sale-of-goods-act-1930 PPT 11-2-2013

7/28/2019 sale-of-goods-act-1930 PPT 11-2-2013

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Sale Of Goods Act 1930

Dtd-11-2-2013


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Sec 4 (1)Defining

A contract whereby the seller transfer or

agrees to transfer the property in goods to

the buyer for a price.

Essential characteristics:

1. Two Parties 2. Transfer of Party

3. Goods 4. Price

5. Includes both sale and Agreement to sale

6. No formalities to be observed


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Section 4Sale and Agreement to Sale

1. The contract of sale of goods is a contract whereby the

seller transfers or agrees to transfer the property ingoods to the buyer for a price. There may be a contractof sale between one part owner and another.

2. A contract of sale may be absolute or conditional.

3. Where under a contract of sale the property in thegoods is transferred from the seller to the buyer, the

contract is called a sale, but where the transfer ofproperty in the goods is to take place at a future time orsubject to some conditions thereafter to be fulfilled, the

contract is called an agreement to sell.4. An agreement to sell becomes a sale when the time

elapses; all the conditions are fulfilled subject to whichthe property in the goods is to be transferred.


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Section 4Sale and Agreement to Sale

Examples:

The Section may be illustrated by the following examples: A dentist agreed to make a set of false teeth for a lady and fit it

into her mouth. Held ,it is a contract for the sale of goods.(Lee vs.Griffin)

A agrees to buy As car for Rs. 50,000 provided B stands surety

for him with C. It is an agreement to sell for B. It becomes a salewhen the condition is fulfilled by B.

Agreement for sale of a quantity of nitrate of soda to arrive at acertain ship. This is an agreement to sell at a future date subjectto the double condition of the arrival of the ship with the specified

cargo on board. (Johnson Vs Macdonald 1842) A customer who picks up goods in a self-service shop is merely

offering to buy them and the sale is not complete until they arepaid for. (Pharmaceutical Society Vs Boots, 1952)


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Essential Requisites of Sale

In the case of (state of Madras Vs Gannon Dunkerley

and Company Limited, 1958) the Supreme Court has

held that according to the law, both of England and India,

in order to constitute a sale, it is necessary that there

should be an agreement between the parties for thepurpose of transferring title to goods, which of course

presupposed capacity to contract, that it must be

supported by money consideration, that as a result of

transaction, the property must actually pass in thegoods. Unless all these elements are present there

would be no sale.


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The essential object of the contract of sale is the exchange ofproperty for a money price. There must be a transfer ofproperty or an agreement to transfer it, from one party, theseller, to the other, the buyer, in consideration of a money

payment or of a promise thereof by the buyer thereof. Bothunder the common law and the statute law relating to sale ofgoods England and in India, to constitute a transaction ofsale, there should be an agreement, expressed or impliedrelating to goods to be completed by passing of title inthose goods. It is the essence of the concept that both the

agreement and the sale should relate to the same subjectmatter. Transfer of property in goods for a price is thelinch pine of the definition. It is, however, not an inevitablerule that the price must be fixed. An allotment of goods amongpartners on dissolution of partnerships is not a sale.Exchange of property for something other than money is not a

sale. The difference between a sale and an exchange is thatin the former the price is paid in money while in the latter it ispaid in good by way of barter. But if the exchange is madepartly for goods and partly for a price, the contract is probablyone of a sale.


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Sale Distinguished from hire purchase

Under hire purchase agreement the goods aredelivered to the hire purchaser for his use at thetime of agreement but the owner of the goodsagrees to transfer the property in the goods to thehire purchaser only when a certain fixed no. of

installments of price are paid by the hirer. Till thattime, the hirer remains the bailee and theinstallments paid by him are regarded as hirecharges for the use of goods. If there is default bythe the hire purchaser in paying an installment, theowner has a right to resume the possession of thegoods immediately without refunding the amount, asthe ownership still rests with him


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Sales distinguished from Contract for

work and labour G engaged an artist to paint a portrait and

supplied the necessary canvas and paint.

Held it is a contract for work and labour as

the substance of the contract is theapplication of the skill and labour in the

production of the portrait. If the canvas and

paint are also to be supplied by the painter, itwill become a contract of sales of goods.


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The Supreme Court distinguished these two classes of contract thus

An agreement to sell is a contact pure and simple whereas a saleis a contract plus conveyance. By an agreement to sale a jus in

personance is causedby a sale a jus in rem also is transferred.Where goods have been sold and the buyer makes the fault, theseller may sue for the contract price on the count of goodsbargained and sold but when an agreement to buy is broken, thesellers normal remedy is an action for unliquidity damages. If anagreement to sell be broken, by the seller, the buyer has only a

personal remedy against the seller. The goods are still theproperty of the seller, and he can dispose of them as he likes, butif there has been a sale and a seller breaks his engagement todeliver the goods, the buyer has not only a personal remedyagainst the seller but also the usual proprietary remedies inrespect of the goods themselves. In many cases, too, he can

follow the goods into the hands of third parties. Again, if there bean agreement of sale, and the goods are destroyed the loss as arule falls on the seller, while if there has been a sale, the loss as arule falls up on the buyer though the goods may have never cometo his position. (The Instalment Supply Limited Vs STOAhmedabad and others, 1974.)


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Formalities of a contract of sale:

Section 5: Contract of Sale - how made

A contract of sale is made by an offer to buy or sellgoods for a price and the acceptance of such price.A contract may provide for the immediate delivery of

goods or immediate payment of the price or both, orfor the delivery or payment by instalments. Or thatthe delivery of payments or both shall be postponed.

Subject to the provisions of any law for the time

being enforced, a contract of sale may be in writingor by the word of mouth or may be impliedly or maybe implied from the conduct of the parties.


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Kinds of goods

1.Existing goods

Specific goods

Unascertained goods

2. Future Goods

3.Contingent goods


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A statement or conduct inviting the making of an offersuch as by display of goods in a shop does not buy itselfbind the shopkeeper to accept the customers offer evenat the price displayed or advertised. Such invitation totreat therefore differs from an offer, which is intended to

be binding on the person making it and is capable ofbeing accepted without any further negotiation. Where,however, the accessibility to goods in intended to anoffer capable of acceptance by customers act such asfilling the petrol tank of a car from a self service pump or

choosing items in a self service shop or taking goodsintended for sale for an automatic vending machine thequestion of obtaining sellers assent does not arise.


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Sub-section 1 emphasis the consensual nature of a

contract of sale; the parties may agree to such terms as

they think fit. A sale can be complete even without

effecting immediate delivery and immediate payment. In

a contract of sale, the title in goods passes immediatelyon the payment of price while in an agreement to sale

the title in goods passes at a future time subject to

conditions to be fulfilled thereafter however, when the

goods are accepted by the buyer and the price isreceived by the seller the sale is deemed to be

complete.


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Conditions and Warranties Sec. 11 - Stipulation as to time Unless a different intention

appears from the terms of the contract, stipulation as to time of

payment are not deemed to be of the essence of a contract of sale.Whether any other stipulation as to time is of the essence of thecontract or not depends on the terms of the contract.Examples: The section may be illustrated by the following examples

1) Sale of some stacks of oak on the sellers ground, upon the termsthat they might remain there for four months and the buyer should

pay within 12 weeks of the contract. The seller on the expiration of 12weeks demanded the price which the buyer failed to pay. Later thebuyer asked for further time which the seller refused to give, andsaid that as the buyer had not paid he should not have the stacks.The buyer later tendered the price, but the seller refused to accept itand subsequently resold the stacks. The Buyer was held entitled to

recover in an action of trover. ( Martin Dale V/s. Smith 1841)2) Sale of goods to be shipped and bill of lading to be dated December January. Goods were shipped on 30th January but the bill of ladingwas dated 2nd February the buyer was held entitled to reject.


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2. Stipulations as to time of

payment As punctual payment does not go to the whole

consideration of the sale, the failure by the buyer to payon the appointed day does not as a rule, entitle the sellerto treat the contract as repudiated, though he may beentitled to withhold delivery until the price is paid and toresell the goods if the buyer does not pay or tender theprice within a reasonable time. Consequently, if beforesuch resale the buyer tenders the price, even though itbe on a date after the date name in the contract theseller cannot, in the absence of a stipulation to the

contrary, treat the contract as at an end and refuse toallow the buyer to have the goods; and a subsequentresale by him will be tortious. The time cannot be takento be the essence of the contract in case where thecontract itself does not stipulate the time for payment ofthe price.


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3. Stipulations as to time of performance

of other terms As the Act deals with all kinds of contracts of sale, and notonly with commercial contracts, the enactment as to

stipulations as to time, other than as to payment of the price,is necessarily put in somewhat general language. If a manorders a suit of clothes, a promise by the tailor that he shallhave it by a certain date would not, generally speaking, be of

the essence of the contract, though it might be if he wasordering court dress for the purpose of attending a court on aparticular day. But in the case of commercial contracts,although occasionally stipulations as to time may not be of theessence, the usual rule is that they are.

In contracts of sales of goods, the computation of the time of

performance from a particular date, act or event is prima facieexclusive of the day, act or event and inclusive of the day ofperformance, although this presumption may be displaced bya contrary intention appearing from the contract and itssurrounding circumstances.


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4. Waiver of the stipulations

Stipulations as to time may be waived by the party inwhose favour they are inserted either expressly orby implication, and if he does so he cannotafterwards treat the failure to comply with them byother party as giving a right to rescind the contract.

Where, however, an initial stipulation making time ofthe essence of the contract is waived, reasonablenotice to make time again of the essence would giverise to the right to rescind. There can, strictly

speaking, be no waiver after breach, but to acceptgoods, though delivered late, is often spoken of as awaiver of the right of action which the breach hasgiven.


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Section 12. Condition and Warranty

1. A stipulation in a contract of sale with reference to goods

which are subject thereof may be a condition or a warranty.2. A condition is a stipulation essential to the main purpose ofthe contract, the breach of which gives rise to a right to treatthe contract as repudiated.

3. A warranty is a stipulation collateral to the main purpose ofthe contract, the breach of which gives rise to a claim for

damages but not to a right to reject the goods and treat thecontract as repudiated.

4. Whether a stipulation in a contract of sale is a condition or awarranty depends in each case on the construction of thecontract. A stipulation may be a condition, though called awarranty in the contract.

Synopsis

1. Conditions and warranties 2. Express Conditions

3. Express Warranties 4. Representations

5. Implied conditions and warranties 6. Puffs


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1. Conditions and Warranties

This section is in effect an additional definition orinterpretation section and supplies a want long felt inIndia. At the time when the Contract Act was passed thephrase warranty had been and used with severaldifferent meanings and shades of meaning, and thedifficulty had been increased by some of those meaningsoverlapping some of the meanings of the wordcondition. The Contract Act used the word warranty inthis ambiguous sense and did not define it. The resultwas that the courts had to decide on the construction ofeach section whether the word warranty was used in

the strict sense of the English Law, as it was . Thepresent Act avoids this confusion and uses the wordscondition, and warranty and draws a distinctionbetween the two.


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2. Express Conditions

The parties if they wish, may put the contents of any

particular statement or promise which passes betweenthem on the same footing as the description of the thingcontracted for, so that if it is not made good by the partyundertaking it, the failure is deemed to be a total failureof the performance, and the other is at least wholly

discharged, and may in addition recover damages forsuch failure of performance. This is a condition in theproper sense, as defined in sub-s (2). In the usualsense, the condition means an essential undertaking inthe contract which one party promises will be madegood. If it is not made good, not only will the other partybe entitled to repudiate the contract, but also to sue fordamages for breach.


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3. Express Warranties There may also be, and there occur in common practice, auxiliary

promises or undertakings of which the breach is not intended toavoid the contract, but only to give a remedy in damages. Theseare warranties in the proper sense, as defined in sub-s (3). Acondition of sale, protecting a seller in respect of misdescription,may be overridden by a warranty given before the sale takes placeand damages may be recovered for breach of the warranty.Whether a statement is to be regarded as warranty must be

objectively ascertained by asking whether adopting the standard ofa reasonable man, the other party assumed that the representorwas to be regarded as undertaking legal liability for his assertions.The importance of the statement, the relative knowledge andmeans of knowledge of the parties, and the possibility ofverification are the relevant factors which would indicate whether

the statement is a warranty. Thus, statements may be warrantieswhen made by dealers, though they would not be warranties ifmade by private sellers; for the dealers may be in possession ofspecial knowledge, expertise and means of information notavailable to ordinary persons.


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4. Representations

An affirmation as regards the goods, if it is to have contractual

effect, must be part of the contract; if it is not, it is only arepresentation, the untruth of which will not, in the absence offraud, give rise to an action an for damages, though it mayenable the other party to rescind the contract and sometimesa representation may amount to a condition precedent to theformation of the contract, so that if be untrue, the other party

is discharged from all liability. It depends upon the intention ofthe parties whether an affirmation made at the time of, orduring the negotiations for sale, is to be treated as acondition, a warranty or a mere representation: and althoughan assertion made by the seller of a fact unknown to thepurchaser may be strong evidence that it was intended as a

warranty, it is not necessary so in law. If the representationdoes not form part of the contract, that is, if it is neither acondition nor a warranty, it amounts to an expression ofopinion not intended to enter the bargain and its no fulfilmentdoes not give rise to any right to a legal action.


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5. Implied Conditions and Warranty Although the parties may have used no expressed words that

would create such a stipulation, the law annexes too many

contracts, conditions, the breach of which may be treated bythe buyer as avoiding the contract or given a right todamages. These are called as implied conditions and areenforced on the grounds that the law infers from all thecircumstances of the case, that the parties intended to addsuch a stipulation to their contract, but did not put it into

expressed words. Most of the statutory implied terms as to sellers duties as to

title, confirmative with description and quality, termsdesignated a conditions by the contract itself, terms similar tothose or already treated as conditions in another case, timeclauses in mercantile contracts and residual category where

breached of term is to be treated as giving right to treat thecontract as discharged are considered as terms likely to betreated as conditions.

The existence of an employed condition or warranty may berebutted by proof of facts, which show a contrary intention


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6. Puffs

A mere puff is a vague and extravagant statement so

preposterous in its nature that nobody could believe that

anyone was misled by it. The extent to which a

statement may be so categorised depends on the

degree or obviousness of its untruth. The circumstances

of its making and in particular on the expertise and

knowledge attributable to the person whom it is made.


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Section 13 : When condition to be

treated as warranty,

1. Where a contract of sale is subject to any condition to befulfilled by the seller, the buyer may waive the condition orelect to treat the breach of the condition as a breach ofwarranty an not as a ground for treating the contract asrepudiate.

2. Where a contract of sale is not severable and the buyer hasaccepted a goods or part thereof, or where the contract is forspecific goods, the property in which has passed to thebuyer, the breach of any condition to be fulfilled by the sellercan only be treated as s breach of warranty and not asground for rejecting the goods and treating the contract as

repudiated unless, there is a term of a contract, expressed orimplied to that effect

3. Nothing in this section shall affect the case of any conditionor warranty fulfilment of which is excused by law, by reasonof impossibility or otherwise.


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Transfer of Property as Between Seller

and Buyer

Section 18Goods must be ascertained Goods must be ascertained: where there is

contract for the sale of unascertained goods, no

property in the goods is transferred to the buyerunless and until the goods are ascertained

Synopsis

1. Transfer of property

2. Property cannot pass until the goods are identified

3. Part of a specific whole

4. Property and risk

5. Identification of goods


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1. Transfer of property

This and the five following sections of the Act deal with

the question foreshadowed by section 4 of the Act and

lay down rules which assist in deciding the question

when the object of the contract of sale, namely, the

transfer of the property in the goods to the buyer hasbeen affected.


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2. Property cannot pass until the

goods are identified It is a condition precedent to the passing of the property in

every case that, the individuality of the thing to be deliveredshould be established. In any given case, there may bequestion whether this condition is fulfilled or not, and it maybe that the property will not pass even if it is fulfilled, butuntil it is, there is no possibility of the property passing. It is

essential that the article should be specific and ascertainedin a manner binding on both the parties, for unless that beso, the contract cannot be construed as contract to pas theproperty in that category.

Where according to the terms of the contract, the seller wasto supply waste coal ash as and when it was dischargedfrom the bunkers of the powerhouse, it was held that thecontract was for the sale of unascertained goods and,therefore no property passed to the buyer till the goodswere ascertained. (Tej Singh Vs State of Uttar Pradeshand others 1981)


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3. Part of a specific whole It is obvious that if the contract is merely for the sale of goods by

description, such as a contract for sale of a certain quantity ofmalting barley, or future goods, the necessary condition is notfulfilled. Nor is it fulfilled even if the goods are so far ascertainedthat the parties have agreed that they shall be taken from somespecified larger stock. The parties did not intend to transfer theproperty in one portion of the stock more than in another, and thelaw which only gives effect to their intention does not transfer theproperty in any individual portion(White Vs. Wilks 1813). Andthe mere fact that an order for the delivery is given by the sellerto the buyer, and is lodged by the buyer with a warehouseman,who holds the specified larger stock out of which the goods soldare to be taken, is not sufficient to transfer the property to thebuyer.(Laurie & Morewood Vs. Dudin & sons 1926) Thus,

where the ascertainment of the goods depends upon their beingseparated from the bulk by the seller or a third party or the buyer,by their being severed, weighed or measured or some otherprocess, no property can pass until this is done (National CoalBoard Vs. Gamble 1959)


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4. Property and Risk In this class of case, it is necessary to distinguish the passing of

the property from the transfer of the risk; the risk usually passeswith the property, but may pass independently of it; Thus,acceptance of the delivery warrant for a certain quantity of spiritout of a larger bulk which was liable to deteriorate in storage washeld to put the risk of deterioration on the buyer, although he hadacquired, not property but only undivided interest in the whole

bulk. Equally, it would seem that there can be none in anindividual part of a chattel, such as a tree which has been felled,of which a marked portion was sold, and of which the otherportion is to be retained by the seller. In such a case, it isconceived, the whole tree remains the property of the seller until

the marked portion is severed, even if the severance is to bedone by the buyer.


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5. Identification of the goods

The contract itself may provide that the property shall pass on the

happening of some specified event, sufficient to identify the goods, andoccasionally they may become identified by other means. Thus, in acase where the seller sold 250 quarters of wheat out of a larger bulkbelonging to him in a warehouse, and the buyer took delivery of 400quarters and pledged the remaining 850 quarters to a bank, and in themeantime the seller sold the remainder of the bulk in the warehouse, ofwhich delivery was taken, so that 850 quarters only were left in the

warehouse, it was held that by this process of exhaustion the 850quarters became ascertained goods and property therein passed to thebuyer, so that the pledgee acquired a title thereto against theseller.(Wait & Midland Bank 1926) In State of karnataka Vs. TheWest Coast Paper Mills Ltd. AIR 1986 it was held that where under acontract a company was permitted to remove bamboos from the forestarea at Rs.10 /- per ton, and the government by a subsequent order

enhanced the price to Rs.20/- per ton, it was held that the enhancedrate was no applicable to the bamboos cut although not removed priorto the date of the government order, because on the bamboos being cutand extricated, the goods being ascertained and in a deliverable state,the property had passed to the company.


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Section 19. Property passes when

intended to pass1. Where there is a contract for the sale of specific or ascertained

goods the property in them is transferred to the buyer at suchtime as the parties to the contract intend it to be transferred.

2. For the purpose of ascertaining the intention of the partiesregard shall be had to the terms of the contract, the conduct of

the parties and circumstances of the case.3. Unless a different intention appears, the roles contained insection 20 to 24 are rules for ascertaining the intention of theparties as to the time at which the property in the goods is topass to the buyer.

Synopsis1. Principles for determining whether the property is transferred

2. Intention of the parties

3. Ascertained goods


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1. Principles for determining whether

the property is transferred

When it appears that the goods -- the subject of the

contractare specific or ascertained, so that it is

possible for the property to pass to the buyer, it becomes

necessary to determine whether it has actually passed;

This section reproduces this statement in statutory form,

and the rules of construction adopted by courts are those

set out in Ss 20 to 24.


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The governing principle which should determine as tothe passing of the property in the goods must be to findout what is the intention of the parties. It is open to theparties to agree that the property shall pass ipso factoimmediately the goods become ascertained or even that

it shall pass at some time after the delivery is effected.The desirability of making express provisions to thiseffect is demonstrated by the consequences of itsomission from the Contract Act. It might have beenthought that, even in the absence of such a provision,the courts would be free to give effect to the intention ofthe parties to a lawful contract of sale on such animportant element of the contract as the transfer of theproperty, and that view has on some occasions beenacted upon.


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Where a company had transferred its plant and machinery to

the finance corporation and the only right the company hadwas to redeem and it was clear that the company could notsell the same without the concurrence of the financecorporation it was held that the intention of the partiesnotwithstanding the language of the document between the

company and M/s Ranga Engineering Company was totransfer the property only after obtaining the consent of thefinance corporation and there was no sale untilthen.(PPLooke Vs. NJ Mathew & others 1967) Sale ofshares becomes complete as soon as property in the sharesis intended to be transferred to the buyer. Such intention doesnot depend on any particular form or mode of transfer and hasto be gathered from the facts of each particular case. UnityCompany Pvt. Ltd. Vs. Diamond Sugar Mills & othersAIR 1971


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3. Ascertained goods

Then term ascertained goods, which also occurs in

Section 58, is not defined by the Act. It is, however, clearthat the words specificgoods bear the meaning assignedto them in the definition clause, goods identified andagreed upon at the time a contract of sale is made.Ascertained probably means identified in accordance

with the agreement after the time a contract of sale ismade. Sections 23 and 25, therefore, must also be readsubject to the provisions of this section, and regard mustbe had to the intention of the parties when consideringwhether the property has or has not passed in the

circumstances dealt with by those sections. Where teaktrees to be cut were of more than 12 inches girth, it washeld that till it was ascertained as to which trees fell withinthe description they were not ascertained goods. BadriPrasad Vs. The State of Madhya Pradesh AIR 1970

SC.


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Section 20 Specific goods in a

deliverable state Where there is an unconditional contract for the sale of

specific goods in a deliverable state, the property in the goodspasses to the buyer when the contract is made, and it isimmaterial whether the time of payment of or the time ofdelivery of goods, or both, is postponed.

Examples

This section may be illustrated by the following examples:

1. Sale on the 4th January of a haystack on the sellers land atthe price of 145 to the paid on the 4th February, the hay tobe allowed to remain on the sellers land until the 1st May: nohay to be cut until the price was paid. The property in thehaystack passed on the making of the contract and on thestack being destroyed by fire, the buyer must bear the lossTarling Vs. Baxter (1827)


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Section 20 Specific goods in a

deliverable state

Examples

2. Sale of a specified number of bushels of oats, thecontents of a bin in a warehouse. The seller gives adelivery order to the buyer, addressed to the

warehouseman, authorising delivery of the oats tiothe buyer, and asking the warehouseman to weighthem,. The warehouseman accepts the order andenters it in his books. The property has passed to

the buyer, as the weighing was not necessary toidentify the oats or to ascertain the price, but wasmerely for the satisfaction of the buyer. SwanwikVs. Sothern (1839)


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Section 21 Specific goods to be put

into a deliverable state Where there is a contract for the sale of specific goods and

the seller is bound to do something to the goods for thepurpose of putting them into a deliverable state, the propertydoes not pass until such thing is done and the buyer hasnotice thereof.

Example

This section may be illustrated by the following example: Saleof the whole contents of a cistern of oil, the oil to be put intocasks by the seller and then taken away by the buyer. Someof the casks are filled in the presence of the buyer, buy before

any are removed, or the remainder are filled, filled, firedestroys the whole of the oil. The buyer must bear the loss ofthe oil which had been put into the casks, the seller that of theremainder .Rugg Vs. Minett (1089)


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Section 22 : Specific goods in a

deliverable state , when the seller has

to do anything thereto in order toascertain price :

Where there is a contract for the sale of specific

goods in a deliverable state, but the seller is bound

to weigh, measure, test or do some other act or

thing with reference to the goods for the purpose of

ascertaining the price, the property does not pass

until such act or thing is done and the buyer has

notice thereof.


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Section 22

Examples

This section may be illustrated by the followingexamples:

1. Sale of a stack of bark at a certain price per ton, the barkto be weighed by the sellers and buyers agents. Part

was weighed and taken away, but before anything morewas done a flood carried away the remainder. The lossof this fell on the seller. Simmons Vs Swift (1826)

2. Sale of 289 specified bales of goatskin, containing 5dozen in each bale, at a certain price per dozen. By the

usage of the trade, it was the sellers duty to see whetherthe bales contain the number specified in the contract.Before the seller had done this the bales were destroyedby fire. The loss fell on the seller. Zagury vsFurnell(1809)


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Section 23 : Sale of unascertained

goods and appropriation.

1. Where there is a contract for the sale of unascertainedor future goods by description and goods of thatdescription and in a deliverable state are unconditionallyappropriated to the contract assent of the buyer or bythe buyer with the assent of the seller, the property in

the goods there upon passed to the buyer. Such assentmay be expressed or implied, and may be given eitherbefore or after the appropriation made.

2. Delivery to the carrier - Where in pursuance of the

contract the seller delivers the goods to the buyer or tothe carrier or other bailee (whether named by the buyeror not) for the purpose of transmission to the buyer, anddoes not reserve the right of disposal, he is deemed tohave unconditionally appropriated the goods to the

contract.


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Section 23 : Sale of unascertained

goods and appropriation

Example

This section may be illustrated by the following example:

1. Sale of 20 hogsheads of sugar out sugar out of a largerquantity. The seller fills four hogsheads which the buyer

takes away. Subsequently the seller fills sixteen morehogsheads, and informs the buyer of this asking him tocome and take them away. The buyer promises to doso. The property has passed to the buyer.

2. Mr A contracts to sell to Mr B a certain quantity of liquor

out of a big cask containing a much larger quantity. Therequired quantity is not separated or bottled. Theproperty in the liquor does not pass to the purchaser.


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Section 24 Goods sent on approval

or on sale or return

When goods are delivered to the buyer on approvalor on sale or return or other similar terms, theproperty therein passes to the buyer

(a) when he signifies his approval or acceptance to

the seller or does any other act adopting thetransaction:

(b) if he does not signify his approval or acceptanceto the seller but retains the goods without givingnotice of rejection, then, if a time has been fixed forthe return of the goods, on the expiration of suchtime, and, if no time has been fixed, on theexpiration of a reasonable time.


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Section 24 Goods sent on approval

or on sale or return Examples The section may be illustrated by the following

examples:

1.Goods delivered on sale or return are pledged by the

deliveree. He thereby becomes the buyer of thegoods, and the original owner cannot recover thegoods from the pledgee.

2. Goods delivered on sale or return to the defendantare delivered by him on similar terms to another.

The latter in turn hands them to a fourth person,who loses them. The defendant, being unable toreturn the goods, must pay for them as if he hadactually agreed to become the buyer.


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Sect ion 26 Risk p r ima facie passes with

property

unless otherwise agreed, the goods remain at thesellers risk until the property therein is transferred tothe buyer, but when the property therein istransferred to the buyer, but when the propertytherein is transferred to the buyer, the goods are atthe buyers risk whether delivery has been made ornot.

Provided also that nothing in this section shall affectthe duties or liabilities of either seller or buyer as abailee of the goods of the other party.


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property

Examples This section may be illustrated by the following examples;

1. Goods in a house held on lease and belonging to thetenant were sold by auction under conditions expressly

providing that all lots should be taken to be delivered at thefall of the hammer, after which time they should remain at theexclusive risk of the purchaser. The rent of the house was inarrear, and after the sale the landlord threatened to distresson these goods; to prevent distress, the auctioneer paid therent and handed the net proceeds of the sale to the original

owner of the goods, the tenant. It was held that the auctioneerhad no right to make this deduction, as the property in thegoods had passe0d to the respective buyers and the seller,therefore, had no further interest in them; the auctioneer, inconsequence, had no implied authority from him to pay therent in order to save the goods from distress. Sweeting Vs.

Turner (1871)


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property

2. The defendant purchased 975 bales of rice, being the wholecontents of a gola, paid earnest money, and took part delivery of therice. The rest was afterwards destroyed by fire. The property in thewhole had passed to him and he was held liable to pay the balance ofthe price. The Union of India Vs. The West Punjab Factories Ltd.AIR 1966 SC

3. The defendant contracted to purchase 30 tons of apple juice.The plaintiff crushed the apples, put the juice in casks and kept itpending d3elivery. The defendant delayed taking delivery and thejuice went putrid and had to be thrown away. The defendant was

liable to pay the price; the seller had been in a position to sell thegoods elsewhere and acquire other goods for the postponed time ofdelivery and he had not done so and there was some loss in themeanwhile, the responsibility for the loss would have fallen on him,but in the present case the seller had to keep the goods ready fordelivery as and when the buyer proposed to take them. Demby

Hammilton & Co. Ltd. Vs. Barden (Endeavour Wines Ltd) 1949


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PERFORMANCE OF THE CONTRACT Section 31. Duties of the seller and buyer It shall be the duty of

the seller to deliver the goods and of the buyer to accept and pay forthem, in accordance with the terms of the contract of sale.

The general rule enunciated in this section follows from the nature ofthe contract of sale, by which the property in the goods is transferred,or agreed to be transferred, from the seller to the buyer in return for

the price.

There would be breach of the duty to accept when the buyerunjustifiably rejects the goods. Taking of delivery of the goods is animportant aspect of the duty to accept and refusal to do so willconstitute rejection of the goods and therefore , would amount to anon-acceptance of the goods. There is however a distinction betweenacceptance of goods and taking delivery of them. The buyersignifying his approval of the goods accepts them though he may nothave taken delivery of the goods. It will be noticed that the Act doesnot expressly impose any duty to take delivery although it prescribessanctions when there is delay in taking delivery.


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Section 32 Payment and delivery are

concurrent condi t ions :

Unless otherwise agreed, delivery of the goods and payment of theprice are concurrent conditions, that is to say, the seller shall beready and willing to give possession of the goods to the buyer inexchange for the price, and the buyer shall be ready and willing topay the price in exchange for the possession of the goods.

A contract of sale is an example of a contract consisting of reciprocalpromises to be simultaneously performed. In accordance, thereof,with the general principle laid down in s.51 of the contract Act, theseller is not bound to deliver, and commits no breach of contract infailing to deliver, if the buyer is not ready and willing to pay the price,

and is not liable to an action for failure to accept the goods, if theseller was not ready and willing to let the buyer have goods ondemand. The owes to the buyer as onerous a duty to deliver thegoods, as the buyer owes to the seller the duty to accept and pay forthem.


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Sect ion 34. Effect o f part delivery

A delivery of part goods, in progress of the delivery of the whole, has

the same effect, for the purpose of passing the property in suchgoods, as a delivery of the whole; but a delivery of the part of thegoods with an intention of severing it from the whole, does notoperate as a delivery of the remainder.

Examples

The section may be illustrated by the following examples:

1`. Sale of a quantity of goods lying at a wharf. The seller left anorder with the wharfinger to deliver the goods to the buyer, who hadpaid for them by a bill. The buyer subsequently weighed the goodsand took away part of them. This was held to amount to a delivery ofthe whole of the goods.


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Sect ion 34. Effect o f part delivery

2. A ship arrived in port with a cargo of wheat. The

master reported her at the Customs House and made anoath that the cargo was for A., the indorsee of the bill oflading. Next day, A made entry of the wheat in his nameat the Customs House. Part of the cargo was thendelivered to A. This constituted a deliver of the whole.

3. Sale of a stack of hay. The buyer asked thepermission of the seller to cut and remove part ofthe stack, which was granted. The clear intention ofthe parties being to separate the part delivered of

the whole.

Sect ion 35 Buyer to app ly for del ivery


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Sect ion 35 Buyer to app ly for del ivery Apart from any express contract, the seller of the goods is not bound to deliver them

until the buyer applies for the delivery

This section reproduces s93 of the contract Act except that for the words in theabsence of any specific promise, the words apart from any express contract havebeen substituted. The words in the absence of any special promise have beenconstrued to mean an express stipulation as to delivery6 which relieves the buyerfrom the obligation to apply for delivery or the necessary implication of such astipulation from the nature of the contract as expressed. It might also arise out ofusage or custom.

Even if there is an obligation on the part of the seller to inform the buyer when thegoods are in a deliverable state, it is not a specialpromise, though it may postponethe obligation of the buyer to apply for delivery, and after the lapse of a reasonabletime, to enable the goods to be procured by the seller, the buyer would be entitledand bound to apply for delivery.

When the applies for delivery and the seller then fails to deliver, the seller is guilty ofa breach of contract. So where the contract provided for delivery in all November on

seven days notice from the buyer, and the buyer gave the notice early in November,it was held that by the terms of the contract the buyer had the right to fix the date inNovember on which the delivery should be made, and the seller having failed todeliver as required by the notice, was guilty of a breach of contract. JuggernathKhan Vs. Machlachar (1881)

Sect ion 36 Ru les as to delivery


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Sect ion 36. Ru les as to delivery 1. Whether it is for the buyer to take possession of the goods or f

the seller to send the goods to the buyer is a question depending ieach case on the contract, express or implied, between the partie

Apart from any such contract, goods sold are to be delivered at thplace at which they are at the time of the sale, and goods agreed tbe sold are to be delivered at the place at which they are at the timof the agreement to sell., if not then in existence, at the placewhich they are manufactured or produced.

2. Where under the contract of sale the seller is bound to send th

goods to he buyer, but no time for sending is fixed, the seller is bounto send them within a reasonable time.

3. Where the goods at the time of sale are in the possession ofthird person, there is no delivery by seller to buyer unless and untsuch third person acknowledges to the buyer that he holds the goodon his behalf :

Provided that nothing in this section shall affect the operation of thissue or transfer of any document of title to goods.

4. Demand or tender of delivery may be treated as ineffectuunless made at a reasonable hour. What is reasonable hour isquestion of fact.

5. Unless otherwise agreed, the expenses of and incidental tuttin the oods into a deliverable state shall be borne b the seller

Sect ion 36. Ru les as to delivery


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y Examples

The section may be illustrated by the following examples :

1. Sale of 12 puncheons of rum, made from molasses, of whichwere delivered. The buyer pressed for delivery of the remainder, bthe seller delayed and in the meanwhile an Act of Parliament wapassed prohibiting the distillation of spirits from molasses, anannulling all contracts for the sale of such spirits. The sellers werheld liable in damages as having failed to deliver within a reasonabltime. Phillips Vs. Blair and Martin (1801)

2. Sale of goods to be sold to be delivered in the last fortnightMarch. Delivery is tendered at 9 p.m. on 31 March. It is a questioof fact whether this is a reasonable hour. If it is not, there is n

delivery, and the buyer may repudiate. Startup Vs. macdonal(1843)

3. Sale of goods for ready money. The seller packs them up in thbuyers boxes in the buyers presence, but they remain in the sellerpremises. This is not a delivery. Boulter Vs. Arnott (1833)


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Sect ion 38. Ins talment Deliveries

1. Unless otherwise agreed, the buyer of goods is not bound toaccept delivery thereof by instalments.

2. Where there a contract for the sale of goods to be delivered bystated instalments which are to be separately paid for, and the sellermakes no delivery or defective delivery in respect of one or moreinstalments, or the buyer neglects or refuses to take delivery of or

pay for one or more instalments, it is a question in each casedepending on the terms of the contract and the circumstances of thecase, whether the breach of the contract is a repudiation of the wholecontract, or whether it is severable breach giving rise to a claim forcompensation, but not to a right to treat the whole contract asrepudiated.


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Sect ion 38. Ins talment Deliveries

Examples


1. Sale of 25 tons of pepper October /November shipment. Thesellers shipped 20 tons in November and 5 tons in December. Thebuyers were entitled to reject the whole 25 tons. Reuter Vs. Sala

(1879)

2. Sale of 200-300 tons of coal to be shipped as early as possible bya named ship or other vessel. The named ship was not available andthe seller shipped 152 tons on another ship, informing the buyer that

he had done so and that he had drawn on him for the price andproposing to ship the remainder later. The buyer made no reply tothis communication. The ship was lost. In an action by the seller forthe price it was held that the buyer had impliedly assented to theshipment of the smaller quantity as an instalment and was liable topay for it. Riichardson Vs. Dunn (1841)

Rights of Unpaid Sel ler against goods


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Rights of Unpaid Sel ler against goods

Section 45. Unpaid seller defined

1. The seller of goods is deemed to be an unpaidseller within the

meaning of this Act (a) when the whole of the price has not been paid or tendered ;

(b) when a bill of exchange or other negotiable instrument has beenreceived as conditional payment, and the condition on which it wasreceived has not been fulfilled by reason of the dishonour of theinstrument or otherwise.

2. In this chapter, the term seller includes any person who is in theposition of a seller, as, for instance, an agent of the seller to whomthe bill of lading has been indorsed, or a consignor or agent who hashimself paid, or is directly responsible for, the price

Examples

The section may be illustrated by the following example;

The seller draws bills for the price of the goods on the buyer, whoaccepts them, and the seller negotiates them. Before the bills arriveat maturity the buyer fails. The seller is in position of an unpaid seller.


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Section 46. Unpaid Sellers rights

1. Subject to the provisions of this Act and of and of any law for thetime being in force, notwithstanding that the property in the goodsmay have passed to the buyer, the unpaid seller of goods, as such,has by implication of law

(a) a lien on the goods for the price while he is in possession ofthem;

(b) in case of the insolvency of the buyer a right of stopping thegoods in transit after he has parted with the possession of them ;

(c) a right of resale as limited by this Act.

2. Where the property in goods has not passed to the buyer, the

unpaid seller has, in addition to his other remedies, a right ofwithholding delivery similar to and co-extensive with his rights of lienand stoppage in transit where the property has passed to the buyer.


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Section 46. Unpaid Sellers rights

Example The section may be illustrated by the following example :

Sale of goods to be delivered by instalments, eachinstalment to be paid for in cash fourteen days afterdelivery. During the currency of the contract, the buyer

becomes insolvent and the price of one instalment isunpaid. The seller need not make further deliveries unlessthe price of that instalment is paid and cash is paid againstdelivery of subsequent instalments.

Section 47. Sellers lien


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1. Subject to the provisions of this Act, the unpaid seller of goodswho is in possession of them is entitled to retain possession of themuntil payment or tender of the price in the following cases, namely :

(a) Where the goods have been sold without any stipulation as tocredit ;

(b) where the goods have been sold on credit, but the term of credithas expired ;

(c) where the buyer becomes insolvent.

2. The seller may exercise his right of lien notwithstanding that he isin possession of the goods as agent or bailee for the buyer.

A sellers lien is described as an additional security given to a personwho has a right to be paid, but he has a right to be paid besides and

independently of his lien. One of the objects of S.47 which confersthe sellers lien is to protect a vendor from incurring an expense inmanufacturing or acquiring goods for which payment remains justly indoubt . The sellers lien is a particular lien arising in the precisecircumstances specified by the Act and not a general lien for all hisdebts due from the buyer and he cannot rely on the equitable

principle of thevendors

lien.


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Sect ion 48. Part delivery

Where an unpaid seller has made part delivery of thegoods, he may exercise his right of lien on the remainder,unless such part delivery has been made under suchcircumstances as to show an agreement to waive the lien.

Section 49. Term inat ion of l ien


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1. The unpaid seller of goods loses his lien thereon

(a) when he delivers the goods to a carrier or other baileefor the purpose of transmission to the buyer withoutreserving the right of disposal of goods;

(b) when the buyer or his agent lawfully obtains

possession of the goods; (c) by waiver thereof.

2. The unpaid seller of goods, having a lien thereon, doesnot lose his lien by reason only that he has obtained adecree for the price of the goods.


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Section 49. Term inat ion of l ien Examples

This section may be illustrated by the following examples:

1. Goods were sold and sent by the sellers at the request of thebuyer to shipping agents of the buyer, and were put on board a shipby those agents. Subsequently, they were re-landed and sent back tothe sellers for the purpose of re-packing. While they were still in thepossession of the sellers for that purpose, the buyer becameinsolvent. Thereupon the sellers refused to deliver them to thebuyers trustee in bankruptcy except upon payment of the price.Held, that the sellers had lost their lien by delivering the goods to theshipping agents, and their refusal to deliver the goods to the trusteewas wrongful. Valpy Vs. Gibson 1847

2. Sale of a stack of hay for 86, to be paid for as it is taken away,the whole to be removed by a certain date. Part, but only part, waspaid for and removed by a certain date, and two months after thatdate the seller cut up and used the remainder. By doing so, the sellerwaived his lien, and the buyer successfully maintained an action

against him. Gurr Vs. Cuthbert 1843


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Sect ion 50 Right of stoppage in trans i t Subject to the provisions of this Act, when the buyer of goods

become insolvent, the unpaid seller, who has parted with the

possession of the goods has the right of stopping them in transit, thatis to say, he may resume possession of the goods as long as theyare in the course of transit, and may retain them until payment ortender of the price.

In order that the right may be exercised, the following conditions mustall be satisfiedthe seller must be unpaid, the seller must haveparted with the possession of the goods and the buyer must not haveacquired it. This last condition, as appears from the next section isthat which is shortly expressed by saying that the goods are in transit.Further, the right can only be exercised by a seller or a person in a

position analogous to that of a seller, the right to stop in transit isunknown outside the law of sale of goods. Lastly, it is a right againstthe goods themselves only.


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Sect ion 52. How stoppage to trans i t is

effected

1. The unpaid seller may exercise his right of stoppage in transiteither by taking actual possession of the goods, or by giving notice ofhis claim to the carrier or other bailee in whose possession the goodsare. Such notice may be given either to the person in actualpossession of the goods or to his principal. In the latter case thenotice, to be effectual, shall be given at such time and in suchcircumstances that the principal, by the exercise of reasonablediligence, may communicate it to his servant or agent in time toprevent a deliver to the buyer.

2. When notice of stoppage in transit is given by the seller to thecarrier or other bailee in possession of the goods, he shall redeliverthe goods to, or according to the directions of, the seller. Theexpenses of such re-delivery shall be borne by the seller.


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Sect ion 52. How stoppage to trans i t is

effected

Examples


1. A railway company is in possession of goods as carriers when thesellers give notice of stoppage in transit. A sum of money is owing bythe buyers to the railway company. The railway company is notentitled to set up in priority to the sellers right of stoppage in transit ageneral lien exercisable by the company against the buyers asowners of the goods.

2. An unpaid seller stops goods sent by sea at a port short of theirdestination. He is liable for the fright, not only to the part where thegoods were actually landed, but also to the port of their ultimatedestination. Booth & Co. vs. Cargo Fleet Iron Co. Ltd. 1916


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Section 64. Auct ion sale In a case of a sale by auction

1. Where goods are put up for sale in lots, each lot is prima faciedeemed to be the subject of a separate contract of sale ;

2. the sale is complete when the auctioneer announces its completionby the fall of the hammer or in other customary manner; and, untilsuch announcement is made, any bidder may retract his bid;

3. a right to bid may be reserved expressly by or on behalf of theseller and, where such right is expressly so reserved, but nototherwise, the seller or any one person on his behalf may, subject tothe provisions hereinafter contained, bid at the auction;

4. where the sale is not notified to be subject to a right to bid onbehalf of the seller, it shall not be lawful for the seller to bid himself orto employ any person to bid at such sale, or for the auctioneerknowingly to take any bid from the seller or any such person ; andany sale contravening this rule may be treated as fraudulent by thebuyer ;

5. the sale may by notified to be subject to a reserved or upset price ;

Documents

sale-of-goods-act-1930 PPT 11-2-2013