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Sale of Goods Act,1930

Business Law,
By: Harshit Mehta
Definition of Sale of Goods

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.
[section 4(1)].

A future transfer of good will be agreement to sale

Business Law, By: Harshit Mehta

Essentials of a contract of sale
1. Two parties sec.2(1)
2. Goods sec.2(7)
3. Transfer of property sec.2(11)
4. Price sec.2(10)

It should be a Contract

Business Law, By: Harshit Mehta

GOODS Sec.2(7)
• Any movable property o/t actionable
claims , money & Shares.
• Growing crops also excluded & Grass.
• Things attached to the land are also

Business Law, By: Harshit Mehta

Classification of goods

Business Law, By: Harshit Mehta

1. Existing goods { sec. 6(1)} :- goods owned and possessed
by the seller at the time of making the contract of sale.
– Specific Goods sec. 2(14):- Goods identified and agreed upon at the
time of the making of the contract of sale.
– Ascertained Goods :- goods identified in accordance with the
agreement after the contract of sale is made.
– Unascertained goods:- goods which are not specifically identified at
the time of contract of sale (goods defined by the description)
1. Future goods sec. 2(6):- means goods to be manufactured
or produced or acquired by the seller after making the
contract of sale
2. Contingent Goods sec. 6(2):- there may be a contract for
the sale of goods, the acquisition of which by the seller
depends upon a contingency which may or may not

Business Law, By: Harshit Mehta

• Sale • Agreement to sale
• Immediate transfer of property • Transfer of property takes place in
from buyer to seller
• Future goods also included.
• Existing goods only Loss falls on seller.

• Loss falls on buyer • Seller can re-sell the goods.
• Seller can not re-sell the goods • Particular property.
• General property • If the buyer becomes insolvent ,the
seller can hold the goods with him.
• If the buyer becomes insolvent,
the seller should return the
goods to Official Receiver • If the seller becomes insolvent, the
appointed by court. buyer only gets dividend & not the
• If the seller becomes insolvent
,the buyer can receive the goods
by Official Receiver.

Business Law, By: Harshit Mehta

Conditions Warranty
• Condition is essential to the • Warranty is collateral to the
main purpose of contract main purpose of contract.

• A contract of sale cannot be • The main contract can be

fulfilled unless the condition to fulfilled even if the warranty is
it, is fulfilled. not fulfilled.

• In case of breach of condition, • In case of breach of warranty,

the aggrieved party can reject the aggrieved party can only
the contract claim for damages.

• Breach of condition can be • Breach of warranty can not be

treated as breach of warranty if treated as breach of condition.
the aggrieved party is happy
with compensation.
Business Law, By: Harshit Mehta
When conditions become
warranty (sec.13)
1. Voluntary waiver of condition (Sec. 13(1))

2. Acceptance of goods by the buyer (sec. 13(2))

3. By impossibility (sec. 13(3))

Business Law, By: Harshit Mehta

Remedies available to the buyer on
breach of condition
If the condition is broken:
1. Buyer can cancel/repudiate the contract and reject the
2. Treat the breach of condition as breach of warranty and
claim the damages.
3. In 2nd case- he have the rights to recover the damages
4. No remedy is available when fulfillment of condition is
excused by law by reason of impossibility.

Business Law, By: Harshit Mehta

Sec.16 - Caveat Emptor
• This means “let the buyer beware”.
• In a contract of sale of goods, the seller is under
no duty to reveal unflattering truths
about the goods sold.
• So, the buyer must examine goods thoroughly.
• If he depends upon his own judgement & skill
&makes a bad selection, he cannot blame
anybody excepting himself.

Business Law, By: Harshit Mehta

Exceptions to Caveat Emptor(CE)
• Fitness for buyer’s purpose - Sec 16(1)
• Buyer expressly or by implication makes known to the seller
the particular purpose for which the goods are required
• Sale under a patent or trade name – Sec 16(1)
• Sale of a specified article under its patent shall reasonably fir
for any particular purpose.
• Merchantable Quality – Sec16(2)
• Goods are purchased by description, and provided goods are
not of a merchantable quality then the doctrine of CE n/a.
• Usage of trade – Sec 16(3)
• Consent by fraud
• Sale by sample sec. 17
• misrepresentation
Business Law, By: Harshit Mehta

Business Law, By: Harshit Mehta

Doctrine of nemo dat quod non
habet - Sec 27
• The above maxim ie.quote means-:
• “No one can give something which he does not

• If the seller has no title to the goods which are

sold ,the buyer of such goods also does not
acquire the title of goods though he has
purchased the goods & acted honestly.

Business Law, By: Harshit Mehta

1. When the whole price has not been paid
2. When a bill of exchange has been issued and
conditions of payment has been dishonoured
3. Whole of the price has not been paid
4. when a bill of exchange or other negotiable
instruments has been received towards
payment and that has been dishonoured.
Ex. A sold certain goods to B for Rs. 2000. and B paid 1500
and failed to pay the balance. Here A is Unpaid seller.
Ex. A sold goods to B for 500. B made payment by cheque,
and cheque was dishonoured.

Business Law, By: Harshit Mehta

Rights of Unpaid Seller

Business Law, By: Harshit Mehta

Remedies for breach of contract of sale
Remedies to seller:
1.Suit for price Sec.(55)
2.Suit for damages for non performance of goods Sec.(56)
3.Suit for damages for repudiation of contract Sec.(60)
4.Suit for interest Sec.(61)

Remedies to buyer:
1.Suit for damages for non delivery of goods Sec.(57)
2.Suit for damages for repudiation of the contract Sec.(60)
3.Suit for specific performance Sec.(58)
4.Suit for breach of warranty Sec.(59)
5.Suit for interest Sec.(61)

Business Law, By: Harshit Mehta

Internal Test Time: 1 hr.
Business law Marks: 20

Q1. Define the sale of goods. And What are the Essential elements for the
contract of sale of goods?

Q.2. Difference Between Sale And Agreement to Sale? Any 6 Points.

Q.3. define what is condition And Warranty? Difference between Condition

and warranty.

Q4. What do you mean by CAVEAT EMPTOR? What are the Exceptions to
Caveat Emptor.

Business Law, By: Harshit Mehta