Sale of Goods Act 1930
Definition of Contract of Sale
Section 4(1) 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.” In other words, a contract to transfer the ownership of goods from the seller to the buyer is known as contract of sale.
Transfer of property 4. Price 6. Goods 5. Two parties 3. Contract 2.Essentials of a contract of sale
The following are essentials of a contract of sale of goods: 1. Other formalities
. Sale and agreement to sell 7.
Risk of loss 5.Difference between sale and agreement to sell
Sale 1. Right of resale 7. Insolvency of seller 9. Type of goods 3. Nature of contract Agreement to sell
. Transfer of property 2. Nature of rights 4. Consequences of breach 6. Insolvency of the buyer 8.
Kinds of goods
• Existing Goods
– Ascertained goods – Unascertained goods
• Future Goods • Contingent Goods
Goods to be put into deliverable state 5. counted. The rules regarding transfer of property in goods are as under: 1. 6.Transfer of property
The phrase transfer of property in goods means transfer of ownership of the goods. tested etc. Intention of parties 3. Unascertained goods 2. Goods delivered on approval
. Specific goods in deliverable state 4. Goods to be measured. Delivery to the carrier 8. Unconditional appropriation 7.
(Sec 31) Delivery of goods.Rules of delivery of goods or Performance of Contract
The parties should include the terms in their contract regarding time. etc. place. Delivery means a “voluntary transfer of possession from one person to another”
. delivery of goods. if the contract is silent the rules contained in the sale of goods act apply. acceptance of delivery and payment of price.
in such case the control over the goods is transferred o Constructive delivery When there is a change in the possession of goods without any change in the actual custody of the goods
.Mode of Delivery o Actual delivery When the goods are physically handed over by the seller or his agent to the buyer or his agent o Symbolic delivery When the goods are in bulk.
Rules of delivery of goods
• • • • • • • • • • • • • • • • Duties of seller and buyer Delivery and payment Mode of delivery Effect of part delivery Demand of delivery Place of delivery Time of delivery Possession by third party Expenses of putting the goods into deliverable state Wrong delivery Installment deliveries Delivery to carrier Examining the goods Acceptance of delivery Rejection of goods Refusal to take delivery
Doctrine of Caveat Emptor
he must blame himself for this mistake. the buyer cannot hold the seller liable. According to the principle. it is the duty of the buyer to be careful while purchasing goods of his requirement. If the buyer at the time of purchase depends upon his own skill and makes a bad choice. If the goods prove to be defective or do not suit his purpose.Caveat Emptor
Caveat emptor means let the buyer beware.
. He should ensure that the goods are suitable for his purpose. The buyer should examine the goods thoroughly.
he must inform to the buyer about those defects provided those defects are not obvious. But if the defects are obvious. the seller is not bound to inform to the buyer.Caveat Emptor (Cont…. the seller is under an obligation to inform the buyer of any defect in the goods sold at the time of contract except in a case where the defect is obviously known to the buyer. It means that if the defects are in the knowledge of seller.)
According to Sections 16 (a).
B. B could return it as it does not correpond with description. describing that it is pentium IV.Exceptions to the doctrine
1-Purchase by description When the goods are purchased by description. the doctrine of caveat emptor does not apply if the goods do not correspond with the description.
. but subsequently found that it is pentium III. Example: Mr. Mr. A is selling computer to Mr.
the buyer is entitled to reject the goods.
. B can reject it. Example: C sells an air filter to B saying that is genuine and fit for a Corolla car.Exceptions to the doctrine
2-Purchase by samples and description When the goods are purchased by sample as well as by description and the bulk of the goods do not correspond both with the sample of with the description. B finds that it is fit for Corolla car but not genuine.
C can reject the car. that he needs a car for touring purpose.
.Exceptions to the doctrine
3-Fitness for purpose The doctrine of Caveat emptor does not apply when the buyer informs the seller about particular purpose for which he needs the goods and relies upon the seller’s skill and judgment. Example: C tells B. B sells a car which is not made for touring purpose. The seller must supply the goods which shall be fit for the buyer’s purpose. a car dealer.
Exceptions to the doctrine
4-Merchantable Quality When the goods are bought by description from a seller who deals in goods of that description. But if the buyer has examined the goods. B was held liable for damages.
. It was contaminated by germs. Example: A bought milk from B. a dairyman. there is an implied condition that the goods shall be of merchantable quality. there is no implied condition as regards defects which such examination ought to have revealed. A’s wife got infected and died after drinking the milk.
Example: A purchase a hot water bottle from B. it burst and injured him.Exceptions to the doctrine
5. The proper use of bottle was known to B. B was liable for damages. the principle of caveat emptor does not apply.Usage of trade When the trade usage attaches an implied condition or warranty as to the quality of fitness and the seller deviates from that condition or warranty. When he opened.
. a retail chemist.
X can return it.Exceptions to the doctrine
6. The oil filter does not correspond with a sample. Example: X buys oil filter from Y by showing a sample.Purchase by sample When the goods are bought by sample.
. the principle of caveat emptor does not apply if the bulk does not correspond with the sample or if the buyer is not provided an opportunity to compare the goods with the sample.
Example: A knows that his watch is made in Pakistan. B can reject the contract. the principle of caveat emptor does not apply.Consent by fraud and misrepresentation When the seller intentionally makes a wrong statement to the buyer and the buyer relies on it or when the seller actively conceals the defects in the goods which could not be discovered on reasonable examination. A tells B that it is made in Switzerland. In order to sell his watch.Exceptions to the doctrine
7. B buys the watch.
Who is an Unpaid Seller?
The seller of goods is deemed to be an unpaid seller in the following circumstances: When the whole of the price has not paid or tendered. When a bill of exchange or other negotiable instrument has been received as a conditional payment and it has been dishonoured.
If he sells the goods on credit.
. He must be unpaid wholly or partly.Features of unpaid seller
He must sell goods on cash basis and must be unpaid. If the price is offered by the buyer and the seller refuses to accept it. the seller cannot be called unpaid seller. he is not an unpaid seller during the period of credit. If the term of credit has expired and the price has not been paid. Where the price is paid in the form of negotiable instrument and it is dishonoured.
An unpaid seller can exercise his right of lien in the following cases: Where the goods were sold for cash and not on credit. Where the goods were sold on credit but the term of credit has expired. even the period of credit has not been expired.Right of Lien
Right to lien means the right to retain the possession of goods until the full price is received.
. Where the buyer becomes insolvent.