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Sale of Goods

Act, 1930

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Sale: Transfer of ownership

Essential ingredients:

TRANSFER

BUYER

FOR A CONSIDERATION (PRICE)

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CHECKPOINTS FOR A CONTRACT OF SALES:

Bilateral contract

Transfer of property in goods

Subject matter --- necessarily goods

Price / money / consideration

All essential elements of a valid contractIndianContract Act, 1872

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Sale & Agreement to sell

Transfer of property

Type of contract

Risk

Liability in case of loss

In case of Breach byseller

- Immediate & future

- Executed & executory

- Agreement is purely a contractbut sale is with conveyance

- In agreement it passes on toseller. In sale, passes on buyer

- In agreement, buyer has onlypersonal remedy against seller,i.e., to claim for damages

In sale, as a owner of goods

buyer can file a suit againstseller beyond the personalremedy of claiming fordamages

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Differences:

Sale and bailment

Sale and contract for work and

labor

Sale and hire purchase

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Subject matter: GOODS

Section 2(7) : goods is every kind of movable

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 which are agreed to be severed before sale or

under the contract of sale.

Classification of goods:

- Existing goods(1) specific or generic

(2) ascertained or unascertained

- Future goods- Contingent goods

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Price / consideration

Constitutes the essence for a contract of sale.

Can be either paid or promised to be paid

If a consideration other than money is to be

given, it is not a sale

Modes of fixing price. Section 9 & 101. by the parties @ the time of contract

2. Left to be determined by the course of dealings

b/w parties

3. Left to be fixed in some way stipulated in contract

4. By third parties

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Conditions and warranties

Situations when condition sink to the level of

warranty:

Condition turns to be warranty where buyer waives

the condition Where buyer treats breach of condition as breach of

warranty

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Implied conditions as to title:

Implied conditions can differ from the kind of contract itself.

That is., under sale of goods by description, or sale by

sample or otherwise.

There is an implied condition that the seller, in an actual sale,

has the right to sell the goods, and in an agreement to

sell, he will have a right to sell the goods at the time when

property is to pass. As a result, if the title of seller turnsout to be defective the buyer is entitled to reject the goods

and can recover full price paid by him.

Case: Rowland Vs. Divall : A had bought a second hand

motor car from Band paid for it. After he had used it for

six months, he was deprived of it because the seller had

no title to it. It was held that Bhad broken the condition

as to title and A was therefore, entitled to recover the

purchase money from B

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Implied conditions under a sale by description

1. Goods must correspond with description

2. Goods must be of merchantable quality

3. Condition as to wholesomeness

4. Condition as to quality or fitness for aparticular purpose

Case: Priest Vs Last: a hot water bottle was bought by theplaintiff, a draper, who could not be expected to havespecial skill knowledge with regard to hot water bottles,from a chemist, who sold such article stating that the

bottle will not stand boiling water but was intended tohold hot water. While being used by the plaintiffswife,the bottle bursted and injured her. It was held that theseller was responsible for damages as the bottle wasnot fit for use as a hot water bottle.

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Implied conditions under sale by samples. u/s

14

Warranty as to quiet possession

Warranty as to freedom from encumbrances

Warranty as to disclose dangerous nature of goods

Warranties implied by custom or usage of trade

Doctr ine of caveat empto rCase: Ward Vs. Hobbs : certain pigs were sold by

auction and no warranty was given by seller inrespect of any fault or error of description. Buyerpaid the price for healthy pigs. But, they were ill andall but one died of typhoid fever. They also infected

some of the own pigs of the buyer. It was held thatthere was no implied condition or warranty that thepigs were of good health. It was the buyersduty tosatisfy himself regarding the health of the pigs.

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Passing of property or passing of ownership.Sec 18-20

1. Risk follows ownership

2. Where there is a danger of goods to be damaged

by a third party, it is generally the owner who can

take action

3. Right of third party may come into being onlyupon the passing of the property if the buyer

resells the goods to a third party.

4. Insolvency of either parties

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Passing of property in specific goods

Where there is an unconditional contract for the sale of specificgoods in a deliverable condition. Here the property in goodspasses at the time when the contract is made.

Where there is a contract for the sale of specific goods not in adeliverable state. That means, the seller shall do something tothe goods to put them into a deliverable state

Case: Rugg Vs Minett : certain quantity of oil was brought. Oil wasfilled into casks by the seller and then taken away by the buyer.Some casks were filled in the presence of buyer but, before theremainder could be filled, fire broke out and the entire quantity ofoil was destroyed. Held, the buyer must bear the loss of the oldwhich was put into the casks and the seller must bear the loss ofthe remainder.

Sale of specific goods in deliverable state, its duty of seller toweigh, measure, test or do something with reference to thegoods for the purpose of ascertaining the price

Where goods are delivered to buyer on approval or on sale ofreturn or other similar terms the property therein passes to buyer

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Transfer of title by person not the owner

Maxim : nemo dat quod non habet no one can pass a

better title than he himself has.

Exceptions to this rule:

1. Sale by mercantile agent2. Sale by co-owner

3. Sale by a person in possession under a voidable

contract

4. Sale by seller in possession after sale

5. Sale by buyer in possession6. Sale by an unpaid seller

7. Sale by a person under other laws

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Performance of the contract of sale

Delivery should have the effect of putting buyer in

possession

Delivery of goods according to the contract

Delivery at the prescribed place and time

Seller to bear the cost of delivery unless thecontract otherwise provides

If goods to be delivered at a different place and the

nature of goods is of deteriorating, then unless

otherwise provided be borne by the buyer

Buyer shall not accept delivery in tranches unlessagreed upon

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Acceptance of goods by buyer

Intimating the acceptance

Retaining the goods received

By doing certain actsinconsistent with the ownership

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Unpaid seller & his rights.

Sec 45-54

Right as to lien of retention

Right of stoppage in transit

Right of resale- Where goods are of perishable in nature

- Such right to resell is expressly reserved in contract

- Proper notice shall be service upon before doing such act

Right to withhold delivery of

goods Right against the buyerSec 55 & 56(1) Suit for price (2) suit for damages