Sale of Goods Act

The Sale of Goods Act, 1930

15th March 1930.

The act came into force on 1st July 1930

Definition, Section 4.

The act extends to whole India except ( J&

K).

Bilateral Contract

Contract of Sale according to Potheir.

State Of Gujarat vs Ramanlal sons and co.

Graff vs Evans.

Money Consideration

Consideration for sale of goods must be

money.

Aldridge vs Johnson

Esso Petroleum co Ltd Vs CCE, [1976]

Sale and Contract of Work and Material

Clay Vs Yates

Lee Vs Griffin

Robinson Vs Graves

Sale and Contract of Work and Material Contd..

State of Rajasthan Vs man Industrial Corp. Ltd. Union Of India Vs Central India Machinery Mfg

co. State of Punjab Vs Associated Hotels of India

Ltd.

Sale and Agreement to Sale

Sale : Section 4 of the Sale of Goods Act defines “sale” as : A 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.

Agreement to Sale : Transfer of property in the goods is to take place at a future date or after fulfillment of certain condition.

Sale Agreement to Sale

Ownership is with the buyer.

Ownership is with the seller

Existing and specific goods Is for future and contingent goods

Sue for price in case of breach

Sue for damages only ,in case of breach

Goods lost by accident, then the loss falls on the buyer

Goods lost on accident, then loss falls on seller

Cannot re-sell The original buyer can only sue the seller for damages

Contd..

Effect of Destruction of Goods

Goods perishing before making of contract [Sec-7]

Conditions

contract must be for the sale of specific goods.

they must have perished before the contract was made and without the knowledge of seller.

Goods perishing after agreement to SELL [Sec -8]

Effect of Destruction of Goods

The price [Sec-9]The price in a contract of sale may be fixed by

the contract or may be left to be fixed in manner thereby agreed or may be determined by course of dealing between the parties.

Where the price is not determined with the foregoing provisions the buyer shall pay the seller a reasonable price.

Fixing of priceAgreement to sell at valuation [Sec – 10]

Conditions & Warranties

Condition – 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(1)]

Baldry v Marshall

Warranty – 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(1)]

T. & J. Harrison v Knowles and Foster

Condition vs. Warranty

Condition Warranty A condition is a stipulation (in

a contract), which is essential to the main purpose of the contract.

A warranty is a stipulation, which is only collateral or subsidiary to the main purpose of the contract.

A breach of condition gives the aggrieved party a right to sue for damages as well as the right to repudiate the contract.

A breach of warranty gives only the right to sue for damages. The contract cannot be repudiated.

A breach of condition may be treated as a breach of warranty in certain circumstances.

A breach of warranty cannot be treated as a breach of condition.

Express & Implied

Conditions and Warranties may be either express or implied.

“Express” when the terms of the contract expressly provide for them.

“Implied” when the law deems their existence in the contract even without their actually having been put in the contract.

Implied Conditions

Condition as to Title [Section 14]

Sale by Description [Section 15]

Purchase on basis of description Packing as Description Meaning of correspondence with description

Sale by Description as well as by Sample [Section 15]

Exceptions to Principle of Caveat Emptor [Section

16]

Cases:

•Rowland vs Divall•Niblett vs Confectioner’s Materials Co. •Mason vs Burningham

Section 14(6)

Implied Warranties

Condition Reduced to Warranty only for Remedial Purposes:

House of Lords in Wallis, Son & Wells Vs Pratt : Common English Sanfion to Giant Sanfion

-A condition is always a condition whether the remedies remain the same or not.

In these kind of cases, the buyers have 2 kinds of remedies: 1)Reject goods- Refund of price paid-Sue for damages of non-delivery

2) Waive condition- Accept goods- Sue for Damages.

GOODS

GOODS

Free from EncumbrancesSection. 14(C)

Condition Reduced to Warranty (CRW)Section. 13

Waiver by Buyer Acceptance of Goods by Buyer

Implied Warranties

Cases Under CRW-Acceptance of Goods by Buyer:•Hardy & Co. (London) Ltd. Vs Hillerns & Fowler•Bombay High Court Appeal

Exclusion of Implied Terms•By Express Contract

Case: Andrew Bros ( Bournemouth) Ltd. Vs Singer & Co. LTd- Express one.- excluding liability for “ all conditions, warranties and liabilities, implied by statute, Common law or otherwise.

Fundamental Breach-Performance of Contract: Karsales (Harrow) Ltd. Vs Wallis

Case: Ernest Beck & Co Vs K. Syzman Owski & Co. : 2000 gross “200 yards reel”•Course Dealing

•Trade Usage

(1) A stipulation in a contract of sale with reference to goods which are the subject thereof may be a condition or a warranty.(2) A condition is a stipulation essential to the main purpose of the contract, the breach of which gives rise to right to treat the contract as repudiated.(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.(4) Whether a stipulation in a contract of sale is condition or a warranty depends in each case on the construction of the contract.Stipulations as to time.- Unless a different intention appears from the terms of the contract,stipulations as to time of payment are not deemed to be of the essence of a contract of sale.Whether any other stipulations as to time is of the essence of the contract or not depends on theterms of the contract.

Stipulation of Time

PASSING OF PROPERTY

• Significance of passing property• Property passes when intended to pass• Specific goods in a delivery state1.Specific goods2.Deliverable state3.Unconditional contractTarling v Baxter• Property passes at the time of contract

Cont………..

• Goods to be put in deliverable state• Goods to be weighed or measured• Sales on approval1.By acceptance2.By failure to return

Transfer of Title by Non Owners Protection of Property(Nemo Dat Quod Non Habet) :

According to section 27 “No one can give a better title than he himself possesses.”

“When the goods are sold by a person who is not the owner thereof and who does not sell them under the consent of the owner, the buyer acquires no better title to the goods than the seller had.”

eg: leo vs Bays ---- Horse auction Farquharson & Bros vs king & Co ---- Timber sale

Exception: finder of lost goods may sell them if The owner can not , with reasonable diligence ,be found or If found he refuses to pay lawful charges of the founderThe goods are of perishable nature

Exceptions to General Rule

Protection of Commercial Transactions :

In case of commercial transactions, there are lots of exceptions, as follows

Exceptions : Sale by a mercantile agent

eg : Lowther vs Harris Sale by a joint Owner Sale by a person in possession under a voidable contract

eg : Phillips vs brooks Sale by a seller in possession of goods after sale Sale by a buyer in possession of goods Estoppel

eg : Mother and son

Performance of contract

Section 31, Sale of Goods Act 1930 provides that it is the duty of the seller to deliver the goods to the buyer, who in turn will have to accept the goods and make the payment.

Delivery Of GoodsActual deliverySymbolic deliveryConstructive delivery/ delivery by attornment

Rules as to delivery of goods

Mode of deliveryDelivery and paymentEffect of part deliveryPlace of deliveryTime of deliveryDelivery by attornmentTime for tender of deliveryExpenses of delivery

Delivery of wrong quantityShort deliveryExcess delivery Delivery of mixed goods

Installment of deliveriesDelivery to carrier or wharfing

Acceptance of Delivery ( Sec. 42)

1.Intimates to the seller2.Inconsistent with the ownership of the seller.3.After the lapse of the reasonable time, he retains the goods.