Sale of Goods

According to the section 4(I) of the sale of Goods Act defines

– “A contract whereby the seller transfers or agrees to
transfer the property in goods to the buyer for a price”.

Essentials Characteristics
1. Two parties – buyer, seller - typewriter
2. Transfer of property – general property and special
property
3. Goods – Actionable claim and money – book debt,
promissory note
4. Price
5. Includes both a sale and an agreement to sell
 Sale – immediate transfer of property
 An agreement to sell – Future date

6. No formalities to be observed –

Distinguished between Sale and Agreement to sell

1. Transfer of property – immediate/future date

2. Risk of loss - buyer/seller
3. Consequences of breach – price
4. Right of resale –
5. Insolvency of buyer before he pays for the goods –
official receiver or assignee, the seller is entitles only to
a rateable dividend for the price of he goods
6. Insolvency of seller if the buyer has already paid the
price -
Distinguish between Sale and Hire Purchase
1. In a sale , property is transferred immediately, whereas in
hire purchase the property in the goods passes to the
hirer upon payment of the last installment.
2. Buyer is the owner of the goods but in hire purchase till
the last payment seller is the owner.
3. Buyer cannot terminate the contract, hirer can terminate
the contract retuning the goods
4. Seller take the risk of any loss resulting fro buyer
insolvency, the owner takes no such risk if hirer fails to
pay the installment
5. Buyer can pass a good title to a bonafide (genuine)
purchaser from him but the hirer cannot pass any title
even to a bonafide purchaser.
6. Sales tax is levied (charge) at the time of the contract, hire
purchase sale tax is not levied until it ripens (mature) into
a sale
Hire Purchase and agreement to sell
In hire purchase the owner is bound to sell if the hirer pay
installment as agreed or reject the agreement at any time
and delivery of goods is necessary
There is no option to the buyer to buy or terminate the contract
and delivery of goods is not essential at the time of
contract.
Kinds of Goods
1. Existing Goods :
 Specific/ascertained goods
 Unascertained goods : sugar
2. Future goods : selling milk, mangoes
3. Contingent goods: rare painting
Effect of perishing Of Goods
Perishing means not only physical destruction but also
damage , loss of goods by theft, goods have been lawfully
requisitioned by the government. sec 7& 8

Essentials
1. Perishing of goods at or before making of the contract sec
7
 Perishing the whole goods : ship had been cast away and
goods were lost, dead horse
 Perishing only a part of the goods : nut
2. Perishing of goods before sale but after agreement to sell :
8 days contract for horse and seller should bear the loss –
future goods – grow potatoes.
Price
The money consideration for a sale of goods is known as price.
Sec 2(10 )

Modes of Fixing the price

1. It may be expressly fixed by the contract itself : alternative

price -cows milk
2. It may be fixed in accordance with an agreed manner
provided by the contract : particular date, offered by third
party.
3. It may be determined by the course of dealings between
the parties : price prevailing on the date of placing the
order
4. If the price is not capable of being determined in
accordance with any of the above modes, the buyer is
bound to pay to the seller a reasonable price : market price
of the goods prevailing on the date of supply
Earnest or Deposit
Money deposited with the seller by the buyer as security for
due fulfillment of the contract is called earnest or deposit.
If contract goes off because of the buyer, the seller is
entitled to forfeit ( give up) it and in case of default of the
seller , buyer is entitled to recover. If on the breach by the
buyer, seller sue him for the breach and earnest is to be
taken as the diminishing amount of damage.
Stipulations as to Time
1. Stipulation relating to time of delivery of goods : if seller
makes a delay in case of fixed time the contact is voidable
at the option of buyer.
2. Stipulation relating to time of payment of the price : seller
has o deliver the goods on the appointed day if buyer fails
to pay but seller may claim compensation.
Transfer of property in goods means transfer of ownership of
the goods. Property in goods is different from possession
of goods. Possession refers to the custody overt he goods.
The precise moment of time at which property in goods passes
from the seller to the buyer is of great importance from
various points of view. Special notice
1. Risk passes with property : if the property is transferred to
the buyer, the goods are at the buyer risk. Example : A
buys goods to B and property has passed to him.
2. Action against third parties : it is only the person in whom
the property vests who can take action against the
wrongdoer.
3. Suit for price : seller can sue if goods has delivered
properly.
4. Insolvency of the seller or the buyer :
Rules regarding Transfer of Property
1. Transfer of property in specific or ascertained goods
 When goods are in a deliverable state : A buys bicycle for
300 TK on a month’s credit.
 When goods have to be put into a deliverable state :
Buying Oil
 When the goods have to be measured etc, to ascertained
price : goat skins
 When goods are delivered on approval : horse sale or
return within 8 days/after the expiry of the day B
retained the horse.
2. Transfer of property in unascertained and future goods :
Essentials
 The goods must be of contract description both as to
quality and quantity.
 It must be made with intention to appropriate goods too
specific contract and it must not due to mere accident or
mistake.
 Assent must be made by both the parties.
 The seller should not reserve to himself the right of
disposal of the goods until and unless certain conditions
are fulfilled.
 Delivery to carrier : railway
 Reservation of right of disposal :
Rule of Transfer of Title on Sale
“ the seller cannot transfer to the buyer of goods a better title
than he himself has “
The buyer cannot get a good title to the goods unless he
purchases the goods from a person who is the owner
thereof or who sells them under the authority or with the
consent of the owner.
Transfer of Title by Non–Owners
1. An unauthorized sale by a mercantile agent : A mercantile
agreement means an agent having in the customary course
of business as such agent authority either to sell goods, or
to consign goods for the purposes of sale, or to buy goods,
or to raise money on the security of goods.
 He should be in possession of the goods or document of
title to the goods in his capacity as mercantile agent and
with the consent of the owner.
 He should sell the goods while acting in the ordinary
course of business
 The buyer should act in good faith without having any
notice, at the time of the contract, that the agent has no
authority to sell
2. Transfer of title by estoppels :” estoppel arises when you
are precluded from denying the truth of anything, which
you have represented as a fact, although it is not a fact” .
 The owner standing by, when the sale is effected , or
 still more, by his assisting the sale, or
 by permitting goods to go into possession of another with
all the insignia of possession thereof and apparent title, or
 if he has otherwise acted or made representations so as to
induce the buyer to alter his position to his prejudice.
example – car sell
3. Sale by a joint owner : Cow sell
4. Sale by person in possession under voidable contract
Example – A, by misrepresentation induces B to sell an
deliver to him a cow. ‘A sell the cow to C before B has
rescinded the contract .C purchases the cow in good faith
and without notice of the seller’s defective title. C acquire
a good title.
5. Sale by seller in possession after sale: It is essential that
the possession of the seller must be as seller and not as
hirer or bailee.
6. Sale by buyer in possession after ‘ agreement to buy’ : an
option to buy is not agreement to buy. Example A buy in
installment , before paying the total installment sell to B .
The actual owner sue A but not B.
7. Resale by an unpaid seller :
8. Exceptions under other Acts :
 Sale by finder of lost goods
 Sale by pawnee or pledgee under certain circumstances
 Sale by official receiver in case of insolvency of an
individual and liquidators of companies
 Under the negotiable instruments Act, a holder in due
course gets a better title than what his endorser had.
Delivery
Delivery of goods means voluntary transfer of possession of
goods from one person to another. If transfer of
possession of goods is not voluntary, possession is
obtained under pistol point or by theft, there is no
delivery.

Modes of delivery
1. Actual delivery – hand over the goods physically - car sell.
2. Symbolic delivery – possession transfer – handover the
key of the godown or document of title.
3. Constructive delivery or delivery by attornment – three
parties involved here warehouseman, seller and buyer.
Rule as to Delivery of Goods
1. Delivery may be either actual or symbolic or constructive
2. Delivery and payment are concurrent conditions – cash
sell
3. Effect of part delivery, when property in goods is to pass
on delivery – if seller delivers only a part of goods with an
intention to deliver rest of goods. Property is passed to
buyer. But without intention it is not delivery of goods.
4. Buyer to apply for delivery –
5. Time of delivery – question of fact
6. Place of delivery –
 Goods to be delivered at which they are at the time of the
sale.
 In agreement to sell goods are to be delivered when they
are at the time of the agreement to sell.
 In case of future goods , goods are to be delivered at the
place at which they are manufactured or produced.
7. Delivery of goods where they are in possession of a third
party – constructive delivery– bill of lading or railway
receipt
8. Expenses of delivery – seller
9. Delivery of wrong quantity or different quality – defected
goods , entitle the buyer
i) To reject the whole
ii) To accept the whole
iii) To accept the quantity and quality he ordered and reject
the rest of the goods so delivered
10. Installment deliveries –
i) The quantitative proportion which the breach bears to
the contract as a whole
ii) The degree of profitability of the repetition of the
breach– meat delivery.
11. Delivery to carrier or wharfinger –
12. Liability of buyer for neglecting or refusing to take
delivery of goods -