Sales of goods act agreement to sell - Legal Environment of Business
-
Upload
manumelwin -
Category
Education
-
view
162 -
download
3
Transcript of Sales of goods act agreement to sell - Legal Environment of Business
Sales of goods act - Agreement to sellLegal Environment of Business
Prepared By
Manu Melwin Joy
Assistant ProfessorIlahia School of Management Studies
Kerala, India.
Phone – 9744551114Mail – [email protected]
Kindly restrict the use of slides for personal purpose.Please seek permission to reproduce the same in public forms and presentations.
Contents
1. Sales and types of sales.
2. Contract of sales and agreement of sales.
3. Essential elements of a contract of sale.
4. Good and types of goods.
5. Perishing of goods.
6. Price and fixation of price.
Sales
• Where the right of
ownership in the goods
is transferred from the
seller to the buyer, the
contract is called a sale.
Example
• On 1st August, X sells 5
bags of cement to Y for a
sum of Rs 1500. This
transaction is called sale
since the ownership of 5
bags of cement is
transferred from X to Y.
Types of sales
Absolute sales
Conditional sales
Absolute sale
• The property in the
goods passes from the
seller to the buyer
immediately and noting
remains to be done by
the seller. A sale on a
counter in a shop is an
absolute sales.
Conditional sale
• The property in the
goods do not pass to the
buyer absolutely until a
certain condition is
fulfilled.
Contract of sale
• A contract of sale ofgoods is a contractwhereby the sellertransfers or agrees totransfer the property ofgoods to the buyer for aprice. Property meansthe right of ownership.
Agreement to sale
• Where the transfer ofownership in the goodsis to take place at afuture time or subject tosome conditionsthereafter to be fulfilled,the contract is calledagreement to sell.
Example
• On 1st May, A and B agreethat A should sell 5 bagsof cement to B on 15th
June for a sum of Rs.1500. It is an agreementto sell since A agrees totransfer ownership in thefuture. Date of agreementis 1st May but actual salewould take place only on15th June.
Essential elements of a contract of sale
1. Contract.
2. Existence of two parties namely buyer and seller.
3. Transfer of ownership.
4. Subject matter of sale of goods.
5. Price.
Essential elements of sale
• Contract – All theessential elements of acontract must bepresent in a contractsale.
Essential elements of sale
• Existence of two partiesnamely buyer and seller– The seller is the personwho sells and the buyeris the person who buys.Both buyer and sellershould be competent toenter into a contract. Aperson cannot buy hisown goods or cannotsell his goods to himself.
Example• C M Transport company Vs.
ITO (1966) – In this case, acompany resolved to transfersome buses to a partnershipfirm consisting of certainpersons who were also themembers of the company.Income tax officer consideredit as transfer as sale becausethe company has a legalentity and can be a seller.This decision was upheld bythe court.
Essential elements of sale
• Transfer of ownership -Transfer of ownershipfrom seller to buyer is themost importantingredient in a contract ofsale.
Example
• A borrows a sum of Rs10000 from B and pledgeshis property against thisloan to B. In this case, Atransfers a special propertyto B, by handing overpossession, but retains hisownership. Thus it is not acontract of sales.
Essential elements of sale
• Subject matter of sale ofgoods – The subjectmatter of sale must bethe goods, the property inwhich, is transferred.
• Price – The considerationfor sales of goods must bemoney called price. Theprice has been defined asmoney consideration forsales of goods.
Goods
• The goods include every
kind of movable
property other than
actionable claim or
money.
Types of Goods
• Existing goods.
– Special goods.
– Ascertained goods.
– Unascertained goods.
• Future goods.
• Contingent goods.
Existing good
• Goods owned and
possessed by the seller
at the time of making of
the contract of sales are
called existing goods.
Example
• If A sells his horse to B,
believing it to be in
existence but in fact the
horse is dead, no
contract will arise.
Specific goods
• These are goods
identified and agreed
upon at the time a
contract of sales is
made.
Example• A has two horses, one black
and one white. He agrees to sell
white horse to B. In this case,
the subject matter is specific.
But if A has two white horse,
unless that particular horse is
identified and individualized
from the remaining horses, it
will not become specific one.
Ascertained goods
• it means goods
identified in accordance
with the agreement
after the contract of sale
is made.
Example
• If A had 30 chairs of the
same kind and offers to
sell 15, the goods are
ascertained only when
15 particular chairs be
appropriated towards
the contract.
Difference
• The only point of difference
is that specific goods are
ascertained before or at the
time of making a contract,
but ascertained goods are
identified and individualized
after the formation of a
contract of sales.
Unascertained goods
• It means generic goods,
good defined by
description or even
samples.
Example
• Where a dealer has only
one car and he makes a
sale of it, the sale is
complete because there
is no uncertainty about
the subject matter of
sales.
Future goods
• It means goods to be
manufactured or
produced or acquired by
the seller after making
of the contract of sale.
Example
• A contract to sell oil not
yet pressed from seeds,
in his possession, is a
contract for the sale of
future goods.
Contingent goods
• These are types of
future goods, the
acquisition of which by
the seller depends upon
a contingency which
may or may not happen.
Example
• Future crops, eggs etc. A
agrees to sell 100 bags
of cement provided the
lorry carrying the
cement reaches safely.
Perishing of goods
• Perishing of specificgoods before making ofthe contract – Wherethere is a contract for thesale of specific goods andif they perish without theknowledge of the seller,even before the contractis made, the contractbecomes void.
Example
• X agrees to sell a cow to Y.
The cow is ill at the time
of the agreement and
subsequently dies. Both X
and Y are ignorant of this
fact. The agreement is
void.
Perishing of goods
• Goods perishing beforesales but after agreementto sell – Where contract isonly an agreement to selland goods without anyfault of either the seller orthe buyer perishsubsequent to thecontract, then also theagreement becomes void.
Example
• Example: In one case, A hadagreed to erect machinery onB’s premises. The price was tobe paid on completion. Duringthe course of the work , thepremises and machinery werecompletely destroyed by fire. Itwas held that both partieswere excused from furtherperformance and A was notentitled to the price ofmachinery as the specific sumwas payable only on thecompletion of the entire work.
Perishing of goods
• Perishing ofunascertained goods:Where the contract is forunascertained goods, theperishing of the good willnot avoids the contractand the seller will beliable for damages for thebreach of contract.
Example
• Example: X agrees to sell toY 10 bags of grain from 50bags stored in his godown.The godown had beendestroyed by fire at thetime of the contract. X isunaware of this fact. But inthis case, the contract is notvoid as the sale is not ofspecific goods but of acertain quantity ofunascertained goods.Hence X must supply 10bags of rice or pay damagesfor the breach of contract.
Price
• Price is the money
consideration of the sales
of goods. It is a
fundamental principle
that no sales can take
place without a price.
Fixation of price
The price must be fixed by
both parties at the time of
contract itself.
Both the parties may enter
into an agreement
regarding the manner in
which the price may be
fixed.
Fixation of price
Where the price is not fixed,
it can be determined in the
course of dealings between
the parties or as it is called
market price of goods.
Where the price has not
been fixed by the parties, the
buyer should pay a
reasonable price.
Mode of payment
In the absence of agreement
to the contrary, the seller is
not bound to accept any kind
of payment other than the
currency of the country. By
common consent, the seller
may accept payment by a
cheque or a draft, bank
guarantee, a letter of credit
or by any other mode.
Mode of payment
In the absence of agreement
to the contrary, the seller is
not bound to accept any kind
of payment other than the
currency of the country. By
common consent, the seller
may accept payment by a
cheque or a draft, bank
guarantee, a letter of credit
or by any other mode.
Examples
Team 1
• A agrees to sell a Maruti car to B for Rs. 1.5lacs. Before making agreement, the car wasstolen and it was in the knowledge of theparties. Is A bound to deliver Maruti Car to B?
No
Team 2
• Ritesh makes contract sales for selling heavymachine costing Rs. 2 Lacs to Hitesh on acondition that Hitesh will pay Rs. One lac incahs and will deliver a second hand car valuedat Rs 1 lac. Is contract of sale valid?
Yes. Payment of price is made partly in cash and partly in goods.
Team 3
• Ram enters into a contract of sales with shyam forselling Photostat machine to him for Rs 30,000.Invoice of the machine has been made in favor ofshyam, payment has not been made. The machineis lying in the godown of the seller. Meanwhile,his godown sets on fire and machine is destroyed.Can shyam claim loss of machine from ram?
No. Ownership of machine has been transferred to Shyam and machine get destroyed without any fault
of ram.
Team 4
• A transport company has resolved andtransferred 10 buses to a partnership firm,which consists of certain people who areowners of the company. Transfer was made ata particular price. Is it a contract of sale?
No person can sell his goods to himself.
Team 5
• A is an agent of foreign currency. B makes anagreement with him for purchasing 100pounds for Rs 7500. is contract of sales valid?
No. Currency cannot be sold or purchased.
Team 6
• Mohan and sohan agree that Mohan will sell hissecond hand car to Sohan at a price which willdetermined by a particular car mechanic. But thecar mechanic refused to do the job of pricefixation. On such refusal, can sohan compelMohan to sell that car for any other price?
No.
Team 7
• A purchased a machine for Rs. 50,000 from Bon installment payment basis. The payment isto be made in five equal monthly installments.A defaults in making the 3rd installment. Is Bentitled to get back the machine from A?
No.
Team 8
• X agrees to sell a horse to B on a conditionthat, B will keep it for six days on trail basis andhave the option to return on the expiry of 6 dayperiod, if he does not find it suitable. Threedays after, the horse dies due to illness withoutthe fault of A or B. Can this agreement beavoided.
yes