Sale of Goods Act 1930 Bare Act

SCC Online Web Edition, Copyright © 2020
Page 1 Saturday, November 28, 2020

Printed For: Prateek Khandelwal, SCC Online MyLOFT Remote Access
SCC Online Web Edition: http://www.scconline.com
-----------------------------------------------------------------------------------------------------------------------------------------------------------
-
The
Sale of Goods Act, 19301
(Sale of Goods Act, 1930)
[Act 3 of 1930 as amended up to Act 34 of 2019]

[15th March, 1930]
CONTENTS
CHAPTER I
PRELIMINARY
1. Short title, extent and commencement
2. Definitions
3. Application of provisions of Act IX of 1872
CHAPTER II
FORMATION OF THE CONTRACT
Contract of Sale
4. Sale and agreement to sell
Formalities of the Contract
5. Contract of sale how made
Subject-matter of Contract
6. Existing or future goods
7. Goods perishing before making of contract
8. Goods perishing before sale but after agreement to sell
The Price
9. Ascertainment of price
10. Agreement to sell at valuation
Conditions and Warranties
11. Stipulation as to time
12. Condition and warranty
13. When condition to be treated as warranty
14. Implied undertaking as to title, etc
15. Sale by description
16. Implied conditions as to quality or fitness
17. Sale by sample
CHAPTER III
EFFECTS OF THE CONTRACT
Transfer of Property as between Seller and Buyer
18. Goods must be ascertained
19. Property passes when intended to pass

-----------------------------------------------------------------------------------------------------------------------------------------------------------
-
20. Specific goods in a deliverable state
21. Specific goods to be put into a deliverable state
22. Specific goods in a deliverable state, when the seller has to do anything thereto in order to ascertain price
23. Sale of unascertained goods and appropriation
24. Goods sent on approval or “on sale or return”
25. Reservation of right of disposal
26. Risk prima facie passes with property
Transfer of title
27. Sale by person not the owner
28. Sale by one of joint owners
29. Sale by person in possession under voidable contract
30. Seller or buyer in possession after sale
CHAPTER IV
PERFORMANCE OF THE CONTRACT
31. Duties of seller and buyer
32. Payment and delivery are concurrent conditions
33. Delivery
34. Effect of part delivery
35. Buyer to apply for delivery
36. Rules as to delivery
37. Delivery of wrong quantity
38. Instalment deliveries
39. Delivery to carrier or wharfinger
40. Risk where goods are delivered at distant place
41. Buyer's right of examining the goods
42. Acceptance
43. Buyer not bound to return rejected goods
44. Liability of buyer for neglecting delivery of goods
CHAPTER V
RIGHTS OF UNPAID SELLER AGAINST THE GOODS
45. “Unpaid seller” defined
46. Unpaid seller's rights
Unpaid seller's lien
47. Seller's lien
48. Part delivery
49. Termination of lien
Stoppage in Transit
50. Right of stoppage in transit

-----------------------------------------------------------------------------------------------------------------------------------------------------------
-
51. Duration of transit
52. How stoppage in transit is effected
53. Effect of sub-sale or pledge by buyer
54. Sale not generally rescinded by lien or stoppage in transit
CHAPTER VI
SUITS FOR BREACH OF THE CONTRACT
55. Suit for price
56. Damages for non-acceptance
57. Damages for non-delivery
58. Specific performance
59. Remedy for breach of warranty
60. Repudiation of contract before due date
61. Interest by way of damages and special damages
CHAPTER VII
MISCELLANEOUS
62. Exclusion of implied terms and conditions
63. Reasonable time a question of fact
64. Auction sale
64-A. In contracts of sale, amount of increased or decreased taxes to be added or deducted
65. Repeal
66. Savings
———
Sale of Goods Act, 19301

[Act 3 of 1930 as amended up to Act 28 of 1993] [15th March, 1930]
An Act to define and amend the law relating to the sale of goods
Whereas it is expedient to define and amend the law relating to the sale of goods; it is hereby enacted as follows:
—
Statement of Objects and Reasons.—The Bill is sufficiently explained in the Report of the Special Committee
printed below.
SIMLA B.L.
MITTER
The 17th July, 1929
Report of the Special Committee
To
HIS EXCELLENCY THE GOVERNOR-GENERAL IN COUNCIL
In accordance with the Legislative Department Resolution, No. 47-1/29-C and G, dated the 28th March, 1929
(Appendix A), we the members of the Committee appointed by the Government of India to examine the provisions of
the Indian Sale of Goods Bill, have the honour to submit the following report—
1. The constitution of the Committee was as follows—
Chairman
The Honourable Sir Brojendra Lal Mitter, Kt., Bar-at-Law Member of the Council of the Governor General.
Members
(1) Mr. D. F. Mulla, C.I.E., M.A. LL.B., Officiating Advocate-General, Bombay.
(2) Mr. M. R. Jayakar. M.A., LL.B., Bar-at-Law, M.L.A.
(3) Mr. Alladi Krishnaswamy Ayyar, Advocate-General, Madras.
Mr. W.T.N. Wright. C.I.E., I.C.S. Joint Secretary and Draftsman to the Government of India, Legislative
-----------------------------------------------------------------------------------------------------------------------------------------------------------
-
Department attended the meetings of the Committee, and Mr. J. R. Dhurandhar, LL.B. Assistant Secretary to the
Government of Bombay, Legal Department, acted as Secretary to the Committee.
2. The Committee assembled at Simla on the 29th April, 1929, when its first meeting was held and continued its
deliberations daily until the 9th May, 1929. A Bill to amend and define the law relating to the Sale of Goods, with the
notes setting forth the reasons for the proposed amendment which had already been prepared in the Legislative
Department of the Government of India was placed before us, and formed the basis of our discussions.
3. Before the passing of the Indian Contract Act, 1872, Chapter VII of which contains the law relating to the sale
of goods or movables, the law on this subject was not only not uniform throughout British India but was also outside
the limits of the original jurisdiction of the High Courts, extremely uncertain in its application. Within the limits of the
Presidency-towns the rules of English law, including those in the Statute of Frauds, were applied, whilst in the
mofussil it was doubtful whether the Statute of Frauds was applicable and as observed by the Indian Law
Commissioners in their Second Report, the Judge was to a great extent without the guidance of any positive law
beyond the rule that his decision should be such as he deemed to be in accordance with “justice, equity and good
conscience”. To remedy this unsatisfactory state of affairs, the Indian Law Commissioners framed in their Second
Report, dated the 28th July, 1866, a set of rules relating to the general law of contracts including therein provisions
relating to the sale of movables. The draft of the Law Commissioners underwent several changes at the hands of the
then Law Members, Sir Henry Maine and Sir James Stephen, and also in the Select Committee of the Indian
Legislature. But, as stated by Sir James Stephen himself while presenting the report of the Select Committee on the
Indian Contract Bill, the chapter on the sale of goods, except in regard to the rule as to market overt represented
generally the English law on the subject as it then stood.
4. The rules of English law relating to the sale of goods had grown up mainly out of judicial decisions. Along with
the general law of contract, they were the product of many generations and were adapted to the circumstances and
exigencies of the times and the dealings of the people. They were, however, largely dominated by the provisions of
the Statute of Frauds which was passed in the reign of Charles the Second. The Law Commissioners, as well as those
who were ultimately responsible for framing the Indian Contract Act, at once realised that the provisions of the
Statute of Frauds, although followed in the Presidency-towns, were not suitable to the conditions prevailing in this
country, and that “any law relating to this important subject must at any rate be free from the inexpressible
confusion and intricacy which is thrown over every part of the Statute in consequence of its vague language.”
5. In 1870, various branches of law were being codified in British India. The main object in view was, in the words
of Sir James Stephen, “that of providing a body of law to the Government of the country so expressed that it might
be readily understood both by English and Native Government servants without extrinsic help from the English law
libraries”. What was urgently needed was a guide for the judge or magistrate who had but little legal training, derived
little or no assistance from the bar and worked at a distance from any law library.
6. Whatever merit the simple and elementary rules embodied in the Indian Contract Act may have had and
however sufficient and suitable they may have been for the needs which they were intended to meet in 1872, the
passage of time has revealed defects the removal of which has become necessary in order to keep the law abreast of
the developments of modern business relations. The law relating to the sale of goods appertains mainly to mercantile
transactions. There can be no doubt that during the last half-century conditions in this country relating to trade and
business have undergone material changes. Methods of business, have largely altered and new relations have arisen
between man and man. In dealing with these relations, it has been necessary to give recognition to new principles
and the Indian Courts have found that a law enacted more than fifty years ago is entirely inadequate to enable them
to deal with these new regulations or give effect to the new principles. The result has been that on various occasions
the Courts have had to hold that Chapter VII of the Indian Contract Act is not exhaustive, and to import therein
analogies from the decisions of the English Courts.
7. The English law relating to the sale of goods which was admittedly the basis of Chapter VII of the Indian
Contract Act has itself since 1872 undergone drastic changes and was finally codified in 1893 by the present Sale of
Goods Act (56 and 57 Vict., C. 71), which discards many of the old common law rules upon which Chapter VII of the
Indian Act was based in favour of provisions more suited to modern conditions or more convenient in actual practice.
8. By the Bill referred for our consideration, the law relating particularly to the sale of goods is embodied in a
separate enactment, although many of the general principles contained in the Indian Contract Act will continue to be
applicable thereto. When Sir James Stephen moved the Indian Contract Bill, he admitted that it was not and could
not pretend to be, a complete code upon the branch of law to which it related. He, however, expressed a hope that in
later years it would be easy to enact supplementary chapters relating to the several branches of the law of contract
which the Bill did not touch. This hope has never been fulfilled. In later years it was found more convenient to have
separate enactments for the several branches of the law of contract, e.g., the Transfer of Property Act, the Negotiable
Instruments Act, and the Merchant Shipping Act. In our opinion in view of the complexity of modern conditions, the
time has now come when this process should be accelerated by embodying the different branches of law relating to
contract in separate self-contained enactments; and we hope that the Bill which we attach to our report may be
passed into law at an early date and may be but the first of the series required to complete the task which we have
outlined above.
9. The Bill referred to us was mainly based on the English Sale of Goods Act, 1893. This Act has stood the test of
nearly thirty five years of practical application, and in the words of Lord Parker in Re Parchim, (1918) AC 157 at pages
160-61, “is a very successful and correct codification of this branch of the mercantile law”. As is shown in Appendix B
to our report, most of the Colonies and Overseas Dominions have adopted and re-enacted the Act with only such
small variations as have been found necessary to adopt its provisions to local circumstances. It is also remarkable,
that the Uniform Sales Act, passed in 1906 in the United States of America and adopted in twenty out of fifty three
States and territories is based very largely on the English Act. These facts constitute striking evidence of the
completeness and the universal suitablity of its provisions.
-----------------------------------------------------------------------------------------------------------------------------------------------------------
-
10. In mercantile transactions a conflict of laws should, as far as possible, be avoided. Uniformity of law in various
countries, particularly in those which have business or trade dealings with one another, is highly convenient and
desirable. We, therefore, approve of the proposal to adopt the provisions of the English Sale of Goods Act so far as
they are suitable to Indian conditions as the basis for the present Bill, and thus to make the Indian Law relating to
the sale of goods as nearly as possible uniform with the law in force in other parts of the British Empire.
11. The provisions of the English Act are far more elaborate and comprehensive than those of Chapter VII of the
Indian Contract Act, and in their arrangement the English Act is more logical and methodical. As we have already
observed, it has revised and brought up to the date rules of the English Common Law. Moreover, the adoption of the
English Act as the basis of present Bill will enable Indian Courts to interpret its provisions in the light of the decisions
of the English Courts.
12. In adopting the provisions of the English Act, we have not been unmindful of the needs and exigencies of this
country. Wherever it has been found that a rule obtaining in England, such as that relating to market overt is not
suitable to Indian conditions, the rule has been rejected. We, have, moreover, carefully scrutinised the provisions of
the English Act in the light of the decisions of English Courts since 1893, and where those decisions have shown the
provisions of the English Act to be defective or ambiguous, we have attempted to improve upon them. We have also
retained several of the provisions of the Indian Contract Act which we consider necessary or useful to meet special
conditions existing in India. The Bill as revised by us on the above lines is attached to our report.
13. A detailed explanation of the various clauses of the Bill is set out in our notes in Appendix C. But we think it
desirable to draw attention to the following few points of importance:
(a) The present Bill embodies the principles that the question whether a contract for the sale of goods does or does
not pass the property in the goods from the buyer to the seller must in all cases be determined by the intention
of the parties to the contract. The provisions of Chapter VII of the Indian Contract Act are vague and conflicting
on this point. The Bill codifies the rules by which that intention may be ascertained, but the operation of these
rules will be displaced by any terms of the contract defining the intention or by any attendant circumstances,
including the conduct of the parties, rendering it ascertainable. In following this principle we have borne in
mind that in mercantile matters the certainty of the rule is often of more importance than the substance. If the
parties know before hand what their legal position is, they can provide for their particular wants by express
stipulation sale, after all, is a consensual contract, and the Bill does not prevent the parties from making any
bargain they please. Its object is to lay down clear rules for the cases where the parties have either framed no
intention or failed to express it.
(b) The distinction between a sale and an agreement to sell which was not clear in Chapter VII of the Indian
Contract Act, has been clearly brought out. This distinction is very necessary to determine the rights and
liabilities of the parties to the contract.
(c) It is made clear that a contract of sale can be made by mere offer and acceptance. Neither payment nor
delivery is necessary for the purpose.
(d) Before 1893 the law in England relating to warranties and conditions was in a very confused state. In the
Indian Contract Act the word “warranty” has been used in a very vague sense. In some provisions it denotes a
condition which would enable a party aggrieved by its breach to repudiate the contract while in others it enables
him to claim damages only. In the Bill this ambiguity has been removed.
(e) There is much conflict of decisions in India regarding the meaning of Section 108 of the Indian Contract Act
which relates to sales by ostensible owners. This is to a certain extent due to the obscure phraseology of the
section itself. We have tried to remove this obscurity in Clauses 27 to 30 of the Bill to simplify the law on the
subject.
(f) We have elaborated the rules relating to delivery to carriers, stoppage in transit and auction sales.
(g) We have anxiously considered the question of the retention of the illustrations appearing in Chapter VII of the
Indian Contract Act and of the insertion of illustrations to new provisions. Our decision is that the better policy
is to forego all illustrations, leaving the Courts to construe the sections as they stand.
14. In conclusion, we desire to place on record our high sense of obligation to Mr. W. T. M. Wright and Mr. J. R.
Dhurandhar, who attended the meetings of the Committee and took part in its deliberations. Mr. Wrights rendered us
great assistance in drafting the clauses of the Bill and in preparing this report. Mr. Dhurandhar who acted as
Secretary brought to bear upon the work great industry in collecting references and otherwise assisting us in the
preparation of our notes.
► Preamble.—The object of Entry 48 is not to confer power on Provincial Legislatures to enact the legislation to deal with contracts
of sale or sale as such. The pith and substance of this is to provide power to levy taxes on sale of goods and it does not entrench upon
the province of the concurrent list and, therefore, there is no repugnancy to Sale of Goods Act. It is certainly within the legitimate share
of the Provincial Legislature so to make the law so long as it does not travel beyond the scope of entry No. 48. The Sale of Goods Act
does not prescribe a situs of sale and consequently there can be no conflict in regard to this matter between Section 2, Madras General
Sales Tax Act, and the material provisions of the Sale of Goods Act. To attract the applicability of Section 107, it has to be established
that the impugned Act and the existing law must be in respect of the same subject-matter and both of them must be covered by one of the
entries in the concurrent list and secondly, there must be repugnancy between the two provisions. If the subjects dealt with by the two
enactments are different and the sources of the power of the Legislature are traceable to two different lists, Section 107 cannot have any
operation. It is by reason of entry No. 48 that the Madras General Sales Tax Act could be passed whereas contracts which are dealt with
in the Sale of Goods Act come under entry No. 10 of the concurrent list. The two enactments therefore deal with the different subjects
and in order to come within the purview of Section 107 the provincial law must be traceable to the concurrent legislative list, Pari
Kameswara Rao v. State of Madras, AIR 1955 Andhra 129.
Chapter I
PRELIMINARY
-----------------------------------------------------------------------------------------------------------------------------------------------------------
-
1. Short title, extent and commencement.—(1) This Act may be called the 2 [* * *] Sale of Goods Act, 1930.
3 [(2) It extends to the whole of India 4 [* * *].]
(3) It shall come into force on the first day of July, 1930.
2. Definitions.—In this Act, unless there is anything repugnant in the subject or context,—
► Agreement for sale.—Sale of land—Agreement for sale by members of joint family—One of them not signing agreement—
Effect—Contract if incomplete or inoperative, Kanniah Gupta v. Subrarami Redi, (1949) 92 MLJ 390.
(1) “buyer” means a person who buys or agrees to buy goods;
(2) “delivery” means voluntary transfer of possession from one person to another;
► Delivery.—Definition of “delivery” has no bearing on definition of speculative transaction in Explanation 2 to Section 24(1) of
Income Tax Act, 1922, Davenport & Co. (P) Ltd. v. CIT, (1975) 2 SCC 399.
(3) goods are said to be in a “deliverable state” when they are in such state the buyer would under the contract be
bound to take delivery of them;
(4) “document of title goods” includes a bill of lading, dock warrant, warehouse-keeper's certificate, wharfingers’
certificate, railway receipt, 5 [multimodal transport document,] warrant of 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 authorising
or purporting to authorise, either by endorsement or by delivery, the possessor of the document to transfer or receive
goods thereby represented;
► Railway Receipt.—A railway receipt is a document of title, within the definition of the term in Section 2(4), Sale of Goods Act, and
enables the person mentioned as consignee to give a valid discharge in respect of the goods to which it relates. Hence, a consignee of
goods or an endorsee of a railway receipt though he be an agent of the consignor has sufficient interest in the goods to file a suit against
the railway, Erachshaw Desabhai Kerawalla v. Dominion of India, AIR 1955 Mad 70.
► Document purporting to be a delivery order.—A document purporting to be a delivery order hedged round with conditions
showing that the supplier of goods had reserved the option to deliver or not to deliver unless further conditions are complied with could not
possibly be a document of title as contemplated by Section 2(4) of the Sale of the Goods Act, 1930. It could not authorise or purport to
authorise the holder of the document to transfer the goods mentioned in it until another agreement took place. The holder might put up an
equitable claim if he had actually paid some money but he could not be compelled to pay damages for the alleged breach of contract
when the delivery was not what he had contracted for. (Per Beg, C.J.), Juggilal Kamlapat v. Pratapmal Rameshwar, (1978) 1 SCC 69.
(5) “fault” means wrongful act or default;
(6) “future good” means goods to be manufactured or produced or acquired by the seller after the making of the
contract of sale;
► Future goods.—Where contracts of sale finalised at Delhi and specific goods manufactured at Faridabad in pursuance of those
contracts. Held, those were ‘future goods’ within the meaning of Section 2(6), Union of India v. K.G. Khosla & Co. Ltd., (1979) 2 SCC
242.
(7) “goods” means every kind of movable property other than actionable claims and money; and includes stock
and shares, growing crops, grass and things attached to or forming part of the land which are agreed to be severed
before sale or under the contract of sale;
► Movable property.—Standing timber is ‘movable property’ if under the contract of sale they are to be severed. But the severance
must take place when the timber still vests in the contracting party. Hence trees which are to be severed before sale or under the contract
of sale are “goods” for the purpose of the Sale of Goods Act, State of M.P. v. Orient Paper Mills, (1977) 2 SCC 77.
► Goods.—Whether within the definition of ‘goods’, trees from which logs of timber were agreed to be cut and sold are things
attached to or forming part of the land, Ram Narain Mahato v. State of M.P., (1970) 1 SCC 25.
The expression “goods” included at all relevant times standing timber agreed to be severed before sale or under the contract of sale.
State of Maharashtra v. Champalal Kishanlal Mohta, (1970) 1 SCC 611.
Bamboos and timber are goods, State of Orissa v. Titaghur Paper Mills Co. Ltd., 1985 Supp SCC 280.
Lottery tickets are “goods” and not actionable claims within the meaning of Section 2(7) of the Act, H. Anraj v. Govt. of T.N., (1986) 1
SCC 414.
Import licence called REP Licence/Exim Scrip provided under Import-Export policy of relevant years, freely saleable in market and
having value of its own. It is in the nature of property and not chose in action or actionable claim or title deed Held, ‘goods’, Vikas Sales
Corporation v. Commissioner of Commercial Taxes, (1996) 4 SCC 433.
(8) 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;
(9) “mercantile agent” means a mercantile agent having in the customary 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;
(10) “price” means the money consideration for a sale of goods;
► Price.—Money consideration for resale is ‘price’, Gopalkrishna Pillai v. K.M. Mani, (1984) 2 SCC 83.
(11) “property” means the general property in goods, and not merely a special property;
(12) “quality of goods” includes their state or condition;
(13) “seller” means a person who sells or agrees to sell goods;
(14) “specific goods” means goods identified and agreed upon at the time a contract of sale is made; and
(15) expressions used but not defined in this Act and defined in the Indian Contract Act, 1872 (IX of 1872) have
meaning assigned to them in that Act.
► Goods.—Sugarcane supplied to sugar factory, held, is “goods” within the meaning of Section 2(7). Further held, price is an
essential element of sale of goods, U.P. Coop. Cane Unions Federations v. West U.P. Sugar Mills Assn., (2004) 5 SCC 430.
► Specific contracts.—Tickets are themselves normally evidence of and in some cases the contract between buyer and seller. A
-----------------------------------------------------------------------------------------------------------------------------------------------------------
-
ticket can be held to be goods or movable property if it evidences the transfer of a right, Sunrise Associates v. Govt. of NCT of Delhi,
(2006) 5 SCC 603.
3. Application of provisions of Act IX of 1872.—The unrepealed provisions of the Indian Contract Act, 1872, save in
so far as they are inconsistent with the express provisions of this Act, shall continue to apply to contracts for the sale
of goods.
Chapter II
FORMATION OF THE CONTRACT
Contract of Sale
4. Sale and agreement to sell.—(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. There may by a contract of sale between one part-owner
and another.
(2) A contract of sale may be absolute or conditional.
(3) Where under a contract of sale the property in the goods is transferred from the seller to the buyer, the
contract is called a sale, but where the transfer of the property in the goods is to take place at a future time or
subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell.
(4) An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the
property in the goods is to be transferred.
► Nature and Scope.—From a combined reading of Section 3 of the Central Sales Tax Act and Section 4 of the Sale of Goods Act
an agreement to sell is also an essential ingredient of sale provided it contains a stipulation for transfer of goods from the seller to the
buyer, Balabhadas Hulaschand v. State of Orissa, (1976) 2 SCC 44 : 1976 SCC (Tax) 164.
An agreement to transfer goods to the buyer for a price is an important element of sale and the same is also borne out from Section 4
of the Sale of Goods Act. If Section 4 of the Sale of Goods Act is read along with Sections 3 and 4 of the Act, it would mean an
agreement to sell would also be a sale within the meaning of “sale” provided such agreement of sale stipulates transfer or movement of
goods or movement of goods is incident of the contract of sale and in that case, such movement of goods would be deemed to be
occasioned by the sale. It is immaterial that actual sale does not take place at the time of movement of goods and takes place later on.
This interpretation of Section 3(a) of the Central Sales Tax Act, 1956 if applied to Section 5(2) of the Central Sales Tax Act, 1956,
thereof, would mean that if an agreement for sale stipulates import of goods or import of goods is incident of contract of sale and goods
have entered the import stream, such import would fall within the expression “sale occassions import”. It is not necessary that a
completed sale should precede the import. In the present case, the import of Carbamite is the direct result of the contract of sale and as
such it can be safely held in the present case that sale has occasioned the import, State of Maharashtra v. Embee Corpn., (1997) 7
SCC 190; K.G. Khosla & Co. (P) Ltd. v. Dy Commr of Commercial Taxes, (1966) 17 STC 473 : AIR 1966 SC 1216; STC v. State of
Mysore, AIR 1963 SC 548: (1963) 14 STC 188, followed Binani Bros (P) Ltd. v. Union of India, (1974) 1 SCC 459: 1974 SCC (Tax)
183; Mohd. Serajuddin v. State of Orissa, (1975) 2 SCC 47: 1975 SCC (Tax) 269; K. Gopinathan Nair v. State of Kerala, (1997) 10
SCC 1, distinguished, Embee Corpn. v. State of Maharashtra, (1990) 78 STC 311 (Bom), affirmed.
► Sale: Ingredients of.—A contract whether express or implied between the parties for the transfer of the property in the goods for
a price paid or promised is an essential requirement for a ‘sale’, Coffee Board v. Commissioner of Commercial Taxes, (1988) 3 SCC
263: 1988 SCC (Tax) 308.
► Contract of sale : Nature.—The imposition of restrictions by buyer on seller would not make it a contract of agency, Bhopal
Sugar Industries Ltd. v. STO, (1977) 3 SCC 147.
In determining the contract of sale or contract of agency, the substance of the agreement has to be seen, Bhopal Sugar Industries
Ltd. v. STO, (1977) 3 SCC 147.
► Composite transaction.—The transaction of sale is a composite transaction consisting of agreement of sale, passing of title,
delivery of goods and payment of price and costs and charges of transportation, R.C. Jal v. Union of India, (1972) 3 SCC 470.
► Sale by auction.—Sale by auction is sale, Chowringhee Sales Bureau (P) (Ltd.) v. CIT, (1973) 1 SCC 46.
► Sale of good.—No one can sell his goods to himself. A sale contemplates a seller and a purchaser. If a person revalues his goods
and shows a higher value for them in his books of account, he cannot be considered as having sold these goods and made profits
therefrom. Nor can a person by handing over his goods to a partnership of which he is a partner and that as his share of capital can be
considered as having sold the goods to the partnership, CIT v. Hind Construction Ltd., (1972) 4 SCC 460.
The expression “sale of goods” is a nomen jures its essential ingredients being an agreement to sell movables for a price and property
passing therein pursuant to that agreement, T.V. Sundram v. State of Madras, (1975) 3 SCC 424.
► Types of contracts.—There is no infallible test of universal application for distinguishing between the two types of contracts
namely a contract for the sale of goods and contract for work and services. Some of the tests suggested are : (a) If the thing to be
delivered has individual existence before delivery as the sole property of the party who is to deliver it, then it is a sale, otherwise not; (b) If
the main object of the contract is the transfer from A to B, for a price, of the property in a thing in which it had no previous property, then
it is a contract of sale; (c) A contract for sale is a contract whose main object is the transfer of the property in and the delivery of the
possession of a chattel, as the chattel to the buyer. Where the main object of work undertaken by the payee of the price is not the
transfer of a chattel qua chattel, the contract is one for work and labour. The test is whether or not the work and labour bestowed end in
anything that can properly become the subject of sale, neither the ownership of materials nor the value of the skill and labour as
compared with the value of materials is conclusive although such matters may be taken into consideration in determining, in the
circumstances of a particular case, whether the contract is in substance one for work and labour or for the sale of a chattel, Union of
India v. Central India Machinery Mfg. Co., (1977) 2 SCC 847.
► Sale and agreement to sell : Distinction.—An agreement to sell is a contract pure and simple whereas a sale is a contract plus a
conveyance. By an agreement to sell a jus in personam is created, by a sale a jus in rem also is transferred. Where goods have been
sold and the buyer makes default, the seller may sue for the contract price on the count of “goods bargained and sold”, but where an
agreement to buy is broken, the seller's normal remedy is an action for unliquidated damages. If an agreement to sell be broken by the
seller, the buyer has only a personal remedy against the seller. The goods are still the property of the seller, and he can dispose of them
as he likes. But if there has been a sale, and the seller breaks his engagement to deliver the goods, the buyer has not only a personal
remedy against the seller, but also the usual proprietary remedies in respect of the goods themselves. In many cases, too, he can follow
-----------------------------------------------------------------------------------------------------------------------------------------------------------
-
the goods into the hands of third parties. Again, if there be an agreement for sale, and the goods are destroyed, the loss as a rule falls on
the seller, while if there has been a sale, the loss as a rule falls upon the buyer though the goods have never come into his possession,
Instalment Supply Ltd. v. STO, (1974) 4 SCC 739.
► Contract of Sale and contract of agency : Distinction.—A contract of agency, differs essentially from a contract of sale
inasmuch as an agent after taking delivery of the property does not sell it as his own property but sells the same as the property of the
principal and under his instructions and directions. Furthermore, since the agent is not the owner of the goods, if any loss is suffered by
the agent he is to be indemnified by the principal. This is yet another dominant factor which distinguishes an agent from a buyer—pure
and simple, Bhopal Sugar Industries Ltd. v. STO, (1977) 3 SCC 147.
► Sale agreement or agency agreement.—Whether a particular agreement is an agency agreement or an agreement of sale
depends upon the terms of the agreement. For deciding that question, the terms of the agreement have got to be examined. The true
nature of a transaction evidenced by a written agreement has to be ascertained from the covenants and not merely from what the parties
choose to call it. The terms of the agreement must be carefully scrutinised in the light of the surrounding circumstances, Khedut
Sahakari Ginning & Pressing Society Ltd. v. State of Gujarat, (1971) 3 SCC 480.
► Contract for sale and contract for hire-purchase : Distinction.—A contract of hire-purchase is properly speaking a contract of
hire by which the hirer is granted an option to buy but is not, as under a contract of sale, under a legal obligation to do so. The contract
of hire-purchase is one of the variations of the contract of bailment, but it is a modern development of commercial life, and the rule with
regard to bailments, which were laid down before any contract of hire-purchase was contemplated, cannot be applied simpliciter,
because such a contract has in it only the element of bailment but also the element of sale, Instalment Supply Ltd. v. STO, (1974) 4 SCC
739.
► Contract of sale and agreement to sell.—Contract of sale is different from agreement to sell. Sale operates by itself and without
delivery to transfer property in the goods sold. Word “sale” connotes both contract and conveyance or transfer of property, Assn. of
Leasing & Financial Service Companies v. Union of India, (2011) 2 SCC 352.
► Essence of sale.—Essence of sale is transfer of property in a thing, from one person to another, for a price. As per Section 4,
contract of sale includes agreement to sell. It is not necessary that contract of sale must be absolute. It may be conditional as well.
Essential feature that distinguishes contract of sale from agreement to sell, is that in contract of sale, property in goods is transferred
from seller to buyer immediately, whereas in agreement to sell, property is transferred on a future date/dates. Agreement to sell becomes
sale on fulfilment of conditions provided therein or when time provided in agreement elapses, State of Uttaranchal v. Khurana Bros.,
(2010) 14 SCC 334 : (2012) 1 SCC (Civ) 459.
► Intention of parties.—When and where title passes can be ascertained from intention of parties. Intention of parties can be
ascertained from terms of contract. If intention is not clear in contract, that is, if it is an unconditional contract, rules in Sections 20 to 24,
Sale of Goods Act, 1930 have to be applied. Four situations clarified, Arihant Udyog v. State of Rajasthan, (2017) 8 SCC 220.
► Composite contract.—A composite contract would be a “works contract”. However, if there are two contracts, namely, the first
for purchase of the components of the lift only from a dealer, it would be a contract of sale and, secondly, if there is a separate contract
for installation only, that would be a contract for labour and service, Kone Elevator India (P) Ltd. v. State of T.N., (2014) 7 SCC 1.
Formalities of the Contract
5. Contract of sale how made.—(1) A contract of sale is made by an offer to buy or sell goods for a price and the
acceptance of such offer. The contract may provide for the immediate delivery of the goods or immediate payment of
the price or both, or for the delivery or payment by instalments, or that the delivery or payment or both shall be
postponed.
(2) Subject to the provisions of any law for the time being in force, 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.
► Terms of contract.—When Parties argued upon terms which will govern a purchase when a purchase order is placed, agreement
upon such terms is not the same as placing a purchase order. A preclude to a contract should not be confused with the contract itself,
Dresser Rand S.A. v. Bindal Agro Chem Ltd., (2006) 1 SCC 751.
Subject-matter of Contract
6. Existing or future goods.—(1) The goods which form the subject of a contract of sale may be either existing
goods, owned or possessed by the seller, or future goods.
(2) There may be a contract for the sale of goods the acquisition of which by the seller depends upon a
contingency which may or may not happen.
(3) Where by a contract of sale the seller purports to effect a present sale of future goods, the contract operates as
an agreement to sell the goods.
► Future goods.—The fact that the seller has no stock under his control at the time of contract does not matter as it is quite
competent for a man to sell what does not belong to him. Before the time for performance, he may buy it or procure the assignment of it,
and be ready to fulfil his contract, Keshav Pandurang Apte (Representing Malabar Products & Co.) v. T. V. Krishna Iyer, AIR 1955
NUC (Tr-Co) 4129.
7. Goods perishing before making of contract.—Where there is a contract for the sale of specific goods, the contract
is void if the goods without the knowledge of the seller have, at the time when the contract was made perished or
become so damaged as no longer to answer to their description in the contract.
8. Goods perishing before sale but after agreement to sell.—Where there is an agreement to sell specific goods and
subsequently the goods without any fault on the part of the seller or buyer perish or become so damaged as no
longer to answer to their description in the agreement before the risk passes to the buyer, the agreement is thereby
avoided.
The Price
9. Ascertainment of price.—(1) The price in a contract of sale may be fixed by the contract or may be left to be
fixed in manner thereby agreed or may be determined by the course of dealing between the parties.
(2) Where the price is not determined in accordance with the foregoing provisions, the buyer shall pay the seller a
reasonable price. What is a reasonable price is a question of fact dependent on the circumstances of each particular
-----------------------------------------------------------------------------------------------------------------------------------------------------------
-
case.
10. Agreement to sell at valuation.—(1) Where there is an agreement to sell goods on the terms that the price is
to be fixed by the valuation of a third party and such third party cannot or does not make such valuation the
agreement is thereby avoided:
Provided that, if the goods or any part thereof have been delivered to and appropriated by, the buyer, he shall pay
a reasonable price therefor.
(2) Where such third party is prevented from making the valuation by the fault of the seller or buyer, the party not
in fault may maintain a suit for damages against the party in fault.
Conditions and Warranties
11. Stipulation as to time.—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.
► Time for payment of advance.—Section 11 has no application when the defendants unequivocally state that, unless and until the
advance is paid, the contract would not come into existence.
Where the parties treat the payment of advance as a vital element in the bargain and the advance is paid only after the offer is
revoked, there is no contract to be enforced, Sundara Bayamma v. Venkateswara & Co., AIR 1955 NUC (Andhra) 5825.
12. Condition and warranty.—(1) A stipulation in a contract of sale with reference to goods which are the subject
thereof may be a condition or a warranty.
(2) A condition is a stipulation essential to the main purpose of the contract, the breach of which gives rise to a
right to treat the contract as repudiated.
(3) A warranty is a stipulation collateral to the main purpose of the contract, the breach of which give rise to a
claim for damages but not to a right to reject the goods and treat the contract as repudiated.
(4) Whether a stipulation in a contract of sale is a condition or a warranty depends in each case on the
construction of the contract. A stipulation may be a condition, though called a warranty in the contract.
► No breach of warranty.—Where a hairdresser sells to customer, a hair dye, there is an implied term in the contract that the
materials used in the preparation of the dye where reasonably fit, for the purpose for which they were required. The implied warranty
extends only to the dyeing of the hair of normal persons who had successfully passed the test.
Where therefore the customer who knows herself to be allergic to the particular hair dye develops dermatitis as a result of applying
the dye after the hairdresser had carefully and with skill carried out the test according to the manufacturers instructions, and it is found
that the customer did not disclose to the hairdresser her particular allergy, the hairdresser is not liable for breach of warranty.
The implied terms as to fitness is dependent on proper discloser by the customer of any relevant peculiarities known to her and in
particular of the fact that she knew by experience that the particular dye might have a bad effect on her. There is a duty to use
reasonable care to disclose known peculiarities, Ingham v. Emes, AIR 1955 NUC (England) 5192.
13. When condition to be treated as warranty.—(1) Where a contract of sale is subject to any condition to be
fulfilled by the seller, the buyer may waive the condition or elect to treat the breach of the condition as a breach of
warranty and not as a ground for treating the contract as repudiated.
(2) Where a contract of sale is not severable and the buyer has accepted the goods are part thereof, 6 [* * *] the
breach of any condition to be fulfilled by the seller can only be treated as a breach of warranty and not as a ground
for rejecting the goods and treating the contract as repudiated, unless there is a term of the contract, express or
implied, to that effect.
(3) Nothing in this section shall affect the case of any condition or warranty fulfilment of which is excused by law
by reason of impossibility or otherwise.
► Alternative remedies.—Where goods not answering to the description contracted for are delivered to a buyer, he has a right to
one of two alternative remedies : (a) reject the goods and obtain a refund of the price if paid in advance and sue for damages for non-
delivery. In such an event the damages he would obtain would be the difference between the contract price and the market price of the
goods on the date of the breach if the latter were higher; (b) waive condition and accept the goods and sue for damages for a breach of
warranty. When he accepts the goods, he has to pay the contract price less any claim for set-off for the breach of warranty, Messrs.
Sha Thilokchand Poosaji v. Crystal & Co., by its authorised agent and Manager C. Satyam, AIR 1955 Mad 481.
► Breach of warranty.—Where the contract for setting up power plant, the provision for capacity of the power plant being of 108
MW was a condition. The plaintiff instead of repudiating the contract working with the power plant, held, breach of condition treated by
the plaintiff as breach of warranty. In view of Section 12(3), the breach of warranty gives a right to claim for damages but not to a right to
reject the goods and treat the contract as repudiated, Svenska Handelsbanken v. Indian charge chrome, (1994) 1 SCC 502.
14. Implied undertaking as to title, etc.—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;
(b) an implied warranty that the buyer shall have and enjoy quiet possession of the goods;
(c) an implied warranty that the goods shall be free from any charge or encumbrance in favour of any third
party not declared or known to the buyer before or at the time when the contract is made.
15. Sale by description.—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 sufficient that the bulk of the goods corresponds with the sample if the goods do not also correspond with the
description.
16. Implied conditions as to quality or fitness.—Subject to the provisions of this Act and of any other law for the
time being in force, there is no implied warranty or condition as to the quality or fitness for any particular purpose of
-----------------------------------------------------------------------------------------------------------------------------------------------------------
-
goods supplied under a contract of sale, except as follows:
(1) Where the buyer, expressly or by implication, makes known to the seller the particular purpose for which the
goods are required, so as to show that the buyer relies on the seller's skill or judgment, and the goods are of
a description which it is in the course of the seller's business to supply (whether he is the manufacturer or
producer or not), there is an implied condition that the goods shall be reasonably fit for such purpose:
Provided that, in the case of a contract for the sale of a specified article under its patent or other trade name,
there is no implied condition as to its fitness for any particular purpose.
(2) 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 shall be of merchantable
quality:
Provided that, if the buyer has examined the goods, there shall be no implied condition as regards defects
which such examination ought to have revealed.
(3) An implied warranty or condition as to quality or fitness for a particular purpose may be annexed by the
usage of trade.
(4) An express warranty or condition does not negative a warranty or condition implied by this Act unless
inconsistent therewith.
► Implied conditions regarding quality or fitness.—Sections 14, 16 and 17 show that even after the buyer had a reasonable
opportunity of examining the goods for the purpose of ascertaining whether they are in conformity with the contract and even when such
an examination has taken place, it might still be open to the buyer to reject the goods where they are not in conformity with the contract,
because of some defect, which was not apparent on such examination. In other words, Section 41 gives the buyer a right of inspection
and unless he has had an opportunity of exercising that right, he is not deemed to have accepted the goods and has a right to reject them
and therefore till the goods are inspected, it cannot be stated that the relationship of buyer and seller has become extinguished and the
relationship of debtor and creditor or of principal and agent alone remains to be considered. In other words, contract to buy does not
immediately transfer ownership but only when goods are found by buyer to be in good condition or when he has accepted them.
On rejection of the goods as not answering to description, the buyer, if he has paid for them, is entitled to recover from the seller the
price as money had and received for his use. Ordinarily when there is a dispute between a buyer and a seller with reference to quality, it
would be the duty of the seller to prove that the goods were of the quality contracted for, In Re Beharilal Baldeo Prasad Firm of
Merchants by partner Tagoor Prasad, AIR 1955 Mad 271.
17. Sale by sample.—(1) 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.
(2) In the case of a contract for sale by sample there is an implied condition—
(a) that the bulk shall correspond with the sample in quality;
(b) that the buyer shall have a reasonable opportunity of comparing the bulk with the sample;
(c) that the goods shall be free from any defect, rendering them unmerchantable, which would not be apparent
on reasonable examination of the sample.
► Sale of goods by sample.—In a contract of sale of goods by sample, if the defects in the goods which are noticed later on are
not apparent on reasonable examination of the sample, the buyer can reject the goods on discovering the defect later. Further, even if
some of the goods are found to be defective, the buyer has the option to reject the entire quantity of goods. Where the goods contain
defects which cannot be apparent by examining the sample and are unmerchantable, the buyer is justified in not accepting the delivery of
the goods. The buyer in such a case does not commit any breach of the contract and the seller is not entitled to any damages which he
may have suffered on release of the goods, Prabhu Dayal v. Bhagwan Shai, AIR 1955 NUC (Raj) 4067.
See also Re Beharilal Baldeo Prasad in AIR 1955 Mad 271 under Section 16 above for details.
Chapter III
EFFECTS OF THE CONTRACT
Transfer of Property as between Seller and Buyer
18. Goods must be ascertained.—Where there is a contract for the sale of unascertained goods, no property in the
goods is transferred to the buyer unless and until the goods are ascertained.
► Breach of contract.—Rules as to breach of contract of sale of goods—Resale—Damages—Basis, Moti Lal Thun Thunia v. Mool
Chand, 1950 ALJ 385.
Ascertainment of Goods
Bharat Sabaigrass Ltd. v. State of Madhya Pradesh, AIR 1955 NUC (Cal) 5612. For details see under Section 6
above.
19. Property passes when intended to pass.—(1) 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.
(2) For the purpose of ascertaining the intention of the parties regard shall be had to the terms of the contract, the
conduct of the parties and the circumstances of the case.
(3) Unless a different intention appears, the rules contained in Sections 20 to 24 are rules for ascertaining the
intention of the parties as to the time at which the property in the goods is to pass to the buyer.
► Ascertained goods : Meaning of.—It is true that trees which are agreed to be severed before sale or under the contract of sale
are “goods” for the purposes of the Sale of Goods Act. But before they cease to be “proprietary” right or interest in proprietary rights
within the meaning of Sections 3 and 4(a) of the Act they must be felled under the contract. It will be noticed that under clause 1 of the
contract the plaintiff was entitled to cut teak trees of more than 12 inches girth. It has to be ascertained which trees fell within that
description. Till this was ascertained, they were not “ascertained goods” within Section 19 of the Sale of Goods Act. Clause 5 of the
contract contemplated that stumps of trees, after cutting had to be 2 inches high. In other words the contract was not to sell the whole of
the trees. In these circumstances property in the cut timber would only pass to the plaintiff under the contract at the earliest when trees
-----------------------------------------------------------------------------------------------------------------------------------------------------------
-
are felled. But before that happened the trees had vested in the State, Badri Prasad v. State of M.P., (1971) 3 SCC 23.
► Transfer of property — When obtains.—Property in goods passes when parties intend it to pass, Usha Beltron Ltd. v. State of
Punjab, (2005) 7 SCC 58.
► Legal title of movable property.—General statement of law on ownership may be contained in Sale of Goods Act, 1930, ICDS
Ltd. v. CIT, (2013) 3 SCC 541 : (2013) 2 SCC (Civ) 183.
20. Specific goods in a deliverable state.—Where there is an unconditional contract for the sale of 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 goods, or both, is postponed.
► Section 20: Conditions for applicability of.—In order that Section 20 is attracted, two conditions have to be fulfilled: (i) the
contract of sale is for specific goods which are in a deliverable state; and (ii) the contract is an unconditional contract. If these two
conditions are satisfied, Section 20 becomes applicable immediately, Agricultural Market Committee v. Shalimar Chemical Works Ltd.,
(1997) 5 SCC 516.
► Sections 19 and 20—Property in good when passes—Intention of the parties should be ascertained having regard to terms of the
contract, conduct of the parties and circumstances of the case as indicated in Section 19(2)—Where conditions for applicability of
Section 20 viz. contract of sale is an unconditional contract and is for specific goods in a deliverable state, are satisfied, court has to see
whether any “different intention appears” in the contract as indicted in Section 19(3)—Supply of ascertained goods in deliverable state—
Supply of copra by lorry from State of Kerala to Hyderabad (State of A.P.) pursuant to order placed by respondent company with
dealer—Despatch at the risk of respondent purchaser—Stock got insured by respondent—Weighment of the stock at Hyderabad only for
respondent's satisfaction—Held, property in goods passed and sale took place in State of Kerala and not at Hyderabad—Hence levy of
market fee on the purchase of copra, an agricultural produce, under A.P. (Agricultural Produce and Live Stock) Markets Act, 1966
invalid, Agricultural Market Committee v. Shalimar Chemical Works Ltd., (1997) 5 SCC 516, relying on Hoe Kim Seing v. Maung Ba
Chit, AIR 1935 PC 182: 62 IA 242: 39 CWN 1217; Consolidated Coffee Ltd. v. Coffee Board, (1980) 3 SCC 358: 1980 SCC (Tax) 279.
21. Specific goods to be put into a deliverable state.—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 thing is done and the buyer has notice thereof.
► Passing of property.—Where a contract for sale of a specific item of machinery said that delivery will be given (or taken) within
15 to 30 days from the date of contract and that driver of the seller himself will go and instal the engine at the buyer's place, and put it in
working order, and that whatever parts, excepting shafting, if lacking would be supplied by him at his own cost and on the seller having
done that, the buyer would pay the balance of price, it was held that under Section 21 the property would not be in a deliverable state and
therefore the property in the goods would not pass to the buyer unless the seller did all he had to do under the contract before the buyer
committed a breach of contract by non-payment of price within the period specified and therefore the seller would not be entitled to
remedy under Section 55(1) which applied to cases where the property in goods has passed to the buyer. His case was not covered by
sub-section (2) also because under the contract the balance of price was not payable on the due date irrespective of delivery but the
delivery and payment were to go together. Therefore, the seller was not entitled to recover the balance of price, Goverdhanlal v.
Bakhtawarlal, AIR 1955 NUC (Raj) 4063.
22. Specific goods in a deliverable state, when the seller has to do anything thereto in order to ascertain price.—
Where there is a contract for the sale of specific goods in a deliverable state, but the seller is bound 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.
23. Sale of unascertained goods and appropriation.—(1) 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 express or implied, and may be given
either before or after the appropriation is made.
► Sale of unascertained goods.—In case of sale of unascertained goods in a deliverable state such goods should be
“unconditionally appropriated to the contract”, with the assent of the parties, before the property in the goods passes to the buyer,
Mahabir Commercial Co. v. C.I.T., West Bengal, (1972) 2 SCC 704.
► Unascertained goods : Meaning of.—Unascertained goods are distinct from specific or ascertained goods in the sense that
future goods include goods not yet in existence or goods in existence but not yet acquired by the seller. It is safe to say that future goods
for purposes of passing of property can never be specific. Future goods if and when sufficiently identified might be specific goods.
Unascertained goods are not defined by the Sale of Goods Act but they fall into three main categories. First, goods to be manufactured
or grown by the seller which are necessarily future goods. Second, generic goods, for example, 100 tonnes of sugarcane or the like
which must also be future goods where the seller does not own sufficient goods of the description in question to appropriate to the
contract. The third category is an unidentified part of a specific whole, for example 1000 tonnes of sugarcane out of a particular lot of
5000 tons of sugarcane, Salar Jung Sugar Mills Ltd. v. State of Mysore, (1972) 1 SCC 23.
(2) Delivery to carrier.—Where, in pursuance of the contract, the seller delivers the goods to the buyer or to a
carrier or other bailee (whether named by the buyer or not) for the purpose of transmission to the buyer, and does
not reserve the right of disposal, he is deemed to have unconditionally appropriated the goods to the contract.
24. Goods sent on approval or “on sale or return”.—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) when he signifies his approval or 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.
► Nature and Scope.—The principle of Section 24 inter alia is that where the goods are delivered to the buyer on terms similar to
the delivery of goods on approval or “on sale or return”, the property in the goods therein passes to the buyer, if he does not signify his
approval or acceptance and also does not return the goods within the time prescribed therefor. According to the said principle, the
position of the purchaser, until he returns the goods within the prescribed period, is that of a bailee and on the expiry of the said period,
-----------------------------------------------------------------------------------------------------------------------------------------------------------
-
he becomes a purchaser. Where, however, the person to whom the goods are delivered is under an obligation to return the goods, there
is no question of sale ever coming into being and the person to whom the goods are delivered remains a bailee, State of Maharashtra v.
Britannia Biscuits Co. Ltd., 1995 Supp (2) SCC 72.
Where the biscuits were manufactured and sold in tins for the price of biscuits plus 20 per cent deposit refundable in case the tin was
returned within the stipulated period in good condition. No sales tax charged on the deposit. In such circumstances if the buyer did not
return the tin, held, the transaction became sale on the expiry of the stipulated period as thereafter the seller-assessee ceased to be
under an obligation to refund the deposit. Such transaction is near to the situation contemplated by and to the principle of Section 24,
State of Maharashtra v. Britannia Biscuits Co. Ltd., 1995 Supp (2) SCC 72.
► Buyer.—The context of Section 24 shows that the word “buyer” is not there used in the sense of the definition of that word as
given in Section 2(1) as the person there called the buyer is in law a bailee in possession of goods with an option to purchase, Smt.
Nirmalabai Misal (accused) v. The State, AIR 1953 Nag 301.
See also Birendra Nath Guha & Co. v. State of Bihar, AIR 1955 Pat 245. For details refer to Section 23 above.
25. Reservation of right of disposal.—(1) 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 certain conditions are fulfilled. In such a case, notwithstanding the delivery of the
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.
7 [(2) Where goods are shipped or delivered to a railway administration for carriage by railway and by the bill of
lading or railway receipts, 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.]
(3) 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 or 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.
Explanation.—In this section, the expressions, “railway” and “railway administration” shall have the meanings
respectively assigned to them under the Indian Railways Act, 1890 (9 of 1890)* .
► Applicability.—Clause 31 of the terms and conditions of Sale of Coffee in the course of export framed by Coffee Board only
amounted to a defeasance clause and Section 25(1) is not applicable, Consolidated Coffee Ltd. v. Coffee Board, (1980) 3 SCC 358.
26. Risk prima facie passes with property.—Unless otherwise agreed, the goods remain at the seller's risk until the
property therein is transferred to the buyer, but when the property therein is transferred to the buyer, the goods are
at the buyer's risk whether delivery has been made or not:
Provided that, where delivery has been delayed through the fault of either buyer or seller, the goods are at the risk
of the party in fault as regards any loss which might not have occurred but for such fault:
Provided also that nothing in this section shall affect the duties or liabilities of either seller or buyer as a bailee of
the goods of the other party.
► Interpretation/Construction.—The expression ‘unless otherwise agreed’ indicates that Section 26 is subject to the contract to the
contrary, State of Orissa v. Titaghur Paper Mills Co. Ltd., 1985 Supp SCC 280.
When the property in goods alongwith risk in goods has been transferred to the buyer by the seller as soon as the goods were loaded
in the railway wagon at seller's station as per the terms of delivery. It was held that the seller was not responsible for subsequent loss of
goods in transit and entitled to full payment of agreed price without any deduction, Marwar Tent Factory v. Union of India, (1990) 1 SCC
71.
► CIF (Cost, insurance and freight) contract.—In CIF contract, conformity with terms of CIF contract is sine qua non for
discharge of liability of seller. Once terms are breached by seller, goods continue to be at risk of sellers as sellers are in fault. In such
situation, shipment of goods or handing over of shipping documents through banking channels does not transfer property in goods to
buyers, Phulchand Exports Ltd. v. O.O.O. Patriot, (2011) 10 SCC 300 : (2012) 1 SCC (Civ) 131.
► Risk, when passes with property.—Prima facie rule in Section 26 is that goods remain at seller's risk until property in goods is
transferred to buyer, Phulchand Exports Ltd. v. O.O.O. Patriot, (2011) 10 SCC 300 : (2012) 1 SCC (Civ) 131.
Transfer of title
27. Sale by person not the owner.—Subject to the provisions of this Act and of any other law for the time being in
force, 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 acquires no better title to the goods than the seller had, unless the owner
of the goods is by his conduct precluded from denying the seller's authority to sell:
Provided that, where a mercantile agent is, with the consent of the owner, in possession of the goods or of a
document of title to the goods, any sale made by him, when acting in the ordinary course of business of a mercantile
agent, shall be as valid as if he were expressly authorised by the owner of the goods to make the same; provided that
the buyer acts in good faith and has not at the time of the contract of sale notice that the seller has no authority to
sell.
28. Sale by one of joint owners.—If one of several joint owners of goods has the sole possession of them by
permission of the co-owners, the property in the goods is transferred to any person who buys them of such joint
owner in good faith and has not at the time of the contract of sale notice that the seller has no authority to sell.
29. Sale by person in possession under voidable contract.—When the seller of goods has obtained possession
thereof under a contract voidable under Section 19 or Section 19-A of the Indian Contract Act, 1872, but the contract
has not been rescinded at the time of the sale, the buyer acquires a good title to the goods, provided he buys them in
good faith and without notice of the seller's defect of title.
30. Seller or buyer in possession after sale.—(1) Where a person, having sold goods, continues or is in possession
of the goods or of the documents of title to the goods, the delivery or transfer by that person or by a mercantile agent
-----------------------------------------------------------------------------------------------------------------------------------------------------------
-
acting for him, of the goods or documents of title under any sale, pledge or other disposition thereof to any person
receiving the same in good faith and without notice of the previous sale shall have the same effect as if the person
making the delivery or transfer were expressly authorised by the owner of the goods to make the same.
(2) Where a person having bought or agreed to buy goods, obtains, with the consent of the seller, possession of
the goods or the documents of title to the goods, the delivery or transfer by that person or by a mercantile agent
acting for him, of the goods or documents of title under any sale, pledge or other disposition thereof to any person
receiving the same in good faith and without notice of any lien or other right of the original seller in respect of the
goods shall have effect as if such lien or right did not exist.
Chapter IV
PERFORMANCE OF THE CONTRACT
31. Duties of seller and buyer.—It is the duty of the seller to deliver the goods and of the buyer to accept and pay
for them, in accordance with the terms of the contract of sale.
32. Payment and delivery are concurrent conditions.—Unless otherwise agreed, delivery of the goods and payment
of the price are concurrent conditions, that is to say, the seller shall be ready, and willing to give possession of the
goods to the buyer in exchange for the price and the buyer shall be ready and willing to pay the price in exchange for
possession of the goods.
► Scope.—Section 32 pertains to a condition which is to be implied in a contract, unless there is a provision to the contrary. Section
32 assumes the existence of a contract in respect of which a term may or may not be read in, Claude-Lila Parulekar v. Sakal Papers
(P) Ltd., (2005) 11 SCC 73.
33. Delivery.—Delivery of goods sold may be made by doing anything which the parties agree shall be treated as
delivery or which has the effect of putting the goods in the possession of the buyer or of any person authorised to
hold them on his behalf.
34. Effect of part delivery.—A delivery of part of goods, in progress of the delivery of the whole, has the same
effect, for the purpose of passing the property in such goods, as a delivery of the whole; but a delivery of part of the
goods, with an intention of severing it from the whole, does not operate as a delivery of the remainder.
35. Buyer to apply for delivery.—Apart from any express contract, the seller of goods is not bound to deliver them
until the buyer applies for delivery.
36. Rules as to delivery.—(1) Where it is for the buyer to take possession of the goods or for the seller to send
them to the buyer is a question depending in each case on the contract, express or implied, between the parties.
Apart from any such 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.
(2) Where under the contract of sale the seller is bound to send the goods to the buyer, but no time for sending
them is fixed, the seller is bound to send them within a reasonable time.
(3) Where the goods at the time of sale are in the possession of a third person, there is no delivery by seller to
buyer unless and until such third person acknowledges to the buyer that he holds the goods on his behalf:
Provided that nothing in this section shall affect the operation of the issue or transfer of any document of title to
goods.
(4) Demand or tender of delivery may be treated as ineffectual unless made at a reasonable hour. What is a
reasonable hour is a question of fact.
(5) Unless otherwise agreed, the expenses of and incidental to putting the goods into a deliverable state shall be
borne by the seller.
► Place of delivery.—In the absence of any express or implied contract to the contrary, the goods sold or agreed to be sold are to
be delivered at the place at which they are at the time of sale or of the agreement to sell. But where there is an implied agreement that the
goods should be delivered at a particular place, the Court at that place has jurisdiction to entertain a suit for the breach of contract, Jai
Narain Ganeshilal v. Nathmal Sheo Karan, AIR 1953 Ajm 29.
37. Delivery of wrong quantity.—(1) Where the seller delivers to the buyer a quantity of goods less than he
contracted to sell, the buyer may reject them, but if the buyer accepts the goods so delivered he shall pay for them
at the contract rate.
(2) Where the seller delivers to the buyer a quantity of goods larger than he contracted to sell, the buyer may
accept the goods included in the contract and 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.
(3) 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 rest, or may reject the whole.
(4) The provisions of this section are subject to any usage of trade, special agreement or course of dealing
between the parties.
38. Instalment deliveries.—(1) Unless otherwise agreed, the buyer of goods is not bound to accept delivery thereof
by instalments.
(2) Where there is a contract for the sale of goods to be delivered by stated instalments which are to be separately
paid for, and the seller makes no delivery or defective delivery in respect of one or more instalments, or the buyer
neglects or refuses to take delivery of or pay for one or more instalments, it is a question in each case, depending on
the terms of the contract and the circumstances of the case, whether the breach of contract is a repudiation of the
whole contract, or whether it is a severable breach giving rise to a claim for compensation, but not to a right to treat
the whole contract as repudiated.
39. Delivery to carrier or wharfinger.—(1) Where, in pursuance of a contract of sale, the seller is authorised or
-----------------------------------------------------------------------------------------------------------------------------------------------------------
-
required to send the goods to the buyer, delivery of the goods to a carrier, whether named by the buyer or not, for
the purpose of transmission to the buyer, or delivery of the goods to a wharfinger for safe custody, is prima facie
deemed to be a delivery of the goods to buyer.
► Effect of seller as consignor.—If the consignee is not the buyer but the seller, it cannot be said that the goods were being
transmitted to the buyer or that the Railway had been directed to carry the goods to the buyer and the seller merely retained some right
of disposal. In such a case, delivery to the Railway Company cannot be deemed to be delivery to the buyer, Durgadutt v. Khemchand,
AIR 1955 NUC (MB) 3816.
► “CIF” contract.—Under a “CIF” contract, prima facie, the property in the goods passes once the documents are tendered by the
seller to the buyer or his agent, as required under the contract. But where the seller retains control over the goods by either obtaining a
bill of lading in his name or to his order, the property in the goods does not pass to the buyer until he endorses the bill to the buyer and
delivers the documents to him. The appropriation of the goods to the contract by itself would not be such as to pass the property in the
goods if it appears or can be inferred that there was no actual intention to pass the property. But if however the seller's dealing with the
bill of lading is only to secure the contract price not with the intention of withdrawing the goods from the contract, and he does nothing
inconsistent with an intention to pass the property, the property may pass either forthwith subject to the seller's lien or conditional on
performance by the buyer of his part of the contract. Landing the delivery can rightfully be given by the shipowner only to the holder of
the bill of lading. Once the bills of lading and documents, contemplated under the contract, were handed over to the bank to be delivered
to the buyer and the seller received the value thereof, as shown in the invoice and in terms of the contract, he no longer retained the
property in the goods, Mahabir Commercial Co. Ltd. v. CIT, (1972) 2 SCC 704.
(2) Unless otherwise authorised by the buyer, the seller shall make such contract with the carrier or wharfinger on
behalf of the buyer as may be reasonable having regard to the nature of the goods and the other circumstances of the
case. If the seller omits so to do, and the goods are lost or damaged in course of transit or whilst in the custody of
the wharfinger the buyer may decline to treat the delivery to the carrier or wharfinger, as a delivery to himself, or
may hold the seller responsible for damages.
(3) Unless otherwise agreed, 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, and if the seller fails so to do, the goods shall be deemed to be at his risk during such
sea transit.
40. Risk where goods are delivered at distant place.—Where the seller of goods agrees to deliver them at his own
risk at a place other than that where they are when sold, the buyer shall, nevertheless, unless otherwise agreed, take
any risk of deterioration in the goods necessary incident to the course of transit.
41. Buyer's right of examining the goods.—(1) Where goods are delivered to the buyer which he has not previously
examined, he is not deemed to have accepted them unless and until he has had a reasonable opportunity of
examining them for the purpose of ascertaining whether they are in conformity with the contract.
(2) Unless otherwise agreed, when the seller tenders delivery of goods to the buyer, he is bound, on request, to
afford the buyer a reasonable opportunity of examining the goods for the purpose of ascertaining whether they are in
conformity with the contract.
42. Acceptance.—The buyer is deemed to have accepted the goods when he intimates to the seller that he has
accepted them, or when the goods have been delivered to him and he does any act in relation to them which is
inconsistent with the ownership of the seller, or when, after the lapse of a reasonable time, he retains the goods
without intimating to the seller that he has rejected them.
43. Buyer not bound to return rejected goods.—Unless otherwise agreed, where goods are delivered to the buyer
and he refuses to accept them, having the right so to do, he is not bound to return them to the seller, but it is
sufficient if he intimates to the seller that he refuses to accept them.
44. Liability of buyer for neglecting delivery of goods.—When the seller is ready and willing to deliver the goods
and requests the buyer to take delivery, and the buyer does not within a reasonable time after such request take
delivery of the goods, he is liable to the seller for any loss occasioned by his neglect or refusal to take delivery, and
also for a reasonable charge for the care and custody of the goods:
Provided that nothing in this section shall affect the rights of the seller where the neglect or refusal of the buyer to
take delivery amounts to a repudiation of the contract.
Chapter V
RIGHTS OF UNPAID SELLER AGAINST THE GOODS
45. “Unpaid seller” defined.—(1) The seller of goods is deemed to be an “unpaid” seller within the meaning of this
Act—
(a) when the whole of the price has not been paid or tendered;
(b) when a bill of exchange or other negotiable instrument has been received as conditional payment, and the
condition on which it was received has not been fulfilled by reason of the dishonour of the instrument or
otherwise.
(2) In this Chapter, the term “seller” includes any person who is in the position of a seller, as, for instance, an
agent of the seller to whom the bill of lading has been endorsed, or a consignor or agent who has himself paid, is or
directly responsible for, the price.
46. Unpaid seller's rights.—(1) Subject to the provisions of this Act and of any law for the time being in force,
notwithstanding that the property in the goods may have passed to the buyer, the unpaid seller of goods, as such,
has by implication of law—
(a) a lien on the goods for the price while he is in possession of them;
(b) in case of the insolvency of the buyer a right of stopping the goods in transit after he has parted with the
possession of them;
(c) a right of resale as limited by this Act.
-----------------------------------------------------------------------------------------------------------------------------------------------------------
-
(2) Where the property in goods has not passed to the buyer, the unpaid seller has, in addition to his other
remedies, a right of withholding delivery similar to and co-extensive with his rights of lien and stoppage in transit
where the property has passed to the buyer.
Unpaid seller's lien
47. Seller's lien.—(1) Subject to the provisions of this Act, the unpaid seller of goods who is in possession of them
is entitled to retain possession of them until payment or tender of the price in the following cases, namely:
(a) where the goods have been sold without any stipulation as to credit;
(b) where the goods have been sold on credit, but term of credit has expired;
(c) where the buyer becomes insolvent.
(2) The seller may exercise his right of lien notwithstanding that he is in possession of the goods as agent or bailee
for the buyer.
48. Part delivery.—Where an unpaid seller has made part delivery of the goods, he may exercise his right of lien on
the remainder, unless such part delivery has been made under such circumstances as to show an agreement to waive
the lien.
49. Termination of lien.—(1) The unpaid seller of goods loses his lien thereon—
(a) when he 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;
(b) when the buyer or his agent lawfully obtains possession of the goods;
(c) by waiver thereof.
(2) The unpaid seller of goods, having a lien thereon, does not lose his lien by reason only that he has obtained a
decree for the price of the goods.
Stoppage in Transit
50. Right of stoppage in transit.—Subject to the provisions of this Act, when the buyer of goods becomes
insolvent, the unpaid seller who has parted with the possession of the goods has the right of stopping them in transit,
that is to say, he may resume possession of the goods as long as they are in the course of transit, and may retain
them until payment or tender of the price.
51. Duration of transit.—(1) Goods are deemed to be in course of transit from the time when they are delivered to
a carrier or other bailee for the purpose of transmission to the buyer until the buyer or his agent in that behalf takes
delivery of them from such carrier or other bailee.
(2) If the buyer or his agent in that behalf obtains delivery of the goods before their arrival at the appointed
destination, the transit is at an end.
(3) If, after the arrival of the goods at the appointed destination, the carrier or other bailee acknowledges to the
buyer or his agent that he holds the goods on his behalf and continues in possession of them as bailee for the buyer
or his agent, the transit is at an end and it is immaterial that a further destination for the goods may have been
indicated by the buyer.
(4) If the goods are rejected by the buyer and the carrier or other bailee continues in possession of them, the
transit is not deemed to be at an end, even if the seller has refused to receive them back.
(5) Where goods are delivered to a ship chartered by the buyer, it is a question depending on the circumstances of
the particular case, whether they are in the possession of the master as a carrier or as agent of the buyer.
(6) Where the carrier or other bailee wrongfully refuses to deliver the goods to the buyer or his agent in that
behalf, that transit is deemed to be at an end.
(7) Where part delivery of the goods has been made to the buyer or his agent in that behalf, remainder of the
goods may be stopped in transit, unless such part delivery has been given in such circumstances as to show an
agreement to give up possession of the whole of the goods.
52. How stoppage in transit is effected.—(1) The unpaid seller may exercise his right of stoppage in transit either
by taking actual possession of the goods, or by giving notice of his claim to the carrier or other bailee in whose
possession the goods are. Such notice may be given either to the person in actual possession of the goods or to his
principal. In the latter case the notice, to be effectual, shall be given at such time and in such circumstances that the
principal, by the exercise of reasonable diligence, may communicate it to his servant or agent in time to prevent a
delivery to the buyer.
(2) When notice of stoppage is given by the seller to carrier or other bailee in possession of the goods, he shall
redeliver the goods to, or according to the directions of, the seller. The expenses of such redelivery shall be borne by
the seller.
53. Effect of sub-sale or pledge by buyer.—(1) Subject to the provisions of this Act, the unpaid seller's right of lien
or stoppage in transit is not affected by any sale or other disposition of the goods which the buyer may have made,
unless the seller has assented thereto:
Provided that where a document of title to goods has been issued, or lawfully transferred to any person as buyer or
owner of the goods, and that person transfers the document to a person who takes the document in good faith and
for consideration, then, if such last mentioned transfer was by way of sale, the unpaid seller's right of lien or
stoppage in transit is defeated and, if such last mentioned transfer was by way of pledge or other disposition for
value, the unpaid seller's right of lien or stoppage in transit can only be exercised subject to the rights of the
transferee.
(2) Where the transfer is by way of pledge, the unpaid seller may require the pledgee to have the amount secured
by the pledge satisfied in the first instance, as far as possible, out of any other goods or securities of the buyer in the
hands of the pledgee and available against the buyer.
-----------------------------------------------------------------------------------------------------------------------------------------------------------
-
54. Sale not generally rescinded by lien or stoppage in transit.—(1) Subject to the provisions of this section, a
contract of sale is not rescinded by the mere exercise by an unpaid seller of his right of line or stoppage in transit.
(2) Where the goods are of a perishable nature, or where the unpaid seller who has exercised his right of lien or
stoppage in transit gives notice to the buyer of his intention to resell, the unpaid seller may, if the buyer does not
within a reasonable time pay or tender the price, resell the goods within a reasonable time and recover from the
original buyer damages for any loss occasioned by his breach of contract, but the buyer shall not be entitled to any
profit which may occur on the resale. If such notice is not given, the unpaid seller shall not be entitled to recover
such damages and the buyer shall be entitled to the profit, if any, on the resale.
(3) Where an unpaid seller who has exercised his right of lien or stoppage in transit resells the goods, the buyer
acquires a good title thereto as against the original buyer, notwithstanding that no notice of the resale has been
given to the original buyer.
(4) Where the seller expressly reserves a right of resale in case the buyer should make default, and, on the buyer
making default, resells the goods, to original contract of sale is thereby rescinded, but without prejudice to any claim
which the seller may have for damages.
Chapter VI
SUITS FOR BREACH OF THE CONTRACT
55. Suit for price.—(1) Where under a contract of sale the property in the goods has passed to the buyer and the
buyer wrongfully neglects or refuses to pay for the goods according to the terms of the contract, the seller may sue
him for the price of the goods.
(2) Where under a contract of sale the price is payable on a certain day irrespective of delivery and the buyer
wrongfully neglects or refuses to pay such price, the seller may sue him for the price although the property in the
goods has not passed and the goods have not been appropriated to the contract.
56. Damages for non-acceptance.—Where the buyer wrongfully neglects or refuses to accept and pay for the
goods, the seller may sue him for damages for non-acceptance.
57. Damages for non-delivery.—Where the seller wrongfully neglects or refuses to deliver the goods to the buyer,
the buyer may sue the seller for damages for non-delivery.
► Refund.—Where the goods were purchased at an auction and sold to the appellant for which sale price were received but goods
were not delivered. Appellant apart from refund of the sale price paid claiming damages for difference between the market price and the
contract price of the goods on the date of the breach. In absence of any convincing and reliable evidence to establish either that the
goods were in brand-new condition at the time of the sale or the market price of goods of similar specifications, the buyer, held, entitled
only to refund of the price paid by him and not to the damages, Sitaram Srigopal v. Daulati Devi, (1979) 4 SCC 351.
► Price received in advance — Sections 57 and 61.—Price received in advance—Whom to be refunded to, actual buyers or their
del credere agents, so as to ensure a valid discharge—Interest whether payable—Petitioner company supplying coal to actual users on
recommendation of G.M., D.I.C, receiving recommendation for supplying a certain quantity of coal to a certain number of actual users—
Price deposited with the petitioner—Petitioner supplying part of the requisite quantity of coal—Subsequently, the petitioner receiving a
number of letters from the G.M., DIC, some of which affirming and other ones denying the genuiness of the said recommendation—
Petitioner referring the matter to Government and withholding further supply—Before the Supreme Court the respondents, claiming to be
del credere agents of the actual buyers, seeking refund of the price—Individual affidavits of actual buyers stating that they had no
objection to the money being released to respondents—Under interim order the amount in question deposited in Court—On facts, held,
handing over the money to respondents would not be proper—Committee constituted to examine the alleged actual users and, if satisfied,
to pay each of them the amount due with proportionate interest—The petitioner being a public corporation and always willing to refund the
amount, burdening the petitioner with interest, held, not warranted, South Eastern Coalfields Ltd. v. Subhash Kumar Gupta, 1994 Supp
(3) SCC 334, 338.
58. Specific performance.—Subject to the provisions of Chapter II of the Specific Relief Act, 1877, in any suit for
breach of contract to deliver specific or ascertained goods, the Court may, if it thinks fit, on the application of the
plaintiff, by its decree direct that the contract shall be performed specifically, without given the defendant the option
of retaining the goods on payment of damages. The decree may be unconditional, or upon such terms and condition
as to damages, payment of the price, or otherwise, as the court may deem just, and the application of the plaintiff
may be made at any time before the decree.
59. Remedy for breach of warranty.—(1) Where there is a breach of warranty by seller, or where the buyer elects
or is compelled to treat any breach of a condition on the part of the seller as a breach of warranty, the buyer is not by
reason only of such breach of warranty entitled to reject the goods; but he may—
(a) set up against the seller the breach of warranty in diminution or extinction of the price; or
(b) sue the seller for damages for breach of warranty.
(2) The fact that a buyer has set up a breach of warranty in diminution or extinction of the price does not prevent
him from suing for the same breach of warranty if he has suffered further damage.
► Breach of warranty.—A breach of warranty does not entitle a buyer to reject the goods and his only remedies would be those
provided in Section 59 of the Sale of Goods Act, 1930, namely, to set up against the seller the breach of warranty in diminution or
extinction of the price or to sue the seller for damages for breach of warranty, Gopalakrishna Pillai v. K.M. Mani, (1984) 2 SCC 83.
60. Repudiation of contract before due date.—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 and wait till the date of delivery, or
he may treat the contract as rescinded and sue for damages for the breach.
61. Interest by way of damages and special damages.—(1) Nothing in this Act shall affect the right of the seller or
the buyer to recover interest or special damages in any case where by law interest or special damages may be
recoverable, or to recover the money paid where the consideration for the payment of it has failed.
(2) In the absence of a contract to the contrary, the court may award interest at such rate as it thinks fit on the
amount of the price—
-----------------------------------------------------------------------------------------------------------------------------------------------------------
-
(a) to the seller in a suit by him for the amount of the price—from the date of the tender of the goods or from
the date on which the price was payable;
(b) to the buyer in a suit by him for the refund of the price in a case of a breach of the contract on the part of
the seller—from the date on which the payment was made.
► Interest.—Amount of interest claimed was not on the basis of agreement but by way of damages, held, allowable under Section 61
(2) of the Act, Gopal Krishna Pillai v. K.M. Mani, (1984) 2 SCC 83.
► Award of interest.—Where the award of interest to the seller on the amount of price being not paid by the buyer within a
reasonable time cannot be denied merely because in the notice served under Section 80 CPC, the seller had not claimed interest. Held
on facts, seller is entitled to a decree of interest at the rate of 6 per cent per annum on the unpaid price from the date of delivery of the
goods.
Marwar Tent Factory v. Union of India, (1990) 1 SCC 71; B.B. Bose v. National Coal Trading Co., AIR 1966 Pat 346; M.K.M. Moosa
Bhai Amin, Kota v. Rajasthan Textile Mills, AIR 1974 Raj 194, approved.
Chapter VII
MISCELLANEOUS
62. Exclusion of implied terms and conditions.—Where any right, duty or liability would arise under a contract of
sale by implication of law, it may be negatived or varied by express agreement or by the course of dealing between
the parties, or by usage, if the usage is such as to bind both parties to the contract.
63. Reasonable time a question of fact.—Where in this Act any reference is made to a reasonable time, the
question what is a reasonable time is a question of fact.
64. Auction sale.—In the case of a sale by auction—
(1) 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;
(2) the sale is complete when the auctioneer announces its completion by the fall of hammer or in other
customary manner; and, until such announcement is made, any bidder may retract his bid;
► Nature and Scope.—Section 64 is subject to Section 62. Once it is accepted that auction sales to which Section 64 applies could
be unconditional or conditional and that the auctioneer can prescribe his own terms and conditions on the basis of which the property is
exposed to sale by auction, held that the acceptance of any bid as well as the passing of the property in the goods sold thereat would be
governed by those terms and conditions, Consolidated Coffee Ltd. v. Coffee Board, (1980) 3 SCC 358.
(3) 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 bid at the auction;
(4) where the sale is not notified to be subject to a right to bid on behalf of the seller, it shall not be lawful for
the seller to bid himself or to employ any person to bid at such sale, or for the auctioneer knowingly to take
any bid from the seller or any such person; and any sale contravening this rule may be treated as fraudulent
by the buyer;
(5) the sale may be notified to be subject to a reserved or upset price;
► Incomplete contract.—Highest bid lower than the reserved price, held, contract incomplete and property in goods will not pass,
Consolidated Coffee Ltd. v. Coffee Board, (1980) 3 SCC 358.
(6) if the seller makes use of pretended bidding to raise the price, the sale is voidable at the option of the buyer.
8 [64-A. In contracts of sale, amount of increased or decreased taxes to be added or deducted.—(1) Unless different
intention appears from the terms of the contract in the event of any tax of the nature described in sub-section (2)
being imposed, increased, decreased or remitted in respect of any goods after the making of any contract for the sale
or purchase of such goods without stipulation as to the payment of tax where tax was not chargeable at the time of
the making of the contract, or for the sale or purchase of such goods tax paid where tax was chargeable at that time,
—
(a) if such imposition or increase so takes effect that the tax or increased tax, as the case may be, or any part of
such tax is paid or is payable, the seller may add so much to the contract price as will be equivalent to the
amount paid or payable in respect of such tax or increase of tax, and he shall be entitled to be paid and to
sue for and recover such addition; and
(b) if such decrease or remission so takes effect that the decreased tax only, or no tax, as the case may be, is
paid or is payable, the buyer may deduct so much from the contract price as will be equivalent to the
decrease of tax or remitted tax, and he shall not be liable to pay, or be sued for, or in respect of, such
deduction.
(2) The provisions of sub-section (1) apply to the following taxes, namely:
(a) any duty of customs or excise on goods;
(b) any tax on the sale or purchase of goods.]
► Applicability.—Finding of ‘sale of goods’ is necessary before the section can apply, State of M.P. v. Orient Paper Mills, (1977) 2
SCC 77.
It is necessary to determine intention of parties from contract as to allocation of risk of increased burden of taxation, Numaligarh
Refinery Ltd. v. Daelim Industrial Co. Ltd., (2007) 8 SCC 466.
The applicability of Section 64-A of the Sale of Goods Act will depend upon the agreement between the parties. No evidence was led
before the authorities below to show that the parties intended that the relief of excise duty if abolished or reduced would be passed on to
the consumers. It was specifically stated in one of the clauses of tariff notification that if the excise duty was enhanced, the tariff would
be raised. No provision was made for reduction of tariff under any circumstance. The specific provision for raising tariff in case of
enhancement of excise duty and absence of any such provision for reduction of tariff in case of lowering or abolition of excise duty go to
show that there was no intention on the part of the Board to reduce the tariff in case of lowering or abolition of the excise duty. The
-----------------------------------------------------------------------------------------------------------------------------------------------------------
-
provision of Section 64-A can only apply if intention to the contrary did not appear from the terms of the contract, Bihar SEB v. Usha
Martin Industries, (1997) 5 SCC 289.
Section 64-A of the Sale of Goods Act deals with the liability of the seller to pay sales tax to the Government. That section provides for
the rights and liabilities inter se of a seller and buyer of goods, where any customs or excise duty or any sales tax or purchase tax is
imposed or its rate increased or decreased, or such duty or tax remitted in whole or in part after the making of the contract of sale,
Khazan Chand v. State of J&K, (1984) 2 SCC 456.
► Sections 64-A and 2(7) : Sale.—Exploitation of forest wealth such as bamboo and wood under a ‘lease’ granted by the Forest
Department is a contract for sale of timber which is goods and transaction “sale of goods”, the royalty paid under the lease being the
“sale price”, State of M.P. v. Orient Paper Mills Ltd., (1977) 2 SCC 77.
65. Repeal.—Chapter VII of the Indian Contract Act, 1872, is hereby repealed.
66. Savings.—(1) Nothing in this Act or in any repeal effected thereby shall affect or be deemed to affect—
(a) any right, title, interest, obligation or liability already acquired, accrued or incurred before the
commencement of this Act, or
(b) any legal proceedings or remedy in respect of any such right, title, interest, obligation or liability, or
(c) anything done or suffered before the commencement of this Act, or
(d) any enactment relating to the sale of goods which is not expressly repealed by this Act, or
(e) any rule of law not inconsistent with this Act.
(2) The rules of insolvency relating to contracts for the sale of goods shall continue to apply thereto,
notwithstanding anything contained in this Act.
(3) The provisions of this Act relating to contracts of sale do not apply to any transaction in the form of a contract
of sale which is intended to operate by way of mortgage, pledge, charge, or other security.
———
1.
Received the assent of the Governor-General on 15th March, 1930.
2. The word “Indian” omitted by Act 33 of 1963, S. 2.
3. Subs. by the A.O. 1950.

4. The words “except the State of Jammu and Kashmir” omitted by Act 34 of 2019, Ss. 95, 96 & Sch. V (w.e.f. 31-10-2019).
5. Ins. by Act 28 of 1993, S. 31 & Sch. (w.r.e.f. 16-10-1992).
6.
The words “or where the contract is for specific goods the property in which has passed to the buyer” omitted by Act 33 of 1963, S. 3.
7. Subs. by Act 33 of 1963, S. 4.
* See now Railways Act, 1989 (24 of 1989).
8. Subs. by Act 33 of 1963, S. 5.
Disclaimer: While every effort is made to avoid any mistake or omission, this casenote/ headnote/ judgment/ act/ rule/ regulation/ circular/ notification is being circulated on the condition and
understanding that the publisher would not be liable in any manner by reason of any mistake or omission or for any action taken or omitted to be taken or advice rendered or accepted on the basis of
this casenote/ headnote/ judgment/ act/ rule/ regulation/ circular/ notification. All disputes will be subject exclusively to jurisdiction of courts, tribunals and forums at Lucknow only. The authenticity
of this text must be verified from the original source.
1950-2020, © EBC Publishing Pvt.Ltd., Lucknow.

Sale of Goods Act 1930 Bare Act

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Sale of Goods Act 1930 Bare Act

Uploaded by

Copyright:

Available Formats

SCC Online Web Edition, Copyright © 2020

Page 1 Saturday, November 28, 2020

[Act 3 of 1930 as amended up to Act 34 of 2019]

1. Short title, extent and commencement

3. Application of provisions of Act IX of 1872

FORMATION OF THE CONTRACT

4. Sale and agreement to sell

Formalities of the Contract

5. Contract of sale how made

6. Existing or future goods

7. Goods perishing before making of contract

8. Goods perishing before sale but after agreement to sell

10. Agreement to sell at valuation

Conditions and Warranties

11. Stipulation as to time

12. Condition and warranty

13. When condition to be treated as warranty

14. Implied undertaking as to title, etc

15. Sale by description

16. Implied conditions as to quality or fitness

17. Sale by sample

EFFECTS OF THE CONTRACT

Transfer of Property as between Seller and Buyer

18. Goods must be ascertained

19. Property passes when intended to pass

20. Specific goods in a deliverable state

21. Specific goods to be put into a deliverable state

23. Sale of unascertained goods and appropriation

24. Goods sent on approval or “on sale or return”

25. Reservation of right of disposal

26. Risk prima facie passes with property

27. Sale by person not the owner

28. Sale by one of joint owners

29. Sale by person in possession under voidable contract

30. Seller or buyer in possession after sale

PERFORMANCE OF THE CONTRACT

31. Duties of seller and buyer

32. Payment and delivery are concurrent conditions

34. Effect of part delivery

35. Buyer to apply for delivery

36. Rules as to delivery

37. Delivery of wrong quantity

38. Instalment deliveries

39. Delivery to carrier or wharfinger

40. Risk where goods are delivered at distant place

41. Buyer's right of examining the goods

43. Buyer not bound to return rejected goods

44. Liability of buyer for neglecting delivery of goods

RIGHTS OF UNPAID SELLER AGAINST THE GOODS

45. “Unpaid seller” defined

46. Unpaid seller's rights

Unpaid seller's lien

47. Seller's lien

48. Part delivery

49. Termination of lien

50. Right of stoppage in transit

51. Duration of transit

52. How stoppage in transit is effected

53. Effect of sub-sale or pledge by buyer

54. Sale not generally rescinded by lien or stoppage in transit

SUITS FOR BREACH OF THE CONTRACT

55. Suit for price

56. Damages for non-acceptance

57. Damages for non-delivery