UNIT-II (A)

Information technology law

Introduction :- scientist who have figured out how to get computer to talk to each other 50 years ago,
possibly have no idea that their computer could evolve into the highly commercial, user friendly, internet
of today.

 Way back in 1969 the ‘infant’ internet was possibly boon, when a computer was first connected to
a switch or routes and later on to another computer.
 Internet has revolutionized society to enable users to search for material, retrieve it, store it on
their computers and open it with a single command.
 The dramatic rise of internet and World Wide Web has transformed the way business is carried out,
improving accuracy, efficiency and speed.
 Today’s industrial economy is evolving into a new business environment in which money, goods,
services and information are exchanged electronically.
 The internet becoming more popular with each passing day. E-commerce has emerged as the
fastest growing form of business today.

Meaning of E-Commerce:- the ability to conduct business electronically or over the internet.

 It is a generic term to describe technology- enabled communication with customers and suppliers
for a business organization.
 When people talk about e-commerce most will think of it as using internet to help the business
market and sell its products or services.
 But in reality, e-commerce is much more than that. Generally there are two kinds of e-commerce:
 B to B
 C to C

Initiatives in India –

1. IPC
2. Indian Evidence Act
3. The Contract Act
4. The Indian Telegraph Act
5. The Banker’s Books Evidence Act
6. The general clauses act
7. The R.B.I Act

E-commerce is categorized as B to B, B to C, C to B, C to C, non business and government and inter-

organizational transactions.

It has examined various combination of tools including legal and business process and policies. E security
would give credibility to E-commerce against online frauds and hacking etc. which can be achieved by
adequate legal framework and a protective technology.

Business to business

 The B2B kind of e-commerce refers to a company, selling or buying from other companies.
 A company communicates with the other companies by electronic means.

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  It is by means of Electronic Data Interchange ( EDI ).
 EDI transaction include sending or receiving of orders invoices and shipping notices.
 This is the method of extending the organization computing power beyond its boundaries.
 But the high cost and maintenance of the networks made this method out of reach for small and
medium sized business.
 With the introduction of the internet, companies regardless of size can communicate with each
other electronically and cheaply.
 Companies that do so use it in several ways depending on weather they are manufacturers or
suppliers.

Business to customers

 This kind of e-commerce refers to a company selling its products or services to the customers using
the internet as the communication medium.
 It is an umbrella term for entire spectrum of activities such as Electronic Data Interchange ( EDI ),
electronic payment systems, inventory and order management, product support and service,
information delivery and other business application linking solutions through the use of paperless
information technologies such as the internet bar coding, e mail, smart cards, CDROMS etc.

Benefits :-

1. Increase customer satisfaction. The internet is always open- so business is always open 24 hours a
day 7 days a week and 365 days a year.
2. Increases sales volume.
3. Decreases costs of doing business.
The technology of cryptography provided legal sanction by Information Technology Act, 2000 would
go a long way boosting E-commerce.

Risks of E-Commerce

1. Security
The issue of cyber jurisdiction has been become global character which cannot be genuinely
address by passing only national legislations. Cyber jurisdiction global in character which requires
global solution. An international treaty relating to uniform rules applicable to E-commerce badly
needed to be adopted.

Initiatives in India :

1. I.P.C
2. Indian Evidence Act
3. The Contract Act
4. The Indian Telegraph Act
5. The Bankers Books Evidence Act
6. The General Clauses Act
7. The Reserve Bank of India Act
To facilitate E-commerce various changes are made in the aforesaid act as an initiative taken in
India.

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Digital signature

1. The digital signature is not a digitalized image of a hand written signature.

2. It is a block of data at the end of the electronic message.
3. This attests the authenticity of the said message.
4. D.S are an actual transformation of an electronic message using public key cryptography.
5. It requires a key pair, private key for encryption, public key for decryption and a hash function.

Creating a digital signature: basically a digital signature is a two way process; involving two parties:

1. Signer – creator of D.S

2. Recipient – verifier of D.S

It is complete when the recipient successfully verifies it.

A Hash function is used in both creating and verifying a digital signature.

A Hash function is an algorithm which creates a digital representation or finger print in form of a hash
value or hash result of a standard length which is much more smaller than the message.

Algorithm (a set of rules that must be followed when solving a particular problem.)

Definition: a digital signature can be defined as a short unit of data in the documents context and
provides assurance to the recipient that the data is authentic.

It also means authentication of any electronic record by a subscriber by applying asymmetric crypto
system and hash function.

The electronic record means data record or data generated image or sound, stored received or sent in
an electronic form.

The electronic form with reference to information means any information guaranteed, sent received or
stored in media, magnetic, optical, computer memory or similar device.

Role and regulation of Certifying Authorities

Chapter 6 Section (17 – 34) : regulation of certifying authorities

A person who has been granted to issue a license.

Section 24 – procedure for grant or rejection of license.

Chapter 7 section35 : Electronic signature certificates

1. Application for issue of D.S.C

2. Application + 25000/-
3. Statement or certification practice statement (2h)
4. Grant of D.S.C

What is the need of Certifying Authorities ?

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The problem of identification of public key holder can be solved by appointing a third party trusted by
sender as well as recipient, to perform the task it is necessary to associate a person, or entity with a
specific public key. This third party is generally called as C.A .

The I.T Act calls that third party as certifying authority. It is also called issuing authority or certificate issuer.
These expressions have been used interchangeably throughout this work.

Functioning of the C.A

1. A Certifying Authority is a trusted body either public or private that ascertains the identity of the
applicant of D.S.C (Digital Signature Certificate).
2. He certifies that the public key of a public- private key pair used to create digital signature belongs
to that person.
3. The applicant seeking to verify a digital signature needs at least –
a) The public key corresponding to the private key used to create the digital signature.
b) Reliable evidence that the public key is identified with the signer.

Process of issuing a certificate

The process of issuing a certificate differs from CA to CA, it requires :-

1. Public- private key pair to be generated by the applicant.

2. Proof to identify such as identity cards, driver’s license or passport or any other proof required by
C.A.
3. Demonstration by the applicant that she/he holds the private key corresponding to the public key
without disclosing the private key.

Once the certifying authority has verified the association between an identified person and a public
key, the certifying authority then issue a certificate.

Contents of the Certificate

 Each certificate contains a public key value and information that uniquely ‘identifies’ the
certificate’s subject that is, the person, device or other identity that holds the corresponding
private key.

Thus a certificate is a digitally signed statement by a certifying authority that provides independent
confirmation of an attribute claimed by a person preferring a digital signature.

It may also be called as a computer based record which –

1. Identifies certifying authority issuing it.

2. Names and identities or describes an attribute of the subscriber.
3. Contains the subscriber’s public key
4. Digitally signed by the certifying authority issuing it.
 The certificate issued by the third party i.e, certifying authority greatly enhances the trust required
for conducting business across the internet.
 If anybody needs public key of any subscriber, he has to obtain a copy of the certificate issued by
the Certifying Authority, extract the public key value and verify the Certifying Authorities signature

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 on the certificate using the CA’s public key. A public key user who uses certificate in this way is
called the relying party.

Since public keys are meant for public use, so there is no need of keeping public key value confidential,
so certificates are not generally confidential.

Types of certificates

 Class 1 are designed for casual web browsing and secure e-mail and are issued to individuals only
inter and intra organizational e-mail, transaction e-mail.
 Class 2 more expensive provides a reasonable level of assurance of a subscriber’s identity but it is
not fool proof.
 Class 3 are issued to individuals as well as organizations for electronic data interchange (EDI),
software validation, e-banking services, membership based online services.
 Class 4 involve through investigation of both an individual as well as organization given by CA in a
statement called certification practice statement (2h).

4 categories of certificate issued by CA

1. Identification certificate – identification

2. Authorizing certificate – residence, age, association with any organization
3. Transactional certificate – it is just like a public notary attesting a document.
4. Digital Time Stamping service – sometimes it becomes necessary to know the exact date on which
the document is executed.

Validity period of digital signature

Public key and private key has to be kept valid only for limited duration, a longer period of validity
increases the chance of compromise.

Chapter 4

Appointment of controller: section 17

Functions of controller: section 18

Appointment

1. The controller of certifying authority is appointed by the central government by issuing a

notification to this effect in the official gazette.
2. By the same or separate notification such number of deputy controllers and assistant controllers
may be appointed as the central government deems fit.
3. The controller shall be subject to direct control and direction of the central government in respect
of functions which he has to perform under the I.T.Act.
4. The deputy and assistant controller shall perform the function assigned by the controller under his
supervision and control.
5. The qualification, experience and terms and conditions of service of controller, deputy controller
shall be prescribed by central government.
6. The head office of the controller shall be located at such place as the central government may
specify.

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 7. There may be branch offices of the office of controller and their places location shall be notified by
the central government and the office of the controller shall have a seal.

Functions:-

1. One of the important functionaries in the I.T.Act is the controller of certifying authority.
2. His role in public key infrastructure is indispensible.
3. He acts as a central controlling body.
4. He has been assigned multiferous functions to effectuate smooth functioning of the certifying
authority.
5. The controller may perform all of the following functions:
a) Exercising supervision over the activities of C.A.
b) Certifying public key of the C.A.
c) Laying down standards to be maintained by C.A.
d) Prescribing qualification, experience for employees.
e) Prescribing business rules.

Powers of controller:

1. The controller of certifying authority is a chief administrator.

2. He acts as a watch dog for the C.A.
3. He has to perform and enjoys vast powers to ensure strict compliance and efficient functioning of
the functionaries under the I.T.Act.
4. The controller has the following powers:
I. Power to recognize foreign CA’s ( 19, 32)
II. Power to issue license ( 21, 22)
III. Power to renew license ( 23,24,25)
IV. Power to suspend + revoke license (26)
V. Power to delegate and investigate (27,28)
a) Power regarding discovery + production of evidence
b) Power of search and seizure
c) Power of requisition Books of Account
d) Power of call for information
e) Power of survey
f) Power to collect certain information
g) Power to inspect registers of companies
5. Power to have access to computers and data.
6. Power to issue direction.
7. Power to decrypt information.
8. Power to make regulations.

CONDITION AND WARRANTY

 In a contract of sale of goods. These may be various terms or stipulations. To state clearly and firmly or thin
is to be done.
 If a stipulation forms the very basis of the contract so it is essential to the main purpose of the contract sec
12(2) it is called condition.

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 If the stipulation is not essential main purpose of the contract but is only of secondary importance, or as it
is called a warranty.
 A lady orders a red saree, it being agreed between her and the seller that it will be sent by a registered
panel and that she will pay the price by 15th Jan, the day of her marriage.
In this illustration, the stipulation regarding the colour of the saree as well as the date of supply are
essential to the main purpose of the contract these are the conditions.
Whereas the stipulation regarding the time of payment of the price and the mode of despatch of
the foods are not essential to the main purpose of the contract but are only collateral they are the
warranties.
 There is no hard and fast rule as to which stipulation is a condition and which one is a warranty.
 Whether a stipulation of a contract of sale is a condition or a warranty depends in each case on the
construction of the contract (sec 12 (4)
 A agrees to supply a suit to B by 15 th November, which wants to wear on the day of his marriage which is to
be held on 16th November.
Here the time of the delivery of the suit is a condition.
 On the other hand, if the suit which A agrees to deliver to B by 15 th November is required by the buyer to
be used in the following winter season, the time of delivery is a warranty.
 The court her to look to the intention of the parties by referring to the terms of the contract and the
surrounding circumstances to Judge wither a stipulation is a condition or a warranty.
 A stipulation may be a condition though called a warranty in a contract.
Stipulation as to time
According to section 55 of the Indian contract Act, if the time of the performance of the contract is
the essence of the contract and the promisor makes a delay in the performance of the contract the
contract is voidable at the option of the promisor.
On the other hand, if the time of performance is not of the essence of the contract, the delayed
performance by the promisor entitles the promise to claim damages only for the loss occasioned to him.
(Importance of various stipulation as to time section 11 provides as under 
“lawless a different intention appears from the terms of the contract, stipulation as to time of payment are
not deemed to be of the essence of contract of sale. Whether any other stipulation as to the time is the
essence of the contract or not depends on the terms of the contract.
 The general rule stated in section 11 is that the time of payment of the price is not deemed to be of the
essence of the contract.
 If the buyer makes a delay is the payment of the price, the seller cannot avoid the contract on that
account, but he can only claim compensation for the same. American pipe company V state of U.P. A ‘1’ R
1983 cal 186.
 The parties are free to express a different intention in their contract. They may make the time of the
payment of the price as the essence of the contract.
For ex: the contract may provide that the buyer must pay the price by a stipulated and otherwise the
goods will not be supply to him.
 In such a case the parties have made to time of payment of the price as of the essence of contract and the
delay in payment by buyer would enable the seller to avoid the contract.
 Weather any other stipulation as to time of the essence of the contract or depends on the terms of the
contract.

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 Where the time is of the essence of the contract and the same has been extended the extended date is
also the essence of the contract. (erissa Textile mills ltd. V Ganesh Das A ‘1’ R 1961 Pat 107, at p.109
 Where the time for the performance of the contract has not been agreed to under the contract, one of the
being of the essence of the contract and therefore repudiate the contract on non-performance at the time
so fixed. National Coop. Sugar mills ltd V Albert Co. (198 2M.L.J.343.
Consequences of the breach of a condition or a warranty
 Condition is a stipulation essential to the main purpose of the contract its breach by one party entitles the
other to treat contract as repudiated refuse to accept. Section 12 (2)
 If the seller makes a breach of condition, the buyer may reject the goods.
 If the breach is made by the buyer, the seller may treat it as a breach of contract and not perform his own
part of the obligation.
Eg: If a lady orders a red saree asking the seller to deliver it by 15 th January so that she can wear it on 16 th
of the occasion of her wedding, but the seller supplies a black saree instead of a red one or supplies the
saree on 18th January there is a breach of condition, the lady buyer can treat the contract as repudiated she
can reject the goods and see the seller for improper performance.
Warranty, a warranty is a stipulation allowance to the main purpose of the contract, its breach is not
considered to be serious.
 The breach of a warranty by one party entitles the other only to claim damages rather than avoiding the
contract, section 12 (3)
Eg: the buyer agrees to pay the price in advance by 15 th Dec and the goods are to be delivered on 15 th
January but the buyer makes payment late say on 25 th Dec – the sellers remedy in such a case is to claim
compensation.
 Because according to section 11, the time of payment of price is generally deemed to be a warranty.
Option of the buyer on breach of condition by the seller
 When there is a breach of condition by the seller the buyers may
1. Treat the contract as repudiated (S 12 (2)
2. Wave the condition (S – 13 (1)
3. Treat the breach condition as a breach of warranty.
Eg: a agrees to supply B 1000 bags of first quality wheat, at the rate of Rs 100/- bag. But he supplied any
second quality wheat the price of which is Rs 90/- per bag.
 There is a breach of condition by the seller and the buyer can reject the goods,
 But if the buyer so likes he may treat it as a breach of warranty,
 Accept the second quality wheat and claim composition at the rate of Rs 10/- per bag.
Breach of condition to be treated as a breach of warranty 
Acc to section 13 in the following cases breach of condition is treated as a breaach of warranty.
a. When the buyer waves the condition or erects to treat it as a breach of warranty and not as a
ground for treating the contract as repudiated; or
b. When the contract is not severable and the buyer has accepted the goods or part there of [Kailash
Sharma V Patra Municipal corp A ‘1’ R.
i. It leaves it to the violation of the buyer to treat the breach of condition as a breach of warranty.
ii. If there is a breach of condition by the seller, the buyer has no right of repudiating the contract but
him only remedy is a claim for damages by treating the breach of condition as a breach of warranty.

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 When the contract of sale is not severable and the buyer has accepted the goods or part there of, the
breach of condition has got to be treated as a breach of warranty.
Acc to section 42 – the buyer is deemed to have accepted the goods:
i. When the intimates to the seller that he has accepted them;
ii. When the goods have been delivered to him and he does not act in relation to them which is in
consistent with the ownership of the seller, for eg receiving a watch sent by the seller, he pledges it,
sells it or states using the same; or
iii. When, after the lapse of a reasonable time, he retains the goods without unifirmating to the seller
that he has rejected them.
Remedy for breach of warranty is given in section ST(1) says.
The buyer has no right to reject the goods or repudiate the sale transaction for the breach of a warranty.
Implied conditions and warranties
1. Implied condition as the title – sec 14 (a)
2. Implied condition in sale by description sec 15
3. Implied condition in sale by sample as well as description S – 15
Two implied conditions, being exception to the rule of caveat emptor
The rule of caveat emptor S – 16
4. Implied condition as to Quality or Fitness (being first exception to the rule of caveat emptor – sec
16(I)
No implied condition when the sale under patent or Trade Name – Proviso to see160,
5. Implied condition of Merchantable Quality (second rule of caveat emptor – 16 (2)
Condition negative when the goods exchanged by the buyer – Provision to sec 16 (2)
6. Implied condition in a sale by sample
Implied warranties
1. Implied warranty of Quiet Possession 14
2. Implied warranty against encumbrances 14 (s)
Exclusion of implies terms + conditions
Implied conditions and warranties
 Parties may expressly preside any conditions or warranties in their contract.
 Apart from what may be provided by the parties in the contract, certain conditions and warranties, as
provided in section 14 to 17 are implied by there in every contract of sale of goods.
 The implied conditions and warranties provided in the Act are binding in every contract of sale unless they
are inconsistent with any express conditions and warranties agreed to by the parties. 16 (2)
 The implied conditions and warranties recognised by the Act are being describe below.
Sec – 14 (a) implied condition as to title
1. In case of sale, he has a right to select the goods and in the case of an agreement to shell, he will
have a sign to sell the goods of the time when the property in them is to pass 14
Rule of Caveat Emptor
Rowland V Divall (1923) 2K.B.500.
 The plaintiff purchased a motor car from the defendant and used the same for several mouths.
 The defendant had no title to the car therefore, the plaintiff was completed to give it up to the true owner.
 The plaintiff sued the defendant to recover back the price which he had already paid.
 It was held that even though the buyer had used the car for some months he was entitled to recover back
the whole of the price paid by him as consideration had totally failed
 Similarly if the buyer having bought the goods from the seller takes the delivery of the same but is
compelled to pay the price to the true owner, he is not bawd to pay the price to his seller, who sold the

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 goods without having a right to sell the same Dickenson V Naul (1833) -4 + Ad. 638 Allen V Hopkins (1844)
13 M+W94
Passing of Property
Implied condition in sale by description – S – 15
 When the goods are sold by description there 6 an implied condition that the goods supplied shall
correspond with the description.
 In case the goods are not in accordance with the description, there is a breach of implied condition and the
buyer has a right to reject them.
 He has however, an option under section 13 to accept the goods by treating the breach of condition as a
breach of warranty and claim damages.
Varley V whipp (1900) 1 Q.B. 513 there was a contract for sale of a second hand reaping machine which the
buyer had not seen.
 The seller described it, as a new machine a year before and having cut only 50 to 60 acres
 After delivery, the buyer found that the machine was not in accordance with the description given by the
seller.
 It was held that the buyer was untitled to reject the machine.
 Similarly, when there was a contract for the supply of ‘new singer cars’ and one of the cars supplied having
already run a considerable mileage was not new, there was a breach of contract on the part of the seller
and he was liable to compensate the buyer for the same.
 Implied condition in sale by sample as well as description sec – 15
 When the goods are sold by sample as well as description
 It is not sufficient that the bulk of the goods corresponds with the sample if the goods do not also
corresponds with the description (15)
 Sometimes there may be a difference between the sample shown and the description of the goods.
 In such a case, the fact that the goods supplied conform to the sample but do not agree with the
description entitle the buyer to reject the goods.
 Because the fundamental condition in every contract is that the goods should correspond to the
description.
Wallis V Pratt (1911) AC 394
 The was a contract of sale by sample of seed described in “English sainfoin” but the “seller giving no
warranty export or implied, as to growth, description or any other matters.”
 The seed was sown and when the crop was ready, it was discovered that the seed supplied and the sample
shown were not of “English sanifoin” seed but “gaint sanifoin” seed. It was held that there was a breach of
condition and the buyer was entitled to recover damages.
Two implied conditions, being exceptions to the rule of caveat emptor
The rule of caveat emptor (sec – 16)
Caveat emptor means buyer beware
According to this rule, the buyer himself should be careful while purchasing the goods and he should
himself ascertain the goods suit his purpose.
 If the goods are subsequently found to be unsuitable for his purpose, he cannot blame the seller for the
same,
 As there is no implied undertaking by the seller that he shall supply such goods as to suit the buyer’s
purpose.
Eg: a purposes a horse from B. A needs the horse for riding but he does not mention this to B. The horse
was not suitable for riding but is suitable only for being driven in a carriage. A can neither reject the horse
nor can he claim any comparison form B.
In re Andrew Yule & Co. A.I.R 1932 cal 879
 Buyer ordered for hessian cloth without specifying the purpose for which he wanted the same.
 It was infect needed for packing.
 Because of unusual smell, it was unsuitable for the purpose.
 It was held that the buyers had no right to reject the same, even if it did not suit his purpose.

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 Section also incorporates the following two conditions to the rule of caveat emptor.
 Which are two further implied condition.
 The purpose may be made known to the seller, expressly or impliedly. When the goods can be used only
for one purpose.
 The purpose need not to told to the seller as he is deemed to known the same.

UNIT-II (B)
 The general rule is that there is no implied condition or warranty as regards the quality or fitness of the
goods for any particular purpose.
 To thin rule there is an exception.
 If the following requirements as mentioned in sec 16 (1) are satisfied, there is cordoned to be an implied condition
from the side of the seller, that the goods supplied shall be reasonably fit for the purpose for which the buyer wants
them:
1. The buyer, while purchasing the goods, expressly or impliedly, makes known to the seller the particular
purpose for which the goods are required by him, so as to should that the buyer relies on the seller’s skill
or judgment:
2. The goods supplied are of such a do scripture which it is in the course of the seller’s 5 supply.
The buyer tells the seller the purpose for which the goods are required by him and relience is placed on the
skill and judgment of the seller, the rule of caveat emptor does not apply and it becomes the seller’s duty
to supply the goods suitable for the purpose maintained by the seller.
Thus in case of Andrew Yule + Co. The buyer had informed the seller that he needed the hessian
cloth for packing purpose, he could reject the cloth if he found that the same was unsuitable for the
purpose.
1. Raghave Meuon V Kuttappan Nair AIR 1962 big (purchased a wristwatch)
2. Priest V Last (1903) 2 K.B. 148 (Hot water bottle)
3. Chaproniese V Mason (1905) 21. TLR633 bun from bakery ( lost his tooth and abscess in jaw)
4. Frost V Aylesbury Dairy Co. (1905) 1 K.B.608 milk from milk dealer (wife died) due to typhoid
5. Grant V Austrilian Knitting Mills ltd (1935) plaintiff purchase from the retailer he can dermatitis.
6. Griffith’s V Peter Conway ltd (1939) 1 Ali E.R.68 (sterns tweed coat and caught dermatitis)
7. It was found that the plaintiff had caught the disease as her skin was abnormally sensitive and a
non wearer would not have been effected by using the.
8. It was held threat the plaintiff could not claim an compensation become there was no implied was
that the goods shall suit an abnormal like the plaintiff.
Non implied condition when the sale under Patent or Trade Name – Provision to sec 16(1)
 When the buyer buys an article by specifying its patent or other trade name, there is no implied condition
of the fitness of the goods for any particular purpose.
 Since the buyer defines the goods by mentioning the trade name, the seller’s only undertaking is that the
goods shall be of the same trade name as demanded by the buyer.
Case chaiter V Hopkins 4M + W 399
Baldry V Marshall (1925) 1 K.B. 260
Tramways V Fiat Motors ltd; (1910) 2 K.B. 831
Bugatti car – the plaintiff wanted to purchase a motor car,
 Approach the defendants who were the dealer of motor cars.
 The plaintiff told the defendants that he wanted a comfortable car suitable for towing purchases.
 The defendants recommended their “Bugatti car” for the purpose and also should a specimen of the same.
 The person their upon ordered for an “Eight cylinder Bugatti car”, which was supplied.
 The car having been found to be uncomfortable and also unsuitable for touring purpose.
 The plaintiff rejected the car and recovered back the purchase money paid by

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 It was held that he was entitled to do so as the plaintiff while order the car by its trade name was should
relying on the recommendation of seller as regards the suitability car for the specific purpose.
Implied condition of merchantable quality (second exception to the rule of caveat emptor) 16 – (2)
Section 16 (2) contains another implied condition which is by way of exception to the rule of caveat
emptor.
 The terms merchantable quality has not been defined in the Act. It means that the article is of such quality
and in such condition that a reasonable man acting reasonably would after a full examination accept it
under the circumstances of the case in performance of his offer to buy the article, whether he buys for his
own use or to sell again.
[In England, ‘Merchantable Quality’ has been defined by sec 62(1A) English ears of gents act 1973 as under,
“Govde of any kind are of merchantable quality within the meaning of this Act if they fit for the purpose is
purposes for which goods of that kind are commonly bought as it is reasonable to expect having regard to
any description applied to them, the price, (if relevant) and all the other relevant circumstances.
 Grant V Australian Knitting Mills ltd (1936) A.C. 85 the underwear contained certain chemicals which could
cause spin disease to a person wearing them next to skin.
 It was held that because of such a defect the under wars were not of merchantable quality.
 Wilson V cockerell + Co. Ltd (1954) 1 Q.B 598
 Morelli V Fitch + Gibbons (1928) 2 K.B. 636
 Jackson V Rotax Motors + cycle Co. (1910)2 K.B. 9
 Shivallingappa shankarappa Mendse V Balksis and son, A.I.R. 1962 Mad 426.
Condition Negative when the goods examined by the Buyer – Provision to sec 16 (2)
According to the provision to sec 16(2) where the buyer has examined the goods, thus shall be no
implied condition as regards defects which such examination ought to have revealed.
 It means that the implied condition of merchantability will be excluded when the buyer has examined the
goods and the defect in the goods was a patent one.
 In case of latent defects the buyer in still protected inspire of the fact, he has examined the goods.
i. Patent: it is found out at the time of examination by a person of ordinary produce with the exercise
of our care & attention.
ii. Latent: if a merchant possessed of ordinary skill using due case and diligence, would not have
thought of the existence of the particular defect which gives rise to action, such a defect would be
latent or hidden one as distinguished from a patent defect.
Thornett and Fehr V Beers and Sons, (1919) 1KB486
 There was sale of a numbers of baskets of vegetable give.
 The buyers having an opportunity to examine the baskets. Examined them only from outside for want of
time.
 The buyers subsequently found that the glue was not of merchantable quality and thin defect could have
been discovered if the baskets has been examined properly from inside.
 In an action by the buyers for damages for breach of implied condition as to merchantable quality by the
sellers.
 It was held that since the buyers had examined the goods and the defect in the goods was a patent one.
They were not entitled to sue the sellers for the same. Implied condition is negative on examination if the
defect is a patent one. In case of latent defects, the implied condition of merchantability continues inspire
of the examination of the goods by the buyer.
Section 41 of the Act entitles the buyer to have an opportunity to examine the goods before he can be
called upon to accept them.
 Such an opportunity will enable the buyer to ascertain whether the goods are in conformity with the
contract.
 Merely taking of the delivery of the goods by the buyer does not imply that he has accepted then.
 If the buyer has not previously examined the goods, he can do so even after taking the delivery and reject
them if he finds that they are not in conformity with the contract.

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 If the buyer has been afforded an opportunity and the buyer does not await of it he is deemed to have
waived the right of examining the goods.
Liability for all the Natural consequences
 When the seller makes a breach of such an implied condition, he is liable for all the nature consequences
of such a breach.
In Jackson V watson, (1909) K.B. 193 the plaintiff purchased a tin of salmon from the defendant.
The contents of the tin being poisonous and cubit for human consumption.
 The plaintiff’s wife died by consuming a part of the contents of that tin.
It was held that the defendant was liable to composite the plaintiff for loss of service of his wife due
to her death.
Implied condition in a sale by sample – sec 17.
A contract of sale in by sample when there is a term in the contract, express or implied, to that
effect. [17 (1)]
 The purpose of a sample is to present to the eye the real meaning and intention of the parties with regard
to the subject matter of the contract which owing to the imperfection of language it may be difficult or
impossible to express in words.
 Exhibition of the sample does not always imply that the sale is by sample became sometimes a sample may
be shown simply to give a rough idea to the buyer about the kind of goods to be supplied.
 It becomes a sale by sample only when the understanding between the parties is the sample constitutes a
true representatives constitutes a true representative of the kind of goods to be ultimately supplied under
the contact.
 The sale may be one by sample either when the contract expressly so provides or the same can be inferred
from the contact or usage of trade.
According to sec 17 (2) there are three implied conditions in a contract of sale by sample
1) The first implied condition is that the bulk shall correspond with the sample in quality.
2) Another implied condition in a sale by sample is that the buyer shall have a reasonable opportunity
of comparing the bulk with sample to satisfy himself that the goods supplied are in accordance with
the sample.
3) The third implied condition in a sale by sample is that the goods shall be free from any defect,
rendering then merchant able which would not be apparent on reasonable examination of the
sample case law.
God by V Perry 1960 1 All. ER 36
 A retailer purchased from a whole seller a no. Of toy catapults in a sale by sample.
 The retailer sold one of these catapults to a boy and when the boy tried to play with it, it broke into pieces.
 Become of manufacturing defects there in the boy was injured.
 The retailer was held bound to pay compensation to the boy.
 In his turn he rued the whole sale to claim indemnity from him. (protection against damages or loss
epically in the form of a promise to pay for any that happens)
(or a sum of money that is given as payment for damage or loss)
 It was found that the retailer had examined the sample and a reasonable examination on his part could not
reveal this defect.
 It was held that under these circumstances, the whole celery was bond to indemnity the retailer for the
loss suffered by the latter.
Mody V Gregson L.R. 4 Ex 49.
 The defendant agreed to manufacture and supply 2500 pcs of grey shirting spiriting according to sample
and each such piece was to weigh seven ponds.
 The goods when manufactured and delivered were found to be according to the sample but they
contained China day to the extent of 15% of their weight which had been added to increase their weight.
 The presence of such a defect could not be discovered on the reasonable examination of the sample and
the same had rendered the goods unmerchantable.

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 The seller was held liable for the same.
Drummond V Van Irgen
 The plaintiffs, who were wasted cloth manufactures, agreed to supply ‘mixed worsted coating’ as per
certain samples to the defendants who were cloth merchants.
 The goods when supplied correspond to the samples but were subject to a defect because of which they
were found to be unsuitable for being counted into coats.
 The same defect existed in the sample also but that was not discoverable by an ordinary and usual
examination which could be made for such types of cloths.
 The buyer had to dispose of the cloth by auction, at a loss.
 In an action for price by the plaintiffs the defendants courter claimed for damages.
 It was held that the sellers were responsible for there was a breach of implied stipulation that the cloth
should be merchantable worsted suiting.
Implied Warranties
1. Implied warranty of quiet peaceful possession [S14(b)]
2. Implied warranty against encumbrances [S14(c)]
1. Section 14(b) there is an implied warranty that the buyer shall have and enjoy possession of the good. It
means that the buyer’s possession of the goods will not be disturbed.
Mason V Burningham (1921) K.B. 387
The plaintiff purchased a second hand typewriters for £20 from the defendant.
 she there after spent a sum of £11 – 10 shillings for getting it overhauled and putting it in order.
 Unknown to the parties the type writer was stolen one and the plaintiff was completed to return the same
to its true owner.
 In an action by the plaintiff against the defendant.
It was held that the defendant had made a breach of sale of goods that the buyer shall have and
enjoy quiet possession of the goods.
the plaintiff was entitled to recover not only the same of £20, the price paid for the type writer, but
amount spent on the once having, as the same was the loss arising naturally in the usual course of things.
Implied warranty against encumbrances 14(c)
A person or thing that presents from moving easily or from doing what they want.
 There is an implied warranty that the goods sold shall be free from any charge or encumbrances infamous
of any third party.
 If there is a charge or encumbrance on the goods sold and the buyer has to discharge the same, he is
entitled to get compensation for the same from the seller.
 If the charge encumbrance of the goods is known to the buyer at the time of the contract of sale, he
becomes bound by the same and does not have any right to claim compensation for discharging the same.
 S, takes a law of Rs10,000/- from L on the security of his car, but retains the possession of the car with
himself.
 There after he sells this car to B without telling him about L’s charge over the car.
 Subsequently L turns up to B and B had to pay Rs10,000 to L.
 There the implied warranty that the car should be free from all encumbrances while selling, will apply and
B units be able to recover Rs10,000 from S.
Alternatively, had B have known about L’s charge on the car at the time of purchase, this warranty would
not have applied in this case.
3. Warranty as to disclosure of dangerous nature of the good to the innocent buyer.
 Where a person sells good which he known to be dangerous, it is his duty to warn the ignorant buyer
regarding the probable danger. If he does not do so, he will be liable for the damage suffered by the buyer
because of the dangerous nature of such goods.

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 It is interesting to know that this warranty has not been mentioned in the sale of goods Act, 1930. It
has been established by a landmark judicial selling in the case of clerk V Anny & Navy cooperative
society (1903) 1KB 155 the facts of the case are as follows:
C purchased a tin of disinfectant powder from A. A knew that lid of the tin was defective and if not
opened with extra care, may be harmful. But he did not tell easy thing about it.
C opened the lid in the namal cause where the disinfectant powder flied into her eyes and caused
injury to her.
A was held liable to pay damage to C as he should have warned about the probable danger
to C.
Warranties implied by customs (S – 16(3)
An implied warranty as to quality or fitness for a particular purpose may be attached by the usage
of trade.
B buys certain shares through a broker S. Subsequently he sends those shares for registration in his name.
 He gets back the shares without registration and marked as bad delivery.
 He can claim the damages from his brokers S. Because as a trade usage, brokers warrants against loss
caused by had deliveries. Of the shares purchased through them.
UNIT-II (C)

Rules regarding transfer of property

17.3 For the purpose of studying the rules for transfer of property, the goods can be divided into two
classes, namely, specific or ascertained, and generic or unascertained.
17.3-1 Transfer of ownership in the sale of specific goods
17.3-1a OWNERSHIP IS TRANSFERRED WHEN THE PARTIES INTEND TO PASS IT-Section 19 of the Act reads
as - "Where there is a contract for the sale of specific or ascertained goods, the property in them is
transferred to the buyer at such time as the parties to the contract intend it to be transferred."
This provision shows that the intention of the parties is supreme. When the parties decide that the
property in the goods will pass at a particular point of time, the property will deemed to be passed at that
time only, irrespective of every other thing. For ascertaining the intention of the parties, regard shall be
had to(i) the terms of the contract, (ii) the conduct of the parties, and in the circumstances of the case.
Example- In a sale on instalments, the parties decided that the property in the goods will pass on the
payment of the last instalment. Here ownership will not be transferred at the time of contract. It will pass
on the payment of last instal ment only - Amies v. Jal AIR 1924 Bombay 41.
However, if the intention of the parties cannot be gathered from the contract, legal provisions as to the
transfer of property would apply. These legal provi sions are dealt with in the following paras.
17.3-1b OWNERSHIP IS TRANSFERRED AT THE TIME OF CONTRACT Section 20 of the Act reads as - "Where
there is an unconditional contract for the sale ol specific goods in a deliverable state, the property 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 post poned."
The analysis of this section reveals that the property is transferred at the time of contract of sale only if the
following conditions are fulfilled:
(a) The sale must be of specific goods.
(b) The goods must be in a deliverable state.
(c) The contract of sale must be unconditional.
Specific goods are the goods whose identity and individuality has already been established at the time of
sale.

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Deliverable state means that the goods are in such a state that the buyer is bound to take delivery of them.
[Section 2(3)].
Unconditional contract means the contract in which no condition is impied regarding the transfer of
ownership of the goods
Examples:
1. A a car dealer had many cars in his showroom Out of these cars held one car to B. But the car sold
to B was not identified and separated from the other cars at the time of contract of sale. Here The
ownership of the car is not transferred at the time of sale, because it is not specified by that time
Provincial Automobile Co. Ltd v. The State [1952]STC 147.
In the above case, had the car dealer have identified that car to be sold to the buyer, its ownership
would have been transferred at the time of contract.
2. Sold his old car to Band agreed to deliver the car alter getting it painted. Here the ownership of the
car is not transferred to Bat the time of contract because the subject matter of the contract is not in
deliverable state.
3. A sold his old car to B for Rs. 10,000 on the condition that he can take the delivery of the car on
making full payment. In this case, the property in the car will not pass to the buyer until full
payment is made him.
17.3-1c CASES WHERE PROPERTY IN SPECIFIC GOODS DOES NOT PASS AT THE TIME OF SALE - The general
rule that ownership of specific goods transfers at the time of contract is subject to the above conditions.
But in the following cases, the property in the specific goods does not pass al the time of contract, but at a
later time.
17.3-1c1 SPECIFIC GOODS TO BE PUT INTO A DELIVERABLE STATISTICS – Where there is a contract for the
sale of specific goods and the seller is bound to do something to the goods for the purpose of putting them
into a deliverable state, the property does not pass until such things done and the buyer has notice
thereof.
Here the word ‘something’ signifies anything necessary to put the goods in deliverable state. It may be
packing polishing, or filling them into containers, etc.
The words ‘buyer has notice thereof’ do not cast an obligation on the seller to inform the buyer They mean
that the buyer have knowledge thereoft.com to know of it somehow.
Example - The entire contents of a cistern of turpentine oil were sold. It was agreed that the oil was to be
filled to ask by the seller and then the buyer was to take them away. Some of the casks were killed in the
presence of the buyer, but belute the remainder could be filled a fire broke out and the entire quantity of
oil was destroyed. The court held that the buyer must bear the los of oil which was put into casks because
in all these casks the property had passed to him, and the seller must bear loss of the remainder – Ruggs v.
Minett [18091] East210.
17.3-1e2 GOODSTOBE WEIGHED OR MEASURED FOR USER AGENT 69 THEIR SECTION 23- Where there
contract for the sale of specie gods in a deliverable state, but the seller is bound to weigh, measure, test or
do some other acl 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.
Example - 289 bales of goatskin containing 60 pieces in each bale were sold. I was the duty of the seller to
count them before sale. Before the counting was completed, they were destroyed by fire. The court held
that the loss fell on the seller as the property in the goods had not passed to the buyer Zagury v.
Furnell 11R.R. 704.
However, when nothing is left to be done on the part of the seller to ascertain the price, but buyer does
not pick up the goods from the seller's place because he wants to do some act for his satisfaction, Section

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22 does not apply. The property in the goods pass to the buyer as soon as the seller completes his part of
the job.
Example-S sells to B a bag containing 10 Kg rice After taking the bag in his hand, B feels that the weight of
the bag is less than 10 Kg. He requests the seller to weigh the rice again. In the meantime, a truck hits S's
shop, and the rice falls in a nearby drain. Here B will suffer the loss because the property in the goods had
passed to him when the seller had given him the rice bag.
17.3-1c3 WHEN GOODS ARE DELIVERED ON APPROVAL SECTION 24] When goods are delivered to the buyer
on approval or "on sale or return" or other similar Terms, the property therein passes lo the buyer (a)
when he signifies his approvalor acceptance to the seller or does any other act adopting the transaction:
(b) if he does not signify his approval or acceptance to the seller but retains the goods without giving
notice of rejection, then, if a time has been fixed for the return of the goods, on the expiration of such
time, and, if no time has been fixed, on the expiration of a reasonable time.
Example - S delivered a horse to B on the terms of sale or return within 8 days'. The horse died on the third
day without any fault on the part of B. The court held that the S was to bear the loss as the horse was still
the property of S- Elphick v. Barnes [1880] 5 C.P.D 321.
In Elphick v. Barnes, the seller could not recover the price from the defendant, the horse being still his
property when it perisheed. This may have been to the disadvantage of the seller, buy the rule often
operates to protect his interest as well and this is amply shown by Re Tersier. These certain articles of
furniture having been delivered for sale on cash or return within a week, ever siezed within two days in
execution proceedings against the buyer.
The seller was allowed to recover them as they were in property at the time of seizure and not that
of the buyer.
In the above case, if B intimates his acceptance of the horse on the 2nd day and the horse dies on the 3rd
day of the transaction, B will be liable for the Moss, because the property in the horse will transfer to him
as soon as he will intimate his acceptance to the seller.
Alternatively, if B does not intimate anything to S, and keeps the horse even after the expiry of 8 days, the
property shall be deemed to be passed to him.
The words ‘any other act adopting transaction’ means an act in the nature of an exercise of right of
ownership of the goods such as a sale to a third person, or pledging the goods with a pledgee, or using the
goods for his own purpose, etc.
Example - K delivered some jewellery to X on sale or return, X pawned the jewellery with A, a pawn broker.
The court held that the X's action amounts to an acceptance of the transaction of sale. Thus K could not
proceed against for the price, he has to recover the price from X Only-Kurkhantv.A. Attenborough [1897] 1
Q.B. 201 C.A.
17.3-2 Transfer of ownership in the sale of unascertained or future goods -
Section 18 of the Act reads as - "Where there is a contract for the sale of ascertained goods, no property in
the goods is transferred to the buyer un less and until the goods are ascertained."
Thus until the goods are ascertained, there are no goods on which the con tract can operate How then are
the goods to be ascertained?
Appropriation:
For eg: A seller, agrees to supply me a wrist watch which he has yet to manufacture, and after
manufacturing some watches he despotches one of them to me, that particular watch has been
appropriated to the contract, by the seller.
When the goods are destroyed before the appropriation could be made the loss has to be brone by the
seller as no poperty in them is deemed to have been passed.

Page 17
 Thus for ex, out of a big heap of coal only 10tons are to be supplied to a buyer, the seller having a
duty to seperate and despatch the coal, if before the seller coukd seperate and despatched the 10tons, the
whole of the lot is destroyed by fire, the seller will have to bear the loss form the same as the property in
the goods has passed to the buyer.
17.3-2a A VALID APPROPRIATION OF GOODS IS REQUIRED - When the contract is for the sale of
unascertained goods, the goods can be defined by the descrip tion only, eg, Fair Bengal Cotton, Calcutta
Silk, Java Sugar, etc. Suppose that the contract is for the sale of 100 bales of Fair Bengal Cotton out of
10000 such bales lying with the seller. If the seller set asides 100 bales of the cotton in his own warehouse,
it does not amount to ascertainment of goods because he at liberty to change his mind and send these
bales to some other purchaser. What is required for the transfer of property to the buyer is unconditional
appropriation of the bales to the contract. This is usually done by the seller giving notice to the buyer that
the bales are ready for delivery and the buyer assent ing to appropriation by saying that he will take
thereof. An In the context of appropriation, the act of taking tings which belongs to same else. Section 23
of the Act provides that, "Where there is a contract for the sale of unascertained or future goods by
description and goods of that description in 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.”
17.3-2b ESSENTIALS OF A VALID APPROPRIATION - An analysis of above provision reveals following
essentials of a valid appropriation:
1. The goods should confirm to the description and quality stated in the contract
Example-There was a contract for two parcels of 'Swan laths of specified length, and it was
provided that the property should pass on shipment, and that if any dispute arose, the buyer was
not to reject the goods but the dispute was to be referred to arbitration. However, the goods
supplied by the seller were not of the contract description. The court held that no question of
passing the property arose. The buyer could reject the goods in spite of the given clause - Vigers v.
Sanderson[1901) 1 K.B. 608.
2. The goods must be in a deliverable state.
3. The goods must be unconditionally appropriated. The goods are said to be unconditionally
appropriated when the seller does not reserve the right of disposal of the goods until certain
conditions (like payment of the price) are fulfilled.
Example - A agreed to sell certain goods to B on the condition that the buyer must pay the price
before the delivery of goods. In this case the seller has reserved the right of disposal of goods until
the condition of payment of the prices is fulfilled - Loesch Man v. Williams [1815]4 Camp. 181.
4. The appropriation must be
(i) by seller with the assent of the buyer, or
(ii) by buyer with the assent of the seller.
5. The assent may be express or implied.
6. The assent may be given either before or after the appropriation.
17.3-2e WAYS OF MAKING APPROPRIATION. It may be inferred from the above that the property in
unascertained goods passes only when they are ascer tained, and the goods are considered to be
ascertained when they are properly appropriated. The goods may be appropriated in any of the following
ways:
(i) By separating the contracted goods from the other goods with the consent of the buyer
(ii) By putting the contracted quantity in suitable receptacles, ie, by putting the goods into boxes,
gunny bags, in case of liquids, by putting them into boules, etc. with the consent of the buyer
(iii) By delivering the contracted goods to the carrier or other bailee for the purpose of transmission
to the buyer and without reserving the right of disposal. (Section 23(2).

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Examples:
1. A contract to sell certain quantity of liquor out of a big cask containing a much larger quantity. The
required quantity is not separated or bottled. The property in the liquor does not pass to the
purchaser Emp, v. Kuvert Kavasji AIR 1941 Bom. 106.
2. A having a quantity of sugar in bulk, more than sufficient to fill 20 hogsheads, contracts to sell to B
20 hogsheads of it. After the contract, A fills 20 hogsheads with the sugar and gives notice to B that
hogsheads are ready and requires him to take them away. B says he will takethem as soon as he
can.
By this appropriation by A, and assent by B, the property in the sugar passes to B Rhodes v.
Thwaites [1827) 6 B & C 388.
3. There was a contract for the sale of machines made by the seller.The seller packed the machines
and, before sending them asked the buyer to suggest the conveyed by which they should be sent.
There was no reply from the buyer. The court held that there was no valid appropriation in this case
because the buyer had not assented. Atkinson v. Bell (1828] 108 E.R 1046.
4. A, agreed to sell B the oil to be produced by him. The Oil was filled by Aini the bottles supplied by B.
It is an effective appropriation and the ownership passes to the buyer when the oil is filled into
bottles. In this case su bottles by the buyer signifies his assent to appropriation Langton v. Higgins
1858] 4H & N 402.
5. On May 6th S sold certain quantity of oil to the buyer and he paid the price thereof. The goods
were not in possession of the seller at the date of contract but had already been dispatched to him
on 25th April Subsequently the seller received 'Railway receipt and endorsed it and sent it to the
buyer. Afterwards on May 12th the goods were destroyed by fire while in transit. The court held
that the property has already passed to the buyer because transfer of railway receipt amounts to
passing the goods of the buyer. Thus the buyer has to bear the loss Shanker Dus v. Bhana RamAIR
1926 Lah. 606.
17.3.2d RESERVING THE RIGHT OF DISPOSAL BY THE SELLER - There is a need to study the term 'reserving
the right of disposal by the seller' in detail. Following para elaborates on the point.
Where there is a contract for the sale of specific goods or where goods are subsequently appropriated to
the contract, the seller may, by the terms of the contract or appropriation, reserve the right of disposal of
the goods until cer tain conditions are fulfilled. In such case, notwithstanding the delivery of goods To a
buyer, or to a carrier or other bailee for the purpose of transmission to the buyer, the property in the
goods does not pass to the buyer until the conditions imposed by the seller are fulfilled. [Section 25(1)] The
seller may reserve his right of disposal by imposing any condition he likes, cg, the goods will not be
delivered till the price is paid. However, in the follow ing circumstances, the seller is presumed to have
reserved this right:
 By taking the documents of title in his own name or his agent's name Section 252) - Where the
goods are shipped or delivered to railways by the seller, and the bill of lading, or railway receipt, as
the case may be, obtained by the seller in his own behalf, and nol on behalf of the buyer, the seller
reserves an absolute right of disposal thereby. In such cases, transfer of ownership does not take
place at the time of delivery of goods to carrier.
It is only when the documents of title are endorsed and send in the name of buyer, the transfer of
property takes place.
Example - A sold certain bales of paper to B which were to be sent to him by railway. A took the
railway receipt in his own name. While on the way, the bales got destroyed. It was A who had to
bear the loss because the property in the bales was not transferred to B.
When a seller takes the documents of title in the name of the buyer, but keeps them under his
control till fulfilment of some condition, the seller is presumed to have reserved the right to
disposal.

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 Example- A sold certain bales of paper to B which were to be sent to him by railway. A took the
railway receipt in the name of B, and sent them to his own banker to be delivered to B on the
payment of the price. Before B paid the price, and received railway receipts, the goods were
destroyed by fire. The court held that the seller should suffer the loss as he has reserved the right of
disposal and at the time of destruction of bales, their ownership had not been transferred to the
buyer - General Papers Ltd. v.V.P. Mohideen & Bros. AIR 1958 Madras 482.
 By sending the bill of exchange for the price to the buyer, along with the documents of title(Section
25(3)]- When documents of title are obtained in the name of the buyer, but they are sent to the
buyer subject to the acceptance of the bill of exchange (a mode of ensuring payment), or payment
of price, the property in the goods is not transferRed until an acceptance to such bill of exchange is
made, or the price is paid otherwise. If, however, the buyer wrongfully retains the documents of
title to the goods without making an acceptance to the bill of exchange or payment of the price, the
property in the goods does not pass to him.
Example - A sold certain quantity of timber to B, and shipped the same for the Transmission to the buyer. A
look the bill of lading in B's name and drew a bill of exchange' on B for the price of the timber. A delivered
the 'bill of lading and the "bill of exchange to his banker. The banker was to hand over the bill of lading to B
on his accepting and paying the amount mentioned in the bill of exchange. The buyer refused to accept the
bill of exchange. Here the banker can refuse to deliver the timber to B as the disposal of timber was subject
to acceptance of Bill of exchange by B.

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