You are on page 1of 70

Sale Of Goods Act 1930 Dtd-11-2-2013

Sec 4 (1)Defining

A contract whereby the seller transfer or agrees to transfer the property in goods to the buyer for a price. Essential characteristics: 1. Two Parties 2. Transfer of Party 3. Goods 4. Price 5. Includes both sale and Agreement to sale 6. No formalities to be observed

Section 4 – Sale and Agreement to Sale
1. The contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. There may be a contract of sale between one part owner and another. A contract of sale may be absolute or conditional. Where under a contract of sale the property in the goods is transferred from the seller to the buyer, the contract is called a sale, but where the transfer of 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. An agreement to sell becomes a sale when the time elapses; all the conditions are fulfilled subject to which the property in the goods is to be transferred.

2. 3.

4.

(Johnson Vs Macdonald 1842) A customer who picks up goods in a self-service shop is merely offering to buy them and the sale is not complete until they are paid for. It becomes a sale when the condition is fulfilled by B. Griffin) A agrees to buy A’s car for Rs. 1952) .Section 4 – Sale and Agreement to Sale       Examples: The Section may be illustrated by the following examples: A dentist agreed to make a set of false teeth for a lady and fit it into her mouth.000 provided B stands surety for him with C.(Lee vs. Held . (Pharmaceutical Society Vs Boots. This is an agreement to sell at a future date subject to the double condition of the arrival of the ship with the specified cargo on board. It is an agreement to sell for B. Agreement for sale of a quantity of nitrate of soda to arrive at a certain ship.it is a contract for the sale of goods. 50.

Unless all these elements are present there would be no sale. in order to constitute a sale. it is necessary that there should be an agreement between the parties for the purpose of transferring title to goods. that as a result of transaction. both of England and India. that it must be supported by money consideration. .Essential Requisites of Sale  In the case of (state of Madras Vs Gannon Dunkerley and Company Limited. which of course presupposed capacity to contract. 1958) the Supreme Court has held that according to the law. the property must actually pass in the goods.

the contract is probably one of a sale. there should be an agreement. to the other. in consideration of a money payment or of a promise thereof by the buyer thereof. There must be a transfer of property or an agreement to transfer it. . Exchange of property for something other than money is not a sale. It is. Both under the common law and the statute law relating to sale of goods England and in India. the seller. however. Transfer of property in goods for a price is the linch pine of the definition. from one party. But if the exchange is made partly for goods and partly for a price. to constitute a transaction of sale. expressed or implied relating to goods to be completed by passing of title in those goods. An allotment of goods among partners on dissolution of partnerships is not a sale. It is the essence of the concept that both the agreement and the sale should relate to the same subject matter. The difference between a sale and an exchange is that in the former the price is paid in money while in the latter it is paid in good by way of barter. the buyer. The essential object of the contract of sale is the exchange of property for a money price. not an inevitable rule that the price must be fixed.

have to be borne by him: and a breach by either party of the agreement will normally only give the other party a right to sue for damages. and belongs on his bankruptcy to his trusty in bankruptcy. so that they may be taken in execution of his debts. . in the absence of excess agreement. The term ‘contract of sale’ includes both actual sales and agreement for sale. the property in the goods which forms subject matter of the contract remains in the seller. which is also called an executive contract of sale. if they are destroyed the loss will. is a contract simply. and creates only a jus in personance.Sale and Agreement to Sale   An agreement to sell.

If there is default by the the hire purchaser in paying an installment. Till that time.Sale Distinguished from hire purchase  Under hire purchase agreement the goods are delivered to the hire purchaser for his use at the time of agreement but the owner of the goods agrees to transfer the property in the goods to the hire purchaser only when a certain fixed no. the owner has a right to resume the possession of the goods immediately without refunding the amount. the hirer remains the bailee and the installments paid by him are regarded as hire charges for the use of goods. as the ownership still rests with him . of installments of price are paid by the hirer.

. If the canvas and paint are also to be supplied by the painter. Held it is a contract for work and labour as the substance of the contract is the application of the skill and labour in the production of the portrait.Sales distinguished from Contract for work and labour  G engaged an artist to paint a portrait and supplied the necessary canvas and paint. it will become a contract of sales of goods.

he can follow the goods into the hands of third parties. and he can dispose of them as he likes. (The Instalment Supply Limited Vs STO Ahmedabad and others. Where goods have been sold and the buyer makes the fault.  The Supreme Court distinguished these two classes of contract – thus An agreement to sell is a contact pure and simple whereas a sale is a contract plus conveyance. while if there has been a sale. the seller may sue for the contract price on the count of ‘goods bargained and sold’ but when an agreement to buy is broken. if there be an agreement of sale. 1974.) . the buyer has not only a personal remedy against the seller but also the usual proprietary remedies in respect of the goods themselves. the loss as a rule falls up on the buyer though the goods may have never come to his position. If an agreement to sell be broken. but if there has been a sale and a seller breaks his engagement to deliver the goods. By an agreement to sale a jus in personance is caused by a sale a jus in rem also is transferred. The goods are still the property of the seller. In many cases. the buyer has only a personal remedy against the seller. by the seller. and the goods are destroyed the loss as a rule falls on the seller. Again. the seller’s normal remedy is an action for unliquidity damages. too.

Or that the delivery of payments or both shall be postponed.Formalities of a contract of sale:    Section 5: Contract of Sale . A contract may provide for the immediate delivery of goods or immediate payment of the price or both. a contract of sale may be in writing or by the word of mouth or may be impliedly or may be implied from the conduct of the parties. Subject to the provisions of any law for the time being enforced. or for the delivery or payment by instalments. .how made A contract of sale is made by an offer to buy or sell goods for a price and the acceptance of such price.

Existing goods Specific goods Unascertained goods 2. Future Goods 3.Contingent goods .Kinds of goods 1.

Where.Formalities of a contract of sale:  A statement or conduct inviting the making of an offer such as by display of goods in a shop does not buy itself bind the shopkeeper to accept the customer’s offer even at the price displayed or advertised. which is intended to be binding on the person making it and is capable of being accepted without any further negotiation. however. the accessibility to goods in intended to an offer capable of acceptance by customer’s act such as filling the petrol tank of a car from a self service pump or choosing items in a self service shop or taking goods intended for sale for an automatic vending machine the question of obtaining seller’s assent does not arise. . Such invitation to treat therefore differs from an offer.

Formalities of a contract of sale:  Sub-section 1 emphasis the consensual nature of a contract of sale. the title in goods passes immediately on the payment of price while in an agreement to sale the title in goods passes at a future time subject to conditions to be fulfilled thereafter however. the parties may agree to such terms as they think fit. . A sale can be complete even without effecting immediate delivery and immediate payment. In a contract of sale. when the goods are accepted by the buyer and the price is received by the seller the sale is deemed to be complete.

.

Goods were shipped on 30th January but the bill of lading was dated 2nd February the buyer was held entitled to reject. Examples: The section may be illustrated by the following examples 1) Sale of some stacks of oak on the sellers ground. and said that as the buyer had not paid he should not have the stacks. but the seller refused to accept it and subsequently resold the stacks. Smith 1841) 2) Sale of goods to be shipped and bill of lading to be dated December – January. Later the buyer asked for further time which the seller refused to give. The Buyer was held entitled to recover in an action of trover. 11 .Conditions and Warranties Sec.  . The buyer later tendered the price. stipulation as to time of payment are not deemed to be of the essence of a contract of sale. ( Martin Dale V/s. The seller on the expiration of 12 weeks demanded the price which the buyer failed to pay. upon the terms that they might remain there for four months and the buyer should pay within 12 weeks of the contract. Whether any other stipulation as to time is of the essence of the contract or not depends on the terms of the contract.Stipulation as to time – Unless a different intention appears from the terms of the contract.

and a subsequent resale by him will be tortious. The time cannot be taken to be the essence of the contract in case where the contract itself does not stipulate the time for payment of the price.2. treat the contract as at an end and refuse to allow the buyer to have the goods. though he may be entitled to withhold delivery until the price is paid and to resell the goods if the buyer does not pay or tender the price within a reasonable time. Stipulations as to time of payment  As punctual payment does not go to the whole consideration of the sale. in the absence of a stipulation to the contrary. entitle the seller to treat the contract as repudiated. the failure by the buyer to pay on the appointed day does not as a rule. even though it be on a date after the date name in the contract the seller cannot. . if before such resale the buyer tenders the price. Consequently.

3. Stipulations as to time of performance of other terms

As the Act deals with all kinds of contracts of sale, and not only with commercial contracts, the enactment as to stipulations as to time, other than as to payment of the price, is necessarily put in somewhat general language. If a man orders a suit of clothes, a promise by the tailor that he shall have it by a certain date would not, generally speaking, be of the essence of the contract, though it might be if he was ordering court dress for the purpose of attending a court on a particular day. But in the case of commercial contracts, although occasionally stipulations as to time may not be of the essence, the usual rule is that they are. In contracts of sales of goods, the computation of the time of performance from a particular date, act or event is prima facie exclusive of the day, act or event and inclusive of the day of performance, although this presumption may be displaced by a contrary intention appearing from the contract and its surrounding circumstances.

4. Waiver of the stipulations

Stipulations as to time may be waived by the party in whose favour they are inserted either expressly or by implication, and if he does so he cannot afterwards treat the failure to comply with them by other party as giving a right to rescind the contract. Where, however, an initial stipulation making time of the essence of the contract is waived, reasonable notice to make time again of the essence would give rise to the right to rescind. There can, strictly speaking, be no waiver after breach, but to accept goods, though delivered late, is often spoken of as a waiver of the right of action which the breach has given.

Section 12. Condition and Warranty
1. A stipulation in a contract of sale with reference to goods which are subject thereof may be a condition or a warranty. 2. A condition is a stipulation essential to the main purpose of the contract, the breach of which gives rise to a right to treat the contract as repudiated. 3. A warranty is a stipulation collateral to the main purpose of the contract, the breach of which gives rise to a claim for damages but not to a right to reject the goods and treat the contract as repudiated. 4. Whether a stipulation in a contract of sale is a condition or a warranty depends in each case on the construction of the contract. A stipulation may be a condition, though called a warranty in the contract.  Synopsis 1. Conditions and warranties 2. Express Conditions 3. Express Warranties 4. Representations 5. Implied conditions and warranties 6. Puffs

as it was .1. The result was that the courts had to decide on the construction of each section whether the word ‘warranty’ was used in the strict sense of the English Law. Conditions and Warranties  This section is in effect an additional definition or interpretation section and supplies a want long felt in India. and ‘warranty’ and draws a distinction between the two. and the difficulty had been increased by some of those meanings overlapping some of the meanings of the word ‘condition’. At the time when the Contract Act was passed the phrase ‘warranty’ had been and used with several different meanings and shades of meaning. The present Act avoids this confusion and uses the words ‘condition’. The Contract Act used the word ‘warranty’ in this ambiguous sense and did not define it. .

but also to sue for damages for breach. the failure is deemed to be a total failure of the performance. This is a condition in the proper sense. In the usual sense. and the other is at least wholly discharged. and may in addition recover damages for such failure of performance. If it is not made good. .2. the condition means an essential undertaking in the contract which one party promises will be made good. as defined in sub-s (2). Express Conditions  The parties if they wish. may put the contents of any particular statement or promise which passes between them on the same footing as the description of the thing contracted for. so that if it is not made good by the party undertaking it. not only will the other party be entitled to repudiate the contract.

the relative knowledge and means of knowledge of the parties. Whether a statement is to be regarded as warranty must be objectively ascertained by asking whether adopting the standard of a reasonable man. the other party assumed that the representor was to be regarded as undertaking legal liability for his assertions. These are warranties in the proper sense. protecting a seller in respect of misdescription. for the dealers may be in possession of special knowledge. The importance of the statement. but only to give a remedy in damages. and the possibility of verification are the relevant factors which would indicate whether the statement is a warranty. expertise and means of information not available to ordinary persons. Express Warranties  There may also be. statements may be warranties when made by dealers. though they would not be warranties if made by private sellers. may be overridden by a warranty given before the sale takes place and damages may be recovered for breach of the warranty. Thus. auxiliary promises or undertakings of which the breach is not intended to avoid the contract. and there occur in common practice. . as defined in sub-s (3). A condition of sale.3.

give rise to an action an for damages. in the absence of fraud. that is. If the representation does not form part of the contract. if it is not. is to be treated as a condition. Representations  An affirmation as regards the goods. the untruth of which will not. . It depends upon the intention of the parties whether an affirmation made at the time of. it amounts to an expression of opinion not intended to enter the bargain and its no fulfilment does not give rise to any right to a legal action. the other party is discharged from all liability. must be part of the contract. it is only a representation. if it is neither a condition nor a warranty. so that if be untrue.4. a warranty or a mere representation: and although an assertion made by the seller of a fact unknown to the purchaser may be strong evidence that it was intended as a warranty. if it is to have contractual effect. or during the negotiations for sale. though it may enable the other party to rescind the contract and sometimes a representation may amount to a condition precedent to the formation of the contract. it is not necessary so in law.

5. terms designated a conditions by the contract itself. Most of the statutory implied terms as to sellers duties as to title. that the parties intended to add such a stipulation to their contract. confirmative with description and quality. which show a contrary intention . terms similar to those or already treated as conditions in another case. The existence of an employed condition or warranty may be rebutted by proof of facts. the law annexes too many contracts. Implied Conditions and Warranty    Although the parties may have used no expressed words that would create such a stipulation. conditions. These are called as implied conditions and are enforced on the grounds that the law infers from all the circumstances of the case. but did not put it into expressed words. the breach of which may be treated by the buyer as avoiding the contract or given a right to damages. time clauses in mercantile contracts and residual category where breached of term is to be treated as giving right to treat the contract as discharged are considered as terms likely to be treated as conditions.

The extent to which a statement may be so categorised depends on the degree or obviousness of its untruth. The circumstances of its making and in particular on the expertise and knowledge attributable to the person whom it is made. Puffs A mere puff is a vague and extravagant statement so preposterous in its nature that nobody could believe that anyone was misled by it.6. .

or where the contract is for specific goods. Where a contract of sale is subject to any condition to be fulfilled by the seller. Where a contract of sale is not severable and the buyer has accepted a goods or part thereof. . 3. expressed or implied to that effect Nothing in this section shall affect the case of any condition or warranty fulfilment of which is excused by law. there is a term of a contract. 2. the property in which has passed to the buyer. the buyer may waive the condition or elect to treat the breach of the condition as a breach of warranty an not as a ground for treating the contract as repudiate.Section 13 : When condition to be treated as warranty. 1. the breach of any condition to be fulfilled by the seller can only be treated as s breach of warranty and not as ground for rejecting the goods and treating the contract as repudiated unless. by reason of impossibility or otherwise.

no property in the goods is transferred to the buyer unless and until the goods are ascertained Synopsis Transfer of property Property cannot pass until the goods are identified Part of a specific whole Property and risk Identification of goods . 4. 3. Goods must be ascertained: where there is contract for the sale of unascertained goods. 2. 5.Transfer of Property as Between Seller and Buyer Section 18 – Goods must be ascertained   1.

.1. Transfer of property  This and the five following sections of the Act deal with the question foreshadowed by section 4 of the Act and lay down rules which assist in deciding the question when the object of the contract of sale. namely. the transfer of the property in the goods to the buyer has been affected.

the ‘individuality of the thing to be delivered’ should be established. it was held that the contract was for the sale of unascertained goods and. there may be question whether this condition is fulfilled or not. It is essential that the article should be specific and ascertained in a manner binding on both the parties. the seller was to supply waste coal ash as and when it was discharged from the bunkers of the powerhouse. Where according to the terms of the contract. there is no possibility of the property passing. and it may be that the property will not pass even if it is fulfilled. the contract cannot be construed as contract to pas the property in that category. therefore no property passed to the buyer till the goods were ascertained. In any given case. Property cannot pass until the goods are identified   It is a condition precedent to the passing of the property in every case that.2. for unless that be so. but until it is. (Tej Singh Vs State of Uttar Pradesh and others 1981) .

such as a contract for sale of a certain quantity of malting barley. no property can pass until this is done (National Coal Board Vs. Gamble 1959) . And the mere fact that an order for the delivery is given by the seller to the buyer. Nor is it fulfilled even if the goods are so far ascertained that the parties have agreed that they shall be taken from some specified larger stock. and the law which only gives effect to their intention does not transfer the property in any individual portion’(White Vs. where the ascertainment of the goods depends upon their being separated from the bulk by the seller or a third party or the buyer. Part of a specific whole  It is obvious that if the contract is merely for the sale of goods by description. by their being severed. or future goods.3. Dudin & sons 1926) Thus. who holds the specified larger stock out of which the goods sold are to be taken. weighed or measured or some other process. Wilks 1813). is not sufficient to transfer the property to the buyer. ‘The parties did not intend to transfer the property in one portion of the stock more than in another. the necessary condition is not fulfilled. and is lodged by the buyer with a warehouseman.(Laurie & Morewood Vs.

such as a tree which has been felled. it would seem that there can be none in an individual part of a chattel. not property but only undivided interest in the whole bulk. . the risk usually passes with the property. In such a case. and of which the other portion is to be retained by the seller. acceptance of the delivery warrant for a certain quantity of spirit out of a larger bulk which was liable to deteriorate in storage was held to put the risk of deterioration on the buyer. even if the severance is to be done by the buyer. it is conceived. Equally. although he had acquired. the whole tree remains the property of the seller until the marked portion is severed. of which a marked portion was sold.4. Property and Risk  In this class of case. it is necessary to distinguish the passing of the property from the transfer of the risk. Thus. but may pass independently of it.

per ton.20/.(Wait & Midland Bank 1926) In State of karnataka Vs. of which delivery was taken.5. . the goods being ascertained and in a deliverable state. and occasionally they may become identified by other means. so that 850 quarters only were left in the warehouse.10 /. The West Coast Paper Mills Ltd. it was held that by this process of exhaustion the 850 quarters became ascertained goods and property therein passed to the buyer. AIR 1986 it was held that where under a contract a company was permitted to remove bamboos from the forest area at Rs. and in the meantime the seller sold the remainder of the bulk in the warehouse.per ton. Thus. the property had passed to the company. Identification of the goods  The contract itself may provide that the property shall pass on the happening of some specified event. and the government by a subsequent order enhanced the price to Rs. and the buyer took delivery of 400 quarters and pledged the remaining 850 quarters to a bank. sufficient to identify the goods. because on the bamboos being cut and extricated. it was held that the enhanced rate was no applicable to the bamboos cut although not removed prior to the date of the government order. so that the pledgee acquired a title thereto against the seller. in a case where the seller sold 250 quarters of wheat out of a larger bulk belonging to him in a warehouse.

3. Unless a different intention appears.Section 19. Property passes when intended to pass Where there is a contract for the sale of specific or ascertained goods the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred. 2. For the purpose of ascertaining the intention of the parties regard shall be had to the terms of the contract. Ascertained goods  . Principles for determining whether the property is transferred 2. Intention of the parties 3. 1. Synopsis 1. the roles contained in section 20 to 24 are rules for ascertaining the intention of the parties as to the time at which the property in the goods is to pass to the buyer. the conduct of the parties and circumstances of the case.

it becomes necessary to determine whether it has actually passed. and the rules of construction adopted by courts are those set out in Ss 20 to 24.1.the subject of the contract—are specific or ascertained. Principles for determining whether the property is transferred   When it appears that the goods -. so that it is possible for the property to pass to the buyer. This section reproduces this statement in statutory form. .

It is open to the parties to agree that the property shall pass ipso facto immediately the goods become ascertained or even that it shall pass at some time after the delivery is effected. Intention of the parties  The governing principle which should determine as to the passing of the property in the goods must be to find out what is the intention of the parties. even in the absence of such a provision. the courts would be free to give effect to the intention of the parties to a lawful contract of sale on such an important element of the contract as the transfer of the property.2. It might have been thought that. and that view has on some occasions been acted upon. The desirability of making express provisions to this effect is demonstrated by the consequences of its omission from the Contract Act. .

Unity Company Pvt. Vs.(PPLooke Vs. Diamond Sugar Mills & others AIR 1971 . NJ Mathew & others 1967) Sale of shares becomes complete as soon as property in the shares is intended to be transferred to the buyer.2. Such intention does not depend on any particular form or mode of transfer and has to be gathered from the facts of each particular case. Ltd. Intention of the parties  Where a company had transferred its plant and machinery to the finance corporation and the only right the company had was to redeem and it was clear that the company could not sell the same without the concurrence of the finance corporation it was held that the intention of the parties notwithstanding the language of the document between the company and M/s Ranga Engineering Company was to transfer the property only after obtaining the consent of the finance corporation and there was no sale until then.

therefore. which also occurs in Section 58. It is. however. Badri Prasad Vs. it was held that till it was ascertained as to which trees fell within the description they were not ascertained goods.’ Ascertained’ probably means ‘identified in accordance with the agreement after the time a contract of sale is made’. The State of Madhya Pradesh AIR 1970 SC. clear that the words ‘specific goods’ bear the meaning assigned to them in the definition clause. Sections 23 and 25. and regard must be had to the intention of the parties when considering whether the property has or has not passed in the circumstances dealt with by those sections. Ascertained goods  Then term ‘ascertained goods’. is not defined by the Act. . must also be read subject to the provisions of this section. Where teak trees to be cut were of more than 12 inches girth.3. ‘goods identified and agreed upon at the time a contract of sale is made.

The property in the haystack passed on the making of the contract and on the stack being destroyed by fire. is postponed. the hay to be allowed to remain on the seller’s land until the 1st May: no hay to be cut until the price was paid.  Examples This section may be illustrated by the following examples: 1. Baxter (1827)  . the buyer must bear the loss Tarling Vs.Section 20 Specific goods in a deliverable state Where there is an unconditional contract for the sale of specific goods in a deliverable state. or both. Sale on the 4th January of a haystack on the seller’s land at the price of £145 to the paid on the 4th February. the property in the goods passes to the buyer when the contract is made. and it is immaterial whether the time of payment of or the time of delivery of goods.

Sothern (1839)  . but was merely for the satisfaction of the buyer. The warehouseman accepts the order and enters it in his books. authorising delivery of the oats tio the buyer. the contents of a bin in a warehouse. as the weighing was not necessary to identify the oats or to ascertain the price. The property has passed to the buyer. Sale of a specified number of bushels of oats.Section 20 Specific goods in a deliverable state Examples 2. addressed to the warehouseman.. and asking the warehouseman to weigh them. Swanwik Vs. The seller gives a delivery order to the buyer.

Some of the casks are filled in the presence of the buyer. the property does not pass until such thing is done and the buyer has notice thereof. the seller that of the remainder .Section 21 Specific goods to be put into a deliverable state   Where there is a contract for the sale of specific goods and the seller is bound to do something to the goods for the purpose of putting them into a deliverable state. buy before any are removed. Minett (1089) . fire destroys the whole of the oil. filled. The buyer must bear the loss of the oil which had been put into the casks. the oil to be put into casks by the seller and then taken away by the buyer. or the remainder are filled.Rugg Vs. Example This section may be illustrated by the following example: Sale of the whole contents of a cistern of oil.

the property does not pass until such act or thing is done and the buyer has notice thereof. but the seller is bound to weigh. measure.Section 22 : Specific goods in a deliverable state . . when the seller has to do anything thereto in order to ascertain price :  Where there is a contract for the sale of specific goods in a deliverable state. test or do some other act or thing with reference to the goods for the purpose of ascertaining the price.

Zagury vs Furnell(1809)  . Simmons Vs Swift (1826) 2. it was the sellers duty to see whether the bales contain the number specified in the contract. but before anything more was done a flood carried away the remainder. Part was weighed and taken away.Section 22 Examples  This section may be illustrated by the following examples: 1. Sale of 289 specified bales of goatskin. The loss of this fell on the seller. at a certain price per dozen. containing 5 dozen in each bale. Sale of a stack of bark at a certain price per ton. By the usage of the trade. the bark to be weighed by the seller’s and buyer’s agents. The loss fell on the seller. Before the seller had done this the bales were destroyed by fire.

and does not reserve the right of disposal. 2. Delivery to the carrier . he is deemed to have unconditionally appropriated the goods to the contract.Section 23 : Sale of unascertained goods and appropriation. the property in the goods there upon passed to the buyer. 1. Such assent may be expressed or implied. and may be given either before or after the appropriation made. Where there is a contract for the sale of unascertained or future goods by description and goods of that description and in a deliverable state are unconditionally appropriated to the contract assent of the buyer or by the buyer with the assent of the seller. .Where in pursuance of the contract the seller delivers the goods to the buyer or to the carrier or other bailee (whether named by the buyer or not) for the purpose of transmission to the buyer.

Mr A contracts to sell to Mr B a certain quantity of liquor out of a big cask containing a much larger quantity.Section 23 : Sale of unascertained goods and appropriation Example  This section may be illustrated by the following example: 1.  . The buyer promises to do so. The property has passed to the buyer. and informs the buyer of this asking him to come and take them away. The property in the liquor does not pass to the purchaser. Subsequently the seller fills sixteen more hogsheads. Sale of 20 hogsheads of sugar out sugar out of a larger quantity. The seller fills four hogsheads which the buyer takes away. The required quantity is not separated or bottled. 2.

if no time has been fixed. the property therein passes to the buyer (a) when he signifies his approval or acceptance to the seller or does any other act adopting the transaction: (b) if he does not signify his approval or acceptance to the seller but retains the goods without giving notice of rejection. then. .Section 24 Goods sent on approval or ‘on sale or return’    When goods are delivered to the buyer on approval or ‘on sale or return’ or other similar terms. on the expiration of such time. and. on the expiration of a reasonable time. if a time has been fixed for the return of the goods.

must pay for them as if he had actually agreed to become the buyer. 2. who loses them. being unable to return the goods.Section 24 Goods sent on approval or ‘on sale or return’ Examples  The section may be illustrated by the following examples: 1. The defendant. and the original owner cannot recover the goods from the pledgee. Goods delivered on sale or return to the defendant are delivered by him on similar terms to another.  .Goods delivered on sale or return are pledged by the deliveree. The latter in turn hands them to a fourth person. He thereby becomes the buyer of the goods.

the goods remain at the seller’s risk until the property therein is transferred to the buyer. Provided also that nothing in this section shall affect the duties or liabilities of either seller or buyer as a bailee of the goods of the other party. the goods are at the buyer’s risk whether delivery has been made or not. but when the property therein is transferred to the buyer. . but when the property therein is transferred to the buyer.Section 26 Risk prima facie passes with property   unless otherwise agreed.

as the property in the goods had passe0d to the respective buyers and the seller. 1. Goods in a house held on lease and belonging to the tenant were sold by auction under conditions expressly providing that all lots should be taken to be delivered at the fall of the hammer. It was held that the auctioneer had no right to make this deduction. The rent of the house was in arrear. therefore. after which time they should remain at the exclusive risk of the purchaser. to prevent distress. the auctioneer. the auctioneer paid the rent and handed the net proceeds of the sale to the original owner of the goods. Sweeting Vs. and after the sale the landlord threatened to distress on these goods.Section 26 Risk prima facie passes with property   Examples This section may be illustrated by the following examples. had no further interest in them. in consequence. the tenant. Turner (1871)  . had no implied authority from him to pay the rent in order to save the goods from distress.

being the whole contents of a gola. The defendant was liable to pay the price. Ltd. the seller had been in a position to sell the goods elsewhere and acquire other goods for the postponed time of delivery and he had not done so and there was some loss in the meanwhile. paid earnest money. The West Punjab Factories Ltd. The property in the whole had passed to him and he was held liable to pay the balance of the price. The plaintiff crushed the apples. the responsibility for the loss would have fallen on him.Section 26 Risk prima facie passes with property  2. The rest was afterwards destroyed by fire. but in the present case the seller had to keep the goods ready for delivery as and when the buyer proposed to take them. put the juice in casks and kept it pending d3elivery. The Union of India Vs. The defendant contracted to purchase 30 tons of apple juice. Barden (Endeavour Wines Ltd) 1949  . The defendant delayed taking delivery and the juice went putrid and had to be thrown away. AIR 1966 SC 3. Demby Hammilton & Co. and took part delivery of the rice. Vs. The defendant purchased 975 bales of rice.

would amount to a non-acceptance of the goods. from the seller to the buyer in return for the price. Taking of delivery of the goods is an important aspect of the ‘duty to accept’ and refusal to do so will constitute rejection of the goods and therefore . Duties of the seller and buyer It shall be the duty of the seller to deliver the goods and of the buyer to accept and pay for them. in accordance with the terms of the contract of sale. There is however a distinction between acceptance of goods and taking delivery of them. by which the property in the goods is transferred. There would be breach of the ‘duty to accept’ when the buyer unjustifiably rejects the goods. The buyer signifying his approval of the goods accepts them though he may not have taken delivery of the goods. or agreed to be transferred.PERFORMANCE OF THE CONTRACT  Section 31. It will be noticed that the Act does not expressly impose any duty to take delivery although it prescribes sanctions when there is delay in taking delivery.   . The general rule enunciated in this section follows from the nature of the contract of sale.

. if the buyer is not ready and willing to pay the price. and is not liable to an action for failure to accept the goods. the seller shall be ready and willing to give possession of the goods to the buyer in exchange for the price.Section 32 Payment and delivery are concurrent conditions :  Unless otherwise agreed. In accordance. and commits no breach of contract in failing to deliver. if the seller was not ready and willing to let the buyer have goods on demand. as the buyer owes to the seller the duty to accept and pay for them. thereof. delivery of the goods and payment of the price are concurrent conditions.  A contract of sale is an example of a contract consisting of reciprocal promises to be simultaneously performed. and the buyer shall be ready and willing to pay the price in exchange for the possession of the goods. The owes to the buyer as onerous a duty to deliver the goods. with the general principle laid down in s.51 of the contract Act. the seller is not bound to deliver. that is to say.

in progress of the delivery of the whole. has the same effect. Sale of a quantity of goods lying at a wharf. for the purpose of passing the property in such goods. Examples The section may be illustrated by the following examples: 1`. Effect of part delivery     A delivery of part goods. who had paid for them by a bill. but a delivery of the part of the goods with an intention of severing it from the whole. This was held to amount to a delivery of the whole of the goods. does not operate as a delivery of the remainder. The buyer subsequently weighed the goods and took away part of them. . The seller left an order with the wharfinger to deliver the goods to the buyer.Section 34. as a delivery of the whole.

which was granted. Effect of part delivery  2. 3. The buyer asked the permission of the seller to cut and remove part of the stack. The master reported her at the Customs House and made an oath that the cargo was for A. Part of the cargo was then delivered to A. The clear intention of the parties being to separate the part delivered of the whole. A made entry of the wheat in his name at the Customs House. A ship arrived in port with a cargo of wheat.Section 34. Next day. Sale of a stack of hay. This constituted a deliver of the whole.. the indorsee of the bill of lading. .

and the seller having failed to deliver as required by the notice. When the applies for delivery and the seller then fails to deliver. the buyer would be entitled and bound to apply for delivery. Juggernath Khan Vs. it was held that by the terms of the contract the buyer had the right to fix the date in November on which the delivery should be made. to enable the goods to be procured by the seller. Even if there is an obligation on the part of the seller to inform the buyer when the goods are in a deliverable state. The words ’in the absence of any special promise’ have been construed to mean an express stipulation as to delivery6 which relieves the buyer from the obligation to apply for delivery or the necessary implication of such a stipulation from the nature of the contract as expressed.Section 35 Buyer to apply for delivery  Apart from any express contract. It might also arise out of usage or custom. was guilty of a breach of contract. So where the contract provided for delivery in all November on seven day’s notice from the buyer. Machlachar (1881)    . and after the lapse of a reasonable time. the seller of the goods is not bound to deliver them until the buyer applies for the delivery This section reproduces s93 of the contract Act except that for the words ‘in the absence of any specific promise’. it is not a ‘special promise’. the seller is guilty of a breach of contract. and the buyer gave the notice early in November. though it may postpone the obligation of the buyer to apply for delivery. the words ‘apart from any express contract’ have been substituted.

Whether it is for the buyer to take possession of the goods or fo the seller to send the goods to the buyer is a question depending in each case on the contract. Where the goods at the time of sale are in the possession of a third person. express or implied. 5. but no time for sending is fixed. What is reasonable hour is a question of fact. goods sold are to be delivered at the place at which they are at the time of the sale. 4. at the place a which they are manufactured or produced. Unless otherwise agreed. there is no delivery by seller to buyer unless and unt such third person acknowledges to the buyer that he holds the goods on his behalf : Provided that nothing in this section shall affect the operation of the issue or transfer of any document of title to goods.Section 36. if not then in existence.. the expenses of and incidental to putting the goods into a deliverable state shall be borne by the seller . 3. the seller is bound to send them within a reasonable time. Rules as to delivery       1. between the parties Apart from any such contract. 2. Demand or tender of delivery may be treated as ineffectua unless made at a reasonable hour. and goods agreed to be sold are to be delivered at the place at which they are at the time of the agreement to sell. Where under the contract of sale the seller is bound to send the goods to he buyer.

The sellers were held liable in damages as having failed to deliver within a reasonable time. Startup Vs. Arnott (1833) . of which 4 were delivered. macdonald (1843)  3. Rules as to delivery   Examples The section may be illustrated by the following examples :  1. but they remain in the seller’s premises.Section 36.m. This is not a delivery. Sale of 12 puncheons of rum. Blair and Martin (1801)  2. and annulling all contracts for the sale of such spirits. Delivery is tendered at 9 p. Sale of goods for ready money. Boulter Vs. there is no delivery. Phillips Vs. The seller packs them up in the buyer’s boxes in the buyer’s presence. bu the seller delayed and in the meanwhile an Act of Parliament was passed prohibiting the distillation of spirits from molasses. It is a question of fact whether this is a reasonable hour. and the buyer may repudiate. If it is not. The buyer pressed for delivery of the remainder. made from molasses. on 31 March. Sale of goods to be sold to be delivered in the last fortnight o March.

Instalment Deliveries   1. 2. the buyer of goods is not bound to accept delivery thereof by instalments.Section 38. but not to a right to treat the whole contract as repudiated. or whether it is severable breach giving rise to a claim for compensation. it is a question in each case depending on the terms of the contract and the circumstances of the case. whether the breach of the contract is a repudiation of the whole contract. Where there a contract for the sale of goods to be delivered by stated instalments which are to be separately paid for. and the seller makes no delivery or defective delivery in respect of one or more instalments. Unless otherwise agreed. or the buyer neglects or refuses to take delivery of or pay for one or more instalments. .

In an action by the seller for the price it was held that the buyer had impliedly assented to the shipment of the smaller quantity as an instalment and was liable to pay for it. Sale of 200-300 tons of coal to be shipped as early as possible by a named ship or other vessel. The buyer made no reply to this communication. Reuter Vs. Riichardson Vs. The named ship was not available and the seller shipped 152 tons on another ship. Sale of 25 tons of pepper October /November shipment. Dunn (1841)   . The ship was lost. Instalment Deliveries   Examples The section may be illustrated by the following examples : 1.Section 38. The sellers shipped 20 tons in November and 5 tons in December. The buyers were entitled to reject the whole 25 tons. Sala (1879) 2. informing the buyer that he had done so and that he had drawn on him for the price and proposing to ship the remainder later.

and the condition on which it was received has not been fulfilled by reason of the dishonour of the instrument or otherwise. for instance. ‘Unpaid seller defined 1. who accepts them. the term ‘seller’ includes any person who is in the position of a seller. an agent of the seller to whom the bill of lading has been indorsed. 2. or is directly responsible for. and the seller negotiates them. The seller is in position of an unpaid seller. The seller of goods is deemed to be an ‘unpaid seller’ within the meaning of this Act (a) when the whole of the price has not been paid or tendered . (b) when a bill of exchange or other negotiable instrument has been received as conditional payment.Rights of Unpaid Seller against goods        Section 45. or a consignor or agent who has himself paid. as. In this chapter. The seller draws bills for the price of the goods on the buyer. Before the bills arrive at maturity the buyer fails. the price Examples The section may be illustrated by the following example.  .

has by implication of law— (a) a lien on the goods for the price while he is in possession of them. as such. 2. in addition to his other remedies. (b) in case of the insolvency of the buyer a right of stopping the goods in transit after he has parted with the possession of them . the unpaid seller of goods.Section 46. Where the property in goods has not passed to the buyer. notwithstanding that the property in the goods may have passed to the buyer. a right of withholding delivery similar to and co-extensive with his rights of lien and stoppage in transit where the property has passed to the buyer. Unpaid Seller’s rights     1. the unpaid seller has. (c) a right of resale as limited by this Act.  . Subject to the provisions of this Act and of and of any law for the time being in force.

 . Unpaid Seller’s rights    Example The section may be illustrated by the following example : Sale of goods to be delivered by instalments.Section 46. the buyer becomes insolvent and the price of one instalment is unpaid. The seller need not make further deliveries unless the price of that instalment is paid and cash is paid against delivery of subsequent instalments. During the currency of the contract. each instalment to be paid for in cash fourteen days after delivery.

The seller may exercise his right of lien notwithstanding that he is in possession of the goods as agent or bailee for the buyer. the unpaid seller of goods who is in possession of them is entitled to retain possession of them until payment or tender of the price in the following cases. (c) where the buyer becomes insolvent. Subject to the provisions of this Act. but the term of credit has expired . but he has a right to be paid besides and independently of his lien. One of the objects of S. namely : (a) Where the goods have been sold without any stipulation as to credit . Seller’s lien      1. The seller’s lien is a particular lien arising in the precise circumstances specified by the Act and not a general lien for all his debts due from the buyer and he cannot rely on the equitable principle of the vendor’s lien.Section 47. A seller’s lien is described as an additional security given to a person who has a right to be paid.  .47 which confers the seller’s lien is ‘ to protect a vendor from incurring an expense in manufacturing or acquiring goods for which payment remains justly in doubt ’. (b) where the goods have been sold on credit. 2.

Section 48. unless such part delivery has been made under such circumstances as to show an agreement to waive the lien. . Part delivery  Where an unpaid seller has made part delivery of the goods. he may exercise his right of lien on the remainder.

Termination of lien      1. The unpaid seller of goods loses his lien thereon— (a) when he delivers the goods to a carrier or other bailee for the purpose of transmission to the buyer without reserving the right of disposal of goods.Section 49. does not lose his lien by reason only that he has obtained a decree for the price of the goods. having a lien thereon. 2. The unpaid seller of goods. (c) by waiver thereof. . (b) when the buyer or his agent lawfully obtains possession of the goods.

Gibson 1847 2. Part. Cuthbert 1843  . the whole to be removed by a certain date. was paid for and removed by a certain date. and were put on board a ship by those agents. the buyer became insolvent. and two months after that date the seller cut up and used the remainder. Valpy Vs. Sale of a stack of hay for £ 86. that the sellers had lost their lien by delivering the goods to the shipping agents. While they were still in the possession of the sellers for that purpose. Subsequently. Gurr Vs. but only part. Thereupon the sellers refused to deliver them to the buyer’s trustee in bankruptcy except upon payment of the price. the seller waived his lien. Goods were sold and sent by the sellers at the request of the buyer to shipping agents of the buyer. and their refusal to deliver the goods to the trustee was wrongful.  Examples This section may be illustrated by the following examples: Section 49. Held. they were re-landed and sent back to the sellers for the purpose of re-packing. and the buyer successfully maintained an action against him. By doing so. Termination of lien  1. to be paid for as it is taken away.

as appears from the next section is that which is shortly expressed by saying that the goods are in transit. In order that the right may be exercised.Section 50 Right of stoppage in transit  Subject to the provisions of this Act.  . the right can only be exercised by a seller or a person in a position analogous to that of a seller. the right to stop in transit is unknown outside the law of sale of goods. that is to say. he may resume possession of the goods as long as they are in the course of transit. the following conditions must all be satisfied—the seller must be unpaid. who has parted with the possession of the goods has the right of stopping them in transit. and may retain them until payment or tender of the price. the seller must have parted with the possession of the goods and the buyer must not have acquired it. This last condition. the unpaid seller. when the buyer of goods become insolvent. it is a right against the goods themselves only. Lastly. Further.

When notice of stoppage in transit is given by the seller to the carrier or other bailee in possession of the goods. or according to the directions of. may communicate it to his servant or agent in time to prevent a deliver to the buyer. by the exercise of reasonable diligence. Such notice may be given either to the person in actual possession of the goods or to his principal. or by giving notice of his claim to the carrier or other bailee in whose possession the goods are. The expenses of such re-delivery shall be borne by the seller. he shall redeliver the goods to. the seller.Section 52. shall be given at such time and in such circumstances that the principal. The unpaid seller may exercise his right of stoppage in transit either by taking actual possession of the goods. How stoppage to transit is effected  1. 2. In the latter case the notice.  . to be effectual.

2. 1916   . Ltd. Booth & Co. He is liable for the fright. Cargo Fleet Iron Co.Section 52. A sum of money is owing by the buyers to the railway company. A railway company is in possession of goods as carriers when the sellers give notice of stoppage in transit. vs. How stoppage to transit is effected   Examples The section may be illustrated by the following examples : 1. The railway company is not entitled to set up in priority to the sellers’ right of stoppage in transit a general lien exercisable by the company against the buyers as owners of the goods. not only to the part where the goods were actually landed. but also to the port of their ultimate destination. An unpaid seller stops goods sent by sea at a port short of their destination.

2. Where goods are put up for sale in lots. and any sale contravening this rule may be treated as fraudulent by the buyer . Auction sale   In a case of a sale by auction 1. 4. a right to bid may be reserved expressly by or on behalf of the seller and. and. it shall not be lawful for the seller to bid himself or to employ any person to bid at such sale. 6. but not otherwise. any bidder may retract his bid. the sale is complete when the auctioneer announces its completion by the fall of the hammer or in other customary manner. until such announcement is made.Section 64. where the sale is not notified to be subject to a right to bid on behalf of the seller. the seller or any one person on his behalf may. each lot is prima facie deemed to be the subject of a separate contract of sale . subject to the provisions hereinafter contained. 3. the sale may by notified to be subject to a reserved or upset price . 5. if the seller makes use of pretended bidding to raise the price. or for the auctioneer knowingly to take any bid from the seller or any such person . where such right is expressly so reserved. bid at the auction. the      .