Sale of Goods Act 1930

SUBMMITTED TO-AMRENDRA KR.

ARYA

SUBMITTED BY-ABHIJEET GAUTAM

MBA:AMC2014-16

MCU,BHOPAL

INTRODUCTION

CONTRACT OF SALES

ESSENTIALS OF CONTRACT OF SALES

CONDITIONS AND WARRANTIES

RIGHTS OF UNPAID SELLER

REMEDIES FOR BREACH OF CONTRACT OF SALE

INDEX

Introduction Sale of Goods Act is one of very old mercantile law. Sale of Goods is one of the special types of Contract. Initially, this was part of Indian Contract Act itself in chapter VII (sections 76 to 123). Later these sections in Contract Act were deleted, and separate Sale of Goods Act was passed in 1930. The Sale of Goods Act is complimentary to Contract Act. Basic provisions of Contract Act apply to contract of Sale of Goods also. Borrowed from the English act.

MEANING OF CONTRACT OF SALEA contract of sale of goods is a contract

Where by the seller transfers or agrees to transfer the property in goods to the buyer for a price.

There may be a contract of sale between one part-owner and another. [section 4(1)].

A contract of sale may be absolute or conditional. [section 4(2)].

Contract of Sale types

SALE AGREEMENT TO SELL

It is a contract where the ownership in the goods is transferred by seller to the buyer immediately at the conclusion contractEXAMPLE: A sells his house to B for Rs. 10,00,000. It is a sale since the ownership of the house has been transferred from A to B.

It is a contract of sale where the transfer of property in goods is to take place at a future date or subject to some condition thereafter to be fulfilled.EXAMPLE: A agreed to buy from B a product but product is not delivered and payment is done then This is a case of ‘an agreement to sale’.

Essentials of contract of sales

There must be at least two parties.Transfer or agreement to transfer the ownership of

goods.The subject matter of the contract must be necessarily be

‘goods’.The consideration is price.A contract of sale may be in writing or by words.All other essentials of a valid contract must be present.

Two Parties: Buyer and Seller

There must be two parties- a buyer and a seller to constitute a contract of sale.

Delivery: means voluntary transfer of possession from one person to another.

Buyer : means a person who buys or agrees to buy goods.

Goods According to Section 2(7) the term ‘goods’ means

“Every kind of movable property other than actionable claims and money, includes stock and shares , growing crops , and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale”

Types of Goods

Existing goods

Future goods

Existing goods: These are the goods which are owned or possessed by the seller at the time of sale.

Future goods: Goods to be manufactured, produced or acquired after making of the contract are called future goods.

Unascertained goods

Existing goods

Ascertained goodsSpecific goods

PriceAccording to Section 2(10) defines price “as money consideration for a sale of goods”. It forms an essential part of the contract.It must be expressed in terms of money.It is not essential that the price should be fixed at the time of sale. Price in a contract of sale may beFixed by the contract itself, Left to be fixed in an agreed manner, orDetermined by the course of dealing between the parties[Sec. 9(1)]

Transfer of general propertyA contract of sale of goods involves transfer of ownership from the seller to the buyer.

RULES REGARDING TRANSFER OF OWNERSHIP

For Specific goods(Sec. 20 to 22)

Passing of property at the time of contract(Sec.20) Passing of property delayed beyond the date of the contract Goods not in a deliverable state(Sec.21) When the price of goods is to be ascertained by weighing (Sec. 22)

For unascertained/ ‘future’ goods (Sec.23)

Goods sent on approval or ‘sale or return’ (Sec.24)

In the case of a contract for a sale of unascertained or future goods by description Property will pass from the seller to the buyer when the goods of the same description, in a deliverable state, are unconditionally appropriated to the contract by one party with the consent of the other.

When the goods are delivered to the buyer on ‘approval’ or on ‘sale or return’ basis, the property in the goods will pass from seller to the buyer, when any of the following conditions are satisfied.The buyer accepts the goods. The buyer does something which is similar to his act of accepting the goods

CONDITIONS AND WARRANTIESAccording to Section 12A stipulation in a contract of sale with reference to goods which are subject matter there of, may be a condition or a warranty. These stipulations forms a part of the contract of sale and breach of it provides a remedy to the buyer against the seller.

CONDITION [SEC12(2)] WARRANTY [SEC.12(3)]A condition is 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.

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 right to reject the goods and treat the contract as repudiated.

TYPES

Express Conditions : Expressly provided in the contract

Implied conditions- warranties : Which the law implies in a contract of sale.

Conditions as to title [Sec.14(a)]

Implied conditions(Sec 14-17)

Sale by description [Sec.15]

Condition as to quality or fitness.[Sec.16]

Sale by Sample (Sec.17)

Condition as to wholesomeness.

• • Conditions as to title [Sec.14(a)]• Sale by description [Sec.15]• Condition as to quality or fitness.[Sec.16(1)]• Conditions as to Merchantability [Sec.16(2)]• Conditions implied by custom[Sec.16(3)]• Sale by Sample (Sec.17)• Condition as to wholesomeness.• IMPLIED WARRANTIES• Warranty of Quiet possession-Sec.14(6)• Warranty against encumbrances-Sec.14(c)• Warranty to disclose dangerous natures of goods.• Warranty as to quality or fitness by usage of trade – Sec.16(4)• •

IMPLIED WARRANTIES

(Sec 14-17) Warranty to disclose dangerous natures of goods.

Warranty of Quiet possession-Sec.14(b)

Warranty against encumbrances-Sec.14(c)

Warranty as to quality or fitness by usage of trade - Sec.16(4)

“DOCTRINE CAVEAT EMPTOR” Caveat Emptor is a Latin phrase meaning “let the buyer beware”.

Let the buyer beware: the principle that the seller of a product cannot be held responsible for its quality unless it is guaranteed in a warranty. For example, you buy a used car which you are told is in perfect condition, but it immediately breaks down OR you buy a house, but it has termites

Under this doctrine the buyer takes the risk on an item he purchases and cannot complain of a defect.

Unless there is either fraud or warranty (guarantee) by the seller, the rule applies to the sale of personal property

The buyer and seller have equal access to information about the item and the buyer is able to make personal inspection

RIGHTS OF UNPAID SELLER

Right against goods

When the property in the goods has been transferredRight of LienRight of stoppage in goods in transitRight to resale

Right against the buyer personally

When the property in the goods has not been transferredRight of withholding delivery

Right against the buyer personallySuit for priceSuit for damages for non acceptanceSuit for interest

REMEDIES FOR BREACH OF CONTRACT OF SALEThe Sale of Goods Act gives the following remedies to a seller and buyer for a breach of a contract of sale.

Seller’s suits

Suit for price (Sec. 55)

Suit for damages for non-acceptance of the goods (Sec.56)

Suit for interest[Sec. 61(2)(a)]

Buyer’s suits

Suit for damages for non-delivery of the goods(Sec.57)

Suit for interest[Sec.61(2)(a)]

Suit for specific performance(Sec.58)

Suit for breach of warranty(Sec.59)

Annexure“BUSINESS LAW” – Peddina Mohna Rao (PHI PUBLICATION)

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