The Sales of Goods Act, 1930


The contract of sale : 

contract of sale of goods is a contract whereby a seller transfers or agrees to transfer the property in goods to the buyer for price´  Contract of sale is a generic term which includes both a sale as well as an agreement to sell.

Main features : 

There must be at least two parties Transfer or agreement to transfer the ownership of goods The subject-matter of the contract must necessarily be µGoods¶ The consideration is price A contract of sale may be absolute or conditional All other essentials of a valid contract must be present

SALE It creates right in REM It is Executed contract If the goods are destroyed the loss falls on the buyer even if the goods are in the possession of seller Seller can sue for the price of the goods The seller can not sell to third parties The buyer is entitled to recover the specific property from the assignee if the seller becomes insolvent The seller is only entitled to the ratable dividend of the price due if the buyer becomes insolvent Ownership passes to the buyer AGREE.TO SELL Right in Personam Executory contract Seller/buyer In case of breach by the buyer the seller is entitled only to damages It can Buyer can claim only ratable dividend for the money paid The seller may refuse to sell the goods to the buyer w/o payments if the buyer becomes insolvent Ownership remains with the seller .

Subject matter of contract of saleSec.6 GOODS Existing Goods Specific Goods Ascertained Goods Future Goods Contingent Goods Un ascertained Goods .

Let the Buyer Beware ± is applied .e.  No Representation: CAVEAT EMPTOR¶ i.Conditions and Warranties  Representation: Statement made by the seller before entering into a contract  Stipulation: If such representation forms an integral part of the contract and other party relies upon it.

12(2) A condition is a stipulation essential to the main purpose of the contract breach of which gives rise to a right to treat the contract as repudiated1 .CONDITION : Sec.

12(3) A warranty is a stipulation collateral to the main purpose of the contract the breach of which gives rise to a claim for damages but not right to reject the goods and treat the contract as repudiated2 .Warranty : Sec.

Difference b/w condition & warranty : as to value  Difference as to Importance  Difference as to Breach  Difference as to Treatment  Difference .

When condition is to be treated as warranty: Sec.13(1)-13(3) of condition  Compulsory treatment of breach of condition as breach of warranty  Waiver .

62  Express .Conditions : Expressely provided in the contract  Implied conditions & warranty : which the law implies in a contract of sale Implied condition & warranty may be negatived or varied by an express agreement or by the course of dealings b/w parties or by the usage & customs of trade.Sec.

62 is based upon two maxims:  Expression Facit Cessare Tacitum i. customs & agreements overrule law(Implied condition & warranty) .e. what is expressed makes what is tacit or implied to cease  Modes et conventio vincent Legem i.e.Sec.

15) B) Conditions as to Merchandibility [Sec.16) Sale by Sample (Sec.16(2)] C) Conditions as to wholesomeness D) Conditions as to fitness for a particular purpose (Sec.17) Sale by sample as well as by description (Sec.15) .14(a)] Sale by description: A) Goods must correspond to description (Sec.Implied conditions :         Conditions as to title [Sec.

 Warranty .Implied Warranties : of Quiet possession-Sec.14(6)  Warranty against encumbrancesSec.14(c)  Warranty to disclose dangerous natures of goods.

Sale under fitness for buyers purpose 2. Sale under merchandable quality 3.CAVEAT EMPTOR Let the µBuyer Beware¶ The maxim Caveat Emptor does not apply & the contract will be subject to the implied conditions under the following circumstances : 1. Consent by Fraud . Sale under usage of trade 4.

Possession of Goods  When does the property in goods pass from the seller to buyer ?  1.Insolvency .If the goods are lost or damaged  2.Damage to goods by third party  3.Transfer of Title/Property in Goods ± Sec.18-25  Property in Goods mean?  Property in goods Vs.

18-25) Specific or Ascertained Goods .When does the property pass from seller to the buyer?(Sec.

20-24)  1) Specific goods in Deliverable State (Sec.Rules as regards Ascertaining Intention (Sec.20)  Goods are said to be in D/S when they are in such state that the buyer would under the contract be bound to take delivery of them  2) Specific goods not in a Deliverable state (Sec.21) .

for ascertaining the price .  Unascertained or future goods (Sec.18)  Sale ³On Approval´ or ³Sale or Return´ basis  Where . test or to do some other thing with reference to them.there is a contract for the sale of specific goods in a deliverable state but the seller is bound to weigh. measure. the property does not pass till such act or thing is done and the buyer has notice of it.

if a time has been fixed for the return of the goods.  When he signifies his approval or acceptance to the seller or does any other act. and if no time has been fixed on the expiration of a reasonable time. then. on the expiration of such time. . adopting the transaction If he does not signify his approval or acceptance to the seller but retains the goods w/o giving notice of rejection.

27)  Maxim : µNemo dat quod non habet¶ .Transfer of Title by Non Owners  General rules as to transfer of title (Sec.

27)  Sale by a joint owner/coowner (Sec.30)  Sale by a buyer in possession of goods  Sale by an unpaid seller (Sec.54) .29)  Sale by a seller in possession of goods after sale (Sec.28)  Sale by a person in possession under a voidable contract (Sec.EXCEPTIONS TO THE RULE:  Sale by mercantile agent (Sec.

. prima facie.64) A sale by auction is a public sale in which goods are offered to the highest bidder  In above case following rules apply:  1) when the goods are put up for sale in lots. to be the subject matter of a separate contract of sale. each lot is deemed.Sale by Auction (Sec.

but not otherwise. the seller or any person on his behalf may bid at Auction . 2) At an auction. the sale is complete when the auctioneer announces its completion by the fall of the hammer or in other customary manner. It is also the practice to say 3 times.  3) A right to bid may be reserved expressly by or on behalf of the seller & where such right is expressly so reserved. until such completion any bidder may withdraw his bid.

sale is voidable at the option of the buyer . 4) The sale may be notified to be subject to a reserved or upset price  5) If the seller makes use of pretended bidding to raise the price.

DELIVERY (Sec.2[2])    µVoluntary transfer of possession of goods from one person to another¶ 1) Physical or Actual Delivery: Physical possession of the good is handed over by the seller to the buyer 2) Constructive Delivery: When a third person who is in possession of the goods acknowledges that he holds the goods on behalf of the buyer .

g: Handing over the key of a godown to the buyer . Symbolic Delivery: Delivery is made by indicating or giving a symbol e.

Rules as to Delivery (Sec.39) :           Mode of delivery Delivery & payment Effect of part delivery Buyer to apply for delivery Place of delivery Goods in possession of a third party Time of delivery Expense of delivery Instalment delivery Delivery to a carrier or wharfinger .

45) :    A seller is deemed to be an U/S when: 1) The whole of the price has not been paid or tendered 2) A bill of exchange or other negotiable instrument has been received as a conditional payment & the condition on which it was received has not been fulfilled by reason of dishonor of the instrument .Unpaid Seller (Sec.

Rights of an U/S :  1) Right against goods:  a) Lien on goods  b) A right of stoppage-in-transit  c) A right of Re-sale .

A) Lien on Goods (Sec.47-49) in case:  i) the goods are not sold on credit  ii) the goods have been sold on credit. but the period of credit has expired  iii) the buyer becomes insolvent .

after the arrival at their destination.B. the carrier acknowledges to the buyer that he holds on his behalf If the carrier wrongfully refuses to deliver the goods to the buyer .50-52)     The transit is end in following cases: If the buyer obtains the possession of the goods before its arrival at the destination If.Right of stoppage in transit (Sec.

C.Right of Re-sale (Sec.54)  Where the goods are of perishable nature  When the buyer does not pay the price .

55)  Suit for damages for Non Acceptance (Sec.Rights of an U/S against the buyer personally:  Suit for price (Sec.2.61) .56)  Suit for damages for Breach of contract  Suit for Interest (Sec.

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