Unit I - Indian Contract Act and Sales of Goods Act

Faculty of Management Studies and Commerce

UM22BB242B - BUSINESS LAW (4-0-0-4-4)

INTRODUCTION TO INDIAN CONTRACT ACT

• Indian contract act 1872 is divided into two parts. deals with general principles of contract
from sections 1 to 75
• The second part deals with special contracts from section 127 - 238
• It consists of 11 chapters
• The first chapter of the Indian contract act, titled communication, acceptance and
revocation of proposals from section 3, section 9, covers the topics like what is an offer, what is
acceptable and what is a contract
• The second chapter title with voidable contracts and void agreements from section 10 to
30
• It covers the topics like agreements agreements and what is restitution
• The third chapter title with contingent contracts from section 31 to section 36. it covers
topics like what are the rules regarding contingent contracts and what are the characteristics of
contingent contract
• The fourth chapter title performance of contracts from section 37 to section 67. it covers
the topics like where contract must be performed, by whom contract must be performed, time
and place to performance of contract, performance of reciprocal promises, appropriation of
payments and contract switch not performed
• The fifth chapter title bit relations resembling those created by contacts from section 68 to
72. it covers the topics like supply of nurseries, payment by an interested person, applications to
pay for non- gratuitous act, responsibility of finder of goods
• The sixth chapter is titled with consequences of breach of contract from section 73 to
section 75
• The seventh chapter titled with sales of goods act from section 76 to section 123 which is
removed from the Indian contract act and mentioned as separate act as sales of goods act 1930
• Chapter 8 is titled with and guarantee from section 124 to 147. it covers of topics it
covers topics like what is contract of indemnity. what is contract of guarantee and discharge of
surety
• Chapter 9 standard with bailment from section 148 to section 181 it covers topics like
bailment of pledges and suits by should buy baileys or villas of wrong yours
• Chapter 10 title agency from section 182 to section 238 it covers topics like appointment
and authority of an agent and sub agent what is ratification what is
revocation of authority and what is agent duty to principal and principal duty to agent and effect of
agency on contract with third person
• Chapter 11 title with partnership act from section 239 to section 266 which is removed
and place doesn't separate act as Indian partnership act 1932

Nature of Law of contract

• The Indian contract act deals with the general principles of Law of contract and special
contracts only

• It does not deal with ads those relating in the partnership sales of goods act negotiable
instruments insurance bills and bill of lading

• The Law of the contract is not the whole agreement, not the whole of obligations.

• There are several agreements which do not give rise to legal applications. There are,
therefore, no contracts. Similarly, there are certain obligations which do not necessarily spring
from an agreement, example for, civil wrongs and quasi-contracts and judgements; of course,
these obligations are not contracted in nature, but even then, they are enforceable

• Law of contract creates jus in personam as distinguished from jus in rem.

• Jus in rem means right against or in respect of the thing’s jus in personam means a right
against or in respect of a specific person

• Jus in rem is available against the world at large jus in personam is available only against
particular persons

• A owes a certain sum of money to B, B has right to recover this amount from A, this
right can be exercised only by B against a person, this right is jus in personam

• X is the owner of a plot of land has a right to have a quiet possession and enjoyment of
that land against every member of the public similarly every member of the public is under and
obligations not to disturb x position of are enjoyment this right of x is just in rem

Essential elements of contract

• According to section 10 all agreements are called rights if they are made by a free concert
of what is competent to contract for a lawful consideration and with the lawful object or not
expressly declared to be void in order to become a contract and agreement must have the
following essential elements
• Offer and acceptance- there might be two parties to an agreement that is one party
making the offer other party accepted the terms of the offer must be definite and accept the offer
must be absolute and unconditional. The acceptance must also be according to the most
prescribed and must be communicated to the offeror
• Intention to create legal relationship- when two parties enter into an agreement their
intention was to create legal relations between them
if there are no such intentions on a party of the path, if there is no contract between them,
agreement of social or domestic nature do not contemplate legal relationship as such they are not
contracts
• Lawful consideration - An agreement to be enforceable by Law must be supported by
consideration. Consideration means an advantage or a benefit moving from one party to the other
in simple word it means something in return
• Capacity of parties- the parties to the agreement must be capable of entering the valid
contract every person is competent to contract if he has attained the age of majority and of sound
mind and not disqualified by any law to which he is subject section 11 and 12
• Free and genuine concern- it is essential to the creation of every contract that there
might be free and consent of the parties to an agreement the consent of the parties is said to be
free when they are of the same mind on all material terms of contract the parties are said to be
same mind when they agree about the subject matter of the contract in the same sense and at the
same time section 13
• Lawful object- the object of an agreement must be lawful in other words it means that
object must not be illegal immoral are opposed to the public policy section 23 of an agreement
suffers from any legal flaw it would be enforceable by Law
• Agreement not declared void agreement must have been expressly declared void in the
force in the country section 24,30,56
• Certainty and possibility of performance- the agreement must be ascertained and not
too vague or indefinite section 29, if it is vague and it is not possible to insert it's meaning, it
cannot be enforced
• Legal formalities- a contract may be made by words spoken or written as regard the
legal effects there is no difference between contract in writing and contract made with the words of
the mouth in some cases the document in which the contract is incorporated is to be stamped in
some cases a contract besides being written one has to register does where there is a statutory
requirement that the contract should be made in writing or presence of witness section 10 para
OFFER AND ACCEPTANCE

How offer is made

• Offer may be made by express word or spoken are return this is known as express offer
• An offer may also be implied from the conduct of the parties are circumference of the
cases this is known as implied offer
• When an offer is made with definite person it is called as specific offer and it can be
accessed only by the person to whom it is made
• When offer is made to the world at large is call general offer

legal rules as to offer

• Offer must be as in Law is capable of being accepted and giving rise to legal relationship
a social invitation even if it is accepted does not create legal relationship because it is not so
intended and therefore must be such as would result in a valid contract when it is accepted
• Terms and offer must be definitely an ambiguous and cetane are not loose and vague is
the term of an offer and vague or indefinite if you accept these cannot create any contractual
relationship
• But if the agreement contains imaginary for setting a vector the agreement is not void and
the grounds of it being vague
• Offer may be distinguished from a declaration of intention and an announcement
• Declaration by a person that he intense to do something gives no right or action to
another such a declaration only means that an offer will be made are invited in future are not that
in our is made now
• An invitation to make an offer or to do business- display of goods by a shopkeeper in his
window with price marked on them is not an offer but merely an invitation to the public to make
an offer to buy the goods at the market price likewise quotations, catalogues, advertisement and
newspaper for sale of an article or circular sent to the potential customer do not constitute an
offer. an invitation to the public to make an offer
• Offer must be communicated- can offer to be completed must be communicated to the
person to whom it is made unless an offer is communicated to the offeree by the offer are by his
duly authorized agent there can be no acceptance of it
• Offer must be made with a view to obtaining the assent- topper to do or not to do
something must be made with a view of obtaining the end of the one party adjust are not merely
with view of disclosing the intention of making an offer
• Offer should not contain a term of non-compliance of which they may be assumed to be
amount to acceptance- does a man cannot say that if accepted this is not communicated by a
certain time the offer would be considered as accepted
• Statement of the price is not an offer- a mere statement of prize is not constructed as an
offer to sell

Acceptance

Acceptance is an act of ascending by the offeree to an offer in other words it is a manifestation by

the offeree of his willingness to be bound by the terms of the offer

Legal rules as to acceptance

• It must be absolute and unqualified - that is it must confirm with the offer and
acceptance in order to binding must be absolute and unqualified section 7 subsection 1 in respect of
all the terms of the offer weather material or immaterial major or minor
• if the parties are not adding it on our other matters concerning the open accept as there is
no contract
• Is must be communicated to the offeror- to conclude a contract between the parties the
acceptance must be communicated in some perceptible form a mere resolve or mental
determination on the part of us to accept an offer where there is no external manifestation of the
intention to do so is not sufficient
• It might be according to the most prescribed are usual and reasonable mode- give
the acceptance is not according to the more described are some usual and reasonable mode the
offeror may intimate to the offer within reasonable time that the acceptance is not according to
the mode prescribed and the offer must be accepted in a prescribed mode only if he does not
inform the offeree is deemed to have accepted the acceptance
• It must be given within a reasonable time- If any time limit is specified acceptance
must be given within the time. If not, It is specified it will be given within a reasonable time.
• It cannot precede an offer- they accept precede and offer it is not a valid acceptance
and does not result in contract
• It much to our intention on the part of the acceptor to fill free terms of the promise
• It must be given by the parties to whom the offer is made
• It cannot be implied from silence

Communication of offer acceptance and revocation

• Communication and offer its acceptance and the revocation to be completed must be
communicated

• Mode of communication section 3- the communication of offer letter acceptance and the
revocation respectively are deemed to be made by an act or omission after party offering
accepting are you working

• When is communication completed section 4

Communication of offer section 4 para 1- the communication of an hour is complete when it

comes to the knowledge of the person to whom it is made

Communication of acceptance section 4 para 2- the communication of acceptance is complete as

against the proposer when it it put into the courts of translation to him so as to be out of the
power of the acceptor and as against the acceptor when it comes to the knowledge of the
proposer

Communication of revocation section 4 para 3- revocation means taking back recording are
withdrawal it may be revocation of offer and acceptance the communication of revocation is
complete as a gun is the person who makes it when it put in the course of transmission to the
person to whom it is made so as to be out of the power of the person who makes it

• Time for revocation of offer and acceptance

Time for revocation of proposal section 5 para 1- a proposal may be revoked at any time before
the communication of its acceptance is complete as against the proposer but not afterwards

Time for revocation of acceptance section 5 para 2- and if as again as the acceptor but not
afterwards

Loss of letter of acceptance in postal transit- acceptance is complete as organised the upper as
soon as the letter of acceptance is posted the contract is complete even if the letter of acceptance
cause as tree our last through the accident the post but in order to offer
it is important that the letter of acceptance is correctly adjust sufficient stamped and posted if it is
not correctly adjusted and sufficiently stamp the communication of acceptance is not complete
within the meaning of section 4 even if it is posted

• Contracts or telephone or telex

• Modern business is mostly done through telephone or telex.

A contract by telephone has the same effect on oral agreement enter into between the parties
when they are face to face but the offer must make sure that his acceptance is properly received
that is heard and understood by the offeror

When does an offer comes to an end

• Revocation or lapse of proper- section 6 deals with various modes of revocation of offer
according to it an offer is revoked by the communication of notice of revocation by the offer at
any time before its acceptance is completely against him

• By lapse of time if it is not accepted within the prescribed time if however, no time is
described it lapse with the expiry of reasonable time

• By non-fulfillment by the offer of a condition precedent to the acceptance

• By death or insanity of the offer

CONSIDERATION

Consideration is one of the Essential elements to support a contract consideration is a technical

term used in the sense of quid pro quo that it something in return. when a party to an agreement
promise to do something, he must get something in return this something is defined as
consideration

Legal rules as to consideration

• It must move at the desire of the promiser- enact custom duty in consideration must have
been done other desire at the request of the promise if it is done at the instance of the third
party or without the desired the promiser it will not be a good consideration

• It may move from promisee or any other person- under the English law consideration
must move from promisee. In India law, considerations memo from the promise or any other
person who is stranger promise.it is immaterial who has furnished it. But a stranger to
consideration will be able to sue only if he is party to the contract

• It may be act, forbearance or return promise- this has already been explained thus it may
be noted that the following a good considerations for a contract

Forbearance to sue- the person who could sue another for the enforcement of a right agrees
not to pursue his claim this constitutes a good consideration for a promise by the other
person these result in a benefit to the person not sold and determined to the person who
could sue

Compromise on dispute claim- compromise kind of forbearance as such the same principle as
discussed above applies to the bonafide compromise of a dispute climb even though
ultimately it might appear that the claim was fully unfounded but originally the claims
should be reasonable and the person claiming should honestly believe that it is a void
claim
• It need not be adequate- consideration as already explained means something in return
this something in return need not necessarily be equal in value of something given

• It must be real or not illusory- all the consideration need not be adequate it must be really
competent and of some value in eyes of Law. There are no real considerations in physical
impossibility, legal impossibility and uncertain consideration

• It must be something which the promissory is already bound to do- a promise to do what
one is already bound to do edelweiss general on an existing contract is not a good consideration
for a new promise since it adds nothing to pre-existing legal or contractual obligations likewise a
promise to perform a public duty by public servant it’s is not a consideration

• It must not be illegal immoral or opposed to public policy section 23- the consideration
given for an agreement must not be unlawful where it is unlawful the courts do not allow and
action on the agreement
Stranger to a contract

• It is a general rule of Law that only parties to contract may sue and be sued on the contract
this rule is known as doctrine of privity of contract

• Privity of contract marriage relationship substituting between the parties who have
entered into a contract applications it implies a mutually of will and creates illegal bought a tie
between the parties to contract

• There are two consequences of doctrine of privity of contract

• A person who is not a party to a contract cannot sue upon it even though the contract is
for his benefit and he provided consideration

• A contract cannot confirm rights or impose obligations arising android or any person other
than the parties to it does if there is a contract between a and b and c cannot enforce it

The following are the exceptions to the rule that stranger to contract cannot sue

• Trust or charge- a person in whose favour a trust our other interest in some specific
immovable properties has been created can enforce it even though he is not a part to the contract

• Marriage settlement- partition a rather family arrangements and arrangement is made in

connection with marriage partition or other family arrangements and provision is made for the
benefit of a person he may sue although he is not a party to the agreement

• Acknowledgement or estoppel- where the promisor by his conduct, acknowledgement

or otherwise constituted himself as agent of third party a binding obligation is thereby incurred by
him towards the third party

• Assignment of a contract- the assignee of rights and benefits under contract not involve
in personal skills can enforce the contract subject to the equalities between the original parties.
Thus the holder in due course of a negotiable instrument can realise the amount on it even
though there is no contract between him person liable to pay

• Contracts entered into agent- the principal can enforce the contracts entered into by his
agent provided the agent acts within the scope of this article and in the name of the principal
• Covenants running with the land- in case of transfer of immovable property the purchase
of the land with notice that the owner of the land is bound by certain conditions or covenants
Created by an agreement affecting the land shall be bound by them all the he was not party to the
original agreement which contained the conditions or covenants

A contract without consideration is void- exceptions

• Love and affection

• Buy a registered agreement
• Compensation for voluntary services
• Promise to be a time barred debt
• Completed gifts
• Agency
• Charitable subscription

CAPACITY TO CONTRACT

Capacity here means competence of the parties to enter into a valid contract according to section
10 an agreement becomes a contract if it is entered into between the parties who are competent to
contract

According to section 11 every person is competent to contract who is age of majority

According to the Law to which he is subject is a sound mind and not disqualified from contracting
by any law to which he is subject the section 11 declared the following persons to be incompetent
their contract

• Minor
• Person of unsound mind
• Person is disqualified by any law to which they are subject

Minors

• According to section 3 of Indian majority act 1875 a minor is a person who has not
completed 18 years of age. in the following two cases attains majority after 21 years of age
• Where a guardian of a minor person or property has been appointed under the guardian
and wards act 1890
• Where the superintendence of the minor property is assumed by the court of wards

• The first role is that the Law protects - against their own in experience and organised the
possible improper designs of those more experienced
• it has been rightly observed in support of this argument that the Law protects minor
person reserves the right and estates and assist them in their pleading the judges on their
counselor, the jury their servants and the Law in their guardian

Person of unsound mind

• One of the essential conditions of competency of parties to contract is that they should be
of reminder section 2a lays down a test of soundness of mind
• it reads as follows a person is said to be a sound mind for the purpose of making a contract
if other time when he makes it he is capable of understanding it and of forming a rational
judgement as it affects upon his interest

• A person who is usually of unsound mind but occasionally of sound mind may make a
contract when is of sound mind

• A person who is usually of sound mind but occasionally of unsound mind may not make
a contract when is of unsound mind

• A sane person who is deliveries from fever are who is so drug that he cannot understand
the terms of contract are from a rational judgement as to eat effects on his interest cannot contract

Contract service person of unsound mind

lunatic- a A lunatic is a person who is mentally Deranged due to some mental strains or others
personal experiences. hi support from intermittent intervals of the sanity and Insanity. we can
enter into contract during the period when he is of sound mind
aur
Idiots- is a person who has completely lost his mental powers. He does not exhibit understanding
of even ordinary matters and it is a permanent whereas lunacy denotes periodical insanity with
lucid intervals. an agreement of an idiot like that of a minor is void
Drunken- a drunken person suffers from temporary capacity to contract that is the time when he
is so drunk or intoxicated that he is incapable of of farming original judgement. The position of
drunken or intoxicate person is similar to that of lunatic

Agreements entered into by a person of unsound Mind divide

However, person of unsound mind or liable for necessities supplied to them to anyone who they
are legally bound to support but even in such cases no personal liability attached to them it is
only their estate which is liable section 68

Other persons

Alien enemies- and alien the subject of a foreign state is a person who is not a subject of the
republic of India he may be alien friend or alien enemy

Contract with the alien enemy subject to certain restrictions are valid contract with an alien
enemy may be studied under two heads namely contract during the war and contract made before
the war during the condition of the war and alien enemy can neither contract with an Indian
subject nor can he sue in Indian contract he can do so only after he receives a license from the
central government

Foreign sovereign, diplomatic staff and a accredited representatives of foreign state-

They have some special privilege and generally cannot be sued unless they are other one submits
the jurisdiction of our law court. they can read the contract and enforce those contracts and other
courts but an Indian citizen has stopped and appreciated sanction of central government in now
to see them in our courts

Corporations- A corporation is an artificial person created by Law having a legal existence apart
from its members it may come into existence by special act of registration for registration of the
companies act 1956 as regards a statutory corporation that is corporation formed by the special
act of the legislature is limited by the statue governing it

Insolvents- When a debtor is adjusted in solvent his property which in the official receiver
official assignee as such the installment is deprived of his power to deal in the property is only
the official receiver official assignee.
You can enter into a contract related to his property and so can be sued for his behalf the
insolvent also suffer from certain disqualifications which are removed when the court passes are
an order of discharge Kerala

Convicts- A contract and undergoes imprisonment is incapable of entering into a contract he

can enter into contract
He can however enter into or sue on a contract if he is lawfully at large under the license of ticket
of leave. This and capacity of contract or to show on a contract come to an end when the period
of sentence expires or when he is pardoned.
The convict however does not suffer from the progress of law limitations limitation is held in
abeyance during the period of his sentence

FREE CONSENT
• All agreements are contracts if they are made by the free consent of the parties
• Two or more persons are said to consent when they agree upon the same thing in the
same sense sec 13
Consent is said to be free when it is not caused by
• Coercion- sec 15
• Undue influence- sec 16
• Fraud- sec 17
• Misrepresentation – sec 18
• Mistake subject to the provision- sec 20,21 and 22

Coercion is the is the committing or treating to commit any forbidden by the Indian panel code
1860 or unlawful detaining or treating to detain, any property, to the prejudice of any person
whatever with the intention of causing any person to enter into an agreement - sec 15

• It includes fear, physical compulsion and menace to goods

Case- a threatens to shoot b if b does not release a from a debt which a owes to b. B releases a
under the threat. The release has been brought about by coercion

• Threat to commit suicide- does it amount to coercion?

Yes threat to commit suicide is coercion

Case- chikham amiraju v seshamma . In this case, a person held out a threat of committing suicide
to his wife and son if they did not execute a release in favour of his brother in respect of certain
properties . The wife and son executed the release deed under the threat

• A contract is said to be induced by undue influence where the relations subsisting

between the parties are such that one of the parties is in a position to dominate the will of the
offer, and uses that position to obtain an unfair advantage over the other.

Case- A having advanced money to his son B during his minority obtains upon b coming of age ,
by misuse of parental influence, A bond from B for a greater amount than the sum due in respect
of the advance. A employs undue influence.

• Misrepresentation is a mis-statement of a material fact made innocently with an honest

belief as to its truth or non- disclosure of a material fact, without any intent to deceive the other
party
Case- A while selling his mare to B, tells him that the mare is thoroughly sound. A genuinely
believes the mare to be sound although he has no sufficient aground for the belief. Later on, B
finds the mare to be unsound. The representation made by A is misrepresentation

• A wrong statement of facts made to a third-party person with the intention of

communicating it to the plaintiff, also amounts to misrepresentation
Case- A told his wife with in hearing of their daughter that the bridegroom proposed for her was
a young man. The bridegroom however was over sixty years. The daughter gave her consent to
marry him believing the statement by her father.

Fraud exists when it is shown that a false representation has been made by
• 1. knowingly
• 2. without belief in its truth
• 3. recklessly, not caring whether it is true or false
• 4.the maker intends the other party to act upon it

• There must be a representation or assertion and it must be false

Case- The prospectus of a company did not refer to the existence of a document disclosing
liabilities. This gave the impression that company was prosperous. If the existence of the
document had been disclosed the impression would have been quite different

• The representation must relate to a material fact which exists now or existed in the past
Case- A while negotiating with B for the sale of specific goods tells him that the goods cost him Rs
2000. This is a statement of fact. But if he states that the goods are worth Rs 2000, this is a
statement of opinion.
• The other party must have been induced to act upon the representatives or assertion Case-
A brought shares in a company on the faith of a prospectus which contained an untrue
statement that one B was a director of the company. A had never heard of B and therefore, the
statement was immaterial from his point of view. A claim for damages in this case was dismissed
because the untrue statement had not included A to buy the shares

Mistake is erroneous belief about something. It may be a mistake of Law and a mistake of fact
Mistake of Law- mistake of Law of the country, mistake of Law of a foreign country
The general rule of Mistake of Law of the country is that ignorance of Law is no excuse
Mistake of the foreign country is regarded as a mistake of fact

Mistake of fact, it may be a

1. Bilateral mistake – where both the parties to an agreement, are under a mistake as to a matter of
fact essential to the agreement, the agreement is void sec 20
• Mistake must be mutual
Case- A agreed to purchase B motor car which is lying in B garage. Unknown to either party, the
car and garage were completely destroyed by fire a day earlier. The agreement is void

• Mistake must relate to matter of fact essential to the agreement

Case- A man and a women entered into a separation agreement under which the man agreed to
pay a weekly allowance to the woman, mistakenly believing themselves lawfully married. Held
the agreement is void as there was mutual mistake on a point of fact which was material to the
existence of the agreement
• Mistake as to the subject matter
Case- A agrees to buy from B a certain horse. It turns out that the horse was dead at the time of
the bargain, though neither party was aware of the fact. The agreement is void

• Mistake as to the possibility of performing the contract

Case- A contract for the hire of a room for witnessing the coronation procession of Edward VII
was held to be void because, unknown to the parties ,the procession had already been cancelled

2. Unilateral mistake- where only one of the parties is under a mistake as to a matter of fact the
contract is not voidable sec 22. there are however two exceptions to this rule:

• Identity of the person contracted with

Case- blenkarn ordered by letter goods from Lindsay and signed it in such a way that Lindsay
believed it came from the well-known firm of blenkarn & co. Held there was no contract between
Lindsay and blenkarn as Lindsay never intended to deal with blenkarn, having never heard of him

• Mistake as to the nature of contract

Case- M an old man of poor sight, endorsed a bill of exchange thinking that it was a guarantee.
Held there was no contract on the grounds that the mind of the signer did not accompany the
signature

Consideration or object unlawful

An agreement is a contract if it is made for a lawful consideration and with a lawful object sec
10
Every agreement of which the object or consideration is unlawful is void. The consideration or
object of an agreement is unlawful
• if it is forbidden by Law
Case- A promise to obtain for B an employment in the public service and B promise to pay Rs. 1000
to A. the agreement is void, as the consideration is unlawful.

• If it is of such a nature that if permitted, it would defeat the provision of any law
Case- A was licensed under a excise act to run a liquor shop. The act forbade the sales, transfer
or sub-lease of the license or the creation of partnership to run the shop. A took B into partnership.
Held the agreement was void

• If it is fraudulent
Case- A being agent for a landed proprietor, agrees for money, without the knowledge of his
principal, to obtain for B a lease of land belonging to his principal. The agreement between A and
B is void, as it implies a fraud by concealment by A on his principal

• If it involves or implies injury to the person or property of another

Case- B borrowed Rs 100 from L and executed a bond promising to work for L without pay for a
period of two years. In case of default, B was to pay interest and the principal sum at once. Held
the contract was void as it involved injury to the person of B

• If the court regards it as immoral

Case- A who is B mukhtiar, promises to exercise his influence as such with B in favour of C, and
C promises to pay Rs 1000 to A. The agreement is void, because it is immoral
LEGALITY OF OBJECT

• An unlawful agreement is one which, like a void agreement, is not enforceable by Law
Case- L lends Rs 5000 to B to help him purchase some prohibited goods from T, an alien enemy.
If B enters into an agreement with T, the agreement will be illegal and the agreement between B
and L shall also become illegal, being collateral to main transaction which is illegal. L
cannot recover the amount. He can recover the amount if he did not know of the purpose of the
loan

• No action can be taken for the recovery of money paid or property transferred under an
illegal agreement and for breach of an illegal agreement

• In case of equal guilt in an illegal agreement, the position of the defendant is better than
that of the plaintiff. The plaintiff (innocent party) however sue to recover money paid or property
transferred

• Whether illegality is severable- Yes

• Reciprocal promises (sec 57) where person reciprocally promise, firstly to do certain
things which are legal and secondly under specified circumstances to do certain others which are
illegal, the first set of promises is a contract, but the second is a void agreement
Case- A and B agree that A shall sell B a house for Rs 10000 but that if B uses it as a gambling
house, he shall pay a Rs of 50000 for it

• Alternative promise, one branch being illegal (sec 58)

Case- A and B agree that A shall pay B Rs 1000 for which B shall afterward deliver to A either
rice or smuggled opium. This is a valid contract to deliver rice and void contract to deliver
opium

• Agreements void, if consideration and objects unlawful in part (sec 24)

Case- A promise to superintend on behalf of B a legal manufacture of indigo and an illegal traffic
in other articles. B promise to pay A a salary of Rs 90000 a year. The agreement is void, the
objects of A promise and the consideration for B promise being in a part of unlawful

An agreement is said to public policy when it is injurious to the welfare of the society or it
tends to be harmful to the public interest.
• The following agreement are or have been held to be, opposed to public policy:
Agreements of trading with enemy
• Agreement to commit a crime
Case- A promise to indemnify B in considerations of his beating C. The agreement is opposed to
public policy

• An agreement which interferes with the administration of justice

Case- A promises to drop a prosecution which he has instituted against B for robbery, and B
promises to restore the stolen property

• Trafficking in public offices and titles

Case- R paid A sum of Rs 15000 to A who agreed to obtain a seat for R son in a medical college.
On A failure to get the seat, R filed A suit for the refund of the money of Rs 15000.Held the
agreement is void on the grounds of public policy

• Agreement tending to create interest opposed to duty

Case- P directs A, his agent to buy, a certain house for him. A tells P that it cannot be brought
and buys the house for himself. P may, on discovering that A has bought the house, compel A to
sell it to him(P) at the price A gave for it.

• Agreements in restraint of parental rights

• Agreements restricting personal liberty

Case- A debtor agreed with his money lender that he would not , without the lender's written
consent, leave his job or borrow money, or dispose of his property, or change his residence .
Held the agreement was void

• Agreement in restraint of marriage

Case- P promised to marry L only and none else and to pay L a sum of Rs 2000. if he married
someone else. P married X, held L cannot recover the sum

• Marriage brokerage
• Agreements interfering with marital duties
• Agreements to defraud creditors or revenue authorities
• Agreements in restraint of trade

Trade combinations
• Traders and manufactures in the same line of business normally form associations to
regulate business or to fix prices.
• The regulations as to the opening and closing of business in a market, licensing of trades,
supervision and control of dealers and the mode of dealing are not unlawful even if they are in
restraint of trade
Case- An agreement between certain ice manufacturing companies not to sell ice creams below
the stated price and to divide the profits in a certain proportion is not void under sec 27

• A combination to regulate supply and maintain price is not necessarily disadvantages to

the public and such is not opposed to public policy
• An agreement among the members of a society of hop growers to deliver all hops grown
by them to the society which was to sell the hops and divide the profit among the members is
valid. But the combinations tend to create monopoly and which is against public interest is void

Service contracts
• Sometimes an employee by the terms of his service agreement, is prevented from
accepting
1. Any other engagement during his employment
2. A similar engagement after the termination of his service

• In the first case it is valid and is not restraint of trade

Case- the doctors are usually debarred from private practice during the terms of their employment

• In the second case it is void if its object is merely to restrain competition by an employee
in his employer business

• Therefore, a restraint on an employee not to engage in a similar business or not to accept a

similar engagement after the termination of his services is void

• If a restraint is intended to protect an employer against an employee making use of trade

secrets learned by him in the course of his employment, the restraint is valid provided it is not for
any other purpose also

Case- A was chiefly engaged in making glass bottles. B, his works manager, was instructed in
certain confidential methods concerning correct mixtures of gas and air in the furnaces B agreed
that during the five years after the termination of his service, he would not carry on in the United
Kingdom, or be interested in, the glass bottle manufacturing.

• Held A was entitled to protection and that the restraint was reasonable

Case-H employed A on a highly skilled work with access to the manufacturing data in his Spare
time A worked for B On a similar work in competition with H, held A was it breach of his duty
and could be restrained from working for B

Case- A Taylor employed as his assistant L under a contract by which L agreed on the
termination of employment not to carry on business as a tailor with it 16 kilometres of
establishment of A establishment

VOID AGREEMENTS

Void agreements
A void agreement is one which is not enforceable by Law
The following agreements have been expressly declared void
• Agreement with an incompetent person- Sec 11
• Agreements made under a mutual mistake- Sec 20
• Agreement the consideration or object of which is unlawful -Sec 23
• Agreement is the consideration or object of which is unlawful-Sec 24
• Agreement made without consideration- Sec 25
• Agreements in restraint of trade- Sec 27
• Agreement in restraint of legal proceedings- Sec 28
• Agreement the meaning of which is uncertain- Sec 29
• Agreements by way of wager- Sec 30
• Agreements contingent on impossible events- Sec 36
• Agreements to do impossible acts- Sec 56
• In case of reciprocal promises- Sec 57
• Agreements in the meaning of uncertain- Sec 29

• The Uncertainty may be because of existence, quantity, quality, price or title to the
subject matter
Case- A agrees to sell to B 100 tons of oil. There is nothing to show what kind of oil was intended.
The agreement is void for uncertainty
A Wagering agreements or wager – Sec 30

• A wagering agreement is an agreement to pay money or money’s worth on the happening

or not- happening of a uncertain event

• Wagering agreements are void in India in the states of Maharashtra and Gujarat, however
they have been declared to be illegal

• The collateral transactions of such wagering agreements in the states of Maharashtra and
Gujarat also become illegal. In the rest India it is legal

Ex-An agreement or a share market transaction, to settle the differences between the contract
price and the market price of certain goods or shares on a specific day is a wagering transaction
Ex- A lottery, which is game of chance is a wagering agreement

Essentials of Wagering Agreement

• Promise to pay money or money’s worth
• uncertain event
• Each party must stand to win or loose
• No control over the event
• No other interest in the event

Contingent contract

• A contingent contract to do or not to do something on the happening of an event becomes

void when the event becomes impossible- Sec 32
• A contingent contract is a contract to do or not to do something, if some event, collateral to
such contract does or doesn't not happen- Sec 31
Ex- A contracts to pay B a sum of money when B marries C. C dies without being married to B.
The contract becomes void

• A voidable contract becomes void when the party whose consent is not free repudiates
the contract
Case- A by misrepresenting certain facts to B, enters into contract with B. B comes to know of the
misrepresentation and repudiates the contract. When B repudiates the contract, it becomes void
• A contract becomes void by supervening impossibility or illegality sec 56 para 2
Case- A contracts to take in cargo fr B at a foreign pot. A government afterwards declares war
against the country in which the port is situated. The contract becomes void when war declared.

Restitution

• It means return of the benefits received from plaintiff under a void contract.

• The principle of restitution is that the defendant who has been unjustly enriched at the
expense of the plaintiff is required to make restitution to the plaintiff

Case- A pays B Rs 1000 in consideration of B promise to marry C, A daughter. C is dead at the

time of the promise. The agreement is void but B must repay Rs 1000

• Section 64 and 65 which deals with restitution are reproduced as

consequence of rescission of voidable contract and when a person at whose option a contract is
voidable rescinds it the other party thereto not perform any promise therein contained in which
he is promisor sec 64

• when an agreement is discovered to be void contract becomes void

• Any person you have received any advantage and such agreements are contract is bound
to restore it how to make compensation for it to the person from whom he received it - Sec 65

Case- A pays B rupees thousand in consideration of B promise to marry C who is A daughter C

is dead at the time of promise the agreement is void but B Must repay rupees thousand to A

• Sec 65 applies to contract discovered to be void and contracts which becomes void. It
does not apply to-

1. contracts which are known to be void when they are entered into
2. contracts of parties who are incompetent to contract- Minor
PERFORMANCE AND DISCHARGE OF CONTRACTS

Offer to Perform

• Performance of a contract takes place when the parties to the contract fulfil their
obligations arising under the contract within the time and in the manner prescribed
• Sec 37 (para 1) lays down that the parties to a contract must either perform or offer to
perform their respective promises, unless such performance is dispensed with or excused

Rules regarding contingent Contract

• It must be unconditional.
Case- D a debtor offers to pay to C, his creditor, the amount due to him on the condition that
C sells to him certain shares at cost. This is not a valid tender
• It must be of the whole quantity contracted for or of the whole obligations
Case- D a debtor, offers to pay C, his creditors, the amount due in instalments and tenders the
first instalment The tender is not of the whole amount due and hence it is not a valid tender

• It must be by a person who is in a position, and willing to perform the promise

• It must be made at the proper time and place

Case- D owes C Rs 100 payable on the 1st of august with interest. He offers to pay on the 1st
July the amount with interest up to the 1st of July. It is not valid tender as it is not made at the
appointed time

• Contracts which need not be performed

• When its performance becomes impossible - Sec 56
• When the parties to it agree to substitute a new contract for it or to rescind or alter it - Sec
62

Contracts which need not be performed

• When the promisee dispenses with or remits, wholly or in part, the performance of the
promise made to him or extends the time - sec 63
• When the person at whose option it is voidable, rescinds it- sec 64
• When the promisee neglects or refuse to afford the promiser reasonable facilities for the
performance of his promise - sec 67
By whom must contract be performed
• Promiser himself
• Agents
• Legal representatives
• Third person
• Joint promiser

Devolution of joint liabilities

• Devolution means passing over from one person to another

• Sec 43 lays down three rules as regard performance of joint promises
• Any one of the joint promisers may be compelled to perform
Case-A, B and C jointly promise to pay D Rs 3000. D may compel all or any or either A or B or c
to pay him Rs 3000

• A joint promiser compelled to perform may claim contribution

Case- A, B and C are under the joint promise to pay D Rs 300. A is compelled to pay the whole
amount to D. He may recover Rs 100 each from B and C

• Sharing of loss arising from default

A, B and C are under joint promise to pay D Rs 3000. C is unable to pay anything and A is
compelled to pay the whole sum. A is entitled to receive Rs 1500from B

• Release of a joint Promiser- Sec 44

Case-D1, D2, and D3 jointly owe a debt to C. C releases D1 from his liabilities and files a suit
against D2 and D3 for payment of the debt. D2 and D3 are not release from their liability nor is
D1 discharged from his liability to D2 and D3 for contribution

• Devolution of joint rights Sec 45

Case- B and C jointly lend Rs 5000 to A who promises B and C jointly to repay them that sum
with interest on a day specified. B dies. The right to claim performance rests with the
performance rests with the representatives of both B and C jointly

Discharge of contract
• Discharge by breach of contract
Breach of contract means a breaking of the obligations with a contract imposes. it covers when a
party to the contract without lawful excuses does not fulfill his contractual obligations are by his
own act makes it impossible that he should perform his obligations under it confirms a right of
action for damage on the injured party

• Discharge by operations of Law a contract may be discharged independently of the wishes

of the parties that is by operation of the Law this include discharge by death by merger by
insolvency by unauthorized alteration of the terms of a written agreement by rights and liabilities
becoming vested in the same person

• Breach of contract may be actual breach of contract or anticipatory or constructive

breach of contract

actual breach of contract it may take place

• at the time when the performance is due
• during the performance of the contract

• Anticipatory breach of contract - it occurs when a party to an execute the contract

declares his intention of not performing the contract before the performance is due, he may do so
• When by expressly renouncing his obligations under the contract
• By doing some act so that the performance of his promise becomes impossible

• The rights of the promisee in case of anticipatory breach of contract are as follows
• He can treat the contract as discharged so that he is absolved of the performance of his
part of the promise
• He can immediately take legal action for a breach of contract are wait till the time

• A agrees to deliver to b five bags of wheat on 1st January he does not deliver the wheat
on the day this is breach of contract
• Case- C contracted with railway company to supply its three thousand tonnes of railway
tickets at a certain price to be delivered in installments after 1787 tons has been supplied the
railway company asked c to deliver no more held c could bring an action for breach of contract
• A undertakes to supply certain goods to b on 1st January before this date inform b that he
is not going to supply the goods this is anticipatory breach of contract by express repudiation
• A promise to assign to b within 7 years from the date of his promise all his interest in a
 lease for the sum of 140 rupees before the end of 7 years he has assigned his interest to another
person held this was anticipatory breach of contract by implied repudiation.

Meaning of Sales of Goods

Contract of sale of goods

• A contract of sale of goods is a contract whereby the seller transfer or agrees to transfer the
property of the goods to the buyer for a price.
• There may be a contract of sales between one part owner and another according to Section
4 (1)
• A contract of sell may be absolute or conditional according to Section 4(2)

Essentials of the contract of sales

• Two parties
• Goods
• Price
• Transfer of general property
• Essential elements of valid contract
Sale and agreement to sell-
• When under a contract of sale the property of goods is transferred from Seller to the buyer
the contract is called a sale.
• Where the Transfer of 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
according to Section 4(3)
• Agreement to sell becomes a sale when the time elapses or the conditions are subject to
which the property of the goods is to be transferred.

Sales and Hire Purchase

• A Hire purchase is the contract whereby the owner of the goods lets them on hire to another
person called hirer or hire purchase on payment of rent to be paid installment, and upon an
agreement that when a certain number of such installments is paid, the property in the
goods will pass to the hirer
• The position of the hire- purchaser is that of the bailee
• The hire purchaser has an option to terminate the contract at any stage, and cannot be forced
to pay the further installment

Subject Matter of Contract of Sale

Goods from the subject matter of a contract of a sale
• According to section 2(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 farming part of the land
• which are agreed to be served before sales are under the contract of sales.
• Trademarks, copyrights, patent rights, Goodwill, electricity, water, gas are all goods
• Actionable claims and money, are not goods
Classification of goods
The goods which form the subject of the contract of sales may be either existing goods or future
goods section 6(1), or contingent goods according to Section 6(2)
• Existing goods
• Future goods
• Contingent goods

Effect of destruction of goods

A. Goods perishing before making of contract- sec 7 -
case- A agrees to sell a horse to B who tells a that they need the horse for riding to Mumbai
immediately the horse is ill at the of time of agreement. Both A and B are ignorant of this fact. This
agreement is void
B. Goods perishing after the agreement to sell but before the sale is effected Sec-8

Document of title to goods:-

A document of title to goods is one which enables its possessor to deal with the goods
described in it as if he were the owner.
• It must be used in the ordinary course of business
• The undertaking to deliver the goods to the possessor of the document must be
unconditional
• The possessor of the document, by virtue of holdings such documents must be entitled to
receive the goods unconditionally

The price

• The price in a contract of sales means the money consideration for sale of goods according
to section 2 (10)
• It forms an essential part of a contract, and it must be expressed in money
• It is not essential that the price should be fixed at the time of sales it must however be
payable though it may not have been fixed

Section 9(1)-
• Price in a contract of sale may be fixed by the contract itself or left to be fixed in
agreement manner or determined by the course of dealing between the parties
Section 9(2)-
• In the absence of the price the buyer must pay to the seller a reasonable price

Section 10 subsection 1-
• The parties agree to sell and buy good on the terms that the price is to be fixed by the
valuation of third party
• If such third party cannot a does not make such valuation the agreement becomes void.
• But if the goods have any part thereafter have been deliver to and appropriated by the
buyer, he shall pay a reasonable price therefor
Section 10 subsection 2-
• If the third party is prevented from making the valuation by the fault of the seller or buyer
the party not involved may maintain a suit for damage against the party in fault
Stipulation of time sec 11-
A. Stipulations relating to the time of payment
B. Stipulations not relating the time of payment

Conditions and Warranties

Conditions and Warranties

• A stipulation in a contract of sale with reference to goods which are subjects there of may
be conditioned or warranty section 12(1)
• Condition- section 12(2) - Condition is a relation which is essential to the main purpose
of the contract it goes to the root of the contract it's not fulfillment updates or upsets the
very basis of the contract
• Warranty-section 12(3)- Warranty is a stipulation which is Collateral to the main purpose
of the contract
Difference as to value-
• A condition is a stipulation which is essential to the main purpose of the contract.
• A warranty is a stipulation which is Collateral to the main purpose of the contract
Difference as to breach-
• If there is a breach of a condition the aggrieved party can repudiate at the contract of sales
• In case of breach of warranty the aggrieved party can claim damages only
Difference as a treatment –
• A breach of condition may be treated as breach of warranty this would have
happened where aggrieved party is contended with damages only
• A breach of warranty however cannot be treated as a breach of condition
Implied Conditions

• Express conditions are those which expressly provided in the contract

• Implied conditions are those which the law implies under the contract unless the parties
stipulate to the contrary

1. Condition as a title section 14(a)-

Case- R brought a car from D and used if for four months. D had no title to the car and
consequently R had to hand it over to the true owner. Held R could recover the price paid

2. Sales by description- Section 15

Case- A ship was contracted to be sold as a copper fastened vessel to be taken with all faults,
without any allowances for any defects whatsoever. The ship turned out to be partially copper
fastened. Held the buyer was entitled to reject

Sales by description as well as by sample- Section 15

Case- In a contract for the sale of quantity of the seeds described as common English sainfoin the
seed supplied was of different kind, though the difference was not discoverable except by sowing.
The defect also existed in a sample. Held the buyer was entitled to recover damages for the breach
of condition

Conditions as to merchantability - Section 16 (2)

Case- A manufacture supplied 600 horns under a contract. The horns were found to be dented,
scratched and otherwise of faulty manufacture. Held there were not merchantable quality and
therefore the seller suit for price was dismissed

Conditions implied by customs-

For instance, bottle of milk is purchased the Purchase for which it is purchased is implied in the
thing itself in such a case the buyer need not tell the seller the purpose for which he buys the goods

Sale by sample-
• A contract of sale is a contract for sale by a sample where there is a term of the contract,
express or implied to that effect
• In case of 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 double
with sample
c. That the goods shall be free from any defect
Condition as to wholesomeness-
• In the case of eatables and provisions in addition to the implied condition as to
merchantability there is another implied condition that the goods shall be wholesome
•
Case- F brought milk from the milk contain gems of typhoid fever, F wife took the milk and
got infection as a result of which she died. F could recover damages.

Implied Warranties

Warranty of Quiet possession sec 14 (b)-

• In a contract of sale unless there is a contrary intention, there is an implied warranty that the
buyer shall have and enjoy quiet possession of the goods.
• If the buyer is in any way distributed in the enjoyment of the goods in consequences of the
seller defective title to sell. He can claim damages from the seller

Warranty of Freedom from Encumbrances sec 14 (c) -

• In addition to the previous warranty, the buyer is entitled to further warranty that the goods
are not subject to any change or right in favour of third party.
• If his possession is anyway distributed by reason of existence of any charge for
encumbrance of the goods in favour of third party, he shall have a right to claim damages
for breach of this Warrant

Warranty as to quality or fitness by usage of trade

Sec 16(4)-
 • An implied warranty as to quality or fitness for a particular purpose may be annexed by the
usage of trade

Warranty to disclose dangerous nature of goods-

• Where a person sells goods knowing that the goods are inherently dangerous or they are
likely to be dangerous to the buyer and that the buyer is ignorant of the dangers, he must
warn the buyer of the probable danger otherwise he will be liable in damages

Caveat Emptor

This means “let the buyer beware”.

Case- H bought oats from S a sample of which had been shown to H. H erroneously thought
that the oats were old. The oats were however new. Held H could not avoid the contract

Transfer of property

Property, possession and risk

• There are three stages in the performance of a contract of sales of goods by a seller
1. The transfer of property in the goods
2. The transfer of possession of the goods
3. The passing of the risk
• Transfer of the property in goods from the seller to the buyer is the main object of a
contract of sales
• It is important to know the precise moment of time at which the property in goods passes
from the seller to the buyer for the following reasons:
• Risk follows ownership
• Action against third parties
• Insolvency of the seller or the buyer
• Suit for price
• Property in goods means the ownership of goods whereas possessions of goods refer to
custody or control of goods

Passing of Property
The primary rule for ascertaining when the property in goods passes to the buyer are as follows
1. Goods must be ascertained
Case- under a contract of sales B was entitled to cut teak trees for more than 12 inches girth. The
stems of the trees after cutting had to be 3 inches high. Held in this circumstances property the
timber that was cut good pass to B when the trees were felled. Till the trees were felled there were
not ascertained

2. Intention of the parties

Case- S offered to sell B a certain machine for rupees 5000. B refused to buy it unless certain work
was done on it to put it into proper running condition. S replied that B could get it done himself,
and when the cost of the repairs was known B might pay S rupees 5000 Less the cost of repairs. To
this B agreed and took the machine to a repair shop while being repair the machine was destroyed
without any fault of the repair man. Held the property in the machine had not passed from S to B

where the of the parties cannot be ascertained the following rules shall apply:
a. Specific goods-
- Passing of property at the time of contract
Case- B selects certain books in a shop. The price is settled. He arranges to take delivery of the
books the next day through his servant and agrees to pay for the books on the first of the next
month. The books are destroyed by fire the same evening. The property in the books has passed to
the buyer and he is bound to pay the price

- Goods not in deliverable state

Case- There was a contract for the sale of a machine, weighing 30 tons and embedded in a
concrete floor. A part of the machine was destroyed while being removed, held the buyer was
entitled to refuse to take the machine as it was not in a deliverable state.

b. Unascertained goods-
Case- In a sale of 20 bags of sugar out of a large quantity 4 were filled and taken away by the
buyer the remaining 16 bags where subsequently filled and the buyer was informed of the same the
buyer promised to take them away but before he could do so the good were lost. held the property
had passed to the buyer at the time of loss

c. Goods sent on approval-

• 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-
1. When he signifies his approval or acceptance to the seller
2. When he does any other act adopting the transaction
K delivered some jewellery to W on sale or return. W pledged it with A . Held the pledge was an
act by W adopting the transcation. As such the property in the jewellery had passed to W so that K
could not recover it from A

Sales by Non-Owners

• The general rule of law is that only the owner of the goods is any person specifically
authorized by him can sell the goods.
• If any other persons sell them, the title of the buyer will not be better than that of the seller

Exceptions-
1. Sales by a person not the owner or title by estoppel (sec 27)
Case- A tells B within the hearing of C that he (A) is the owner of certain goods which in fact
belong to C. C does not contradict A statement. After sometime B buys these goods from A. The
title of B will be better than that of A, and C will be precluded from disputing Bs title to the goods.

2. Sale by a mercantile agent- (provision to sec 27)

The buyer of goods from a mercantile agent, who has no authority from the principal to sell gets a
good title to the goods if-
 a. The agent is in possession of the goods or documents of the title to the goods with the
consent of the owner
b. The agent sells the goods while acting in the ordinary course of business of a mercantile
agent
c. The buyer acts in good faith
d. The buyer has not at the time of the contract of sale notice that the agent has no authority to
sell

3. Sale by one of several joint owners- sec 28

If one of the several joint owners, who is in sole possession of the goods by permission of the other
co-owners, sells the goods a buyer in good faith of those goods gets a good title to the goods
4. Sales by a person in possession under the voidable contract- sec 29
Case- A sells certain goods to B and promises to deliver the goods the next day. Before delivery A
sells the piano to C, who buys in good faith and in ignorance of the fraud.
C gets a good title

5. Sale by seller in possession after sale – sec 30(1)

Case- A sells certain goods to B and promise to deliver the goods the next day. Before delivery A
sells and delivers the goods to C who buys them in good faith and without notice of the prior sale
to B. C gets a good title to the goods notwithstanding that the property had, before he purchased
passed to B. B only remedy in this case is against A

Performance of Contract of Sales

• It is the duty of a seller to deliver the goods and the buyer to accept and pay for them in
accordance with the terms of contract of sale
• Delivery means voluntary transfer of possession of goods from the seller to the buyer. It
may be
a. Actual-
• where the goods are handed over by the seller to the buyer are his duly authorized agent the
deliver is said to be actual.
• Delivery of goods may also be made by doing anything which has the effect of putting the
goods in the possession of the buyer section 33
b. Symbol-
• Where goods are ponderous and incapable of actual delivery
• Examples- Handing over the keys of a warehouse to the buyer is a symbolic delivery
c. Constructive-
• where third party who is in possession of goods of the Seller at the time of sales at
managements to the Buyer that he has the goods on his behalf there takes place a delivery
by attornment is constructive delivery section 36 (3)

Case- A sells to B 10 bags of wheat lying in C godown. A gives an order to C asking him to transfer
the goods to B. C assents to such order and transfer the goods in his books to B. this is a delivery
by attornment
Rules as to deliver
• Delivery and payment account current conditions
 • Effect of part delivery
• Buyer to apply for delivery
• Place of delivery
• Time of delivery
• Goods in possession of a third party
• Cost of delivery
• Delivery of wrong quantity
• Instalment delivery

Rights of Buyer

• Right to have delivery as per contract

• Right to reject the goods
• Right to repudiate
• Write to notice of insurance
• Right to examine
• Rights against the seller for breach of contract
• Suit for damages
• Suit for price
• Suit for specific performance
• Suit for breach of warranty
• Repudiation of contract before due date

Duties of Buyer
• Duty to accept the goods and pay for them in exchange for possession
• Duty to apply for delivery
• Duty to demand delivery at a reasonable hour
• Duty to accept installment delivery and pay for it
• Duty to take risk of deterioration in the course of transmit
• Duty to intimate the seller where he rejects the goods
• Duty to take delivery
• Duty to take price
• Duty to pay damages for non-acceptance