Instructor: Muhammad Talal Akbar Course: Business Law

Outlines

Introduction Definition Classification of Goods

Formation of Contract

Exiting Goods Future Goods Contingent Goods

Essential of Contract Sell and an Agreement to Sell Difference

Introduction

Originally, the law relating to sale of goods was contained in Chapter VII of the Contract Act, 1872. The same was repealed and re-enacted by the Sale of Goods Act 1930. Allows parties to agree to any term they like Consideration must only by way of price(money) Subject matter of contract of sale must be goods

Definition
(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.

In other words, a contract to transfer the ownership of goods from the seller to the buyer is known as contract of sales.

Definition

Goods

Goods are things you can buy that you can touch.
Can

you buy apples? Can you touch apples? Then the apples are goods Term Two

Buyer means a person who buys or agrees to buy goods Seller means a person who sells or agrees to sell goods Price means the money consideration for a sale of goods

Can you tell the difference between a good and a service?

Classification of Goods

Existing goods
Specific

goods Unascertained goods

Future goods

Contingent goods

Classification of Goods

Existing goods: are such goods as are owned or possessed by the seller at the time of making of contract.
Or

Goods which are physically in existence and are in possession of seller at time of sale

These goods are further divided into:

specific goods- these are the goods which are actually identified and agreed by the parties at the time of contract of sale. Specific car, cow, laptop Unascertained goods- not specifically identified or ascertained at the time of contract of sale. A has 100 bags of sugar. A promises to sell 10 bags of sugar out the them. It is a contract of unascertained goods.

Classification of Goods

Future goods: Goods to be manufactured or produced or

acquired by the seller after making of the contract of sale are called future goods. The seller can only make the contract an agreement to sell the future goods.

A agrees to sell B all the milk that his cow may yield during coming year

Contingent goods: The acquisition of goods by the seller

depends upon the uncertain contingencies A contract of sale of contingent goods is enforceable when the event happens on which its performance depends.

A agrees to sell B all the fish in his fishing boat, when it arrives A agrees to sell to B a rare painting if he is able to purchase it from its present owner. This is a contract of sale of contingent goods.

Essential of Contract

Two Parties Transfer of Property Goods Price Sale/Agreement to Sell Formalities to be observed

Essential of Contract

Two parties. There must be two distinct parties to a contract of sale i.e. a buyer and a seller.

A person cannot buy his own goods. There may be a contract of sale between one Part-owner and another A sells his computer to B for Rs.40,000. A is the seller and B is the Buyer.

Transfer of property. Property here means Ownership

A mere transfer of possession of goods cannot be termed as sale A sells his car to B for Rs.800,000. The ownership and possession of the car will transfer from A to B. If the ownership is not transferred then it is not the sale of contract either the possession of car has transferred to the other party.

Essential of Contract

Goods. The subject-matter of contract of sale must be goods

Goods means every kind of movable property other then actionable claims and money Actionable claims means claims which can be enforced by a legal action or suit. e.g., account book, bill of exchange or a promissory note Money means current money. A sells his car to B for Rs.800,000. The ownership and possession of the car will transfer from A to B. It is a contract of sale because the subject matter of contract is car and i.e. movable.

Essential of Contract

Price. The consideration for a contract of sale must be money consideration called the price.

If goods sold or exchanged for the other goods will governed by Transfer of Property Act not by Sale of Goods Act. Ali sells his horse to B against Bs promise to give 100 ton of wheat. It is not a contract of sales.

Include both Sale & an Agreement to Sell

Sale (immediate transfer of ownership).

Agreement to sell (parties are agree but transfer of goods will occur in future ). A agree to buy Bs car for Rs.200,000 if his mechanic approves the car. It is an agreement to sell.

Essential of Contract

No formalities to be observed.

Sale of good act dose not prescribe any particular form to constitute a valid contract of sale.
It is made by mere offer and acceptance. Offer could be made by either party and accepted by other. Neither payment nor delivery is necessary at time of making the contract of sale C verbally promises to sell his laptop to B. it is a contract of sale if the parties are competent to contract and all essential of contract have been fulfilled.

Sale and Agreement to sell

Property in the goods is transferred from the seller to the buyer SALE

Transfer of the property in the goods is to be taken place at some future date or after fulfillment of some condition,
AGREEMENT TO SALE

Agreement to Sell

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 31st March 1998 when the car is got registered in B`s name. It is an agreement to sell and it will become sale on 31st March when the car is registered in the name of B

Difference between Sale and Agreement to Sell

Details Transfer of Property Sale the property in goods passes from seller to buyer immediately. Agreement to Sell Property in goods passes from seller to buyer at some future date or subject to fulfillment of certain condition. Future and contingent goods the seller may sell the goods since ownership is with the seller. if goods are destroyed the risk of loss falls on a seller even if the goods were in the possession of buyer

Types of Goods Nature of Rights

Existing and specific goods the seller cannot resell the goods even if he is in possession of goods after sale. if the goods are destroyed, the risk of loss falls on the buyer even if the goods were in the possession of seller

Risk of Loss

Difference between Sale and Agreement to sell

Details Consequence of Breach Sale If the buyer fails to pay the price of the goods, the seller can sue for the price, even though the goods are in the possession of seller. Agreement to Sell If the buyer fails to pay the price the seller can sue for damages and not for the price, even thought the goods are in the possession of buyer.

Right of Resale

The ownership transfer to buyer The owner can re sell the so the owner can not resell the goods to the new buyer. But goods. the original buyer can sue for the breach of contract. Executed Contract if the seller becomes insolvent, the buyer is entitled to recover the goods from the official receiver or assignee Executory Contract if the buyer has already paid the price and the seller becomes insolvent ,buyer can claim only for price not for the goods.

Nature of contract Insolvency of the seller

Questions/Discussions

Question One
Discussion Discussion

Question Two

Discussion Discussion

Questions Three