A Term paper

on

A Study on the Application of Sale of Goods Act in Bangladesh.

Course title:Law of sale of Goods and Carriage of Goods
Course code:Law 209
Department of Law

Submitted to

Mst.RezwanaKarim

Lecturer,

Department of Law,BAIUST

Submitted by

MD. Main Uddin

Id:5203010
LL.B (level 2, term 2)

Bangladesh Army International University of Science and technology,

Cantonment Cumilla.

Submitted date:18.12.21
Introduction
The Sale of Goods Act,1930 governs the contracts relating to sale of goods.A contract for sale of goods has,
however,certain peculiar features such as, transfer of ownership of the goods, delivery of goods rights and
duties of the buyer and seller, remedies for breach of contract, conditions and warranties implied under a
contract for sale of goods, etc.The Act is divided into 66 sections and applies to the entire country of
Bangladesh.It is largely modelled on the English Act, and many of its clauses are included.The general
requirements of the Contract Act continue to apply to contracts for the sale of commodities insofar as they do
not contradict with the specified provisions of this Act. Thus, the Contract Act's provisions on the parties'
capacity, free consent, restraint of trade agreements, wagering agreements, and damages measurement apply to
a contract for the sale of goods.The general provisions of the Contract Act continue to be applicable to the
contract of sale of goods in so far as they are not inconsistent with the express provisions of this Act. Thus the
provisions of the Contract Act relating to capacity of the parties, free consent, agreements in restraint of trade,
wagering agreements and measure of damages continue to be applicable to a contract of sale of goods.A
contract of sale of goods results, like any other contract, by an offer by one party and its acceptance by the
other. The parties to the contract enjoy unfettered discretion to agree to any terms they like relating to delivery
and payment of price as of consideration.This freedom is not limited by the Sale of Goods Act. It simply
specifies some general positive criteria in situations when the parties have failed to expressly address
eventualities that could jeopardize the smooth execution of the sale contract. In a number of situations, the
Negotiable Instruments Act is a cause of concern.

Meaning of Contract of Sale of Goods:

A selling contract might be unconditional or conditional. In an absolute sale, the seller's ownership of the items
passes to the buyer instantly,and the seller has no further obligations. A sale on a shop counter is an absolute
sale. The property in the products does not pass to the buyer unconditionally unless a condition is met in a
conditional contract of sale.

I. There is a "sale" and a "agreement to sell" when the seller transfers the property in the items to the
Buyer instantly.
II. The contract is considered an agreement to sell when the transfer of property in the items is to take place
at a later date or is subject to a condition that must be met afterward.1

General principles as to formation of contract of sale of goods

A contract of goods is a contract whereby the seller transfers or agrees to transfer the property to goods to the
buyer for a price. There may be a contract of sale between one part-owner and another [Sec. 4(1)]. A contract of
sale may be absolute or conditional [Sec 4(2)].
1
‘LawTeacher,Essay on The Sale of Goods Act ,1930;2665 words(11 pages),11th Jun 2021<https://www.lawteacher.net/free-law-
essays/commercial-law/definition-of-sale-of-goods-act-commercial-law-essay.php>Accessed 10 January 2022
The term ‘contract of sale’ is a generic term and includes both a sale and an agreement to sell.

Sale and agreement to sell: when 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 conditions thereafter to be fulfilled, the contract is called an ‘agreement to sell’
[Sec. 4(3)]. An agreement to sell becomes a sale when time elapses or the conditions, subject to which the
property in the goods is to be transferred are fulfilled [Sec. 4(4)].

Essential elements of contract of Goods :The essential elements of a contract for the sale of goods are below:

Two PartiesThe first essential is that there must be two distinct parties to a Contract of Sale, i.e., a buyer and a
seller, as a person cannot buy his own goods. Thus, for example, when student of a hostel take meal with a
mess run by themselves on cooperative line, there is on Contract of Sale. According to Section 4(1), there may
be a contract of sale between one party-owner and another.

Transfer of Property:The term „property‟, as used in the Sale of Goods Act, means „general property‟ in
goods as distinguished from „special property‟6 Transfer of property in the goods in another essential of a
contract of sale of goods. Similarly, in the case of goods for the purpose of repair, the bailee has special interest
in goods bailed to the extent of his labour charges.
Goods:A goods means every kinds of movable property other than actionable claims and money; and includes
stock and shares, growing crop, grass, and thing attached to or forming part of the land which are agreed to be
severed before sale or under the contract of sale.”
Price:The consideration for a contract of sale must be money consideration called the „Price‟. If goods are sold
or exchanged for other goods, the transaction is barter, governed by the Transfer of Property Act and not a sale
of goods under this Act. But if goods are sold partly for goods and partly for money, the contract is one of sale.
Meaning of Goods and its kinds:The Sale of Goods Act , 1930 provides that , “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 Goods form the subject- matter of a contract of sale. Goods may be classified into the
following types: (I) Existing goods; (II) Future goods; and (III) Contingent goods.
Existing goods are goods which are already in existence and which are physically present in some person‟s
possession and ownership.14 Existing goods may be either (a) Specific and Ascertained or (b) Generic and
Unascertained. Specific goods Are goods which can be clearly identified and recognized as separate things. The
term Ascertained Goods is used in the same sense as Specific Goods. Generic Goods or Unascertained Goods
are Goods indicated by description and not separately identified. They are indicated or defined only by
description.2

Stipulations of the contract of Sale of Goods:

2
M C Kuchha & Vivek Kuchhal,MERCANTILE LAW(Eight Edition,2008;Published VIKAS PUBLISHING HOUSE PVT LTD)
Conditions: Section [12(2)] of the Code of Federal Regulations A 'conditions' clause is a term that is vital to
the contract's principal purpose and whose infringement allows the offended party to reject the contract. The
term makes it clear that condition is critical to a contract's fulfilment.

Warranty: Section [12(3)] of the Code of Federal Regulations A 'Warranty' is a clause attached to the
contract's principal purpose that allows the aggrieved party the right to sue for damages solely, rather than the
contract itself, if it is breached.

Implied Conditions:

i) Every selling contract includes an implicit condition called the "Right to Sell." He is assumed to be able
to sell the products and engage into a sale agreement.
ii) The implied requirement in the case of "Sale by Description" is that the products must match the
description. If the items do not match the description, the customer has the option to reject them.
iii) In the event of "Sale by Sample," goods must be delivered in accordance with the sample's agreed-upon
conditions: (I)the buyer should be able to compare the sample to the bulk; (ii) the products should be
free of defects; and (iii) the bulk should equal the sample's quality.
iv) When selling by sample and description, the items must match both the sample and the description. As a
result, there is an implied condition that if the mass does not match one, the buyer may reject the items.
v) The term "merchantable quality" refers to the commodities' ability to be sold in the market as goods of
that kind. A vendor must notify the customer if there is a fault. It is a condition that is suggested.
vi) "Conditions as Quality to Fitness" may be defined as the buyer informing the vendor that he wants to
acquire the items for a certain reason. It is an implied condition that the items will fulfil the buyer's
needs. Because the customer is relying on the vendor's abilities, the seller must provide the items as
described.3

Doctrine of Caveat Emptor :

The maxim of caveat emptor means “ let the buyer beware.According to the doctrine of caveat emptor it is the
duty of the buyer to be careful purchasing goods of his requirement and in the absence of any Enquiry the
buyer,the seller is not bound to disclose every defect in goods of which he may be cognizant.

Delivery of goods:Delivery of goods means voluntary transfer of possession of goods form one person to
another.If transfer of possession of goods is not voluntary and possession is obtained under pistol point. There
is no delivery. Delivery of goods May be made in any of the following ways.

Actual delivery:Where the goods physically handed over by the seller to the buyer the delivery is said to be
actual. For example, the seller ofa car hands over the car to the buyer. This is an actual delivery of the goods.

Symbolic delivery:When the buyer gets means of obtaining possession.

3
ACCOUNTLEARNING.COM,5‘’Essential elements of a Valid Sale or a Contract of Sale ‘’<https://accountlearning.com/5-
essential-elements-of-a-valid-sale-or-a-contract-of-sale/ >Accessed 11 January 2022
Constructive delivery:Constructive delivery occurs when a change in the possession of the goods without any
change in the actual and visible custody.4

Contractual Dispute And Remedial Measures:

A contract is formed by the concern parties with intend to perform it or to make it real. Both parties of the
contract are well known about their rights, duties and liabilities regarding the contract. If any party fails to
perform his own part, it is known to him what sort of liability he has to bear for such non performance. In spite
of these sometimes the parties of a contract may be reluctant, or unable to perform the contract specifically. In
case of contract of sale of goods it is the seller‟s responsibility to deliver the agreed goods to the buyer and
thebuyer is on duty to pay the price therewith.

Unpaid Seller: Unpaid seller is the person who gives the goods to his customers on credit & keeps the balance
due; exchange of bills on some condition keeps due. The seller of goods is deemed to an unpaid seller (a) when
the whole of the price has not been paid or tendered: or (b) where a bill of exchange or other negotiable
instrument has been received as a conditional payment

Rights of an Unpaid Seller:An unpaid seller has two-fold rights

(i) Rights of unpaid seller against the goods, and

(ii) (ii) Rights of unpaid seller against the buyer personally.5

Conclusion:

The contract for sale does not result in any transfer of ownership. However, a sort of obligation is created in
respect of the ownership of the property.The provisions of the Sale of Goods Law are not complete. Unless
otherwise agreed by the parties begins practically every section of the Sale of Goods Act, implying that if the
contracting parties include any condition that is not inconsistent with the basic norms contained in the Act, it is
legal. The parties to a contract for the sale of commodities have the freedom to include any restrictions they
choose in the contract. Other applicable regulations governing the sale of products are not forbidden, but rather
encouraged, in order to ensure that the rules governing the sale of goods are followed.The parties of a contract
of sale of goods enjoy unfettered liberty to enjoy the stipulations for putting in the contract as they like. Other
relevant laws concerning sale of goods are not prohibited rather encouraged in following rules regarding sale of
goods. Rules in due course of business vary from transaction to transaction, time to time and
circumstances to circumstances, considering all these matter general rules are enunciated in the Sale of Goods
Act.In the normal course of business, rules differ from transaction to transaction, period to time, and
circumstance to circumstance.

4
The Contract Act,1872(Act No. IX of 1872)
5
The Sale of Goods Act,1930 (Act No. III of 1930)