SALES OF GOODS ACT 1930

CONDITIONS AND WARRANTIES ( SECTION 11-17)

A) Introduction
- Sales of goods act,1930 came into force on 1st July, 1930. Until 1930, Sales of goods act was part
of the Indian contract act,1872. Since, 1872, when the Indian contract act was passed, conditions
relating to trade and commerce had undergone enormous change.
- The Law commission of India, with Shri MC Setalvad as its chairman, submitted its report ( 8th
report) on the sales of goods act, on march 1,1958 suggesting some minor changes to give effect
to the judicial decisions since 1930 and the developments of law relating to the sale of goods that
date.
- The Sales of goods act, 1930 which was earlier known as Indian Sales of goods act, 1930 was
based mainly on the English Sale of goods act, 1893.

B) Definitions-
- Document of title of goods (section 2(4) ) - A document of title of goods is described as any
document which is used as a proof of possession of control of goods. It includes- Dock warrant,
bill lading, receipt etc.
- Goods (section 2 (7)) - it means every kind of movable property other than actionable claims and
money. It 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.
- Buyer (section 2(1)) A person who buys or agrees to buy goods.

C) Definition of conditions and warranties-

- In a contract of sale of goods there may be various terms or stipulations. Such stipulations may be
either conditions or warranties.
- According to section 12(2), if the stipulation is an essential to the main purpose of the contract, it
is called Condition.
- According to Section 12(3), if the stipulation is not essential to the main purpose of the contract
but is only of secondary importance or is collateral to the contract, it is called warranty.
- Whether a stipulation is condition or warranty, it depends on the construction of the contract.

D) Stipulation as to time
- Section 11 of Sales of goods act, 1930
- The general rule according to this section is that the time of payment is not deemed to be of the
essence of the contract. Therefore, if the buyer makes a delay in the payment of the price, the
seller cannot avoid the contact of the account but he can claim compensation for the same.
- However, this general rule may change from situation to situation.
- For instance, if there is a contact which provide that the buyer must pay the price on the
stipulated date, otherwise the goods will not be supplied to him. In such a case, the parties have
made the time of payment of the price as the essence of the contract and the delay in payment
would enable the seller to avoid the contract.

E) Consequences of the breach of a condition or a warranty-

- Section 12 of the sales of goods act, 1930
- According to section 12( 2) , Since a condition is a stipulation essential to the main purpose of
the contract, its breach by one party entitles the other to treat contract as repudiated. There are
three options to the buyer on breach of condition by the seller-

 I) Treat the contract as repudiated- the buyer can sue the the seller for breach of contract if the
former breaches the contract.
II) Waive the condition- The buyer can waive off his right to reject the goods. In such a case, the
condition is deemed to be non-existent, and he accepts the goods without bringing any action
against the seller.
III) Treat the breach of condition as a breach of warranty- the buyer can accept the goods instead of
rejecting them and can claim damages as if there was a breach of warranty only.
- According to section 12(3), the breach of a warranty by one party entitles the other only to claim
damages rather than avoiding the contract. 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.

F) Conditions were the condition can be treated as warranty-

- According to Section 13 of the sales of goods act, 1930, there are two cases whereby the breach
of a condition can be treated as breach of warranty-
a) when the buyer waives the condition or elects to treat it as a brach of warranty and not as a
ground for treating the contract as repudiated
b) When the contract is not severable and the buyer has accepted the goods or part of it.

- Section 13(1) states that it is upon the buyer to treat the breach of condition as a breach of
warranty. Section 13(2), states that even though there is a breach of condition by the seller, the
buyer has no right of repudiating the contract but his only remedy is a claim for damages by
treating the breach of condition as a breach of warranty.

G) Implied conditions and warranties-

- Implied condition as to title- Section 14 of the sales of goods act, 1930
• In every contract of sale, unless the circumstance are such which shows different intention, there
is an implied condition on the part of the seller that in case of sale, he has a right to sell the goods
an in the case of an agreement to sell, he will have a right to sell the goods at the time when the
property in them is to pass.
• In Rowland v. Divall, it was held that even though the buyer had used for car for some months,
he was entitled to recover back the whole of the price paid by him as consideration had totally
failed.
- Implied condition in sale by description- section 15
• When the goods are sold by description there is an implied condition that the goods supplied
shall correspond with the description. In case the goods are not in accordance with the description
there is a breach of implied condition and the buyer has a right to reject them.
• In Varley v. Whipp, it was held that the buyer was entitles to reject the machine since it was not
in accordance to the the description as provided by the seller.
- Implied condition in sale by sample as well as description- section 15
• When the goods are sold by sample as well as description, it is not sufficient that the bulk of the
goods corresponds with the sample if the goods do not also correspond with the description.
• In Nacho vs. Godts, it was held that since the oil supplied was not in accordance with the
description, the buyer was entitled to reject the same.
- Implied condition as to qualify or fitness- section 16
• The general rule is that there is no implied condition or warranty as regards the quality or fitness
of the goods for any particular purpose. However the following are an exception-
a) If the buyer tells the seller the purpose for which goods are not required by him.

 b) The goods brought by description from the seller who deals with goods and the same are of
merchantable quality.
c) To qualify or fitness for a particular purpose may be annexed by the usage of trade.
• In Priest v. Last, since the bottle was not fit for being used as a hot water bottle, the particular
purpose for which the buyer had purchased it, the defendant was liable to pay compensation for
the breach of the implied contract.
- Implied conditions in a sale by sample- section 17
• There are three conditions in a contract of sale by sample-
a) the bulk shall correspond with the sample in quality.
b) Buyer shall have a reasonable opportunity of comparing the bulk with sample.
c) The goods shall be free from any defect, rendering them unmerchantable.

- Implied warranty of quiet possession- section 14(b)

• In a sale, it is implied warranty that the buyer shall have and enjoy possession of the goods. It
means that the buyer’s possession of the goods will not be disturbed.
- Implied warranty against encumbrances- section 14 (c)
• There is an implied warranty that the goods sold shall be free from any charge or encumbrances
in favour of any third party. If there is a charge or encumbrance on the goods sold and sold and
the buyer has to discharge the same, he is entitled to get compensation for the same from the
seller.

H) Conclusion-
Conditions and warranties form an integral part of the sale of goods act, 1930. Conditions and
warranties are the two type of stipulations made during a contract. Conditions are essential for the
purpose of a contract, while warranty is collateral to the main purpose of the contract. The breach of
conditions leads to termination of contract while the breach of warranty leads to claim for breach.

 TRANSFER OF PROPERTY AS BETWEEN SELLER AND BUYER

A) Introduction
- Transfer of property in the goods from the seller to the buyer is the essence of the contact of sale.
According to section 4 of the sales of goods act, 1930, in a contract, the seller either transfers or
agrees to transfer the property in the goods to the buyer for a price. For the purpose of transfer of
property, goods may be divided into two classes- specific or unascertained. Specific goods are
the goods which have been identified and agreed upon at the time of the contract of sale. On the
other hand, if the the amount or quantity is not specified, then the goods are unascertained.

B) Transfer of the property in specific goods-

- The transfer of the property in specific goods have been mentioned from section 19-22, 24of the
Sales of goods act,1930.
1. Property transferred as intended- Section 19
• In a contract of sale of specific goods, the property or the goods are transferred to the buyer as
the parties intended it to be transferred.
• According to the Section 19(2), if the parties do not expressly mention anything, their intention
could be inferred from their contract. For the determining 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.
2. Specific goods in deliverable state- Section 20
• If the contract between the parties satisfies the following conditions, the property passes at the
time of making of the contract:
I. The goods are specific
II. The goods are in deliverable state.
III. The contract is an unconditional one.
• On the fulfilment of these conditions, the property would pass even though the delivery of the
goods or the payment of the price or both is postponed. A contract which is not subject to any
condition precedent or subsequent is unconditional. If contract is a conditional one, the property
wouldn’t pass at the time of making of the contract.
• In Ghulam Mohammad Wani v. State of J & K , It was held that in the circumstances of the case,
while there was demand for the payment of the higher revised price from the purchase of the
timber, the price to be chargeable was to be reasonable price to be determined by the court.
3. Specific goods not in deliverable state- Section 21
• When the contract is for the sale of specific goods but the goods at the time of the contract are
not in deliverable state, the property in such goods passes when the goods are put in a deliverable
state and the buyer has notice thereof.
4. Specific goods to be weighed, etc by the seller- Section 22
• In the contract of sale of specific goods, the goods may be in a deliverable state at the time of the
making of the contract but according to the contract, the seller may be bound to weigh, measure
or test or do something else to ascertain the price of the goods. In such a case, the property in the
goods does not pass until the seller has done all that and the buyer has notice thereof.
• In Simons v. Swift, it was held that the loss do the weighed portion, which was carried away by
floods, fell upon the seller as the property therein had not passed to the buyer.
5. Goods delivered on approval or on sale or return- Section 24
• When the goods are sold on approval, on sale or return basis or on trial, the delivery of the goods
may be made to the buyer but that does not result in transfer of the property in the goods to the
buyer. The property in such a case passes when one or the other of the following conditions are
satisfied.
1. When the buyer signifies to the seller that he has approved or accepted the goods-

 2. The property in such goods passes to the buyer when the buyer dots the transaction.
3. When the goods are sold on approval and the buyer neither signifies his approval nor does he
give any notice of rejection within the time fixed for the return of the goods or, if no such time
is fixed, within a reasonable time but retains the goods beyond such time, the property in the
goods passes to him.

C) Transfer of property unascertained or future goods- Section 18, 23 and 25

1. Section 18- When there is a contract for the sale of unascertained or future goods, the property
therein does not pass at the time oF making of the contract. The property in unascertained goods
cannot pass until the goods are ascertained.
2. Section 23- The property in respect of the unascertained goods or future goods sold by the
description passes to the buyer when the following conditions are satisfied-
• There is appropriation of the goods to the contract either by the seller or by the buyer
• The appropriation of the goods is made by one party with the assent of the other, i.e. if the seller
makes the appropriation, it must be with the buyer’s assent and if the appropriation is made by
the buyer, the seller’s assent thereto is necessary.
• The goods appropriated to the contract are of the same description as given in the contract and
are in the deliverable state,
• The appropriation is unconditional.
- Appropriation of the goods to the contract means doing of any act by the parties which indicates
that certain goods are to be assigned to a particular contract i.e. certain goods are considered to
be meant for the performance of a particular contract.
- In United India Ins. Co v. Jameela Beevi, It was held that since the requisite conditions necessary
for the transfer of property had not yet been fulfilled, the seller was the owner of the vehicle at
the time of the accident.
3. Section 25- reservation of right to disposal
• Where the seller has reserved the right of disposal, notwithstanding the delivery of the goods to a
buyer, or to carrier or toothed bailee for the purpose of transmission to the buyer, the property in
the goods does not pass until the buyer pays for it and receives the same.

D) Risk follows property- Section 26

When there is any loss or damage to the goods after making the contract, the question which
generally arises is as to which of the two parties is to bear the loss. In this regard, the general rule of
the section is that goods are at the risk of the person in whom the property in the goods vests.
However, there are 3 exceptions to the same-
1. The parties may express their intention which is contrary to the general rule during the
formation of the contract.
2. If the delivery of the goods has been delayed due to the fault of either the buyer or the seller and
there has occurred some loss to the goods due to such a delay, the party at fault has to bear the
loss.
3. It provides that that the seller or the buyer may not be the owner of the goods but, if he is in
their possession, he may be responsible in his capacity as the bailee of the goods.

E) Transfer of the title- Section 27

- If the 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. However there are many exceptions to this for example- sale by one of joint
owners ( Section 28) , sale by finder of goods, etc.

F) Conclusion-
Transfer of the property in the goods from the seller to the buyer holds a significant place in a
contract. There are two type of goods- unascertained or specific. Section 19,20,21,22 and 24 deal
with transfer of the property in specific goods, while Section 18, 23 and 25 deals with transfer of
property in future goods. As a general rule, risk and title also transfers with the transfer of property.