Sales of good act.ppt

BITS PilaniPilani Campus

SALES OF GOOD ACT-1930

BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956

Introduction:

• A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property to goods to the buyer for a price (money).

•It includes both sale and agreement to sell.

•Under contract of sale ,the property in the goods is transferred from the seller to the buyer, the contract is called a sale.

•When the transfer of the property in the goods is to take place at a future time or subject to some conditions thereafter to be fulfilled the contract is agreement to sell

•In sale “Right of ownership passes”


Difference between Sale and Contract to Sell

Characteristics SALE CONTRACT TO SELL

Transfer of property a) Property of goods passes immediately fro buyer to seller

a) Transfer of property in goods is to take place at future

Type of goods b) Existing and Specific goods b) Future and contingent goods, also refer to unascertained goods

Risk of loss c) Loss falls on buyer even though the goods are in possession of the seller

c) Loss falls with seller, even though the goods are in possession of buyer

Consequences of breach d) Seller can sue for even though the goods are in possession of the seller

Seller can only sue for damages and not for the price .

Right to re-sell Seller cannot re-sell the goods. except certain cases

Buyer get the title of goods and original buyer can only sue the seller for damages


Essentials of a contract of sale

• Two parties

• Goods : Immovable property not the movable property

• Price : The consideration for the contract of sale called price, must be money, when goods are exchanged for goods ,it is not sale but a barter.

•CASE : ‘A’ agreed to exchange with ‘B’ 100 quarters of barley at $ 2 per quarter for 52 bullocks valued at $ 6 per bullock and pay the difference in cash.( Valid contract of sale).

•Essential elements of valid contract.


Classification of goods

A) Existing Goods:

A) Specific Goods : goods which are identified and agreed upon at the time a contract of sale is made.

B) Ascertained Goods : these are the goods which become ascertained subsequent to the formation of a contract of sale

C) Unascertained Goods: Goods which are not identified and agreed upon at the time of the contract of sale

CASE : ‘A’ who wants to buy a television set goes to a showroom where four sets of particular television are displayed. he sees the performance of a particular set, which he agrees to buy.

B) Future Goods :

C) Contingent Goods: Seller depends upon a contingency which may or may not happen


Effects of destruction of goods:

a) Goods perishing before making of contract : void if seller is unaware of the fact

CASE : ‘A’ cargo of dates was sold. The dates were contaminated with sea water so as to be unsalable as dates, though they could be used for making spirits.

Also void if part of good has perished from indivisible goods.

CASE : ‘ A’ sold to ‘B’ 700 bags of Chinese groundnuts identified by marks and lying in a named warehouse. Unknown to ‘A’. 109 bag had been stolen at the time of sale. A tendered delivery of 591 bags. Held the sale was void and ‘B’ can not be compelled to take the remainder.

b) Goods perishing after the agreement to sale but before the sale : effected.

Agreement to sell specific goods become void but not to an unascertained goods.


CAVEAT EMPTOR

• Means “ let the buyer beware”

•Seller is under no duty to reveal unflattering truths about the goods sold

•Exception of CAVEAT EMPTOR ;

•Fitness for buyers purpose

•Sale under a patent or trade name

•Usage of trade

•Consent by fraud


Meaning of Transfer of property


Example:- A buys 2000 tons of oil from B.B informs A that goods are ready for delivery but A does not take delivery for few days, before delivery of oil to A there is fire in B’s warehouse and whole oil was burnt . Who is liable for loss

( A is liable for loss because property in goods was with A)

Example 2:- A agrees to buy B’s car for Rs One lakh on April ,15 while the price is paid

in advance on march 15.On march 10 ,the car is damaged in an accident .Who will bear loss

(B will have to bear loss because property in goods did not pass to A on march 10.and also B is liable to refund advance)

Action against third party:- Owner alone can exercise proprietary rights. Example:- A sells his car to B but insurance policy is still in the name of A .The car is

damaged in accident .Who can claim for damages from insurance .(B cannot claim from insurance company)


Specific Goods Passing of property delayed beyond the date of the contract

i) Goods not in the deliverable state

Example;-A sells a dining set to B .As per the terms of contract it is to be polished by A ,before delivery .thus the set is not in the deliverable state but A is to put it in deliverable state. When the set has come in to deliverable state .does the transfer of property take place.

(No untill B is not informed)

Example : There was a contract for the sale of a machine, weighing 30 tons and embedded in a concrete floor. A part of the machine was destroyed while being removed. Is buyer in the state to refuse

(Yes he is entitled to refuse )


ii) When something is to be done for ascertaining the price by weighing etc :-

Example:- A entered into a contract with B for the sale of entire rice in his godown .According to A, it amounted 975 tons was to remove the rice after weighing .After removing 20 tons ,there was fire in the godown, consequently rest was destroyed by fire. Who will be liable loss.

(B was liable for the loss because nothing remained to be done by A)

Example:- A sold 24 tins of oil by auction which were to be fully filled by the

seller .He filled up all the tins but 10 and B had a notice of it .before he could fill the remainder ,they were all destroyed by fire .who will be liable for loss

( A was liable for the loss of 10 and B for the 14 as sale was complete as to the tin which has been filled but not for the rest 10)


Transfer of property in the unascertained/ future goods

The property of ownership does not pass untill it does not become ascertained

Example:-

A agrees to sell b ,500 units of toys out of a lot to be manufactures in his factory. B has an option to select toys out of the lot .B goes to the factory and selects 500 units with the consent of A .They are packet in a cartoon by A to be taken by B .

Thus at the time of contract the goods were unascertained but with the consent of seller buyer ascertained the good and become liable.

Delivery to carrier :-

i) Absolutely for the buyer (if bill of lading or receipt is made out in the name of buyer and is sent to him ownership passes to him)ii) Absolutely for the seller (if bill of lading or receipt is taken in the seller’s or his agent’s name and is sent to the agent of the seller to be delivered to the buyer on the fulfillment of certain condition till that time ownership remains with seller)


Transfer of property in goods sent on approval or “ on sale or return”


SALE BY NON OWNER

“ No one can give that which one has not got”

Example:- If A steals an article and sell it to B,B does not become the owner of article

i.e if the seller has no title of the good the buyer does not acquire even if he has acted honestly


Exception to Sale By Non owner

I ) Sale by a person not the owner or title by estopel (by the act or conduct causing buyer to believe that the seller has the authority to sell)Example:- A says to B in the presence of C that he (A) is the owner of the goods where as C is the true owner.C remains silent. A sells the goods to B ,Can C recover goods from B(No, because C has given an implied authority by his conduct to A to sell the goods)

II) Sale by mercantile agent

Example :- ‘F’, the owner of a car, delivered it to ‘H’, a merchantile agent, for sale at not less than $575. ‘H’ sold the car for $140 to ‘K’, who bought it in good faith and without notice of any fraud . ‘H’ misappropriated the money. ‘F’ sued to recover the car from ‘K’.( ‘H’ was in possession of the car ith ‘F’s consent for the purpose of sale , ‘K’ obtained a good title to the car .)


III) Sale by one of the joint owners

IV) Sale by a person in possession of goods under voidable contract

Example:- A by fraud induces B to sell and deliver a diamond ring .A sells the ring to C before B rescinds the contract .C keeps the ring in good faith without the notice of misrepresentation .

(Sale is valid ,C gets a good title)

PERFORMANCE OF CONTRACT

• It means as regards the seller, delivery of goods to the buyer of the quality, in the quantity, at a place and in the manner agreed

• As regards to the buyer ,acceptance of the delivery of the goods validly tendered and paying the price at a time and place agreed upon

DELIVERY OF THE GOODS

• “ DELIVERY” means voluntary transfer of possession of goods from one person to another.

MODES OF DELIVERY

Three modes of delivery :-

ACTUAL DELIVERY :- It is a physical delivery of the goods sold to the buyer

SYMBOLIC DELIVERY :- It is not a physical delivery of the goods sold to the buyer. For example :- delivering keys of a warehouse containing goods sold.

CONSTRUCTIVE DELIVERY :- It takes place when the seller does some act that causes the delivery of the goods to any person authorized to hold them on behalf of the buyer

• Example:- A sold 100 TV sets to B .The TV sets are in a

warehouse .A orders to the warehouse keeper that he will henceforth hold them for the use of B….What type of delivery it is ?

(Constructive delivery)

Rules of Delivery of goods

• Mode of Delivery• Delivery and payment concurrent conditions• Effect of part delivered :- A delivery of part of

goods ,in progress of the delivery of whole has same effect as a delivery of the whole.

Example:- A sold 1000 tons of sugar to B ,B requested A for a permission to remove 200 tons of sugar and A allowed. Held it is a part delivered

• Place of delivery (business hour and working day)» In case of SALE (at the place where they were at the

time of the sale)» In case of Agreement to sell (at the place where

they were at the time of the agreement to sell)» If goods are not in existence ( where they are

manufactured)

• Time of delivery• Cost of delivery (making of delivery are born by seller ,but

all expense of obtaining of delivery are born by the buyer)

• Delivery of wrong quantity• Delivery of lesser quantityCASE: ‘A’ sells to ‘B’ 2000 gross of 200 yards reels of

swing cotton. After taking delivery ‘B’ finds that the length of the cotton per reel is less than 200 yards, the average being shortage of about 6%.

• Delivery of larger quantity» Effect :- Can reject whole, Can accept whole and in case

larger quantity can accept the ordered quantity and return the rest

CASE : ‘A’ places an order with ‘B’ to supply 25 bottles of orange syrup. ‘B’ sends 30 bottles .

Exception : term “about” or “more or less”

– Delivery of goods contracted for mixed with other goodsEffect :- Can reject whole, Can accept whole

– Right to reject the goods is not equivalent to the right to cancel the goods

Buyer’s liability for rejecting , neglecting and refusing

• Buyers liability in case of rejection of goods» Effect :- If seller refuses to take away the

goods ,buyer become bailee and “may charge for keeping them”

• Buyers liability for neglecting or refusing delivery of goods

» Effect :- buyer has to bear any loss occasioned by his neglect or refusal to take delivery And reasonable charge for the care and custody of the goods

RIGHTS AND DUTIES OF BUYERRIGHTS OF THE BUYER:-

Right to have delivery Right to return the goods Right to reject the goods Right to reject the goods if delivered in installment Right to examine the goods before accepting Right in case of breech of contract by the seller

i) suit for damages for non deliveryii)suit for specific performanceiii) suit for breach of warranty

• DUTIES OF BUYER» Duty to accept goods » Duty to make payment» Duty to apply for delivery of goods» Duty to demand delivery of goods at reasonable time» Duty to intimate the seller when he rejects the goods» Duty in case of breach of contract by him

i) Duty to pay the priceii) Duty to pay damages for non acceptanceiii) Duty to pay damages for repudiationiv) Duty to pay interest

Documents

Sales of good act.ppt