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8/3/2019 Chapter Two of SOGA of 1930
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Condition?(sec.12(2))
A condition is a stipulation essential tothe main purpose of the contract, breach
of which gives rise to a right to treat the
contract as repudiated or broken.
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Warranty? [Sec.12(3)]
A warranty is a stipulation collateral to the main
purpose of the contract the breach of whichgives rise to a claim for damages but not to a
right to reject the goods and treat the contract as
repudiated or broken.
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Whether a particular stipulation in a contract of
sale is a condition or a warranty depends in
each case on the construction of the contract and
is to be gathered from the stipulation of the
contract as a whole.
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A stipulation may be a condition, though called
a warranty in the contract. [Sec.12(4)]
Conditions and warranties may be
expressly stated or may be implied from the
circumstances.
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Stipulation as to time whether a
condition?[Sec.11]Where a different intention appears
from the terms of the contract,
stipulation as to time of payment is notdeemed to be of the essence of a contract
of sale
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Whether any other stipulation as to time is of the
essence of the contract or not depends on theterms of the contract.
Stipulations as to time, except as regards
time of payment are usually of the essence of thecontract
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Condition and Warranty distinguished
1. Stipulation :Condition is an essential term or
stipulation of the contract which must be
fulfilled for the performance of the contract.
Warranty is a collateral or incidental stipulation
to the main purpose of the contract. It is not as
essential a stipulation of the contract as a
condition.
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2. Remedy : Breach of condition gives right to
repudiate or treat the contract as broken or
rescinded and also a right to claim damages.
Breach of warranty gives right to claim damages
only. A breach of warranty does not entitle a
buyer to reject the goods and his only remedy
would be to set up against the seller
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Summary:-
A places an order on B for supply of machine parts
strictly according to the sample. Delivery to be made
within three months. Now supply of parts strictly
according to the sample is an essential condition while
delivery within three months is a warranty. Time is not
essential to the main purpose of the contract, if,therefore, B does not supply the machine parts strictly
according to the sample. A can repudiate or reject the
goods and also claim damages, if, however, b suppliesthe parts later than three months, A can claim damages
only for late delivery but he cannot repudiate the
contract.
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Transfer of propertyIt means that the ownership of the seller in the
goods ceases and the buyers ownership in the
goods commences.
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Condition related to transfer property /
ownershipTransfer of property in the goods is distinct
from deliver of goods. Transfer of property
means transfer or passing of ownership in thegoods.
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Property means the general property in the
goods and not merely a special property[sec2(11)]. Property or ownership in the
goods may pass to the buyer without delivery
of the goods. On the other hand. Mere
delivery of the goods may not constitute
transfer of ownership in the goods. Therefore
property in the goods is distinct from delivery
or possession of the goods.
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The time of transfer of property in the goods
decides various rights and liabilities of the seller
and the buyer. As a general rule, unless
otherwise agreed, the goods remain at the
sellers risk until the property therein is
transferred to the buyer, when the property
therein is transferred to the buyer the goods are
at the buyers risk. Whether delivery has been
made or not (sec.26). Risk therefore, prima facie
passes with the property.
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a) B offers A for his horse Rs. 1000, the horse to
be delivered to B on a stated day and the price to
be paid on another stated day. A accepts theoffer. The horse becomes Bs property when the
contract is made, that is, as soon as the offer is
accepted.b) B offers A for his horse Rs. 1000 on a
months credit. A accepts the offer. The horse
becomes Bs property as soon as the offer isaccepted.
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TRANSFER OF PROPERTY OR OWNERSHIP
SUMMARY
A contract of sale of goods is a contract whereby
the seller transfers or agrees to transfer property ingoods to the buyer for a price. Transfer of property is
the essence of a contract of sale of goods. There are
three stages in the performance of a contract of saleby the seller which are as follows:-
a. transfer of property in goods
b. Delivery of goods or transfer of possession ofgoods; and
c. The passing of the risk.
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1. Performance of the contract :-
Definition :- section 2 (2) defines delivery as
voluntary transfer of possession of goods from
one person to another. Section 33 further states
that delivery may be made by doing anything
which has the effect of putting the goods in
possession of the buyer or of a person
authorized to hold them on his behalf. Deliver
goods may be actual or symbolic.
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Delivery & Payment :- it is the duty of the
seller to deliver the goods an of buyer to acceptand pay for them in accordance with the terms
of the contract of sale (sec. 31). Delivery of the
goods by the seller and payment of the price bythe buyer are concurrent condition
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Delivery to be made to buyer : Delivery of
goods sold may be made by doing anything
which the parties agree shall be treated as
delivery or which has the effect of putting the
goods in the possession of the buyer, or of any
person authorized to hold them on his behalf
(sec. 33)
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Part Delivery : Delivery of part of the goods,
in progress of delivery of the whole amounts to
delivery of the whole, if there is no intention of
severing of such part from the whole (sec 34).
Buyer to apply for delivery : seller of goods is
not bound to deliver the goods until the buyer
applies for delivery thereof (sec. 35).
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Mode of delivery : mode of delivery depends on thecontract between the parties. Whether it is for the buyer to
take possession of the goods or for the seller to send themto the buyer is a question depending in each case on the
contract, express or implied, between the parties
[(sec.36(1)].
6. place of Delivery : Apart from such a contract:i) Goods sold are to be delivered at the place at which
they are at the time of sale.
ii) Goods agreed to be sold are to be delivered at the
place at which they are at the time of the agreement to sell.
Go Goods not in existence are to be delivered at the
owners risk
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Time of Delivery : where no time for sending thegoods is fixed the seller must send the goods in time.
If the delivery is to be done as and when required,
demand for delivery must be made at a reasonable
time.
Demand at reasonable hour : Demand for or tender
of delivery must be made at a reasonable hour. What is
a reasonable hour is a question of fact [Sec.36 (4)].
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Rights of unpaid seller
Unpaid seller : unpaid seller is one who has not
received the whole of the price or has received the
payment by bill of exchange or negotiable
instrument which is dishonored.
Ri h f id ll
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Rights of an unpaid seller :
(1) where the property in the goods has passed, the
unpaid seller has the following right (i) right of lien;(ii) stoppage in transit; (iii) resale, where the property
in the goods has not passed, the unpaid seller has the
following right; (i) withholding delivery;
Oth i ht Ri ht f li li i h f
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Other rights:Right of lien : lien means right of
retaining the possession of the goods until the claim is
paid. It may arise by status, by express or implied
contract or in the ordinary course of dealing. Lien is
either general or particular. The unpaid seller is
entitled to retain the goods until he has been paid for
them. If the goods are sold on credit, the right of liencommences on the expiry of the credit term. The seller
is also entitled to retain the goods if the buyer
becomes insolvent. The right of lien may be exercisedalso where the seller has made part delivery of the
goods. On the remainder, a right of lien can be
exercised. If the seller parts with the actual possession
of the oods, he loses the ri ht of lien.
T i ti f li h h ll d li h
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Termination of lien : when the seller delivers the
goods to the carrier for purposes of transmission to
the buyer or when the buyer lawfully obtains
possession of the goods or when the seller waiveshis right of lien, the right the right of lien is lost.
(2) Right of stoppage in transit :- the right of
stoppage in transit can be exercised when (i) the
buyer of the goods becomes insolvent; (ii) the
unpaid seller has parted with the possession of the
goods.
(3) Ri ht f l h h ll h d
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(3) Right of re-sale:- when the seller has resumed
possession of the goods, the buyer can re-sale the
goods if (i) they are of perishable nature; (ii) seller has
given notice to buyer; and (iii) seller has expresslyreserved his right to re-sale.
(4) Right of withholding delivery: The right can be
exercised when the property in the goods has not
passed to the buyer.
(5) Reservation of right of disposal : seller mayreserve the right of disposal over the goods under
certain instances like a situation, where seller imposes
certain conditions and until conditions are fulfilled.
Remedial Measures
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Remedial Measures
Remedies available to the seller
In case of breach of the contract of sale of goods where the seller
is the aggrieved party he has the following remedies:
1. suit for price (sec.55)
2.suit for damages
Remedies available to the buyer
In case of breach of the contract of sale, where the buyer is the
aggrieved party he has the following remedies
1. suit for damages for non-delivery of the goods: (sec. 57)
2. Suit for specific performance (sec 58)
3. suit for warranty : (sec 59)
4. suit for repudiation of the contractanticipatory breach: sec 60
Rights of An unpaid seller
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Rights of An unpaid seller
a) Rights Against the Goods b) Right against the buyer personally
1.suit for price
2.suit for damages
3.Repudiation of contract
4.suit for contract
1)where property in ii)where property in
goods has passed goods has not passed
Right Right Right withholding stoppage
of of of the delivery in transit
Lien stoppage Resale of goods
Auction sales provision : section 64
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Auction sales provision :-section 64
A sale by way of auction is complete when the auctioneer announces so
by the fall of the hammer, a bidder can withdraw his bid at any time
before it is accepted by the auctioneer. Condition in the auction sale thatbidding once made cannot be withdrawn is not enforceable. Agreements
not to bid against each other are called knock-out agreements and they
are valid. A seller may protect himself by a reserve bid. In case of sale
through the court I t would be subject to the confirmation of the court.
The auctioneer gives certain implied warranties in an auction sale.
Auction sale [section 64]
An auction sale is a public sale where different [various] buyers try to
buy the goods by outbidding each other. The goods are sold to that buyerwho gives the highest bid. The rules related to an auction sale are
contained in section 64 of this Act which is stated below:In the case of a
sale by auction(1) where goods are put up for sale in lots, each lot is
prima facie deemed to be the subject of a separate contract of sale.
(2) the sale is complete when the auctioneer announces its completion
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(2) the sale is complete when the auctioneer announces its completion
by the fall of the hammer or in any other customary manner; and until
such announcement is made, any bidder may retract his bid.
(3) A right to bid may be reserved expressly by or on behalf of theseller, and where such right is expressly so reserved, but not otherwise,
the seller or any one person on his behalf may, subject to the
provisions hereinafter contained, bid at the auction.
(4) where the sale is not notified to be subject to a right to bid onbehalf of the seller, it shall not be lawful for the seller to bid himself or
to employ any person to bid at such sale, or for the auctioneer
knowingly to take any bid from the seller or any such person; and any
sale contravening this rule may be treated as fraudulent by the buyer.
(5) the sale may be notified to be subject to a reserved or upset price;
(6) If the seller makes use of pretended bidding to raise the price, the
sale is viodable at the option of the buyer.