Sale of Goods Act - 1930

Introduction
 This Act is complimentary to Contract Act.
 Basic provisions of Contract Act apply to
contract of Sale of Goods also.
 Offer and acceptance,
 legal enforceability of agreement,
 mutual consent,
 parties competent to contract,
 free consent,
 lawful object,
 Consideration and so on
Essentials of Contract of Sale (sec-4)
 It is contract, i.e. all requirements of ‘contract’ must be fulfilled

 It is of ‘goods’
 "goods" means every kind of moveable 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

 Transfer of property is required

 General property - means ‘full ownership

 and not special property – means hire, lease, hire purchase or

pledge

 Contract is between buyer and seller

 Sale should be for ‘price’
 in case of contract of sale of goods, the consideration should be


‘price’ i.e. money consideration
 Contract may be absolute or conditional.
How Contract of sale is made
 By an offer to buy or sell goods for a price and the acceptance of
such offer.

 May provide for the

 immediate delivery of the goods

 immediate payment of the price or both,

 for the delivery or payment by installments,

 delivery or payment or both shall be postponed. [section 5(1)]

 A contract of sale may be made in writing or by word of mouth, or

partly in writing and partly by word of mouth or may be implied
from the conduct of the parties. [section 5(2)]

 Credit sale is also a ‘sale’

 A verbal contract or contract by conduct of parties is valid. e.g.

putting goods in basket in super market  or taking food in a hotel.
Contract of Sale includes agreement to
sale
 Property in the goods is transferred from the seller to the buyer,
in the contract of sale.

 If the transfer of the property in the goods is to take place at a

future time or subject to some condition, the contract is called an
agreement to sell. [section 4(3)]

 An agreement to sell becomes a sale when the time elapses or

the conditions are fulfilled subject to which the property in the
goods is to be transferred. [section 4(4)]

 The provision that contract of sale includes agreement to sale is

only for the purposes of rights and liabilities under Sale of Goods
Act and not to determine liability of sales tax, which arises only
when actual sale takes place.
Conditions and Warranties
Conditions (sec – 12(2)) – is a stipulation essential to the main
purpose of the contract. Breach of which gives rise to a right to
treat the contract as broken

Warranty (Sec – 12(3)) – is a stipulation collateral to the main

purpose of the contract. The breach of which gives rise to claim
for damages and not to reject the whole contract
Remedies available to the buyer on breach of
 Condition
 Reject the goods

 Elect to treat as breach of warranty

 Waive the condition

 Warranty
 File a suit for extinction of prices

 File a suit for damages

Implied warranties and conditions
 Conditions as to the title:
 The seller has the right to sell the goods
 Buyer will have the good title to goods
 Goods shall be free from any charge
 Sale by description:
 Goods shall correspond with the description
 Breach of this will give buyer the right to reject the goods
 Sale by Sample:
 Goods should correspond with the sample shown
 Sale by sample and description
 Goods should correspond with both sample and description
Cont..
 Warranty as to Quality or Fitness
 The buyer makes known to the seller the particular purpose
for which the goods are required,
 The buyer relies on the seller's skill or judgment,
 The goods are of a description which the sellers ordinarily
supplies in the course of his business, and
 The goods supplied are not reasonably fit for the buyer's
purpose.

 Remedies available in case of implied conditions

and warranties
 May reject the goods or
 Accept them and claim damages
Caveat Emptor ( Buyer Beware)
 Buyer is expected to be careful while purchasing the
goods and seller is not liable for any defects in goods
sold by him

 Exceptions in case of implied warranties under

following circumstances

 Custom or usage of trade

 Fraud
 For the specific purpose known to seller and buyer relies on
seller’s judgment
 Merchantable quality or commercially sellable
 RIGHTS AND DUTIES OF THE BUYER

 RIGHT DUTIES

1. To have delivery of the goods as per 1 To accept the delivery of goods,

contract. (sec. 31 & 32) when the seller is willing to make the
delivery as per the contract
(Sec. 31)

2. To reject the goods when they are not of 2 To pay the price in exchange for
the description, quality or quantity as . possession of the goods
specified in the contract (Sec 37).

3. To be informed by the seller, when the 4 To demand delivery of the goods at a

goods are to be sent by sea route, so that reasonable hour ( sec 36 (4)
he may arrange for their insurance [Sec 39
(30]

4. To have a reasonable opportunity to 5 To accept delivery of the goods in

examine the goods for ascertaining installments and pay for them, in
whether they are in conformity with the accordance with the contract. (Sec. 38
contract. (sec. 41) (2)
5. To sue the seller for recovery of the 5.
price, if already paid, when the seller
fails to deliver the goods.
6. To sue the seller for damages if the 6
seller wrongfully neglects or refuses to
deliver the gods to the buyer ( sec 57)
7 To sue the seller for specific 7
performance
8. To sue the seller for damages for 8.
breach of a warranty or for breach
of a condition treated as breach of
a warranty ( Sec 59)
9. To sue the seller the damages for 9.
anticipatory breach of contract
( Sec 60)
10 To sue the seller for interest where
there is a breach of contract on the
part of the seller and price has to be
refunded to the buyer ( sec 61)
To bear the risk of deterioration in
the course of transit, when the goods
are to be delivered at a place other
than where they are sold ( sec 40)
To inform the seller in case the buyer
refuses to accept or rejects the goods (
sec 43)
To take the delivery of the goods
within a reasonable time after the
seller tenders the delivery (Sec. 44)
To pay the price, where the property
in the goods are passed to the
buyer, in accordance with the terms of
the contract ( Sec 55)
To pay damages for non-acceptance
of goods ( Sec 56)
RIGHTS AND DUTIES OF THE SELLER

RIGHT DUTIES
1 To reserve the right of disposal of 1 To make the arrangement for transfer of
. the goods until certain conditions property in the goods to the buyer.
are fulfilled. ( sec 25 (1)
2 To assume that the buyer has 2 To ascertain and appropriate the goods
. accepted the goods , where the . to the contract of sale
buyer
I)Conveys his acceptance;
ii)  Does an act adopting the sale; or
iii) Retains the goods without giving
a notice of rejection, beyond the
specified date (or reasonable time),
in a sale on approval. ( sec 24)

3 To deliver the goods only when 3 To pass an absolute and effective title to
. applied for by the buyer ( sec 35) . the goods, to the buyer.
4 To make delivery of the goods in 4 To deliver the goods in accordance with
. installments, when so agreed ( sec . the terms of the contract ( sec 31)
39 (1)
5. To exercise lien and retain 5.
possession of the goods, until
payment of the price ( sec 47 (1))
6. To stop the goods in transit and 6.
resume possession of the goods, until
payment of the price ( sec 49 (2) and
50)
7 To resell the goods under certain 7
circumstances ( sec 54)
8 To withhold delivery of the goods 8
when the property in the goods has not
passed to the buyer (sec 46 (2))
9 To sue the buyer for price when the 9
property in the goods has passed to the
buyer or when the price is payment on a
certain day, in terms of the contract, and
the buyer fails to make the payment
(sec 55)
To ensure that the goods supplied
conform to the implied / express
conditions and warranties.
To put the goods in a deliverable
state and to deliver the goods as and
when applied for by the buyer ( sec 35)
To deliver the goods within the time
specified in the contract or within a
reasonable time and a reasonable hour.
[ sec 36 (2) and (4)]
To bear all expenses of and
incidental to making a delivery ( i.e.
upto the stage of putting the goods into
a deliverable sate (sec 36 (5))
To deliver the goods in the agreed
quantity. (Sec. 37 (1))
Unpaid seller defined
 When the whole of the price has not been paid

 When a bill of exchange or other negotiable

instrument has been received as conditional
payment, and the condition has not been fulfilled
by due to dishonor of the instrument or otherwise

 Seller has no right to take forceful possession of

goods from buyer, once property in goods is
transferred to him. However, the Act gives some
rights to seller if his dues are not paid
Unpaid seller's rights
     
 Has right to lien on the goods for the price while he
is in possession of them
 in case of the insolvency of the buyer a right of
stopping the goods in transit after he has parted
with the possession of them;
 a right of re-sale

 a right of withholding delivery similar to and co-

extensive with his rights of lien and stoppage in
transit where the property has passed to the buyer.
Transfer of title
 Sale by person not the owner (buyer does not get good
title)
 Sale by one of joint owners (with permission gets the
good title)
 Sale by person in possession under voidable
contract (before the contract is rescinded buyer get good title)

 Seller or buyer in possession after sale (buyer in

good faith gets good title)
 Sale by mercantile agent (buyer gets good title)