Sales of Goods Act, 1930 Laws related to Sale of goods, Act are contained in Sales of Goods Act, 1930

The general provisions of the Indian Contract Act are applicable for Contract of Sales of Goods also. So, provisions like capacity of the parties, free consent, damages etc are applicable in case Sales of Goods also. Sec. 4 (1) Def.: A contract whereby the seller transfers are agrees to transfer the property in goods to the buyer for a price. Essential characteristics of Contract of Sales of goods. 1. Two parties There must be two parties to a contract of sale, i.e., A buyer and a seller, as a person cannot buyer his owner goods. There may be contract of sale between one part owner and another. Ex : A & B jointly owner some goods, A way sell his part to B, so that that B becomes the sole owner of the goods. Exception: A person may buy his own goods, where a persons goods are sold in an auction, he may buys them to save from transfer of ownership to some on else. 2. Transfer of Property: Property means ownership. Transfer of property in goods is essentials of a contract of Sales 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 goods to the buyer.

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Goods Goods means every kind of movable property other than actionable claims and money, and includes stocks and shares, growing crops , and things to or forming a part of land. Goodwill, trade mark, copyright, patent right, water gas, electricity are all regarded as goods. Contract of sale of things forming part of the land itself are not contract for sale of goods. Ex: a contract for the sale of stone quarry is not a contract of sale of goods. Money means current money, Old and rare coins may be treated as goods and sold. Thus, sale of immovable property is governed and Transfer of property Act. 4. Price : The consideration for a contract of sale may be money, called the price. Contract of Sale includes both sale and an agreement to sell. Sale : When under a contract of Sale the property in good are immediately transferred at the time of making the contract from the seller to the buyer. An Agreement to Sell : When under a contract of Sale the transfer of property in goods is to take place at a future time or subject to some condition thereafter to be fulfilled. Ex : A buyer some furniture for Rs. 10,000 and agrees to pay for that in two monthly installments , the ownership passes to him only after the payment of 2nd installment. 6. No Formal Procedure : contract of sale. There is no particular form for valid

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A contract of Sales of goods can be made by mere offer and acceptance.

Neither payment or delivery is necessary at the time and making the contract of sale. Such a contract may be made either orally or in writing or both. Kind of Goods : 1. Existing Goods: Goods which are physically in existence and which are in sellers ownership or possession, at the time of entering the contract of sale are called existing goods.
(a) (b)

Specific goods: Goods which are identified and agreed upon at the time of making the contract are called specific goods. Unascertained goods: The goods which are not separately identified at the time of making of the contract are known as Unascertained good.

Ex : Bags of sugar or rice etc. 2. Future Goods: Goods to be manufactured, produced or acquired by the seller after the making of the contract of sale are called Future goods 9Sec 2(6). There can be no present sale of future goods, because property cannot pass what is not owned by the seller at the time of the contract. 3. Contingent Goods: Goods whose acquisition by the seller depends upon an uncertain contingency are called contingent goods. Ex: A promises to provide B with some amount of raw cotton, depending upon , whether the crop is good or its a failure. So, providing cotton is contingent upon the crop being failure or sucess. Effect of Perishing of Goods: Sec. 7 & 8 deals with the effect of perishing of goods on the rights and obligations of the parties. 1) Perishing of specific goods at or before making of the contract.

Ex: A agrees to sell to B a horse. The horse was dead at the time of bargain, neither party was aware of it. The agreement is Void. 2) Perishing of specific goods before sale but after agreement to sell (Sec. 8). Ex : Machine set on fire. Effect of perishing of future goods. Ex ; Potato crop failure.

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PRICE: The money consideration for a sale of good is

known as Price.

Price should be paid or promised to be paid in the form of a cheque, hundi, bank deposit etc. Modes of Fixing Price: 1) It may be expressly fixed by the contract itself. It means that parties are free to fix the price, the courts cannot question that but the sum of money should be definite, where an alternative price is fixed, the agreement is void-ab-initio. Ex : Cow, is to sell for 15,000, if it give 10 kg milk every day, but for only 5,000 if it fails to do so. 2) It may be fixed in accordance with an agreed manner provided by the contract. It may be agreed that the buyer would pay the market price, prevailing on a particular date or the price may be fixed by a third persons as agreed between the parties. But if in case the price is uncertain (not capable of being fixed) then the agreement is void. 3) It may be determined by the course of dealing between the parties. Previous payment to a particular seller on at the basis of price prevailing on that day, then it can be deemed that in subsequent dealing the prevailing price for that day shall be applicable.

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If the price is not capable of being determined in accordance with any of the above modes the buyer is bound to the seller a reasonable price What is reasonable price is a question of fact.

Stipulation as to time: 1) Stipulation relating to time of delivery of goods. In case of late delivery. The buyer may refuse to accept the delivery and may end the contract. Stipulation regarding time of payment of price. It case the payment is not paid on agreed time, the contract cannot be avoided by the seller. He has to deliver the goods if the buyer offers to pay the price within a reasonable time.

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Document of Title to Goods : Bill of lading ,dock- warrant, warehouse keepers certificate, Railway receipt, delivery order etc. are Example for holding the title of goods. These document proofs the ownership of goods.

Conditions & Warranties At the time of selling goods a seller usually makes certain statements with a view to induce the intending buyer to purchase the goods. Such statements are about the nature and quality of the goods, price, mode of payment, delivery of goods etc. These statements made before entering into a contract of sale are known as Representations. When these representations form a part of the contract of sale and the buyer relies upon them, then they have a legal effect on the contract. A representation which forms a part of the contract of sale is called Stipulation However, every stipulation is not important. 1) A stipulation which is most important for the formation of the contract of sale is known as a Condition. A stipulation which is of lesser importance for the formation of the contract of sale , is known as warranty. Def: Sec. 12(2) A condition is a stipulation essential to the main purpose of the contract, the breach of which gives rise to a right to treat the contract repudiated Sec.12(3) A warranty is a stipulation collateral to the main purpose of the contract, the breach of which gives rise to a claim for damages but not to a right to reject the goods and treat the contract as repudiated. Ex: 1). A says to B I want a horse which can run at a speed of 40 km/hr, B the horse dealer gives a particular horse. A buys it but later found that it can run only at a speed of 25 km/hr. This is breach of condition, because buyers stipulation is essential to the main purpose of the contract.

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Ex: 2). If in the above example; A say to B I want a good horse, B points out a particular horse says, this is a good horse and can run at a speed of 40 km/hr. A buys the horse. A later on finds that the horse can run only at 25km/hr. This is breach of warranty as the buyers stipulation is secondary.

Express & Implied Conditions & Warranties Express conditions and warranties are those which are entered in clear words in the contract.

They are said to be implied when the law. Presumes their existence in the contract automatically, though they have not been put into words.

Following are the implied conditions:(a) Condition as to title it is implied condition that the seller has a right to sell the goods, this is called as conditions as to title. Ex Theft Sale, Breach of conditions (b) Condition as to Description - It means that in case the goods do not match the description given , then the other party is not bound to accept it as per the sales of goods. Condition as to Sample - the goods to be supplied should be like the sample agreed upon, and the bulk shall correspond or match with the sample in quality and without any defect. Condition as to Fitness: Where the buyer makers it known to the seller the particular purpose for which the goods are required. Conditions as to Merchantability and wholesomeness This is always a implied condition that the goods purchased should be of merchantable quality. Ex : Sale of contaminated juice or fruits, milk, edible oil etc.

(c)

(d)

(e)

Implied Warranties : (a) Warranty of quiet possession : the buyer should have sole possession without any hindrance. Ex: Purchase of 2nd hand computer, found to be stolen. The purchasers can recover the price paid and also the cost of repair. (b) Warranty of freedom from Encumbrances : It means the goods purchased should be free from any charge from the third party. Ex : Car which was pawned, sold to the buyer results in encumbrance. Warranty to disclose Dangerous Nature of Goods Which may harm the ignorant buyer. Ex : Usage of electrical appliances etc.

(c)

RIGHTS OF AN UNPAID SELLER Unpaid Seller - The seller is deemed to be an unpaid Seller : (a) (b) (c) (d) (e) When the whole of the price has not been paid. When a BOE of other N.I. has been received as a conditional payment and the same has been dishonored. The good must have been sold on current terms and not on credit. Even if a portion of payment remain unpaid he is deemed to be an unpaid seller. The seller must not refuse to accept payment when tendered (offered).

Right of an Unpaid Seller An unpaid seller has two rights: I) II) I. Rights of unpaid seller against the goods. Right of unpaid seller against the buyer personally. Right of Unpaid Seller against the goods: i) Right of lien. ii) Right of stoppage of goods in transit. iii) Right of Resale.
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Right of Lien Lien is the right to retain possession of goods and refuse to deliver them to the buyer until the price due in respect of the goods is paid or offered. Lien can be exercised in the following cases: (a) Where the goods have been sold without any stipulation as to credit. (b) Where the goods have been sold on credit, but the term of credit has expired. (c) Where the buyer becomes insolvent, even though the period of credit may not have yet expired. Right of Stoppage of Goods in Transit:

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It means right of stopping further transit of the goods while they are with the carrier for the purpose of transmission to the buyer, and resuming possession of the goods and retaining possession until payment is made or offered. This right can be exercised when (a) The buyer becomes insolvent i.e. when the buyer is unable to pay his debts in the ordinary course of business, whether he is declared insolvent or not. The property has not passed to the buyer. The goods are in the course of transit. It means that good must be neither with the seller not with the buyer not with the agent. They should be in the custody of a carrier as an independent middleman.

(b) (c)

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Right of Resale the right of resale is a valuable right given to an unpaid seller. If even after right of stoppage in transit is exercised and the buyer continues to remain in default, then the seller cannot continue to retain the possession of the goods indefinitely, especially when the goods are perishable in nature. This right confers a limited right to the seller to resell the goods in the following cases 1) When the goods are of perishable nature. 2)
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Where this right is expressly made in the contract in case of buyers default to pay. Where the seller has given notice to the buyer of his intentions to resell and even then the buyer does not pay.

II. Right of Unpaid Seller against the Buyer personally :

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Suit for price Where the property in goods has passed to the buyer, and the sale price is payable on a particular dates

or where the property in goods has not passed and the buyer wrongfully neglect to pay the price. Then the seller is entitled to sue the buyer for price, irrespective of the delivery of goods.
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Suit for damages for non-acceptance Where the buyer wrongfully neglects or refuses to accept and pay for the goods, the seller may sue him for damages for nonacceptance. Sellerss remedy in this case is suit for damages rather than an action for full price of the goods. Suit for special damages & interest - This is ensued , when it is in the contemplation of the buyer that the breach of contract may result in loss to the seller.

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Performance of Contract of Sale 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. Delivery : Means voluntary transfer of possession of goods from one person to another. Modes of Delivery : 1) Actual Delivery : where the goods are physically handed over by the seller or his authorized agent to the buyer at his authorized agent. Ex: Handing over of the car to the buyer by the Seller. 2) Symbolic Delivery Here the goods remain where they are (because they are bulky) but means of obtaining possession of goods is delivered. Ex : The seller handing over the keys of the godown so that the buyer can take possession of goods. Constructive Delivery Such delivery takes place when the person in possession of the good of the seller acknowledges in accordance with the sellers orders, that he holds the goods on behalf of the buyer and the buyer has his consent to it.

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Rules of Delivery of Goods : 1) Delivery may be either actual, symbolic or constructive (Sec. 33). 2) Delivery and payment are concurrent conditions (Sec. 32) i.e. the sellers should be ready and willing to deliver the goods to the buyer in exchange for the price and the buyer should be ready to pay the price. 3) Effect of part delivery, when property in goods is to pass on delivery (Sec. 34) When a delivery of part of goods has been made with the interaction of delivering the rest also, the property in whole of goods is deemed to pass to the buyer as soon as some portion is delivered. 4) Buyer to apply for delivery (Sec. 35) It is the duty of the buyer to demand delivery, and if he fails to do so, be cannot blame the seller for the non delivery.

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Time of Delivery (Sec. 36(2) Where no time is fixed the seller is bound to send them within a reasonable time, and also the delivery should be made at a reasonable time and hour. Place of Delivery - May be stated in the contract, where it is stated, the goods must be delivered at the names place during business house on a working day. Delivery of goods where they are in possession of a third party (Sec. 36(3). Example Constructive Delivery. Expenses (Sec. 36(5) The expenses and incidentals in putting the goods into a deliverable state must be borne by the seller. Delivery of Wrong quality or different quality (sec 37) A defective delivery i.e. delivery of a quantity less or more than that contracted for or delivery of goods mixed with the goods or a different description not includes in the contract, shall entitle the buyer : 1) To reject the whole lot, 2). To accept the whole lot, 3).To accept the quantity and quality ordered and reject the rest of the good delivered. Installment deliveries (Sec. 38) the buyer of goods is not bound to accept delivery by instilments, but if the parties so agree then, only the delivery of the goods, may be made by instilments. Delivery to carrier or wharfinger (Sec. 39) Delivery of good to a carrier or wharfinger is deemed to be delivery of the goods to the buyer. Liability of buyer for neglecting or refusing to take delivery of goods (Sec. 44) the buyers becomes liable to the seller for any loss that may occur by his neglect or refusal to take delivery, and also charge for the safe custody and care of the goods.

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