.However as the provisions of section 76 to 123 were insufficient of growing merchandise transactions so this act was formed.  The law as to sales of goods is basically originated from the INDIAN CONTRACT ACT 1872.From sec 76 to 123.INTRODUCTION…….

SALE……… Defination of sale [sec4(1)]. “It is a contract where by 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” .

ESSENTIAL ELEMENTS OF A CONTRACT OF SALES OF GOODS ACT The following are the essential characteristics of a contract of sales of goods Two parties  Goods  Price  Transfer of property  Includes both a sales and agreement to sales  Absolute and Conditional .


3. Agreement to sell 1. Ownership is with the seller Executory contract Sue for damages only. Ownership is with the buyer Executed contract Sue for price. 4. 4. in case of breach Goods lost by accident then loss falls on the Seller. 2. 3.SALE AND AGREEMENT TO SELL Sale 1. in case of breach Goods lost by accident then loss falls on the buyer. 8 . 2.

 Price: The consideration for the contract of sale. called price..e.ESSENTIALS OF VALID SALE CONTRACT  Two parties: There must be 2 distinct parties i. must be money  Essential elements of a valid contract: A contract is made by an offer to buy or sell goods for a price and the acceptance of such offer. a buyer and a seller  Goods: Goods which form the subject matter of the contract of sale must be movable. 9 .

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

but not to a right to reject the goods and treat the contract as repudiated or broken. the breach of which gives rise to a claim for damages. .WARRANTY What is Warranty? [Section 12 (3)] A warranty is a stipulation collateral to the main purpose of the contract.

12 . 2. When condition breaches? Breach of condition can be breach of warranty Its a term in contract which is collateral. 2. 3.CONDITION AND WARRANTY Condition 1. 3. Warranty 1. Its is a term in contract which is essential. When warranty breaches? Breach of warranty cannot be breach of condition.

 Acceptance of goods by buyer. .When breach of condition treated as breach of warranty [sec.13]  Voluntary waiver by buyer.

IMPLIED CONDITIONS 1) Condition as to title 2)Condition in a sale by description 3)Condition in a sale by sample 4)Condition in a sale by sample as well as by description 5)Condition as to fitness or quality 6)Condition as to merchantability 7)Condition as to wholesomeness .

IMPLIED WARRANTY 1)Warranty of quiet possession 2)Warranty of freedom from encumbrances 3)Warranty of disclosing the dangerous nature of goods to the ignorant buyer .

.  While making purchase the buyer depends on his own skills and makes a bad choice and hence he can’t hold the seller liable for the same.DOCTRINE OF CAVEAT EMPTOR Caveat emptor means “let the buyer be aware”  According to the doctrine of caveat emptor it is the duty of buyer to be careful while purchasing goods of his requirement and the seller is not bound to disclose every defect in goods of which he may be cognisant. as there is no implied undertaking by the seller.

Rights of unpaid seller Against the goods Against the seller personally Where the property in the goods has not passed Where the property in the goods has passed Suit for price Repudiation of contract Suit for damages Suit for interest With holding delivery Lien Stoppage in transit Stoppage in transit Re sale 17 .

 To pay custom and insurance.  To pay unloading  Procure a contract of affreightment. wharf age charges. 18 . INSURANCE. FREIGHT  Seller’s duty:  Make out an invoice of  Buyer’s duty the goods sold. etc. import duties.  To arrange for an charges.COST.

19 .  The goods are ultimately sold to the highest bidder. the owner.e. i.  The auctioneer who sells the goods by the auction is an agent of the seller.AUCTION SALE :(sec 64)  A sale by auction is a public sale where different intending buyers try to outbid each other.

gone” 20 .RULES OF AUCTION SALE  Completion of sale:• The sale is complete when the auctioneer announces its completion by the fall of the hammer or in some other customary manner like “one two three” or “going going.


If the goods does not correspond with description. the contract is terminated .Case law : Mody v/s Gregson  Facts of the case : Instead of sale of Brandy by sample. here the goods shall correspond both with sample as well as by description. where sale is by sample as well as by description. it is not sufficient that the bulk of the goods correspond with the sample .It was held that the buyer was entitled to reject the goods.  Sale as per sample as well as description:( section 15) If sale is by sample as well as by description. Even if the bulk correspond with sample. but the bulk doesnot corespond with description . brandy coloured with dye was supplied.

there should be reasonable effect for which they are generally using If ther are not for resale. it should be commercially saleable underthe description by which they are known in the market at their full value Nicholas V/s Gogts .Case law  Facts of the case: When nicholas agreed     to sell to Gogts some oil describe as “ foreign refined grape oil” warranted only egual to sample but contained an added mixture of “hemp oil” Held: it was held that Gogts could reject the goods Condition as to Merchandise Quality Sec16(2) The merchandice has not been defined in this Act but it means If one buys it for self use.

 Held : the catipult was not of Mercandise quality. foodstuffs that means goods shall be fit for human consumption .  Condition as to Wholesomeness: It it applicable to eatables . while the boy was using it the catipult broke & made the boy blind by one eye .Godley Case law  Facts of the case : P sold “catipult “ to a boy of v/s Perry 6 yrs . so he had to refund for damages as compensation.

Case Law Priest v/s Last A brought a hot water bag from B a retail chemist. The bottle burst after a few day of use & injured A’s wife . A examine bottle A asked B if it would stand boiling water. B told him that it was intended to hold hot water.  Held : B was liable for breach of implied condition that the bottle was unfit for the purpose for which it was made. .

the buyer purchases the goods at it’s own risk relying upon his own skill & judgement.Doctrine of ‘caveat Emptor’  Caveat emptor means ‘let the buyer beware’ that is the buyer must take care as general rule. If the goods. his mind active & cautious while buying thIn other words. . the buyer purchases goods after satisfying himself as to quality & fitness & therefore. This doctrine of caveat emptor implies that the person who bought the goods must keep his eyes open. the buyer while buying the goods must examine them thoroughly.

 Turns out to be defective  Does not serve this purpose .  In absence of any warranty/ misrepresentation .  If he depends upon his skill & judgement & makes a bad choice he cannot blame anybody but must thank himself for his own faults.

to be sold by auction. The buyer should not claim damages from seller on the principles of caveat Emptor . Pigs were sold to W with all fauits & errors of description. H knew the pigs were suffering from swine fever (typhoid fever)but he never disclosed this to W. But the seller was not bound to disclose that the pigs were unhealthy.  Held: sale was valid. The house of lords (supreme court) held that sending infected . as there was no implied warranty/ condition for the sale. Pigs to the market was offence(crime).Case law :  Facts of the case: H sends pigs to Wards v/s Hobbs (1878) market.

.exceptions to ‘cAveAt emptor’  Doctrine of caveat Emptor does not imply under the following circumstances  The seller does not give an implied warranty as to quality & fitness of the goods & if the goods are not fit of sale the seller cannot take refence under the doctrine of caveat Emptor & he shall be liable for breach of warranty of quality & fitness.

i) Customs/Usage of trade:  An implied warranty/ condition as to quality & fitness for particular purpose may be annexed by the custom/ usage of trade. However custom should not be unreasonable & should not be inconsistent with express terms of contract  ii)Fraud: when the seller is guilty of fraud Eg: When the seller got consent of the buyer by fraud & conceals a defeat the seller is liable. In case law Wards V/s Hobbs .

there is an implied condition that the goods shall be of merchantable quality .iii) For specific Purpose:  Where the goods are ordered & the seller is made aware of it & when the buyer relies on skill & judgement of the seller. there is an implied condition that the goods shall be reasonably fit for such purpose  iv) Merchantable Quality : Where the sale is by description & purchases is done from the seller . Who deals in goods of that description.

Frost V/s Ayalsbury dairy co Ltd  Facts of the case: F brought milk from K.Case law: .  Held: The milk dealer was held liable (A was held liable ) . the plaintiff’s wife (F’s wife) was infected & died. The milk supplied by Davis (A) was contaminated with germs of typhoid fever.

 Eg.Condition implied by trade usage:  Condition as to quality / fitness for particular purpose may be annexed by usage of trade i. Printing & manufacturing the expiry date for medicines .e an implied warranty or condition as to quality or fitness for particular purpose .

expressly or by implication makes known. To the seller that particular purpose for the goods are enquired so that the buyer relies on the sellers skill and judgement & the goods are of description which is in course of the sellers business to supply ‘ where he is the manufacturer or producer or not’. There is implied condition that the goods shall be reasonably fit for such purpose”  This condition arises only when the following circumstances are proved: .Condition as to quality / fitness for buyer’s purpose (sec 16(1)  It lays down “when a buyer .

Where the buyer has relied upon the seller’s skill & judgement Where the goods are brought by description. Where the buyer has made known to the seller for which     the goods were ordered. Which is in course of seller’s business to sell Finally by custom & usage implied condition of fitness's & merchantible quality is annexed (attached) to contract of sale .

But it was a old machine. The buyer buys it without seeing. Held: Buyer could reject the machine Sale by Sample : (sec 17) The sale by sample means where there is a term of contract express or implied there are 3 implied transactions where the goods are supplied accordingly to the sample That the bulk shall correspond with the sample in quality That the bulk shall have reasonable opportunity for comparing the bulk with the sample That the goods shall be free from any defects .Case law:  Facts of the case: A buys a machine described    Varley V/s Whipps    by the seller as it is good as new. It was found that it tuned out to be old & rusted.