CONTRACT OF SALE OF GOODS

Presented by:

Rahul Vardhan Manish Manoj

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 ORIGIN AND GROWTH AN ITRODUCTION

The Sale of Goods Act 1930 deals with the law relating to sale of goods in india. The term Goods means every kind of property , other than Money and Actionnable claims. The Sale of Goods Act 1930 is mainly based on the English Sale of Goods Act 1893. Before the Sale of Goods Act 1930, the law relating to sale of goods was covered under the Chapter VII of Indian Contract Act 1872.
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Continue..
The provisions of which were found to be inadequate. Therefore a strong need was to have an independent sale of goods act and consequently sale of goods act was passed. The act contains 66 sections came into force from Ist July 1930 which extends to whole of india except the state of J&K.
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Contract of sale
Section 4 of the Sale of Goods Act 1930: A contract of sale of goods is a contract whereby seller transfers or agrees to transfer the property in goods to a buyer for a price. A contract of sale consists of: Sale (or Absolute Sale) Agreement to sell(or Conditional Sale)
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Sale or Absolute Sale Where the property(ownership) in the goods is immediately transferred from the seller to buyer, and nothing is left on the part of the seller, there is a sale or absolute sale. e.g: counter sale in a shop is a sale or an absolute sale.
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Agreement to sell
Also called as conditional sale. Where transferred of property(ownership) in the goods shall take place in future or on fulfillment of certain conditions, it shall be an agreement to sell or a conditional sale.

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How agreement to sell become a sale?

In the first stage every contract of sale is an agreement to sell. When seller and buyer agrees to sell and buy some goods at a price, there is an agreement between the two for the sale of goods. If the ownership is transferred by immediately it becomes a sale, and If he does not transfer the ownership until some condition is fulfilled it shall remain an agreement to sell till the condition is fulfilled and the ownership is transferred.
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Difference between Sale and Agreement to Sell

Basis Sale Agreement to Sell

1.Nature of Contract.

Sale is an executed Contract.

Agreement to Sell is an executory Contract.

2.Risk of Loss.

In a Sale, If the goods are destroyed, the risk of loss falls on seller even If the goods were in possession of the seller because the risk of loss passes with ownership.

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But in an Agreement to Sell If the goods are destroyed, the risk of loss falls on the seller even If the goods were in the possession of buyer. Because ownership has not passed from the seller to the buyer and the risk passes with the ownership.

3.Transfer of property. (Ownership)

In sale the property in goods passes from seller to buyer immediately and buyer becomes the owner of the goods immediately.

But in Agreement to sell the property in goods passes from seller to buyer at some future date or subject to the fulfillment of certain conditions.

4.Consequences of the But on a sale, if breach. buyer does not pay the price the seller may sue him for the price.

On breach of an agreement to sell by the seller, the buyer has only a personal remedy against seller. In Agreement to sell, if buyer fails to accept the goods the seller may sue for damages only and not for price.
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5. Insolvency of the Buyer.

In a sale, if buyer is insolvent, the seller in the absence of a lien over the goods is bound to deliver the goods to the official receiver or assignee.

In Agreement to Sell, when the buyer becomes insolvent before he pays for the goods, the seller may not part with the goods.

6. Insolvency of the seller.

In a Sale, if the seller becomes insolvent , the buyer is entitled to recover the goods from official receiver or assignee as the property of the goods is with the buyer.

In an Agreement to Sell, if the buyer has already paid the price and the seller becomes insolvent, the buyer can claim only a rateable dividend and not the goods.
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7. General and particular property.

In a sale, the buyer gets an absolute right of ownership and this right of buyer is recognized by the whole world.

In an Agreement to Sell the buyer and seller get remedy against each other in case of breach of agreement. The agreement of sale creates a right with which only the contracting parties are concerned and not whole world. In an Agreement to Sell, the seller may sell the goods since ownership is with the seller. If he does so, he may become liable for breach of agreement. But in this case the buyer gets 11 good title.

8.Right of re-sale.

In a sale the seller cannot resell the goods even if he is in possession of the goods after sale. If he does so the new buyer does not get the good title and the first buyer can recover the29-03-2012 22:12:45 goods.

ESSENTIALS OF A CONTRACT OF SALE

1. A Valid Contract. A contract of sale is just like any other contract made under Indian Contract Act 1872. Therefore to consitute avalid contract of sale, it would satisfy all essentials of a valid contract. 1. Offer and Acceptance. 2. Intention to create a legal relationship. 3. Lawful Consideration. 4. Capacity of Parties. 5. Free Consent. 6. Lawful Object. 7. Possibility of Performance. 8. Not Declared to be Void or Illegal. 9. Legal Formalities.

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2. Two Parties.

To consitute a contract of sale, there must be a transfer or agreement to transfer the property in goods by the seller to buyer. It means that there must be two persons, one the seller and other the buyer.

3. Agreement for the transfer of ownership.

To consitute a valid contract of sale, there should transfer the general property in goods from seller to buyer with or without physical possession of goods
The subject matter of the contract of sale must be the goods, the property in which is to be transferred from seller to buyer. Goods of any kind except money, actionable claims and immovable property.
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4.Goods.

Sale Distinguished From Other

Basis 1.Transfer of property and possession. Sale In a Sale, the property in goods is transferred from seller to buyer and the buyer can therefore deal with the goods in any way he likes. Bailment In a Bailment, there is only transfer of possession of goods from bailor to bailee for any of the reasons like Safe costody, carriage, use etc. and the bailee can only deal with goods according to the directions of the bailor

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2. Return of goods.

Goods once sold normally cannot be returned unless there is a breach of some condition.

In Bailment the bailee must return the goods to the bailor on the fulfillment of the purpose for which the bailment was made.

3. Consideration.

In a Sale the consideration is the price in the terms of money.

In a Bailment the consideration is an undertaking to return the goods after the accomplishment of purpose.

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Basis 1.Nature of contract.

Sale A sale is an executed contract in which the ownership is transferred from seller to buyer as soon as contact is entered to.

Hire-Purchase agreement In a hire purcahse agreement it becomes the property of the buyer only after a certain agreed no. of installments is paid till then the hire purchaser stands in the position of bailee and not the owner of goods. The hire purchaser is at liberty to terminate the contract at any stage and cannot be forced to pay the remaining installments.
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2.Termination of contract.

The buyer in this case cannot terminate the contract and as such is bound to pay price of the goods.
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3.Risk of loss in case of insolvency of the buyer.

In a sale the seller takes the risk of any loss resulting from the insolvency of buyer.

In a hire purchase the owner is not at any risk because if hirer does not pay any instalment the seller has a right take back the goods.

4.Resale.

The buyer in a sale can resell the goods.

The hire purchaser cannot resell unless he has paid all the instalments of hire.

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