salesofgoodsact1930-111121092602-phpapp02

7/29/2019 salesofgoodsact1930-111121092602-phpapp02

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Sale of Goods Act 1930
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Contd -

Act Deals with goods

Sec 4(1) contract of sale Contract of sale

of goods is a contract whereby the seller

transfers or agrees to transfer the property

in goods to the buyer for a price.
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Essential elements

Two parties - Seller and buyer

Goods

Transfer of property Price

Essential elements of a valid contract
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Contract of sale

Contract of salemaybe

Express

In writingBy word of

mouth

Partly in writingand partly by

word of mouth

Implied from theconduct of the

parties


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Contract of sale and agreement to

sell

Contract of saleincludes

Sale

i.e, where theownership of

goods istransferred

Agreement tosell

I.e., where the transfer of ownership ingoods is to take place at a future time orsubject to fulfillment of some condition


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Condition and warranties

Both seller and buyer make representations

to each other at the time of entering into

contract of sale.

Some of these representations are mere

opinions which do not form a part of the

contract of the sale. Whereas some become

part of the contract of sale
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Contd -

Representations which become part of the

contract of sale are termed as stipulations

which may rank as condition or warranty

Stipulation Sec 12(1) A stipulation in a

contract of sale of goods may be a condition

or warranty.
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Meaning of condition

A condition is a stipulation

(a) which is essential to the main purpose of the

contract

(b) the breach of which gives the aggrieved

party a right to terminate the contract.

It goes to the root of the contract.

Its non-fulfillment upsets the very basisof the contract.
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Warranty

It is a stipulation collateral to the main

purpose of the contract

It is of secondary importance

If there is a breach of a warranty, the

aggrieved party can only claim damages and

it has no right to treat the contract as

repudiated.
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Condition and warranties

There is no hard and fast rules as to which

stipulation is a condition and which one is a

warranty.

Whether a stipulation is a condition or a

warranty depends in each case on the

construction of the contract as a whole.

The court is not to be guided by the

terminology used by the parties to the

contract
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Basis of distinction

Condition

It is a stipulation which

is essential to the main

purpose of the contract. The aggrieved party can

terminate the contract

A breach of condition

can be treated as abreach of warranty . For

example, a buyer may

like to retain the goods

and claim only damages.

Warranty

It is a stipulation which is

only collateral to the main

purpose of the contract The aggrieved party can

claim damages but cannot

terminate the contract.

A breach of warrantycannot be treated as a

breach of condition.


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Conditions and warranties

Two kinds express and implied

Express conditions and warranties Conditions

and warranties expressly provided in the contract

Implied conditions They are implied by the lawinto the contract

Condition as to title

Sale by description

Sale by sample

Condition as to the quality of the items
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Conditions and warranties

Implied warranties

Warranty of quite possession

Warranty as to freedom from encumbrances Warranty to disclose dangerous nature of

goods
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Doctrine of caveat emptor

Let the buyer beware

It is the duty of the buyer to be careful while

purchasing goods of his requirement and in

the absence of the enquiry from the buyer,

the seller is not bound to disclose every

defect in the goods of which he may be

cognisant.
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Exceptions to the doctrine of

caveat emptor

In case of misrepresentation by the seller

In case of concealment of latent defect

In case of sale by description In case of sale by sample

In case of sale by sample and description

Fitness for a particular purpose Merchantable quality
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Passing of property Transfer of property in goods from the

seller to the buyer is the main object of acontract of sale.

property in goods means the ownership ofgoods

An article may belong to A although it maynot be in his possession. B may be in

possession of that article although he is notits owner.

It is important to know the precise momentof time at which the property in goods

passes from the seller to the buyer for the
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Contd -

Significance Time of transfer of ownership of

goods decides various rights and liabilities of the

seller and buyer.

Risk Owner to bear the risk and not the personwho merely hs the possession

Action against third party Owner can take action

and not the person who merely has possession.
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Types of goods

Goods

Existing

goods

Future

goods

Contingent

goods


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Types of existing goods

Specific goods

Ascertained goods

Unascertained goods Goods sent on approval or on sale on

return basis
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Primary rules

Goods must be ascertained Where there is acontract for the sale of unascertained goods, noproperty in the goods is transferred to the buyerunless and until the goods are ascertained.

Intention of the parties Where there is a contractfor the sale of specific or ascertained goods theproperty in them passes to the buyer at the timewhen the parties intend it to pass
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Contd -

Where the intention of the parties cannot be

ascertained from the contract-

Specific goods

Passing of the property at the time of the contract

Where there is an unconditional contract for the sale

of specific goods in a deliverable state, the property

in the goods passes to the buyer when the contract is

made.
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Contd-

Passing of property delayed beyond thedate of the contract

(1) Goods not in a deliverable state Where

there is a contract for the sale of specific goodsnot in a deliverable state,ie, the seller has to dosomething to the goods to put them into adeliverable state, the property does not pass

until such thing is done and the buyer hasnotice of it.


23/41

Contd -

(2) When the price of goods is to be ascertainedby weighing, etc. Where there is a contract forthe sale of specific goods in a deliverable state,but the seller is bound to weigh measure test orto do some other act or thing with reference tothe goods for the purpose of ascertaining theprice the property does not pass until such actor thing is done and the buyer has notice

thereof


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Contd -

Unascertained goods

Where there is a contract for the sale of

unascertained goods, the property in the goods

does not pass to the buyer until the goods areascertained. Until the goods are ascertained

there is merely an agreement to sell.
http://images.google.co.in/imgres?imgurl=http://www.consumerconnect.ie/images_upload/christmas_trolley.jpg&imgrefurl=http://www.consumerconnect.ie/eng/Hot_Topics/Tip_Of_The_Week/Tips_Archive/12_Tips_of_Christmas.html&usg=__CCyErMZedjUhbyq46ko3TX6M7ec=&h=135&w=94&sz=10&hl=en&start=181&tbnid=FAm3QE-W8Z4cQM:&tbnh=92&tbnw=64&prev=/images%3Fq%3Dsales%2Bof%2Bgoods%2Bact%26gbv%3D2%26ndsp%3D20%26hl%3Den%26sa%3DN%26start%3D180


25/41

Contd -

Where there is a contract for sale of

unascertained or future goods by description

and goods of that description and in a

deliverable state are unconditionallyappropriated to the contract, the property in

the goods thereupon passes to the buyer.

ascertainment of goods, unconditional

appropriation to the contract


26/41

Delivery to carrier

A seller is deemed to have unconditionally

appropriated the goods to the contract

where he delivers them to the buyer or to a

carrier or other bailee for the purpose oftransmission to the buyer and does not

reserve the right of disposal.
http://www.vca.gov.uk/images/goods-vehicle_4.jpghttp://www.made-in-china.com/image/2f0j00sMcEaYQGVubKM/Special-Goods-Transportation.jpg


27/41

Goods sent on approval or on

sale or return

When goods are delivered to the buyer on

approval or on sale or return or other

similar terms the property therein passes to

the buyer

(1) When he signifies his approval or

acceptance to the seller:

(2)When he does any other act adopting thetransaction
http://images.google.co.in/imgres?imgurl=http://www.ssrekhi.com/gifs/dvat.jpg&imgrefurl=http://www.ssrekhi.com/vat.html&usg=__6Occ6AZoMY3Q_piIol277UtdyZA=&h=116&w=122&sz=5&hl=en&start=287&tbnid=zpjs9RMCU6ZjyM:&tbnh=85&tbnw=89&prev=/images%3Fq%3DSales%2Bof%2BGoods%2BAct%26gbv%3D2%26ndsp%3D20%26hl%3Den%26sa%3DN%26start%3D280http://images.google.co.in/imgres?imgurl=http://www.ssrekhi.com/gifs/dvat.jpg&imgrefurl=http://www.ssrekhi.com/vat.html&usg=__6Occ6AZoMY3Q_piIol277UtdyZA=&h=116&w=122&sz=5&hl=en&start=287&tbnid=zpjs9RMCU6ZjyM:&tbnh=85&tbnw=89&prev=/images%3Fq%3DSales%2Bof%2BGoods%2BAct%26gbv%3D2%26ndsp%3D20%26hl%3Den%26sa%3DN%26start%3D280


28/41

Reservation of right of disposal

The property in goods whether specific or

subsequently appropriated to the contract

does not pass to he buyer if the seller

reserves the right of disposal of goods untilcertain conditions are fulfilled.


29/41

Rights of an unpaid seller

Meaning of an unpaid seller Sec 45(1)(2)

The seller of the goods is deemed to be anunpaid seller -

(a) When whole of the price has not been paid ortendered

(b) When a bill of exchange or other negotiableinstrument (such as cheque) has been received asconditional payment and it has been dishonoured

[sec 45(1)]
http://images.google.co.in/imgres?imgurl=http://www.consumeractiongroup.co.uk/forum/user-pics/customavatars/avatar189595_2.gif&imgrefurl=http://www.consumeractiongroup.co.uk/forum/high-street-stores/124102-help-my-rights-under.html&usg=__J2MVH4umvEV_IgUbNSYzUcyv53E=&h=68&w=80&sz=2&hl=en&start=304&tbnid=-hjDNwX59KHJdM:&tbnh=63&tbnw=74&prev=/images%3Fq%3DSales%2Bof%2BGoods%2BAct%26gbv%3D2%26ndsp%3D20%26hl%3Den%26sa%3DN%26start%3D300http://images.google.co.in/imgres?imgurl=http://static.desktopnexus.com/avatars/guest.gif&imgrefurl=http://www.arnoldclarkforum.com/forums/viewtopic.php%3Ff%3D16%26t%3D150&usg=__Z87Od1VzVCIaewh4oP5Rz1m7b48=&h=50&w=50&sz=2&hl=en&start=281&tbnid=5GkCsVdO59NXRM:&tbnh=50&tbnw=50&prev=/images%3Fq%3DSales%2Bof%2BGoods%2BAct%26gbv%3D2%26ndsp%3D20%26hl%3Den%26sa%3DN%26start%3D280


30/41

Contd -

The seller shall be called an unpaid seller evenwhen only a small portion of the price remainsto be paid.

It is for the non-payment of the price and notfor other expenses that a seller is termed as anunpaid seller.

Where the goods have been sold on credit, theseller cannot be called as an unpaid sellerduring the credit period unless the buyer

becomes insolvent. On the expiry of creditperiod if the price remains unpaid, then onlythe seller will become an unpaid seller


31/41

Contd -

Where the full price has been tendered by

the buyer and the seller refused to accept it,

the seller cannot be called as an unpaid

seller.
http://images.google.co.in/imgres?imgurl=http://www.ethics.ohio.gov/images/people.gif&imgrefurl=http://www.ethics.ohio.gov/EducationandPublicInfo_EIEB.html&usg=__BaL9yejaUy0tRqpqjqO6GtLD1zY=&h=178&w=210&sz=10&hl=en&start=546&tbnid=Z8ciM9JLFKiCFM:&tbnh=90&tbnw=106&prev=/images%3Fq%3DSales%2Bof%2BGoods%2BAct%26gbv%3D2%26ndsp%3D20%26hl%3Den%26sa%3DN%26start%3D540


32/41

Rights of an unpaid seller

Against goods

Against buyer personally

AGAINST GOODS

Where the property in

goods has passed to

the buyer

Where the property

in goods has not

passed to the buyer


33/41

Contd -

Where the property in goods has passed to

the buyer

Right of

lien

Right of

stoppage intransit

Right ofresale
http://www.made-in-china.com/image/2f0j00sMcEaYQGVubKM/Special-Goods-Transportation.jpghttp://www.made-in-china.com/image/2f0j00sMcEaYQGVubKM/Special-Goods-Transportation.jpg


34/41

Right of lien

The right of lien means the right to retainthe possession of the goods until the fullprice is received.

Circumstances under the right of lien can beexercised

Where the goods have been sold without anystipulation to credit

Where the goods have been sold on credit, but theterm of credit has expired

Where the buyer becomes insolvent


35/41

Right of stoppage of goods in

transit

Right of stoppage in transit means the rightof stopping the goods while they are intransit, to regain possession and to retain

them till the full price is paid. Conditions under which Right of stoppage in

transit can be exercised

(i)Seller must have parted with the possessionof goods,ie, the goods must not be in thepossession of the seller


36/41

Contd -

(ii) the goods must be in course of transit

(iii) buyer must have become insolvent
http://images.google.co.in/imgres?imgurl=http://www.companyrescue.co.uk/partnership-rescue/guides/images/iStock_000003580772XSmall.jpg&imgrefurl=http://www.companyrescue.co.uk/partnership-rescue/guides/insolvent.aspx&usg=__gSSjBi9lUNNopeCu5V-RrHnDa_g=&h=424&w=283&sz=138&hl=en&start=2&tbnid=JQz6t9Ki2f7V5M:&tbnh=126&tbnw=84&prev=/images%3Fq%3DInsolvent%26gbv%3D2%26hl%3Den%26sa%3DGhttp://www.made-in-china.com/image/2f0j00sMcEaYQGVubKM/Special-Goods-Transportation.jpg


37/41

Right of resale

An unpaid seller can resell the goods under the

following circumstances:

(i) Where the goods are of a perishable nature

(ii) Where the seller expressly reserves the right ofresale if the buyer commits a default in making

payment

(iii)Where the unpaid seller who has exercised his right

of lien or stoppage in transit gives a notice to the buyerabout his intention to resell and buyer does not pay or

tender within a reasonable time.
http://images.google.co.in/imgres?imgurl=http://farm3.static.flickr.com/2158/1541147915_bde810ff9a_b.jpg&imgrefurl=http://bangalore-city.blogspot.com/2007_10_01_archive.html&usg=__huM6sPqiAauZLCQdx38DUEev1s0=&h=769&w=1024&sz=410&hl=en&start=147&tbnid=e9Vg-nzXbYULfM:&tbnh=113&tbnw=150&prev=/images%3Fq%3DSales%2Bof%2BGoods%2BAct%26gbv%3D2%26ndsp%3D20%26hl%3Den%26sa%3DN%26start%3D140http://images.google.co.in/imgres?imgurl=http://farm3.static.flickr.com/2158/1541147915_bde810ff9a_b.jpg&imgrefurl=http://bangalore-city.blogspot.com/2007_10_01_archive.html&usg=__huM6sPqiAauZLCQdx38DUEev1s0=&h=769&w=1024&sz=410&hl=en&start=147&tbnid=e9Vg-nzXbYULfM:&tbnh=113&tbnw=150&prev=/images%3Fq%3DSales%2Bof%2BGoods%2BAct%26gbv%3D2%26ndsp%3D20%26hl%3Den%26sa%3DN%26start%3D140


38/41

Contd -

Where the property in goods has not passed

to the buyer

Withholding

delivery Lien Stoppage in

transit

Resale
http://images.google.co.in/imgres?imgurl=http://www.dupagedoubles.com/Resale8.jpg/Resale8-full%3Binit:.jpg&imgrefurl=http://www.dupagedoubles.com/clothing%26equipmentsale2&usg=__By91505g_M-lyYF3WLNjm6c7ezw=&h=1200&w=1600&sz=417&hl=en&start=9&tbnid=RYcuIVZx-szGGM:&tbnh=113&tbnw=150&prev=/images%3Fq%3Dresale%26gbv%3D2%26hl%3Den%26sa%3DGhttp://images.google.co.in/imgres?imgurl=http://comps.fotosearch.com/comp/phd/PHD162/notice-right-lien_~25281.jpg&imgrefurl=http://www.fotosearch.com/PHD162/25281/&usg=__hTl3dpI41t3KbvrFKtK3DKQz7LE=&h=218&w=300&sz=17&hl=en&start=4&tbnid=9AWj62LQbk9acM:&tbnh=84&tbnw=116&prev=/images%3Fq%3Dright%2Bof%2Blien%26gbv%3D2%26hl%3Den%26sa%3DG


39/41

Contd -

Against the buyer personally

Suit for

price

Suit for

damages

Suit for

interest
http://images.google.co.in/imgres?imgurl=http://delhilawyerslive.com/site/MyImages/civil.jpg&imgrefurl=http://delhilawyerslive.com/site/page002.aspx&usg=__gwM2umKDaOHm_6zCEY5gb7TLddU=&h=244&w=360&sz=36&hl=en&start=17&tbnid=3eepoabo_XUu2M:&tbnh=82&tbnw=121&prev=/images%3Fq%3DSuit%2Bfor%2Bdamages%26gbv%3D2%26hl%3Den%26sa%3DG


40/41

Contd -

Buyers suits

(a) Suit for damages for non-delivery of the

goods

(b) suit for specific performance

Suit for breach of warranty

(d)Suit for interest

(e)Suit for damages for repudiation of contractby the seller before the due date.

d f b h f
http://images.google.co.in/imgres?imgurl=http://www.cartoonstock.com/lowres/hsc1641l.jpg&imgrefurl=http://www.cartoonstock.com/directory/s/slander.asp&usg=__s4-rllz8OEmtpjqAz2kvUtdH9Gs=&h=319&w=400&sz=22&hl=en&start=20&tbnid=KRe8Xcg03uOCnM:&tbnh=99&tbnw=124&prev=/images%3Fq%3DSuit%2Bfor%2Bdamages%26gbv%3D2%26hl%3Den%26sa%3DGhttp://images.google.co.in/imgres?imgurl=http://delhilawyerslive.com/site/MyImages/civil.jpg&imgrefurl=http://delhilawyerslive.com/site/page002.aspx&usg=__gwM2umKDaOHm_6zCEY5gb7TLddU=&h=244&w=360&sz=36&hl=en&start=17&tbnid=3eepoabo_XUu2M:&tbnh=82&tbnw=121&prev=/images%3Fq%3DSuit%2Bfor%2Bdamages%26gbv%3D2%26hl%3Den%26sa%3DG


41/41

Remedies for breach of contract

of sale

(1) sellers suits

(a) Suit for price

(b) Suit for damages for non acceptance of the

goods

(c) Suit for damages for repudiation of contract

by the buyer before the due date

(d) Suit for interest.
http://images.google.co.in/imgres?imgurl=http://www.cartoonstock.com/lowres/hsc1641l.jpg&imgrefurl=http://www.cartoonstock.com/directory/s/slander.asp&usg=__s4-rllz8OEmtpjqAz2kvUtdH9Gs=&h=319&w=400&sz=22&hl=en&start=20&tbnid=KRe8Xcg03uOCnM:&tbnh=99&tbnw=124&prev=/images%3Fq%3DSuit%2Bfor%2Bdamages%26gbv%3D2%26hl%3Den%26sa%3DGhttp://images.google.co.in/imgres?imgurl=http://delhilawyerslive.com/site/MyImages/civil.jpg&imgrefurl=http://delhilawyerslive.com/site/page002.aspx&usg=__gwM2umKDaOHm_6zCEY5gb7TLddU=&h=244&w=360&sz=36&hl=en&start=17&tbnid=3eepoabo_XUu2M:&tbnh=82&tbnw=121&prev=/images%3Fq%3DSuit%2Bfor%2Bdamages%26gbv%3D2%26hl%3Den%26sa%3DG

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