Sales of goods

Meaning
 Sec 40 of NCA: A contract relating to sale of goods
shall be deemed to have been concluded in case any
seller agrees to hand over any goods to the buyer
immediately or in the future by receiving a price.
Explanation
For the purpose of this chapter, the term 'goods' means
any type of movable property except currency and
security and actionable claim .
 Cont..
 A contract relating to sale of goods may be
conditional or unconditional.
 A contract may be concluded with a provision
to sell goods owned or possessed by the seller
or those to be produced or acquired by
him/her in the future.
 Essential of sales of goods
1. Two parties.
2. goods: movable property which can be bought
and sale.
3. Price: According to sec 43 of NCA, except
otherwise agreed the price of the goods must be
fully paid as follows in the following
circumstances.
a) buyer must pay the price of the goods to the
seller at the time of purchasing the goods.
 Cont…
b) Payment of the goods should be in cash.
Here the term cash includes: cheques, traveler
cheque, promissory notes, bill of exchange .
Letter of credit, bank draft, credit cards and
telegraphic transfers.
4) Transfer of ownership.
5) Essential elements of valid contract.
 Types of goods
1. Existing goods: Existing goods are goods which are
physically present in some person’s possession and
ownership.
2. Future goods: Future goods are goods to be
manufactured or produced or acquired by the
seller after the making of the contract of sales.
3. Contingent goods: contingent goods are goods the
acquisition of which by the seller depends upon a
contingency which may or may not happen.
 Sales and agreement to sell
Sales:
 where under a contract of sales the property in the goods is immediately
transferred at the time of making contract from the seller to the buyer.
 It is executed contract; So risk of goods also transfer to buyer.
 If buyer breach contract; seller can sue the buyer for the price even though the
goods are in his possession.
 If seller breach contract; buyer can sue for specific performance or sue for damages
against the seller and can sue against the third person as a position of owner.
 If the seller is adjudged insolvent, the buyer is entitled to recover the goods from
the Official receiver or Assignee.
 If the buyer is adjudged insolvent before paying the price, the seller must deliver
the goods to the official receiver or assignee because the ownership of goods has
transferred to the buyer. Seller have right to claim ratable dividend for the unpaid
price.
 Cont..
Agreement to sell:
 where under a contract of sale the transfer of property in the
goods is to take place at the future time or subject to some
condition thereafter to be fulfill, the contract is called ‘an
agreement to sell.
 It is executory contract (i.e something remain to be done); so
risk also doesnot pass to the buyer.
 If buyer breach contract; seller can sue the buyer for
damages(not for price) even though the goods are in his
possession.
 If seller breach contract; buyer can sue for damages only.
 Cont…
 If the buyer has already paid the price and the
seller is adjudged insolvent, the buyer can only
claim a retable dividend and not the goods
because property right is still rests with the seller.
 If the buyer is adjudged insolvent before paying
the price, the seller can refuse to deliver the
goods unless he is paid full price of the goods
because the ownership has not transferred to the
buyer.
 Conditions and Warranty
Conditions
In simple words, a condition is an essential
requirement of the contract on which the
whole contract depends and if that
requirement of contract is breached then the
sufferer has right to reject the contract itself.
 Cont..
Warranty
Warranty is a stipulation collateral to the main
purpose of contract, the breach of which gives
the aggrieved party a right to sue for damage
only, and not to avoid the contract itself.
Express and Implied condition and warranties

A. Express condition and Express warranties:

those which are expressly provided in the
contract.
B. Implied condition and Implied warranties:
Implied condition and implied warranties are
those which the law implies into the contract
unless the parties stipulate to the contrary.
 Express or Implied condition
1. Condition as to title : implied condition emphasizes
that when a person seeks to sell some goods, there
is unspoken assurance from him that the entitled to
sell them and pass the property to the buyer.
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 Cont..
2. Sales by description(sec 44(1)): In case the name, brand,
trademark or specification of goods to be sold are mentioned
in the contract, the contract shall be deemed to have been
concluded to sell goods of the same name, brand, trade mark
or specification.
3. Condition as to fitness or quality: the goods supplied shall be
reasonably fit for the purpose for the buyer wants .
4. Sale by sample(sec 47): In case provisions have been made in
a contract to sell goods after inspecting their samples directly
or otherwise, it shall be deemed to have been signed to sell
goods after inspecting their samples.
 Cont..
5. Condition as to merchantability: goods
should be commercially salesable under the
description by which they are known in the
market at their full value
6. Condition as to wholesomeness: this
condition is implied only in a contract of
eatables.
 Express or Implied warranty
1. Warranty as to quiet or undisturbed possession:
2. Warranty of freedom encumbrances(burden):
3. Disclosure of dangerous nature of goods:
 Doctrine of “Caveat Emptor”
Caveat Emptor means let the buyer beware. The
person who buys goods must keep his eyes
open, his mind active and should be cautions
while buying the goods.
If buyer makes bad choice he must suffer the
consequences of lack of skill and judgment in
the absence of any misrepresentation or
guarantee by the seller.
Exception to the doctrine of Caveat Emptor

1. In case of misrepresentation by seller:

2. In case of concealment of defect:
3. In case of sale by description:
4. In case of sale by sample:
5. Fitness for buyer’s particular purpose:
6. Where goods are not merchantable:
7. Sales under patent, trademark:
 Transfer of ownership
 The main purpose of sale is the transfer of
ownership from the seller to the buyer.
Ownership is a legal rights over the goods of a
person.
 In a sale, any risk of the goods also is
transferred with the ownership of goods
because risk follows ownership.
Transfer of ownership is important because:
 Cont..
a. Risk passes with ownership
b. Only owner have right to take action if goods
are damaged by anyone.
 Rules regarding transfer of ownership

1. Transfer of ownership of specific or

ascertained goods:
a. transfer of ownership at the time of
contract: Except when otherwise provided for in the contract,
in case a contract has been signed in such a situation that specific
goods can be delivered immediately, the parties shall be deemed to
have the intention of delivering them after concluding the contract
or paying their price.
 Cont..
b. Goods not in deliverable stage: where there is a contract for
sale of specific goods and the seller is bound to do something to
the goods for the purpose of putting them in a deliverable state,
the property does not pass until such thing is done.
c. When the price of goods is to be ascertained by weight,
measure and examine: In case a contract has been signed in such
a situation that specific goods can be delivered immediately, and
in case the buyer has to weight, measure and examine them or
execute any function to determine their price, such goods shall
not be delivered until such functions are executed and
information thereof is supplied to the seller within a reasonable
period. them or execute any function to determine their price
 Cont..
2. Transfer of ownership of unascertained
goods: unascertained goods may transfer after
unascertained goods are ascertained.
 Unpaid seller
The seller of goods is deemed to be unpaid
seller;
a. When the whole of the price has not been
paid. Or
b. When a conditional payment was made by
bill of exchange or other negotiable
instrument, and the same has been
dishonored.
 Cont..
In simple words, an unpaid seller is one who has
sold goods on cash terms and does not include
a seller who has sold goods on credit. An
unpaid seller has a two fold right, one against
the goods, and the other against the buyer
personally.
 Cont..
1. Rights against goods:
a. right of lien
b. right of re sale
c. right of stoppage in transit
2. Right against buyer personally
a. sue for price
b. sue for damages
 Performance of contract of sales
1. Voluntary transfer or delivery of goods
2. Acceptance of the goods by the buyer
3. Payment of price of goods.