SALE OF GOODS ACT, 1930

CONTRACT OF SALE
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.
ESSENTIALS OF A VALID SALE
• PROPERTY- General Vs. Special property
• MOVABLE GOODS
1. Existing goods
• Specific goods
• Generic goods
2. Future goods
• PRICE
• PARTIES
• ALL ESSENTIALS OF VALID CONTRACT
 AGREEMENT TO SELL
• Where the transfer of the property in the
goods is to take place at a future time or
subject to some conditions thereafter to be
fulfilled, the contract is said to be agreement
to sell.
• It can be a sale when the time elapses or the
conditions, subject to which the property in
the goods is to be transferred are fulfilled.
 SALE AND AGREEMENT TO SELL
SALE
1. Executed contract
2. Jus in rem (gives rights to the buyer
to enjoy the goods as against the
world)
3. Property passes immediate
4. Entitled to sue for price and right to
lien, stoppage in transit & re-sale
5. Risk of loss of buyer
6. Insolvency of buyer-must deliver
goods to official assignee & can
claim ratable dividend for price
7. Insolvency of seller-buyer is
entitled to receive the goods from
the official assignee
AGREEMENT TO SELL
1. Executory contract
2. Jus in personnam (gives a right
to the buyer against the seller
to sue for damages)
3. Property passes later
4. Entitled to sue for damages
5. Risk of loss is of seller
6. Insolvency of buyer-seller may
refuse to deliver
7. Insolvency of seller-buyer can
claim ratable dividend.
 Conditions and warranties

• What is Condition?

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 broken.
• What is 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
broken.
Difference : conditions and warranties
CONDITION WARRANTY

(1) A Condition is a term or a A Warranty is a secondary

stipulation basic to the contract. stipulation. It is not an essential
Its breach is the breach of elements of contract.
contract.

Here buyer can not reject the

(2) In case of a breach the buyer goods but can claim damage only.
gets right to reject the goods.
Here there is no such option.
(3) Here, the aggrieved party has
an option to regard the breach of
condition as a breach of warranty.
It is collateral to the main purpose
(4) It directly goes to the root of of the contract.
the contract
 Implied condition
1) Condition as to title:
The person selling the goods must have ownership of the goods and
therefore has a right to sale the goods.
2) Sales by description:
Goods should be same as per the sample or description.
Where the buyer has not seen the goods, where he has seen but relies
on what was stated to him, packing………
3) Sale by sample:
• Goods should be according to samples.
• The buyer must be given an opportunity to compare sample and actual goods.
• The goods should be free from defects.
4) Condition as to quality or fitness
5) Condition as to merchantability : means goods should by such as are
commercially saleable under the description by which they are known in the
market at their full value.
6) Condition implied by custom
7) Condition as to wholesomeness
 Implied warranties
❖ Warranty of quiet possession
❖ Warranty as to quiet possession free from
encumbrances:
The goods shall be free from any charge or
encumbrances in favor of any third party not declared or
known to the buyer before or at the time when the
contract is made.
❖ Warranty to disclose dangerous nature of
goods
 CAVEAT EMPTOR
(BUYER BEWARE)
The buyer must take care of his own
interest while purchasing the goods. He
purchase them at his own risk and has to rely
on his own skill and judgment when he make
purchases.
 EXCEPTION:
• If the seller has made a false representation relating to
goods.
• When the seller has deliberately concealed a defect.
• In the case of goods bought by description from seller
who deals in that class of goods, there is an implied
condition that the goods shall be of merchantable
quality.
• Where the goods are ordered from specific purpose.
• The buyer relies on the skill or judgment of the seller,
there is an implied condition that the goods shall be
reasonably fit for purpose.
 SALE BY NON-OWNERS
“No one can pass or transfer a better title than he himself
possesses”

1. TITLE BY ESTOPPEL
2. SALE BY MERCANTILE AGENT
3. SALE BY ONE OF SEVERAL JOINT OWNERS
4. SALE OF GOODS BY A PERSON IN POSSESSION OF
GOODS UNDER A VOIDABLE CONTRACT
5. SALE BY SELLER IN POSSESSION AFTER SALE
6. SALE BY BUYER IN POSSESSION AFTER AGREEMENT TO
SELL
7. SALE BY AN UNPAID SELLER
8. SALE IN MARKETOVERT- UNDER ENGLISH LAW
 DELIVERY OF GOODS
Voluntary transfer of possession of goods from one person to other person.

TYPES OF DELIVERY:-
1) ACTUAL DELIVERY
when goods are physically handover by the seller to buyer.
2) SYMBOLIC DELIVERY
when the goods are bulky and incapable of actual delivery, the
delivery may be symbolic.
3) CONSTRUCTIVE DELIVERY
When delivery made without any change in actual possession of
goods. Here there is only an acknowledgement by the person in
possession that he hold them on behalf of another.
 RULES OF DELIVERY

• Delivery & payment:

Delivery of goods and payment of price must be
the concurrent conditions.
• Delivery to be made to buyer:
Delivery of goods sold may be made by doing
anything which the parties agree shall be treated
as delivery.
• Part delivery:
Delivery of goods in parts in order to deliver
whole amount.
• Buyer to apply deliver:
Seller is not bound to apply for goods unless
buyer for delivery.
• Mode of delivery:
Mode of delivery is depend upon the contract
between the parties. It may be actual, symbolical
or constructive
• Place and time of delivery:
Delivery of good must be made at place and time
specified and places is specified the place will be,
the place of contract and reasonable time
• Goods with third party:
When the goods are with third party at the
time of sale there is no delivery of goods until
third party acknowledge that he holds the
goods on his behalf.
• Cost of delivery:
Generally all expenses before the delivery of
the goods are to be borne by seller and all
expenses after the delivery of goods are to be
borne by buyer.
• Installment delivery:
Unless agreed, the seller is not bound to
delivery the goods in installment and if he
does not, buyer is not bound to accept.
• Delivery of wrong quantity:
Wrong quantity may be either short delivery,
excess or mixed delivery.
• Goods delivered at distant place-CIF, FOB, Ex-
Shipment
 Rights and duties of buyer
Rights:
• To receive the delivery of goods
• Opportunity to examine the goods
• To sue the seller for damages for non-delivery of
goods
• To recover the amount of paid, if the seller fail to
deliver the goods
• To sue seller for damages for breach of warranty.
Duties:
• To pay for the goods and take delivery their of.
• To compensate the seller for any loss by his refusal to
take delivery.
 Rights and duties of seller
Rights-
• To receive the price of goods
• To receive compensation
• To receive reasonable charge for custody of good
• To sue the buyer for damages, for refusing to accept the
good.
Duties-
• To deliver the goods in buyer demand
• To compensate buyer in case he breach the contract.
• To refund the amount in case he failed to deliver the
good.
• To compensate the buyer in case of delivery of wrong
quantity.
UNPAID SELLER
 LIEN- RIGHT TO RETIAN
The unpaid seller of goods, who is in possession of them is entitled to retain
possession of them until payment or tender of the price in the following cases:

1. Where the goods have been sold without any

stipulation as to credit
2. Where the goods have been sold on credit
and the term of credit has expired. Therefore,
during currency of credit right cannot be
exercised
3. Where the buyer become insolvent and the
seller is in possession of the goods.
 TERMINATION OF LIEN
1. When seller delivers the goods to a goods
carrier or other bailee for the purpose of
transmission without reserving the right of
disposal of goods;
2. When the buyer or his agent lawfully obtains
possession of goods;
3. When the seller waives his right of lien
 Rights of stoppage in transit

Definition:-
Rights of stoppage in transit is the right of
stopping goods transit after unpaid seller has
left the possession of goods. He can repossess
such goods, so long as they are in transit.
Available:-
• The buyer become insolvent.
• The goods are in transit.
• The negotiable instrument given by buyer is
dishonored.
Termination:-
• When buyer pays full price.
• If buyer obtain delivery of goods before
appointed destination.
• If carrier holds good on behalf of buyer.
• When part goods are deliver to buyer then
remainder of goods may be stop in transit.
 Rights of re-sale
Definition:-
The unpaid seller can re-seller the goods,
- where the goods are of a perishable nature.
- where he gives notice to the buyer of his
intention to re-sell the goods and still buyer
does not pay within reasonable time.
 Rights against buyer
Right of withholding delivery:
When the property in goods has not passed to the buyer,
and unpaid seller has a right of withholding delivery which is
similar to the right of lien.
Other rights:
The seller has the following rights against the buyer personally,
- Sue the buyer for the price of the goods.
- The seller may sue the buyer for refusing to accept the
goods.
- Recover interest from the buyer where there is specific
agreement to that effect.
SUITS FOR BREACH OF THE CONTRACTS
 REMEDIES FOR BREACH OF THE
CONTRACTS
REMEDIES AVAILABLE TO THE SELLER
• Suit for price :
Where under a contract of sale, the property in the goods has
passed to the buyer and the buyer wrongfully neglects or refuses
to pay for the goods according to the terms to the contract, the
seller may sue him for the price of the goods.
• Suit for damages :
(1) For non-acceptance :
Where the buyer wrongfully neglects or refuses to accept and
pay for the goods, the seller may sue him for the damages for
non acceptance. The measure of the damages is according to the
provisions of section 73 of The Indian contract Act , depending
upon the available market for the goods.
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(2) For repudiation of the contract :

Where the buyer repudiates the contract before the date of

delivery, the seller may either treat the contacts as
subsisting and wait till the date of delivery, or he may treat
the contract as rescinded and sue for the damages for the
breach.
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REMEDIES AVAILABLE TO THE BUYER
• Suit for damages for non-delivery of the goods :
Where the seller wrongfully neglects or refuse to deliver the
goods of the buyer, the buyer may sue the seller for non delivery.
• Suit for specific performance
• Suit for breach of warranty :
Where there is a breach of warranty by the seller, the buyer may :
(1) set up against the seller, the breach of warranty or diminution
of the price
(2) sue the seller for damages for the breach of warranty.
• Suit for repudiation of the contract –anticipatory breach:
Where the seller repudiates the contract before the date of
delivery, the buyer may either treat the contract as subsisting and
wait till the day of delivery.