The Sales of Goods Act Unit 3

By: Vijit Mittal Asst. Prof. NIET, NBS

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INTRODUCTION
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1930 and sections 76 to 123 were repealed from The Indian Contract Act.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.

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 money b) Movable property other than goods

DEFINATION
According 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

ESSENTIAL ELEMENTS OF THE ACT

BUYER AND SELLER

ESSENTIAL ELETMENTS OF VALID CONTRACT

GOODS

PRICE
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TRANSFER OF PROPERTY

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

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.

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 .

CONDITION AND WARRANTIES

CONDITION :-

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.

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 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.
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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.
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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. Vijit Mittal (NBS, Gr. Noida) 4/10/2014

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C. TRANSFER OF PROPERTY
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
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Rights of Unpaid seller

Section 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.
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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.

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Negotiable instrument act

Negotiable 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.

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Nature of Negotiable instrument act

Characteristics of a Negotiable Instrument:
i. ii.

iii.
iv.

v.

It must be in writing. It must be signed by the maker/drawer. It must involve payment of money only. There must be an unconditional promise or order to pay. They are transferable by delivery or by endorsement and delivery.
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Types of Negotiable instrument

i. Promissory notes ii. Bills of Exchange iii. 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
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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.

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Negotiation and assignments

Easy transferability is one of the important

characteristics of a negotiable instrument. An instrument may be transferred: 1. By assignment, or 2. 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.
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Holder in Due Course

The 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

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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 Vijit Mittal (NBS, Gr. 4/10/2014 obligated to Noida) pay the original obligation to C.

Arbitration
Arbitration, 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

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