Study Note - 2

SALE OF GOODS ACT, 1930

This Study Note includes

2.2 Transfer of Ownership

2.3 Conditions and Warranties
2.4 Performance of Contract of Sale
2.5 Rights of an Unpaid Vendor
2.6 Auction Sales

2.1 DEFINITION

Introduction
The law relating to sale or purchases goods was dealt with by the Indian Contract Act, 1872, prior to
1930. During the year 1930, Sections 76 to 123 of the Contract Act were repealed. A separate Act viz.,
Sale of Goods Act, 1930 was passed. The Sale of Goods Act, 1930 lays down the special provisions
governing the contract of sales of goods. The provisions of the Contract Act are also applicable to the
contracts for the sale of goods unless they are inconsistent with the express provisions of Sale of Goods
Act.
Applicability
This Act extends to whole of India, except Jammu and Kashmir.
Effective date
This Act came into force from 01.07.1930.

IMPORTANT DEFINITIONS
Goods

part of the land which are agreed to be severed before sale or under the contract of sale.
Future Good

Document of title to goods

document, warrant or order for the delivery of goods and any other document used in the ordinary
course of business as proof of the possession or control of goods or authorizing or purporting to authorize,
either by endorsement or by delivery, the possessor of the document to transfer or receive goods
thereby represented;

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Insolvent
Section 2 (8) provides that a person is said to be “insolvent” who has ceased to pay his debts in the
ordinary course of business, or cannot pay his debts as they become due, whether he has committed
an act of insolvency or not;
Mercantile agent

course of business as such agent authority either to sell goods, or to consign goods for the purposes of
sale, or to buy goods, or to raise money on the security of goods;

contract of sale is made;

CONTRACT OF SALE
As per section 4(1) “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.”
Essentials of a Contract of Sale
The following are thus the essentials of a contract of sale of goods:
(1) Bilateral contract: It is a bilateral contract because the property in goods has to pass from one
party to another. A person cannot buy the goods himself.
(2) Transfer of property: The object of a contract of sale must be the transfer of property (meaning
ownership) in goods from one person to another.
(3) Goods: The subject matter must be some goods.
(4) Price or money consideration: The goods must be sold for some price, where the goods are
exchanged for goods it is barter, not sale.
(5) All essential elements of a valid contract must be present in a contract of sale.
Agreement to sell

the goods is to be transferred.

Contract of sale how made

the contract may provide for the immediate delivery of the goods or immediate payment of the price
of both, or for the delivery or payment by instalments, or that the delivery or payment or both shall be
postponed.
A contract of sale may be made in writing or by word of mouth, or partly in writing and partly by word
of mouth or may be implied from the conduct of the parties.

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Subject matter of contract
The subject matter of the contract –

Existing or future goods

possessed by the seller, or future goods.

a contingency which may or may not happen.

operates as an agreement to sell the goods.

Goods perishing before making contract

perished or become so damaged as no longer to answer to their description in the contract.

Goods perishing before sale but after agreement to sell

goods without any fault on the part of the seller or buyer perish or become so damaged as no longer

thereby avoided.
Ascertainment of price

parties.
Section 9(2) provides that where the price is not determined in accordance with the foregoing

fact dependent on the circumstances of each particular case.

Agreement to sell at valuation
Section 10(1) provides that where there is an agreement to sell goods on the terms that the price is to

the agreement is thereby avoided. If the goods or any part thereof have been delivered to, and
appropriated by, the buyer, he shall pay a reasonable price there for.

of the seller or buyer, the party not in fault may maintain a suit for damages against the party in fault.

Stipulations to time
Section 11 provides that unless a different intention appears from the terms of the contract, stipulations
as to time of payment are not deemed to be of the essence of a contract of sale. Whether any other
stipulation as to time is of the essence of the contract or not depends on the terms of the contract.

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Difference between contract of sale and agreement to sell.

Basis Contract of sale Agreement to sell

Transfer of property The property of the goods passes
from the buyer to the seller. place at a future time or subject
to certain conditions to be

Type of contract It is an executed contract It is an executory contract

Type of goods Future and contingent goods.

If the goods are destroyed, the If the goods are destroyed, the
loss falls on the buyer despite the loss falls on the seller despite the
goods are in the possession of goods are in the possession of
the seller. the buyer
Breach of contract The seller can sue the buyer for The seller can sue for damages
price and for damages in case only in case of breach by the
of breach by the buyer buyer
General and particular property It gives buyer to enjoy the goods It gives a right to the buyer
as against the world at large against the seller to sue for
including the seller damages
Insolvency of the buyer In the absence of lien over the The seller is not bound to part
goods the seller is to return the with the goods until the price is
paid to him.
assignee. He is entitled to get
the dividend declared by the

the reduced rate.

Insolvency of the seller The buyer, becoming the owner, The buyer cannot claim
is entitled to recover the same the goods but the dividend

assignee or assignee.

2.2 TRANSFER OF OWNERSHIP

Transfer of Ownership
The Sections 18 to 25 of the Sale of Goods Act, determine when the property passes from the seller to
the buyer.
Rules for Ascertaining Passing of Property:
The provisions are discussed hereunder:
(A) Goods must be ascertained (section18)
As per section 18 in a contract for sale of unascertained goods, the property in the goods does not
pass to the buyer unless and until the goods are ascertained.
(B) Intention of the parties for such transfer (section 19)

is transferred to the buyer at such time as the parties to the contract intend it to be transferred. The
intention of the parties is ascertained from the terms of the contract, the conduct of the parties and
the circumstances of the case.

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be applied for ascertaining the time of transfer of property which is discussed hereunder:

in the goods passes to the buyer when the contract is made, and it is immaterial whether the
time of payment of the price or the time of delivery of the goods, or both, is postponed. (Sec
20). Goods are said to be in deliverable state when they are in such a state that the buyer

to the goods for the purpose of putting them into a deliverable state, the property does not
pass until such thing is done and the buyer has notice thereof (sec 21).

ascertain price (section 22)

to weigh, measure, test or do some other act or thing with reference to the goods for the
purpose of ascertaining the price, the property does not pass until such act or thing is done
and the buyer has notice thereof. (sec 22).
(ii) Unascertained goods (Sec 23)
(a) Where there is a contract for the sale of unascertained or future goods by description and
goods of that description and in a deliverable state are unconditionally appropriated to the
contract, either by the seller with the assent of the buyer or by the buyer with the assent of the
seller, the property in the goods thereupon passes to the buyer. Such assent may be expressed
or implied, and may be given either before or after the appropriation is made.
(b) Delivery to carrier: Where, in pursuance of the contract, the seller delivers the goods to the
buyer or to a carrier or other bailee for the purpose of transmission to the buyer and does not
reserve the right of disposal, he is deemed to have appropriated the goods for the purpose of
the contract.
(iii) Goods on approval or ‘on sale or return’
In order to push up the sales generally there is a practice of sending goods to the customer with
the clear cut understanding that he has option to approve or return the goods within a given

not culminate into sale until the goods are approved by the customer and the property in goods
still remains with the seller.
When goods are delivered to the buyer on approval or on sale or return or other similar terms, the
property therein passes to the buyer—
(a)
(b) When he does any other act adopting the transaction.
(c) If he does not signify his approval or acceptance to the seller but retains the goods without

Reservation of Right of Disposal (Sec 25)

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to the contract, the seller may, by the terms of the contract or appropriation, reserve the right of

the goods to a buyer, or to a carrier or other bailee for the purpose of transmission to the buyer, the

The seller is deemed to have reserved the right of disposal:

(1) Where goods are shipped or delivered to a railway administration for carriage by railway and by
the bill of landing or railway receipt, as the case may be, the goods are deliverable to the order
of the seller or his agent, the seller is prima facie deemed to reserve the right of disposal.
(2) Where the seller of goods draws on the buyer for the price and transmits to the buyer the bill of
exchange together with the bill of lading or, as the case may be, the railway receipt, to secure
acceptance to payment of the bill of exchange, the buyer is bound to return the bill of lading or
the railway receipt if he does not honour the bill of exchange, and, if he wrongfully retains the bill
of lading or the railway receipt, the property in the goods does not pass to him.
Effect of Destruction of Goods:

unless otherwise is agreed by the parties. In other word the parties may in the contract have different

Quite often it may happen without knowledge of the seller the goods have perished or so damaged
as not to answer the description of the goods contracted to be sold, the contract is void if the goods

become so damaged as no longer to answer to their description in the contract.

Goods perishing before making of contract (Sec 7)

contract was made, perished or become so damaged as no longer to answer to their description in
the contract.
Goods perishing before sale but after agreement to sell (Sec 8) – Where there is an agreement to sell

passes to the buyer, the agreement is thereby avoided.

Risk Prima Facie Passes with Property: Exceptions

exceptions:
(a) This rule of 26 will apply only if there is no agreement to the contrary. It is permissible for the parties

(b) Where delivery has been delayed through the fault of either party the buyer or the seller, the

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 with delivery of goods.
Transfer of Title by Non-Owners of Goods:
As per section 27 of the Sale of Goods Act where goods are sold by a person who is not the owner
thereof and who does not sell them under the authority or with the consent of the owner, the buyer

A buyer cannot get good title to the goods unless he purchased the goods from a person who is the
owner thereof and sell them under the authority or with the consent of real owner.
“Nemo dat qui non habet” means that no one can give what he himself does not have. It means a non

owners, but in the interest of the trade and commerce there must be some safeguard available to a

Accordingly the Act provides the following exceptions

interest of buyers:
1. Sale by a mercantile agent: If a mercantile agent is authorized by the owner of the goods sell on

he person must be in possession of goods or documents of title to the goods in his capacity as
a mercantile agent and with the consent of his owner
The person must sell the goods while acting in the ordinary course of business.
The buyer must act in good faith without having any notice, at the time of contract that the
mercantile agent has no authority to sell the goods.
2. Transfer of title by Estoppels: This exception is based on the principle of personal estoppels.
Sometime, the real owner may lead the buyers by virtue of his conduct or words or by act to
believe that the seller is the owner of the goods or has the authority to sell them. In such case, he

3. Sale by a joint owner: It there are several joint owners of goods, one of them if has sole possession

person who buys them from such joint owner. In order to apply this exception following conditions

One of the several owners must be in sole possession of the goods.

The buyer must purchase goods in good faith.

The buyer should not have notice regarding the matter that the seller has no authority to sell.
4. Sale by person in possession under voidable contract
possession of goods under a voidable contract which is not rescinded, can transfer a good title

defective title.
5. Sale by seller in possession after sale
has sold goods but he continues in possession of goods or of the documents of title to the goods,
he may sell them to a third person and if such person obtains delivery thereof in good faith and

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without notice of the previous sale, the person can get a good title to them. In order to apply
this exception, the seller must be in possession after sale of goods and there must be delivery or
transfer of the goods or documents of title by the seller.
6. Sale by buyer in possession after sale:-
having bought or having agreed to buy goods, obtain with the consent of the seller the possession
of the goods or documents of title to the goods can and resells the goods to a transfer.
If at the time of this sale, buyer was not in possession, then this exception will not apply.
7. Sale by an unpaid seller:- If the unpaid seller has exercised right of lien or stoppage in transit, resells

8. Exception under other Acts:- According to some Acts, a person although he is not the owner of

pawned subject to satisfying some conditions.

2.3 CONDITIONS AND WARRANTIES

Section 12(1) provides that a stipulation in a contract of sale with reference to goods which are the
subject thereof may be a condition or a warranty.
Condition [Section 12(2)]
A condition is a stipulation essential to the main purpose of the contract, the breach of which gives rise
to right to treat the contract as repudiated.
A condition in a contract of sale of goods is of fundamental nature for breach of which the buyer can
repudiate the contract.
Warranty [Section 12(3)]
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.
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.
Differences between Condition and Warranty
S.No. Condition Warranty
1. A condition is a stipulation which is essential A Warranty is a stipulation which is collateral to
to the main purpose of the contract. the main purpose of the contract.
2. The aggrieved party can repudiate the The aggrieved party can claim damages only
contract of sale in case there is a breach of in case of breach of a warranty.
a condition
3. A breach of condition may be treated as A breach of a warranty, con not be treated as
a breach of a warranty. This would happen a breach of a condition.
where the aggrieved party is contended
with damages only

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When condition to be treated as warranty?

to treat the breach of the condition as a breach of warranty and not as a ground for treating the
contract as repudiated.;

rejecting the goods and treating the contract as repudiated, unless there is a term of the contract,
express or implied, to that effect.

by law by reason of impossibility or otherwise.

Remedies Available to the Buyer for Breach of Conditions
(a) Affected party may claim refund of price and reject the goods;
(b) Elect to treat breach of condition as breach of warranty and claim damages or compensation;
(c) When the affected party treat breach of condition as breach of warranty he cannot repudiate
the contract but claim damages only;

or otherwise 13(3).
Consequences of Breach of Warranty:
(a) The breach of warranty gives right to a claim for damages but not to reject the goods and treat
the contract as repudiated.
(b) Buyer may sue for damages.

Implied conditions are of the following types:

(i) Condition as to title [Sec 14(a)]
In a contract of sale, unless the circumstances of the contract are such as to show a different intention,
there is—
(a) An implied condition on the part of the seller that, in the case of a sale, he has a right to sell the
goods and that, in the case of an agreement to sell, he will have a right to sell the goods at the
time when the property is to pass.

(c) An implied warranty that the goods shall be free from any charge or encumbrance in favour of

made.
(ii) Sale by description (Sec 15)
Where there is a contract for the sale of goods by description, there is an implied condition that the
goods shall correspond with the description, and, if the sale is by sample as well as by description, it is not

with the description. Goods are sold be description when they are described in the contract such
as MP Atta, Dehradun Rice, Kasmiri Rajama, Amul butter and the buyer contracted relying on such
description of goods by the seller.

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Sale of Goods Act, 1930

of goods he purchased and is also charged with the responsibility of seeing that the goods suit the
purpose for which they were purchased by him. Later on if the goods does not turn out to be as per

which are as under:

he is the manufacturer or producer or not), there is an implied condition that the goods shall be

particular purpose.
(b) Where goods are bought by description from a seller who deals in goods of that description
(whether he is the manufacturer or producer or not), there is an implied condition that the goods

no implied conditions as regards defects which such examination ought to have revealed.

(i) the seller should be dealer in goods of that description;

(ii) the buyer must have not opportunity to examine the goods or there must be some latent
defect in the goods which would not be apparent on reasonable examination of the same.

regard to any description applied to them, the price and all other relevant circumstances.

ascertained from the acts and conducts of the parties to the sale or from the nature of the
description of the article purchased. For example if a hot water bottle is purchased, the purpose
for which it is purchased is implied in the thing itself. In such a case the buyer need not tell the seller
the purpose for which the bottle is purchased. Similarly if a thermometer is purchased in common

(d) An express warranty or conditions does not negative a warranty or condition implied by this Act
unless inconsistent therewith.

(iv) Sale by sample (Sec 17)

A contract of sale is a contract for sale by sample where there is a term in the contract, express or
implied, to that effect.

be apparent on reasonable examination of the goods.

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(v) In case of eatables and provisions, in addition to the implied condition as to merchantability, there
is another implied condition that the goods shall be wholesome.

Implied warranties are of following types:

The implied warranties are as under:
(i) Warranty of quiet possession [Sec.14 (b)]

seller shall not nor shall anybody claiming under a superior title or under his authority interfere with

buyer.
(ii) Warranty of freedom from encumbrances [Sec.14(c)]
The buyer is also entitled to additional warranty that the goods are free from any charge or right

third parties charges if it is otherwise the buyer is entitled to claim damages from the seller.

trade.
(iv) Warranty to disclose dangerous nature of goods:

be dangerous to the buyer and the buyer is ignorant of the danger he must be warn the buyer of
the probable danger, otherwise he will be liable in damages.

DOCTRINE OF CAVEAT EMPTOR

The term “caveat emptor” is a Latin word which means “let the buyer beware”. This principle states

purpose. The doctrine of caveat emptor is embodied in Section 16 of the Act which states that “subject
to the provisions of this Act and of any other law for the time being in force, there is no implied warranty

turn out to be defective or do not serve his purpose. The principle was applied in the case of Ward v.
Hobbs, (1878) 4 A.C. 13, where certain pigs were sold by auction and no warranty was given by seller
in respect of any fault or error of description. The buyer paid the price for healthy pigs. But they were ill

to satisfy himself regarding the health of the pigs.

Exceptions: Section 16 lays down the following exceptions to the doctrine of Caveat Emptor:

(2) When the seller actively conceals a defect in the goods which is not visible on a reasonable
examination of the same.

(4) Where goods are bought by description from a seller who deals in goods of that description.

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Sale of Goods Act, 1930

2.4 PERFORMANCE OF CONTRACT OF SALE

Chapter IV of the Act describes the procedure for performance of the contract of sales. Section 31
provides that it is the duty of the seller to deliver the goods and the buyer to accept and pay for them,

Payment and delivery are concurrent conditions;

Delivery;

Acceptance of goods;

Payment and delivery are concurrent conditions

Section 32 provides that the delivery of the goods and payment of the price are concurrent conditions
unless otherwise agreed.
The seller shall be ready and willing to give the possession of the goods to the buyer in exchange
for the price.
The buyer shall be ready and willing to pay the price in exchange of the possession of the goods.
Delivery

by doing anything which the parties agree; 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;
Section 35 provides that the seller of goods is not bound to deliver them until the buyer applies for the
delivery apart from any express contract.

Part delivery
Section 34 deals with the effect of part delivery. A delivery of part of goods, in progress of the delivery
of the whole, has the same effect as a delivery of the whole for the purpose of passing the property in
such goods. If a delivery of part of the goods is done with an intention of severing it from the whole,
then it does not operate as a delivery to the reminder.

Rules as to delivery
Section 36 provides rules for the delivery as detailed below:
Apart from any contract goods sold are to be delivered
at the place at which they are at the time of the sale; and
goods agreed to be sold are to be delivered at the place at which they are at the time of the
agreement to sell; or
if not then in existence, at the place at which they are manufactured or produced;
Where under the contract of sale the seller is bound to send the goods to the buyer, but no time for

Where the goods at the time of sale are in the possession of a third person, there is no delivery by

his behalf; This shall not affect the operation of the issue or transfer of any document of title to the
goods;

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 Demand or tender of delivery may be treated as ineffectual unless made at reasonable hour;

state shall be borne by the seller.

Delivery of wrong quantity

The transfer of goods, in a sale, is expected to be delivered as agreed to in the contract. If there is

contracted to sell, the buyer may reject them. If the buyer accepts the goods so delivered he shall
pay for them at the contract rate;

contracted to sell, the buyer may accept the goods included in the contract and the reject the
rest. Or he may reject the whole. If the buyer accepts the whole of the goods so delivered, he
shall pay for them at the contract rate;
Section 37(3) provides that where the seller delivers to the buyer the goods he contracted to sell
mixed with goods of a different description not included in the contract, the buyer may accept the
goods which are in accordance with the contract and reject the reject or may reject the whole;
Section 37(4) provides that the provisions of this section are subject to any usage of trade, special
agreement or course of dealing between the parties.

Instalment deliveries
Section 38(1) provides that the buyer of the goods is not bound to accept the delivery of goods by
installments unless otherwise agreed to between both the parties.
Section 38(2) provides that where there is a contract for the sale of goods to be delivered by stated

a repudiation of the whole contract; or

whether it is severable breach giving rise to a claim for compensation
but not to treat the whole contract as repudiated.

goods to the buyer.

buyer as may be reasonable having regard to the nature of the goods and other circumstances of the
case. If the seller omits so to do and the goods are lost or damaged in the course of transit or whilst in

may hold the seller responsible for damages.

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Section 39(3) provides that where goods are sent by the seller to the buyer by a route involving sea
transit, in circumstances in which it is usual to insure the seller shall give such notice to the buyer as may
enable him to insure them during their sea transit. If the seller fails so to do, the goods shall be deemed

Delivery of goods at a distant place

Buyer’s right of examining the goods

According to Section 41, the buyer is having right to examine the goods, which have not been
examined by him previously before acceptance. The examination of the goods by the buyer is for the
purpose of ascertaining whether they are in conformity with the contract. The seller is also bound to
afford an opportunity to the buyer for examining the goods for the purpose of ascertaining whether
they are in conformity with the contract.
Acceptance

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.
Return of rejected goods
Section 43 provides that where goods are delivered to the buyer and he refuses to accept them, the

to accept them.
Liability of the buyer

reasonable charge for the care and custody of the goods. The rights of the seller shall not be affected

the contract.

2.5 RIGHTS OF AN UNPAID VENDOR

Unpaid seller

instruments or otherwise;

agent of the seller to whom the bill of lading has been endorsed or a consignor or agent who has
himself paid, is directly responsible for the price.

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Rights of an Unpaid Seller against the Goods

(a) A lien or right of retention

(b) The right of stoppage in transit.
(c) The right of resale.
(d) The right to withhold delivery
(a) Right of Lien

(i) the goods have been sold without stipulation as to credit; or

(ii) the goods have been sold on credit, but the term of credit has expired; or
(iii) the buyer becomes insolvent.

the price and not for any other charges.

A lien is lost – (i) When the seller delivers the goods to a carrier or other bailee for the purpose of
transmission to the buyer, without reserving the right of disposal of the goods;
(ii) When the buyer or his agent lawfully obtains possession of the goods;
(iii) By waiver of his lien by the unpaid seller
(b) Stoppage in transit (Sections 50-52) The right of stoppage in transit is a right of stopping the goods
while they are in transit, resuming possession of them and retaining possession until payment of the
price.
The right to stop goods is available to an unpaid seller
(i) when the buyer becomes insolvent; and
(ii) the goods are in transit.
The buyer is insolvent if he has ceased to pay his debts in the ordinary course of business, or cannot
pay his debts as they become due. It is not necessary that he has actually been declared insolvent by
the court.

them.
The transit comes to an end in the following cases:
(i) If the buyer obtains delivery before the arrival of the goods at their destination;

holds the goods on his behalf, even if further destination of the goods is indicated by the buyer;
(iii) If the carrier wrongfully refuses to deliver the goods to the buyer.
If the goods are rejected by the buyer and the carrier or other bailee holds them, the transit will be

goods. On notice being given to the carrier, he must redeliver the goods to the seller who must pay
the expenses of the redelivery.

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the seller has assented to it. A transfer, however, of the bill of lading or other document of seller to a

(c) Right of re-sale (Section 54):

(i) where the goods are perishable;

(ii) where the right is expressly reserved in the contract;
(iii) where in exercise of right of lien or stoppage in transit, the seller gives notice to the buyer of his

(d) Rights to withhold Delivery:

If the property in the goods has passed, the unpaid seller has right as described above. If, however, the

with his rights of lien and stoppage in transit.

Rights of an unpaid seller against the buyer
An unpaid seller in addition to his rights against the goods has the following rights against the buyer
personally.
1. Suit for price: [Sec. 55]
Where the property in goods has passed to the buyer, and the buyer wrongfully neglects or refuses
to pay the price, the seller can sue the buyer for price.
2. Suit for damages for non-acceptance: [Sec. 56]
Where the buyer wrongfully neglects or refuses to accept and pay for the goods, the seller can sue him

3. Suit for repudiation:

Where the buyer repudiates the contract before the date of delivery, the seller may wait till the date
of delivery or may treat the contract as cancelled and sue for damages for breach.
4. Suit for interest: [Sec. 61]

Buyer’s Remedies against Seller for Breach of Contract

A buyer also has certain remedies against the seller who commits a breach. These are:
1. Suit for Damages for Non-Delivery

2. Suit for price

recover the amount paid.

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4. Suit for Breach of Warranty- Where there is a breach of warranty by the seller, or where the buyer
elects or is compelled to treat the breach of condition as breach of warranty; the buyer cannot reject
the goods. The buyer may,
(a) set up the breach of warranty in extinction or diminution of the price payable by him, or
(b) sue the seller for damages for breach of warranty.
5. Repudiation of contract before the due date
Section 60 provides that where either party to a contract of sale repudiates the contract before the
date of delivery, the other may either treat the contract as subsisting or wait till the date of delivery, or
he may treat the contract as rescinded and sue for damages for the breach.
6. Suit for interest
The buyer may recover such interest or special damages, as may be recoverable bylaw. He may also
recover the money paid where the consideration for the payment of it has failed.
In the absence of a contract to the contrary, the court may award interest, to the buyer, in a suit by

on the amount of the price from the date on which the payment was made.

2.6 AUCTION SALE

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;
the sale is complete when the auctioneer announces its completion by the fall of the hammer or in
other customary manner; and until such announcement is made, any bidder may retract its bid;
a right to bid may be reserved expressly by or on behalf of the seller 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, bit at the auction;

lawful for the seller to bid himself or to employ any person to bid at such sale, or for the auctioneer

may be treated as fraudulent by the buyer;

the buyer.

announcement of the close of the sale in other customary manner by the auctioneer. In other words,
all that happens at the fall of the hammer or at the announcement of the closure of the sale in other
customary manner is that a contract of sale comes into existence and parties get into the relationship
of a promisor and a promisee in an executory contract.

EFFECT OF TAX
The goods are subject to tax as existing in the country. The tax imposed on goods may be customs or

LAWS AND ETHICS 63