Beruflich Dokumente
Kultur Dokumente
Kalpeshkumar L Gupta
Assistant Professor of Law
April 4, 2015
1
Outline
1. Introductory Part
2. Sale & Quality of Goods
3. INCOTERMS
4. Performance of
Contract
Outline
1. Introductory Part
2. Sale & Quality of Goods
3. INCOTERMS
4. Performance of
Contract
Sale of Goods
Sale of Goods is a contract where the ownership
in goods is transferred for a price in cash.
In the language of contract law, a sale is a
contract where the consideration for the buyer is
the transfer of ownership and for the seller is a
price in cash.
Goods
Section 2(7) goods means every kind of
movable property other than actionable claims
and money; and includes stock and shares,
growing crops, grass, and things attached to or
forming part of the land which are agreed to be
severed before sale or under the contract of
sale.
Cont
Cont
Goods
Goodwill, trade marks, copyrights, patents right,
water, gas, electricity etc. are all regarded as
goods.
In the case of land the grass which forms part of
land have to be separated from the land. Thus
where trees sold so that they could be cut out
and separated from the land and then taken
away by the buyer, it was held that there was a
contract for sale of movable property or goods
(Kursell vs Timber Operators & Contractors Ltd.).
But contracts for sale of things forming part of
the land itself are not contracts for sale of goods.
For example, a contract for the sale of coal mine
or building-stone quarry is not a contract of sale
of goods.
Cont
Goods
Actionable Claims means claims which can be
enforced by a legal action or a suit, example a
book debt. A book debt is not goods because it can
only be assigned as per Transfer of Property Act
but cannot be sold. Same is case in the case of bill
of exchange, promissory note etc.
The negotiable instrument like promissory note
can be transferred under Negotiable Instruments
Act by mere delivery or endorsement and delivery,
such
instruments
cannot
be
sold.
Cont
transporter
co.
is
carrying
the
goods
Cont
10
Cont
11
Outline
1. Introductory Part
2. Sale & Quality of Goods
3. INCOTERMS
4. Performance of
Contract
12
13
14
15
Condition - Warranty
Whether a stipulation in a contract of sale is
condition or a warranty depends in each case on
the construction of the contract as a whole.
The court is not be guided by the terminology
used by the parties to the contract. A stipulation
may be condition though called a warranty in
the contract. (Sec. 12(4))
16
17
18
Implied Conditions
1. Condition as to title (Section 14 (a))
2. Sale by description (Section 15)
3. Condition
as
to
quality
or
fitness
(Section 16(1))
4. Condition as to merchantability (Section
16(2))
5. Condition implied by custom (Section
16(3))
6. Sale by sample (Section 17)
7. Condition as to wholesomeness.
19
Implied Conditions
1. Condition as to title (Section 14 (a))
an implied condition on the part of the seller
that, in the case of a sale, he has a right to sell the
goods and that, 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.
e.g. R bought a car from D and used it for four
months. D had no title to the car and consequently
R had to hand over to the true owner.
Held R could recover the price paid (Rowland v/s.
Divali, 1923)
20
Implied Conditions
2. Sale by description (Section 15)
Where there is a contract for the sale of goods by
description, there is an implied condition that the
goods shall correspond with the description.
Buyer Beware. There is no protection for the buyer
in relation to the quality of goods except in
following situations.
a. Goods sold must be of merchantable quality.
However, if the buyer has examined the goods,
directs which such examination ought to have
revealed would be exempted from the
requirement of merchantable quality.
b. If the buyer has relied on the skill and judgment
of the seller, the goods should be fit for the
Cont
purpose described by the buyer.
21
Cont
Implied Conditions
2. Sale by description (Section 15)
e.g. A ship was contracted to be sold as a copperfastened vessel to be taken with all faults, without
any allowance for any defects whatsoever. The
ship turned out to be partially copper-fastened.
Held Buyer entitled to reject (Shepherd v/s. Kain,
1821)
---------In a auction sale of a set of napkins and table
cloths, these were described as dating from the
seventh century. The buyer bought the set after
seeing it. Subsequently found the set of an
eighteenth century set.
Held He could reject the set (Nicholson & Venn
v/s. Smith Marriot, 1947)
22
Cont
Implied Conditions
3. Condition as
(Section 16(1))
to
quality
or
fitness
her
Held the seller was not liable, the cloth being fit
for any one with a normal skin (Griffiths v/s. Peter
Conway Ltd., 1939)
23
Implied Conditions
3. Condition as
(Section 16(1))
to
quality
or
fitness
24
Implied Conditions
4. Condition as to merchantability (Section
16(2))
Where goods are bought by description from a
seller who deals in goods of that description
(whether he is the manufacturer or producer or
not), there is an implied condition that the goods
shall be of merchantable quality.
The term merchantable quality is not defined in
the Sale of Good Act.
But as per Sec. 62(1-A) of the English Sale of
Goods Act, 1893, Goods of any kind are of
merchantable quality if they are as fit for the
purpose or purposes for which goods of that kind
are commonly bought as it is reasonable to expect
Cont
having regard to any description applied to them,
25
Cont
Implied Conditions
4. Condition as to merchantability (Section
16(2))
If goods are of such a quality and in such a
condition that a reasonable person acting
reasonably would accept them after having
examined them thoroughly , they are of
merchantable quality. Thus a watch that will not
keep time, a pen that will not write and tobacco
that will not smoke, cannot be regarded as
merchantable under such names.
e.g. A manufacturer supplied 600 horns under a
contract. The horns were found to be dented,
scratched and otherwise of faulty manufacture.
Held, they were not of merchantable quality and
Cont
therefore the sellers suit for price was dismissed
26
Cont
Implied Conditions
Section 14(1) English Sale of Goods Act,
1893
Reliance on the skill and judgment of the seller.
Grant v/s. Australian Knitting Mills Ltd. (1935, All
ER Rep 209)
Grant bought two woollen underwear garments
from John Marlin & Co. who dealt in such goods.
John Marlin had purchased them in the ordinary
course, along with other stock from Australian
Knitting , the manufacturer.
Grant put on one suit on the morning of June 28,
1931. By the evening, he started to feel itchy.
Problem
became
serious.
He
consulted
dermatologist, who suspected the undergarments
to be cause of dermatitisdoctor treating Cont
Grant
27
Cont
Implied Conditions
The mfg. attempted to attribute the problem to
the sensitive nature of Grants skin and not to
the defect in garment. Detailed evidence was
brought out that mfg. process and the treating
of the garments with chemicals had left a
content of sulphites in the garments.
The Privy Council was of the opinion that the
case attracted both the clauses, relying on the
skill and judgement of the sellers and the goods
not being merchantable quality.
The reliance of the buyer on the seller need not
be expressed. If the goods are meant for only
one use, it is implied that the buyer relied on the
seller in giving goods that would be fit for that
28
Implied Conditions
5. Condition implied by custom (Section
16(3))
An implied warranty or condition as to quality or
fitness for a particular purpose may be annexed by
the usage of trade.
e.g. A bought a set of false teeth from a dentist.
The set did not fit into As mouth.
Held he could reject the set as the purpose for
which anybody would buy it was implicitly known
to the seller (Dr. Baretto v/s. T R Price, AIR 1939
Nag. 19)
29
Implied Conditions
6. Sale by sample (Section 17)
In the case of sale by sample, there is an implied
condition that the bulk will tally with the sample
and goods should be free from defect rendering
them unmerchantable, which would not be
apparent on reasonable examination of sample.
If the sale is by sample as well as by description, it
is not sufficient that the bulk of the goods
corresponds with the sample if the goods do not
also correspond with the description.
The goods must fully correspond with the sample
and with the description.
Cont
30
Implied Conditions
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.
e.g. C bought a bun containing a stone which broke
one of Cs teeth.
Held he could recover damages (Chaproniere v/s.
Mason, 1905)
31
Cont
Implied Conditions
6. Sale by sample (Section 17)
e.g. In a contract for the sale of brandy by sample,
brandy colored with a dye was supplied.
Held the buyer was not bound to the contract
even though goods supplied were equal to sample,
as the defects were not apparent on reasonable
examination of sample. (Mody v/s. Gregson, 1868)
32
Implied Warranties
1. An implied warranty that the buyer shall have
and enjoy quiet possession of the goods;
(Section 14(2)).
2. An implied warranty that the goods shall be
free from any charge or encumbrances
in favour of any third party not declared or
known to the buyer before or at the time
when the contract is made.(Section 14(c))
3. An implied warranty as to quality or fitness
for a particular purpose may be annexed by
the usage of trade. (Section 16(4))
4. Warranty to disclose dangerous nature of
Cont
goods.
33
Implied Warranties
4. Warranty to disclose dangerous nature of
goods.
e.g. A sold a tin of disinfectant powder to C. He
knew that it was likely to be dangerous to C if it
was opened without special care being taken. C
opened the tin whereupon the powder flew into
her eyes, causing injury.
Held A was liable in damages to C as he should
have warned C of the probable danger (Clarke
v/s. Army & Navy Co-operative Society Ltd.,
1963)
34
35
Cont
36
Cont
37
Cont
38
Unascertained Goods
A sale contract whose subject matter is the sale of
certain specific identified goods is a sale of specific
goods.
Sale contracts can also be of unascertained goods.
In sale of unascertained goods, the goods are
described.
In the course of the performance of the contract,
the parties would come to settle on certain specific
goods meeting that description.
Cont
39
40
41
Cont
42
Cont
44
Outline
1. Introductory Part
2. Sale & Quality of Goods
3. INCOTERMS
4. Performance of
Contract
46
INCOTERMS
47
INCOTERMS
INCOTERMS
stands
for
International
Commercial Terms.
Prepared by International Chamber of
Commerce (ICC) Paris.
INCOTERMS
prepared
to
facilitate
Some
INCOTERMS
All modes of
Transport
49
EXW Ex Works
The seller makes the good available to the
buyer at his premises. The buyer bears all
the costs and the risk in taking the goods
from the sellers premises to his own
destination
Works stands for the premises of the seller.
50
FCA Free
Carriage
The buyer organizes for the carriage of the
goods and informs the seller about the
carrier and the place where the goods would
be handed over to the carrier.
The risk passes when the goods are handed
over to the carrier.
The term is followed by the name of the
place where the goods are to be handed
over to the carrier.
51
CPT Carriage
Paid To
The seller pays the freight for the carriage of
the goods to the named destination. The risk
in the goods passes to the buyer on delivery
of the goods to the first carrier.
The term is followed by the destination at
which the carrier has to deliver the goods.
52
53
55
56
57
58
Exclusive for
Maritime
Trade
Exclusive for
Maritime
Trade
Exclusive for
Maritime
Trade
port
of
61
Exclusive for
Maritime
Trade
port
of
62
63
64
Outline
1. Introductory Part
2. Sale & Quality of Goods
3. INCOTERMS
4. Performance of
Contract
65
erformance of Contrac
66
67
Delivery of Goods
Delivery
means
voluntarily
transfer
of
possession of goods from one person to another
(Sec 2(2))
Delivery of goods sold may be made by doing
anything which the parties agree shall be
treated as delivery or which has the effect of
putting the goods in the possession of the buyer
of his agent. (Section 33)
Delivery of goods may be
1. Actual
2. Symbolic
3. Constructive Delivery
68
Delivery of Goods
1. Actual Delivery
Where the goods are handed over by the seller
to the buyer or his duly authorized agent, the
delivery is said to be actual.
2. Symbolic Delivery
Where goods are bulky and incapable of actual
delivery, delivery may be symbolic. Handling
over of the key of a warehouse to the buyer is
symbolic delivery of the goods to the buyer and
it is as effective as actual.
Cont
69
Cont
Delivery of Goods
3. Constructive Delivery
Where a third person who is in possession of the
goods of the seller at the time of the sale
acknowledges to the buyer that he holds the
goods on his behalf, there takes place a
constructive delivery.
e.g. A sells to B 10 bags of wheat lying in Cs
godown. A gives an order to C asking him to
transfer the goods to B. C assents to such order
and transfers the goods in his books to B. T
70
71
Cont
72
73
75
Right
against
the
seller
for
breach
of
contract
a. Suit for damages (Sec. 57)
b. Suit for price
c. Suit for specific performance (Sec 58)
d. Suit for breach of warranty (Sec. 59)
e. Repudiation of contract before due date (Sec. 60)
f.
76
77
Cont
78
79
83