Lien on Goods (Sec.47-49) in

case:

i) the goods are not sold on credit

ii) the goods have been sold on credit,

but the period of credit has expired

iii) the buyer becomes insolvent

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B.Right of stoppage in transit

(Sec.50-52) The transit is end in following cases:

If the buyer obtains the possession of the

goods before its arrival at the destination If, after the arrival at their destination, the

carrier acknowledges to the buyer that he

holds on his behalf

If the carrier wrongfully refuses to deliver the

goods to the buyer

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C.Right of Re-sale (Sec.54)

Where the goods are of perishable

nature

When the buyer does not pay the price

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2.Rights of an U/S against the

buyer personally: Suit for price (Sec.55)

Suit for damages for Non Acceptance

(Sec.56)

Suit for damages for Breach of contract

Suit for Interest (Sec.61)