Sale of Goods Act, 1930Sale of Goods Act, 1930

Unit VUnit V

GeneralGeneral

Act applies to whole of India Act applies to whole of India except the State of Jammu & except the State of Jammu & KashmirKashmir

Contract of Sale of Goods subject Contract of Sale of Goods subject to the general principles of law to the general principles of law relating to contracts (Indian relating to contracts (Indian Contract Act)Contract Act)

Sale & Agreement to SellSale & Agreement to Sell

SaleSale The property in the goods is The property in the goods is

transferred from the seller to the transferred from the seller to the buyerbuyer

Agreement to SellAgreement to Sell Transfer of property in the goods Transfer of property in the goods

is to take place at a future timeis to take place at a future time Becomes sale when time elapses Becomes sale when time elapses

or conditions are fulfilled i.e. or conditions are fulfilled i.e. property in goods is transferredproperty in goods is transferred

Essentials of Contract of SaleEssentials of Contract of Sale

Fulfill all essentials of contractFulfill all essentials of contract It is of ‘Goods’It is of ‘Goods’ Transfer of Property is requiredTransfer of Property is required Contract is between buyer and Contract is between buyer and

sellerseller Sale should be for ‘Price’Sale should be for ‘Price’ Contract may be absolute or Contract may be absolute or

conditionalconditional

Document of Title to GoodsDocument of Title to Goods

Entitles and enables its rightful Entitles and enables its rightful holder to deal with the goods holder to deal with the goods represented by it as if he were the represented by it as if he were the ownerowner

It is proof of ownership, It is proof of ownership, possession or control of goodspossession or control of goods

Cash memo, Bill of Lading, Cash memo, Bill of Lading, Warehouse keeper’s certificate, Warehouse keeper’s certificate, Lorry receipt (L/R), Railway Lorry receipt (L/R), Railway Receipt (R/R)Receipt (R/R)

Conditions and WarrantiesConditions and Warranties

Stipulations that are essential Stipulations that are essential for main purpose of contract. for main purpose of contract. Non-fulfillment of such will mean Non-fulfillment of such will mean loss of foundation of contract. loss of foundation of contract. These are termed as These are termed as ‘Conditions’.‘Conditions’.

Stipulations not essential are Stipulations not essential are termed as ‘warranty’. Aggrieved termed as ‘warranty’. Aggrieved Party may claim damages.Party may claim damages.

Implied ConditionsImplied Conditions

Condition as to titleCondition as to title Condition of seller : He has right to Condition of seller : He has right to

sell the goods (title to goods)sell the goods (title to goods) If seller’s title is defective – buyer If seller’s title is defective – buyer

may rejectmay reject Condition as to DescriptionCondition as to Description

Goods & Packing should Goods & Packing should correspond with the description correspond with the description given by sellergiven by seller

Implied ConditionsImplied Conditions

Condition as to Quality or Condition as to Quality or FitnessFitness Conditions : Buyer makes known Conditions : Buyer makes known

to the seller the purpose, Relies to the seller the purpose, Relies on skill of seller, Goods are of on skill of seller, Goods are of description which the seller description which the seller ordinarily supplies in the course of ordinarily supplies in the course of businessbusiness

The goods shall be reasonably fit The goods shall be reasonably fit for such purposefor such purpose

Implied ConditionsImplied Conditions

Condition as to MerchantabilityCondition as to Merchantability Goods should be commercially Goods should be commercially

saleable under the description in saleable under the description in the market at their full valuethe market at their full value

Condition as to WholesomenessCondition as to Wholesomeness Incase of eatables and foodstuff, Incase of eatables and foodstuff,

Goods must be for human Goods must be for human consumption.consumption.

Implied ConditionsImplied Conditions

Condition implied by Custom or Condition implied by Custom or Trade UsageTrade Usage

Conditions in a Sale by SampleConditions in a Sale by Sample Is implied when sample is shownIs implied when sample is shown Goods to be of the same kind and Goods to be of the same kind and

qualityquality Conditions in a Sale by Sample Conditions in a Sale by Sample

as well as by Descriptionas well as by Description Goods must correspond with sample Goods must correspond with sample

and with descriptionand with description

Implied WarrantiesImplied Warranties

Implied Warranty of Quiet Implied Warranty of Quiet PossessionPossession If disturbed, the buyer may sue the If disturbed, the buyer may sue the

seller for damages.seller for damages. Implied Warranty of Freedom Implied Warranty of Freedom

from Encumbrancesfrom Encumbrances Shall be free from encumbrance in Shall be free from encumbrance in

favor of any third party not declared favor of any third party not declared or known to buyeror known to buyer

If discharge of amount of If discharge of amount of encumbrance is required the buyer encumbrance is required the buyer is entitled to damages.is entitled to damages.

Transfer of Property in GoodsTransfer of Property in Goods

Property : Ownership of GoodsProperty : Ownership of Goods Possession of Goods : Physical Possession of Goods : Physical

custody or Control of goodscustody or Control of goods Moment when property in goods Moment when property in goods

passes:passes: OwnershipOwnership Risk follows ownershipRisk follows ownership Action against third partiesAction against third parties Suit for priceSuit for price

Essentials of Transfer of Essentials of Transfer of PropertyProperty

Goods must be ascertained : Goods must be ascertained : Buyer should have reasonable Buyer should have reasonable opportunity to examine the opportunity to examine the goods for the purpose of goods for the purpose of ascertaining whether they are in ascertaining whether they are in conformity with the contract.conformity with the contract.

Intention to pass Property in Intention to pass Property in Goods must be thereGoods must be there

Rights of Unpaid SellerRights of Unpaid Seller

Where the property in the goods has Where the property in the goods has passed to the buyerpassed to the buyer Right of LienRight of Lien Right of Stoppage in transitRight of Stoppage in transit Right of Resale.Right of Resale.

Where the property in the goods has not Where the property in the goods has not passed to the buyerpassed to the buyer Right of with holding deliveryRight of with holding delivery Suit for priceSuit for price Suit for damages for non-acceptanceSuit for damages for non-acceptance Suit for damages for repudiation of contractSuit for damages for repudiation of contract Suit for interestSuit for interest

Buyer’s remedies against Buyer’s remedies against Seller for breach of contractSeller for breach of contract

Suit for damages for Non-Suit for damages for Non-DeliveryDelivery

Suit for PriceSuit for Price Suit for specific performanceSuit for specific performance Suit for Breach of WarrantySuit for Breach of Warranty Suit for damages for repudiation Suit for damages for repudiation

of contract before due dateof contract before due date Suit for InterestSuit for Interest