SALE OF GOODS ACT,

1930
a contract whereby the seller
transfers or agrees to transfer the
property in goods to the buyer for
a price - Sec 4(1)
There may be a sale between one
part owner and another.
A contract of sale may be absolute
or conditional depending upon the

ESSENTIALS OF A
CONTRACT OF SALE
1. Two Parties
2. Goods
3. Transfer of Ownership
4. Price
5. Essentials of a valid contract
6. Includes both sale and
agreement to sell

 Two Parties: Bilateral contract, property

in goods to pass from one person to
another, different parties.
Goods: Sec2(7) every kind of movable
property.
Transfer of Ownership: agreement by
seller to transfer ownership to buyer.
Price: Consideration in money
Essentials of a valid contract
Includes both sale and agreement to sell

Sale and agreement to sell

distinguished
Sale

Agreement to sell

Transfer of Ownership:
Ownership in goods
transfers immediately.

Ownership to be
transferred at a future
time subject to fulfillment
of certain conditions.

Nature of contract:
Executed contract
Nature of rights of buyer:
Creates jus in rem
Consequences of breach:
Seller may sue for price,
even when delivery not
done

Executory contract

Jus in personam
Can only sue for damages,
even when goods in
possession of buyer

Sale

Sale and Bailment

Bailment

Title and Possession

Title in goods passes
from seller to buyer
immediately with or
without possession

Ownership not
transferred, only
possession transferred.
Bailor- bailee for
specific purpose

Return of goods: Buyer

in no obligation to
return goods

Bailee is under
obligation to return
goods

Relevance of
consideration:
monetary consideration

Gratitous/non-gratitous
bailment

Right of goods: Buyer

is absolute owner

Bailee to follow
instructions of bailor

Hire Purchase
agreement
a contract of hiring under which
owner delivers his goods on lease
basis to a person called hirer, but
in addition gives hirer an option to
purchase goods at the end of hiring
period.

SALE

Sale and Hire Purchase

agreement
HIRE PURCHASE AGREEMENT

Transfer of Ownership
Executed contract
Position of Buyer: Like
an owner of goods
Right to terminate:
Buyer cannot
terminate and bound
to pay agreed price
Mode of contract:
Oral/writing
Sale of goods Act,
1930

Executory contract
Like a bailee till last
installment paid
Hirer may terminate
contract and return
goods
Always written
Hire Purchase Act,
1972

Sale and Contract for work

and labour
A contract of sale involves the
passing of property in goods and
ultimate possession thereof to
buyer for a price.
A contract of work and labour
involves the exercise of skill and
labour by one party on some goods
or materials supplied by another.
The party exercising is paid for
work. At times materials also belong
to party applying skill and labour.
Principal object not to supply

Classification of Goods
1. Existing goods (goods owned or
possessed by seller at the time
of entering the contract of
sale)- Specific, Ascertained, un
ascertained goods
2. Future goods (goods that have
to be manufactured, produced
or acquired by seller after
making of contract of sale)
3. Contingent

goods

(whose

PRICE
Price means monetary consideration
for sale of goods- Sec 2(10)
Sale distinguished from a gift
Price is a prerequisite
Price should be paid or promised
Can also be by Negotiable
instrument- Cheque, Bill of
Exchange, Promissory Note
Important is money consideration not
mode of payment

CONDITIONS AND
WARRANTIES
A condition is a stipulation which
is essential to the main purpose
of the contract. IT goes to the
root of the contract.
Non-fulfillment upsets the very
basis of the contract.

 A warranty is a stipulation which

is collateral to the main purpose
of the contract.
It is no so vital as compared to
the condition.

 Whether
a
stipulation
in
a
contract of sale is a condition or
warranty depends in each case on
the construction of the contract as
a whole.
A stipulation may be a condition
though called a warranty in a
contract.

Difference between
condition and warranty
Difference as to value:
A condition is a stipulation
essential to the main purpose of
the contract.
A warranty is a stipulation which
is collateral to main purpose of
contract.

 Difference as to breach:
If there is a breach of a
condition, the aggrieved party
can repudiate the contract of
sale.
In case of breach of warranty,
the aggrieved party can claim
damages only.

Difference as to
treatment
A breach of condition may be
treated as a breach of warranty.
This
would
happen
when
aggrieved party is content with
damages only. A breach of
warranty, however, cannot be
treated as a breach of condition.

 Express and Implied

Conditions

Express and Implied

Warranties

Implied Conditions

Condition as to title:
Sale by Description
Condition as to quality or fitness
Condition as to merchantability
Sale by sample
Condition as to wholesomeness

Implied Warranties
Warranty of quite possession
Warranty of freedom from
encumbrances
Warranty as to quality or fitness
by usage of trade
Warranty to disclose dangerous
nature of goods

UNPAID SELLER
A seller of goods is deemed to be an
unpaid seller when: the whole of the price has not been
paid or tendered,
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.

Rights of Unpaid Seller

I Against the goods, and

II Against the buyer personally

 Against the Goods:

A) where the property in goods has
passed
1.Lien
2.Stoppage in transit
3.Resale
B) where the property in goods has
not passed:
1.Withholding delivery
2.Stoppage in transit

Against the buyer

personally

Suit for price

Suit for damages
Repudiation of contract
Suit for interest