CONTRACT OF SALE OF GOODS

Meaning of CONTRACT OF SALE OF GOODS

Contract where by the seller transfer or agree to transfer the property in goods to buyer for price. Contract of sale they may be between one party owner and another sec.4 (1).

ESSENTIAL ELEMENT OF CONTRACT OF SALE

1. Two parties 2. Goods 3. Price 4. Transfer of general property 5. A contract of sale may be I) Absolute or II) Conditional 6. Essential elements of a valid contract

SALE AND AGREEMENT OF SALE

Sale- under contract of sale, the property in the goods is transferred from the seller to buyer. But where the transfer of the property in goods is take place at a future time called an agreement to sale.

DIFFERENCES BETWEEN SALE AND

AGREEMENT OF SALE

SALE
1
The property in the goods passes from the seller to the buyer no more the owner of goods sold immediately so that the seller is
Type of goods. A sale can only Be in case of existing and specific goods only.

AGREEMENT OF SALE
The transfer of property in the goods is to take place at a future time.

Is mostly in case of future and contingent goods although in same cases it may refer to unascertained existing goods. If the goods are destroyed, the loss falls on the seller even though the seller is in the possession of the buyer.

Risk of loss. In a sale, if the goods are destroyed, the loss falls on the buyer even though the goods are in the possession of the seller.

DIFFERENCES BETWEEN SALE AND

AGREEMENT OF SALE
4
Consequences of breach. In a sale, if the buyer fails to pay the price of the goods or if there is a breach of contract by the buyer, the seller can sue for the price even though the goods are still in his possession. Right to re-sell, the seller cannot re-sell the goods (except in a certain cases, as for example, a sale by a seller in possession after sale in Sec.30. or a sale by an unpaid seller under Sec.54.). If he does so the subsequent buyer does not acquire title to the goods. If there is a breach of contract by the buyer, the seller can only sue for damage and not for the price even though goods are in the possession of buyer.

In ca of re-sale, the buyer, who take the goods for consideration and without notice of the prior agreement, get a good title. In such a case, the original buyer can only sue the seller for damages.

DIFFERENCES BETWEEN SALE AND

AGREEMENT OF SALE
6
General and particular Is merely a contract, pure and property. A sale is a contract simple, and creates jus in plus conveyance, and personam, i.e., gives a right creates jus in rem, i.e., gives to the buyer against the seller right to the buyer to enjoy to sue for damages. the goods as against the world at large including seller. Buyer cans one claim rate buyer can claim the goods. . able dividend.

7 If seller become insolvent

SALE AND HIRE PURCHASE AGREEMENT

A hire purchase agreement is a contract where by the
owner of the goods lets them on hire to another person called hire or hire purchaser on payment of rent to be paid in installments and upon agreement that when a certain number of such installment is paid, the property in the goods will pass to hirer.
any obligation to pay the balance rent. A hire purchase agreement is not a contract to sale but only a bailment and the property in goods remains in the owner during the continuance bailment. In other words, it is a bailment plus an agreement to sell.

The hirer may return the goods at any time without

DISTINCTION BETWEEN A SALE AND A HIRE PURCHASE AGREEMENT.

SALE
1

HIRE PURCHASE AGREEMENT

Ownership is transferred from Ownership is transferred from the the seller to the buyer as soon as seller to the hire purchaser only when the contract is interred into. a certain agreed number of installments are paid. The position of the buyer is that of the owner. The buyer cannot terminate the contract and as such is bound to pay the price of the goods. If the payment is made by buyer in instalments, the amount payable by buyer to the seller is reduce, for the payment made by the buyer is toward the price of the goods. The position of hire purchaser is that of the bailee. The hire purchaser has an option to terminate the contract at any stage, and cannot be forced to pay the further instalments. The instalments paid by the hire purchaser are regarded as hire charges and not as payment toward the price of the goods till option to purchase the goods is exercised.

2 3

SUBJECT- MATTER OF CONTRACT OF SALE

Goods form the subject-matter of a contract of sale. According to Sec.1 (7) goods means every kind of movable property other than actionable claim and money; and including stocks and shares, growing crops, grass and things attached to our forming part of the land which are agreed to be serve before sale or under the contract of sale. Trade mark; copy right, good will. Electricity water, gas, is all goods. Actionable claim and money are not goods. An actionable claim means a claim to any debt or any beneficial interest in movable property not possession (Sec. 3 of the Transfer of the property Act, 1882). It is something which can only be enforced by action in a court law. A debt due from one person to another is an actionable claim and cannot be bought or sold as goods. It can only be assigned. Money here means current money and not old rare coins.

CLASSIFICATION OF GOODS
The goods which form the subject of a contract of
sale may be either goods, or future. Goods [Sec. 6 (1)], or contingent goods [Sec. 6 (2)].

(I). Existing of goods. (II). Future goods (III). Contingent goods

(I). Existing of goods.

These are goods which are owned or possessed by seller at the time of sale. Only existing goods can be the subject of a sale, the existing goods can be: (a). Specific goods

(b). Ascertained goods

(c). Unascertained or generic goods

(II). Future goods

These are the goods which a seller does not possess at the time of the contract but which will be manufactured or produced or acquired by him after the making of the contract of sale [Sec. 2 (6)]. A contract of present sale of future goods, though expressed as an actual sale, purports to operate as an agreement to sell the goods and not a sale [Sec. 6 (3)]. This is because the ownership of a thing can not be transferred before that thing comes into existence

Example, A railway administration antlered into a contract for sale of coal ash that might accumulate during the period of contract. Held, the contract amounted to to an agreement to sell [Union of India v. Tara Chand, A.I.R. (1976) M.P 101]

(III). Contingent goods

Though a type of future goods, there are the goods the acquisition of which by the seller depends upon a contingency which may or may not happen [Sec. 6 (2)].
Example; A agrees to sell specific goods in particular ship to B to be delivered on the arrival of the ship. If the ship arrives but with no such goods on board, the seller is not liable, for the contract is to deliver the goods should they arrive. Contingent and Future goods- The procurement of contingent goods depends upon a contingency whereas it is not so in case of future goods. On non acquisition of contingent goods, the parties are discharged whereas on non acquisition or non-production of future goods the parties are not discharges.

EFFECT OF DESTRUCTION OF GOODS:

1). Goods perishing before making of contract (Sec 7). 2. Goods perishing after the agreement to sell but before the sale is effected (Sec. 8).

1). Goods perishing before making of contract (Sec 7). A contract for the sale of specific goods is void if at the time when the contract was made, the goods have, without the knowledge of the seller perished. The same would be the case where the goods become so damaged as no longer to answer to their description in the contract. The rule is based on the ground of mutual mistake or impossibility of performance [Couturier Vs Hastie, (1856)

5 H.L.C. 673].

2. Goods perishing after the agreement to sell but before the sale is effected (Sec. 8).
An agreement to sell specific goods become void if subsequently the goods, without any fault on the part of the seller or buyer, perish or become so damaged as no longer to answer to their description in the agreement before the risk passes to the buyer. Fault means wrongful act or default [Sec. 2 5)].This rule is base on the group of impossibility of performance

[Howell v. Coupland , (1876) Q.B.D. 258].

Secs. 7 and 8 apply only to specific goods and not to unascertained goods. If the agreement is to sell certain quality of unascertained goods, the perishing of even the whole quantity of such goods in possession of the seller will not relieve him of his obligation to deliver the goods.