Sale of Goods Act, 1930

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 Introduction
• The law relating to sale and purchase of goods, prior to 1930 were
dealt by the Indian Contract Act, 1872.

• In 1930, Sections 76 to 123 of the Contract Act was repealed and a

separate Act known as the Sale of Goods Act, 1930 was passed.

• The provisions of the Contract Act still apply to contracts of sale of

goods except where the Sale of Goods Act, 1930 specifically provides
for the contrary.

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 Introduction
• Transaction in the nature of sale of goods form the subject
matter of the Sale of Goods Act -1930
 The act covers following topics:-
 Concept of sales of Goods
 Warranties & Conditions arising out of sale
 Delivery of Goods & passing of property & other obligations of buyer & seller
 The Act also covers the field of documents of title to Goods & the transfer of
ownership on the basis of such documents.
The Act came into being on 01 July 1930, it extends to whole of India except
Jammu & Kashmir .
Business persons/entities have worked out several varieties of contracts of sale
of goods e.g. fob( free on board), c.i.f.(cost, insurance & freight) & ex ship etc.
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 Essential Features of Sale
• Bilateral Contract
• Money Consideration
• Goods
• Transfer of Property
• Essential Elements of a Contract

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 Definition
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. (Sec. 4)
• The term contract of sale is a generic term, which includes sale and agreement
to sale both.
Essentials of a contract of Sale
 There must be at least two parties: A person can not sell to himself or a person
can not buy his own goods.
 However a part owner may sell to another part owner
 Transfer or agreement to transfer the ownership of Goods: In a contract of sale it
is the ownership that is transferred , or agreed to be transferred , as against the
transfer of mere possession or limited transfer(as in the case of bailment or
pledge)

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 Essentials of a contract of Sale
3. Price is the consideration of the contract of sale:
 If goods are offered as the consideration for goods, it will not amount to
sale. It will be called as Barter.
 If price paid partly as cash & partly as value of goods, that is considered as
Sale. These are known as part –exchange contracts.
 EX: 50 Chairs valued at Rs300/= per chair. Consideration paid 100 Kg of
wheat at Rs 25/= per kg & balance amount paid as cash/cheque or by
credit card
4. Payment by Installments
 In case of sale, parties may agree that the price will be paid by installments.
Also the terms may stipulate some amount as down payment & the
balance in installments.
 In case possession is handed over to buyer & buyer defaults in payment of
installment, the seller can not take back the goods, he can only file suit for
recovery of installments
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 Essentials of a contract of Sale
5. A contract of sale may be absolute or conditional.
6. All other conditions as per Indian contract act must be present in the
contract of sale.
a) Parties to contract must be competent to contract.
b) Object of the contract must not be unlawful.
c) Consent of the parties must be free

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 Goods
Goods means every kind of movable property other than
• actionable claims and money and
• includes stocks and shares, growing crops, grass and
• things attached to or forming part of the land
• which are agreed to be severed before sale or under the contract of sale.
[Sec 2(7)]
• Example : Trade marks, patents, copyright, good will, water,gas, electricity
are all goods & dealt under sales Act
• Actionable claims are things which a person can not make use of , but which
can be claimed by him by means of a legal action , e.g. , a debt
• ‘Money’ itself can not be the subject of sale . Because price of goods has to
be expressed in terms of money. Therefore money itself can not be the
subject of sale. Foreign currency may , however be bought & sold
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•
 Classification of Goods
• a) Existing goods - Goods which either owned or possessed by the seller at the
time of contract of sale.
• i) Specific goods - Means goods identified and agreed upon at the time a
contract of sale is made.
• ii) Ascertained goods - When, out of a mass or a lot of unascertained goods,
the quantity extracted is identified and earmarked for a given contract.
• iii) Unascertained goods : Generic or unascertained goods are goods
indicated by description & not specifically identified.
• EX: , Anthony , who owns a TV show room , has 100 TV sets on display &
agrees to sell one of them to Mathew . The contract is for unascertained
goods, since which particular TV set is to be sold has not been specified at the
time of sale. 9
 Classification of Goods
• b) Future goods - Means goods to be manufactured or produced or
acquired by the seller after making of the contract of sale.
• Ex: Kulkarni agrees to sell future crop of a particular agricultural field in the
next season. This is called a contract to sell future goods.
• c) Contingent goods - The goods the acquisition of which by the seller

depends upon a contingent event which may or may no happen.

• Contingent goods is apart of future goods.

• EX: Alka agrees to sell Bhola a certain painting only if Chetan, its present
owner, sells it to her. This painting is classified as Contingent Goods
•

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 The Price
• Price means the money consideration for a sale of goods. [Sec 2(10)]
Price can be fixed in the following ways :
• by the contract or terms of agreement, or
• may be determined by course of dealing between the parties.

 It may be the price prevailing on a particular day, or

 price to be fixed by a third party.

 When price is not capable of being fixed by any of the above modes,
 the buyer shall pay the seller a reasonable price.

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 Sale & Agreement to Sale
• Where under a contract of sale, the property(ownership ) in goods is
transferred from seller to buyer, it is called sale( Sec 4(3))
• A sale is an Executed Contract
Ex : Sham sells his car to Bhim for Rs 1 lakh. Thus sale takes place when the
ownership of the car stands transferred from Sham To Bhim.
• This is so even if payment of price of car, the delivery of car or
both have been postponed.

• Agreement to sell means a contract of sale under which the transfer of

property in goods is to take place at a future date or subject to some
conditions thereafter to be fulfilled.
Ex: Amar agrees to sell certain goods to Akbar. The goods are on their way from
London to Mumbai in a ship.
The ownership in goods will pass to buyer when the goods arrive at Mumbai &
agreement is subject to the condition that ship arrives at port with the goods.
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 Distinction between Sale & Agreement to Sell
S.No Sale Agreement to sell
1 Sale is an Executed contract It is an Executory contract
2 Since the ownership passes to the In case of breach the seller can only sue
buyer, the seller can sue the buyer for damages, unless the price was
for the price of goods , if the latter payable at a stated date.
makes a default in payment

3 It creates a right in rem, i.e. It creates a right in personam i.e.

against the whole world against the specified person only
4 In case of loss of goods , the loss The loss in this case shall be borne by
will fall on the buyer, even though the seller, even though the goods are in
the goods are in the possession of the possession of the buyer.
the seller. It is because the risk is
associated with the ownership.
5 In case, the buyer pays the price, In this case the buyer can not claim the
& the seller thereafter becomes goods but only a ratable dividend for
Insolvent , the buyer can claim the the money paid.
goods from the official receiver or
assignee as the case may be .
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 Distinction between Sale & Agreement to Sell
S.No Sale Agreement to sell

5 In case, the buyer pays the price, In this case the buyer can not claim the
& the seller thereafter becomes goods but only a ratable dividend for
Insolvent , the buyer can claim the the money paid.
goods from the official receiver or
assignee as the case may be .

6 If the buyer becomes insolvent Under this, the seller can refuse to
without paying the price, the deliver the goods to the official receiver
ownership having passed to the or assignee , as the case may be
buyer,
the seller shall have to deliver the
goods to the official receiver or
assignee,

as the case may be , except where

he has a lien over the goods.

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 Effect of Perishing of Goods [Sec 7]
• A contract for the sale of specific goods is void if the goods have perished at
the time of contract.
• Contract is void ab initio if the goods perished before the formation of
contract.
• In agreement to sell it becomes void if
• subsequently the goods have perished before the risk passes to the buyer.

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THANKS

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