PRESENTATION BY:ABHA PILLAI ANJALI SINGH KALYANI PATEL INDRANI DUTTA ANNPURNA VERMA

SALES OF GOODS ACT (1930)

TOPICS COVERED……….Formation of contract of sales and its

elementDifference between sale and Agreement

to sellClassification of goodsConditions and warrantiesRule of Caveat EmptorUnpaid sellerAuction sale

THE HISTORY OF SALES OF GOODS ACT

Sale of goods act was enacted in 1930.

Borrowed from the English act.

Came into force in July, 1930.

Prior to the act, the law of sale of goods was contained in chapter VII of the Indian contract act,1872.

Formation of

contract of sale and its essential

TOPIC 1

DEFINITION………..Sec 4(1) of the Indian Sale of Goods Act, 1930 defines the contract of the sale of goods in the following manner:

“ 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”.

MEANING…..The term “Contract of sale of goods’ is a generic term and it includes A. Sale and B. An agreement to sell

where the seller transfers the ownership rights to the buyer immediately on making the contract, it is the contract of sale, but where the ownership rights are to pass on some future date upon the fulfillment of certain conditions then it is called an agreement to sell.

Essentials of a contract of saleTwo parties- buyer and seller

Goods

Price

Transfer of general property

Essential elements of a valid contract

A contract of sale may be absolute or conditional.

TOPIC 2DIFFERENCE BETWEEN SALE AND AGREEMENT TO SELL

Agreement to sell

Ownership passes to the buyer.

It is a executed contract.Risk of loss falls on the

buyer.Seller cannot resell the goods.It can be in case of

existing and specific goods.

Ownership remains with the seller.

It is a executory contract.Risk of loss falls on the

seller.Seller can sell goods to

third party.It can be in case of future

and unascertained goods.

Difference……… Sale

Sale Agreement to sellIn case of breach of a

contract, seller can sue for the price of the goods .

The seller is only entitled to the ratable dividend of the price due if the buyer becomes insolvent.

The buyer is entitled to recover the specific property from the assignee if the seller becomes insolvent.

In case of breach of a contract, seller can sue only for damages not for the price.

The seller may refuse to sell the goods to the buyer w/o payments if the buyer becomes insolvent.

Buyer can claim only ratable dividend for the money paid.

Difference……….

Classificationof

goods

TOPIC 3

Classification

FUTURE

CONTINGENT

EXISTING

Conditionsand

warranties [sec 12]

Topic 4

Terms……….Representation: Statement made by the seller

before entering into a contract.

Stipulation: If such representation forms an integral part of the contract and other party relies upon it.

No Representation: CAVEAT EMPTOR’i.e., Let the Buyer Beware – is applied

Condition And Warranty “A 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)]“ 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.”

It goes to the root of the contract.

Its non fulfillment upsets the very basis of the contract.

Condition [sec12(2)]Example :- [Behn v. Burness,1863]

By charter party( a contract by which a ship is hired for the carriage of goods), it was agreed that ship m of 420 tons “now in port of Amsterdam” should proceed direct to new port to load a cargo. In fact at the time of the contract the ship was not in the port of Amsterdam and when the ship reached Newport, the charterer refused to load. Held, the words “now in the port of Amsterdam” amounted to a condition, the breach of which entitled the charterer to repudiate the contract.

Condition Warranty It is a stipulation

which is essential for the main purpose of the contract.

In case of breach of a condition, the aggrieved party can repudiate the contract of sale.

It is a stipulation which is collateral to the main purpose of the contract.

In case of breach of warranty, the aggrieved party can claim damages only.

Distinction ……..

Condition Warranty A breach of condition may be treated as breach of warranty.

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

Distinction……

TYPES……. Express Conditions : Expressly provided in the contract

Implied conditions & warranty(sec 14 to 17) : Which the law implies in a contract of sale

Implied conditions :Conditions as to title [Sec.14(a)] [Rowland v. Divall,(1923)]Sale by description [Sec.15] [Bowes v.shand,(1877)]Condition as to quality or fitness.[Sec.16(1)]Conditions as to Merchantability [Sec.16(2)] [R.S.Thakur v. H.G.E. corp., A.I.R.(1971)] 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).

When conditions to be treated as warrantyVoluntary waiver of condition: where a

contract of sale is subject to any condition to be fulfilled by the seller, the buyer may (a) waive the condition or (b) elect to treat the breach of the

condition as a breach of warranty. If the buyer once decides to waive the condition he cannot afterwards insists on its fulfillment.

When conditions to be treated as warranty Acceptance of goods by buyer: where a contract of sale is not severable and the buyer has accepted the goods or part thereof, the breach of any condition to be fulfilled by the seller can only be treated as a breach of warranty. Unless there is an agreement to the contrary.

Rule of

Caveat Emptor

Topic 5

CAVEAT EMPTOR Let the ‘Buyer Beware’ The maxim Caveat Emptor does not

apply & the contract will be subject to the implied conditions under the following circumstances :

1. Sale under fitness for buyers purpose2. Sale under merchantable quality 3. Sale under usage of trade4. Consent by Fraud

Exceptions…… Fitness for buyer’s purpose.Sale under a patent or trade name.

Merchantable qualityUsage of tradeConsent by fraud

Unpaid Seller(sec 45)

Topic 6

Unpaid Seller (Sec.45)A seller of goods is deemed to be an unpaid seller when:- The whole of the price has not been paid or tendered;

A bill of exchange or other negotiable instrument has been received as a conditional payment, and the condition on which it was received has not been fulfilled by reason of the dishonour of the instrument or otherwise.

Unpaid seller - Rights 1) Right against goods:

Where the property in the goods has passed Lien on goods A right of stoppage-in-transit A right of Re-sale

Where the property in the goods has not passed Withholding delivery Stoppage in transit

2) Right against the buyer: Suit for price Suit for damages Repudiation o contract Suit for interest

Unpaid seller - Rights 3) Right to resale

Where the goods are perishable Where unpaid seller gives notice of his intention to

resale the goods Where the seller expressly reserves his right of resale.

Auction sale (sec 24(a))

Topic 7

Auction sale [Sec 24(a)]Auction sale is a public sale to any person

bidding the highest upon the terms and conditions already mentioned for the goods to be sold.in an auction anyone can be a buyer and even the seller does not know what price he will get for his goods.

An auction is a process of buying and selling goods or services by offering them up for bid, taking bids, and then selling the item to the highest bidder.

Auction sale - RulesIn the case of sale by auction-

1. where goods are put up for sale in lots, each lot is prima facie deemed to be the subject of separate contract of sale.

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

3. a right to bid may be reserved expressly by or on behalf of the seller and, where such rights is expressly so reserved, but not otherwise, the seller or any one person on his behalf may, subject to the provisions hereinafter contained, bid at the auction,

4. where the sale is not notified to be subject to a right to bid on behalf of the seller, it shall not be lawful for the seller to bid himself or to employ any person to bid at such sale, or for the auctioneer knowingly to take any bid from the seller or any such person, and any such person,and any sale contravening this rule may be treated as fraudulent by the buyer.

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

6. if the seller makes use of pretended bidding to raise the price, the sale is voidable at the option of the buyer.

Auction sale - Rules

Conclusion