(i) Definition

(ii) Applicability
(iii) Essentials of a Contract of Sale
 Definition
It is a contract by which the ownership of movable
goods is transferred from the seller to the buyer. The
term ‘contract of sale’ is defined in Section 4(1) of the
Sale of Goods Act as-
“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”

The Sale of Goods Act extends to whole of India

except the State of Jammu and Kashmir
Essentials of a Contract of Sale
(i) All requirements of a valid contract must be
fulfilled
(ii) Two Parties –
(iii) Goods
(iv) Transfer of Property
(v) Price
(vi) Includes both a ‘sale’ and ‘agreement to
sale’
(vii) No formalities are required
Price

, Exchange,sale

Mode of determining of price [ section 9(1)]

Fixed by contract
By third parties
(iii) Goods
The subject matter of a contract of sale of goods is
goods. According to Sec 2(7) “goods means every kind of
movable property other than actionable claims and
money; and includes stock 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
contract of sale.
ACTIONABLE CLAIM – ‘means a claim which can be enforced
through the court of law e.g a debt due from one person to another
is an actionable claim
Examples of Goods
Goodwill, Trade Mark, Copyright, Patent
right, Water, Gas, Electricity, are all example of good

Classification of Goods
(i) Existing Goods (ii) Specific goods (iii)unascertained goods

(iv)Future Goods- This is applicable to goods which are subject

matter of the agreement to sale

(v) Contingent Goods- i.e. the goods arriving by ships etc.

Sale & Agreement to sell
The ownership is At some future date
transferred immediately Executory Contract
Executed contract A seller can sue for
A seller can sue for damages.
price. He has all the An agreement to sell
right of unpaid takes place in the case of
seller future goods.
Sale takes place in A seller bears the risk.
the case of existing
goods usually.
A buyer bears the
risk.
Stipulation, Condition & Warranty
A representation which forms part of the contract of
sale and affects the contract, is called a stipulation.

A stipulation which is most important for

formation of the contract of sale is known as a
‘condition’.

A stipulation which is collateral or of least

importance for the formation of the contract of sale,
is known as a ‘warranty’.
Conditions
Section 12(2) of the Sale of Goods Act, 1930 defines
condition as, “a condition is a stipulation essential
to the main purpose of the contract, the breach of
which gives rise to right to treat the contract as
repudiated.”

Example: Buyer wanted a horse which could run at a

speed of 45 m.p.h.
Implied Conditions
(i) Condition as to Title [Sec 14(a)]
(ii) Condition as to Description [Sec 15]
(iii) Condition as to Sample [Sec 17(2)]
(iv) Condition as to Sample as well as Description [Sec 15]
(v) Condition as to Quality or Fitness for Buyer’s
purpose [Section 16(1)]
(vi) Condition as to Merchantability
[Section 16(2)]
(vii) Condition as to Wholesomeness
 Condition as to Title [Sec 14(a)]
It is the most important implied condition in a
contract of sale that seller has the right to sell the
goods.
.
Condition as to Description [Sec 15]

Whenever the goods are sold by description, the

implied condition is that the goods shall correspond
with the description.

’
Condition as to Sample
In a sale by sample there is a implied condition that the
goods shall correspond with the sample in quality, and the
goods shall be free from the defects which render them
unmerchantable.
Sale by sample has following three conditions:
(i)Correspondence of Goods with sample in quality [sec
17(2)(a)]
(ii)Reasonable opportunity of comparing goods with the
sample [Sec 17(2)(b)]
(iii) Merchantability of Goods [Sec 17(2)(c)]
Condition as to Sample as well as Description
[Sec 15]
Sometimes, the seller shows sample to the buyer and
also gives him description. In such case, the implied
condition is that the goods shall correspond with both,
the sample as well description.
 Condition as to Merchantability
[Section 16(2)]
The term merchantability means two things:
(i) If goods are purchased for resale, they should
be immediately re-saleable; &
(ii) If goods are purchased for self use then they should
be reasonably fit for the purpose for which they are
generally used.
.
Condition & Warranties
Condition is a Warranties are subsidiary
stipulation which is or collateral to the main
essential to the main
purpose of the contract.
purpose of the
It is not of vital importance.
contract.
The main contract can be
Itis of vital completed even if warranty
importance is not fulfilled.
Condition & Warranties
In case of breach of In case of breach of
condition, the buyer may warranty, the buyer cannot
put an end to the put an end to the
contract. contract. He can only
claim damages from the
Abreach of seller.
as a A breach of warranty
condition
may be treated
breach of warranty. cannot be treated as a
breach of condition.
Doctrine of Caveat Emptor
[Sec 16]
The doctrine of caveat emptor is a fundamental
principle of law of sale of goods. It means ‘Caution
Buyer’ i.e. ‘let the buyer beware’. In other words, it is
no part of the seller’s duty to point out defects in his
own goods. The buyer must inspect the goods to find
out if they will suit his purpose e.g. certain pigs are
sold ‘subject to all faults’. These pigs being infected
cause typhoid to the other healthy pigs of the buyer.
The rule of caveat emptor would apply.
Exceptions to the Doctrine of Caveat Emptor
(i) Condition as to Quality or Fitness for Buyer’s purpose
(ii) Where the seller makes a false representation or obtains
consent of the buyer by fraud
(iii) Condition as to Merchantability
(iv) Condition as to Wholesomeness
(v) Condition implied by the Custom or Trade Usage