 A 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.  Where there is a transfer it is a contract call a „Sale‟.  A contract of sale may be absolute or conditional. The former is without any conditions.  Conditions may have to be fulfilled by the seller or by the buyer.

Essentials of a Valid Sale
 Property: Transfer of ownership in goods.  Movable goods: Goods that are not fixed  Price: Price or consideration of goods must be money.  Parties: Two parties only. Buyer & Seller.  Form: May be made in writing or by word of mouth.

ownership in the goods is to take place at a future date or subject to some condition to be fulfilled.  When agreement to sell becomes a sale? It is when the time lapses or the conditions are fulfilled subject to which the property in the goods is to be transferred. for example. .Agreement to Sell  Where the transfer of property. the contract is called an agreement to sell.

. that is right on the goods against the person who defaults. ATS – does not pass on to buyer immediately. that is right on the goods against the whole world. ATS creates jus-in-personam.  Creation of right: Sale creates jus-in-rem.Sale & Agreement to Sell: Distinguished  Nature of contract: Sale – executed contract.  Passing of property: Sale – property & risk of the goods pass on to the buyer. ATS – executory contract.

ATS – seller has only right to sue for damages for nonperformance of contract. Insolvency of seller: Sale – buyer is entitled to receive the goods from official . ATS – seller may refuse to deliver goods unless paid for.  Insolvency: Insolvency of buyer: Sale – seller must deliver goods to official assignee and claim dividend for the price of goods. Remedies: Sale – seller is entitled to sue for the price of goods.  Risk of loss: Sale – loss will be borne by the buyer even if the possession is with seller. ATS – seller will have to pay for loss.

 A stipulation essential or core to the contract is called a Condition. or specification of a bargain.Conditions & Warranties  A Stipulation refers to demand. exchange . . requirement.  A stipulation which is not essential to the contract is called a Warranty. provision.  A contract contains some stipulations or terms. etc.

 What is Warranty? [Section 12 (3)] A warranty is a stipulation collateral to the main purpose of the contract. What is a Condition? [Section 12 (2)] A condition is a stipulation essential 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 . the breach of which gives rise to a right to treat it as repudiated or broken.

even if the outer cover is black or silver. a seller of electronic goods. The outer surface of the TV came in two colours. he has got what he basically asked for. Y had asked for silver colour. Thus. X. thus. He. X is unable to deliver a set in silver colour. was supposed to sell a TV of a particular brand & model to Y. delivers a TV set of black colour. Yet . Has Y got what he had contracted for? There is no difference in the quality of the TV. silver and black.

quality.  The term that the TV must be of a particular brand and model is the core part of contract. A contract for sale would contain a number of terms specifying the nature. while others may be surrounding and peripheral. while its colour is not of central importance. .  Some of the terms may form the core of the contract. & feature of the good being sold.

 Even if there is breach of „warranty‟.  In a given situation. the contract has been mostly fulfilled.  That is. Thus. for violation of a condition. but the suffering party can claim damages. stipulation (condition or warranty) would depend on . the contract can be repudiated. Any breach of a „condition‟ would be a breach of a contract. the contract cannot be repudiated.

(i) Sale – seller has a right to sell the goods. title to the goods. ATS – seller will have the right to sell at the time when property is to pass.t. (iii) Goods shall be free from any charge or encumbrance.r. . (ii) Buyer shall have and enjoy possession of goods.Implied Warranties & Conditions  Warranty as to title (Section 14): There are 3 implied situations on the part of seller w.

A description can be physical appearance. trade mark. or particulars of the ship where the goods are to be . Sale by description (Section 15): It means that there is a implied condition that the goods shall correspond with the description. packing particulars. Breach of this warranty entitles the buyer to reject the goods. brand name.

Against the goods Where the property in the goods has passed Rights of unpaid seller Against the seller personally Where the property in the goods has not passed Stoppage in transit Lien Stoppage in transit With holding delivery Re sale Suit for damages Suit for price Repudiation of contract Suit for interest 14 .

RULES OF DELIVERY  Mode of delivery  Delivery and payment con current condition  Effects 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  Installment deliveries 15 .

(ii) Buyer shall have a reasonable opportunity of comparing the bulk with the sample. (iii) Goods shall be free from any defect. . The defect shall not be apparent on reasonable examination. Sale by sample (Section 17): There are 3 implied conditions when the goods are supplied according to the sample: (i) Bulk shall correspond with the sample in quality.

. Warranty as to quality or fitness (Section 16): There is an implied warranty as to the quality or fitness under the following circumstances. (iv) By custom or usage of trade.g. implied condition of fitness is annexed to a contract of sale. For e. (i) Where goods are ordered for specific purpose and the same is made known to seller. if the buyer selects himself then there is no implied condition as to fitness. However. (iii) Where goods are bought by description from seller there is an implied condition that the goods shall be reasonably fit for such purpose. (ii) Where the buyer relies on the seller‟s skill of judgment. sale of eatables shall be fit .

 Warranty as to quiet possession free from encumbrances. The buyer shall have and enjoy quiet possession of the goods [Section 14 (b)]. The buyer shall have a right to sell the goods [Section 14 (a)]. The goods shall be free from any charge in favor of any 3rd party not declared or known to the buyer before or at the time when the contract is .

 In a contract for sale of goods there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods. the buyer purchases the goods at his risk relying on his own skill and judgment (Section 16).  Therefore. That is.  There are certain cases where the Doctrine of Caveat Emptor does not . the buyer must take care.CAVEAT EMPTOR  It means “let the buyer beware”.

Caveat Emptor: Exceptions  Custom or Usage of Trade: Implied warranty/condition as to quality or fitness for particular purpose may be annexed by the custom or usage of trade. he is liable. .  Fraud: Where the seller is guilty of fraud or conceals a defect.

there is an implied condition that the goods are of . there is an implied condition that the goods shall be reasonably fit.  Merchantable Quality: Where (i) sale is by description and (ii) purchased from the seller who deals in goods of that description. For specific purpose: Where the goods are ordered for a specific purpose and seller is made aware of it and the buyer relies on the skill or judgment of the seller.

Performance of Contract: Buyer‟s Rights & Duties  To receive delivery of goods.  To recover amount paid if seller fails to deliver. .  To sue for damages for breach of warranty.  To repudiate contract on seller‟s breach.  Reasonable opportunity to examine goods.  To sue for damages for non-delivery of goods.

 To compensate the seller for any loss occasioned by his neglect or refusal to take delivery of the goods and also for reasonable charge for care and custody of the goods.  To apply for the delivery of goods as the seller is not bound to deliver until the buyer applies for delivery.Duties:  To pay for the goods and take delivery thereof. .

 To receive the price of the goods. to exercise his right of resale.  To receive reasonable charge for care & custody of the goods.  If he is unpaid seller then – to exercise his right of lien.  To receive compensation or sue buyer for not taking delivery of the goods. to exercise his right of stoppage in transit. Performance of Contract: Seller‟s Rights & Duties .

 To refund the amount paid by the buyer in case he fails to deliver the goods. . To recover interest from the buyer for price due.  To compensate the buyer in case he repudiates the contract.  To sue for damages on buyer repudiating the contract.  To give reasonable opportunity to the buyer to examine the goods. Duties:  To deliver the goods when buyer demands.

.Unpaid Seller  Who is an unpaid seller? (Section 45) One who has not been paid or tendered the whole of the price or one who receives a bill of exchange or other negotiable instrument as conditional payment and the condition on which it was received has not been fulfilled by reason of the dishonor of the instrument.

s. . Where goods have been sold on credit and the term has expired. credit sales.t.Where property in goods has passed  (1) (2) Unpaid Seller: Rights (3) (4) Right of lien (Section 47): Entitled to retain possession until payment under the following cases: Where goods have been sold w/o any stipulation w. he may exercise right of lien on the remainder. Where the buyer becomes insolvent and the seller is in possession of the goods.r. has made part delivery of goods. When u.

What is Transit? If it is with a middle man who is . That is. the u. who has parted with the possession of the goods has the right of stopping them in transit.s. he may resume possession of the goods as long as they are in the course of transit and may retain them until payment. Right of stoppage in transit (Section 50): When the buyer of goods becomes insolvent.

. (ii) Buyer must have become insolvent. Essentials: (i) Seller must be unpaid wholly or partly.  How is stoppage in transit effected? (i) By taking actual possession of the goods. or (ii) By giving notice of his claim to the carrier in whose possession the goods are. to re-deliver to the seller or according to his directions. (iii) The goods must be in transit.  When does transit of goods come to an end? When buyer acquires possession or is deemed to acquire possession of the goods.

or Where part delivery has been made. Carrier acknowledges to buyer that he holds goods on his behalf. Carrier wrongfully refuses to deliver. When is right of stoppage in transit lost? Upon delivery of the goods. .

. Right of Re-Sale (Section 54): He can resell the goods under the following circumstances: Where goods are of perishable nature. Where the seller gives notice to the buyer of his intention to resell and the buyer does not pay within a reasonable time after notice. Where the seller has expressly reserved his right of re-sale in case the buyer makes default.

 Right to sue buyer personally for the price of the goods (Section 55). Unpaid Seller .  To recover interest from buyer where there is specific agreement to that effect.  Seller reserves the right of disposal over the goods (Section 25).  Right to sue for damages for wrongfully neglecting or refusing to accept the goods (Section 56).Where property in goods has not passed  Right of withholding delivery.

. Suit for Damages (i) For non-acceptance: (Sec. seller may sue him for the price of the goods. the seller may sue for damages for nonacceptance. 56) Where buyer wrongfully neglects or refuses to accept and pay.Remedies Available to the Seller Breach of Contract   Suit for Price (Section 55) If the buyer neglects or refuses to pay as per terms of contract.

(ii) For repudiation of contract – Anticipatory breach: (Sec. seller may either treat it as: Subsisting and wait till delivery date. . or he may treat the contract as rescinded and sue for damages for the breach. This remedy is in anticipation of the breach of contract popularly known as „anticipatory breach of contract‟.60) If buyer repudiates contract before date of delivery.

Remedies Available to the Buyer  Suit for damages for non-delivery of the goods (Section 57). .  Suit for repudiation of the contract – Anticipatory breach (Section 60).  Suit for specific performance (Section 58).  Suit for breach of warranty (Section 59). This is similar to seller claiming damages for repudiation or anticipatory breach of contract.