MEANING OF CONTRACT OF SALE

 According to section 4 of the sale of goods

act, 1930 . ‘Contract of sale of goods is a
contract whereby the seller transfer or agrees
to transfer the property in goods to the buyer
for a price’.
 Essentials of contract of
sale

 1. Seller and buyer

 There must be a seller as well as a buyer.

 ’Buyer’ means a person who buys or agrees to
buy goods
 ’Seller’ means a person who sells or agrees to
sell goods
 2. Good :-
 Sec2[7]
 The subject matter of a contract of a sale
must be goods. The term ‘goods’ means
‘every kind of movable property other than
actionable claims and money and includes
stock and shares, growing crops, and things
attached to or forming part of the land which
are agreed to be served or under the contract
of sale’.
 3. Transfer of property :
 means the general property in goods, and not
merely a special property[Section 2(11)].

 4. Price :
 There must be a price.
 Price here means the money consideration
for a sale of goods[Section 2(10)]
 Types of Goods

 1.Existing Goods Existing goods mean the

goods which are either owned or possessed
by the seller at the time of contract of sale.

 The existing goods may be specific or

ascertained or unascertained
 Specific Goods:-

 These are the goods which are identified and agreed

upon at the time when a contract of sale is made.
 Ascertained Goods: Goods are said to be ascertained
when out of a mass of unascertained goods, the
quantity extracted for is identified and set aside for a
given contract. Thus,
 when part of the goods lying in bulk are identified and
earmarked for sale, such goods are termed as
ascertained goods.
 Unsanctioned / Goods: These are the goods which
are not identified and agreed upon at the time
when a contract of sale is made e.g. goods in stock
or lying in lots.

 Future Goods[Section 2(6)]

 Future goods mean goods to be manufactured or
produced or acquired by the seller after the
making of the contract of sale.
 There can be an agreement to sell only.
 Contingent Goods [Section 6(2)]
 These are the goods the acquisition of which
by the seller depends upon a contingency
which may or may not happen.
 Sale and Agreement to sell
SECTION 4

 1) 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.

 (2) A contract of sale may be absolute or

conditional.
 (3) Where under a contract of sale the
property in the goods is transferred from the
seller to the buyer, the contract is called a
sale, but where the transfer of the property in
the goods is to take place at a future time or
subject to some condition thereafter to be
fulfilled, the contract is called an agreement
to sell.
 (4) An agreement to, sell becomes a sale
when the time elapses or the conditions are
fulfilled subject to which the property in the
goods is to be transferred
 DIFFERENCE BETWEEN SALE AND AGREEMENT TO SELL

 In sale
 Ownership passes to the buyer.
 •It is a executed contract.
 •Risk of loss falls on the buyer.
 •Seller cannot resell the goods

 In Agreement to Sell

 Ownership remains with the seller.

 •It is a executory contract.
 •Risk of loss falls on the seller.
 •Seller can sell goods to third party
 SECTION 7
Goods perishing before making of contract

 The contract of sale is void if the following

three conditions are satisfied:
 •There must be a contract of sale for specific
goods.
 •The goods must have become perished
 or so damaged as no longer to answer their
description in the contract, before making of
the contract.
 Section 8
 An agreement to sell becomes void if the
following four conditions are satisfied:
 •There must be an agreement to sell specific
goods.
 •The goods must have become perished or so
damaged as no longer to answer their
description in the agreement.
 •There must not be any fault of seller or buyer.
 •The risk must not have passed to the buyer,
i.e. the goods must have perished before the
agreement to sell becomes sale.
 Section 9
Ascertainment of price
 (1) The price in a contract of sale may be fixed
by the contract or may be left to be fixed in
manner thereby agreed or may be
determined by the course of dealing between
the parties.
 (2) Where the price is not determined in
accordance with the foregoing provisions, the
buyer shall pay the seller a reasonable price.
 Conditions and Warranties

 Meaning of Condition[Sec.12(2)] : -

 •The stipulation which is essential to the

main purpose of a contract is known as
Condition.
 •The breach of condition gives the aggrieved
party the right to terminate/ repudiate the
contract.
 Meaning of Warranty
[Sec.12(3)]

 •A warranty is a stipulation which is collateral

to the main purpose of the contract, and
 •The breach of which gives the aggrieved
party a right to claim damages but not a right
to reject goods and to terminate/ repudiate
the contract.
Difference Between Condition
And Warranty
 1. Nature: Condition is essential to the main purpose
of the contract. It is of a fundamental nature. The
main purpose of the contract cannot be fulfilled
without the prior fulfillment of this stipulation.
 Warranty is only collateral to the main purpose of
the contract. It is of a subsidiary of inferior
character. Fulfillment of the main purpose of the
contract does not depend upon the fulfillment of the
warranty.
 2. A breach of condition may be treated as a
breach of warranty. A breach of warranty
cannot be treated as a breach of condition.
 Express and Implied
Conditions And Warranties
 Express conditions and warranties are those
which have been expressly agreed upon by the
parties at the time of the contract of sale.

 Implied conditions and warranties are those

which the law incorporates into the contract
unless the parties stipulate to the contrary.
They may be cancelled or varied by an express
agreement or by the course of dealings or by
usage and custom
 IMPLIED CONDITIONS
 1. Condition as to Title:
 Section - 14(a)
 Unless a different intention appears from the contract, there is
an implied condition that the seller has a right to sell the goods
in the case of a sale, and he will have a right to sell the goods in
the case of an agreement to sell at the time when the property
is to pass. Buyer is entitled to repudiate the contract if he finds
the title of the seller to the goods defective

 If the goods delivered can only be sold by infringing a trade

mark, the seller shall be deemed to have broken the condition
that he has a right to sell the goods.
 2. Condition as to Description:

 Sale by Description
 Section 15
 Where there is a contract for the sale of goods
by description, there is an implied condition that
the goods shall correspond with the description;
and, if the sale is by sample as well as by
description, it is not sufficient that the bulk of
the goods corresponds with the sample if the
goods do not also correspond with the
description.
 16. Implied conditions as to quality or fitness

 Subject to the provisions of this Act and of any

other law for the time being in force, there is no
implied warranty or condition as to the quality
or fitness for any particular purpose of goods
supplied under a contract of sale, except as
follows:—
 (1) Where the buyer, expressly or by implication,
makes known to the seller the particular purpose
for which the goods are required, so as to show
that the buyer relies on the seller’s skill or
judgment, and the goods are of a description
which it is in the course of the seller’s business to
supply (whether he is the manufacturer or
producer or not), there is an implied condition that
the goods shall be reasonably fit for such purpose.
 Provided that, in the case of a contract for the sale
of a specified article under its patent or other trade
name, there is no implied condition as to its fitness
for any particular purpose.
(2) Where goods are bought by description from
a seller who deals in goods of that description
(whether he is the manufacturer or producer or
not), there is an implied condition that the
goods shall be of merchantable quality:
Provided that, if the buyer has examined the
goods, there shall be no implied condition as
regards defects which such examination ought
to have revealed.
 (3) An implied warranty or condition as to
quality or fitness for a particular purpose may
be annexed by the usage of trade.

 (4) An express warranty or condition does not

negative a warranty or condition implied by
this Act unless inconsistent therewith
 17. Sale by sample

 (2) In the case of a contract for sale by sample there

is an implied condition—
 (a) that the bulk shall correspond with the sample in
quality;
 (b) that the buyer shall have a reasonable
opportunity of comparing the bulk with the sample;
 (c) that the goods shall be free from any defect,
rendering them unmerchantable, which would not
be apparent on reasonable examination of the
sample
 • Passing of property

 18. Goods must be ascertained.

 19. Property passes when intended to pass.—

(1) Where there is a contract for the sale of
specific or ascertained goods the property in
them is transferred to the buyer at such time
as the parties to the contract intend it to he
transferred
 20. Specific goods in a deliverable state :

 Where there is an unconditional contract for

the sale of specific goods in a deliverable
state, the property in the goods passes to the
buyer when the contract is made, and it is
immaterial whether the time of payment of
the price or the time of delivery of the goods,
or both, is postponed.
 21. Specific goods to be put into a deliverable
state
 22. Specific goods in a deliverable state, when
the seller has to do anything thereto in order to
ascertain price.—
 Where there is a contract for the sale of specific
goods in a deliverable state, but the seller is
bound to weigh, measure, test or do some
other act or thing with reference to the goods
for the purpose of ascertaining the price, the
property does not pass until such act or thing is
done and the buyer has notice thereof
 23. Sale of unascertained goods and appropriation.
—
 (1) Where there is a contract for the sale of
unascertained or future goods by description and
goods of that description and in a deliverable state
are unconditionally appropriated to the contract,
either by the seller with the assent of the buyer or by
the buyer with the assent of the seller, the property
in the goods thereupon passes to the buyer.
 Such assent may be express or implied, and may by
given either before or after the appropriation is
made
 SECTION – 24
 When goods are delivered to the buyer on
approval or “on sale or return” or other similar
terms, the property therein passes to the buyer :
 (a) when he signifies his approval or acceptance to
the seller or does any other act adopting the
transaction;
 (b) if he does not signify his approval or
acceptance to the seller but retains the goods
without giving notice of rejection, then, if a time
has been fixed for the return of the goods, on the
expiration of such time, and, if no time has been
fixed, on the expiration of a reasonable time
Risk prima facie passes with
property: Section 26
 Unless otherwise agreed, the goods remain at the seller’s
risk until the property therein is transferred to the buyer,
but when the property therein is transferred to the buyer,
the goods are at the buyer’s risk whether delivery has
been made or not:
 Provided that, where delivery has been delayed through
the fault of either buyer or seller, the goods are at the risk
of the party in fault as regards any loss which might not
have occurred but for such fault
 Provided also that nothing in this section shall affect the
duties or liabilities of either seller or buyer as a bailee of
 Transfer of title

 Section 27 of the sale of goods act 1930

 Sale by person not the owner.-
Subject to the provisions of this Act and of any
other law for the time being in force, where goods
are sold by a person who is not the owner thereof
and who does not sell them under the authority or
with the consent of the owner, the buyer acquires
no better title to the goods than the seller had,
unless the owner of the goods is by conduct
precluded from denying the seller’s authority to sell.
 Application of rule in section 27

 Nemo dat quod non habet, no one gives what

he does not possess.

 The rule can be demonstrated by the case

of Greenwood v Bennett
 Some of the exceptions of this rule are-

 Transfer of Title by Estoppel (Sec 27 )

 Sale by a Mercantile Agent (sec 27)
 Sale by joint owner:(Sec.28)
 Sale by a person in possession under a voidable
Contract- (section 29)
 Sale by the seller in Possession (Section 30) (1)
 Sale by the buyer in Possession – sec 30(2)
 Resale by an unpaid seller – Sec 54(3)
 Sale by finder of goods- (sec 169, Indian Contract Act)
 Sale by Pawnee- sec 176 of Indian contract act
 Rights of Unpaid seller
 Rights against the goods
Rights against the buyer personally

 a) Right of Lien [Section 47,48 and 49]

 Meaning of Right of Lein:
The  right of lien means the right to retain the possession of the
goods until the full price is received.
 b) Right of Stoppage of Goods in Transit
 c)Right of Resale[Section 46(1) and 54]
 Right of withholding delivery 46(2)
 Right of unpaid seller against the buyer
 Suit for price( 55)
 Suit For damages (56)
 Suit For interest (61(2)
 Remedies for Breach of
Contract

 1. Damages for non-delivery -Section 57

 2. Suit for specific performance - Section 58
 3.Suit for breach of warranty -section 59
 4.Repudiation of contract before due date
Section 60
 5. Suit for interest