unit-3 CHAPTER 4 SALE OF GOODS ACT 1930

Originally, the law relating to sale of goods was contained in Chapter VII of the Indian Contract Act, 1872. The same was repealed and re-enacted by the Sale of Goods Act, III of 1930.

4.1 FORMATION OF THE CONTRACT OF SALE Definition

Section 4(1) of the Sales of goods Act, 1930 defines a contract of sale as under:

4(1) A 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. There may be a contract of sale between one part-owner and another. (2) A contract of sale may be absolute or conditional. (3) Where under a contract of sale the property in the goods is transferred from the seller to the buyer, the contract is called a sale, but where the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell, (4) An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to he transferred.

The essentials to constitute a contract are: 1. It is a contract between two parties, one known as the seller and the other as buyer. 1. The subject matter of a contract is goods. 2. The seller should transfer or agree to transfer the property in the goods to the buyer. 3. The transfer of property in the goods from the property to the buyer is for consideration known as price. A price is money paid or promised. 4. Mutual Consent 5. Parties competent to contract. It defines sale and agreement to sell. A contract of sale may be absolute or conditional. If under the contract of sale property in the goods is transferred from the seller to the buyer the contract is called a sale but where the transfer of the property in the goods is to take place at a future time or subject to some conditions thereafter to be fulfilled the contract is called an agreement to sell. The agreement to sell may become sale when the time elapses or the conditions, subject to which the property in the goods is to be transferred, are fulfilled.

SALES OF GOODS ACT, 1930.

Not everyone who agrees to buy or sell goods is fortunate enough to find that the transaction turns out to be good.

Introduction

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Those who are disappointed by the transaction may seek the help of law. This law is known as sales of goods act, which came into force on 1st July, 1930. Sale of Goods Act is one of very old mercantile law. Sale of Goods is one of the special types of Contract. Initially, this was part of Indian Contract Act. Later these sections in Contract Act were deleted, and separate Sale of Goods Act was passed in 1930. The Sale of Goods Act is complimentary to Contract Act. Basic provisions of Contract Act apply to contract of Sale of Goods also. Basic requirements of contract i.e. offer and acceptance, legally enforceable agreement, mutual consent, parties competent to contract; free consent, lawful object, consideration etc. apply to contract of Sale of Goods also. A 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. There may be a contract of sale between one part-owner and another. [section 4(1)]. A contract of sale may be absolute or conditional. [section 4(2)].
Sale is distinguished from agreement to sell The term contract of sale includes both actual sale and agreement for sale. It is important to distinguish both of them as an agreement to sell is also known as executor contract of sale and is a pure contract and a simple one whereas sale is as executed contract of sale is a contract plus a conveyance. A sale is a transfer of the absolute title to property for a certain agreed price. It is contract between two parties, one of whom acquires a property in the thing sold, and the other parts with it for a valuable consideration known as price. If there is no consideration for the goods then it is not sale but a gift because sale is only for a valuable consideration. And if there is exchange of goods for one another then it is barter and no sale. Sale takes place only when there is transfer of the title to property for a price. In the case of Firm of Sunder Singh v. Firm of Gulab Singh[2] it was held that where goods are sent through railway, the railway receipt being addressed to the consignor to be delivered to the purchaser only on receipt of the price for the goods, the property in the goods does not pass to the purchaser till the price is paid. An agreement to sell is a contract that defines a future sale, thus all conditions precedent and other terms like delivery, payment, etc, continue to be executory, that is are yet to be fully carried out. A breach of this contract could result in a court order of specific performance, or for damages caused by the loss of the opportunity to buy or sell. An agreement to sell is just that. A promise if you will, that you will sell something to someone.

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A sales contract is far more important and far more legal. If for example you want to purchase a new car, this contract that you and the dealer fill out is called a Sales Contract, and both parties are bound by what this contract says. A Contract of Sale is a generic term and includes both an actual sale, where the ownership in the goods passes to the buyer immediately when the contract is made, and an agreement to sell, where the ownership in the goods is to pass subsequent to the making of the contract. In the case of M.R.Dhawan V. Madan Mohan[3] it was held that in sale the property in the goods in transferred from the buyer to the seller. The important points of distinction between a sale and an agreement to sell are as follows: 1. If the property in the goods passes from the seller to the buyer at the time of making of the contract, it is known as sale; but if the passing of the property in the goods is postponed until some future time or fulfillment of certain conditions, it is an agreement to sell. It means that in case of sale the buyer becomes the owner of the goods at the time of making of the contract whereas in an agreement to sell, he is to become the owner of the goods at a later time.

In the case of Dwarka das Ayodhya v. Ram Ratan[4] it was held that on the sale of ascertained goods the property in the goods passes to the purchaser as soon as the contract of sale is made even though the delivery of the goods is postponed at his request and to suit his own convenience.

1. If after making the contract there is loss or damage to the goods, the question may arise as to which of the two parties has to bear the loss to the goods. According to the general rule contained in Section 26, the goods are at the risk of the person who is their owner at the relevant time. It means that in the case of sale, since the ownership in the goods has passed to the buyer, the loss to the goods has to be borne by the buyer. On the other hand, in the case of an agreement to sell, while the seller is still the owner of the goods, the loss has to be borne by him.

In the case of Firm of Ramdyal Ram Narain V. Firm of Bhairo Bux Gouridutta[5] it was held that where the goods are purchased on a condition that they would be damaged and subject to inspection and approval, there is an implied warranty that they are such as fall under the denomination of undamaged goods. The goods cannot be said to be ascertained until they are inspected and approved.

1. In case of sale, i.e., where the property in the goods has passed to the buyer, if he wrongfully neglects or
refuses to pay for the goods according to the terms of the contract, the seller may sue him for the price of the goods.2 In case of an agreement to sell, the seller being still the owner of the goods can dispose them of and, therefore, if the buyer wrongfully neglects or accept and pay for the goods, the seller may sue him for for non-acceptance.

Gulab Rai Sagar Mal. V. Nirbal Ram Nagar Mal[6] in this case a Manchester firm sent goods to India for defendant firm at Delhi, after shipment sent the drafts and shipping documents to the National bank of Delhi with directions for the delivery to the buyer on payment of the money to the Bank, held that the property in the goods did not pass to the buyer till the money was paid to the Bank.

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1. Sale is an executed contract, where there is a contract conveyance, whereas an agreement to sell is termed as contract, as it is contract pure and simple. In case of sale, seller breaks the engagement to deliver the goods or sells goods to a third party, the buyer may sue the seller not the breach of a contract but may also sue him for the conversion and detinue. The buyer has also a right in rem. In case of sale in many cases, he may follow the goods fiats hands of third parties. If there is a breach of agreement by the seller, then the buyer has only a right in personam, i.e. only a personal remedy against the seller.

In Union of India v. Thrachand[7], the defendants contracted to to the plaintiff all the coal-ash that might accumulate at a pump-house fora period of one year, from 15-6-1968 to 14-6-1969. ft found that the defendants unilaterally cancelled the contract and of allowing the plaintiff to remove the coal-ash, themselves co,: part of it and issued the remainder to third parties. The plaintiff sued the defendants not only for the breach of but also for the tort of conversion. It was held by the Madhya High Court that because the contract was for the sale of future sell was merely an agreement to sell and since the buyer had not yet the owner of the goods, the seller did not commit any tort of conversion. The only remedy recognized in this case was an action for breach of and refund of price which the buyer had paid to the seller. In the case of Md. Serujuddin v. State of Orissa[8] it was held that where a person has contracted to sell mineral ore to a corporation who entered into contract with a foreign buyer for sale of identical goods, purchased by corporation from the former person the sales by that person to the corporation were not in the course to the purchaser.

1. In a contract of sale, the seller has lost and cannot recover ownership of the thing until and unless the contract is resolved or rescinded whereas in an agreement to sell the title of the thing remains in the seller, and when he seeks to eject the buyer because of noncompliance by such buyer with the suspensive condition stipulated, he is only enforcing the contract and not resolving the same.

Wheels India Ltd. V. Khem Chand Raj Kumar[9] where the seller has property performed all his obligations with respect to the goods delivery to his career thus becomes delivery to the buyer for purpose of risk and title. Gopabandhu Type Foundry v. State of Orissa[10] it was held that unless both the parties are juristic persons, a supply of materials by one another cannot amount to sale. 1. In a contract of sale the title of the thing passes to the buyer upon the delivery of the thing sold and in an agreement to sell the ownership of the thing is reserved in the seller and is not to pass to the buyer untill the full payment of the price.

[1] (1971) 2 SCWR 535 [2] AIR 1927 Lah 269 [3] AIR 1969 Delhi 313 at p. 315 [4] 20 ALJ 579 [5] 1 Pat LR 398 [6] 4 Lah 423 AIR 1924 Lah 239 [7] AIR 1976 M.P. 101 [8] (1975) 2 SCC 47 [9] (1970) 2 Mad LJ 648 [10] (1970) 36 Cut LT 1156

(Section 4)
A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for price".

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ESSENTIALS OF CONTRACT OF SALE

From the above definition, the following essentials of a contract of sale may by noted: 1. There must be at least two parties 2. Transfer or Agreement to transfer the ownership of goods. 3. The subject matter of the contract must necessarily be 'goods'. 4. The consideration is Price. 5. A Contract of sale may be absolute or conditional 6. All other essentials of a valid contract must be present.

`SALE` AND 'AGREEMENT TO SELL' DISTINGUISHED

Sale: It is a contract where the ownership in the goods is transferred by seller to the buyer immediately at the conclusion contract. Thus, strictly speaking, sale takes place when there is a transfer of property in goods from the seller to the buyer. A sale is an executed contract. It must be noted here that the payment of price is immaterial to the transfer of property in goods. Ex A sells his Yamaha Motor Bicycle to B for Rs. 10,000. It is a sale since the ownership of the motorcycle has been transferred from A to B. Agreement to sell: It is a contract of sale where the transfer of property in goods is to take place at a future date or subject to some condition thereafter to be fulfilled. Ex(i) A agreed to buy from B a certain quantity of nitrate of soda. The ship carrying the nitrate of soda was yet to arrive. This is `an agreement to sale`. In this case, the ownership of nitrate of soda is to be to transferred to A on the arrival of the ship containing the specified goods (i.e. nitrate of soda) [Johnson V Mcdonald (1842) 9 M & W 600, 60 RR 838] (ii) On 1st March 1998, A agreed to sell his car to B for Rs. 80,000. It was agreed between themselves that the ownership of the car will transfer to B on 31 st March 1998 when the car is got registered in B`s name. It is an agreement to sell and it will become sale on 31 st March when the car is registered in the name of B. Other points of distinction between a sale and an agreement to sell are: Sale Agreement to sell 1. A sale is an executed contract. 1. An Agreement to sell is an executory contract. 2. In a sale, since the property has passed to the buyer, 2. In an agreement to sell, in case of breach, the the seller can sue the buyer for the price of the seller can only sue for damages, unless the price was goods. payable at a stated date. 3. A sale creates a right in rem. 3. An agreement to sell creates a right in 4. In case of loss of goods, the loss will fall on the personam. buyer, even though the goods are in the possession 4. The loss in this case shall be borne by the seller, of the seller. It is because 'Risk' is associated with even though the goods are in the possession of the ownership. buyer. 4. In case buyer pays the price and the seller thereafter becomes an insolvent, the buyer can claim the goods 5. In these circumstances, the buyer cannot claim from the Official Receiver or Assignee. the goods but only a rateable dividend for the money 6. If the buyer becomes an insolvent without paying the paid. price, the ownership having passed to the buyer, the 6. In these circumstances, the seller can refuse to seller shall have to deliver the goods to the Official deliver the goods to the Official Assignee or Receiver. Assignee or Receiver except where he has a lien over the goods.

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A sale and an agreement to sell can be distinguished as:i) Transfer of Property (Ownership): In a sale, the property in goods or the ownership is immediately transferred from the seller to the buyer. In an agreement to sell the property in the goods is not transferred immediately at the time of contract, but the ownership is transferred at a later time either at the expiry of a certain period or fulfillment of certain condition. Until then, the seller continues to be the owner of the goods. ii) Risk of Loss: The general rule is that, unless otherwise agreed, the risk of loss passes with property. In case of sale, if the goods are destroyed the loss falls on the buyer, even if the buyer is not in possession of goods because the ownership has been transferred. In an agreement to sell, the loss is to be borne by the seller because the ownership has still not passed on to the buyer, even if the buyer has possession of it. iii) Consequences of Breach: In case of sale, if the buyer fails or refuses to pay the price of the goods, the seller can sue for the price, even if he has the possession of goods. In an agreement to sell, if the buyer fails to accept and pay the price, the seller can sue him only for damages and not for the price, even if the goods in possession of the buyer. iv) Right of Resale: In a sale the property of goods is immediately transferred to the buyer and so the seller (even if the goods are in his possession) cannot result the goods. If the seller does so, the subsequent buyer cannot acquire the title to the goods. The original buyer can recover the goods from the third person and can also sue the seller for the breach of contract. In an agreement to sell, the seller can sell the goods to anyone as he has the property of goods and the new buyer gets the title of goods as he purchases the goods for consideration and without any notice of prior agreement. In such a case the original buyer can only sue for damages. v) Buyers Insolvency: In a sale, if the buyer becomes insolvent before he pays the price of the goods, the seller will have to deliver the goods to the official assignee or receiver and he can only claim dividend for the price of the goods. In an agreement to sell, if the buyer becomes insolvent and has not paid the price, the seller can refuse to deliver the goods to the official assignee or receiver until paid in full. vi) Sellers Insolvency: If the seller becomes insolvent then in case of sale the buyer is entitled to recover the goods from the official assignee of receiver since the ownership has been transferred to the buyer. In case of an agreement to sell, if the buyer has paid the full price, he can only claim a rateable dividend and not the goods because the property in the goods still rests with the seller. vii) Nature of Contract: A sale is an executed contract. An agreement to sell is an executary contract. viii) Types of Goods: A sale can only be in the case of existing and specific goods. An agreement to sell mostly takes place in the case of future and contingent goods.

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Distinguish between agreement to sell and sale
From the English definition of Contract of sale comprises of two things one is sale and other is agreement to sell. Having regard to the sharp distinction maintained in the Indian Act between Agreement and contract it is not desirable to use the expression agreement to sell. But now the chapter Sale of goods stands in the Indian Act, the expression sale contract of sale, contract for the sale of goods and agreement for sale are used more or less discriminately. It is so as to maintain a distinction between sale and contract of sale corresponding to with agreement to sell in the English Act.

The term sale has been separately defined in the Act C.I.T. V. Hind Construction Ltd.[1] The distinction between an agreement to sell and a sale is fundamental. The former is a contract pure and simple. At the time of the contract the property in the goods does not pass, but the buyer acquires a right in personam to the transfer of the property upon the happening of an event or the fulfillment of a condition. A sale on the other hand is more than a contract. Its effect is to transfer to the buyer forthwith a right in rem the property in the goods. Under an agreement to sell the seller remains the owner until the agreement to sell becomes a sale, under a sale the buyer becomes the owner forthwith. An agreement to sell and a sale are sometimes referred to as an executory contract of sale and an executed contract of sale respectively.

SALES In a sale, the property in goods sold passes to the buyer, so that the seller is no more the owner of goods.

AGREEMENT TO SELL If an sale, the buyer is declared insolvent before he pays for the goods, the seller, in the absence of lien over the goods, must deliver the goods to the official receiver and will be entitled to a rate able dividend for the price due.

A sale is an executed contract.

A sale is a contract plus conveyance, and creates JUS IN REM i.e. gives right to buyer to enjoy the goods.

If there is a loss of goods by an accident, in sale, the loss falls on the buyer even though the goods are with the seller.

unit-3 In an agreement to sell, the ownership of goods does not pass to the buyer at the time of contract so that the seller continuous to remain the owner of goods until the agreement to sell turns into actual sale by expiry of certain time or fulfillment of some conditions. Agreement to sell is an executory contract. An agreement to sell is a contract pure and simple, and thus creates JUS IN PERSONA ,i.e. ,gives a right to either buyer or seller against the other, for any default, in fulfilling his part of agreement. If there is a loss of goods by an accident, in agreement to sell, the loss as a rule, falls on the seller, even though the goods are in the possession of the buyer. If in an agreement to sell, the buyer is declared insolvent before he pays for the goods, the seller may refuse to deliver the goods unless paid for, as ownership has not passed to the buyer.

when agreement to sell become sale(1) A 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. There may be a contract of sale between one part-owner and another. (2) A contract of sale may be absolute or conditional (3) Where under a contract of sale the property in the goods in transferred from the seller to the buyer, the contract is called a sale, but where the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell. (4) An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred.
4. Sale and agreement to sell.- (1) A 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. There may be a contract of sale between one part-owner and another. (2) A contract of sale may be absolute or conditional (3) Where under a contract of sale the property in the goods in transferred from the seller to the buyer, the contract is called a sale, but where the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell. (4) An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred. 5. Contract of Sale how made -. (1) A contract of sale is made by an offer to buy or

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sell goods for a price and the acceptance of such offer. The contract may provide for the immediate delivery of the goods or immediate payment of the price or both, or for the delivery or payment by instalments, or that the delivery or payment or both shall be postponed. (2) Subject to the provisions of any law for the time being in force, a contract of sale may be made in writing or by word of mouth, or partly in writing and partly by word of mouth or may be implied from the conduct of the parties.

4. Sale and agreement to sell.- (1) A 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. There may be a contract of sale between one part-owner and another. (2) A contract of sale may be absolute or conditional (3) Where under a contract of sale the property in the goods in transferred from the seller to the buyer, the contract is called a sale, but where the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell. (4) An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred. 5. Contract of Sale how made -. (1) A contract of sale is made by an offer to buy or sell goods for a price and the acceptance of such offer. The contract may provide for the immediate delivery of the goods or immediate payment of the price or both, or for the delivery or payment by instalments, or that the delivery or payment or both shall be postponed. (2) Subject to the provisions of any law for the time being in force, a contract of sale may be made in writing or by word of mouth, or partly in writing and partly by word of mouth or may be implied from the conduct of the parties.

4.4 CONDITIONS AND WARRANTIES [Sections 11-17]

In a contract of sale, parties make certain stipulations, i.e., agree to certain terms. Some of them may be intended by the parties to be of a fundamental nature, e.g., quality of the goods to be supplied. The stipulation essential to the main purpose of the contract, the breach of which gives rise to a right to treat the contract as repudiated. Such stipulations are known as `Conditions`.

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In contrast, some may be intended by the parties to be binding, but of a subsidiary or inferior char acter, e.g., time of payment. Thus, 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. Here the stipulations are known as `warranties'.

DISTINCTION BETWEEN 'CONDITION' AND 'WARRANTY'

1.

Condition A condition is a stipulation (in a contract), which is essential to the main purpose of the contract. 2. A breach of condition gives the aggrieved party a right to sue for damages as well as the right to repudiate the contract. 3. A breach of condition may be treated as a breach of warranty in certain circumstances. 1.

Warranty A warranty is a stipulation, which is only collateral or subsidiary to the main purpose of the contract. 2. A breach of warranty gives only the right to sue for damages. The contract cannot be repudiated. 3. A breach of warranty cannot be treated as a breach of condition.

ExA man buys a particular horse, which is warranted quiet to ride and drive. If the horse turns out to be vicious, the buyer's only remedy is to claim damages. But if instead of buying a particular horse, a man asks a dealer to supply him with a quiet horse and the horse turns out to be vicious, the stipulation is a condition and the buyer can reject the horse, or keep the horse and claim damages.

WHEN CONDITION TO BE TREATED AS WARRANTY [SECTION 13]

Under the following circumstances a breach of condition is to be treated as a breach of warranty, i.e., the right to repudiate the contract is deemed to have been lost: 1. Waiver of Condition 2. Compulsory treatment of breach of condition as breach of Warranty.

EXPRESS AND IMPLIED CONDITIONS AND WARRANTIES

Conditions and Warranties may be either express or implied. They are said to be "express" when the terms of the contract expressly provide for them. They are said to be 'implied' when the law deems their existence in the contract even without their actually having been put in the contract.

(A) IMPLIED CONDITIONS

The following are the implied conditions (1) Condition as to Title (2) Sale by Description (3) Condition as to Quality or Fitness (4) Merchantable Quality Sale by sample - A contract of sale is a contract for sale by sample where there is a term in the contract, express or implied, to that effect. In a sale by sample, the following are the implied conditions: 1. The bulk shall correspond with the sample in quality; 2. That the buyer shall have a reasonable opportunity of comparing the bulk with the sample; and 3. That the goods shall be free from any defects rendering them unmerchantable, which would not be apparent on reasonable examination of the sample. Ex(i) Certain shoes were sold by sample for the French Army. The shoes were found to contain paper not discoverable by ordinary inspection. Held, the buyer was entitled to the refund of price plus damages. (ii) In a contract for the sale of brandy by sample, the brandy that was supplied had been coloured with a dye. Held, the buyer was not bound by the contract, though the bulk corresponded with sample, since the defect could not have been located on reasonable examination of the sample [Mody v. Gregson (1868) L.R.4Ex. 49.].

(B) IMPLIED WARRANTIES

There are two implied warranties. These are: 1. Warranty of Quiet Possession 2. Warranty of Freedom from Encumbrances Ex

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A purchased a second hand typewriter from B. A used it for sometime and also spend some money on its repairs. The typewriter turned out to be stolen one and as such A had to return it to the true owner. It was held that A could recover damages from B amounting to the price paid and the cost of repair [Mason v. Burmingham (1949) 2 KB 545]

4.5 DOCTRINE OF caveat emptor

Caveat Emptor is a fundamental principle of the law of sale of goods. It means "Caution Buyer", i.e. "Let the buyer beware". In other words, it is not the duty of the seller's duty to point out defects of his own goods. The buyer must inspect the goods to find out if they will suit his purpose.

ExPigs were sold "subject to all faults", and these pigs, being infected, caused typhoid to other healthy pigs of the buyer, it was held that the seller was not bound to disclose that the pigs were unhealthy. The rule of the law being 'Caveat Emptor'. [Goddard v. Hobbs 1878, 4 App. Cas. 13].

Exceptions
1. Where the seller makes a false representation and buyer relies on that representation. The rule of "Caveat Emptor" will not apply and the buyer will be entitled to the goods according to that representation; 2. Where the seller actively conceals a defect in the goods, so that on a reasonable examination the same could not be discovered; 3. Where the buyer makes known to the seller the purpose for which he is buying the goods, and the seller happens to be a person whose business is to sell goods of that description, then there is an implied condition that the goods shall be reasonably fit for such purpose. The rule of Caveat Emptor will not apply; 4. In case of sale by description, there is implied condition as to their being of merchantable quality. However, if the buyer has examined the goods, this condition of "merchantability" extends only to hidden or latent defects. The defects, which such examination ought to have revealed, are not covered, i.e., the rule of Caveat Emptor will be applicable. Ex In Donoghue v. Stevenson (the `snail in the ginger-beer `case) it was held that manufacturers owed a duty to the ultimate consumer to take care in making their goods where there is no likelihood of their being examined before they reach the ultimate consumer.

When does property pass from the seller to the buyer

(a) Specific or Ascertained goods - the property in the good is transferred to the buyer at such times the parties to the contract intend to be transferred or when something has to be done by the seller to put them in a deliverable state, property passes only when such thing is done, and the buyer has notice thereof. ExThe whole of the contents of a cistern of oil were sold, and the seller had to put the oil in casks to be then delivered to the buyer. Held, the property did not pass until the oil was actually put into casks ready for delivery and the buyer was notified accordingly. [Rugg v. Minett, 1809,11 East 2.101]. (b) Unascertained or Future Goods - property in the goods is not transferred to the buyer unless and until the goods are ascertained. ExX agrees to sell Y 200 quintals of wheat out or a larger quantity lying in X's store. The agreed price is to be paid on the day appointed under the contract. Unless and until the required quantity of 200 quintals is separated from the larger quantity and the goods have thus been ascertained, -property cannot pass from the seller to the buyer.

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Doctrine Of CAVEAT EMPTOR # The maxim Caveat Emptor means let the buyer beware.When the sellers display their goods in the open market, it is for the buyers to make a proper selection of the goods. Buyer cannot hold the seller liable if the goods turn out to be defective or do not suit his purpose or if the buyer makes a mistake in assessing the quality of goods. # i.e. the seller is not under the duty to reveal unflattering truths about the goods sold .therefore wen person buys some goods he should examine it throughly # if the goods turn out to be defective or does not meet his purpose ,he can't blame the seller. Section 16 of the Sale of Goods Act has enunciated this principle in the following words : Subject to the provisions of this Act or any other law for the time being in force, there is no implied warranty or of condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale. Example: 'A' purchased from 'B' basmati rice. 'B 'erroneously thought that the rice were new. The rice, in fact were old. Here, A cannot avoid the contract, as he depended on his own skill and judgment. Therefore, the rule of Caveat Emptor was applicable. The Doctrine of Caveat Emptor is, subject to the following exceptions :1.Implied condition as to quality or fitness Where the buyer has made known to the seller the purpose for which he requires the goods and depends on the seller's skill or judgment, there is an implied condition that seller will supply the goods which are fit for that purpose. Section 16(i) Example: A buys a black yarn from B and finds that it has been damaged by white ants. The condition as to merchantable quality is broken and therefore, the doctrine of caveat emptor does not hold good.
2.Sale of goods by description.. Where the goods are purchased by description from a seller, who deals in such class of goods, there will be an implied condition that the goods shall be of merchantable quality. Section 16(2) Example: English sainfoin seeds, duly exhibited by a sample, are sold. The bulk corresponds to the sample but the seeds supplied are giant sainfoins and not English sainfoin. There is a breach of condition as to description of goods. So the doctrine of caveat emptor is not applicable. 3.Usage of trade.. -

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An implied condition or warranty as to quality or fitness for a particular purpose may be annexed by the usage of trade and if the seller deviates from that, the rule of caveat emptor does not hold good. Section 16(1) Example: A dealer sells a refrigerator to Mohit. The refrigerator performs all other functions except making ice. This would amount to breach of an implied condition and thus the doctrine of caveat emptor will not work. 4.Consent by fraud.. When the buyer relies on false representation of the seller and suffers damages, i.e., in a contract where the buyer;s consent was obtained by the seller by fraud, the doctrine of caveat emptor will not hold good.

Example: A bought 3000 tins of preserved milk from U.S.A. The tins were labeled in such a way as to infringe the Nestl's trademark. As a result, they were detained by the custom authorities. To get the clearance certificate from the customs, A had to remove the labels and sell them at a loss. Now A can hold the seller responsible for fraud and claim damages.

4.6 TRANSFER OF TITLE BY NON-OWNERS [Sections 27-30]

Ex-

The general rule is that only the owner of goods can transfer a good title. No one can give a better title than he himself has. This rule is expressed by the maxim "Nemo dat quod non habet" which means "that no one can give what he himself has not" If the seller, therefore, has no title, or a defective title, the buyer's title will be equally wanting or defective as the case may be, though he may be a purchaser - bonafide and for value.

A finds a ring of B and sells it to a third person who purchases it for value and in good faith. The true owner, i.e., B can recover from that person, for A having no title could pass none the better. [Faruquaharson v. King (1902) A.C. 324.). Exceptions to the Rule

1. Sale by Mercantile Agent 2. Sale by a Joint-owner 3. Sale by a Person in Possession under a Voidable Contract 4. Sale by the Seller in Possession of Goods after Sale - Where a seller having sold goods, continues in possession
thereof or of documents or title to the goods, such seller will pass a good title to the (second) buyer, if that buyer has acted in good faith and without notice of the previous sale. 5. Sale by an unpaid seller - a seller who has exercised his right of lien or stoppage in transit can, resell the goods and convey a valid title to another buyer, though no notice of re-sale has been given to the original buyer.

6.

DUTIES OF THE SELLER AND BUYER

Duty of the seller a) To deliver the goods, in accordance with the terms of the contract of sale. b) Delivery and payment of price are concurrent conditions. c) The seller of goods has the duty of giving delivery according to the terms of the contract. Duty of the buyer a) Pay for the goods; b) Accept delivery; and c) Pay compensation to the seller in case he wrongfully refuses to accept delivery.

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4.7 UNPAID SELLER AND HIS RIGHTS
A contract is comprised of reciprocal promises, in a contract of sale, if seller is under an obligation to deliver goods; buyer has to pay for it. In case buyer fails or refuses to pay, the seller, as an unpaid seller, shall have certain rights. An unpaid seller of goods is a person who has not been paid the whole of the price or to whom the whole of the price has not been tendered. The term "seller" includes an agent of the seller. The seller of goods is deemed to be an "unpaid seller" if: (a) 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 an unpaid seller may broadly be classified under two heads namely: 1. Rights against goods An unpaid seller has the following rights against the goods:

Who is an unpaid seller

Rights of an unpaid seller

(a) Lien on the goods (b) A right of stoppage in transit (c) A right of re-sale
2. Rights Against the Buyer Personally An unpaid seller, besides his rights against goods, has the following rights against the buyer personally: (i) Right to sue for the price; and (ii) the right to sue the buyer for damages for non-acceptance.