Sale of Goods Act,1930

John Charles Lobo

MBA Jan 2021 Batch
PV-2
Agenda
• Introduction
• Definition & Applicability
• Essentials of a Contract of Sale
• Goods and Classification
• Sale & Agreement to sell
• Stipulation, Condition & Warranty
• Doctrine of Caveat Emptor
• Exceptions to the Doctrine of Caveat Emptor
• Rights of Unpaid Seller

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Introduction
• Contracts or agreements related to the sale of goods are governed under the Sale of Goods Act 1930. This act came
into effect on the 1st of July 1930 in the whole of India except the state of Jammu and Kashmir. Let us learn some
important definitions and provisions of the act.

• Definitions of Important Terms • Passing of Property – Part 1

• Sale and Agreement of Sale • Passing of Property – Part 2

• Ascertainment of Price • Passing of Risk

• Concept of Condition and Warranty • Transfer of Title

• Express and Implied Conditions • Performance of Contract of Sale

• Express and Implied Warranties • Rights of Unpaid Seller against Goods

• The Doctrine of Caveat Emptor • Rights of Unpaid Seller against Buyer

• Auction Sale

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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

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Essentials of a Contract of Sale
Valid contract

Two Parties

Goods

Transfer of Property

Price

‘Sale’ and ‘Agreement to sale’

No formalities are required

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Goods | According to Sec 2(7)
• 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
Includes Excludes
Growing Crops Immovable Property
Standing Timber Actionable Claim
Grass Money/ Currency
Old Currency
Water, Gas, Electricity
Trademark
Goodwill
Shares( After allotment)
Stock

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Classification of Goods

Goods

Existing Future Goods Contingent

Specific Ascertained Unascertained

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Sale & Agreement to Sell
Sale Agreement to sell
The ownership is transferred immediately At some future date
Executed contract Executory Contract
A seller can sue for price. He has all the right of unpaid seller A seller can sue for damages
Sale takes place in the case of existing goods usually. An agreement to sell takes place in the case of future goods
A buyer bears the risk. A seller bears the risk

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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

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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.

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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

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Rights of Unpaid Seller
Right of Lien

When the property in

Right of stoppage in
the goods has been
goods transit
transferred

Right against goods Right to Resale

When the property in

Right of withholding
the goods has not been
Right of Unpaid transferred
delivery

Seller Suit for price

Right against the buyer Suit for damages for

personally non- acceptance

Suit for special damage

and interest

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 Thank You

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