SALE OF GOODS ACT, 1930

According to Section 4(1) of the Sale of Goods Act 1930 “ 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.”

Essential Elements of Contract of Sale

a) Seller and buyer
b) Goods
c) Transfer of general Property
d) Price
e) Essential elements of a valid contract.

Absolute Or Conditional
(a) Offer & acceptance
(b) Delivery and payment
(c) Express or implied.

Meaning and Types of Goods (sec. 2(7))

A goods means every kind of movable property other than actionable claims and money,
and include the following:
a) Stock and shares
b) Growing crops, grass and things attached to or forming part of the land which are
agreed to be served before sale or under the contract of sale.

Things Excluded from the Terms ‘Goods’

a) Actionable claims
b) Money, which means the legal tender
c) Immovable property

TYPES OF GOODS (SEC.-6)

Goods
a) Existing goods  Specific goods, Ascertained goods ,Un ascertained goods.
b) Future goods
c) Contingent goods.

1
CONDITIONS AND WARRANTIES STIPULATED (SEC.-12(1))
A stipulation in a contract of goods may be condition or warranty.

Condition (S-12 (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

Warranty (S-12 (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 a
right to reject goods and to terminate the contract.

Express And Implied Conditions And Warranties

a) Express conditions & warranties : these are expressly provided in the contract.
b) Implied conditions and warranties : these are implied by law in every contract of sale
of goods unless a contrary intention appears form the terms of the contract.

Impliled Conditions And Warranties

IMPLIED CONDITIONS IMPLIED WARRANTIES

a) Conditions as to title (sec 14(a)) a) Warranty as to quiet possession (Sec –
b) Conditions in case of sale by 14(b))
description (Sec – 15) b) Warranty of freedom from
c) Condition in case of sale by sample encumbrances (Sec – 14 (c))
(Sec – 17) c) Warranty as to quality or fitness for a
d) Conditions in case of sale by particular purpose annexed by usage of
description and sample (Sec – 15) trade (Sec – 16(3))
e) Condition as to quality or fitness (Sec –
16(1))
f) Condition as to Merchantile quality
(Sec- 16(2))
g) Condition as to wholesomeness
h) Condition implied by customers (Sec-
16(3))

Meaning and Exception to the Doctrine of Caveat Emptor:

The expression ‘Caveat Emptor’ means ‘let the buyer beware.’ In other words, it is not part
of the sellers duty to point out defects of the goods which he offers for sale, rather it is the
duty of the buyer to satisfy himself about the quality as well as the suitability of the goods.

Exceptions To The Doctrine Of Caveat Emptor

a) In case of misrepresentation by the seller.

b) In case of concealment of latent defects by seller
c) In case of sale by description (S –15)
d) In case of sale by sample (S-15)
e) In case of sale by description and sample (S – 15)
f) Fitness for a particular purpose (S – 16(1))
g) Merchantable quality (S – 16(2))

2
 RIGHTS OF UNPAID SELLER
The seller of goods is deemed to be an ‘unpaid seller’
a) When the whole of the price has not been paid or tendered
b) When a bill of exchange or the other negotiable instrument (such as cheque) has
been received as conditional payment and it has been dishonored (Sec – 45(1)).
c) The term ‘seller includes any person who is in the position of a seller (for instance an
agent of the seller to whom the bill of lading has been indorsed, or a consignor or
agent who has himself paid, or is directly responsible for the price) S – 45(2).

Note:
a) The seller shall be called an unpaid seller even when only a small portion of the price
remains to be paid.
b) It is for the non-payment of the price and not for other expenses, that a seller is
termed as an unpaid seller
c) Where the goods have been sold on credit, the seller cannot be called as an unpaid
seller during the credit period unless the buyer becomes insolvent.
d) Where the full price has been tendered by the buyer and the seller has refused to
accept it the seller cannot be called as unpaid seller.

RIGHTS OF AN UNPAID SELLER

AGAINST THE BUYER

AGAINST GOODS PERSONALLY

I II
WHERE THE PROPERTY IN WHERE THE PROPERTY IN THE
GOODS IS PASSED TO THE GOODS HAS NOT PASSED TO THE
BUYER BUYER

RIGHT RIGHT OF RIGHT OF WITH HOLDING LIEN STOPPED RESALE

TO LIEN STOPAGE RESALE DELILVERY IN
IN TRANSIT TRANSIT

SUIT FOR SUIT FOR SUIT FOR

PRICE DAMAGES INTEREST

RIGHTS OF BUYER

RIGHTS OF BUYER
3
 SUIT FOR
DAMAGES FOR
NON-DELIVERY
IN CASE OF
SEC. 57 SUIT FOR SUIT FOR
REPUDIATIO SUIT FOR
SPECIFIC BREACH OF
N OF THE INTEREST
PERFORMANCE WARRANTY
CONTRACT SEC. 41(3)
SEC. 58 SEC. 59
SEC. 60

AUTION SALE (S – 64)

Auction sale means a public sale where intending buyers assemble at one place and offer
the price at which they are ready to buy the goods. The offer of the price is known as ‘bid’
and the person making the bid is known as the ‘bidder.’ The owner of the goods may himself
sell them by auction or appoint a person to sell the goods in auction on his behalf. The
person so appointed is known as “auctioneer.”