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SALES OF GOODS ACT

This Act came into force on first July

1930. The provisions of this Actextends to the

whole of India except the state of J&K. certain minor

amendments where made in this Act in 1963

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Definition of Sale of goods Section 4

(1) the sales of goods Act defines a

contract of sale ofgoods as Acontract where by the seller transfers

or agrees to transfer the property

in goods to the buyer for a price.

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CHARACTERICS OF CONTRACTOR

OF SALETWO PARTIES

GOODS PRICE

TRANSFER OF OWNERSHIP

ESSENTIALS OF VALID CONTRACT

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DIFFERENCE BETWEEN SALE AND AGREEMENT TO SELL

Transfer of property (ownership): - In a sale the property in goods

passes to the buyer immediately at the time of making the contract In

an agreement to sell there is no transferof property to the buyer at

the time of the contract.

Risk of loss. The general rule is that unless otherwise agreed, the

risk of loss prima facie passes with property (Sec. 26). Thus in

case of sale, if the goods are destroyed the loss falls on the buyer eventhough the goods may never have come into his possession because

the property in the goods has already passed to the buyer. On the other

hand, in case of an agreement to sell where the ownership in the goods

is yet to pass from the seller to the buyer, such loss has to be borne bythe seller even though the goods are in the possession of the buyer.

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DIFFERENCE BETWEEN SALE AND AGREEMENT TO SELL

Consequences of breach: - In case of sale, if the buyer wrongfully

neglects or refuses to pay the price ofthe goods, the seller can sue for

the price, even though the goods are still in his possession. In

case ofan agreement to sell, if the buyer fails to accept and pay for

the goods, the seller can only sue for damages and not for the price,

even though the goods are in the possession of buyer.

Right of resale : - In a sale, the property is with the buyer and as such

the seller (in possession of goods after sale) cannot resell the goods. If

he does so, the subsequent buyer having knowledge of the previous

sale does not acquire a title to the goods. The original buyer can sue

and recover the goods from the third person as owner, and can alsosue the seller for the breach of contract as well as for the

tort ofconversion. The right to recover the goods from the third person

is, however, lost if the subsequent buyer had bought them bonafide

without notice of the previous sale (Sec. 30).

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Insolvency of buyer before he pays for the goods: - In a sale, if the

buyer is adjudged insolvent before he pays for the goods, the seller, in

the absence ofa right oflien over the goods, must deliver the goods

to the Official Receiver or Assignee. The seller is entitled only to a

ratable dividend for the price of thegoods. But in an agreement to sell,

in these circumstances, the seller may refuse to deliver the goods to

the Official Receiver or Assignee unless paid for, as ownership has not

passed to the buyers.

Insolvency of seller: - If the buyer has already paid the price In a sale,

if the seller is adjudged insolvent, the buyer is entitled to recover

the goods from the Official Receiver or Assignee, as the property in

thegoods rests with the buyer. On the other hand, in an agreement tosell, if the buyer has already paid the price and the seller is adjudged

insolvent, the buyer can only claim a ratable dividend (as a creditor)

and not the goods because property in them still rests with the seller

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Difference between Sale And Hire-Purchase

Sale Hire purchase agreement

Ownership is transferred from the seller to the buyer as soon as the

contract is entered into. Ownership is transferred from the seller to thehire-purchaser only when a certain agreed number of installments are

paid.

The position of the buyer is that of the owner. The position of the hire-

purchaser is that of the bailee.

The buyer cannot terminate the contract and as such is bound to pay

the price of the goods. The hire-purchaser has an option to terminate

the contract at any stage, and cannot be forced to pay the further

installments.

If the buyer makes the payment in installments, the amount payable

by the buyer to the seller is reduced, for the payment made by the

buyer is towards the price of the goods. The installments paid by the

hire-purchaser are regarded as hire charges and not as payment

towards the price of the goods till option to purchase the goods is