UNIT -2

Sales of Goods Act

1) Introduction to act:

It is sec-4 “A contract of sale of goods is a contract where by the seller

transfers or agrees to transfer the property in goods to a buyer for a price”.

2) Sale and agreement to sell-distinction:

There are 8 types

i. Nature of contract

ii. Transfer of property

iii. Risk of loss

iv. Consequences of the breach

v. Insolvency of the buyer

vi. Insolvency of the seller

vii. General and particular property

viii. Right of re-sale

i. Nature of contract:

An agreement to sell is an executor contract, is a contract pure and simple and

no property passes whereas a sale is an executed contract plus a conveyances

ii. Transfer of property:

In sale the property in goods passes from seller to buyer immediately and buyer

becomes the owner of the goods immediately.

But in an agreement to sell the property in goods possess from seller to buyer

at some future date or subject to the fulfillment of certain conditions.

iii. Risk of loss:

If the goods are destroyed, the risk of loss falls on the seller and the risk passes

with the ownership.

iv. Consequence of the breach:

If the buyer fails to accept the goods the seller may sue for damages only and

not for the price and seller may sue for him the price.

v. Insolvency of the seller:

Seller becomes insolvent; the buyer is entitled to recover the goods. If the

buyer has already paid the price and the seller becomes insolvent, the buyer can

calim only a rate able dividend and not the goods.

vi. Insolvency of the buyer:

Buyer is adjudged an insolvent, where the buyer becomes insolvent before he

pays for the goods, the seller may not part with the goods.

vii. General and particular property:

The agreement of sale creates a right with which only the contracting parties

are concerned and not the whole world.

The buyer gets an absolute right of ownership and this right of the buyer is

recognized by the whole world.

viii. Right of re-sale:

The seller cannot resell the goods even if he is in possession of the goods after

seller.

The seller may sell the goods since ownership is with the new buyer gets good

title.

3) Conditions and warranties:

“A stipulation in a contract of sale with reference to goods which are subject

matter thereof may be a condition or a warranty. “

I. Conditions (sec 12(2)):

“A condition is a stipulation essential to the main purpose of the contract, the

breach of which give to a right to treat the contract as repudiated.”

II. Warranties (sec 12(3)):

“A warranty is stipulation collateral to the main purpose of the contract, the

breach of which rise to a claim for damages but not a right rejects the goods and

treatthe contract as repudiated.”

4) Rights of unpaid seller:

The sale of goods act has expressly given two kinds to an unpaid seller of

goods, namely-

a) Against the goods:

When the property in the goods has passed

i) Right of lien

ii) Right of stoppage of goods in transit

iii) Right of re-sale

b) Against the buyer personally:

i) Right to sue for price

ii) Right to sue for damages

iii) Right to sue for interest