Condition?(sec.

12(2)) A condition is a stipulation essential to the main purpose of the contract, breach of which gives rise to a right to treat the contract as repudiated or broken.

Warranty? [Sec.12(3)] 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 or broken.

Whether a particular stipulation in a contract of sale is a condition or a warranty depends in each case on the construction of the contract and is to be gathered from the stipulation of the contract as a whole.

A stipulation may be a condition, though called a warranty in the contract. [Sec.12(4)] Conditions and warranties may be expressly stated or may be implied from the circumstances.

Stipulation as to time whether a condition?[Sec.11] Where a different intention appears from the terms of the contract, stipulation as to time of payment is not deemed to be of the essence of a contract of sale

Whether any other stipulation as to time is of the essence of the contract or not depends on the terms of the contract. Stipulations as to time, except as regards time of payment are usually of the essence of the contract

Condition and Warranty distinguished 1. Stipulation :Condition is an essential term or stipulation of the contract which must be fulfilled for the performance of the contract. Warranty is a collateral or incidental stipulation to the main purpose of the contract. It is not as essential a stipulation of the contract as a condition.

2. Remedy : Breach of condition gives right to repudiate or treat the contract as broken or rescinded and also a right to claim damages. Breach of warranty gives right to claim damages only. A breach of warranty does not entitle a buyer to reject the goods and his only remedy would be to set up against the seller

Summary:A places an order on B for supply of machine parts strictly according to the sample. Delivery to be made within three months. Now supply of parts strictly according to the sample is an essential condition while delivery within three months is a warranty. Time is not essential to the main purpose of the contract, if, therefore, B does not supply the machine parts strictly according to the sample. A can repudiate or reject the goods and also claim damages, if, however, b supplies the parts later than three months, A can claim damages only for late delivery but he cannot repudiate the contract.

Transfer of property It means that the ownership of the seller in the goods ceases and the buyers ownership in the goods commences.

Condition related to transfer property / ownership Transfer of property in the goods is distinct from deliver of goods. Transfer of property means transfer or passing of ownership in the goods.

Property means the general property in the goods and not merely a special property [sec2(11)]. Property or ownership in the goods may pass to the buyer without delivery of the goods. On the other hand. Mere delivery of the goods may not constitute transfer of ownership in the goods. Therefore property in the goods is distinct from delivery or possession of the goods.

The time of transfer of property in the goods decides various rights and liabilities of the seller and the buyer. As a general rule, unless otherwise agreed, the goods remain at the sellers risk until the property therein is transferred to the buyer, when the property therein is transferred to the buyer the goods are at the buyers risk. Whether delivery has been made or not (sec.26). Risk therefore, prima facie passes with the property.

a) B offers A for his horse Rs. 1000, the horse to be delivered to B on a stated day and the price to be paid on another stated day. A accepts the offer. The horse becomes Bs property when the contract is made, that is, as soon as the offer is accepted. b) B offers A for his horse Rs. 1000 on a months credit. A accepts the offer. The horse becomes Bs property as soon as the offer is accepted.

TRANSFER OF PROPERTY OR OWNERSHIP SUMMARY A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer property in goods to the buyer for a price. Transfer of property is the essence of a contract of sale of goods. There are three stages in the performance of a contract of sale by the seller which are as follows:a. transfer of property in goods b. Delivery of goods or transfer of possession of goods; and c. The passing of the risk.

1. Performance of the contract :-

Definition :- section 2 (2) defines delivery as voluntary transfer of possession of goods from one person to another. Section 33 further states that delivery may be made by doing anything which has the effect of putting the goods in possession of the buyer or of a person authorized to hold them on his behalf. Deliver goods may be actual or symbolic.

Delivery & Payment :- it is the duty of the seller to deliver the goods an of buyer to accept and pay for them in accordance with the terms of the contract of sale (sec. 31). Delivery of the goods by the seller and payment of the price by the buyer are concurrent condition

Delivery to be made to buyer : Delivery of goods sold may be made by doing anything which the parties agree shall be treated as delivery or which has the effect of putting the goods in the possession of the buyer, or of any person authorized to hold them on his behalf (sec. 33)

Part Delivery : Delivery of part of the goods, in progress of delivery of the whole amounts to delivery of the whole, if there is no intention of severing of such part from the whole (sec 34). Buyer to apply for delivery : seller of goods is not bound to deliver the goods until the buyer applies for delivery thereof (sec. 35).

Mode of delivery : mode of delivery depends on the

contract between the parties. Whether it is for the buyer to take possession of the goods or for the seller to send them to the buyer is a question depending in each case on the contract, express or implied, between the parties [(sec.36(1)]. 6. place of Delivery : Apart from such a contract: i) Goods sold are to be delivered at the place at which they are at the time of sale. ii) Goods agreed to be sold are to be delivered at the place at which they are at the time of the agreement to sell. Go Goods not in existence are to be delivered at the owners risk

Time of Delivery : where no time for sending the goods is fixed the seller must send the goods in time. If the delivery is to be done as and when required, demand for delivery must be made at a reasonable time. Demand at reasonable hour : Demand for or tender of delivery must be made at a reasonable hour. What is a reasonable hour is a question of fact [Sec.36 (4)].

Rights of unpaid seller

Unpaid seller : unpaid seller is one who has not received the whole of the price or has received the payment by bill of exchange or negotiable instrument which is dishonored.

Rights of an unpaid seller :

(1) where the property in the goods has passed, the unpaid seller has the following right (i) right of lien; (ii) stoppage in transit; (iii) resale, where the property in the goods has not passed, the unpaid seller has the following right; (i) withholding delivery;

Other rights:Right of lien : lien means right of retaining the possession of the goods until the claim is paid. It may arise by status, by express or implied contract or in the ordinary course of dealing. Lien is either general or particular. The unpaid seller is entitled to retain the goods until he has been paid for them. If the goods are sold on credit, the right of lien commences on the expiry of the credit term. The seller is also entitled to retain the goods if the buyer becomes insolvent. The right of lien may be exercised also where the seller has made part delivery of the goods. On the remainder, a right of lien can be exercised. If the seller parts with the actual possession of the goods, he loses the right of lien.

Termination of lien : when the seller delivers the goods to the carrier for purposes of transmission to the buyer or when the buyer lawfully obtains possession of the goods or when the seller waives his right of lien, the right the right of lien is lost. (2) Right of stoppage in transit :- the right of stoppage in transit can be exercised when (i) the buyer of the goods becomes insolvent; (ii) the unpaid seller has parted with the possession of the goods.

(3) Right of re-sale:- when the seller has resumed possession of the goods, the buyer can re-sale the goods if (i) they are of perishable nature; (ii) seller has given notice to buyer; and (iii) seller has expressly reserved his right to re-sale. (4) Right of withholding delivery: The right can be exercised when the property in the goods has not passed to the buyer. (5) Reservation of right of disposal : seller may reserve the right of disposal over the goods under certain instances like a situation, where seller imposes certain conditions and until conditions are fulfilled.

Remedial Measures

Remedies available to the seller

In case of breach of the contract of sale of goods where the seller is the aggrieved party he has the following remedies:

1. suit for price (sec.55)

2.suit for damages Remedies available to the buyer

In case of breach of the contract of sale, where the buyer is the aggrieved party he has the following remedies
1. suit for damages for non-delivery of the goods: (sec. 57)

2. Suit for specific performance (sec 58)

3. suit for warranty : (sec 59) 4. suit for repudiation of the contract anticipatory breach: sec 60

Rights of An unpaid seller

a) Rights Against the Goods b) Right against the buyer personally

1.suit for price 2.suit for damages

3.Repudiation of contract
4.suit for contract

1)where property in goods has passed

ii)where property in goods has not passed

Right Right
of of

Right
of

withholding
the delivery of goods

stoppage
in transit

Lien stoppage Resale

Auction sales provision :-section 64

A sale by way of auction is complete when the auctioneer announces so by the fall of the hammer, a bidder can withdraw his bid at any time before it is accepted by the auctioneer. Condition in the auction sale that bidding once made cannot be withdrawn is not enforceable. Agreements not to bid against each other are called knock-out agreements and they are valid. A seller may protect himself by a reserve bid. In case of sale through the court I t would be subject to the confirmation of the court. The auctioneer gives certain implied warranties in an auction sale. Auction sale [section 64]
An auction sale is a public sale where different [various] buyers try to buy the goods by outbidding each other. The goods are sold to that buyer who gives the highest bid. The rules related to an auction sale are contained in section 64 of this Act which is stated below:In the case of a sale by auction (1) where goods are put up for sale in lots, each lot is prima facie deemed to be the subject of a separate contract of sale.

(2) the sale is complete when the auctioneer announces its completion by the fall of the hammer or in any 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 right 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. (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 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 viodable at the option of the buyer.