KURSELL VS TIMBER OPERATORS AND

CONTRACTORS LTD.(1927) 1K, B.928

SUBMITTED BY: SUBMITTED TO:

MANJEET KUMAR DR. SANGEETA TAAK

SUPERVISOR
ROLL NO. 18106

GROUP NO. 16

RAJIV GANDHI NATIONAL UNIVERSITY OF LAW,

PUNJAB

11 SEPTEMBER 2019
 ACKNOWLEDGEMENT

On completion of this project it is my present privilege

to acknowledge my heartfelt gratitude and indebtedness
towards my teachers for their valuable suggestion and
constructive criticism. Their precious guidance and
unrelenting support kept me on the right path
throughout the whole project and very much thankful to
my teacher in charge and project coordinators for giving
me this relevant and knowledgeable topic.

I wish to express my sincere gratitude to my teacher

Sangeeta Taak ma’am for their guidance and
encouragement in carrying out this project work.

I also wish to express my thanks to my group members and

my friends for their ideas because of which this project
became more captivating. I am also thankful to my institution
library for providing a broad range of books to learn more.
RAJIV GANDHI NATIONAL UNIVERSITY OF
LAW, PUNJAB

SUPERVISOR’S CERTIFICATE

Dr. Sangeeta Taak Patiala

(Punjab)
Date:11
September

Rajiv Gandhi National University of Law

Punjab

This is to certify that the Dissertation titled Changing

family structure : a current discourse , submitted to Rajiv
Gandhi National University of Law, Patiala in partial
fulfilment of the requirement of the B.A.LLB (Hons.).
Course is an original and bona fide research work carried
out by Mr. Manjeet Kumar under my supervision and
guidance. No part of this project has been submitted to any
University for the award of any Degree or Diploma,
whatsoever.

Dr. Sangeeta Taak

 CONTENTS
1. INTRODUCTION ……………….……………………………

2. TERMINOLOGY AND RELATED SECTION….…….……

3. FACTS OF CASE LAW…….………………………..…………

4. JUDGEMENT ….……………………………………………….

5. CONCLUSION……………………………….…………………

6. BIBLIOGRAPHY………………………………………………
 1.INTRODUCTON
The law relating to sale of goods is contained in the Sale of Goods Act, 1930,' which came
into force on 1st July 1930. The Act contains sixty-six Sections and extends to the whole of
India except the State of Jammu and Kashmir. A few minor amendments in the Act were
made by Sale of Goods1 (Amendment) Act, 1963. The general provisions of the Indian
Contract Act continue to be applicable to the contract of sale of goods in so far as they are not
inconsistent with the express provisions of Sale of Goods Act (Sec. 3). Thus, for example, the
provisions of the Contract Act relating to capacity of the parties, free consent, agreements in
restraint of trade, wagering agreements and measure of damages, continue to be applicable to
a contract of sale of goods. But the definition of consideration stands modified to the extent
that in a contract of sale of goods consideration must be by way of 'price,' i.e., only money
consideration [Secs. 2(10) and 4].

Definition and Essentials of a Contract of Sale Section 4(1) of the Sale of Goods Act
defines a contract of sale of goods as – "a contract whereby the seller transfers or agrees to
transfer the property in goods to the buyer for a price."
Definition and Essentials of a Contract of Sale Section 4(1) of the Sale of Goods Act
defines a contract of sale of goods as – "a contract whereby the seller transfers or agrees to
transfer the property in goods to the buyer for a price."
1. Two parties: The first essential is that there must be two distinct parties to a contract of
sale, viz., a buyer and a seller, as a person cannot buy his own goods.
2. Transfer of property: here means ‘ownership'. Transfer of property in the goods is
another essential of a contract of sale of goods. A mere transfer of possession of the goods
cannot be termed as sale. To constitute a contract of sale the seller must either transfer or
agree to transfer the property in the goods to the buyer.2
3. Goods: The subject-matter of the contract of sale must be 'goods'. (Defined Later)
4. Price: The consideration for a contract of sale must be money consideration called the
'price.' If goods are sold or exchanged for other goods, the transaction is barter, governed by
the Transfer of Property Act and not a sale of goods under this Act. But if goods are sold
partly for goods and partly for money, the contract is one of sale (Aldridge vs Johnson).
Definition and Essentials of a Contract of Sale

5. Includes both a 'sale' and 'an agreement to sell’: The term 'contract of sale' is a generic
term and includes both a 'sale' and an 'agreement to sell' [as is clear from the definition of the
term as per Section 4(1) given earlier]. Sale. Where under a contract of sale the property in
the goods is immediately transferred at the time of making the contract from the seller to the

1
Pandey, Nitya Nand (30 September 2018). "3. Definition clause". Docs.google.com. Retrieved 28 January 2019.
2
Bare Act of Sale of Goods Act
buyer,' the contract is called a 'sale' [Sec. 4(3)]. It refers to an 'absolute sale', e.g., an outright
sale on a counter in a shop. There is immediate conveyance of the ownership and mostly of
the subject-matter of the sale as well (delivery may also be given in future). It is an executed
contract. An agreement to sell. Where under a contract of sale the transfer of property in the
goods is to take place at a future time or subject to some condition thereafter to be fulfilled,
the contract is called 'an agreement to sell' [Sec. 4(3)]. It is an executory contract and refers
to a conditional sale. Definition and Essentials of a Contract of Sale3
6. No formalities to be observed (Sec. 5). The Sale of Goods Act does not prescribe any
particular form to constitute a valid contract of sale. A contract of sale of goods can be made
by mere offer and acceptance. The offer may be made either by the seller or the buyer and the
same must be accepted by the other. Neither payment nor delivery is necessary at the time of
making the contract of sale. Further, such a contract may be made either orally or in writing
or partly orally and partly in writing or may be even implied from the conduct of the parties.
Where articles are exhibited for sale and a customer picks up one and the sales assistant
packs the same for him, there has resulted a contract of sale of goods by the conduct of the
parties. Definition and Essentials of a Contract of Sale.4
Goods - Defined According to 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.“ Thus every kind of movable property except actionable claim
and money is regarded as 'goods'. Goodwill, trade marks, copyrights, patent rights, water,
gas, electricity, decree of a court of law,' are all regarded as goods. Shares and stock are also
included in goods. With regard to growing crops, grass and things attached to or forming part
of the land, such things are regarded as goods as soon as they are agreed to be separated from
the land. Thus where trees were 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 sate 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.

2. TERMINOLOGY AND RELATED SECTION

3
GAUTAM, KHAGESH. “Sales Tax and Cloud Computing in India.” The Tax Lawyer, vol. 68, no. 4, 2015, pp. 671–
713., www.jstor.org/stable/43920882.
4
L.R. 4 C.P. 296, 310.
1. Transfer of property (ownership). In a `sale' the property in goods passes to the buyer
immediately at the time of making the contract. In other words, a sale implies immediate
conveyance of property so that the seller ceases to be the owner of the goods and the buyer
becomes the owner thereof. It creates a jus in rem i.e., gives right to the buyer to enjoy goods
as against the whole world. In 'an agreement to sell' there is no transfer of property to the
buyer at the time of the contract. The conveyance of property takes place later so that the
seller continues to be the owner until the agreement to sell becomes a sale either by the
expiry of certain time or the fulfilment of some condition. An agreement to sell creates a jus
in personam, that is, it gives a right to either buyer or seller against the other for any default
‘Sale’ and ‘Agreement to Sale’ Distinguished5

2. Risk of loss. The general rule is that unless otherwise agreed, the risk of loss prima facie
passes with property (Sec. 26). Thus in case of sale, if the goods are destroyed the loss falls
on the buyer even though the goods may never have come into his possession because the
property in the goods has already passed to the buyer. On the other hand, in case of an
agreement to sell where the ownership in the goods is yet to pass from the seller to the buyer,
such loss has to be borne by the seller even though the goods are in the possession of the
buyer.
‘Sale’ and ‘Agreement to Sale’ Distinguished
3. Consequences of breach. In case of sale, if the buyer wrongfully neglects or refuses to
pay the price of the goods, the seller can sue for the price, even though the goods are still in
his possession. In case of an agreement to sell, if the buyer breaks his promise, the seller can
only sue for damages and not for the price, even though the goods are in the possession of
buyer.
‘Sale’ and ‘Agreement to Sale’ Distinguished
4. Right of resale. In a sale, the property is with the buyer and as such the seller (in
possession of goods after sale) cannot resell the goods. If he does so, the subsequent buyer
having knowledge of the previous sale does not acquire a title to the goods. The original
buyer can sue and recover the goods from the third person as owner, and can also sue the
seller for the breach of contract as well as for the tort of conversion. The right to recover the
goods from the third person is, however, lost if the subsequent buyer had bought them bona
fide without notice of the previous sale (Sec. 30). In an agreement to sell, the property in the

5
Jain, S. N. “A CRITIQUE OF ‘STATE OF MADRAS v. DAVAR & CO." Need for Amending the Central Sales Tax Act.”
Journal of the Indian Law Institute, vol. 11, no. 3, 1969, pp. 382–386. JSTOR, www.jstor.org/stable/43950037.
goods remains with the seller and as such he can dispose of the goods as he likes and the
original buyer can sue him for the breach of contract only. In this case, the subsequent buyer
gets a good title to the goods, irrespective of his knowledge of previous sale. Further, goods
forming the subject-matter of an agreement to sell can also be attached in execution of a
decree of the court of law against the seller
‘Sale’ and ‘Agreement to Sale’ Distinguished6
5. Insolvency of buyer before he pays for the goods. In a sale, if the buyer is adjudged
insolvent before he pays for the goods, the seller, in the absence of a ,right of lien' over the
goods, must deliver the goods to the Official Receiver or Assignee. The seller is entitled only
to a rate-able dividend for the price of the goods. But in an agreement to sell, in these
circumstances, the seller may refuse to deliver the goods to the Official Receiver or Assignee
unless paid for, as ownership has not passed to the buyer.
6. Insolvency of seller if the buyer has already paid the price. In a sale, if the seller is
adjudged insolvent, the buyer is entitled to recover the goods from the Official Receiver or
Assignee, as the property in the goods rests- with the buyer. On the other hand, in an
agreement to sell, if the buyer has already paid the price and the seller is adjudged insolvent,
the buyer can only

3. FACTS OF CASE LAW: -

By a contract dated September 10, 1920, the vendors agreed to sell and the purchasers to
purchase all the merchantable timber growing on August 20, 1920, in the forest of Luhde in
the Republic of Latvia. Merchantable timber was therein defined to be "all trunks and
branches of trees but not seedlings and young trees of less than six inches in diameter at a
height of four feet from the ground. The. timber was to be cut not more than twelve inches
from the around. The purchasers were to have fifteen years in which to cut the timber and
were to have the use of the vendors' sawmills, plant and huts. and the right to occupy every
part of the forest. The price was 225,000l., and the payments were to be made 15,000l. on
each of the three quarter days in the year, and for the fourth quarter a sum equal to 4l. a
standard of exportable timber cut in the forest during the year, less 45,000l. (the three
previous instalments). The amount was to be certified by the authorized agents of the vendors
and purchasers, the measurements having been agreed by them. The purchasers, unless
prevented by some act or enactment of the Government of the country, or by force majeure,

6
Bare Act of Sale of Goods Act
were to cut the timber at the rate of 15,000 standards per annum, and if they were so
prevented, the fifteen years' period was to receive a corresponding extension of time. During
the period of prevention the 15,000l. instalments of price were to be reduced to 4l. a standard
of timber cut, carried away and sold or exported during the quarter.7

On September 16 the Latvian Assembly passed an agrarian law, by which from October 1,
1920, the forest became the property of the Latvian State and the contract was annulled and
all property and rights of vendors and purchasers in the forest were confiscated. For the last
five and a half years, therefore, it had been illegal to perform the contract in the place where
alone it could be performed and the obstacle to its performance was continuing. The
purchasers had paid 30,000l. to the vendors covering the first six months, and no question
therefore arose that a default of payment of sums due had made the whole price payable:-

Held, that the contract was not a contract for the sale of specific goods in a deliverable state
within the meaning of s.18, r. 1, of the Sale of Goods Act, 1893 ; that the goods in question
were neither identified nor agreed upon; that it was not every tree in the forest which passed,
but only those complying with certain measurements not then made; that the timber was not
in a deliverable state until the purchasers had severed it and that they could not under the
definition in the rule be bound to take delivery of an undetermined part of a tree not yet
identified, and accordingly that the property in the timber had not passed under s. 18, r. 1, and
therefore that the timber was not at the risk of the purchasers.

The facts as found by the special case were as follows:-

(a) The forest of Luhde in the agreement of September 10, 1920, mentioned had an area of
9000 dessiatines or thereabouts. A dessiatine was a Russian measurement equal to 2.7 acres.
A small part of the forest consisted of leaf bearing trees ; by far the greater part consisted of
conifers.

(b) The forest was estimated by the plaintiffs to contain 24,000,000 and by the defendants to
contain about 33,000,000 or 34,000,000 cubic feet of timber ripe for cutting.

7
Gupta, CA. Upender. “INTEGRATED GOODS AND SERVICES TAX (IGST).” National Law School of India Review,
vol. 28, no. 2, 2016, pp. 134–142. JSTOR, www.jstor.org/stable/26201830.
(c) The sum of 30,000l. part of the purchase money payable tinder the agreement was duly
paid by the defendants to the plaintiffs in manner provided by clause 13 (i) of the agreement.
No further part of the purchase money had been paid.

(d) On September 15, 1920, the defendants were duly admitted by the plaintiffs into the
forest and took possession of the timber, the subject-matter of the agreement.

(e) On or about October 2, 1920, the defendants began to cut the timber in pursuance of the
agreement and continued so to cut the same until October 14, 1920. There was no evidence
before the arbitrator as to the amount of timber so cut by the defendants.8

(f) On October 14, 1920, the Government of Latvia by its agents in pursuance of the Lettish
agrarian law passed on September 16, 1920, Part I. of which (being the relevant Part) came
into operation on October 1, 1920 took possession of the forest and the timber therein.

(g) By virtue of the said law as from October 1, 1920, the forest and the timber therein
became the property of the, Latvian State and the agreement of September 10, 1920, became
annulled, and all property and rights of the plaintiffs and the defendants in the forest and the
timber therein became entirely confiscated to the Latvian State.9

(h) Continuously until the present time (a) the said law had remained in force and (b) the
Government of Latvia had remained in possession of the forest and (subject to the
arrangement and agreement with the defendants hereinafter referred to) of the timber therein.

(i) The defendants used all reasonable means to obtain from the Latvian Government
recognition of the agreement of September 10, 1920, with a view to the agreement being
carried into effect, but were unsuccessful in obtaining such recognition.

(j) The defendants recommenced felling timber in the forest about the end of October, 1920,
and continued such felling until December 23, 1920. Such felling was done under a
temporary arrangement with the Latvian Government made while negotiations were being

8
1912 S.C. 1017; 49 S.L.R. 865.
9
(1872) L.R. 7 C.P. 438, 449.
carried on between the defendants and the Government for a formal contract between the
defendants and the Government.

(k) On December 23, 1920, the defendants ceased felling timber in the forest in consequence
of an order of the Latvian Government prohibiting any further felling therein. The defendants
did not fell any timber in the forest after that date until January 21, 1921.10

(l) On January 21, 1921, the defendants recommenced felling timber in the forest and
continued to fell timber therein until March 9, 1921. From and after March 9, 1921, no
timber was felled in the forest by the defendants or by their servants or agents.

(m) All the timber in the forest which was felled by the defendants on and after January 21,
1921, was so felled under and in pursuance of the agreement of that date specified in the
schedule to the special case.

(n) As from October 14, 1920, no timber was felled in the forest under or in pursuance of the
agreement of September 10, 1920.11

(o) The total amount of timber in the forest felled by the defendants between the end of 1920
and March 9, 1921, was about 2,000,000 cubic feet.

(p) The defendants did not in regard to any matter relevant to the subject of the reference
induce the plaintiffs to alter their position for the worse or to refrain from altering their
position for the better.

(q) The risk of confiscatory legislation on the part of the Latvian Government to the
detriment of British subjects was mentioned in the course of the negotiations between the
plaintiffs and the defendants leading up to the agreement of September 10, 1920, but such
risk was treated in the course of such negotiations by both the plaintiffs and the defendants as
being too remote to require consideration, and both parties entered into the agreement on the
footing that there would be no such confiscatory legislation.

10
1912 S.C. 1017; 49 S.L.R. 865.
11
1912 S.C. 1017; 49 S.L.R. 865.
(r) Apart from the said Lettish agrarian law passed on September 16, 1920, there was nothing
in any relevant law rendering the agreement of September 10, 1920, or the performance
thereof in accordance with the terms thereof illegal or unenforceable by the plaintiffs. The
arbitrator declined to admit, as being irrelevant to any issue arising in the reference, evidence
tendered by the plaintiffs for the purpose of showing that the defendants made considerable
profits by the sale of timber cut under their arrangement and agreement with the Latvian
Government.12

4. JUDGEMENT
LORD HANWORTH M.R.
The contention of the vendors appears to strain the agreement in their favour, and to leave out
of sight many important terms which remained to be operative on their part during its
continuance. It is in my judgment impossible to hold that the intention of the parties was that
the property passed immediately at the date of the agreement. For these reasons, therefore, I
am unable to answer the first question favourably to the vendors, with the result that their
appeal fails and must be dismissed with costs.

SCRUTTON L.J.
I would add that I think the same result would follow under the decision of this Court in Ralli
Brothers v. CampaniaNaviera Sotay Aznar23 from the fact that performance of the contract is
at present permanently illegal in the place where the greater part of the contract is to be
performed. The appeal must be dismissed with costs.

SARGANT L.J.
Further I am of opinion that under the contract in question the timber sold did not form goods
in a deliverable state. I am content on this point to adopt the views of Lord Johnston in the
Scotch case of Morison v. Lockhart.25 In the view I have taken, it is unnecessary to consider
whether the doctrine of frustration would have applied even if the property in the timber had
passed to the purchasers, though I do not desire to express any doubt as to the decision on
13
this point also of the learned judge.

5. CONCLUSION
12
Mercantile Law by Areeb Shamsi.
13
6 B. & C. 360, 365.
‘The property’: s61(1) describes property means ‘the general property in goods, andnot
merely a special property.’ The special property is sometimes used to describe theinterest of a
pledgee, in order to emphasise the fact that he has something more thanmere possession of
the goods which have been pledged. Loosely, property can bethought of as ownership.
Battersby and Preston describe property as a transfer oragreement to transfer the absolute
legal interest from the seller to the buyer.

The Plaintiff sold to the defendant all the trees in a Latvian forest which conformed to certain
measurements namely 15 meters on the date of the contract. The Buyer would have 15 years
on which to cut and remove the timber. Almost immediately afterwards, the Latvian
14
Parliament passed a law confiscating the forest. The matter went to court and went to the
House of Lords primarily on one issue. Had the property in the trees passed from the Seller
to the Buyer or as one of the Judges did “whose forest and therefore the trees was confiscated
by Parliament? Remember he who has the property bears the risk. The court held as follows
“the property in the goods had not passed to the defendant the buyer as the goods were not
sufficiently identified since not all the trees were to pass to the buyer but only those
conforming to the stipulated measurements namely 15 metres.” So in this case the court fixed
the speciality of goods and said that special goods do not comes under the special goods. And
if certain terms of a good are describing its speciality than the good must be considered as
special in nature.

7. BIBLIOGRAPHY
1. Rabel, Ernst. “The Drafts of an International Sales of Goods Act and of a Revised Uniform
Sales Act.” Rabels Zeitschrift Für Ausländisches Und Internationales Privatrecht / The Rabel
Journal of Comparative and International Private Law, vol. 50, no. 1/2, 1986, pp. 331–336.
JSTOR, www.jstor.org/stable/27877048.
2. “Sales. Sale of Goods Act. Notice of Shipment by Sea.” Harvard Law Review, vol. 27, no.
2, 1913, pp. 187–188. JSTOR, www.jstor.org/stable/1325909.3. “Sales. Sale of Goods Act.
Effect of Tender of Payment on Verbal Agreement.” Harvard Law Review, vol. 21, no. 3,
1908, pp. 222–223. JSTOR, www.jstor.org/stable/1324896.
4. 1912 S.C. 1017 ; 49 S.L.R. 865

14
M. C. Purohit. “Sales Tax Exemptions in India.” Economic and Political Weekly, vol. 10, no. 10, 1975, pp. 445–
452. JSTOR, www.jstor.org/stable/4536923.
5. (1888) 13 App. Cas.523.
6. “Volume Harverd” Vol.31, No.1, 1972(B)