8 Chapter 2 The Sale of Goods Act, 7 3.1___ INTRODUCTION TO CONTRACT OF SALE a a ae | Definition of A contract, where by- “Contract of sale’ | The seller (a)_ transfers; or i its | ~(b) agrees to transfer the property inthe goods tothe buyer + ® | 5 _foraprice. AS | Definition of ‘sale’ | A contract of sale, whereby-the property in goods is transferred from seller to buyer. vy | Definition of ‘A contract of sale, whereby- ‘Agreement to sell” | The property in goods shall be transferred- | (a) ata fumpre time; or (b) subject to some condition thereafter to be fulfilled, a ‘Agreement to sell’ | An agreement to sell becomes a sale when ~ becoming ‘sale’ (a) the time clapses: or | (b) the conditions are fulfilled subject to which the property in goods is to | be transferred. Applicability of | * The provisions of the Contract Act, 1872 shall also apply to contracts | provisions for sale of goods, ices * However, the provisions of the Contract Act, 1872 shall not apply to a contract of sale of goods if such provisions are inconsistent with the jons of the Sale of Goods Act, 1930. Scope ofthe Act | * The Act applies only to a contract of sale of goods. ‘Contract of sale’ is a wide term which includes — (a) sale; and (b) Agreement to sell * The sale of Goods Act shall apply to a contract only if'the ownership of e goods is transferred from one person to another. | Hie (@) immediately at the time of formation of contract; or | (b) Subsequent to formation of contract. * The sale of Goods Act shall not apply to — (a) ailment of goods ue (b)_ pledge of goods; i | (©) any contract relating to immovable property; (@_ Contract of work and skill proC.P.T. / MERCANTILE LAW / THE SALES Ur WUULe AL: aoe~ 3.2. ESSENTIAL ELEMENTS OF CONTRACT OF SALE = All the requirements of a valid contract must be fulfilled. ‘Contract. * A contract of sale is made by an offer to buy or sell the goods for a price and the acceptance of such offer. = A contract of sale may be ~ (a) expressed (in writing or by word of mouth); or (b) implied (by circumstances of the case or conduct of the parties). + Acontract of sale may be — (a) absolute; or (b)_ conditional. Parties to the ‘There must be two parties, i.e, the seller and the buyer. contract = Seller- A person who sells or agrees to sell the goods. = Buyer-A person who buys or_agrees to buy _the goods. “Goods? Means — - every kind of movables property Excludes - (a) actionable claims (ie., a right or claim which can be enforced In a Court of law ) (b) money (ie., currency in circulation) Includes - (a) stock and shares (b) growing crops, grass (©) things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale. Transfer of + ‘Property in goods’ means the general property in goods and not merely a ‘property in “special property in goods.” goods” "= ‘Property in goods’ means the ‘ownership’ of goods. Price’ + Price means the money consideration for sale of goods. * The consideration payable by the buyer must be ‘money’. * The consideration need not be money only, i.e. ‘price’ may be paid party in Money and partly in some other form. * Gift of goods, and exchange of goods (i.e., barter) does not result in a contract of sale. 3,3 DISTINCTION BETWEEN SALE AND AGREEMENT TO SELL BASIS SALE AGREEMENT TO SELL Time of | The transfer of ownership passes from | The transfer of ownership passes from seller transfer of | Seller to buyer immediately. ownership to buyer subsequent to the formation of agreement to sell. Risk of loss | The goods are.at the risk of the. buyer of goods _| as Soon as sale takes place. The goods are-at the risk of the seller until the agreement to’sell becomes a sale. Remedies | In case of breach by buyer, the seller In case of breach by buyer, the seller cannot for breach | has the legal right to sue the buyer for | Sue the buyer for recovery of price of goods. byseller | Recovery of price of goods. His right is limited to claim damages, 62 LOO me eer tanets; mERVANiue aN) be ono UE BUUUD ALL 190U Right of | In case of sale, the seller has no legal | In case of agreement to sell, the seller can resale Right to resell the goods Resell the goods to any other person, Insolvency | If the buyer becomes insolvent, the | If the buyer becomes insolvent, the official of buyer Official assignee/official receiver shall | Assigneelofficial receiver shall have no right Have a right over the goods. (vetithe goods. + 32: Psa sed oo | [Insolvency | If the seller becomes insolvent, the _| Ifthe seller becomes insolvent, the official of seller Official assignee/official receiver shall | Assignee/official receiver shall have a right Have no right over the goods. __| Over the goods Nature of | In case of ‘sale’, the buyer gets the | In case of ‘agreement to sell’, the buyer gets rights rights Against the whole world, i.c., | The rights only against the seller, i., jus in fines ae personal, 3.4 © CONTRACT FOR WORK AND SKILL a Meaning of ‘A contract is a contract for work and skill if the following 2 conditions are ‘contract for work | satisfied: and skill” «The substance of the contract (ie., the main purpose of the contract) is to exercise work and skill, and not to transfer goods. It is immaterial that the party exercises work and skill upon the goods lying in his own | stock since supply of own goods is only incidental and ancillary (i.e. | subsidiary) to the exercise of work and skill; the main purpose being to exercise work and labour. * The goods have no material significance in the minds of the parties to contract. 4 Whether a * Whether a contract is a Contract of sale or a contract of work and skill contract is a is a mixed question of fact and law. t contract of sale or |* The intention of the parties is the main criterion to determine whether a contract for contract is 2 contract of sale or a contract of work and skill. work and skill? | * If the dominant motive behind a contract is to render services and exercise work and skill, it is a contract of work and skill, even though the person exercising such work and skill supplies the goods from his own stock, | ¥ If the dominant motive behind a contract is to transfer the goods, it is a contract of sale, even though while transferring such goods, some work and skill is also exercised on the goods. 3.5 MODES AND FORM OF CONTRACT OF SALE, (Gee. 5) DELIVERY.OF GOODS 1 PAYMENT OF PRICE Immediate ey Immediate c Ata future date I Ata future date By installments By installments | 36 MODES OF FIXATION OF PRICE __(Gec. 9) Contract ‘The price may be specified in the contract of sale. [Manner specified ‘The parties may decide that the price shall be fixed in Future on some basis, 63C.P.T. / MERCANTILE LAW / ‘THN SALES Ur UvyEy ove = Inthe contract _| Specified in the contract. Usage of trade | If the partes regularly trade with each other, the price may be fixed as per | the usage of trade, ic., on the basis of past transactions. Third party Ts The contract of sale may provide that the price shall be fixed by a third party named in the contract of sale. * Insuch acase, the price shall be such as is fixed by the third party. + If the third party fails to fix the price, contract of sale shall become void. Reasonable price | If the price cannot be fixed by any of the aforesaid criteria, the buyer shall be liable to pay a reasonable price to the seller. _ 3:7__ DESTRUCTION OF GOODS (Gee. 7 & 8) Basis See. 7 i Sec.8 Nature of There mustbe a contract of sale, ie, | Sec. 8 applies only if the contract of Contract of sale | (a) sale; or sale is an agreement to sell. | (b) agreement to sell. Time of Destruction of goods takes place | Destruction of goods takes place Destruction of Before formation of contract of sale. | after Agreement to sell but before | Goods completion Of sale, i.e., before | agreement to sell Becomes a sale. Nature of goods | See.7 applies only if the goods are | Sec. 8 applies only if the goods are Specific goods Specific goods Conditions ‘Sec. 7 applies only if the destruction | Sec. 8 applies only if the destruction of goods takes place without any | of goods takes place without any knowledge of the seller. | fault of the seller. 38 KINDS OF GOODS (See. 2) Existing goods * The goods that exist at the time of formation of contract of sale are | called as existing goods. | + The seller is either the owner of such goods or has the possession of | such goods. + Existing goods may further be classified as follows: [/Specifie goods | Goods that are- | Identified; and | = Agreed to by the parties At the time of contract of sale. Unascertained | Goods which are not specifically identified at goods the time of contract of sale. |+ At the time of contract, such goods are | described by description or sample only. \FAscertained | Goods that are identified and agreed to by the parties | goods by the parties after formation of contract of sale. Future goods ‘Goods that are not in existence at the time of formation of contract of sale. Contingent goods | Such category of future goods, the acquisition of which is subject to some condition, ie., upon uncertain events which may or may not happen. 64 | aMeee) MeCAN uy won / EE SAMBO UE BUULS ALL L¥0U 3.9 CONDITIONS AND WARRANTIES-A COMPARISON (See. 12) [BASIS CONDITION WARRANTY i) Definition [A stipulation Essential to the main A stipulation | purpose of the contract; | Collateral to the main purpose of the | The breach of which Gives rise to a right | Comact, | to treat the contract As repudiated. Thebreach of which- | (a) does not entitle the buyer to treat the | eontract as repudiated; (2) gives rise to isin for damages Significance |» vis a representation that forms the|* Such representation does not form basis of the contract. the basis of the contract. + Ifsuch a representation is discovered |" Even if such a representation is | © to be false, the buyer shall have a} discovered to be false, the buyer right to avoid the contract and| shall have no right to avoid the I receive back the price paid by him. contract. ‘Treatment | A breach of condition may be treated as a | A tweach of warrafity cannot be treated as breach of warrant | a breach of condition. Types It may be expressed (Le., mutually agreed | It may be expressed (ie., mutually agreed to by the parties) or implied (je,|to by the parties) or implied (ie., presumed by law to be present in every | pressed by law to be present in every contract of sale), contract of sale). 3.10 _ IMPLIED CONDITIONS (See. 14, 15, 16 & 17) Condition as |] Meaning | * The Law presumes, that the seller has a valid title to the totitle | | goods, i.e., he has the right to sell the goods. | © ‘Right to sell” means the right to pass the ownership of goods in the same form as is expressed in the contract oF sale. | At the time of sale of certain goods, § répresented to B that such goods are of ‘Nissly* brand was an infringement of ‘Nestle’ brand, and therefore B was legally bound to remove the labels of ‘Nissly’ brand pasted on goods bought by him from $. It was held to be a breach of condition as to title, even though $ was competent enough to pass the ownership of goods toB. Example It means that description of goods given by the seller to the buyer to description must be found present in the goods actually delivered to the buyer. | Applicability | "The condition as to description shall apply only if- | | (a) the seller gives a description of goods proposed to be sold | | to the buyer; (b) the seller agiees to supply the goods to the buyer that will correspond to the description given by him; and | (c) * the buyer buys the goods relying on the description given to him. Condition as_|| Meaning 65C.P.T. / MERCANTILE LAW / ine saLES Ue wey ow Condition as || Meaning It means that goods supplied hy the seller must be same as the to sample sample shown by him. ‘Applicability | The condition as to sample shall apply only if- | (a) the seller shows a sample of goods proposed to be sold to the buyer; (b) the seller agrees to supply the goods to the buyer that will correspond to the sample; and (©) the buyer buys the goods relying on the sample shown tohim. Requirements | (a) That the goods supplied by the seller shall correspond with the sample shown by the seller, (b) That the seller shall give reasonable opportunity to the buyer for inspection of goods. (c) That the goods shall be free from any latent defect, i.e., the deféct which is not apparent. Condition as to | It means that goods supplied by the seller must correspond to the description as Sample as well | well as sample. as description Condition as to |{ General rule |* A buyer must ensure himself that the goods purchased by Fitness for him- buyer's (2) are free from any defects; Purpose (b) are of the right quality (ie. quality desired by him); and (b) shall be fit for the purpose for which he intends to buy the goods. = If, after buying the goods the buyer realizes that goods bought by him! do not serve the intended purpose, the seller cannot be held liable for it, Exception | There is a condition as to quality of goods or that the goods i shall be fit for the purpose of the buyer, if all the following requirements are fulfilled: (a) The, buyer tells the seller the purpose for which he requires the goods. (b) The seller exercises his judgment and suggests some ‘goods which will suit the buyer's purpose. (©) The buyer relies on the judgment of the seller. (a) The seller trades or does business in the kind of goods which are subject matter of contract of sale. It is immaterial that the seller is the manufacturer of such goods or not. 66é Condition as to |] Applicability | This condition shall apply only if the following 2 requirements merchantability | ate satisfied: | (a) The seller sells the goods by description, | (b) The seller trades or does business in the kind of goods which are subject matte of contract sale. It is | | | immaterial that the seller is the manufacturer of such | | | goods or not. j |) Meaning Jt means that the goods must serve the purpose which is | expected of them as per the name given to them, The conditions as to merchantability requires that- (@) ifthe goods are purchased for the purpose of using such goods, such goods can be used for such purpose. (b) © ifthe goods are purchased for the purpose of resale, such goods can be resold under the same name, || Non- ‘The condition as to merchantability is not applicable if the Applicability _| buyer buys the goods ater inspecting such goods. as Condition as to |/ Applicability | This condition applies only in case of such goods as are meant Wholesomeness | for human consumption, ic. foodstuffs | | Meaning | It means that the goods sold by the seller must be fit for human sy] | consumption, if these goods are meant for human consumption. Condition If there is a custom or usage imposing any condition in a contract of sale, the seller implied by ‘must fulfill the requirements of such a custom or usage of trade. customs 3.11_IMPLIED WARRANTIES (See. 14816) as [Warranty as to | it means that the buyer shall have quiet possession of the goods, ie, he shall | quiet possession | have a right to enjoy the goods the way he likes os Warranty asto | * It means that the goods shall be free from any encumbrance (Le, charge). Free from * However, ifthe fact that the goods have been encumbered was known tO ‘Encumbrance the buyer, the buyer cannot claim breach of warranty. 2 Warranty If there is a custom or usage imposing any warranty in a contract of sale, the - implied by seller must fulfil the reqirements of such a warranty. « customs | 3.12 _ CHANGE OF A CONDITION INTO A WARRANTY (See. 13) _ = a ’ "i Voluntary _| A condition shall not give a right to the buyer to rescind the contract of sale in | the following cases: = | (a) Where the buyer waives the breach of a condition. | (b) Where the buyer decides to treat a breach of condition as « breach of | |e waaay ‘| = o7C.P.T. / MERCANTILE LAW / THE SALES OF GUUws avs +-~~ ‘Compulsory circumstances 3.13 _ DOCTRINE OF CAVEAT EMPTOR ‘The non-fulfill the contract, ifthe following conditions are satisfied: Tment of a condition shall not give any tight to the buyer to rescind ‘The contract of sale is not divisible ‘The buyer accepts all the goods or a part of goo% a condition is known to him. ‘The buyer cannot reject the goods on the ground that certain condition is not fulfilled. zi ‘The buyer's remedy is limited to recovery of damages from the seller xis even though breach of ‘Meaning Exceptions condition- (a) asto description (b) asto sample (6) as to,description as well as sample (@) as to merchantability. (e} a8 to quality ot fitness for buyer’s purpose (D as to wholesomeness. E doctrine of caveat emptor shall not apply if This doctrine states that a buyer must ensure himself that the goods purchased by him- (a) are free from any defects; (b) are ofthe right quality (ie. quality desired by him); and (b) shal be fit forthe purpose for which he intends to buy the goods In short, the doctrine lays down the rule ‘Let the buyer beware’, i-t, the buyer should be careful and cautious while purchasing the goods, and if afterwards the goods tur out t0 be defective or unusable, he himself is to be blamed for the same, and the seller cannot be held liable for it. ‘The seller is not duty bound to disclose any defect in his goods. there is a breach of implied (a) imposed by a custom or usage of trade. 68 meme cee eee ee3.14 TRANSFER OF OWNERSHIP Gee. 18 t0 24) of [Sale of specific || Tmmediate transfer | The ownership stall be transferved from the seller to goods of ownership buyer immediately at the time of formation of contract 2 of sale, ifthe following conditions are satisfied [+ The contract is for sale of specific goods. i" The specific goods are in a deliverable state. zl | - ‘The goods are not required to be weighed or E Measured for the purpose of determination of =| price | Ee * The contract of sale is unconditional, ie., the as} contract does to provide any other time for transfer of ownership. 1 : Transfer of The ownership of goods is transferred after formation ownership of the contract of sale in the following 2 cases : | subsequently |(@) The ownership shall be transferred when the || goods are put in a deliverable state, if the = | following conditions are satisfied = : | * The contract is for sale of specific goods. * At the time of formation of contract of sale, “4 the specific goods are not in a deliverable state, | The goods are put in a deliverable state by | the seer fact that the goods have been put in a deliverable State, has come to the | kriowledge of the buyer. | (>) ‘The ownership shall be transferred when the goods are weighed or measured, if the following conditions are satisfied: * — Thecontract is for sale of specific goods. ‘ | * At the {ime of formation of contract of sale, eh the price of specific goods are required to be weighed or measured in order to | detémine the price. {| Sale of aEeatinca | "Afterwards, the goods are weighted or Goa ‘measured so as to determine the price | + The fact that the goods have been weighed or measured has come to the knowledge of the bayer. “The ownership shall be transferred when both the following con satisfied: (a) The goods haven heen identified (i.e, set apart. The goods have been appropriated tothe contract (ie, the act of identification of goods by the seller has come to the knowledge of the buyer)Sale of goods on approval Acceptance of Goods | Adoption of transaction ‘The ownership shall pass to the buyer as follows ‘= When the buyer intimates to the seller that he has Accepted the goods, the ownership shall pass to the Buyer. | The ownership shall be tansferred even though the time Specified in the contract for return of goods, if any, has Not expired. ih the | When the buyer does anything inconsistent ownership of seller in relation to such goods, the buyer shall be deemed to have accepted to have accepted the goods. the goods Failure to return | The ownership shatl pass to the buyer, if the buyer fails to return the goods to the seller — | + Within specified time - iff certain time has been Fixed for return of goods. Within a reasonable time - if no time has been fixed _For return of goods, | 3.15__ PASSING OF RISK (See. 36) m a putting The General rule » Risk passes with ownership, | In other words, in case of loss of goods, the p2rty who is the owner of such | Goods at the time of loss shall bear the loss of goods. Exceptions | Express The parties may expressly provide that — T agreement * The goods shall be at the risk of the seller, even between the though the ownership of goods has been passed to parties the buyer; or | The goods shall be at the risk of the buyer, even | though The ownership of goods has not been [I passed to the Buyer. || Goodsareat the | Where the buyer wrongfully refuses to accept the delivery risk of defaulting | of goods, the buyer shall be responsible for any loss of such party goods, even though the ownership of goods has not been passed to the buyer. Risk imposed on_| If there isa custom or usage imposing risk on any party to aMirty by a the contract, such party shall be liable for any loss of goods, custom: Leven though such a party is not the owner of goods. I 3.16 PERFORMANCE OF CONTRACT OF SALE __(Gec. 32 to 38) s Delivery and price Rend Areconcurrent —_|{ General rule Delivery of goods and payment of price are concurrent conditions conditions. In other words, the delivery of goods shall be accompanied by payment of price. Exception The parties to the contract may provide otherwise, Prescribed mode |* The act has not prescribed any mode of delivery. | of delivery ‘The delivery should be made in such a manner which has the effect of goods in the possession of the buyer Buyer's duty Tis the buyer's duty to demand the delivery of goods. ‘The parties to the contract may provide otherwise. Modes of delivery | Actual delivery Transfer of physical possession of goods results in actual delivery. 70| Symbolic Where the seller does not physically wansfer the goods 10 | delivery the buyers, but does something which has the etfect of | | delivery of goods to the buyer, it is called as sy | delivery of goods. mbolic Constructive Where a person holding the goods on behalf of the sellen | delivery acknowledges to the buyer that he now holds the goods on | behalf of the buyer, constructive delivery of goods takes I lace, Delivery to carvier |/General rule | The delivery of goods to the carrier amounts to delivery to | | OU EY eae ee Exception livery of goods to the carrier does not amount to delivery | sas to buyer if right of disposal of goods is reserved by the | sellez. x veer Place of delivery | (a) Delivery must be made at the place specified in the contract | (b) Ifthe contract does not specify the place of delivery, then — a = Incase of'sale = goods shall be delivered where the goods are Present atthe time of sale Seal + Inease of agreement to sell - goods shall be delivered where ot such Goods are present at the time of Agreement to sell. Time of delivery | (@) Delivery must be made at such time as is specified in the contract. ae re | (©) Ifthe contract does not specify the time of delivery, then delivery must be od to | made at a reasonable time. Expenses of || General rale (a) Seller shall bear the expenses of putting the goods | ven delivery in Deliverable condition. been (b)__Buyer shall bear the expenses for receipt of goods. _| __| [ixception | ‘The parties to the contract may provide otherwise. Part delivery Part delivery is not a valid delivery. such Delivery of wrong | (a) Short quantity is delivered - Buyermay accept the short delivery oo quantity ~ Buyer may reject the whole goods. al | (b) Excess quantity is delivered - Buyer may accept the contracted quantity ieee ~ Buyer may accept the whole quantity vs | oes = Buyer may reject the whole goods. ce 5 3.47 UNPAID SELLER — MEANING FSD a Cremer aa If payment is made | The selleris an pnpaid seller if — aa aioe by a negotiable "the price is paid by way of a negotiable instrument; but instrument the negotiable instrument is dishonoured. al Itpayment is not | Ifthe price has fallen due, but is not paid in full by the buyer, the seller is an made by a negotiable | unpaid seller. . instrument fs| ious cbt xt of a a 3 i 713.18 RIGHT OF AN UNPAID SELLER AGAINST THE GOODS WHERE THE OWNERSHIP HAS BEEN TRANSFERRED (Sec. 46 to 54) Right of lien Condition for exercising lien: ‘Termination of lien or loss of lien: (a) The unpaid seller must be in actual possession of the goods sold. (b) The buyer has not paid the price of the goods, | By delivery of | Lien is lost if— goods to carrier | - the goods are delivered to some person for the purpose of transmission to buyer = without reserving the right of disposal of goods. By delivery of | Lien is lost if the seller delivers the goods to the buyer. ‘goods to buyer By waiver Lien is lost if the seller agrees to waive his right of lien. By payment of | If the buyer pays the price of the goods the seller ceases to price be an unpaid seller. Therefore, his right of lien is lost. _ Right of stoppage || Meaning of “Transit means transportation of goods from seller to of goods in transit | ‘transit’ buyer Ba Meaning of ‘The period starting with delivery of goods to the carrier ‘goods in transit’ | and ending with the delivery of goods by the carrier to the buyer Meaning of - Stopping of goods by the seller ‘stoppage in | - While the goods are in the course of transit. transit” is Conditions for | (a) the buyer has not paid the price of the goods ‘stoppage in (b) ‘The goods are in the course of transit transit” (©)__The buyer has become insolvent. Right of resale Condition | * The seller has exercised right of lien or stoppage | in transit. * The buyer fails to pay the price within a reasonable time. | | * The seller has given a notice to the buyer of his intention to resell the goods (however, notice by seller is not required if the goods are perishable), [Consequence | The seller shall have @ right to recover any loss incurred on such resale, (i.c., where the price received on resale of goods is less than the price payable by the buyer). * The buyer shall have no right over the surplus, if any, arising on such resale. i 723.19 RIGHT OF LIEN & RIGHT OF STOPPAGE OF GOODS IN TRANSIT - A COMPARISON a goods | Consequences “Right of stoppage of goods in Basis Right of lien Ik transit e Meaning Lien means a right of a person to! It means a right to regain the retain the possession of goods | possession of goods belonging to | belonging to same other person. some other persons. When canthe | The right can be exercised, at anytime, | This right can be exercised by an right be exercised? | by an unpaid seller, ie., whether or | unpaid seller only if the buyer has not the buyer has become insolvent. | become insolvent. Conditions for | * ‘The possession of the goods lies |= The seller delivers the goods to a | exercising the =| with the seller cartier for delivery of such goods right = The seller is an unpaid seller to the buyer. «The buyer has become insolvent. | +The seller is an unpaid seller. i [Period during | Lien can be exercised until the goods | This right can be exercised — which the right | are delivered to the buyer. = Starting such time when the goods may be exercised are delivered to the carrier (i.e., when the right of lien ends); and + Ending with such time when the goods are delivered by the carrier bs to the buyer. When is the right| * If the possession of goods .is | This right is lost if the goods reach the lost? transferred to the buyer. destination and the carrier delivers the "If the seller delivers the goods to | goods to the buyer. a cattier without reserving his right of disposal of goods. 3.20 RIGHT OF AN UNPAID SELLER AGAINST THE GOODS —_ (See. 46) WHERE THE OWNERSHIP HAS NOT BEEN TRANSFERRED Right to | : ae Condition (a) The seller is an unpaid seller. e () The ownership of goods has not been passed to the buyer: - SS Se ere ere (a) The seller can lawfully refuse to deliver the goods to the buyer until he is paid the pris (b) The buyer cannot hold the seller liable for non- Delivery of goods. 73Cares | menwins 3.21 UNPAID SELLER’S REMEDIES AGAINST THE BUYER (Sec. 55, 56, 60 & 61) | Suit for price Suit for interest Suit for damages for non- acceptance of goods “An unpaid seller has the right to sue the buyer foe recovery of price where price has become payable, but is not fully paid ‘A seller has the right to sue the buyer for recovery of interest only if he has the» right to sue the buyer for recovery of price. "An unpaid seller has the right to sue the buyer for recovery of damages if- (a) the seller is ready and willing to deliver the goods to the buyer as per the terms of the contract; but (b) the buyer wrongfully neglects or refuses 10 acvept the goods, | | { | Suit for damages for repudiation of contract before the due date of delivery of goods Tf before the due date of payment of price has arrived, the buyer declares his | intention of non-payment of price to the seller, the seller may exercise any of the following 2 options: (a) The seller may decide to wait until the due date of payment of price has arrived. If on the due date the buyer does not pay the price, it would amount to a breach of Contract, for which the seller shall have a right to sue the buyer. (b) The seller may immediately sue the buyer for damages without waiting for due date for payment of price to arrive. 3.22 BUYER’S REMEDIES AGAINST ‘THE SELLER. (Sec. 57 to 61) Suit for damages for non-delivery of goods * “The buyer has the right (0 sue the seller for recovery of damages resulting from non-delivery of goods if the following conditions are satisfied: (@) The seller is bound to deliver the goods to the buyer as per the terms of the contract (0) The seller wrongfully neglects or refuses to deliver the goods. (c)__ The buyers ready and willing to take the delivery of goods. ‘Suit for damages for repudiation of the contract before the due date of delivery Tf before the due date of delivery of goods has arrived, the seller declares his intention of non-delivery of goods to the buyer, the buyer may exercise any of the following 2 options: (@) The buyer may decide to wait until the due date of delivery of goods has anrived. If on the due date the seller does not deliver the goods, it would amount to a breach of contract, for which the buyer shall have a right to sue the seller. (b) The buyer may immediately sue the seller for damages without waiting for due date for delivery of goods to arrive. Suit for specific performance of contract Th case of wrongful neglect or refusal to deliver the goods by the seller, the buyer may sue the seller for specific performance, ic., the buyer may seek Court order directing the seller to deliver the goods as agreed (0 in the contract of sale, Suit for breach of warranty “A breach of warranty gives a right to the buyer to claim damages from the seller. ‘Suit for interest Tn Zase of wrongful neglect or refusal by the seller to deliver the goods, the buyer has the right to repudiate the contact of sale. When the contrat of sae is | repudiated, the buyer shall be entitled to refund of price, if he has already paid | the price. Also, the buyer may sue the seller for recovery of interest 74 J } } ; a i ’ 1 i 1 i 1 t t Pans a1. General rule- 2.__Exceptions: Title by estoppels — - | Sale by a | | mercantile agent Sale by a joint owner | representation to be true, acted on the faith of such representation, | conditions are satisfied: _323 “TRANSFER OF TITLE BY NON-OWNERS _ (Sec. 27, 28, 30 & 54) “No one can transfer a better title than he himself has” Where a person makes @ representation (whether expressed or implied) to another person that certain state of things exist, he can be estoppels from denying the validity of such representation if some person has, believing such A sale by mercantile agent shall pass a valid title to the buyer even though such sale is not made as per the directions of the seller, if the following conditions are satisfied: {a) The sale is made by a mercantile agent in the capacity of mercantile agent. . (b) © The goods came into the possession of the mercantile agent with the, consent of the seller. (©) The saie is made by the mercantile agent acting in the ordinary course of business (@)__ The buyer buys the goods in good faith Assale by one of the joint owners shall pass a valid ttle o the buyer even though such sale is not made with the consent of other joint owners, if the follo (@) The goods are in the sole possession of one joint owner. (b) The goods came into the possession of the joint owner with the consent of other joint owner. (©) ~The buyer buys the goods in good faith, ie. the buyer has no knowledge of the fact that the goods are owned jointly. | Sale by a person | A re-sale of goods by a buyer shall pass a valid title to the new buyer, if the | in possession _| following conditions ate satisfied: under a (a) A person buys the goods under an avoidable contract. avoidable (6) Such buyer resells the goods to a new buyer. contract (©) Atthe time of resale, the avoidable contract (under which the buyer had acquired the goods) has not been rescinded by the original seller, (@) The new buyer buys the goods in good faith, ie. the new buyer has no | knowledge of the fact that the goods were acquired by the buyer under a Voidable contract. Sale by aseller | A seller, who has the possession of the goods already sold by him, may resell in possession of | such goods to a new buyer, and the new buyer shall have a valid title to such goods after their | goods, if the following conditions are satisfied sale (a) The ownership of goods has been passed to the buyer. | (@) The new buyer buys the goods in good faith, i., the new buyer had no () The seller continues to be in the possession of goods, even after their sale. (©) The seller resells the goods to a new buyer: knowledge of the fact that the goods being sold by the seller have already been sold to some other buyer. 75CPT. / MEKUAN Kis wean) soo ~ ies by a finder of goods T Sale by a finder of goods shall pass a valid title to the buyer if the condition: specified ws 169 ofthe Contract Act, 1872 are fulfilled, [ Sale Dy a Sale by a Pawnee shall pass a valid ttle to the buyer if the conditions specifiei | Pawnee u/s 176 of the Contract Act, 1872 are fulfilled. J 3.24 AUCTION SALE pene ~__{See. 64) Completion of * Bids are made by the intending buyers. : auction sale = The highest bid constitutes an offer to buy. = The acceptance of a bid by the seller results in a contract. Retraction of bid | Before completion of auction sale, the bidder has the right to retract his bid. Seller’s right to || Nature of = Right to bid in the auction himself. bid rights = Right to appoint a person to bid on his behalf. Conditions 5 ‘The seller has expressly reserved his right to bid | in the notice of auction sale. = The seller can appoint only one bidder to bid on his behalf. Fraudulent sale || Meaning TiBidding is done by the seller or any other person on behalf of the seller. While such bidding, the conditions to be followed by seller are contravened Consequences | The sale is avoidable at the option of the buyer. ‘Auction sale The seller has a right to make the sale subject to a reserve price. with ‘reserve + The auctioneer is not bound to accept the highest bid if it is bel6w the price’ or ‘upset reserve price. price” QU. Goods mean: le claims and currency money (b) Old currency notes and copyright (@ Both (b) and (c) (@) Actionable (©) Goodwill OBJECTIVE QUESTIONS (@® Formation of Contract of Sale s every kind of immovable property including : Q2. In case of an agreement to sell, subsequent loss or destruction of the goods is the liability of (a)The buyer (0) Theseller _(c) Both the buyer & seller (4) The Insurance Company Q3. X purchased papers from Y and resold them to Z, who found that the papers were infected with white ants and returned them to X. Can X return the goods to Y? (a) No (b) Yes (c) Zhas to return directly (4) None of the above 76