THE SALE OF GOODS ACT 1930

INTRODUCTION
According to Sec 4(1) of the Sale of Goods Act, 1930, 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 The contract of sale is a generic term which includes both sale as well as an agreement to sell

Hire- Purchase Agreement

Governed by Hire Purchase Act, 1972 It is a bailment plus an agreement to sell. Ownership of goods is transferred on payment of the last installment, when the option to purchase is exercised. The hirer has an option to terminate the agreement at any time before the ownership is transferred. The hirer vendor has a right to reposes the goods if the hirer defaults. Must be in writing

Subject Matter Of Contract Of Sale

According to Sec. 2(7) goods means every kind of movable property other than actionable claims and money Includes stocks and shares, growing crop, grass and things attached to or forming part of the land which are agreed to be severed before sale or under contract of sale Trade marks, copyrights, patent rights, goodwill, electricity, water, gas are all goods Actionable claim means a claim which can be enforced through the courts of Law Money means the currency of the country.

Classification Of Goods
Existing Goods
Specific Goods Ascertained Goods Unascertained Goods

Future Goods-Sec2(6)which the seller does not posses

at the time of agreement to sale.

Contingent

Goods-Sec6(2) Acquisition of which depends upon a contingency, which may or may not occur

Destruction of goods (only specific goods) Sec7- Goods perishing before making a contract. Sec8- Goods perishing after the agreement to sell but before the sale is effected.

The Price
Sec. 2(10) Price means the money consideration for a sale of goods. Modes of Determining the price. Sec9(1) It may be fixed by the contract. It may be left to be fixed in an agreed manner. It may be determined by the course of dealing between the parties. Agreement to sell at valuation Earnest vs. Advance Payment

CONDITIONS AND WARRANTIES

Sec12(1) A stipulation in a contract of sale of goods maybe a condition or a warranty Sec12(2) Condition is a stipulation 1. Which is essential to the main purpose of the contract. 2. The breach of which gives the aggrieved party a right to terminate the contract.

 Sec12(3) a Warranty is a stipulation1. Which is collateral to the main purpose of the contract 2. The breach of which gives the aggrieved party the right to claim damages but not the right to reject goods and terminate the contract. When Condition to be Treated as Warranty 1. Voluntary waiver of condition 2. Acceptance of goods by buyer

Condition
1.Condition is essential to the main purpose of the Contract. 2.The aggrieved party can terminate the contract.

Warranty

1. Warranty is collateral to the main purpose of the Contract. 2. The aggrieved party can claim damages but not terminate the contract. 3. A breach of condition can be 3. Cannot be treated as Treated as breach of warranty. breach of condition.

Express and Implied Conditions and Warranties

Express Conditions & WarrantiesExpressly implied in the contract Implied conditions Condition as to title {sec14(a)} Sale by Description {sec15} Sale by Sample {sec17} Sale as to Quality and Fitness {sec16(1) Condition as to Merchantability{sec16(2) Condition as to Wholesomeness Condition Implied by Custom {sec16(3)}

Implied Warranties
Warranty of Quit Possession. Sec14[b] Warranty of Freedom from Encumbrances. Sec14(c) Warranty to disclose dangerous nature of Goods Exclusion of Implied conditions and Warranties Express agreement between the parties The course of dealing between them The custom or usage of trade

Caveat Emptor
Let the Buyer beware
Subject to the provision of this Act and any other law for the time being in force, there is no warranty and condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale

Exceptions To Caveat Emptor

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 as well as description Fitness for a particular purpose

Transfer of Property
Transfer of property implies transfer of ownership and not the physical possession of goods. Risk follows ownership. Action against the third party. Insolvency of the seller or the buyer. Sue for price.

Passing Of Property
General Rule:

1. Goods must be ascertained. (Sec.18) 2. Intention of the parties.(Sec19)

Specific Goods
Goods identified and agreed upon when the contract was made

Passing of property at the time of the contract. Passing of property delayed beyond the date of the contract:
a) Goods not in a deliverable state b) When the price of goods is to be ascertained by weighing

 Unascertained Goods and Future Goods

Goods which have not been identified and agreed upon at the time when the contract is made.

1. Goods must be ascertained. 2. Goods must have been unconditionally appropriated by the seller or the buyer with the consent of the other. 3. Delivery to a carrier may bea) Absolutely for the buyer b) Absolutely for the seller

 Goods sent on approval (Sec.24) 1. When the buyer signifies his approval or acceptance to the seller. 2. When the buyer does some act adopting the transaction. 3. When the buyer fails to return the goods (a) On the expiry of fixed time (b) On expiry of reasonable time. (if no time has been fixed)

 Reservation of rights of disposal. (Sec25)

Ownership of the goods will not be transferred to the buyer until the conditions imposed by the seller are fulfilled, even if the goods have already been delivered.

1. In case of goods deliverable to the order of seller or his agent. 2. In case of drawing a Bill of Exchange

Risk Prima Facie passes with Property (Sec.26)

Sale by Non Owners

General Rule: No one can give what he does not possess. Exceptions: Sale by Owner by Estoppels. (sec27) By Mercantile Agent.(sec27) By one of the Joint Owners.(sec28) By a person under the possession of a voidable contract.(sec29) Sale by seller in possession after sale.(sec30[1]) Sale by buyer in possession before transfer of ownership.(sec30[2]) Sale by an unpaid seller. (sec54[3]) Sale by Pawnee or pledgee. Sale by Official Receiver or Official Assignee

Performance Of Contract
Sec.2(2)- Delivery means the voluntary transfer of possession from one person to another.

1. 2. 3.

Types of Delivery: Actual Delivery Symbolic Delivery Constructive Delivery or Delivery by Attornment

Rules As To Delivery
Modes of Delivery (sec.33) Delivery may be actual, constructive, or symbolic. Delivery and Payment to be concurrent.(sec33) Buyer to Apply for Delivery. (sec35) Place of Delivery. (sec36{1]) Time of Delivery. (sec36[4]) Goods in Possession of third party.(sec36[3]) Cost of delivery.(sec.36[5]

 Delivery of wrong quantity. (sec37)

1. 2. 3. Delivery of goods less than contracted for. Delivery of goods in excess of the quantity contracted for. Delivery of goods contracted for mixed with other goods.

Delivery by Installments. (sec38) Delivery to Carrier or Wharfinger(sec39) 1. Seller to make a reasonable contract with the carrier 2. To give notice to the buyer to insure goods.

Rights And Duties Of Buyer

Acceptance of Delivery
1. 2. 3. 1. 2. 3. 4. 5. When the buyer intimates the seller of acceptance. When he does an act which signifies acceptance. When he retains the goods beyond reasonable time. Right Right Right Right Right to to to to to reject the goods. (sec37) have delivery as per contract. (sec31&32) repudiate. (sec38[1]) notice of insurance. (sec39) examine. (sec41)

Rights of the buyer

6.

Right against the seller for breach of contract Suit for damage. (sec57) Suit for price. Suit for specific performance (sec58) Suit for breach of warranty. (sec59) Repudiation of contract before due date.(sec60) Suit for interest(sec61)

RIGHT OF AN UNPAID SELLER

A seller is goods is said to be an unpaid seller When the whole of the price has not been paid or tendered When a bill of exchange or other negotiable instrument has been received as conditional payment and it has been dishonored.

Types of Rights of Unpaid Seller

Rights against goods Rights against the buyer personally

Rights Against The Goods

Right of lien (sec47,48,49) A lien is a right to retain possession of goods until payment of price. 1. When the goods have been sold without any stipulation as to credit 2. The goods have been sold on credit, but the term of credit has expired. 3. The buyer becomes insolvent.

Rules Regarding Lien

The seller may exercise his right of lien, even if he possess goods as agent or as bailee for buyer. (sec47[2]) The lien depends on actual possession and not on title. Lien is available only for the price of the goods. In case of part delivery, this right of lien can be exercised only where part delivery is not intended as delivery of the whole.

 Termination of Lien (sec49)

1. When he delivers goods to a carrier or other bailee for the purpose of transmission to the buyer, without reserving the right of disposal of goods. 2. The buyer or his agent lawfully obtains possession of goods. 3. He waives the right of lien on goods.

 Right of stoppage in transit 1. When the goods are in transit (sec50) 2. When the buyer becomes insolvent.

Duration of Transit (Sec51(1))

From the time they are delivered to a carrier or other bailee for the purpose of transmission to the buyer, until the buyer or his agent in that behalf takes delivery.

How the Exercise Right of Stoppage in Transit (Sec52(1))

By taking actual possession of goods By giving notice of his claim to the carrier or other bailee who possesses the goods.

Right Of Resale
The unpaid seller can resale the goods When the goods are of perishable nature When he gives notice to the buyer of his intention to resell the goods. In case notice is not given, the unpaid seller is not entitled to Recover any loss on the sale of goods. To retain any surplus arising of the resale Where the seller expressly reserves a right of resale in case the buyer should make default.

Rights of an Unpaid Seller against the Buyer Personally

1. 2. Suit for Price(sec55) Where property has passed. Where property has not passed. Suit for Damages for Non acceptance Repudiation of Contract before Due Date Suit for Interest

Auction Sales
Rules of Auction Sales:
Goods put up for sale in lots (sec(64)1) Completion of sales (sec64(2)) Right of seller to bid. (sec64(3)) Sale not notified to a right to bid (sec64(4) Reserve price. (sec64(5)) Use of pretended bidding.(src64(6)) Knock out agreement not to bid against each other.