Unit 3 Sale of Good Act

By:Vijit MittalAsst. Prof.NIET, NBS

05/03/23Vijit Mittal (NBS, Gr. Noida)1

The Sales of Goods Act Unit 3

INTRODUCTION

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Before The Sales of Goods Act, transactions relating to sales and purchase of goods were regulated by The Indian Contract Act 1872.

The Indian Sales Of Goods Act was passed in 1930 and sections 76 to 123 were repealed

from The Indian Contract Act.

Cont. It came into force on 1st July 1930 and w.e.f 22nd

Sept. 1963 the word Indian was removed and now the present act is called The Sales Of

Goods Act 1930.

This act extends to whole of INDIA except the state of Jammu n Kashmir.

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Sales of Goods Act does not Deals with:-

MORTAGAGE(which is dealt with under the Transfer of

Property Act,1882)PLEDGE(which is dealt under The Contract Act,1872)This Act deals with goods but not with:-a)Movable property e.g actionable claim or

moneyb)Movable property other than goods

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DEFINATIONAccording to Section 4(1) of The Sales of

Goods Act,1930.“contract of sales of goods is a contract

whereby the seller transfer or agrees to transfer the property in goods to

the buyer for a price”Contract of Sale is a generic term ,which

includes both sales and an agreement to sell

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ESSENTIAL ELEMENTS OF THE ACT

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A.BUYER AND SELLER“BUYER”

means a person who buys or agrees to buy good.[Section 2(1)]

“SELLER” means a person who sells or agrees to sell

the good.[Section 2(13)]

A person cannot be a buyer as well as a seller as a person cannot buy his own goods

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B. GOODS“GOODS” means every type of movable

property other than actionable claim n money but it can include stock and

shares,crops,lands etc.

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Cont.ACTIONABLE CLAIM:- It means which

can be enforced through the courts of Law, e.g. debt due.

MONEY:- means the legal tender i.e. the currency of the country but not old coins .

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CONDITION AND WARRANTIESCONDITION :-

It is defined in the following words, "A condition is stipulation essential breach to the main purpose of the contract, the breach of which give rise to a right to treat the contract as repudiated."

So according the above definition it is clear that condition is very essential for the performance of a contract. The breach of condition will be regarded as the breach of the whole contract.


WARRANTY :-Sales act defines the warranty in the following words, "A warranty is a stipulation collateral to the main purpose of the contract the breach of which gives rise to a claim for damages but not to a right to reject the goods and treat the contract as repudiated."

The above definition shows that for the implementation of a contract warranty is not essential. For the breach of warranty only damages can be claimed.


Difference between condition and warranty 1. Difference In Importance :-

Condition : A condition is essential to the main purpose of a contract.

Warranty : Breach of warranty gives right to the party to claim the damage only.

2. Difference in Rights :-

Condition : Breach of condition gives right to the party to reject the contract.

Warranty : Breach of warranty gives right to the party to claim the damages only.


Difference cond:3. Superiority of Condition :-

Condition : A breach of condition may be treated as a breach of warranty.Warranty : A breach of warranty may not be treated as a breach of condition.

4. Link With Contract :-Condition : A condition has a direct link with the essential party of the contract.

Warranty : A warranty has no direct link with the essential part of the contract.05/03/23Vijit Mittal (NBS, Gr. Noida)13

C. TRANSFER OF PROPERTY

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“PROPERTY” means the general property in goods, and not merely a special property.

General property in goods means ownership of the goods

Special property on the goods means possession of the goods

Thus, there may be either a transfer of ownership of goods or an agreement to transfer of the goods. The ownership may transfer either immediately on completion of sale or something in future in agreement to sell

Rights of Unpaid sellerSection 45. ‘Unpaid seller defined 1. The seller of goods is 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 dishonour of the instrument or otherwise.


Rights of unpaid seller(a) a lien on the goods for the price

while he is in possession of them;(b) in case of the insolvency of the

buyer a right of stopping the goods in transit after he has parted with the possession of them ;

(c) a right of resale as limited by this Act.


Negotiable instrument actNegotiable Instruments Act, 1881

‘Instrument’ means any written document by which a right is created in favour of some person.

‘Negotiable Instrument’ means a document transferable from one person to another.


Nature of Negotiable instrument actCharacteristics of a Negotiable

Instrument:

i. It must be in writing.ii. It must be signed by the maker/drawer.iii. It must involve payment of money only.iv. There must be an unconditional promise

or order to pay.v. They are transferable by delivery or by

endorsement and delivery.05/03/23Vijit Mittal (NBS, Gr. Noida)18

Types of Negotiable instrument

i. Promissory notesii. Bills of Exchangeiii. Cheques

Promissory Note is an instrument in writing (not being a bank or a currency note) containing an unconditional undertaking, signed by the maker to pay a certain sum of money to, or to the order of, a certain parson or to the bearer of the instrument


Bills of Exchange (Section 5):A Bill of Exchange is an instrument in writing containing an unconditional order signed by the maker, directing a certain person to pay a certain sum of money only to or to the order of a certain person or to the bearer of the instrument

Cheques (Section 6):A cheque is a bill of exchange drawn on a specified banker, and not expressed to be payable otherwise than on demand.


Negotiation and assignmentsEasy transferability is one of the important

characteristics of a negotiable instrument. An instrument may be transferred:

1. By assignment, or2. By negotiation.1. Transfer by assignment:A negotiable instrument can also be

transferred by assignment. Assignment means transfer of ownership by a written document under the provisions of the Transfer of Property Act, 1882.


Holder in Due CourseThe Holder in Due Course (HDC) doctrine is a rule

in commercial law that protects a purchaser of debt, where the purchaser is assigned the right to receive the debt payments. The doctrine insulates the purchaser of debt, or other obligation to pay, against charges that either party to the original transaction might have had against the other.

Suppose A promised to pay money to B in exchange for services. B then transferred the right to payment to C. C is then insulated from any consequence arising from a conflict between A and B. Suppose A sues B for non-performance of service. C is insulated from any remedy A receives against B. A is still obligated to pay the original obligation to C.


http://en.wikipedia.org/wiki/Non-performing_loan

ArbitrationArbitration, a form of alternative dispute

resolution (ADR), is a technique for the resolution of disputes outside the courts, where the parties to a dispute refer it to one or more persons (the "arbitrators", "arbiters" or "arbitral tribunal"), by whose decision (the "award") they agree to be bound. It is a resolution technique in which a third party reviews the evidence in the case and imposes a decision that is legally binding for both sides and enforceable


Unit 3 Sale of Good Act

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