MY PresentationPresented By ‘Ishak’

ID # 11302026

Sale of Goods Act, 1930 (Bangladesh)

Table of Contents

What is a Sale? Why the Sale of Goods Act is important Buyer, Seller, Price Delivery & Deliverable State Goods Specific Goods Future Goods Contract of Sale Caveat Emptor Sale and Agreement of Sale Offer and acceptance Method of Contract Existing and future goods Goods perishing before making of contract

Table of Contents

Ascertainment (deciding the price) of Price Price ascertained by joint agreement or by the course of dealings Ascertainment of Reasonable Price Ascertainment of price as by third parties What is Condition? What is warranty? When condition to be treated as warranty Voluntary Waiver Compulsory Waiver Condition as to title Sale by description Sale by sample

What is a Sale?

A Sale is the act of selling a product or services in return for money or other compensation.

Why the Sale of Goods Act Important?

The Sale of Goods act is a very important and relevant legislation to

understand in order to avoid the problems many consumer faces when

they make purchases.

It is advised to know what rights you have and how you can resolve the

situation in case of any issue.

Short title, extent and commencement

1. This act may be called the 2** Sale of Goods Act, 1930

2. It extends to the whole of Bangladesh

3. It shall come into force on the first day of July, 1930

Buyer, Seller, Price

Buyer:A person who buys or agrees to buy goods. (clause:2-1)Seller:A person who sells or agrees to sell goods. (clause:2-13)Price:The money consideration for a sale of goods. (clause:2-10)

Delivery & Deliverable State

Delivery:Voluntary transfer of possession from one person to another.

(clause:2-2)

Deliverable State:Goods are said to be in a “deliverable state” when they are in

such state that the buyer would under the contract be bound to take delivery of them. (clause:2-3)

Goods

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. (clause:2-7)

Goods

Specific Goods:It means goods identified and agreed upon at the time a contract

of sale is made. (clause:2-4)

Future Goods:It means goods to be manufactured or produced or acquired by

the seller after making the contract of sale. (clause:2-6)

Contract of Sale

1) 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. Clause:4-1

2) A contract of sale may be absolute (The way it is) or conditional. Clause: 4-2 

Example: Karim has a horse. Karim hands over the horse to Rahim for the amount of 20000Tk or karim agrees to hand over the horse to rahim within three(3) days. For both party this is an example of Contract for sale of goods

Caveat Emptor

[Latin, Let the buyer beware.] A warning that notifies a buyer that the goods he or she is buying are "as is," or subject to all defects.

When a sale is subject to this warning the purchaser assumes the risk that the product might be either defective or unsuitable to his or her needs.

It merely summarizes the concept that a purchaser must examine, judge, and test a product considered for purchase himself or herself.

Example :- Karim went to market and purchased a bike to take a part in Bike race competition. But he did not tell the seller that for which purpose he is buying. When he reached home, he came to know that this bike is not suitable for bike race competition. Due to the principal of Caveat Emptor Mr. Karim can neither reject the bike nor can claim for compensation.

Sale and Agreement of Sale

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 condition thereafter to be  fulfilled, the contract is called in agreement to sell.  Clause: 4-3 

An agreement to sell becomes a sale when the time elapses or the 

conditions are fulfilled subject to which the property in the goods is  to be transferred. Clause: 4-4

Example: Karim sells 50 kg of rice to Rahim for an amount. Or Karim accepts money from Rahim and promises that Karim will send Rahim 50 kg of rice within three(3) days. Those Two(2) examples are the example of Sale and Agreement of Sale.

Offer and acceptance

A contract of sale is made by an offer to buy or sell goods for a price and the acceptance of such  offer. The contract may provide for the immediate delivery of the goods or immediate payment of the price or both, or for the delivery or payment by installments, or that the delivery or payment or both shall be postponed.  Clause: 5-1 

Method of Contract

Subject to the provisions(law) of any law for the time being in force a  contract of sale may be made in writing or by word of mouth, or partly  in writing and party by word of mouth or may be implied from the  conduct of the parties. Clause: 5-2 

Existing and future goods

(1) Goods present at the time of transaction with the seller

(2) Future Goods means goods to be manufactured or produced by the seller after the making of the contract of sale Clause: 6-2 

Goods perishing before making of contract

Where there is a  contract for the sale of specific goods, the contract is void (cancelled) if the  goods without the knowledge of the seller have, at the time when the  contract was made, perished or become so damaged as no longer to  answer to their description in the contract. Clause: 7 

Example: Karim wants to import 100 tons of onions from Rahim. Those Onions was suppose to come to Bangladesh by a Ship from India. Rahim is the Onion merchant here.

Both parties (Rahim and Karim) make a contract of sale of those Onions. But when Rahim (the seller) goes to his warehouse to get those onions to

put them in a ship Rhaim finds that all the onions got rotten in the warehouse without his knowledge and Which was unknown to Rahim. In this case that contract will be void(cancelled).

Ascertainment (deciding the price) of Price

Price ascertained by joint agreement or by the course of dealings:

The price in a contract of sale may  be fixed by the contract or may be left to be fixed in manner thereby  agreed or may be determined by the course of dealing between the  parties. Clause: 9-1 

Example: Rahim purchases two tons of wheat from Karim in the month of May. But it was decided by them that the price of those wheat will be decided by them on the 1st of July according to the market value as of July 1st.

Ascertainment of Reasonable Price

Where the price is not determined in accordance (according to) with the foregoing (previous) provision (condition), the buyer shall pay the seller a reasonable price.

What is  a reasonable price is a question of fact dependent on the circumstances of each particular case.  Clause: 9-2

Example: Rahim delivered two tons of wheat from Karim on May 1st . But when Karim purchased those wheat from Rahim the price of those wheat was not fixed. In this case the price of those wheat will be fixed as the market price of wheat as of May 1st.

Ascertainment of price as by third parties

(1) Where there is an agreement  to sell goods on the terms that the price is to be fixed by the  valuation of a third party and such third party cannot or does not  make such valuation, the agreement is thereby avoided:  Clause: 10-1 

Provided that, if the goods or any part of the good thereof have been  delivered to the buyer and appropriated (use/taken) by the buyer, he (the buyer) shall pay a reasonable  price thereof.  But

1) Where such third party is prevented (obstructed) from making the valuation by  the fault of the seller or buyer, the party not in fault may maintain  a suit for damages against the party in fault. Clause: 10-2 

What is Condition?

A condition is a stipulation/conditions essential to the main purpose of the contract the breach (break)of which gives to right to treat the contract as repudiated (Reject).Clause: 12-2

Example: Karim wants to buy some furniture. He goes to a furniture shop and says to the furniture shop owner that Karim will only purchase furniture’s from the furniture shop only if the seller provides Furniture’s to Karim made of Segun Wood.

In this case the “ Segun Wood” is the Condition (main requirements) in case of purchasing furniture from the seller.

What is warranty?

According to Sale of Goods Act, 1930 A warranty is a stipulation collateral to the main purpose of the contract, the breach of which (collateral) gives rise to claim for damages but not to a right to reject the goods and treat the contract as repudiated. 

Clause: 12-3Example: Karim wants to buy some furniture. He goes to a furniture shop and says to

the furniture shop owner that Karim will only purchase furniture’s from the shop only if the seller provides Karim Furniture’s made of “Good Wood”.

The seller assures Karim that Karim will receive furniture from the seller made of Segun Wood. And an agreement was made between them.

But on the time of delivery of the furniture’s Karim finds out that the furniture’s were not made of Segun wood they were made of Korai tree wood.

In this case Karim must accept the fact that the seller has broken the secondary conditions not the primary conditions of the sell.

In this case Karim may claim for damages but cannot reject the goods and treat the contract as repudiated(reject) Because Karim did not mention specifically in the contract that the seller musr provide Segun Wood furniture otherwise the contract will be void.

When condition to be treated as warranty

Voluntary Waiver (1) Where a contract of sale is subject to any condition to be fulfilled by the seller, the buyer may waive the condition or elect to treat the breach of the condition as a breach of warranty and not as a ground for treating the contract as repudiated.  Clause: 13-1

Example: An agreement of sale is made between a buyer and seller that certain product will be delivered by the seller to the buyer by May 1st . And this date May 1st was fixed by the seller, But in reality the product was delivered to the buyer on May 2nd.

Here the buyer instead of cancelling the contract make a claim against the seller for any damage done to the buyer for not delivering him the product on time

When condition to be treated as warranty

Compulsory Waiver: Where a contract of sale is not severable(unbreakable by the buyer)

If a buyer has accepted goods or part of goods thereof the breach of any condition that suppose to be fulfilled by the seller can only be treated as a breach of  warranty and not as a ground for rejecting the goods and treating the contract as repudiated, unless there is a term of the contract, express or implied, to that effect. Clause: 13-2

Example: Karim makes an agreement with a car garage that the car garage will provide Karim

a complete “Motor Engine” to run his car. The car garage provides Karim half of the motor engine and keeps on delaying to

provide the other half of the engine to Karim. Since half of the motor engine was provided to karim and karim also accepted that

half of the engine but the car garage by delaying the delivery of the other part of the engine actually breached the conditions

But Since Karim has accepted the half of the engine he can not reject the contract with the garage Karim can only claim for monetary damage for the delay delivery.

Condition as to title

There is an implied condition on the part of the seller that, in the case of sale, he has a right to sell the goods and that, in the case of an agreement to sell, he will have a right to sell the goods at the time when the property is to pass. Clause: 14-A

On the other hand it is said that: If someone sales anything by not being the owner of those things in such case the buyer can reject the contract.

Example: Karim purchases a car from Rahim and use the car for eight months. Later Karim finds out that Rahim is not the original owner of the car, Jamal is.

In that case Jamal will get the car back from Karim and Rahim will give the full amount money taken from Karim to Karim.

Sale by description

Where there is a contract for the sale of goods by description there is an implied condition that the goods shall correspond with the description.

Clause: 15

Example :- Mr. Rahim sells butter to Mr. Karim saying that it is a pure butter and there is nothing mixing in it. When Mr. Karim uses it, he comes to know that there is adulteration in it. Now Mr. Rahim will be held responsible.

Sale by sample

A contract of sale is a contract for sale by sample where there is a term in the contract, express or implied, to that effect.

  (a) That the bulk shall correspond with the sample in quality;  that is the

product must match as described earlier.(b) that the buyer shall have a reasonable opportunity of comparing the bulk

with the sample;  That is the buyer must be given enough time to match the product with the sample. 

(c) that the goods shall be free from any defect, rendering them un merchantable, which would not be apparent on reasonable examination of the sample. That is the product must be supplied as the sample. No fault can be there. Clause: 17