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The Sales of Goods Act, 1930

Introduction

The contract of sale :


 A

contract of sale of goods is a contract whereby a seller transfers or agrees to transfer the property in goods to the buyer for price  Contract of sale is a generic term which includes both a sale as well as an agreement to sell.

Main features :
     

There must be at least two parties Transfer or agreement to transfer the ownership of goods The subject-matter of the contract must necessarily be Goods The consideration is price A contract of sale may be absolute or conditional All other essentials of a valid contract must be present

SALE It creates right in REM It is Executed contract If the goods are destroyed the loss falls on the buyer even if the goods are in the possession of seller Seller can sue for the price of the goods The seller can not sell to third parties The buyer is entitled to recover the specific property from the assignee if the seller becomes insolvent The seller is only entitled to the ratable dividend of the price due if the buyer becomes insolvent Ownership passes to the buyer

AGREE.TO SELL Right in Personam Executory contract Seller/buyer In case of breach by the buyer the seller is entitled only to damages It can Buyer can claim only ratable dividend for the money paid The seller may refuse to sell the goods to the buyer w/o payments if the buyer becomes insolvent Ownership remains with the seller

Subject matter of contract of saleSec.6


GOODS

Existing Goods Specific Goods Ascertained Goods

Future Goods

Contingent Goods

Un ascertained Goods

Conditions and Warranties


 Representation:

Statement made by the seller before entering into a contract  Stipulation: If such representation forms an integral part of the contract and other party relies upon it.  No Representation: CAVEAT EMPTOR i,e, Let the Buyer Beware is applied

CONDITION : Sec.12(2)
A

condition is a stipulation essential to the main purpose of the contract breach of which gives rise to a right to treat the contract as repudiated1

Warranty : Sec.12(3)
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 right to reject the goods and treat the contract as repudiated2

Difference b/w condition & warranty :


as to value  Difference as to Importance  Difference as to Breach  Difference as to Treatment
 Difference

When condition is to be treated as warranty: Sec.13(1)-13(3)


of condition  Compulsory treatment of breach of condition as breach of warranty
 Waiver

Conditions : Expressely provided in the contract  Implied conditions & warranty : which the law implies in a contract of sale Implied condition & warranty may be negatived or varied by an express agreement or by the course of dealings b/w parties or by the usage & customs of trade.Sec.62

 Express

Sec.62 is based upon two maxims:


 Expression

Facit Cessare Tacitum i,e, what is expressed makes what is tacit or implied to cease  Modes et conventio vincent Legem i,e, customs & agreements overrule law(Implied condition & warranty)

Implied conditions :
       

Conditions as to title [Sec.14(a)] Sale by description: A) Goods must correspond to description (Sec.15) B) Conditions as to Merchandibility [Sec.16(2)] C) Conditions as to wholesomeness D) Conditions as to fitness for a particular purpose (Sec.16) Sale by Sample (Sec.17) Sale by sample as well as by description (Sec.15)

Implied Warranties :
of Quiet possession-Sec.14(6)  Warranty against encumbrancesSec.14(c)  Warranty to disclose dangerous natures of goods.
 Warranty

CAVEAT EMPTOR
Let the Buyer Beware The maxim Caveat Emptor does not apply & the contract will be subject to the implied conditions under the following circumstances : 1. Sale under fitness for buyers purpose 2. Sale under merchandable quality 3. Sale under usage of trade 4. Consent by Fraud

Transfer of Title/Property in Goods Sec.18-25


 Property

in Goods mean?  Property in goods Vs.Possession of Goods  When does the property in goods pass from the seller to buyer ?  1.If the goods are lost or damaged  2.Damage to goods by third party  3.Insolvency

When does the property pass from seller to the buyer?(Sec.18-25)

Specific or Ascertained Goods

Rules as regards Ascertaining Intention (Sec.20-24)


 1)

Specific goods in Deliverable State (Sec.20)  Goods are said to be in D/S when they are in such state that the buyer would under the contract be bound to take delivery of them  2) Specific goods not in a Deliverable state (Sec.21)

there is a contract for the sale of specific goods in a deliverable state but the seller is bound to weigh, measure, test or to do some other thing with reference to them, for ascertaining the price , the property does not pass till such act or thing is done and the buyer has notice of it.  Unascertained or future goods (Sec.18)  Sale On Approval or Sale or Return basis
 Where

When he signifies his approval or acceptance to the seller or does any other act, adopting the transaction If he does not signify his approval or acceptance to the seller but retains the goods w/o giving notice of rejection, then, if a time has been fixed for the return of the goods, on the expiration of such time, and if no time has been fixed on the expiration of a reasonable time.

Transfer of Title by Non Owners


 General

rules as to transfer of title

(Sec.27)  Maxim : Nemo dat quod non habet

EXCEPTIONS TO THE RULE:


 Sale

by mercantile agent (Sec.27)  Sale by a joint owner/coowner (Sec.28)  Sale by a person in possession under a voidable contract (Sec.29)  Sale by a seller in possession of goods after sale (Sec.30)  Sale by a buyer in possession of goods  Sale by an unpaid seller (Sec.54)

Sale by Auction (Sec.64)


A

sale by auction is a public sale in which goods are offered to the highest bidder  In above case following rules apply:  1) when the goods are put up for sale in lots, each lot is deemed, prima facie, to be the subject matter of a separate contract of sale.

 2)

At an auction, the sale is complete when the auctioneer announces its completion by the fall of the hammer or in other customary manner; until such completion any bidder may withdraw his bid. It is also the practice to say 3 times.  3) A right to bid may be reserved expressly by or on behalf of the seller & where such right is expressly so reserved, but not otherwise, the seller or any person on his behalf may bid at Auction

 4)

The sale may be notified to be subject to a reserved or upset price  5) If the seller makes use of pretended bidding to raise the price, sale is voidable at the option of the buyer

DELIVERY (Sec.2[2])
 

Voluntary transfer of possession of goods from one person to another 1) Physical or Actual Delivery: Physical possession of the good is handed over by the seller to the buyer 2) Constructive Delivery: When a third person who is in possession of the goods acknowledges that he holds the goods on behalf of the buyer

 Symbolic

Delivery: Delivery is made by indicating or giving a symbol e.g: Handing over the key of a godown to the buyer

Rules as to Delivery (Sec.39) :


         

Mode of delivery Delivery & payment Effect of part delivery Buyer to apply for delivery Place of delivery Goods in possession of a third party Time of delivery Expense of delivery Instalment delivery Delivery to a carrier or wharfinger

Unpaid Seller (Sec.45) :


  

A seller is deemed to be an U/S when: 1) The whole of the price has not been paid or tendered 2) A bill of exchange or other negotiable instrument has been received as a conditional payment & the condition on which it was received has not been fulfilled by reason of dishonor of the instrument

Rights of an U/S :
 1)

Right against goods:  a) Lien on goods  b) A right of stoppage-in-transit  c) A right of Re-sale

A) Lien on Goods (Sec.47-49) in case:


 i)

the goods are not sold on credit  ii) the goods have been sold on credit, but the period of credit has expired  iii) the buyer becomes insolvent

B.Right of stoppage in transit (Sec.50-52)


  

The transit is end in following cases: If the buyer obtains the possession of the goods before its arrival at the destination If, after the arrival at their destination, the carrier acknowledges to the buyer that he holds on his behalf If the carrier wrongfully refuses to deliver the goods to the buyer

C.Right of Re-sale (Sec.54)


 Where

the goods are of perishable

nature  When the buyer does not pay the price

2.Rights of an U/S against the buyer personally:


 Suit

for price (Sec.55)  Suit for damages for Non Acceptance (Sec.56)  Suit for damages for Breach of contract  Suit for Interest (Sec.61)