THE SALE OF GOODS ACT, 1930

Subject (105) LEGAL ASPECTS OF BUSINESS

RMD SINHGAD SCHOOL OF MANANGEMENT STUDIES

SYLLABUS
Contract for Sale of Goods - Meaning Essentials of a Contract of Sale Formalities of a Contract of Sale - Provisions relating to conditions and Warranties Provisions relating to transfer of property or ownership - Provisions relating to performance of Contract of Sale - Rights of Unpaid Seller Rules as to delivery of goods
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INTRODUCTION & SCOPE

Initially, this Act was known as, Indian Sale of Goods Act In 1963, the name Indian was dropped by making an amendment This Act is applicable to all states of India, except Jammu & Kashmir The sale of immovable goods is not controlled by this Act
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ESSENTIALS FOR SALE OF GOODS

TWO PARTIES GOODS PRICE ESSENTIAL TERMS OF A VALID CONTRACT TRANSFER OF GOODS Unless all these elements are present there would be no sale.
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ESSENTIAL TERMS OF VALID CONTRACT

LAWFUL OFFER ACCEPTANCE OF OFFER FREE CONSENT LAWFUL CONSIDERATION LAWFUL OBJECT CERTAINTY OF TERMS

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TYPE OF GOODS
EXISTING GOODS Specific Goods, Ascertained Goods, Generic / Unascertained Goods FUTURE GOODS CONTINGENT GOODS

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EXISTING GOODS 1
EXISTING GOODS Specific Goods, Ascertained Goods, Generic / Unascertained Goods Specific Goods are those goods which are identified & agreed upon, at the time of sale Goods identified or which become ascertained subsequent to formation of contract of sale are called as Ascertained Goods
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EXISTING GOODS 2
Goods which are not identified or which become ascertained subsequent to formation of contract of sale are called as Generic or Unascertained Goods

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TYPE OF GOODS (Contd..)

FUTURE GOODS They are those goods, which are yet to be manufactured CONTINGENT GOODS Goods which are under uncertain contingency or in transit

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AGREEMENT TO SELL 1
Where the transfer of property in the goods is to take place at a future time or subject to some conditions thereafter to be fulfilled, then the contract is called as; an agreement to sell. Section 4(3) clearly defines the difference between a Sale & Agreement to Sell.

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AGREEMENT TO SELL 2
An agreement to sell becomes a sale when the time elapses; all the conditions are fulfilled subject to which the property in the goods is to be transferred.

The liability to pay sales tax arises only when there is an actual sale, not an agreement to sell

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Section 4(1) SALE

The 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 certain price.

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CONTRACT OF SALE
The essential object of the contract of sale is the exchange of property for a price, which is decided and agreed by both parties.

There must be a transfer of property or an agreement to transfer it, from one party, the seller, to the other, the buyer, in consideration of payment of money.
To complete the Contract of sale, the owner must pass the title of those goods to the buyer.
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DIFFERENCE BETWEEN SALE & AGREEMENT TO SELL

POINT OF DIFFERENCE NATURE OF CONTRACT SALE Its an executed contract AGREEMENT TO SELL Its an executory contract

TRANSFER OF OWNERSHIP
TYPE OF GOODS / NATURE OF PROPERTY TRANSFERED CONSEQUENCES OF BREACH RISK OF LOSS

Property in goods passes to buyer immediately

It takes place in case of existing & specific goods only If buyer fails to pay the price, the seller can sue for the price

No actual transfer of property at time of contract

It takes place in case of future & contingent goods

In this case, the seller can sue for damages only

The buyer automatically The seller remains the becomes the owner, so he is owner, so he is responsible responsible for all the for all the losses lossesTHE SALE OF GOODS ACT, 1930 LAB 14

A SALE & A EXCHANGE

Barter Exchange, that is exchange of property for something other than money is not a sale. An allotment of goods among partners on dissolution of partnerships is not a sale.

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DIFFERENCE BETWEEN A SALE & EXCHANGE

SALE SOME AMOUNT OR CONSIDERATION IS PAID TO OBTAIN A PARTICULAR PRODUCT EXCHANGE ONLY IF AN EXCHANGE OF GOODS IS MADE WITHOUT ANY TRANSFER OF MONEY
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SALE & HIRE-PURCHASE AGREEMENT

In such a contract, the seller agrees to transfer the goods to the hire-purchaser on the payment of the certain sum in certain fixed number of installments.

But if hirer fails to pay any installment, then seller can terminate that contract.

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DIFFERENCE BETWEEN A SALE & HIRE-PURCHASE

POINT OF DIFFERENCE NATURE SALE Ownership is transferred from seller to buyer as soon as they enter into a contract HIRE-PURCHASE Ownership is transferred from seller to buyer only when a certain number of installments are paid as per the contract

TERMINATION OF CONTRACT PRICE

The buyer is not entitled The hirer has the option to terminate the contract. to terminate contract at any time. The buyer pays the price The buyer pays the price immediately in installments
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SECTION 12 CONDITIONS & WARRANTIES

A Condition is a stipulation essential to the main purpose of the contract. A Warranty is a stipulation collateral to the main purpose of the contract. When a Condition is breached, it gives right to cancel the contract. When a Warranty is breached, the buyer can only claim for the damages.
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DIFFERENCE BETWEEN A CONDITION & WARRANTY

POINT OF DIFFERENCE PURPOSE DIFFERENCE AS TO BREACH DIFFERENCE AS TO TREATMENT DAMAGES CONDITION It is essential for the main purpose of the contract WARRANTY It is only a collateral to the contract

In case of breach, the buyer In case of breach, the buyer can cancel the contract & can sue for damages sue for damages Breach of condition is treated as breach of contract If there is breach of condition, the buyer has an option to claim damages, instead of repudiating the contract
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Breach of warranty is not treated as breach of contract In case of breach of warranty, the buyer can in no way can terminate contract, he can only claim for damages
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WARRANTY & GUARANTEE

WARRANTY If the product is found defective, then the product will be repaired within given time period of the warranty. GUARANTEE If the product is found defective, then the product will be replaced with new one, if it is within given time period by the Guarantor.
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When Condition is treated as Warranty

Voluntary waiver of condition Section 13 Section 42 Acceptance of goods by the buyer a) When the buyer intimates the seller that, he has accepted the goods b) When the goods have been delivered to the buyer & he does any act in relation to goods that are inconsistent with their contract c) After a lapse of a reasonable time
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EXPRESS & IMPLIED CONDITIONS & WARRANTIES

Express conditions & warranties are those which have been expressly agreed upon parties at the time of contract of sale & mentioned in the contract. Section 14 Implied conditions & warranties are those which law incorporates into the contract, unless the parties stipulate the contrary. Eg. Change in title
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IMPLIED CONDITIONS
Condition of Title Change in the title of the goods, from seller to the buyer Sale by Description under Sec. 15, when the goods are sold by description, the goods must be of that particular description Sale by sample it must imply that a) The goods in bulk correspond the sample b) The buyer must have reasonable time to inspect the goods
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SECTION 16 CAVEAT EMPTOR

It means, Let the buyer beware A buyer cannot held the seller responsible & liable, if the buyer makes any mistake in assessing the quality of goods purchased. The buyer must examine the goods thoroughly before buying the goods. He cant just rely on the skills of the seller, in this matter. If done so by the buyer, he cant blame the seller for the faulty goods.
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SECTION 64 AUCTION SALE

Only when the goods are put up for sale It takes place only when there are multiple buyers for a product The bidding process starts after the setting of Base Price Bids can only be equal or more than the Base Price

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SECTION 64 AUCTION SALE

Bidders can revise and re-submit their bids any time before the fall of hammer Bid is complete when the hammer is allowed to fall No bidder can make changes in the bid after the fall of hammer

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Section 45(1) UNPAID SELLER

A seller is deemed to be Unpaid seller when The goods must have been sold by the seller & the price must be due from the buyer Seller must be unpaid either wholly, or partly Seller must have not refused payment, when it was tendered by the buyer The negotiable instrument sent by the buyer, is dis-honoured
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RIGHTS OF UNPAID SELLER

RIGHTS AGAINST THE GOODS - Where property in goods has passed - Where property of goods is not passed RIGHTS AGAINST THE BUYER PERSONALLY
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RIGHTS AGAINST THE GOODS

a) Where property in goods has passed Right of stoppage of goods in transit, Right of Lien*, Right of resale b) Where property of goods is not passed
*Lien To retain the possession of
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RIGHTS AGAINST THE GOODS Where property in goods has passed

Right of stoppage of goods in transit The seller has right to stop the delivery of goods Right to Lien It is the right to retain the possession of goods until the payment of the price of such goods Right to Resale The seller can acquire those goods back & resale them
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RIGHTS AGAINST THE GOODS Where property in goods has not passed

Withholding the delivery of goods Stoppage in transit

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RIGHTS AGAINST THE BUYER PERSONALLY

SUIT FOR PRICE SUIT FOR DAMAGES REPUDIATION (Cancellation) OF CONTRACT SUIT FOR CONTRACT

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THANK YOU!!!

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