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PERFORMANCE OF

CONTRACT RELATED

WITH SALE OF GOODS ACT

Jappanjyot

PERFORMANCE OF CONTRACT

Performance of contract takes place when the parties to the contract fulfil their obligations arising under the contract within the time and in the manner prescribed. Sec 37 lays down that the parties to a contract must either perform or offer to perform

their respective promises, unless such performance is dispensed with or excused.

TENDER OR OFFER OF PERFORMANCE

Tender is an part of offer.

Tender is not a contract. It should be legal & free consent.

BY WHOM CONTRACT MUST BE PERFORMED

By the promisor By the agent By the representative By the third person

TIME AS THE ESSENCE OF THE CONTRACT

  • when time is the essence of the contract

  • when time is not the essence of the contract

CONTRACT OF SALE OF GOODS

A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property to goods to the buyer for a price. There may be a contract of sale between one part owner and another [Sec. 4(1)]. A contract of sale may be absolute or conditional [Sec. 4(2)].

The term “contract of sale” is a generic term and includes both a sale and an agreement to

sell.

SALE AND AGREEMENT TO SELL

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 conditions thereafter to be fulfilled, the

contract is called an “agreement to sell” [Sec. 4(3)].

ESSENTIALS OF A CONTRACT OF SALE - The

following essential elements are necessary for a contract of sale:

  • TWO PARTIES: There must be two parties .i.e., a buyer and a seller, to

effect a contract of sale and they must be competent to contract . Buyer means a

person who buys or agrees to buy goods. Seller means a person who sells or

agrees to sell goods. These two terms are complimentary.

Example

A partnership firm was dissolved and the surplus assets, including

.... the stock-in-trade, were divided among the partners, in same form. Held, it was not a sale as the partners themselves were the joint owners of the goods and they

could not be both sellers and buyers.

  • GOODS: There must be some goods the property in which is or to be

transferred from the seller to the buyer. The goods which form the subject-matter of the contract of sale must be movable. Transfer of immovable property is not

regulated by the Sale of Goods Act.

  • Example

....

A hotel company provided residence and food making a

consolidated charged for both the services. No rebate was allowed if food was not taken by the customers. Held, supply of good was not sale of goods but simply a service as the transaction was an indivisible Excise & Taxation Officer, A.I.R.

  • PRICE: The consideration for the contract of sale, called price, must be money.

When goods are exchanged for goods, it is not a sale but a barter. There is, however,

nothing to prevent the consideration from being partly in money and partly in goods.

  • Example

....

A agreed to exchange with B 100 quarters of barley at £ 2 per quarter

for 52 bullock valued at £ 6 per bullock and the difference in cash . Held, the contract was a contract of sale.

TRANSFER OF GENERAL PROPERTY: There must be a

transfer of general property as distinguished from special property in goods from the seller to the buyer. If A owns certain goods, he has general property in the goods. If he pledge them B, B special property in the goods.

  • ESSENTIAL ELEMENTS OF A VALID CONTRACT: All

the essentials elements of a valid contract must be present in the contract of sale.

SUBJECT-MATTER OF CONTRACT OF SALE

GOODS FORM THE SUBJECT-MATTER OF A CONTRACT OF SALE:

Goods means kind of movable property other than actionable claims and money;

it also includes stocks and shares, growing crops, grass.

ACTIONABLE CLAIMS AND MONEY, ARE NOT GOODS: It means a claim to any debt or any beneficial interest in movable property not in possession.

It is something which can only be enforced by action in a court of law.

CLASSIFICATION OF GOODS:

  • 1. Existing goods

    • Specific goods

    • Ascertained goods

    • Unascertained or generic goods

      • 2. Future goods

      • 3. Contingent goods

      • 4. Contingent and future goods

EFFECT OF DESTRUCTION OF GOODS:

Goods perishing before making of contract

Example: A agrees to sell a horse to B who tells A that he (B) needs the horse for riding to Mumbai immediately. The horse is ill at the time of the agreement. Both A and B are ignorant of this fact. So, this contract is void.

Goods perishing after the agreement to sell but before the sale is effected

Example: A agrees to sell to B 10 bales of cotton out of 100 bales lying in his godown. The godown had been destroyed by fire at the time of contract. Both A and B are unaware of this fact. The contract is not void as the sale here is not of specific goods, but of a certain

quantity of unascertained goods. A must supply 10 bales of cotton or pay damages for the

breach.

DOCUMENT OF TITLE TO GOODS

A document of title to goods is one which enables its possessor to deal with the goods described in it as if he were the owner. It is used in the ordinary course of business as proof of the possession or control of goods.

CONDITIONS TO BE FULFILLED BY A DOCUMENT OF TITLE TO GOODS

1)

It must be used in the ordinary course of business.

2)

The undertaking to deliver the goods to the possessor of the document must be

unconditional.

3)

The possessor of the document, by virtue of holding such document, must entitled to receive the goods unconditionally.

Some instances of documents of title to goods are given below:

  • Bill of lading

  • Dock warrant

  • Warehouse-keeper’s certificate

  • Railway receipt

  • Delivery order

Bill of lading: It is a document, which acknowledgement receipt of goods on board a ship and is signed by the captain of the ship or his duly authorised representative.

Dock warrant: It is an document issued by the dock owner, giving details of the goods and certified that the goods are held to the person named in it. It authorises the person holding it to receive possession of the goods.

Warehouse-keeper’s certificate: It is a document issued by a warehouse-keeper stating that the goods specified in the document are in his warehouse.

Railway receipt: It is a document issued by the railway company acknowledging receipt of goods.

Delivery order: It is a document containing an order by the owner of the goods to the holder of goods on his behalf, asking him to deliver the goods to the person named in the document.

THE PRICE

The price in a contract of sale means the money consideration for sale of goods. It forms an essential part of the contract. It must be expressed in money. It is not essential that the price should be fixed at the time of sale. It must, however, be payable, though it may not have been fixed.

STIPULATION AS TO TIME

Stipulation as to time in a contract of sale may be---

Stipulation relating to time of payment: these are not the essence of a contract of sale, unless a different intention appears from the contract.

Stipulation not relating to time of payment, e.g., delivery of

goods, etc. As regards these stipulation, time may be of the essence of the contract but this essentially depends on the terms of the contract. In a contract of sale, stipulation other than those relating to the time of payment are regarded as of the essence of the contract. Thus, if a time is fixed for the delivery of goods, the delivery must be made at the fixed time, otherwise the other party is entitled to put an end to the contract.

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