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(1) Two Parties: The first essential is that there must be two distinct parties to a contract
of sale, viz, a buyer and a seller, as a person cannot buy his own goods. However, there
may be a contract of sale between one part-owner and another part-owner [Section
4(1)]. A partner may, therefore, buy the goods from the firm in which he is a partner and
vice-versa.
(2) Mutual Consent: Just the presence of two parties is not sufficient. The parties must
agree on the transfer of property
. (3) Transfer of Property: What a contract of sale stipulates is the transfer of property i.e.
the ownership of the goods and not the possession of the goods.
(4) Goods: Goods means every kind of movable property other than actionable claims
and money. But it 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. [Sec. 2(7)]. Since the price of the goods is expressed in terms of the
money, money itself cannot be bought, and hence, money is not considered as goods.
(5) Price: Under a contract of sale, property in the goods is transferred to the buyer for a
price. Price is the money consideration for the goods. (
6) Varied requirement as to delivery and payment: The contract may provide for the
immediate delivery of goods or immediate payment of the price or both,
(7) Requires no formalities: (Sec.5) The sale of goods act does not provide for a valid
contract; mere offer and acceptance thereof forms a contract; it can be made either of
the two and accepted by the other. Neither the payment nor delivery is necessary at the
point of making the contract. It can either be verbal or in writing or both or understood
through the conduct of parties involved.
The use of the word “condition” appears to have originated in the 17th century. In my second chapter I
have discussed about it in brief. The Sale of Goods Act, 1930 defines the term condition in section 12(2).
According to this definition a condition can be defined as a stipulation which is so vital to the contract that
its complete and exact performance by one party is condition precedent to the obligation of the other party
to perform his part.
A stipulation in a contract of sale with reference to goods which are the subject thereof may be a condition
or a warranty. [section 12(1)]. 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. [section 12(2)]. 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. [section 12(3)]. 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. [section 12(4)].
Where a particular stipulation in contract is a condition or warranty depends on the interpretation of terms
of contract. Mere stating 'Conditions of Contract' in agreement does not mean all stipulations mentioned
are 'conditions' within meaning of section 12(2).
Seller :- A person who sells the goods or agrees to sell the goods is called seller.
In simple words, "Unpaid seller" means a person who has sold the goods for a price but price has not been
paid to him.
ii. And where a bill of exchange or other negotiable instruments has been accepted by him as a condition
on which it was received has not been fulfilled by reason of dishonor of the instrument or otherwise.
It is also declares that any person who is in the position of a seller like agent is also considered seller.
1. Right of Lien :-
For the recovery of price an unpaid seller has a right to keep the goods in his own possession.
Example :- Mr. Hunny sells the goods to Mr. Abhijit for Rs. 10 lac. Mr. Abhijit pays 5 lac and promises to
pay the remaining 5 lac after two month. Mr. Hunny has a right of lien on the goods.
2. Right of Stopping :-
If buyer becomes insolvent, an unpaid seller has a right of stopping the goods in transit.
Example :- "X" sells 100 bales of cotton to "Y" but delivery will be two stages. "X" delivers 50 bales first.
Later on he comes know that "Y" has become insolvent. "X" can stop delivery of bales in transit.
3. Right of Resale :-
An unpaid seller is considered the owner of the goods until he is not paid by the buyer. So he has a right to
Example :- "X" sells one horse to "Y" on credit. "Y" does not pay. "X" can resell to other person.
4. Right of Delivery :-
The unpaid seller has a right of with holding the delivery of goods where the property in the goods has not
5. Right of Claim :-
The unpaid seller has also a right to claim the buyer for the prices of goods.
i. Suit For Price :- If the goods have passed to the buyer and buyer refuse to pay the price, the seller can
Example :- "M" sells the goods to "Y" for Rs. 5 lac. "Y" refuses to pay. "M" can sue for price.
ii. Suit For Damages For Non Acceptance :- If buyer refuses to accept and pay for the goods, the seller
has the right to sue him for damages non-acceptance. He can recover only damages and not full price.
iii. Suit For Interest & Special Damages :- The unpaid seller can recover the reasonable interest on the
unpaid price goods sold. The seller can also sue the buyer for special damages where both the parties are