Sales of Goods Act Explained

By:
ANSHUL SHOKEEN
03080303912

 Originally, the law relating to the sale of goods or
movables was contained in the chapter VII of the Indian
contract act, 1872.
 The sale of good Act , 1930 was laid down to define and
amend the law relating to the sales of goods or movables.
The act came into force on 1st day of july,1930. it
extended to the whole of India except Jammu and
Kashmir.
2

 Section 4(1) of the sales of goods act , 1930 defines
the term contract of sale as : ‘a contract of sale of
goods is a contract where by the seller transfer or
agrees to transfer the property in goods to the
buyer for the price.
3

5
Two Parties
Goods
Price
Transfer of general property
Essential elements of a valid
contract

 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.
6

7
Existing goods
Future goods
Contingent goods
Specified
goods
Unascertai
ned
goods

Basis Sale Agreement to sale
Transfer of
property
Property in goods passes from
seller to buyer immediately: an
Executed contract
To take place in future: an executory
contract
Risk of loss Of the buyer even though goods
are in possession of the seller
Of the seller even though goods are
in possession of the buyer
Types of goods Existing and specific goods only Future and contingent
Consequence of
breach
If there is breach by buyer, seller
can sue for price, possession does
not matter
If there is breach by buyer, seller
can sue for damages and not for
price, possession does not matter
Right to resale Seller cannot re-sale the goods. If
he does, the second buyer does not
get the title to the goods
Second buyer gets a good title.
Original buyer can only sue the
seller for damages.
9

A stipulation in a contract of sale with reference to goods which are
subject thereof may be a condition or a warranty.
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 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 rise to a
claim for damages but not to a right to reject the goods and
treat the contract as repudiated.
Whether a stipulation in a contract of sale is a condition or a
warranty depends in each case on the construction of the
contract. A stipulation may be a condition, though called a
warranty in the contract.
10

The Contract Act used the word ‘warranty’ in this
ambiguous sense and did not define it. The result was that
the courts had to decide on the construction of each
section whether the word ‘warranty’ was used in the strict
sense of the English Law, as it was . The present Act avoids
this confusion and uses the words ‘condition’, and
‘warranty’ and draws a distinction between the two.
Basis Condition Warranty
Value Essential to the main purpose of
the contract
Collateral to the main purpose
Breach Aggrieved party can repudiate the
contract of sale
Aggrieved party can claim
damages only
Treatment Breach of condition may be
treated as breach of warranty
Breach of warranty cannot be
treated as breach of condition
11

Performance of a contract of sale
means as regards the seller, delivery of the goods to
the buyer, and the buyer, acceptance of the delivery
of the goods and payment for them, in accordance
with the terms of the contract of sale (Sec. 31).
If the contract contains any special terms as to
delivery and acceptance, these must be compiled
with. If there are no terms in the contract to this
effect, delivery of the goods and payment of the
price are concurrent conditions, i.e. both these must
take place at the same time as in, for instance, a
cash sale over a shop counter Sec. 32)
Delivery of Goods
Delivery means voluntary transfer of possession of
goods from one person to another (Sec. 2(2)..
12

 Payment and delivery are concurrent conditions (Sec. 32):
Unless otherwise agreed, delivery of the goods and payment of the
price are concurrent conditions, that is to say, the seller shall be
ready and willing to give possession of the goods to the buyer in
exchange for the price, and the buyer shall be ready and willing to
pay the price in exchange for the possession of the goods.
 Effect of part delivery (Sec. 34):
A delivery of part goods, in progress of the delivery of the whole,
has the same effect, for the purpose of passing the property in such
goods, as a delivery of the whole; but a delivery of the part of the
goods with an intention of severing it from the whole, does not
operate as a delivery of the remainder.
 Buyer to apply for delivery (Sec. 35)
Apart from any express contract, the seller of the goods is not
bound to deliver them until the buyer applies for the delivery 13

 Place of delivery Sec. 36 (1): Where the place at which delivery of
the goods is to take place is specified in the contract, the goods
must be delivered at that place during business hours on a working
day. Where there is no specific agreement as to place, the goods sold
are to be delivered at the place at which they are at the time of sale.
 Time of delivery Sec. 36 (2): where under the contract of sale the
seller is bound to send the goods to the buyer, but no time for
sending them is fixed, the seller is bound to send them within
reasonable time.
 Goods in possession of a third party Sec. 36(3): When at the
time of sale the goods are with a third party, there is no delivery by
the seller to the buyer until such third party acknowledges to the
buyer that he holds them on his behalf.
 Cost of delivery Sec. 36(5): Unless otherwise agreed, all expenses
of and incidental to making of delivery are borne by the seller, but
all expenses of and incidental to obtaining of delivery are borne by
the buyer.
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 Delivery of wrong quantity Sec 37
1. Delivery of goods less than contracted for: The buyer may
reject the goods. If he accepts them, he shall pay for them at
the contract rate. Sec 37(1)
2. Delivery in excess of the quantity contracted for: The buyer
may (i) accept the whole: or (ii) reject the whole: or (iii)
accept the quantity he ordered and reject the rest. If buyer
accept the whole of the goods so delivered, he must pay for
them at the contract rate. Sec. 37(2)
3. Delivery of goods contracted for mixed with other goods:
The buyer may accept the goods which are in accordance
with the contract and reject the rest, or may reject the whole.
Sec. 37(3)
 Installment delivery Sec. 38:
Unless otherwise agreed, the seller is not entitled to deliver
the goods by installments and if he does so, the buyer is not
bound to accept the goods.
15

Rights of the buyer:
 Right to have delivery as per contract
 Right to reject the goods
 Right to repudiate : unless otherwise agreed, the buyer of
goods has a right not to accept delivery thereof by
installments.
 Right to notice of insurance: unless otherwise agreed,
where the goods are sent by the seller to the buyer by a sea
route, the buyer has a right to be informed by the seller so
that he may get the goods insured.
 Right to examine
 Right against the seller for breach of contract
16

Duties of the buyer:
1. Duty to accept the goods and pay for them in exchange for
possession
2. Duty to apply for delivery
3. Duty to demand delivery at a reasonable hour
4. Duty to take risk of deterioration in the course of transit
5. Duty to intimate the seller where he rejects the goods
6. Duty to take delivery
7. Duty to pay price
8. Duty to pay damages for non-acceptance
17

Section 45. ‘Unpaid seller defined
The seller of goods is deemed to be an ‘unpaid seller’ when-
(a) when the whole of the price has not been paid or tendered ;
(b) when a bill of exchange or other negotiable instrument has
been received as conditional payment, and the condition on
which it was received has not been fulfilled by reason of the
dishonour of the instrument or otherwise. [Sec. 45(1)]
The term ‘seller’ includes any person who is in the position of a
seller, as, for instance, an agent of the seller to whom the bill of
lading has been indorsed, or a consignor or agent who has
himself paid, or is directly responsible for, the price [Sec.45(2)]
18

Rights of an
unpaid seller
Against the
goods
Where the
property
In the goods
has
passed
{Sec 46(1)]
Lien
(Se. 47 to
49)
Stoppage in
Transit
(Sec. 50 to
52)
Re-sale
(Sec.54)
Where the
property
In the goods
has not
passed
{Sec 46(2)]
Withholding
delivery
Stoppage in
Transit
Against the
buyer
personally
Suit for price
(Sec. 55)
Suit for
Damages
(Sec. 56)
Repudiation
Of contract
(Sec. 60)
Suit for
Interest
(Sec.61)
19

Where the property in goods has passed to the buyer, an unpaid seller has
the following rights against the goods
1. Right of lien :A lien is a right to retain possession of goods until
payment of the price.
2. Right of stoppage in transit
3. Right of re-sale : the unpaid seller can resale the goods-
a. Where the goods are of a perishable in nature; or
b. Where he gives notice to the buyer of his intention to re-sell the goods
and the buyer does not within a reasonable time pay or tender the price.
20

These rights of the seller against the buyer are called rights in
personam as against the rights in rem (i.e. rights against the goods),
and are in addition to his rights against the goods. The rights in
personam are as follows:
1. Suit for price
2. Suit for damages for non-acceptance
3. Repudiation of contract before due date: Where the buyer
repudiates the contract before the date of delivery, the seller may
either-
i. Treat the contract as subsisting and wait till the date of delivery, or
ii. He may treat the contract as rescinded and sue for damages for
breach. This rule is known as the ‘rule of anticipatory breach of
contract’.
4. Suit for interest 21

Sales of Goods Act Explained

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