THE SALE OF GOODS ACT * Definition [Section - 4 (1)] The sales of goods Act defines a contract of sale of goods as “A contract where by the seller transfers or agrees to transfer the property in goods to the buyer for a price”. Includes both a ‘sale’ and ‘an agreement to sell.’ The term ‘contract of sale’ is a generic term and includes both a ‘sale’ and an ‘agreement to sell’. Sale - Where under a contract of sale the property in the goods is immediately transferred at the time of making the contract from the seller to the buyer, the contract is called a ‘sale’ [Sec. 4(3)]. It refers to an ‘absolute sale’. It is an executed contract. An agreement to sell - Where under a contract of sale the transfer of 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’ [Sec. 4(3)]. It is an executory contract and refers to a conditional sale. ‘Scanned with CamScannerEssential Characteristics of Sale of Goods ° Two parties: There should be two parties namely the buyer and seller. ¢ Transfer of Property: ‘Property’ here means ‘ownership’. Transfer of property in the goods is another essential of a contract of sales of goods. A mere transfer of possession of the goods cannot be termed as sale. To constitute a contract of sale the seller must either transfer or agree to transfer the property in the goods to the buyer. * Goods: The subject-matter of the contract of sale must be ‘goods’ According to Section 2(7) “goods means every kind of movable property other than actionable claims and money; and includes stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale.” * Price: The consideration for a contract of sale must be money consideration called the ‘price .’ If goods are sold or exchanged for other goods, the transaction is barter, governed by the Transfer of Property Act and not a sale of goods under this Act. ‘Scanned with CamScanner“Sale’ and ‘Agreement to Sell’ Distinguished * Nature of Contract — Sale is an executed contract, whereas an agreement to sell is an executory contract. ¢ Transfer of Property — In sale it passes to buyer immediately, while in an agreement to sell agreed io be passed in future. * Seller’s right of resale — The seller has no right to resell even if it is in his possession. In an agreement to sell the seller may deal with goods, though he may be accused of a breach of the agreement. * Risk of loss — In sale buyer is to bear the risk of subsequent loss of or damages to the goods not caused by the fault of the seller, even though the goods may be in possession of the seller. In an agreement to sell, the seller is to bear the risk. ‘Scanned with CamScannerSubject Matter of Contract of Sale + The subject matter in sales of goods is ‘goods. The subject-matter of the contract of sale must be ‘goods’ According to Section 2(7) “goods means every kind of movable property other than actionable claims and money; and includes stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale.” * Types of Goods 1. Existing goods; 2. Future goods; 3. Contingent goods ‘Scanned with CamScannerypes of Goods Cont... 1. Existing goods: At the time of sales if the goods are physically in existence and are in possession of the seller the goods are called ‘Existing Goods’. Existing goods can be classified into specific, ascertained or unascertained. (a) Specific goods - Goods identified and agreed upon at the time of the making of the contract of sale are called ‘specific goods’. (b) Ascertained goods — Goods identified subsequent to the formation of the contract of sale. However, in actual practice the term ‘ascertained goods’ is used in the same sense as ‘specific goods. (b) Unascertained or Generic goods. Goods, which are not separately identified or ascertained at the time of the making of the contract, are known as ‘unascertained goods,’ They are indicated or defined only by description. The distinction between ‘specific’ or ‘ascertained’ and ‘unascertained’ goods is important in connection with the rules regarding ‘transfer of property’ from the seller to the buyer. ‘Scanned with CamScannerTypes of Goods Cont. 2. Future goods: Goods to be manufactured or produced or acquired by seller after the making of the contract are called future goods. 3. Contingent goods: Goods, the acquisition of which by the seller, depends upon an uncertain contingency. It is also treated as a type of future goods. ‘Scanned with CamScannerConditions and Warranties * Condition [Sec. 12(2)]: “A condition’ is a stipulation essential to the main purpose of the contract, the breach of which gives rise to a right to reject goods and treat the contract as repudiated. ¢ Warranty [Sec. 12(3)]: *A warranty’ is a stipulation collateral to the main purpose of the contract, the breach of which gives the aggrieved party a right to sue for damages only, and not to treat the contract as repudiated. + There is no fix rule as to which stipulation in a contract is a condition or warranty. Whether a stipulation in a contract of sale is a condition or a warranty depends in each case on the construction of contract. A stipulation may be a condition, though called a warranty in the contract [Sec 12(4)]. ‘Scanned with CamScanner