SALES OF GOODS ACT

(1930)

PRESENTATION BY:
ABHA PILLAI ANJALI SINGH
KALYANI PATEL
INDRANI DUTTA
ANNPURNA VERMA
 TOPICS COVERED……….
 Formation of contract of sales and its
element
 Difference between sale and
Agreement to sell
 Classification of goods
 Conditions and warranties
 Rule of Caveat Emptor
 Unpaid seller
 Auction sale
 THE HISTORY OF SALES OF GOODS ACT

 Sale of goods act was enacted in 1930.

 Borrowed from the English act.

 Came into force in July, 1930.

 Prior to the act, the law of sale of

goods was contained in chapter VII of
the Indian contract act,1872.
 TOPIC 1
Formation
of
contract of sale and
its essential
DEFINITION………..
 Sec 4(1) of the Indian Sale of
Goods Act, 1930 defines the
contract of the 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”.
MEANING…..
The term “Contract of sale of goods’
is a generic term and it includes
A. Sale and
B. An agreement to sell
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.
Essentials of a contract of sale
 Two parties- buyer and seller

 Goods

 Price

 Transfer of general property

 Essential elements of a valid contract

 A contract of sale may be absolute or conditional.

 TOPIC 2
DIFFERENCE
BETWEEN SALE
AND AGREEMENT
TO SELL
Difference………
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.
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.
Difference……….
Sale
 In case of breach of a
contract, seller can sue for
the price of the goods .
 The seller is only entitled to
the ratable dividend of the
price due if the buyer
becomes insolvent.
 The buyer is entitled to
recover the specific
property from the assignee
if the seller becomes
insolvent.
Agreement to sell
 In case of breach of a
contract, seller can sue only
for damages not for the
price.
 The seller may refuse to
sell the goods to the buyer
w/o payments if the buyer
becomes insolvent.
 Buyer can claim only
ratable dividend for the
money paid.
TOPIC 3

Classification
of
goods
Classification

FUTURE

EXISTING CONTINGENT
Topic 4
Conditions
and
warranties
[sec 12]
Terms……….
 Representation: Statement made by the seller
before entering into a contract.

 Stipulation: If such representation forms an

integral part of the contract and other party
relies upon it.

 No Representation: CAVEAT EMPTOR’

i.e., Let the Buyer Beware – is applied
Condition And Warranty
 “A sTiPulATiOn in A COnTRACT Of sAlE
with reference to goods which are
subject matter there of, may be a
COndiTiOn OR A wARRAnTy.”

 These stipulations forms a part of the

contract of sale and breach of it
provides a remedy to the buyer against
the seller.
 Condition [sec12(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.”

 It goes to the root of the contract.

 Its non fulfillment upsets the very basis

of the contract.
 Condition [sec12(2)]
 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.
Distinction ……..
Condition Warranty
 It is a stipulation  It is a stipulation
which is essential for which is collateral to
the main purpose of the main purpose of
the contract. the contract.
 In case of breach of  In case of breach of
a condition, the warranty, the
aggrieved party can aggrieved party can
repudiate the claim damages only.
contract of sale.
Distinction……
Condition Warranty
 A breach of  The breach of
condition may warranty
be treated as cannot be
breach of treated as a
warranty. breach of a
condition.
TYPES…….
 Express Conditions :
Expressly provided in the
contract
Implied conditions &
warranty(sec 14 to 17) : Which
the law implies in a contract of
sale
 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 Warranties :
 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).
When conditions to be treated as
warranty

 Voluntary waiver of condition: where a

contract of sale is subject to any condition
to be fulfilled by the seller, the buyer may
 (a) waive the condition or

 (b) elect to treat the breach of the

condition as a breach of warranty. If the
buyer once decides to waive the condition
he cannot afterwards insists on its
fulfillment.
When conditions to be treated as
warranty

 Acceptance of goods by buyer: where

a contract of sale is not severable and
the buyer has accepted the goods or
part thereof, the breach of any
condition to be fulfilled by the seller
can only be treated as a breach of
warranty. Unless there is an agreement
to the contrary.
 Topic 5

Rule
of
Caveat Emptor
 CAVEAT EMPTOR
Let the ‘Buyer Beware’
The maxim Caveat Emptor does not apply
& the contract will be subject to the
implied conditions under the following
circumstances :
1. Sale under fitness for buyers purpose
2. Sale under merchantable quality
3. Sale under usage of trade
4. Consent by Fraud
 Exceptions……
Fitness for buyer’s purpose.
Sale under a patent or trade
name.
Merchantable quality
Usage of trade
Consent by fraud
 Topic 6

Unpaid Seller(sec
45)
Unpaid Seller (Sec.45)
 A seller of goods is deemed to
be an unpaid seller when:-
 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.
Unpaid seller - Rights
1) Right against goods:
 Where the property in the goods has passed
 Lien on goods
 A right of stoppage-in-transit
 A right of Re-sale
 Where the property in the goods has not passed
 Withholding delivery
 Stoppage in transit

2) Right against the buyer:

 Suit for price
 Suit for damages
 Repudiation o contract
 Suit for interest
 Unpaid seller - Rights
3) Right to resale
 Where the goods are perishable
 Where unpaid seller gives notice of his intention to resale the
goods
 Where the seller expressly reserves his right of resale.
 Topic 7

Auction sale
(sec 24(a))
 Auction sale [Sec 24(a)]
 Auction sale is a public sale to any person
bidding the highest upon the terms and
conditions already mentioned for the goods
to be sold.in an auction anyone can be a buyer
and even the seller does not know what price
he will get for his goods.
 An auction is a process of buying and
selling goods or services by offering them up
for bid, taking bids, and then selling the item
to the highest bidder.
Auction sale - Rules
 In the case of sale by auction-
1. where goods are put up for sale in lots, each lot is prima facie
deemed to be the subject of separate contract of sale.

2. the sale is complete when the auctioneer announces its

completion by the fall of the hammer or in other customary
manner, and, until such announcement is made, any bidder may
retract his bid.

3. a right to bid may be reserved expressly by or on behalf of the

seller and, where such rights is expressly so reserved, but not
otherwise, the seller or any one person on his behalf may,
subject to the provisions hereinafter contained, bid at the
auction,
Auction sale - Rules
4. where the sale is not notified to be subject to a right to bid
on behalf of the seller, it shall not be lawful for the seller to
bid himself or to employ any person to bid at such sale, or
for the auctioneer knowingly to take any bid from the seller
or any such person, and any such person,and any sale
contravening this rule may be treated as fraudulent by the
buyer.
5. the sale may be notified to be subject to a reserved or upset
price.
6. if the seller makes use of pretended bidding to raise the
price, the sale is voidable at the option of the buyer.
Conclusion