The ‘Unpaid Seller’ is the most

sought after person by the

lawyers

Presented by
Liana Deboo (18)
Vinka Garg (21)
Shray Jain (26)
Deven Rao (41)
Priyen Sangoi (42)
Namrata Shah (50)
Shashi Tikiani (55)(18)
 Focus Areas
 Sale of goods

 Conditions and Warranties

 Transfer of Property

 Performance of Contract

 Rights of an Unpaid Seller

Sale of Goods
 A seller transfers or agrees to transfer
the property in goods to the buyer for a
price


 Special features
 Conditions and Warranties
 When does ownership get transferred
from seller to buyer
 Unpaid seller
 Remedies of the buyer if goods are not
delivered



 Essentials of a contract of sale
 Two parties (buyer and seller)
 Goods(movable)
 Price
 Transfer of general property
 Essential elements of a valid contract

 Goods & Price
 Classification of goods
› Existing goods, future goods, specific goods,
unascertained goods
 Effect of destruction of goods
› Goods perishing before making a contract
› Goods perishing after agreement of sale but
before sale is affected
 Price
› Ascertainment of price (fixed, left to be
fixed, determined by course of dealing)
› Agreement to select valuation (3rd party
fixing the price)

 Sale v/s Agreement to sell
Sale
Transfer of property Executed
Type of goods Existing and specific
Risk of loss On buyer
Consequences of breach Seller can sue the buyer
General & particular property Buyer’s right to enjoy the
goods
Insolvency of buyer Buyer to return to official
receiver/ assignee
Insolvency of seller Buyer to recover from official Buyer can only claim a
receiver/ assignee
Agreement to sell
Executory
Future and contingent goods
On seller
Seller can sue only for
damages, not for price
Buyer’s right to sue seller for
damages
Buyer not bound to part with
goods until paid for
rateable dividend
 Other concepts
 Hire purchase agreement
 Barter or Exchange
 Bailment
 Contract for work and material
 Documents of title to goods
 Earnest
 Stipulations as to time

Conditions and Warranties
  WARRANTY
 CONDITION
 

 A condition is a  A warranty is a
stipulation which is stipulation which is
essential to the main
purpose of the collateral to the main
contract purpose of the
 If there is a breach of a contract
condition, the  In case of a breach of a
aggrieved party can
repudiate the contract warranty, the
of sale aggrieved party can
 A breach of a condition claim damages only
may be treated as a  A breach of a warranty
breach of a warranty.
This would happen cannot be treated as
when the aggrieved the breach of a
party is contented condition
with damages only
 When can a condition be
treated as a warranty??

 Voluntary waiver of condition
 Where a contract of sale is subject to any condition
to be fulfilled by the seller, the buyer may
(a)Waive the sale or
(b)Elect to treat the breach of condition as a breach of
warranty
 Acceptance of goods by buyer
 When the buyer has accepted the goods or part
thereof, the breach of any condition to be fulfilled
by the seller can only be treated as a breach of
warranty, unless there is a term in the contract to
the contrary

 Express and Implied
Conditions and Warranties

 Express conditions and warranties are
those which are expressly provided in
the contract


 Implied conditions and warranties are

those which the law implies into the
contract unless the parties stipulate
to the contrary
 Implied Conditions
1. Condition as to title
There is an implied condition on the part of the seller that
(a) In the case of a sale, he has a right to sell the goods, and
(b) In the case of an agreement to sell, he will have a right to sell
the goods at the time when the property is to pass


2. Sale by Description


 Sale of goods by description includes the following situations:

(a) When the buyer has not seen the goods, and relies on the
description given by the seller
(b) When the buyer has seen the goods, but he relies not on what
is seen but on what is stated to him and the deviation of the
goods from the description is not apparent
(c) Packing of goods may sometimes be a part of the description
 3. Condition as to quality or fitness


 The buyer must examine the goods thoroughly before he buys

them in order to satisfy himself that the goods will be suitable
for its purpose
However,

(a) Where the buyer, makes known to the seller the particular
purpose for which he needs the goods and depends upon his
skill and judgment, there is an implied condition that the goods
shall be reasonably fit for that purpose
(b) If the buyer purchases an article and is suffering from an
abnormality and it is not made known to the seller, it does not
apply
(c) If a buyer purchases an article under patent, the implied
condition does not apply, unless the buyer relies on the seller’s
skill and makes known to the seller that he so relies on him
(d) In case the goods can be used for a number of purposes, the
buyer must tell the seller the particular purpose for which he
requires the goods.


4. Condition as to Merchantability
 Where goods are bought by description from a seller who deals in
goods of that description ,there is an implied condition that the
goods are of merchantable quality
 Merchantable quality implies that goods are commercially
saleable under that description by which they are known in the
market at full value.


5. Condition implied by Custom

 An implied condition as to quality or fitness for a particular
purpose may be annexed by the usage of trade



 6.Sale by Sample
 In case of a contract for sale by sample, there is an implied
condition –
(a)That the bulk shall correspond with the sample in quality,

(b)That the buyer shall have a reasonable opportunity of

comparing the bulk with the sample

(c)That the goods shall be free from any defect.

 (applies to latent defects only)



7.Condition as to Wholesomeness
 In the case of eatables and provisions, in addition to the
implied condition as to merchantability, there is another
implied condition that the goods shall be wholesome
 Implied Warranties
Warranty of quiet possession
 In a contract of sale, there is an implied warranty
that the buyer shall have and enjoy quiet possession
of the goods
 Warranty of freedom from encumbrance
 The buyer is entitled that the goods are not subject to

any charge or right in favour of a third party.

 Warranty as to quality or fitness by usage of trade
 Warranty to disclose dangerous nature of goods

 CAVEAT EMPTOR
 Meaning “Let the Buyer Beware”


 Exceptions
Ø Fitness for buyer’s purpose
Ø Sale under a patent or trade name
Ø Merchantable quality
Ø Usage of trade
Ø Consent by fraud
Transfer of Property
Property, Possession And Risk
 Property, Possession And Risk
3 Stages in performance of a contract
of sale of goods by a seller
 1. Transfer of property in the goods
 2. Transfer of possession of the goods
 3. Passing of the RISK.

 Importance of time at which
property in goods passes from
seller to the buyer

1. Risk follows ownership

2. Action against third parties
3. Insolvency of the seller or the buyer
4. Suit for price
 Passing the Property

 Rules for ascertaining when property in
goods passes to the buyer


 1. Goods must be ascertained

 2. Intention of the parties

 Passing the Property
 Rules when the intention of the parties is
unascertainable as to when the property
of goods to be transferred to the buyer
 1. Specific Goods
 (i)Passing of property at the time of
contract
 (ii)Passing of property delayed beyond
date of contract
 * Goods not in deliverable state
 * Price of goods to be ascertained by
weight
 Passing the Property
2. Unascertained goods
Pre conditions for transfer of property

a. Ascertainment of goods
b. Appropriation to the contract


3. Goods sent on approval or `on sale or return’

The property passes to the buyer when:

a. Buyer signifies approval to seller

b. Does an act adopting transaction
c. Keeps the goods for the fix time or reasonable
time
 Sale By Non owners

 “No one can give that which one has not got”

Exceptions

1.Sale by a person not the owner

2.Sale by a mercantile agent

3.Sale by one of several joint owners

4.Sale by person in possession under a voidable contract

5.Sale by seller in possession after sale

6.Sale by buyer in possession having bought or agreed to

buy
7.Sale by an unpaid seller

8.Exception in other Acts

Performance of contract
 Delivery of goods
 Delivery means voluntary transfer of
possession of goods from one person to
another
 3 Types in which goods can be delivered


a)Actual Delivery


b)Symbolic Delivery


c)Constructive Delivery or Delivery by



Attornment
 Rules as to Delivery of
goods
1. Mode of delivery
2. Deliver & Payment-concurrent

conditions
3. Effect of part delivery

4. Buyer to apply for delivery

5. Place of Delivery

6. Time of delivery

7. Goods in possession of a third party

8. Cost of delivery

 Rules as t o Delivery of goods
9. Delivery of wrong quantity
a)Delivery of goods less than contracted
for
b)Delivery of goods more than contracted
for
c)Delivery of goods contracted for mixed
with other goods
10. Instalment deliveries

11. Delivery to a carrier or wharfinger

 Acceptance of delivery

 The buyer is deemed to have accepted the

goods-
 When he intimates the seller that he has
accepted the goods
 When the goods have been delivered to
him and he does any act to them which
is inconsistent with ownership of seller
such as re-sell, use or alteration
 When, after the lapse of reasonable time,
he retains the goods without intimating
the seller that he has rejected them

 Buyer’s liability for rejection,
neglecting or refusing delivery

 In case of rejection ,it is sufficient for the buyer to
intimate to the seller the same. If the seller
refuses to take away the goods, the buyer
becomes the bailee and may charge for keeping
them
 In case of neglecting or refusing the delivery, the
buyer is liable for
a) Any loss occasioned by his neglect or refusal
b) A reasonable charge for the care and custody of the
goods


 The seller may sue for price and damages on where

the refusal of the buyer to take delivery amounts
to repudiation of contract
 Rights of the buyer

1.Right to have delivery as per contract

2. Right to reject the goods

3. Right to repudiate

4. Right to notice of insurance

5. Right to examine

6. Right against the seller for breach of contract

 a)Suit for damages

 b)Suit for price
 c)Suit for specific performance
 d)Suit for breach of warranty
 e)Repudiation of contract before due date
 f) Suit for interest
 Duties of the buyer

1. Duty to accept the goods and pay for them in

exchange for possession
2. Duty to apply for delivery
3. Duty to demand delivery at a reasonable hour
4. Duty to accept installment delivery and pay
for it
5. Duty to take risk in the course of transit
6. Duty to intimate the seller where he reject the
goods
7. Duty to take delivery
8. Duty to pay price
9. Duty to pay damages for non-acceptance
RIGHTS OF AN UNPAID
SELLER
Who is an unpaid seller?
1.
2. A seller of goods is deemed to be an
unpaid seller when:-
3. 1) The whole of the price is not
paid/tendered.
4. 2) A bill of exchange or other negotiable
instrument has been received as a
conditional payment, and the condition
on which it was received has not been
fulfilled by reason of the dishonor of
the instrument or otherwise.
5.
6. Conditions to be fulfilled before a seller of
goods can be deemed to be an unpaid
seller:
7. 1) He must be unpaid and price must be
due.
8. 2) He must have an immediate right of
action for the price
 RIGHTS OF AN UNPAID SELLER AGAINST
THE GOODS
 RIGHT OF LIEN [ SEC.46(1)(a)&47 TO 49]

Available to unpaid seller when :-
1) Goods sold without stipulation as to credit

2) Goods sold on credit, but term expired

3)The buyer becomes insolvent

ü Rules regarding lien :-

1)Seller exercises lien as agent
2)Lien depends on actual possession and not on title

3)Possession of goods by seller not expressly exclude right of

linen
4)Exercised only for price & not other charges

5)Exercise right of linen on remainder part of goods

ü Termination of lien :-
1)Delivers goods to a carrier, without reserving right of
disposal
2)If buyer lawfully obtains possession of goods

3)Waives his right of linen on goods either expressly or



 Right of stoppage in transit [sec.46(1)(b)&50-

52]


 - It is available as :-

a) When buyer becomes insolvent. b) When goods are in transit.
 - Duration of transit (sec. 51)
 Transit is an intermediate stage, from time they are delivered to a
 carrier till received by buyer from such carrier.


 - Transit comes to end

1)If buyer/agent takes delivery of goods before they arrive at destination
2)After arrival carrier acknowledges to buyer

3)Carrier wrongfully refuses to deliver goods to buyer/agent

4)Part delivery of goods done to its buyer

- How stoppage in transit is effected

1)By taking actual possession of goods

2)By giving notice of his claim to carrier

 - Liability of carrier



  Distinction between right of lien and right of
stoppage in transit
 1)
Stoppage in transit - when buyer is insolvent
 Right of lien - when the buyer is able to pay but does not pay.
2) Right of lien – on goods in actual possession of the seller
 Stoppage in transit - goods are in possession of a middleman.
3) Right of lien – ends when possession of goods surrendered by
seller
 Stoppage in transit – ends when goods have left the possession
of seller.
4) Right of lien – to retain possession
 Stoppage in transit - to regain or resume possession.


 Right of re-sale
 The unpaid seller can re-sell the goods :
 1) where the goods are of perishable nature
 2) when exercised his right of lien or stoppage in transit & given
notice to the buyer of his intension to re-sell the goods and the
buyer has not within a reasonable time paid the price.
 3) seller expressly reserves a right of re-sale when buyer makes
 Right of withholding delivery
 Rights of an unpaid seller against the buyer
personally :


1) Suit for price [sec.55]:-a) where the property has passed
 b) where property has not passed
2) Suit for damages for non-acceptance [sec.56]

3) Repudiation of contract before due date [sec.60]

4) Suit for interest [sec.61(2)(a)]

 Remedies for breach of contract of

sale
1) Seller’s Suits
2) Buyer’s Suits

 AUCTION SALES
 - A sale by auction is a public sale where different intending buyers try to
outbid each other which is finally sold to highest bidder. The auctioneer
who sells the goods by auction is an agent of seller. His relationship with
owner is governed by general principles of law.
 The law on auction sales is in Sec.64 of sale of goods act.
 Rules of auction sales
1) Goods put up for sale in lots
2) Completion of sale
3) right of seller to bid
4) Sale not notified subject to a right to bid
5) Reserve price
6) Use of pretended bidding
7) Knock out or agreement not to bid against each other
 Damping
 - It is an illicit act dissuading the intending purchaser from bidding,
it is illegal and entitles the auctioneer to withdraw the property
from auction.
Thank You