SALE OF GOODS ACT 1930

Definition, basic concepts

scope of this Act
Conditions and Warranties
Implied Conditions and Warranties
Performance of sales contracts
Conditional sales
Unpaid Vendor – Rights of unpaid vendor
 Sale of Goods Act, 1930
SCOPE
The Sale of Goods Act is a kind of Indian Contract Act.

It came into existence on 1 July 1930.

It is a contract whereby the seller transfers or agrees to transfer the title
(ownership) in the goods to the buyer for consideration.

It is applicable all over India, except Jammu and Kashmir.

The goods are sold from owner to buyer for a certain price and at a given
period of time.

The act has 66 Sections and VII Chapter.

 Sale & Agreement to sell
Section 4 of Sale of Goods Act define the term "Sale" and "agreement to sell" as follows-

As per 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. There may be a contract of sale
between one part-owner and another.”

As per Section 4 (2), “A contract of sale may be absolute or conditional.”

As per Section 4 (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.”

As per Section 4 (a), “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.”
Essential elements of a Contract of
Sale
1.Two parties: buyer and a seller, to affect a contract of sale and they must be competent
to contract.
2.Goods: The goods which form the subject-matter of the contract of sale must be movable.
Transfer of immovable property is not regulated by the Sale of Goods Act.

3.Price: Price is an essential ingredient for all transactions of sale and in the absence of
the price or the consideration, the transfer is not regarded as a sale.

4.Transfer of general property: There must be a transfer of general property as

distinguishes from special property in goods from the seller to the buyer.
5.Essential elements of a valid contract
 Goods
Goods are any merchandise or possession. An important clause in
the contract for sale goods is described in Section 2(7) as:
• It is a moveable property (except for money and actionable
claims)
• Stocks and shares
• Growing crops, grass, standing timber
The things that are attached to the land but are agreed to be
severed before the sale.
 Types of Goods (Section 6)
Specific
Section 2(14)

Existing Ascertained

Contingent Unsanctioned
Goods or
Sec 2(6) Unascertained

Future
Sec2(6)
 Find the type of goods

1.A wants to sell a Bike of a certain model and year of

manufacture, and B agrees to buy the bike.
2.There is a bulk of 1000 quinols of wheat out of which
500 quinols are agreed to be sold..
Sale of Goods Act 1930 – Important Terms (vedantu.co
m
)
IDENTIFY THE GOODS TYPE
 BASIS FOR SALE AGREEMENT TO SALE
COMPARISON

1. Meaning The exchange of goods for The parties of the contract agree to
money consideration takes exchange the goods for a price at a future
place immediately, it is known specified date is known as an Agreement
as Sale. to Sell.

2. Nature Absolute Conditional

3. Type of Executed Contract Executory Contract

Contract

4. Transfer of risk Yes No

5. Title The title of goods transfers to The title of goods remains with the seller
the buyer with the transfer of as there is no transfer of goods.
goods
 BASIS FOR SALE AGREEMENT TO SALE
COMPARISON
6. Right to sell Buyer Seller
7. Consequences of Responsibility of buyer Responsibility of seller
subsequent loss or
damage to the goods

8. Tax GST is charged at the time of No tax is levied.

sale.
9. Suit for breach of The buyer can claim damages from the Here the buyer has the right
contract by the seller seller and proprietary remedy from the to claim damages only.
party to whom the goods are sold.

10. Right of Right to sue for the price. Right to sue for damages.
unpaid seller
Example When A goes to the grocery store, pay When B agrees to sell A 5 Kg of
the money in return for a few Kgs of gram/ beans every month.
gram/ beans, etc.
 ACTIVITY
Mohit is entering into a contract to sell 100 bales of cotton to Ramesh at
$1000 per bale. Mohit put a term that he will sell only after the payment of
50% done by Ramesh as a advance.

Point of discussion: Is this a Contract of Sale?

if a resort is offering complimentary food along with lodging and customers

do not want to take the food.

Point of discussion: whether the customer can rebate for the food??
 Case Study

Case Study on Application of The S

ale of Goods Act 1930 (lawteacher.
net)
 STIPULATION
A requirement or a particularized goods in an agreement

STIPULATION

CONDITIONS WARRANTY
 CONDITIONS AND WARRANTY
Conditions:
A condition is a stipulation essential to the main purpose of the
contract, the breach of which gives rise to a right to treat the
contract as repudiated”. [Sub-section (2)]
Warranty:
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 to a right to reject the goods and treat the contract as
repudiated”. [Sub-section (3)]
 IMPLIED CONDITIONS AND WARRANTY

Implied’ conditions and warranties are those, which

the law includes into the contract unless the party’s
stipulate hostile. 
SEC.62 says Implied conditions and warranties might
be call off or diverse by an express agreement or by
the advancement of dealings or by usage and
custom.
 Implied conditions
1. Conditions as to title  subject matter must be there

2. Condition as Per Description  even the small part of the product to be mentioned

3. Condition as to Sale by Sample  sample pieces can be bought if its convinced

4. Sale by Sample as well as a Description When products are sold through the sample as well as

description

5. Condition Referring to the Quality or Fitness of a Product  the product must fit.

6. Condition as Per Merchantability  damaged products not to be considered

7. Condition Based on Wholesomeness  eatable items.

 Implied Warranty
Warranty as to
Undisturbed
Possession

Warning against
the Dangerous
Nature of a Good

Warranty for the

absence of Third-
party Charges