Sales of goods act...

Introduction
 The sale of goods act was originally included in
chapter VII of the Indian contract act
 Borrowed from the English Sales of Goods
Act,1893
 Came into force in July 01, 1930
 It extends to whole India except J& K.

Definition
Sec 4(1) of the Indian Sale of Goods Act, 1930 defines the contract of sale of goods in
the following manner:
“ 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 CONTRACT OF
SALE
 There must be at least two parties.
 Transfer or Agreement to transfer the ownership of goods.
 The subject matter of the contract must necessarily be 'goods'. Sale of
immovable property is not covered under this act.
 The consideration is Price.
 A Contract of sale may be in writing or by words.
 All other essentials of a valid contract must be present

Goods
 'Goods' means every kind of moveable property 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.
 Actionable claims and money are not included in the definition of goods.
Types of goods:
 Existing goods
 Future goods
 Contingent goods

 Existing goods: Goods which are physically in existence and which are in
seller's ownership and/or possession, at the time of entering the contract of
sale are called 'existing goods.' Where seller is the owner, he has the general
property in them.
 . Future goods: Goods to be manufactured, produced or acquired by the seller
after the making of the contract of sale are called 'future goods' [Sec. 2(6)].
These goods may be either not yet in existence or be in existence but not yet
acquired by the seller.
 3. Contingent goods: Though a type of future goods, these are the goods the
acquisition of which by the seller depends upon a contingency, which may or
may not happen [Sec. 6 (2)]

Sale and agreement to sale
 where the seller transfers the ownership rights to the buyer immediately on
making the contract, it is the contract of sale, but where the ownership rights are
to pass on some future date upon the fulfillment of certain conditions then it is
called an agreement to sell.
Sale:
 It is a contract where the ownership in the goods is transferred by seller to the
buyer immediately at the conclusion contract. Thus, strictly speaking, sale takes
place when there is a transfer of property in goods from the seller to the buyer. A
sale is an executed contract.
 It must be noted here that the payment of price is immaterial to the transfer of
property in goods.
 Ex : A sells his Yamaha Motor Bicycle to B for Rs. 10,000. It is a sale since the
ownership of the motorcycle has been transferred from A to B.

Agreement to sale:
 It is a contract of sale where the transfer of property in goods is to take place
at a future date or subject to some condition thereafter to be fulfilled.
 Ex: A agreed to buy from B a certain quantity of nitrate of soda. The ship
carrying the nitrate of soda was yet to arrive. This is `an agreement to sale`.
In this case, the ownership of nitrate of soda is to be to transferred to A on the
arrival of the ship containing the specified goods (i.e. nitrate of soda) [Johnson
V Mcdonald (1842) 9 M & W 600, 60 RR 838]
 On 1st March 1998, A agreed to sell his car to B for Rs. 80,000. It was agreed
between themselves that the ownership of the car will transfer to B on 31st
March 1998 when the car is got registered in B`s name. It is an agreement to
sell and it will become sale on 31st March when the car is registered in the
name of B.

DIFFERENCE
BETWEEN
Sale
 Ownership passes to
the buyer.
 It is a executed
contract.
 Risk of loss falls on the
buyer.
Seller cannot resell the
goods.
 It can be in case of
existing and specific
goods.
 In case of breach of a
contract, seller can sue
for the price of the
goods
Agreement to sell
 Ownership remains
with the seller.
 It is a executory
contract.
 Risk of loss falls on the
seller.
 Seller can sell goods to third
party.
 It can be in case of future
and unascertained goods.
 In case of breach of a contract,
seller can sue only for
damages not for the price.

MEANING OF CONDITION:
 A condition is a stipulation –
(a) which is essential to the main purpose of
the contract
(b) the breach of which gives the aggrieved
party a right to terminate the contract.
 It goes to the root of the contract.
 Its non-fulfillment upsets the very basis of the
contract.
Sec 12(2) of Sales Of Goods Act, 1930has defined
Condition as:
“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”.

Example :- [Behn v. Burness,1863]
 By charter party( a contract by which a ship is hired for the carriage of goods),
it was agreed that ship m of 420 tons “now in port of Amsterdam” should
proceed direct to new port to load a cargo. In fact at the time of the contract
the ship was not in the port of Amsterdam and when the ship reached
Newport, the charterer refused to load. Held, the words “now in the port of
Amsterdam” amounted to a condition, the breach of which entitled the
charterer to repudiate the contract

Warranty:
 It is a stipulation collateral to the main purpose of the contract
 It is of secondary importance
 If there is a breach of a warranty, the aggrieved party can only claim damages
and it has no right to treat the contract as repudiated.
 Sec 12(3) of Sale Of Goods Act, 1930has defined Warranty as :
 “A warranty is a stipulation collateral to the main purpose of the contract, the
breach of which gives rise to only claim for damages but not to a right to
reject the goods and treat the contract as repudiated”.

Difference between condition and warrenty :
Condition Warranty
1. A condition is a stipulation
(in a contract), which is
essential to the main
purpose of the contract.
2. A breach of condition gives
the aggrieved party a right
to sue for damages as well
as the right to repudiate the
contract.
3. A breach of condition may be
treated as a breach of
warranty in certain
circumstances.
1. A warranty is a stipulation,
which is only collateral or
subsidiary to the main
purpose of the contract.
2. A breach of warranty gives
only the right to sue for
damages. The contract
cannot be repudiated.
3. A breach of warranty cannot
be treated as a breach of
condition.

EXPRESS AND IMPLIED CONDITIONS
AND WARRANTIES
 Conditions and Warranties may be either express or implied.
 They are said to be "express" when they are expressly provided by the parties.
 They are said to be 'implied' when the law deems their existence in the contract
even without their actually having been put in the contract.

IMPLIED CONDITIONS :
 Conditions as to title
[Sec.14(a)] [Rowland v.
Divall,(1923)]
 Sale by description
[Sec.15] [Bowes
v.shand,(1877)]
 Condition as to quality or fitness.[Sec.16(1)]
 Conditions as to Merchantability [Sec.16(2)]
[R.S.Thakur v. H.G.E. corp.,A.I.R.(1971)]
 Conditions implied by custom[Sec.16(3)].
 Sale by Sample (Sec.17)
 Condition as to wholesomeness.
Implied warranty :
 Warranty of Quiet possession-Sec.14(6)
 Warranty against encumbrances-Sec.14(c)
 Warranty to disclose dangerous natures of
goods.
 Warranty as to quality or fitness by usage
of trade – Sec.16(4).

DOCTRINE OF CAVEAT EMPTOR
 Caveat Emptor is a fundamental principle of the law of sale of goods
 It means "Caution Buyer", i.e. "Let the buyer beware".
EXCEPTIONS:
In case of misrepresentation by the seller
 In case of concealment of latent defect
 In case of sale by description
 In case of sale by sample
 In case of sale by sample and description
 Fitness for a particular purpose
 Merchantable quality

TRANSFER OF PROPERTY:
 Transfer of property in goods from the seller to the buyer is the main object of a
contract of sale.
 “property in goods” means the ownership of goods
 It is important to know the precise moment of time at which the property in goods
passes from the seller to the buyer for the following reasons
 Significance – Time of transfer of ownership of goods decides various rights and
liabilities of the seller and buyer.
 Risk – Owner to bear the risk and not the person who merely has the
possession
 Action against third party – Owner can take action and not the person who
merely has possession.

Unpaid seller :
 A seller of goods is deemed to be an unpaid sellerwhen:-
The whole of the price has not been paid or tendered;
A bill of exchange or other negotiable instrument has been received as a conditional payment,
and the condition on which it was received has not been fulfilled by reason of the dishonour
of the instrument or otherwise
RIGHTS OF AN UNPAID SELLER:
 Against goods
 Against buyer personally

AGAINST GOODS
 Where the property in goods has passed to the buyer
 Right to lien
 Stoppage of transit
 resale
 Where the property in goods has not passed to the buyer
 Withholding delivery
 Stoppage in transit

Against the buyer personally:
 Suit for price
 Suit for damages
 Suit for anticipartary breach of contract
 Suit for interest
 Suit for specific performance

Sales of goods act...

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