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    rescinded and also a right to claim damages.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.