Sale

Sales means the activities involved in selling products or services in return for money.

Contract of sale of goods

The law relating to sale of goods is contained in the sale of goods act, 1930. This law2 came into force on 1st July, 1930. The act contains 66 sections and extends to the whole of Pakistan.

Definition of contract of sale

Section 4(1) of the sale of goods act defines a contract of sale of goods as A contract whereby the seller transfer or agrees to transfer the property in goods to the buyer for a price. In other words, a contract to transfer the ownership of goods from the seller to the buyer is known as contract of sale.

Essentials of contract of sale

Some essential elements are to be present in a contract which makes the contract of sale valid. If, the essential elements are missing, then the contract of sale will not be valid. Example R agrees to sell his Car to S without any consideration. This contract of sale is not valid since there is no consideration. The following are the essentials of a contract of sale of goods:

1.

Contract

Contract means an agreement enforceable by law. All essentials of a valid contract should also be present in the contract of sale like capacity of parties, free consent, legality of object, etc. it may be verbal or in writing. It may be express or implied.

2.

Two parties

There should be two parties to a contract of sale, i-e. buyer and seller. One person cannot act as a buyer and seller at the same time, because a person cannot buy his own goods and similarly a person cannot sell his own goods to himself. However, the owner of one part can sell his share to the owner of another part. Similarly, a partner may buy the goods from the firm in which he is partner and vice versa.

Example a. A sell his computer to B for Rs. 40000. A is a seller and B is a buyer. b. A and B jointly own a computer. A sell his share to B. b become the sole owner of the computer. c. N is the owner of certain goods, but he is not aware of this fact. M pretends to be the owner of the goods and sells them to N. Since the goods already belong to N, he cannot buy his own goods, hence there is no sale and the contract is not valid.

3.

Transfer of property

The transfer of property is an essential of the contract of sale. Here, property means ownership. A mere transfer of possession of the goods cannot be turned as sale. In order to constitute a contract of sale, the seller must either transfer or agrees to transfer the property (ownership) in the goods to the buyer. It is the ownership that is transferred in a Contract of sale. The ownership is agreed to be transferred in an agreement to sell as in case of pledge. Property means the general property in the goods and not merely a special property. The general property is transferred from seller to the buyer in a contract of sale. When the goods are pledged, it is only the special property which is transferred i.e., possession of the goods is transferred to the pledgee while the ownership rights remain with the pledger. You should note that for transferring the ownership of goods, the physical delivery of the goods is not essential. Example A sell his car to B for Rs. 80,000. The ownership and possession of the car will transfer from A to B upon payment.

4.

Goods

The subject matter of the contract of sale must be goods. According to section 2(7), Goods means every kind of movable property other then actionable claims and money; and includes electricity, water, gas stock and share, growing crops, grass and things attached to or forming part of the land which are agreed upon to be severed before sale or under the contract of sale. Every movable property is regarded as goods. The trees, fruits, vegetables etc. are regarded as goods because they can be separated from the land. An actionable claim means a debt or a claim for money which a person may have against another and which can be recovered by filing a suit. Money is not regarded as goods. However, old coins are treated as goods. Example a. A sell his car to M for Rs. 3 lac. It is a contract of sale because the subject matter of contract i-e car is a movable thing.

b. A contract for the sale of the coal mine or building stone quarry is not a contract of sale of goods.

5.

price

The consideration in a contract of sale must be the price. When goods are sold or exchanged for other goods, the transaction is barter and not a contract of sale of goods. If, the goods are sold partly for goods and partly for price. It is a contract of sale. Example a. A sells his chair to B for Rs. 2,000. It is contract of sale. b. X sells his horse to B against Bs promise to give 100 tons of wheat. It is not a contract of sale.

6.

Sale and agreement to sell

The contract of sale includes both sale and an agreement to sell. When the property in the goods is transferred from the seller to the buyer at the time of formation of contract, the contract is called as sale. Where under a contract of sale the transfer of ownership in the goods is to be transferred from seller to the buyer at some future date, the contract is called an agreement to sell. Example a. A buys a book from S and pays the whole price on a counter. It is a sale. b. A agrees to buy Bs car for Rs. 2 Lac, if his mechanic approves the car. It is an agreement to sell.

7.

Other formation

There is no specific procedure to make a contract of sale. All essentials of a valid contract should be there in a contract of sale like capacity of parties, free consent, legality of object etc. (sec. 5) Example C verbally promise to sell his radio to B. it is a contract of sale if parties are competent to contract, their consent is free and all essentials of the contract have been fulfilled.

An agreement to sell
Where under a contract of sale, the transfer of property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called 'an agreement to sell' [Sec. 4(3)]. It is an executory contract and refers to a conditional sale.

Examples (a) On 1st January, A agrees with B that he will sell B his scooter on 15 January for a sum of Rs. 3,000. It is an agreement to sell, since A agrees to transfer the ownership of the scooter to B at a future time. (b) A agrees to purchase B's car for Rs. 50000, provided B stands surety for him with C. It is an agreement to sell for B. It becomes a sale when the condition is fulfilled by B. (c) B agrees to buy A's car for Rs. 30,000 and pay for it, if his solicitor approves. It is an agreement to sell for A and an agreement to buy for B. (d) A buys some furniture for Rs. 2,000 and agrees to pay for that in two monthly installments, the ownership to pass to him on the payment of second installment. There is an agreement to sell for the furniture dealer. 'An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled, subject to which the property in the goods is to be transferred [Sec. 4 (4)].

Comments
1. It is doubtful whether sale of goods act is applicable to such things as gas, water and electricity. AIR 1936 Cal 753(766); 38 Clr.L.J 545(DB). 2. Sale of goods act does not apply to case under Cl.10, Letters patent (Rang) because suite relates to immovable property. Sale of goods act cannot, except in branch of law to which it specially applies, overrule General Clause Act. AIR 1931 Rang 109(111). 3. A shopkeeper is not bound to serve any member of public. He is not bound to give reasons for his refusal. Invitation by him is voluntary and without consideration. AIR 1934 All 203(205). 4. In the matter of taxation the provision of sale tax act subject to the Constitutional limitations, if any shall determine the situs of sale and not the sale of goods act which is not concerned with the place where the sale take place. The provision of sale of goods act only relates to the time when the property in the goods passes from the seller to the buyer. AIR 1960 Andh pra 196(203) ** AIR 1955 Andh 129(132). 5. When an individual, hands over his property to a firm consisting of himself and others, there is no transfer of property to constitute a sale as defined in act. (1970) 2 ITJ 343(347) (Mad) ** (1969) 72 ITR 528(532); ILR (1969) 3 Mad 220 (DB).

Conditions and warranties

As a general rule when a person buys something it is his duty to see whether that something suits his purpose or not .He cannot hold any body responsible for making a bad choice. This is known as the doctrine of caveat emptor when seller gives express condition or warranty regarding a product; he is bound to honor that. In case the goods bought do not comply with such condition or warranty, the seller is liable to compensate the buyer. Even in the absence of express stipulations by the seller, law presumes that products should meet certain conditions and warranties, breach of which has the same effect as the breach of express stipulations. The sale of goods Act ,1930,recognize condition and warranty separately although both the terms denote the promise made by the seller The difference lies in the nature of promise. If the promise is such that it affects the very basis of the contract, it is a condition .If the promise is such that it is collateral to the main purpose of the contract it is a warranty. The severity of the consequences of the breach depends upon the nature of the promise.

Definition of condition:
Condition is a stipulation essential to the main purpose of the contract, the breach of which give rise to the right to treat the contract as repudiated. (sec.12 (2)) Lord Justice, Fletcher Moulton defined condition as ,an obligation which goes so directly to the substance of the contract, or in other words, is so essential to its very nature ,that its nonperformance will fairly be considered by the other party as a substantial failure to perform the contract at all. A condition is essential for the main purpose of the contract. Condition is a stipulation that forms the basis of the contract of sale. Its non-fulfillment causes irreparable loss to the aggrieved party. In case of violation of condition, the aggrieved party (party whose loss has been occurred due to breach of contract) has the right to cancel the contract. Examples: a) C contract to deliver 100 royal fans to B. but C instead of royal fans deliver climax fans to B. so it is the breach of condition as the contract was for royal fans, not for climax fans. In such case, B can accept or reject the fans and also can claim damages from C, as B is the aggrieved party due to act of C. b) A consulted B a car dealer and told him that he wanted to purchase a car for touring purposes suggested that a Buggatti car will be fit for the purpose .Relying upon the statement , he bought the Buggatti car .Later on the car turned to be unfit for the purpose of touring. The

Court observed that the suitability of the car for touring purpose was a condition because, it was so important that the non fulfillment defeated the very purpose of purchasing the car. It was held that A was entitled to return the car and get back the price paid.

Definition of warranty:
A warranty is a stipulation collateral to the main purpose of the contract, the breach of which gives rise to the claim for damages but not a right to reject the goods and treat the contract as repudiated. (sec12(3)) In other words, a warrantee is not essential for the main purpose of the contract. It is subsidiary or collateral to the main purpose of the contract. The breach of warranty gives the aggrieved party the right to recover damages only but not the right to cancel the contract. The aggrieved party can only sue the other party for damages incurred to him. But, he cannot reject the contract.

Example: a) C promise to deliver 100 fans to B at his office. But C delivers the fans at his home. It is the breach of warranty. B cannot cancel the contract. He can claim damages only for not transferring the fans at his office. b) A buyer goes to a car dealer and asks for a good car. While selling the car, the dealer claims that the mileage of the car is 16 km per liter. But subsequently the buyer discovers that car gives a mileage of only 12 km per liter. Here the buyer cannot repudiate the contract but can only claim damages from the seller because the statement made by the seller amounts to a warranty

Difference between condition and warranty

The following are the points of differences between condition and warranty. Conditions warranties

1.value A warranty is a stipulation not essential to the main A condition is a stipulation essential to the main purpose of the contract. purpose of contract. 2. Basis It forms the basis of a contract and goes direct to the It does not form the basis of a contract and does not go root of contract. direct to the root of the contract. 3. Breach The breach of condition gives the aggrieved party the The breach of warranty does not give the aggrieved party a right to reject the contract. right to reject the contract. 4. Treatment A breach of condition may be treated as a breach of A breach of warranty cannot be treated as a breach of warranty. condition. 5.Option In breach of condition, the aggrieved party has an In breach of warranty, the aggrieved party has no option to option to claim damages instead of rejecting the reject the contract. He can only claim damages. contract.

Conditions treated as warranty

A breach of condition is treated is a breach of warranty under the following cases: The following are the case in which waiver of condition operate:

1: Voluntary waiver by buyer: Where the seller has to fulfill certain conations under the contract of sale and he commits a breach of conditions, the buyer may

a. Altogether waives the performance of the condition. A party may for his own benefit, waive a stipulation; or

b. Elects to treat the breach of the condition as one of a warranty that is to say, he may only claim damages instead of repudiating the contract.

2: compulsory waiver by buyer: Here the waiver does not depend on the will of the buyer, but creates an estoppels against him by his conduct and his presumed by law. a. Where the contract is non severable and the buyer has accepted either the whole goods or any thereof. b. Where the fulfillment of any condition or warranty is excused by law by reason of impossibility or otherwise Where the buyer has accepted the goods and subsequently he comes to know of breach of condition, he cannot reject them, but can only maintain an action for damages this case does not depend upon the will of buyer but the law compulsorily treats a breach of condition as breach of warranty.

Acceptance of only part of the goods, if the buyer has accepted only part of goods and the contract is indivisible; he will have to treat the breach of condition as breach of condition as a breach of warranty and accept the remaining part also. But, in case of divisible contracts, he can repudiate as regards remaining goods, if he has accept only part thereof. Indivisible contracts are those where price for lot, consisting goods of different qualities, as such a fixed and fixed per unit or per bag or per ton, etc. Meaning of acceptance; taking possession or delivery of the goods does not by itself amount to acceptance. The buyer is deemed to have accepted the goods.

Examples a. P agrees with Q to deliver 100 bags of sugar on 1st of March, 2009. P failed to deliver the sugar on 1st of March, 2009 as agreed and is liable for breach of contract. But now he is prepared to deliver the sugar on 19th March 2009. Q can accept this delivery by treating the breach of condition as a breach of warranty and can claim damages.

b. J contracted to sell horns to R. the horns were delivered in 19 boxes by installments. R accepted 1 box and rejected others dented. J sued for the price for all horns. Held, that R could reject.

Express and implied conditions and warranties

Conditions and warranties are of two types given below; 1. Express conditions: Those conditions in which parties are agree upon at the time of contract.The conditions and warranties which are included in the contract are called express condition and warranties. 2. Implied conditions: Those condition which the law incorporates in to contract unless parties stipulate to the contrary. The conditions warranties which are not included in the contract but the law presume their existences in the contract are called implied condition and warranties.

Implied conditions
Whether any express condition is made or not law presumes certain standards which are to be ensured by the seller before selling the any product .These presumptions as to nature, quality, and rightful ownership of the product are termed as implied conditions.

1.

Condition of title

In case of sale, the implied conditions is that the seller has a right to sell the goods. In case of agreement to sell, the implied condition is that the seller will have a right to sell goods at time when the ownership is to pass from the seller to the buyer. Therefore, it is presumed that the seller has a valid title to the goods in every contract of sale. If the seller title is proved to be defective, the buyer can reject the goods and recover his price. (sec. 14(a)) It is presumed in law that in the case of sale, the seller has the right to sell the Goods, and in the case of an agreement to sell the, the seller will have the right to sell the goods at the time of sale. In case a seller sells without the right to sell them, the buyer has the right to repudiate the contract. The term right to sell infers that the seller should have a valid title to the Goods. According to section 14 of the Act, In a contract of sale, unless the circumstances of the contract are such as to show a different attention, there is an implied condition on the part of the seller that, a. In the case of a sale, the seller has the right to sell.

b.

In the case of an agreement to sell, the seller will have a right to sell at the time of sale.

Example a. B bought a second hand car from S a car dealer. After few months the car was taken away by the police as it was a stolen one. The court observed that it was a breach of condition as to title as S had no right to sell the car. It was held that B could recover full price from S. b. B bought 3000 tins of condensed milk from S. Out of these 1000 tins were labeled as Nestle Brand. N, another manufacturer of the milk under the brand name of Nestle, claimed that this was an infringement of his trademark. Consequently B had to remove all the labels from the tins and had to sell them at loss. The court held that the seller had breached the implied condition that he had a right to sell. c. B buys a stolen car from S without knowing this fact .By the time B came to know about it S had compensated the true owner and acquired a legal ownership of the car. Now B cannot terminate the contract on the ground of breach of implied condition. d. Where a seller having no title to the goods at the time of the sale, subsequently acquires a title, that title feeds the ,that title feeds the defective titles of both the original buyer and the subsequent buyer.

2.

Sale by description

In contract of sale of goods by description, it is implied condition that the goods shall match with the description. If the goods are not according to the description, the buyer can reject the goods. if the seller supplies different goods, the buyer is not bound to accept such goods. (sec. 15) If you contract to sell peas, you cannot oblige a party to take beans. This is the rule laid down in section 15, where there is a contract for the sale of goods by description, there is an implied condition that the goods shall correspond with the description. When a descriptive word or phrase is used in a contract of sale to describe the product it creates an implied condition that the goods will correspond to the description.

Examples

a. C advertized a car for sale a corolla, 1990 model. B after buying the car discovered that the car is of an earlier model. B can return the car as it does not correspond with the model advertized. b. S contracted to supply new singer car to A. Later, It was found by A that the car supplied had run some mileage. It was held that there was a breach of condition and A could reject the car. c. A ship was contracted to be sold as copper fastened vessel to be taken with all faults, without any allowance for any defects whatsoever. The ship turned to be partially Copper fastened .The court held that the buyer was entitled to reject the goods. Sale of Goods by description may include the following situations,, (1) Where the buyer has not seen the goods and relies on their description given by the seller. W bought a reaping machine which he had never seen V the seller described to have been new the previous year and used to cut only 50 to 60 acres .W found the machine to be extremely old .It was held that W could return the machine as it did not answer to the description. (2) Where the buyer had seen the goods but relies not on what he had seen but on what was stated to him by the seller. In an auction sale of a set of Napkins and table clothes, these were described as dating from the seventh century; the buyer bought the set after seeing it. Subsequently it was found that the set was not of the seventh century but of the eighteenth century, it was held that he could reject the goods. (3) Packing of goods may sometimes be part of the description.

M sold to L 300 TINS OF Australian Apple packed in cases containing 30 tins. M tendered a substantial portion in case containing 24 tins. It was held that l could reject all the tins as the goods were not packed according to the description given in the contract as the method in which the fruit was packed was an essential part of the description.

3.

Sale by sample

In case of contract of sale by sample, the goods must be supplied according to the sample agreed. A contract of sale by sample is subject to the following conditions: (sec.17) a) The bulk shall correspond the sample in quality.

b) The buyer shall have reasonable opportunity to compare the bulk with the sample. c) The goods shall be free from any defect, rendering them unmerchantable, which would not be apparent on reasonable examination of the sample. Example a. In a contract for the sale of brandy, by sample brandy colored with a dye was supplied. The court held that the buyer was not bound to the contract even though the goods supplied were equal to the sample. As the defects were not apparent on the reasonable examination of the sample. b. A agreed to buy some rubber material from B. The sample of the rubber was shown to A .On receiving the rubber material, A found that the measurement of the rubber material was different from that of the sample. The court held that measurement of the rubber material was part of its quality. It was held that the goods did not correspond to the sample. c. A agreed to buy some rubber material from B. The sample of the rubber was shown to A .On receiving the rubber material, A found that the measurement of the rubber material was different from that of the sample. The court held that measurement of the rubber material was part of its quality. It was held that the goods did not correspond to the sample.

4.

Sale by sample and description

When the goods are sold by sample as well as by description, there is an implied condition that the bulk of goods shall correspond with the sample and the description, if the goods supplied correspond with the sample and not with the description or vice versa, the buyer can reject the goods. (sec. 15) If the sale is by sample as well as by description then it is not sufficient that it corresponds to the description but it should also correspond to the sample. Example a. N agreed to sell foreign refined grapes oil to G. The oil supplied corresponds with the sample but was mixed with hemp oil. Held, that the oil was not in accordance with the description so the buyer could reject. b. In a contract for the sale of a quantity of the sale of seed described as common English Sainfoin, the seed supplied was of a different kind, though the defect was not discoverable except by sowing the defect also existed in the sample. Held the buyer was entitled to recover damages for the breach of contract.

5.

Condition of fitness or quality

Where the buyers inform the seller about the particular purpose for which the goods are required, there is an implied condition that the goods shall be reasonably fit for such purpose. This condition applies if the following requirements are satisfied: a) b) c) The buyer should inform the seller about the purpose of goods. The buyer should rely on the sellers skill or judgment. The sellers business must be to sell goods of that type. *sec.16(1)+

Firstly the particular purpose for which goods are required must be known to the seller The purpose may be made known explicitly or by implication If the goods can be used for many purposes, the buyer should make known the specific purpose to the seller; otherwise the condition as to fitness would not apply. Example a. A buyer ordered for Hessian cloth which is generally used for packing purposes the cloth was supplied accordingly, on receiving the cloth, the buyer found that the cloth was not suitable for packing food products as it had unusual smell He wanted to reject the cloth. The court observed that the buyer had no right to reject the cloth because although it was not fit for the specific purpose, it was fit for the purpose of packing otherwise for which it was commonly used. There was no breach of condition of fitness in this case. In this case had the buyer have informed to the seller that he needs the cloth for the packing of food products, situation would have been different. It is not necessary that the purpose should be expressed in words only. If the goods could only be used for one purpose only, it is implied that the seller had knowledge about the purpose for which the buyer need the goods. b. B went to S a chemist and demanded a hot water bottle from him, S gave a bottle to him telling that it was meant for hot water, but not boiling water. after few days while using the bottle Bs wife got injured as the bottle burst out, it was found that the bottle was not fit to be used as hot water bottle. The court held that the buyers purpose was clear when he demanded a bottle for hot water bottle, thus the implied condition as to fitness is not met in this case. Secondly, the buyer must have relied upon the skill and judgment of the seller. B asked S, he need a car for touring purpose, S supplies a car which is not fit for touring. A breach of condition has been committed here.

6.

Condition of merchantability

Section 16 (2)-Where goods are bought by description from a seller who deals in goods of that description whether he is not the producer or manufacturer or not, there is an implied condition that the goods shall be of merchantable quality The above provision reveals that the condition of merchantability is applicable when, a) The goods are sold by description b) The seller deals with such goods Thus when Mohan a blacksmith sells to Das his old car, no implied condition as to merchantability applies. Merchantable means that the goods must be fit for the ordinary purpose for which such goods are used. For example, when shoes are sold, merchantability requires that the shoes have their heals attached well enough, that they will not break of under the normal use. Examples a. A firm of merchants contracted to buy from S some bales of Manila Hemp. This was to arrive from Singapore. The hemp arrived wetted with sea water. It was so damaged that it was not possible to sell it as Manila hemp in the market. The court held that the hemp was not of merchantable quality and it was entitled to be rejected. But where the buyer examines the goods and the defects are such which can be revealed by ordinary examination, the condition of merchantability does not apply to the extent of such defects. Where the product has some latent defects which cannot be revealed by ordinary examination, the condition of merchantability would apply when even if the buyer has examined the goods. b. B wanted to purchase some glue. The glue was stored in the sellers warehouse in barrels. B was given every facility to open the barrels and inspect them but B did not open the barrels. Liter on the glue was found to have defects which B could have noted if he had opened the Barrels. The court held that there is no breach of implied condition as to merchantability in this case and B was not entitled to any relief. c. B bought underwear from S, B examined it while purchasing .Later on it turned out to be harmful for his skin because of the presence of hidden sulphites in the underwear which could not have been revealed by ordinary examination. The court held that the implied condition of merchantability is applicable in this case. Now what amounts to an examination is a question of fact in each case. In Thornets case the buyer had the product before him to examine but he chose not to examine it. Here as against the seller the examination is deemed to be made by the buyer. Packing of goods is an equally important consideration in judging their merchantability. d. M asked for a bottle of Stones Ginger Wine at Ss shop. Which was licensed for the sale of wines? While M was drawing the cork, the bottle broke and M was injured. Held the sale was by description and M was entitled to recover damages as the bottle was not of merchantable quality.

7.

Condition by custom

An implied condition as to quality or fitness for a particular purpose may be annexed by the usage of trade. In some cases, the purpose for which the goods are required may be ascertained from the acts and conduct of the parties to the sale, or form the nature of description of the article purchased. (Sec. 16(3)) There are instances where the purpose of purchasing goods may be ascertained from the conduct of parties to the sale. Or from the nature of description of the thing purchased. Examples a. X sold goods by auction to Y. In a sale by auction, there was a custom to declare any fault in the goods. Goods were sold without any declaration. Goods were found damaged. Held, Y could reject the goods. b. A bought a set of false teeth from a dentist. The set did not fit into As mouth. Held A could reject the set as the purpose for which anybody would buy it was implicitly known to the seller, here the dentist. c. P asked for a hot water bottle to S,retail chemist ,he was supplied one which burst after few days use and injured Ps wife. The court held that S was liable for the breach of implied condition because P had made known to the Chemist the purpose for which he buys the goods.

8.

Condition of wholesomeness

Wholesomeness means beneficial for health. This condition applies only in contract of sale of eatable and provisions. In such case, the goods supplied must be merchantable and wholesome. It means that the goods must be fit for consumption. Examples a) F bought milk from A. The milk contained germs of typhoid fever. On drinking the milk, Fs wife developed typhoid fever and died. A was held liable in damages. b) C bought a bun containing a stone from M, which broke Cs tooth. Held, C could recover damage from M.

9.

Sale under patent or trade name

In the case of contract for the sale of specified article under its patent or other trade name, there is no implied condition as to its fitness for any particular purpose. It is so because in such a case the buyer is not relying on the skill and judgment of the seller but relies on the good reputation that the goods came to acquire and buy them on the strength of that reputation. The sellers duty is to supply the goods of the same trade name as demanded by the buyer, whether they are fit for any particular purpose or not, is his concern. Examples The buyer wrote to the seller send me your patent smoke -consuming furnace for fitting up in my brewery. The seller supplied the furnace according to the order but the same was found to be not fit for the purpose of the buyers brewery. It was held that the seller had performed his part of the contract by supplying his patented furnace and so he was entitled to recover its price from the buyer.

Implied warranties
Unless otherwise agreed, the law also incorporates into a contract of sale of goods the following implied warranties. 1. Warranty of quiet possession In every contract of sale, the first implied warranty on the part of the seller is that the buyer shall have and enjoy quiet possession of goods. If the quiet possession of the buyer is in any way disturbed by a person having a superior right than that of the seller, the buyer can claim damages from seller. Since disturbance of quiet possession is likely to arise only where the sellers title to goods is defective, this warranty may be regarded as an extension of the implied condition of title provided. In fact the two clauses are overlapping and it was not easy to see what additional rights this warranty confers on the buyer over and above those conferred by the implied condition as to title. Examples P purchased a second hand type writer from the defendant and spent money on its repair and used it for some months. Unknown to the parties the typewriter was stolen one and the P was compelled to return the same to its true owner. P was held entitled to recover from the sellers for the breach of this warranty damages reflecting not merely the price and paid but also the cost of repair that the decision in the instant cause would not change if we treat it as a case of breach of condition as to title.

2. Warranty of freedom from encumbrances: Implied warranty on the part of the seller is that the goods shall be free from any charge or encumbrances in favor of any third party not declared or know to the buyer before or at the time when the contract is made. If the goods are afterwards found to be subject to a charge and the buyer has to discharge the same, there is breach of warranty and the buyer is entitled to damages. It is to be emphasized that the breach of warranty occurs only when the buyer in fact discharge the amount of the encumbrance, and he had no notice of that at time of contract of sale. If the buyer knows about the encumbrance on the goods at the time of entering into the contract, he becomes bound by the same and he is not entitled to claim compensation from the seller for discharging the same. Examples A, the owner of the watch, pledges it with B. after a week A obtains possession of the watch from B for some limited purpose and sell it to C. B approaches C and tells him about the pledge affair. C has to make payment of the pledge amount to B. there is breach of this warranty and C is entitled to claim compensation from A. [Noticed that in the instant case the (i.e., C) cannot allege breach of implied condition as to title against the seller (i.e., A) because the seller in fact had a title to the goods, through subject to the rights of the pledgee].

3. Warranty of disclosing the dangerous of goods: The third implied warranty on the part of the seller is that in case the goods sold are of dangerous nature he will warn the ignorant buyer of the probable danger. If there is breach of this warranty the buyer is entitled to claim compensation for the injury caused to him. Romer L.J observed, I think that, apart from any question of warranty, there is a duty cast upon a vendor, who know of the dangerous character of goods which he is supplying, and also knows that the purchaser is not, or may not be, aware of it, not to supply the goods without giving some warning to the purchaser of that danger.

Example C purchases a tin of disinfected powder from A. A knows that the lid of tin is defective and if is opened without special care it may be dangerous, but tells nothing to C. C opens the tin in the

normal ways whereupon the disinfectant powder flies into her eyes and causes injury. A is liable in damages to C as he should have warned C of the probable danger.

4. Usage of trade:
An implied warranty as to quality or fitness for particular purpose may be annexed by the usage of trade. Examples (a): S market offers to pay damages on the fading of colour of cloth. Every seller of cloth of the market is bound by this warranty. (b): A drugs was sold by an auction and according to the usage of trade. It was to disclose in advance any sea damage; otherwise it will be taken as a breach of warranty if no such disclosure has been made and the goods found to be defective.

Doctrine of Caveat Emptor

Caveat emptor is a combination of two Latin words. Caveat means caution or warning or bewares; and Emptor means the buyer, the purchaser. Caveat emptor means: Let the purchaser beware. Disclaimer of liability for buyers disappointment. It is one of the settled maxims, applying to a purchaser who is bound by actual as well as constructive knowledge of any defect in the thing purchased, which is obvious or which might have been known by proper diligence. Caveat emptor does not mean either in law or in Latin that the buyer must take chances, it means that the buyer must take care. Caveat emptor: qui ignorare non debuit quod jus alienum emit. A maxim meaning Let purchaser beware; who ought not to be ignorant that he is purchasing the rights of another. As the maxim applies, with certain specific restrictions, not only to the quality of , but also to the title to, land which is sold, the purchaser is generally bound to view the land and to enquire after and inspect the title-deeds, at his peril if he does not. Upon a sale of goods the general rule with regard to their nature or quality is caveat emptor, so that, in the absence of fraud, the buyer has no remedy against the seller for any defect in the goods not covered by some condition or warranty, expressed or implied. It is beyond all doubt that, by the general rules of law there is no warranty of quality arising from the bare contract of sale of goods, and that where there has been no fraud a buyer, who has not obtained an express warranty, takes all risk of defect in the goods, unless there are circumstances beyond mere fact of sale from which a warranty may be implied.

In Pakistani Law the rule of Caveat Emptor has been embodied in section 16 of the Sale of Goods Act, 1930, which states: Subject to the provisions of this Act and any other law for the time being in force there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale. The doctrine of caveat emptor passes the responsibility on the shoulder of buyer. It puts emphasis on the buyer to check, examine and test the goods to save him from being deceived. A buyer must employ best of his discretion, not less than the discretion of a common man, while purchasing goods. No one ought to ignore to buy that which is the right of another. The buyer according to the maxim has to be cautious, as the risk is his and not that of the seller.

Exception to the rule of CAVEAT EMPTOR

There are eight exceptions to this rule of caveat emptor. They are:

1. Purchase by description
The rule of caveat emptor does not apply in a case where goods are bought by description from a seller. In such a situation there is an implied condition that the goods shall correspond with the description. It is a condition which goes to the root of the contract, and the breach of it entitles the buyers to reject the goods. Example V sold a reaping machine to W, describing that it is one year old. W found it to be two year old. W could return it as it is not correspond with description.

2. Purchase by sample and description

Where goods are bought by sample as well as by description and the bulk of goods do not correspond with the sample or with the description, the buyer is entitled to reject the goods. The rule of caveat emptor shall not apply in such a case. Example C sells an air filter to B saying that it is genuine and fit for a corolla car. B find that it is fit for corolla car but not genuine. B could reject.

3. Fitness for purpose

Where the buyer informs the seller the particular purpose for which the goods are required and relies upon the sellers skill or judgment there is in that case, an implied condition that the goods shall be reasonably fit for the purposes for which they are required.

Example

C tells B, a car dealer, that he needs a car for touring purpose. B sells a car which is not made for touring purpose. It is breach of condition.

4. Trade name
In the case of a contract for the sale of a specified article under its patent or other trade name, there is no implied condition as to its fitness for any particular purpose.

5. Merchantable quality
Where the goods are bought by description from a seller who deals in goods of that description whatever he is manufacturer or producers or not, there is an implied condition that the goods shall be of merchantable quality. Example A bought milk from B, a dairyman. It was contaminated by germs. As kid got infected and died after drinking the milk. B was held liable for damages.

6. Usage of trade
Where the usage or trade annexes an implied condition or warranty as to quality or fitness for a particular purpose and seller deviates from that, then this rule (of caveat emptor) does not apply. Example A purchase a hot water bottle from B, a retail chemist. When As wife opened the bottle, it was burst and injured her. The proper use of bottle was known to B. B was liable for damages.

7. Sale by sample
In a sale of goods by sample, the rule of caveat emptor does not apply if the bulk does not correspond with the sample or if the buyer is not given an opportunity to compare bulk with the sample. Example X buys oil filter from Y by showing a sample. The oil filter does not correspond with a sample. X can return the filter.

8. Consent by fraud
Where the seller makes a false statement intentionally to the buyer and the buyer relies on it or where the seller knowingly conceals the defects in the good, the doctrine of caveat emptor does not apply. Example

A knows that his watch is made in Pakistan. In order to sell his watch, A tells B that it is made in Switzerland. B buys the watch considering of Switzerland made. B can reject the contract.