LEGAL ASPECTS OF BUSINESS.

THE SALE OF GOODS ACT,1930.

INTRODUCTION:

TILL, 1930, TRANSACTIONS RELATING TO SALE AND PURCHASE OF GOODS WERE REGULATED BY THE INDIAN CONTRACT ACT,1872. IN 1930, SECTIONS 76 TO 123 OF THE INDIAN CONTRACT ACT WERE REPEALED AND A SEPARATE ACT CALLED THE SALE OF GOODS ACT ,1930 WAS PASSED.THIS ACT EXTENDS TO WHOLE OF INDIA EXCEPT JAMMU AND KASHMIR.

SCOPE OF THIS ACT :

THIS ACT DEALS WITH GOODS BUT NOT WITH ANY MOVABLE PROPERTY , E.G., ACTIONABLE CLAIMS AND MONEY.THIS ACT DOES NOT DEAL WITH MOVABLE PROPERTY OTHER THAN GOODS AND IMMOVABLE PROPERTY.

CONTRACT OF SALE MEANING SEC4.

CONTRACT OF SALE OF GOODS IS A CONTRACT WHEREBY THE SELLER TRANSFERS OR AGREES TO TRANSFER THE PROPERTY IN GOODS TO THE BUYER FOR A PRICE. CONTRACT OF SALE IS A GENERIC TERM WHICH INCLUDES BOTH A SALE AS WELL AS AN AGREEMENT TO SELL.

ESSENTIAL ELEMENTS OF CONTRACT OF SALE:

A) SELLER AND BUYER

B) GOODS
C) TRANSFER OF PROPERTY D) PRICE E) ESSENTIAL ELEMENTS OF VALID CONTRACT.

A) SELLER AND BUYER: BUYER MEANS A PERSON WHO BUYS OR AGREES TO BUY GOODS SEC2(1).AND SELLER MEANS A PERSON WHO SELLLS OR AGREES TO SELL GOODS SEC2(13).

B) GOODS: 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 A PART OF THE LAND WHICH ARE AGREED TO BE SEVERED BEFORE SALE OR UNDER THE CONTRACT OF SALE.SEC2(7).

NOTES:
THE ACTIONABLE CLAIMS MEANS A CLAIM WHICH CAN BE ENFORCED THROUGH THE COURTS OF LAW, E.G A DEBT DUE FROM ONE PERSON TO ANOTHER IS AN ACTIONABLE CLAIM. THE MONEY HERE MEANS THE LEGAL TENDER MONEY I.E CURRENCY OF THE COUNTRY BUT NOT OLD COINS.

C) TRANSFER OF PROPERTY: PROPERTY MEANS THE GENERAL PROPERTY IN GOODS, AND NOT MERELY A SPECIAL PROPERTY.GENERAL PROPERTY IN GOODS MEANS OWNERSHIP OF THE GOODS.SPECIAL PROPERTY MEANS POSSESSION OF GOODS.
THUS THERE MUST BE EITHER TRANSFER OF GOODS OR AN AGREEMENT TO TRANSFER THE OWNERSHIP OF GOODS( IMMEDIATELY OR IN FUTURE).

D)PRICE: PRICE HERE MEANS THE MONETARY CONSIDERATION FOR THE SALE OF GOODS SEC2(10).WHEN CONSIDERATION IS FOR GOODS IT AMOUNTS TO BARTER SYSTEM. AND WHEN IT IS FOR NO CONSIDERATION THEN IT IS GIFT AND NOT SALE. E) ESSENTIAL ELEMENTS OF A VALID CONTRACTU/S 10 OF INDIAN CONTRACT ACT 1872.

BASIS OF DISTINCTION BETWEEN SALE AND AGREEMENT TO SELL: 1) TRANSFER OF OWNERSHIP: SALE TRANSFER OF OWNERSHIP OF GOODS TAKES PLACE IMMEDIATELY. AGREEMENT TO SELL: TO HAPPEN AT A FUTURE DATE OR SUBJECT TO FULFILMENT OF SOME CONDITION. 2) EXECUTED CONTRACT/EXECUTORY CONTRACT:

SALE: EXECUTED CONTRACT

AGREEMENT TO SELL : EXECUTORY CONTRACT.

3) CONVEYANCE OF PROPERTY: SALE: A SALE CREATES JUS (RIGHT AGAINST THE PROPERTY). IN REM

AGREEMENT TO SELL: IT ONLY CREATES JUS IN PERSONAM( RIGHT AGAINST THE PERSON)

4) TRANSFER OF RISK:

SALE : TRANSFER OF RISK OF LOSS OF GOODS TAKES PLACE IMMEDIATELY BECAUSE THE OWNERSHIP IS TRANSFERED . AGREEMENT TO SELL: RISK OF LOSS OF GOODS IS NOT EXISTING AS THE OWNERSHIP IS NOT YET TRANSFERED.

HIRE PURCHASE AGREEMENT:

MEANING: IT MEANS AN AGREEMENT UNDER WHICH GOODS ARE LET ON HIRE AND THE HIRER HAS AN OPTION TO PURCHASE THEM IN ACCORDANCE WITH THE TERM OF THE AGREEMENT AND INCLUDES UNDER WHICH:

POSSESSION OF GOODS IS DELIVERED BY THE OWNER THEROF TO A PERSON ON CONDITION THAT SUCH PERSON PAYS THE AGREED AMOUNT IN PERIODICAL INSTALMENTS.

TYPES OF GOODS:
1) EXISTING GOODS:IT MEANS GOODS WHICH ARE EITHER OWNED OR POSESSED BY THE SELLER AT THE TIME OF CONTRACT OF SALE.THE EXISTING GOODS MAY BE AS FOLLOWS: SPECIFIC :LIKE T.V, D.V.D ETC. ASCERTAINED GOODS: WHEN PART OF THE GOODS LYING IN BULK ARE IDENTIFIED AND EARMARKED FOR SALE. UNASCERTAINED: UNIDENTIFIED. GOODS LYING IN LOTS

2) FUTURE GOODS: SEC 2(6) IT MEANS GOODS TO BE MANUFACTURED OR PRODUCED OR ACQUIRED BY THE SELLER AFTER MAKING OF THE CONTRACT OF SALE. THERE CAN BE AGREEMENT TO SELL ONLY AS ONE CANNOT DO A SALE OF WHAT HE DOES NOT POSSESS.

CONDITIONS AND WARRANTIES:

MEANING OF STIPULATION: SEC12(1) A STIPULATION IN A CONTRACT OF SALE OF GOODS MAY BE A CONDITION OR WARRANTY.

MEANING OF CONDITION:SEC12(2) A CONDITION IS A STIPULATION A) WHICH IS ESSENTIAL TO THE MAIN PURPOSE OF THE CONTRACT AND B) THE BREACH OF WHICH GIVES THE AGGRIEVED PARTY A RIGHT TO TERMINATE THE CONTRACT.

MEANING OF WARRANTY SEC12(3):

A WARRANTY IS A STIPULATION A) WHICH IS COLLATERAL TO THE MAIN PURPOSE OF THE CONTRACT AND B) THE BREACH OF WHICH GIVES THE AGGRIEVED PARTY A RIGHT TO CLAIM DAMAGES BUT NOT THE RIGHT TO REJECT GOODS AND TO TERMINATE THE CONTRACT. EXAMPLE: X ASKED A CAR DEALER TO SUGGEST HIM A GOOD CAR AND

CAR COULD RUN ONLY 15KMPL . IN THIS CASE, THE STATEMENT MADE BY THE SELLER WAS A WARRANTY. X WAS, THEREFORE NOT ENTITLED TO REJECT THE CAR BUT HE WAS ENTITLED TO CLAIM THE DAMAGES.

Distinction between condition and warranty:

1) ESSENTIAL vs. COLLATERAL: CONDITION IS A STIPULATION WHICH IS ESSENTIAL TO THE MAIN PURPOSE OF THE CONTRACT. WARRANTY IS A STIPULAION WHICH IS ONLY COLLATERAL TO THE MAIN PURPOSE OF THE CONTRACT. 2) RIGHT IN CASE OF BREACH: IN THE CASE OF CONDITION THE AGGRIEVED PARTY CAN TERMINATE THE CONTRACT.

RIGHTS OF UNPAID SELLER:

AN UNPAID SELLER IS ONE WHO HAS NOT BEEN PAID OR TENDERED THE WHOLE OF THE PRICE OR ONE WHO RECEIVES A BILL OF EXCHANGE OR OTHER NEGOTIABLE INSTRUMENT AS CONDITIONAL PAYMENT AND THE CONDITION ON WHICH IT WAS RECEIVED HAS NOT BEEN FULFILLED BY REASON OF THE DISHONOUR OF THE INSTRUMENT OR OTHERWISE.

SITUATION -1: WHEN THE PROPERTY IN THE GOODS HAS PASSED TO THE BUYER: A) LIEN(RIGHT TO RETAIN), B) STOPPAGE IN TRANSIT, C) RESALE.

SITUATION-2: WHERE THE PROPERTY IN THE GOODS HAS NOT PASSED: 1) WITHHOLDING THE DELIVERY, 2) SUE THE BUYER FOR THE PRICE OF GOODS AND THE LIKE.