Sale Of Goods Act, 1930Sale Of Goods Act, 1930Came into force on 1st July 1930

It extends to the whole of India [except the State of Jammu and Kashmir].

Section 4(1) defines contract of sale as under A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in the goods to the buyer for a price.

The essentials of a valid contract of sale:1.Two parties2.The seller should transfer the property in the goods to the buyer3. The subject matter of the contract is ‘goods’Sec 2(7) "goods" means every kind of movable property other than actionable claims and money; and includes stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale4. The transfer of property in the goods from seller to the buyer is for consideration known as price.5.Includes both sale and agreement to sell6.No formalities to be observed.

“buyer" means a person who buys or agrees to buy goods. "seller" means a person who sells or agrees to sell goods . "price" means the money consideration for a sale of goods.

Classification of goodsClassification of goods1.Existing goods: are such goods as are owned or possessed by the seller at the time of making of contract.These goods are of three types specific goods- these are the goods which are actually identified and agreed by the parties at the time of contract of sale. Unascertained goods- not specifically identified or ascertained at the time of contract of sale.

2.“Future goods“: means goods to be manufactured or produced or acquired by the seller after making of the contract of sale;

3.Contingent goods-The acquisition of goods by the seller depends upon the uncertain contingencies .

Agreement to sell“Where under a contract of sale the transfer of property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called agreement to sell”

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Sale and Agreement to sellSale and Agreement to sellProperty in the goods is

transferred from the seller to the buyer- sale

Transfer of the property in the goods is to be taken place at some future date or after fulfillment of some condition,-AGREEMENT TO SALE

Difference between Sale and Difference between Sale and agreement to sellagreement to sell

Transfer of ownershipRisk of lossConsequences of breachRight of sale.Insolvency of buyer before he pays for the goods Insolvency of seller if the buyer has already paid the price.

Section 26, the goods are at the risk of the person who is their owner at the relevant time

Earnest money:Money deposited with the seller by the buyer as security for due fulfillment of the contract .

Stipulations as to time:1.Stipulations relating to time of delivery of goods2. Stipulations relating to time of payment of the price.

Effect of goods perishingPerishing is not just physical destruction of the goods, but it covers :(a)Damage to goods so that the goods have ceased to exist in the commercial sense(b)Loss of goods by theft(c)Where the goods have been lawfully requisitioned by the government

- Perishing of specific and ascertained goods effect the contract of sale.

1.Goods perishing before making of contract

where there is a contract for the sale of specific

goods, the contract is void if the goods without

the knowledge of the seller have, at the time

when the contract was made, perished or

become so damaged as no longer to answer to

their description in the contract.

2) Goods perishing before sale but after agreement to sale

When there is an agreement to sell

specific goods and subsequently the

goods without any fault on the part of the

seller or buyer perish or become so

damaged as no longer to answer their

description in the agreement before the

risk passes to the buyer, the agreement is

thereby avoided.

Condition And WarrantyCondition And WarrantyCondition:Condition is a stipulation essential to the main

purpose of the contract, the breach of which gives the aggrieved party a right to repudiate the contract itself.

- can maintain a action for damages.

Warranties: is a stipulation collateral to the main purpose of

the contract, the breach of which gives the aggrieved party a right to sue for damages only.

Cannot avoid the contract

DifferenceDifference

1. As to value2. As to breach3. As to treatment

When breach of condition can be treated When breach of condition can be treated as breach of warrantyas breach of warranty

1.Voluntary waiver by buyer2.Acceptance of goods by the buyerMeaning of acceptance: Taking possession or

delivery of the goods does not by itself amount to acceptance.

1. When he intimates to the seller that he has accepted them

2. When he does any act in relation to goods which is inconsistent with the ownership of the seller.

3. When, after the lapse of reasonable time he retains goods without intimating the seller that he has rejected them.

EXPRESS AND IMPLIED CONDITIONS AND EXPRESS AND IMPLIED CONDITIONS AND WARRANTIESWARRANTIES

Condition and warranty may be either express or implied.

- They are said to be express when at the will of the parties they are inserted in the contract.

- They are said to be implied when the law presumes their existence in the contract automatically.

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IMPLIED CONDITIONSIMPLIED CONDITIONS

1. Condition as to title: In a contract of

sale, unless the situation of the contract are

such as to show a different intention, there is

an implied condition on part of the seller that

—

In sale, he has right to sell goods.

In agreement to sell, he will have a right to

sell at the time when property is to pass.

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Condition in a Sale By Description

In sale by description there is an implied

condition that the goods shall correspond

with description.

This means “if you contract to sell peas, you

cannot oblige the party to take beans.”

Hence if the description of the article

tendered is different then the buyer may not

buy the goods.

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Condition in a Sale By SampleSale By Sample A contract of sale is a contract for sale by

sample where there is a term in the contract, express or implied, to that effect.

1. That bulk shall correspond with the sample in quality.

2. That the buyer shall have a reasonable opportunity of comparing the bulk with the sample.

3. That the goods shall be free from any defects, rendering them unmerchantable.

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Condition in a Sale by Sale by Description and SampleDescription and Sample

If the sale is by sample as well as by

description, it is not sufficient that the bulk of

goods corresponds with the sample, if the

goods do not also correspond with the

description.

This means goods must match with the

description and sample.

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Condition As To Quality Condition As To Quality Or FitnessOr Fitness

Normally, in a contract of sale there is no

implied condition as to quality or fitness for

particular purpose.

The buyer must test the goods before he buys

them in order to satisfy him self that the

goods shall be suitable for him.

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Condition Of Condition Of MerchantabilityMerchantability

Where goods are bought by description from a

seller who deals in goods of that description there

is an implied condition that the goods are of

merchantable quality.

This means goods should be such that they are

commercially saleable, as per the description by

which they are known in the market at their full

value.

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Condition As To Wholesomeness

In the case of eatables and provisions, in

addition to the implied condition as to

merchantability, there is another implied

condition that the goods shall be wholesome.

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Implied warrantiesImplied warranties

1.Warranty of quiet possession:In a contract of sale, unless there is a

contrary intention, there is an implied warranty that the buyer shall have and enjoy quite possession of the goods.

If the buyer is in any way disturbed in the enjoyment of the goods in consequence of the seller’s defective title to sell, he can claim damages from the seller.

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2.Warranty Of Freedom From 2.Warranty Of Freedom From EncumbrancesEncumbrances

In addition to the previous warranty, the buyer is entitled to a further warranty that the goods are not subject to any charge or right in favor of a third party.

If the possession is in any way disturbed by reason of the existence of any charge or encumbrances on the goods in favor of any third party, he shall have a right to claim damages for breach of this warranty.

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3.Warranty To Disclose Dangerous 3.Warranty To Disclose Dangerous Nature Of GoodsNature Of Goods..

When a person sells goods knowing that

the goods are inherently dangerous or

they are likely to be dangerous to the

buyer and that the buyer is ignorant of

the danger, he must warn the buyer of

the probable danger, other wise he will

be liable in damages.

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CAVEAT EMPTORCAVEAT EMPTOR

This means “LET THE BUYER BEWARE” i.e., the seller is under no duty to reveal unflattering truths about the goods sold.

Therefore, when a person buys some goods, be must examine them thoroughly.

If the goods turn out to be defective or do not suit his purpose or he depends upon his own skills and makes a bad decision, he cannot blame the seller.

EXCEPTIONS TO CAVEAT EXCEPTIONS TO CAVEAT EMPTOREMPTOR

Seller makes a misrepresentation

Seller makes a false representation amounting to fraud

Where the goods purchased by description but they don't correspond with the description

Where the goods are not of merchantable quality

Bulk does not correspond with the sample.

Where the buyer relies on seller

Trade usages

Performance of the contract of sale

It is the duty of the seller to deliver the goods Buyer to accept and pay for them

Performance of the contract of sale implies the delivery of goods by the seller and acceptance of the delivery of goods and payment of price by the buyer

DeliveryDelivery

Delivery of goods means voluntary transfer of possession of goods from one person to another.

Modes of delivery:1.Actual delivery2.Symbolic delivery3.Constructive delivery

Rules as to delivery of Rules as to delivery of goodsgoods

1.Delivery may be either actual, symbolic or constructive

2. Delivery and payment are concurrent conditions

3.Effect of part delivery, when property in goods is to pass on delivery

4.Buyer to apply for delivery5.Time of delivery6.Place of delivery

7.Delivery of goods where they are in possession of a third party

8.Expenses on delivery9.Delivery of wrong quantity or different quality10.Installment deliveries11.Delivery to carrier or wharfinger12.Liability of buyer for neglecting or refusing to

take delivery of goods.

unpaid sellerSection 45 of sales Act defines unpaid seller as“ the seller of the goods deemed to be an

unpaid seller within the meaning of this act

a) when the whole of the price has not been paid or tendered

b) when a bill of exchange or other negotiable instrument has been received as conditional payment and the condition on which it was received has not been fulfilled by reason of the dishonor of the instrument or otherwise.

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Rights of unpaid sellerAgainst

the goods Against the seller personall

yWhere the property in the goods

has not passed

Where the

property in the goods

has passed

Lien

Stoppage in transit

Re sale

With holding delivery

Stoppage in transit

Suit for price Repudiation of contract

Suit for damages

Suit for interest

Rights of unpaid seller of unpaid seller

1) Against the goods2) Against the buyer personally

Against the goods

a) Where the ownership is transferred to the buyer

b) where the ownership is not transferred to the buyer

Where the ownership is transferred

Right of lien

Right of stoppage in transit

Right of resale

Right of Lien of Lien“The unpaid seller of the goods who is in

possession of them, is entitled to retain his

possession until the payment or tender of

the price in following cases namely:

a) Where the goods have been sold without the

stipulation as to credit

b) where the goods have been sold on credit ,

but the term of the credit has expired

c) where the buyer becomes insolvent”

When lien is lost?When lien is lost?

By delivery of goods to the carrier By delivery of goods to the buyer By waiver of lien By the tender of price by the buyer

Right of stoppage in transitRight of stoppage in transit It is defined as the state of transmission of

goods It means the stopping of goods while they

are in the course of transit

This right can be exercised if the following conditions are satisfied:

a) The buyer has become insolventb) the goods are in the course of transit, but

not reached the possession of the buyerc) the unpaid seller can exercise this right only

for the payment of the price of the goods

Duration of Transit of Transit

This is the period between the commencement

and the end of transit. The transit commences

from the time when the goods are delivered to

the middleman and it continues till the buyer or

his agent takes the delivery of the goods.

If the goods are rejected by the buyer and the

carrier continues to have the possession of the

goods, the transit does not cone to an end.

If the goods are delivered to a ship chartered

by the buyer and the circumstances show that

the carrier is acting as an agent of the buyer ,

then transit comes to an end.

When the goods are delivered in parts , the

seller may stop the remainder of the goods

unless the delivery of the part of the goods

shows an intention to give up the possession

of the goods.

Modes of exercising the right

a)By taking actual possession of the goods

b) By giving notice to the carrier to stop the

goods and redeliver them to the seller or

according to his directions

Right of resaleRight of resale

Is one of the valuable right given to an unpaid seller.

If the buyer fails to pay or offer the price within a reasonable time , the unpaid seller has the right to resell the goods in the following circumstances:

Where the goods are of perishable natureWhere he has exercised his right of lien and

stoppage and gives a notice to the buyer of his intention to resell the goods.

where the seller has expressly reserved his right of resale

Right Right wherein the ownership the ownership of the goods is not transferredof the goods is not transferred

Right of withholding the delivery of the goods sold

Right against the buyer

Suit for price

Suit for damages

Suit for interest

Suit for repudiation of contract