DUTIES OF SELLER AND BUYER UNDER THE SALES OF GOODS ACT

DUTIES OF SELLER AND BUYER UNDER THE SALES OF GOODS ACT NO.III OF 1903

SUBMITTED BY
ANJU SARAH ABRAHAM BBA LLB- A ROLL NO.29

Symbiosis Law School, NOIDA Symbiosis International University, PUNE on 16, NOVEMBER,2011

Under the guidance of Amit Kumar Mishra Assistant Professor Symbiosis Law School, Noida Symbiosis International University Pune

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DUTIES OF SELLER AND BUYER UNDER THE SALES OF GOODS ACT

CERTIFICATE
The project titled DUTIES OF SELLER AND BUYER UNDER SLAES OF GOODS ACT NO III OF 1930 submitted to the Symbiosis Law School, NOIDA for Special Contract- I as part of Internal assessment is based on my original work carried out under the guidance of AMIT KUMAR MISHRA. The research work has not been submitted elsewhere for award of any degree. The material borrowed from other sources and incorporated in the project has been duly Acknowledged. I understand that I myself would be held responsible and accountable for Plagiarism.

Signature of the candidate

Date:

ACKNOWLEDGEMENTS
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DUTIES OF SELLER AND BUYER UNDER THE SALES OF GOODS ACT

It is a great pleasure for me to put on records our appreciation and gratitude towards Amit Kumar Mishra for his immense support and encouragement all through the preparation of this report. I would like to thank the college for providing us with a well-equipped library. Last but not the least, I would like to thank all the friends and others who directly or indirectly helped us in completing our project report.

Date- 16/11/2011 Place- NOIDA

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DUTIES OF SELLER AND BUYER UNDER THE SALES OF GOODS ACT

TABLE OF CONTENTS 1. LIST OF ABBREVIATIONS...5 2. INTRODUCTION.6 3. DUTIES OF BUYER 7 4. DUTIES OF SELLER...10 5. CONCLUSION.14 6. BIBLIOGRAPHY..16

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DUTIES OF SELLER AND BUYER UNDER THE SALES OF GOODS ACT

LIST OF ABBREVATIONS
1. & - And -All India Reporter -Edition -Company -Honourable -Limited -Others -Supreme Court - Supreme Court Cases - Volume

2. AIR 3. Edn 4. Co. 5. Honble 6. Ltd 7. Ors. 8. SC 9. SCC 10. Vol

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DUTIES OF SELLER AND BUYER UNDER THE SALES OF GOODS ACT

DUTIES OF SELLER AND BUYER UNDER SALES OF GOODS ACT.

INTRODUCTION The term contract is defined in Section 2(h)of the Indian Contract Act, 18721,as follows: An Agreement enforced by law. Sale of goods is also an agreement enforced by law. The law of sale of goods was contained in chapter VII of the Indian contract Act. 1872(Sections 76 of 123), but was found to be inadequate to deal with new situations arising due to increase in mercantile transactions in the wake of rapid industrialisation. The courts had to draw upon analogies from the decisions of English Courts to meet the new situations. Hence the legislature intervened by passing the present Act ( The Sale Of Goods Act, 1930), incorporating therein the various provisions of English Sale Of Goods Act, 1893. Contracts for the sale of goods are subject to the general legal principles applicable to all contracts, such as offer and its acceptance or other essential elements of a contract. CONTRACT OF SALE OF GOODS A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to buyer for a price. The term contract of sale is a generic term and includes both a sale and an agreement to sell. Where under a contract of sale, the property in the goods is transferred from the seller to the buyer, the contract is called a sale but where the transfer of the property in the goods is to take place at a future time or subject to some conditions thereafter to be fulfilled. The contract is called agreement to sell . An agreement to sell becomes a sale when the time elapses or the conditions, subject to which the property in the goods is to be transferred, are fulfilled. The true nature of a transaction evidenced by a written agreement has to be ascertained from its convenants and not merely from what the parties choose to call it.

The Indian contract Act,1872(9of 1872)

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The Supreme Court in that case stated that for considering whether a particular transaction is a sale or not the Court has to consider whether as a result of the transaction the property in the goods passed to another in return for price. It is the substance of the transaction evidenced by the agreement which must be looked at 2. The substance of the matter must be ascertained by a consideration of the whole of agreement 3

BUYER AND SELLER According to Section 2(1) of The Sales of Goods Act , buyer means a person who buys or agrees to buy goods and Section 2(13) says seller means a person who sells or agrees. In a Sale of Good the two paries are the seller and the buyer, and each has his duties and obligations to perform. DUTIES OF BUYER The duty of buyer are to accept the goods and to pay for them. Both these duties are to be performed in accordance with the terms of the contract of sale. In section 31 of Sales of goods act the words in accordance with the terms of the contract of sale are intended to show that the parties are at liberty to modify the terms. In absence of a contract to the contrary these duties are concurrent conditions stated in the following section.So this may mean the buyer and seller can agree amoung themselves to create certain rights One of the main duty of buyer is to apply for delivery. The buyer has no cause of action against the seller if he has not applied for delivery and5 he must state that cause of action in his plaint4 In a case where the contract provided that seller should give notice of the arrival of the goods (such as railway receipt), the buyer is still under an obligation to pay

Khedut Sahakari Ginning & Pressing Society v. State of Gujarat, A.I.R 1972.S.C.1786 Helby v. Mathews 1895 .A.c.471 Sivayya v.Ranganayakulu(1935)37 Bomba.L.R Ramamorthy v. p. Satyanarayana AP 550 Ganesh Das v. Ram Nath 1928

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In the case Ganesh Das V Ram Nath 6, it was held that the buyer is under an obligation to apply for delivery even if the seller is under an obligation to give notice. The application for delivery must be in such a way that the buyer must be ready and willing to pay the price in exchange for possession of goods
7

In a case, B buys goods from A, and assigns the benefit of the contract to C. C applies for delivery. B then takes a reassignment from C and Sues A on the contract without making any demand for the goods. It is found that the assignment to c was fictitious. B is not entitled to adopt the demand for delivery made by C. Such a demand is no demand for the goods In Section 35 of sales of goods act it is written Apart from any express contract, seller is not bound to deliver the goods to the buyer The buyers duty to apply for delivery does not arise where the seller has refused to perform his part of the contract without any justification even before the final date of delivery has arrived as it would become an idle formality to apply for delivery. Next duty of the buyer is payment In the absence of any specific agreements, the buyer must make payment at the time and place he receives the goods. When a sale is made on credit, the buyer is obliged to pay according to the specified credit terms, not when the goods are received. The credit period usually begins on the date of shipment. Payment can be made by any means agreed on between the parties -- cash or any other method generally acceptable in the commercial world. If the seller demands cash when the buyer offers a check, credit card, or the like, the seller must permit the buyer reasonable time to obtain cash Buyer has the right of Inspection under Sales of goods act, 1930 section 40 Unless otherwise agreed, or for C.O.D. transactions, the buyer has an absolute right to inspect the goods. This right allows the byer to verify, before making payment, that the goods tendered or delivered are what were contracted for or ordered. If the goods are not what the buyer ordered, the buyer has no duty to pay. An opportunity for inspection is therefore a condition precedent to the right of the seller to enforce payment. nless otherwise agreed, inspection can take place at any reasonable place and time and in any reasonable manner Generally, what is reasonable is determined by custome of the trade, past practices of the parties, and the like. Costs of inspecting conforming goods are borne by the buyer unless otherwise agreed.

Sivayya v. Ranganayakulu 62 AIR 1935

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Despite examination of the goods by the buyer in consonance with his right , the buyer has a right to reject the goods if a hidden, not apparent, defect is subsequently found out A buyer is not bound to return rejected goods,where a buyer rejects goods as not being of the contract description, it is not his duty to send them back to the seller, it is enough for him to give a clear notice that they are not accepted and then they are at sellers risk The Buyer is also under the obligation to accept, A buyer can manifest assent to the delivered goods in the follwoing ways, each of which constitutes acceptance: 1.Three is an acceptance if the buyer, after having had a reasonable opportunity to inspect the goods, signifies agreement to the seller that the goods are either conforming or are acceptable despite their nonconformity.

2.Acceptance is presumed if the buyer has had a reasonable opportunity to inspect the goods and has failed to reject them within a reasonable period of time.

3.In sales contracts, the buyer will be deemed to have accepted the goods if he performs any act inconsistent with the seller's ownership, e.g., use or resale of the goods. Buyers Liability for delay in taking delivery section 44 of Sales of goods act, contemplates the case where the property in the goods has passed to the buyer and he has become the owner thereof. The fact that the seller has been given the right to recover charges for care and custody and to recover the loss shows that the buyers neglect does not entitle the seller to put an end to the contract, that the property in the goods has passed to the buyer and that the goods are kept against the sellers will. In such a case if the buyer fails to take delivery with a reasonable time, he is liable to the seller for any loss occasioned by his default and also for a reasonable charge fot the care and custody of the goods.

Isherwood v. Whitmore (1873)

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DUTIES OF SELLER AND BUYER UNDER THE SALES OF GOODS ACT

DUTIES OF SELLER The major obligation of the seller under a sales contract is to tender conforming goods to the buyer. Tender of delivery requires that the seller have and hold conforming goods at the disposal of the buyer and give the buyer whatever notification is reasonably necessary to enable the buyer to take delivery. Conforming goods are goods that conform exactly to the description of the goods in the contract. Tender must occur at a reasonable hour and in a reasonable manner. Unless the parties have agreed otherwise, the goods must be tendered for delivery at a reasonable hour and kept available for a reasonable period of time to enable the buyer to take possession of them. All goods called for by a contract must be tendered in a single delivery unless the parties agree otherwise, or the circumstances are such that either party can rightfully request delivery in lots. Delivery It is the duty of the seller to deliver the goods and of the buyer to accept and pay for them, in accordance with the terms of the contract of sale. Unless otherwise, agreed, delivery of goods and payment of the price are concurrent conditions, that is to say, the seller shall be ready and willing to give possession of the goods to the buyer in exchange of the price, and the buyer shall be ready and willing to pay the price in exchange of possession of the goods. Risk of deterioration in the goods Where the seller of goods agrees to deliver them at his own risk at a place other than that were they are when sold, the buyer shall, nevertheless, unless otherwise agreed, take any risk of deterioration in the goods, necessarily incident to the course of transit. Damages for non-delivery Where the seller wrongfully neglects or refuses to deliver the goods to the buyer, the buyer may sue the seller for damages for non-delivery.

Specific Performance Under certain circumstances in any suit for breach of contract the deliver specific or ascertained goods, the Court may if it thinks fit, on the application of the plaintiff, by its decree direct that the contract shall be performed specifically. The power of the court to order specific performance in such cases is to be used subject to rules contained in the Specific Relief Act regarding specific performance of contracts.
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Place of Delivery The UCC provides for the place of delivery pursuant to a contract if the contract does not Of course, the parties may agree on a particular destination, or their contract's terms or the circumstances may indicate the place. Noncarrier Cases If the contract does not designate the place of delivery for the goods, and the buyer is expected to pick them up, the place of delivery is the seller's place of business or, if the seller has none, the seller's residence. if the contract involves the sale of identified goods, and the parties know when they enter into the contract that these goods are located somewhere other than at the seller's place of business, then the location of the goods is the place for their delivery. Carrier Cases It is the sellers duty to do whatever necessary to secure the carriers responsibility for the safe delivery of the goods to the buyer so that in the event of a loss, the buyer may have his indemnity against the carrier 10 In many instances, attendant circumstances or delivery terms in the contract make it apparent that the parties intend that a carrier be used to move the goods. There are two ways a seller can complete performance of the obligation to deliver goods in carrier cases -- through a shipment contract and through a destination contract. Shipment Contracts: Unless otherwise agreed, the seller must do the following: (1) Put the goods into the hands of the carrier. (2) Make a contract for their transportation that is reasonable according to the nature of the goods and their value. (3) Obtain and promptly deliver or tender too the buyer any documents necessary to enable the buyer to obtain possession of the goods from the carrier. (4) Promptly notify the buyer that shipment has been made.

If the seller fails to notify the buyer that shipment has been made or fails to make a proper contract for transportation, and a material loss of the goods or a significant delay results, the buyer can reject the shipment. Of course, the parties can agree that a lesser amount of loss or any delay will be grounds for rejection.
10

Clarke v. Hutchis (1811)14 east

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Destination Contracts: In a destination contract, the seller agrees to see that conforming goods will be duly tendered to the buyer at a particular destination. The goods must be tendered at a reasonable hour and held at the buyer's disposal for a reasonable length of time. The seller must also give the buyer appropriate notice. In addition, the seller must provide the buyer with any documents of title necessary to enable the buyer to obtain delivery from the carrier. Sellers often do this by tendering the documents through ordinary banking channels.

The Perfect Tender Rule The seller has an obligation to ship or tender conforming goods, and this entitles the buyer to accept and pay for the goods according to the terms of the contract. Under the common law, the seller was obligated to deliver goods in conformity with the terms of the contract in every detail. This was called the perfect tender rule. The UCC preserves the perfect tender rule by saying that if goods or tender of delivery fail in any respect to conform to the contract, the buyer has the right to accept the goods, reject the entire shipment, or accept part and reject part. Exceptions to the Perfect Tender Rule Because of the rigidity of the perfect tender rule,several exceptions to the rule have been created. They are: (1) Agreement of the parties; (2)Right to cure; (3) Substitution of Carriers; (4) Installment contracts; (5) Commercial Impracticability; (6) Destruction of Identified Goods. I've decided they are not worth inflicting on you. Its not that they aren't important, but they would require an entire day by themselves and its not likely that you will need this kind of intimate knowledge of the UCC unless to work in a high specialized commercial practice. Section 45 lays down that a seller is unpaid : (1) When the whole of the price has not been paid or tendered. (2) When a negotiable instrument or a bill of exchange has been received as conditional payment and the condition in which it was received has not been fulfilled by reason of the dishonor of the instrument or otherwise.

The seller remains as unpaid seller as long as any portion of the price, however small, remain unpaid. Where the whole of price has been tendered, and the seller refused to accept such a tender, seller ceases to be an unpaid seller. In such a case the seller loses all high right against the goods. If there is a period of credit then the seller is not unpaid until the price become due. Against if there is a condition attached to payment it must be fulfilled.

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The unpaid sellers right can be exercised by an agent of the seller to whom the bill of leading has been endorsed, or a consignor or an agent who has himself paid, or is directly responsible for the price.

Rights of an unpaid seller. If seller is not pais he has some right under this act The sale of Goods Act has expressly given two kinds of right to an unpaid seller of goods, namely : (1) Against the goods (a) When property in the goods has passed (i) Right of lien (ii) Right of stoppage of goods in transit (iii) Right of re-sale (b) When property in the goods has not passed (i)Right of withholding delivery. (2) Against the buyer personally (i) Right to use for price (ii) Right to sue for damages (iii)Right to sue for interest On these the main important is the Right of lien Right of lien The lien of an unpaid seller is a right to retain possession of the goods until tender or payment of the price. A person cannot on his own goods11. On the basis of this principle, when the statute gives a right of lien to the seller, it presumes that the property in the goods has passed to the buyer 11.The lien depends on actual possession and not on title, and is not affected by his having parted with a document capable of transferring title. He may have given a bill of lading which passes the legal property in the goods, or he may have given a delivery order,

11

Nippon Yusen Kaisha v. Ramjiban (1938) A.P.C.(155).

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Which though it does not pas the legal titled or property in the goods, enables the person receiving it to acquire possession of the goods and acquire a title in that way, but whatever he has done in that respect does not destroy his right of lien as long as he keeps possession of the goods as a vendor. 12 Under sub-sec(2), an unpaid seller could exercise his right of lien even though his character of an unpaid vendor has ceased and has become the bailee or agent for the buyer. Accordingly, it has been held that giving a delivery order by a seller to a buyer does not itself give the buyer such a possession of the goods as to defeat the sellers lien for the price. But the sellers lien may be defeated where the circumstances of the case are such as to estop him from denying that payment had been received for the goods to which the delivery order related.

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Imperial Bank v. London and St. Katherine Docks Co.(1877)5 Ch. Div.195.200.

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CONCLUSION It is the duty of the seller to deliver the goods and of the buyer to accept and pay for them, in accordance with the terms of the contract of sale A 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. For a contract of sale to be made, an offer to sell or buy goods should be there. Provision for payment of price and delivery of goods should also be there. For the smooth functioning of the contract of sales. The sales of goods act has laid down some duties to seller and buyer, during payment and delivery of goods or price. The duties of seller and buyer were discussed in my research, of those as mentioned earlier in the research work is. The sellers main duty is to deliver the goods while the buyer is to accept the goods Other duties under various provisions of Sales of goods act, 1930, were discussed throughout my research work. A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to buyer for a price. The term contract of sale is a generic term and includes both a sale and an agreement to sell. Where under a contract of sale, the property in the goods is transferred from the seller to the buyer, the contract is called a sale but where the transfer of the property in the goods is to take place at a future time or subject to some conditions thereafter to be fulfilled. The contract is called agreement to sell . An agreement to sell becomes a sale when the time elapses or the conditions, subject to which the property in the goods is to be transferred, are fulfilled. The true nature of a transaction evidenced by a written agreement has to be ascertained from its convenants and not merely from what the parties choose to call it. If both the seller and buyer agrees to abide by their duties only then a contract is complete by the sales of goods Act, 1930.

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BIBLIOGRAPHY
STATUTES
1) The Sales Of Goods Act, 1930 2) H.S. Pathak, Mulla Sales of Goods Act And Indian Partnership Act, 9th edition, Reprint 2009 3) Avatar Singh, Law of Sales Of Goods

LIST OF CASES
1. Khedut Sahakari Ginning & Pressing Society v. State of Gujarat, A.I.R 1972.S.C.1786. 2. Helby v. Mathews 1895 .A.C.471 3. Sivayya v.Ranganayakuluai A.I.R 1935 P.C.67. 4. Ramamorthy v. p. Satyanarayana A. I.R 1935 P.C.67 5. Ganesh Das v. Ram Nath (1928)A. Lah.20(27) 6. Sivayya v. Ranganayakulu A.I.R.1935 P.C.67,58 Mad.670.154 I.C.1097 7. Nippon Yusen Kaisha v. Ramjiban (1938) A.P.C.(155). 8 Imperial Bank v. London and St. Katherine Docks Co.(1877)5 Ch. Div.195.200. 9 Clarke v. Hutchis (1811)9 Cal.473. 10. Isherwood v. Whitmore (1874) L.R.9 C.P.208 11.Greaves v. ashlin (1813)3 Camp. 426 12. Randall v. Newson (1872) 2Q.B.D.102

WEBSITES
http://en.wikipedia.org/wiki/Sale_of_Goods_Act_1979 http://220.227.161.86/168131930ofsga.pdf papers.ssrn.com/sol3/papers.cfm?abstract_id=1447877
http://www.publishyourarticles.org/eng/articles/duties-of-seller-of-goods.htm

http://www.ricardobarraza.com/Duties%20of%20Seller's%20Agent,%20Buyer's%20 Agent,%20and%20Transaction%20Broker.htm

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http://www.heinonline.org/HOL/Page?handle=hein.beal/lutitmtsgw0001&id=1&colle ction=beal http://www.wipo.com http://www.manupatra.com http://westlawindia.com

DICTIONARY AND LEXICONS

1. Aiyar Ramanatha P., The Law Lexicon, 2nd Edition, Reprint 2006, Wadhwa Nagpur. 2. Garner Bryan A. Blacks law Dictionary, 7th Edition, 1990, West. 3. Kirkpatrick, Betty, The Concise Oxford Thesaurus, A Dictionary of Synonyms, 2004. 4. The New International Websters Comprehensive Dictionary, 2004.

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