Chapter

Legal and Regulatory

Environment of

In Review
Business

7
Notes

Learning Objectives ●● 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. There can be a contract of
Contract of sale: definition, essentials sale between one co-owner and another co-owner.
Sale distinguished from agreement to sell ●● A sale consists in the passing of title from the seller to the buyer for a price but in an
agreement to sell, the transfer of property in the goods is to take place at a future
Goods: meaning; classification time or subject to some condition thereafter to be fulfilled.
Price: meaning, modes of fixation ●● The goods, which form the subject matter of a contract of sale, may be either exist-
ing goods, owned or possessed by the seller, or future goods. When a seller, by a
Conditions
contract of sale, purports to effect a sale of future goods or contingent goods, the
Warranty contract operates as an agreement to sell.
Doctrine of caveat emptor ●● Price represents the money consideration for a sale of goods. The price in a contract
of sale may be fixed by the contract, or may be left to be fixed in a manner thereby
Delivery of goods; modes of delivery; actual,
agreed, or may be determined by the course of dealing between the parties. Where
symbolic, and constructive delivery
the price is not determined in accordance with the foregoing provisions, the buyer
Rights of an unpaid seller 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.
●● A condition is a stipulation essential to the main purpose of the contract, the breach
Key Terms of which gives rise to a right to treat the contract as repudiated besides seeking for
damages. A warranty, on the other hand, is a stipulation collateral to the main pur-
Contract of sale: A contract whereby a
pose of the contract, the breach of which gives rise to claim for damages but not a
seller transfers or agrees to transfer the
right to reject the goods and treat the contract as repudiated.
property in goods to the buyer for a price
●● Under the doctrine of ‘caveat emptor’, the buyer alone is responsible for checking
Goods: Every kind of movable property the quality and suitability of goods before a purchase is made. This doctrine is sub-
other than actionable claims and money ject to certain exceptions such as where the seller actively conceals latent defects;
Future goods: Goods that are yet to be where the seller misrepresents or commits a fraud; where goods are bought by de-
manufactured, produced, or acquired by scription from a seller who deals in goods of that description and the goods supplied
the seller after making the contract of sale by the seller do not correspond with the description; etc.
Contingent goods: Goods whose acquisition ●● It is the duty of the seller to deliver the goods sold and of the buyer to accept and
by the seller depends on a contingency, pay for them, in accordance with the terms of the contract of sale. Whether the
which may or may not happen delivery is actual, symbolic, or constructive, it should have the effect of putting the
Price: Refers to the money consideration for goods in the possession of the buyer or his/her authorised agent.
the sale of goods ●● The seller of goods is deemed to be an ‘unpaid seller’ when the whole of the price
has not been paid or tendered. The rights of an unpaid seller may be classified as
Condition: A stipulation essential to the
against the goods and against the buyer personally.
main purpose of the contract, the breach
of which gives rise to a right to treat the
contract as repudiated
Warranty: 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
Caveat emptor: Let the buyer beware
Delivery: Voluntary transfer of possession
of goods from one person to another
Unpaid seller: One who has not received
the full price of the goods sold by him
Lien: Retention of possession of goods until
the price due in respect of the same is paid
or tendered

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Legal and Regulatory Environment of Business