Sale of Goods Act1930

Introduction

Act is known as Sale of Goods Act, 1930 [Section 1(1)]

Whole of India except Jammu & Kashmir [Section 1(2)]

Came into force on July 01, 1930 [Section 1(3)]

66 Sections

Contract of Sale [Section 4]

Sale of Goods Act defines a contract as,“A contract, whereby, the seller transfers or agrees to transfer the property in goods to buyer for a price. There can be contract of sale between one part owner and another. [Section 4(1)]

A contract of sale may be absolute or conditional. [Section 4(2)]

Sale of Goods Act defines a contract as,“A contract, whereby, the seller transfers or agrees to transfer the property in goods to buyer for a price. There can be contract of sale between one part owner and another. [Section 4(1)]

A contract of sale may be absolute or conditional. [Section 4(2)]

Contract of Sale [Section 4(3)]

Contract of Sale

Sale Agreement to Sell

Sale [Section 4(3)]

Sale of Goods Act defines sale as,“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.”

Sale of Goods Act defines sale as,“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.”

Agreement to Sell [Section 4(3)]

Sale of Goods Act defines agreement to sell as,“Where under a contract of sale 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 an agreement to sell.”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. [Section 4(4)]

Sale of Goods Act defines agreement to sell as,“Where under a contract of sale 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 an agreement to sell.”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. [Section 4(4)]

Sale & Agreement to SellBasis of Difference Sale Agreement to Sell

Transfer of ownership Immediate At Future Time

Nature of Contract Executed Executory

Nature of rights of Buyers Just –in-rem Just-in-personam

Consequence of breach by Buyer

Seller may sue Buyer for price of Goods. Seller can sue only for damages.

Risk of Loss Falls on Buyer Falls on Seller

Essentials of Contract of Sale [Section 4 and 5]

Two Parties Goods Transfer of Ownership Price Essentials of a valid contract Contract to include both a ‘sale’ and ‘an agreement to sell’

Two Parties Goods Transfer of Ownership Price Essentials of a valid contract Contract to include both a ‘sale’ and ‘an agreement to sell’

Two Parties

Bilateral in Nature

One cannot buy one’s own goods

Part-owner of goods

Goods [Section 2(7)]

Sale of Goods Act defines Goods as,“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 land which are agreed to be severed before sale or under the contract of sale.” [Section 2(7)]

Sale of Goods Act defines Goods as,“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 land which are agreed to be severed before sale or under the contract of sale.” [Section 2(7)]

Goods - Extension[Section 2(7)]

Sale & Purchase of Immovable PropertySale & Purchase of Immovable Property

Contract of ServiceContract of Service

ElectricityElectricity

Classification of Goods [Section 6]

Classification of Goods

Existing GoodsGoods that are in physically in existence at the time of entering of contract of sale.

Future GoodsGoods that are to be manufactured, produced or acquired by the seller after making contract of sale.For Eg: A order B to manufacture 50 chairs.

Contingent GoodsGoods whose acquisition by seller depend upon happening or non-happeing of an event.For Eg: A agrees to sell car to B, provided C who is present owner sell it to A.

Specific GoodsGoods identified and agreed upon at time of making contract of sale.For Eg, A agrees to sell his Rolex watch as pointed or specified to B.

Ascertained GoodsGoods identified subsequent to contract of sale.For Eg, A agree to sell 40 sack of rice to B out of 100 sacks,

Existing Goods [Section 6]

Sale of Goods Act defines Existing Goods as,“Existing Goods are those goods, that are owned and/or possessed by the seller at the time of contract of sale. [Section 6]

Existing goods can be further sub-divided as,1. Specific Goods2. Ascertained Goods3. Unascertained Goods

Existing Goods > Specific Goods [Section 2(14)]

Sale of Goods Act defines Specific Goods as,“Goods identified and agreed upon at the time of making the contract of sale are specific goods. [Section 2(14)]

Existing Goods > Ascertained Goods [Section 2(14)]

Goods that have been identified subsequent to formation of contract of sale.These are more or less specific goods.

Existing Goods > Unascertained Goods [Section 2(14)]

Goods that are not specifically identified or ascertained at the time of entering the contract of sale. They are identified only by Description.

Future Goods [Section 2(6)]

Sale of Goods Act defines Future Goods as,“Goods to be manufactured or produced or acquired by the seller after making the contract of sale. [Section 2(6)]

Contingent Goods

Sale of Goods Act defines Contingent Goods as,“Goods, the acquisition of which by seller depends upon a contingency which may or may not happen.

Transfer of Ownership [Section 2(11)]

Sale of Goods Act defines Property as,“Property means general property in goods and not merely a special property.” [Section 2(11)]

Sale of Goods Act defines Property as,“Property means general property in goods and not merely a special property.” [Section 2(11)]

Price [Section 2(10)]

Sale of Goods Act defines Price as,“the money consideration for sale of goods.” [Section 2(10)]

How Contract of Sale is Made? [Section 5(1)]

Offer + Acceptance to offer for consideration = Contract

Contract of Sale

Immediate delivery of Goods or;

Immediate payment of price or;

Both

Delivery of Goods or;

Payment of Price or;Both in Installment

Delivery of Goods or;Payment of Price or;

Both in Future subject to some conditions fulfilled

How Contract of Sale is Made? [Section 5(2)]

Contract of Sale*

Orally In Written Partly orally and partly in writing

Implied from the conduct of the

parties

*Subject to the provision of law for time being in force

Acceptance [Section 42]

Sale of Goods Act defines Acceptance as, “The buyer is deemed to have accepted the goods when he intimates to

the seller that he has accepted them, or When the goods have been delivered to him and he does any act in

relation to them which is inconsistent with the ownership of the seller, or

When after the lapse of a reasonable time, he retains the goods without intimating to the seller that he has rejected them. [Section 42]

Stipulation [Section 12(1)]

Sale of Goods Act defines Stipulation as,“A stipulation in a contract of sale with reference to goods which are the subject thereof may be a condition or a warranty..” [Section 12(1)]

Condition [Section 12(2)]

Sale of Goods Act defines Condition as,“A condition is a stipulation essential to the main purpose of the contract, the breach of which gives rise to a right to treat the contract as repudiated..” [Section 12(2)]

Warranty [Section 12(3)]

Sale of Goods Act defines Warranty as,“A warranty is a stipulation collateral to the main purpose of the contract, the breach of which gives rise to a claim for damages but not to a right to reject the goods and treat the contract as repudiated.” [Section 12(3)]

Stipulation – Condition or Warranty [Section 12(4)]

”Whether a stipulation in a contract of sale is a condition or a warranty depends in each case on the construction of the contract. A stipulation may be a condition, though called a warranty in the contract.” [Section 12(4)]

Condition & WarrantyPoint of Difference Condition Warranty

NatureIt is a stipulation essential to the main purpose of the contract.

It is a stipulation which is collateral to the main purpose of the contract.

Breach of Contract Aggrieved party can repudiate the contract and sue seller for damages.

Aggrieved party can only claim damages.

ImportanceVital importance for completion of contract

Not vital importance, the main contract can be completed even if warranty is not fulfilled.

Treatment

A breach of condition may be treated as breach of warranties if the aggrieved party chooses to be satisfied only with claiming damages or when the contract is not divisible and the buyer has accepted the goods or part thereof.

A breach of warranty under no circumstances can be treated as breach of condition.

Types of Condition Express Conditions Implied Conditions• Condition as to Title• Condition as to Description• Condition as to Sample• Condition as to Sample as well as Description• Condition as to Quality or Fitness• Condition as to Merchantability• Condition as to Wholesomeness

Types of Warranties Express Warranties Implied Warranties• Warranty as to quiet possession• Warranty against encumbrances• Warranty to disclose dangerous nature of goods

Breach of Condition as Breach of Warranty [Section13(2)]

“Where a contract of sale is not divisible and the buyer has accepted the goods or part thereof, the breach of condition can only be treated as a breach of warranty.”

The buyer is such case cannot reject the goods and treat the contract as repudiated on the ground that certain condition was not fulfilled.

Doctrine of Caveat Emptor Caveat Emptor, Latin expression means caution buyer i.e. ‘let the buyer

beware’\ Section 16, “Subjects to provisions of this Act and of any other law for

the time being in force, there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale”

Exceptions to Doctrine of Caveat Emptor Misrepresentation by seller Seller actively conceals a defect in the goods Goods sold by sample Sale by description and sample

Doctrine of Caveat Venditor Caveat Venditor, Latin expression means caution buyer i.e. ‘let the

seller beware’

Performance of Contract of Sale It is duty of seller to deliver the goods and it the buyer to accept and

pay for them, in accordance with the terms of the contract of sale. Apart from the transfer of property in goods from the seller to buyer,

delivery of goods to buyer and payment of price to the seller by buyer are two important events.

Significance of Transfer of Ownership Risk ‘Prima facie’ passes with property Action against third party Suit for price Insolvency of buyer or seller

Rules regarding Transfer of Property [Section(18-24)] Transfer of property in specific or ascertained goods

Transfer of property in generic or unascertained goods

Transfer of property in goods sent ‘on approval’ or ‘sale or return’ basis.

Delivery [Section 2(2)] ”Voluntary transfer of possession from one person to another.” [Section

2(2)] Any forced transfer of possession will not amount to delivery of goods. Modes of Delivery• Actual• Symbolic• Constructive

Part Delivery Buyer should apply for delivery Place & Time of Delivery [Section 36(1 and 2)] Delivery by attornment [Section 36(3)] Expenses of Delivery [Section 36(2)]

Delivery [Section 2(2)] Delivery of wrong Quantity• Excess Delivery• Short Delivery• Mixed Goods

Installment Deliveries [Section38(1)]

Delivery to carrier or wharfinger [Section 39]• Assumed Delivery to Buyer• Seller’s Duty• Sea Transit• Forms of Contract involving sea transit• CIF Contract & FOB Contract• Ex-ship Contract

Unpaid Seller

Sale of Goods Act defines unpaid seller as,“The seller of goods is deemed to be an unpaid seller,1. When whole of the price has not been paid or tendered, or2. When a Bill of exchange or other negotiable instrument has been

received as conditional payment and the condition on which it has been received has been fulfilled by reason of dishonor of the instrument or otherwise.”

Rights of an Unpaid Seller

The rights of an unpaid seller can be classified under two heads, Rights against Goods Rights against Buyer

Rights against Goods

The seller has following rights to an unpaid seller against goods, Rights of lien or retention Rights of stoppage of goods in transit Rights of resale Right to withhold delivery

Rights against Buyer

The seller has following rights to an unpaid seller against buyer, Suit for Price Suit for Damages for non-acceptance Suit for Damaging for repudiating contract before due date Suit for interest and special damages.

Rights against Seller

The buyer has following rights against defaulter seller, Suit for damages for non-delivery Suit for specific performance Suit for damages of breach of warranty Suit for damages for rescission of contract before due date Suit for recovery of price along with interest

Auction Sale

The term auction refers to a public event at which things are sold to the person who offers the highest price for them.In Auction sale, untended buyers called bidders, assemble at one place and offer the price (known as Bid) at which they are ready to buy the goods . The goods are ultimately sold to higher bidder.=> Rules regarding sale by auction

Case Analysis

Baldry v Marshall Case

BaldryClient

MarshallCar Dealer

B consulted M, a car dealer, for a car which is suitable for touring purpose. M suggested “Bugatti” car and B accordingly purchased it. The car turns out to be unfit for touring purpose It was held that suitability of car for touring purpose is a condition It was so vital that, if it is not fulfilled, it would defeat the very purpose of contract for

which B bought the car. He was therefore entitled to reject the car and get his money back from the dealer.

Grant v

Australian Knitting Mills Ltd

Case

THE SALE OF

GOODS AC T1930

THANK YOU

HARSH BOHRA

Sale of Goods Act1930