SALE OF GOODS ACT 1930

Sale Of Goods Act 1930

The sale of Goods Act came into force on the 1st day of July 1930. It extends to the whole of India except the state of Jammu & Kashmir. Earlier the legal provisions relating to the contract of sale were contained in sec.76 to 123 of ICA. Now all the legal provisions relating to the sale of movable goods are contained in the Sale of Goods Act 1930. Contract of Sale is a contract by which the ownership of movable goods is transferred from the seller to the buyer.

DEFINITION
According to Sec. 4 (1) of the Sale of Goods Act A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in the goods to the buyer for a price . This definition reveals that a contract to transfer the property in the goods i.e...legal ownership of the goods . The ownership of the goods is transferred from the seller to the buyer for a price.

Terms The Seller : A person who sells or agrees to sell the goods . The buyer : A person who buys or agrees to buy the goods . The contract of sale may be absolute or conditional . In an absolute Sale , the ownership of goods passes from the seller to the buyer immediately. In a conditional contract of sale the ownership of goods does not pass to the buyer absolutely until certain conditions are fulfilled. The term contract of sale is a general term & it includes both sale & agreement to sell.

SALE

Sale means the ownership of the goods is immediately transferred from a seller to a buyer. The term sale is defined in sec 4 (3) of the Sale of Goods Act When the legal ownership of goods is immediately transferred to the buyer , the contract of sale is called sale. Example : On 1st December A sells his Car to B for Rs.1 lac.It is a sale because the ownership of the car has been transferred immediately from A to B.

Agreement to sell
Agreement to Sell means the transfer of legal ownership of goods is to take place at a future date or subject to the fulfillment of certain conditions. It is defined in sec.4 (3) of the Sale Of Goods Act where under a contract of sale the transfer of property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled , the contract is called an agreement to sell. Example : On 1st January A agrees to sell his car to B for Rs.1 lac on 1st March. This is an agreement to sell because the transfer of ownership of car takes place only at a future date.

ESSENTIAL ELEMENTS OF SALE

Contract Existence of two parties namely buyer & seller Transfer of ownership Subject matter of sale of goods price

DISTINCTION BETWEEN SALE & AGREEMENT TO SELL

SALE
The ownership is transferred immediately after the contract If the goods are destroyed after the agreement the loss falls on the buyer even though the goods are with seller It is an executed contract

AGREEMENT TO SELL
The ownership is to be transferred only at some future time or after the fulfillment of certain conditions If the goods are destroyed after the agreement to sell the loss as a rule falls on the seller It is an executory contract

If the buyer fails to pay the price the seller can sue for the price If the buyer becomes insolvent before he pays for the goods the seller can claim rateable dividend for the price due If the seller becomes insolvent the buyer is entitled to recover the goods from the official receiver It creates a right in rem

If the buyer fails to accept & pay for the goods the seller is only entitled to damages If the buyer becomes insolvent the seller may refuse to deliver the goods unless paid for If the seller becomes insolvent the buyer who has paid the price can only claim rateable dividend It creates a right in personam

DISTINCTION BETWEEN SALE & BAILMENT

SALE
There is transfer of ownership

BAILMENT
There is no transfer of ownership

Delivery may be immediate or postponed

Immediate delivery of goods is essential

There is no question of returning the goods sold

The bailee must redeliver the goods

An unpaid seller has a right to sell the goods on the default of the vendee after due notice to him
The buyer is entitled to deal with the goods in any way he likes The consideration for a sale is the price in terms of money

The bailee has no right to sell the goods bailed

The bailee should deal with the goods only according to the directions given by the bailor The consideration is an undertaking to return the goods after the purpose is accomplished

SALE & HIRE PURCHASE AGREEMENT SALE

It may be made either orally or in writing

HIRE PURCHASE
It must be writing

The ownership of the goods is transferred The ownership of the goods is transferred from the seller to the buyer as soon as the only when all agreed number of contract is made installments are paid The buyer has no opinion to return the goods .He is bound to take delivery of goods The hirer has an option to terminate the agreement at any stage .He may or may not buy the goods

The buyer becomes the owner & gets all the rights of the owner, like right to pledge, resale etc.
Each instalment of payment of price is regarded as part payment of the price.

The hirer does not become the owner. He becomes the owner only when all the instalments are paid
The instalment is regarded as the hire charges for the use of goods . If the hirer purchase the goods then each instalment is regarded as the part payment

Sale is governed by the sale of Goods Act It is governed by the Hire Purchase Act 1930 1972 Sale tax is payable on the goods sold Sale tax is not payable on hire purchase until it becomes sale

SALE & MORTGAGE

SALE
There is transfer of the whole interest of the seller in the goods

MORTGAGE
There is transfer of a limited interest

Buyer becomes the absolute owner of the The ownership of the goods remains goods sold vested in the mortgager Consideration is the price Consideration is the advance of loan & the securing of the debt

FORMATION OF A CONTRACT OF SALE Sec 4 of the Act defines a contract of sale & sec 5 deals with the formalities required for making a contract of sale. It provides that a contract of sale is made by a buyer offering to buy or a seller offering to sell goods for a price & the other party accepting such offer. Every contract thus involves two parties one of whom must offer & the other must accept to buy or sell & the consideration should be the price. Delivery & payment of the price. It may be in writing or by word of mouth or partly It may also be implied from the conduct of the parties

SUBJECT MATTER OF CONTRACT OF SALE

Goods form the subject matter of contract of sale According to Sec.2(7) SGA Goods means every kind of movable property other than actionable claims & money;& includes stocks & shares ,growing crops, grass& things attached to or forming part of land which are agreed to be severed before sale or under the contract of sale. Things like water , gas , copy right , trade mark, electricity etc.. Are goods. An actionable claim is something which can only be enforced by action in a court of law. A debt due from one person to another is an actionable claim & cannot be bought or sold as goods

Goods
Goods may be divided into three types namely 1)Existing goods 2)Contingent goods 3)Future goods