The provision of Sale of Goods were earlier part of Indian Contract Act. Came into force on 1st JULY,1930. Are subject to the general legal principles applicable to all the contracts such as, offer & its acceptance, consideration etc. Contract of sale of goods [Section 4(1)]:- a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price.
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at some future date or after fulfillment of some condition-Agreement to Sale Eg: On 1 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.
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Insolvency of buyer Seller must deliver the Seller may refuse to before he pays for the goods to Official Receiver. deliver the goods to goods Official Receiver as ownership has not passed.
Insolvency of seller if Buyer is entitled to recover Buyer could not claim the buyer has already the goods from Official right on the property. paid the price. Receiver.
Kinds of Goods
Goods
Existing goods
Future goods
Contingent goods
Specific goods
Unascertained goods
Examples
Specific goods: Where A agrees to sell to B a particular radio bearing a distinctive number. Unascertained goods: If A agrees to sell to B one bag of
sugar out of the lot of one hundred bags lying in his godown, it is a sale of unascertained goods because it is not known which bag is to be delivered. Future goods: X agrees to sell to Y all the mangoes, which will be produced in his garden next year. It is contract of sale of future goods, amounting to an agreement to sell. Contingent Goods: A agrees to sell specific goods in a particular ship to B to be delivered on the arrival of the ship.
Price
The money consideration for a sale of goods is known as Price.
Modes of fixing the Price 1. It may be expressly fixed by the contract itself. 2. It may be fixed in accordance with an agreed manner provided by the contract. 3. It may be determined by the course of dealings between the parties. 4. If the price is not capable of being determined in accordance with any of the above modes, the buyer is bound to pay to the seller a reasonable price.
undertaking on the part of the issuing authority to deliver the goods to the holder thereof unconditionally. A document of title is a proof of the ownership of the goods.
Eg: Bill of Lading, Dock-warrant, Warehouse
Ownership is transferred from the Ownership is transferred from the seller seller to the buyer as soon as the to the hire-purchaser only when a certain contract is entered into. agreed number of installments is paid. The position of the buyer is that The position of the hire-purchaser is that of the owner. of the bailee. The buyer cannot terminate the The hire-purchaser has an option to contract and as such is bound to terminate the contract at any stage, and pay the price of the goods. cannot be forced to pay the further installments. If the buyer makes the payment in installments, the amount payable by the buyer to the seller is reduced, for the payment made by the buyer is towards the price of the goods. The installments paid by the hirepurchaser are regarded as hire charges and not as payment towards the price of the goods till option to purchase the goods is exercised
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stipulations regarding quality of the goods, price mode of payment, delivery of goods etc. are very important. These stipulations are known as conditions and warranties.
stipulation essential to the main purpose of the contract, the breach of which gives the aggrieved party a right to repudiate the contract itself. In addition he can claim damages from the guilty party.
Warranty- Sec. 12(3) defines A warranty is a stipulation
collateral to the main purpose of the contract, the breach of which gives the aggrieved party a right to sue for damages only, and not to avoid the contract itself.
Example- Condition
P goes to R, a horse dealer, and says, I want a
horse which can run at a speed of 30 kilometers per hour. The horse dealer points out a particular horse and says, This will suit you. P buys the horse. Later on P finds that the horse can run only at a speed of 20 kilometers per hour. There is a breach of condition, P can repudiate the contract, return the horse to R and get back the price.
Example-Warranty
If P says to R, I want a good horse. R shows him a
horse and says, This is a good horse and it can run at a speed of 30 kilometers per hour, and P buys the horse and finds later on that it can run at a speed of 20 kilometers per hour only, there is a breach of warranty because the stipulation made by the seller did not form the very basis of the contract and was only subsidiary one. The seller gave the assurance about the running speed of the horse of his own without being asked by the buyer hence it is only of secondary important.
to the main purpose of the contract, whereas a warranty is a stipulation which is collateral to the main purpose of the contract. [Sec. 12(2)(3). 2. As to breach. The breach of a condition gives the aggrieved party the right to repudiate the contract and also to claim damages, whereas the breach of warranty gives the aggrieved party a right to claim damages only. 3. As to treatment. A breach of condition may be treated as a breach of warranty. But a breach of warranty can not be treated as a breach of condition.
be negatived by express agreement, or by course of dealing between the parties or by the usage of trade.
Implied Conditions
1. Condition as to title
2. Condition in a sale by Description 3. Condition in a sale by sample
1.Condition as to title
Example: R purchased a motorcar from D used the same for several months. D had no title to the car and, therefore, R was compelled to return the car to the true owner. R sued D to recover back the price which he had already paid. He was held entitled to recover the whole of the price paid by him despite the fact that he had used the car for some months ( Rowland vs Divall). It may be noted that the implied condition as to title makes it obligatory upon the seller that he must not only be the owner but also must be able to uphold the validity of the contract. Thus if the goods sold bear labels infringing the trade mark of another, the seller is guilty of breach of this condition although he had full ownership of the goods.
fruit, to be packed in cases each containing 30 tins. M tendered a substantial portion in cases containing 24 tins, It was held that the mode of packing constituted a part of the description and, therefore, L was entitled to reject the whole consignment ( Re Moore & co. and Landaure & C.)
sample quality. Buyer shall have reasonable opportunity to compare the sample. There should not be any latent defect in the goods.
shall correspond, both with the sample and with description. If it corresponds with only sample and not with description, or vice versa, the buyer is entitled to reject the goods. It must correspond with both.
6. Condition as to merchantability
The term merchantable quality means that the
goods are such quality and in such condition that a reasonable man, acting reasonably, would accept them under the circumstances of the case in performance of his offer to buy those goods, whether he buys them for his own use or to sell.
7. Condition as to wholesomeness
This condition is implied only in a contract of sale of eatables and provisions. Wholesome= free from any defect which render them unfit for human consumption. Example: The plaintiff bought a bun at a bakers and confectioners shop. The bun contained a stone which broke one of the plaintiffs teeth. Held, the seller was liable in damages because he violated the condition of wholesomeness (Chaproniere vs Mason).
Implied Warranties
some money for repairs. It turns to be a stolen article. A is entitled to get back what he paid plus repair charges.
for limited purpose and A sales it to C. B tells C about the pledge. C has to make payment for the pledge amount to B. Here is breach of warranty and C can get compensation from A.
A. A knows that the lid of the tin is defective and if it 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.
one person to another. Delivery of goods may be actual, symbolic, or constructive. Actual delivery. Where the goods are handed over by the seller to the buyer or his duly authorized agent, the delivery is said to be actual. Symbolic delivery. Where the goods are ponderous or bulky and incapable of actual delivery, the delivery may be symbolic. Constructive delivery or delivery by attornment .Where a third person (e.g., a bailee) who is in possession of the goods of the seller at the time of the sale acknowledges to the buyer that he holds the goods on his behalf, there takes place a delivery by attornment or constructive delivery.
The buyer must examine the goods thoroughly and must see that the goods he buys are suitable for the purpose for which he wants them.
when the whole of the price has not been paid or tendered or; (b) where a bill of exchange or other negotiable instrument has been received as a conditional payment, i.e., subject to the realization thereof, and the same has been dishonoured.
he must be unpaid. 2. He must be unpaid either wholly or partly. Even if only a portion of the price, however small, remains unpaid, he is deemed to be an unpaid seller. Where the price is paid through a bill of exchange or other negotiable instrument, the same must be dishonoured. 3. He must not refuse to accept payment when tendered. If the buyer has tendered the price but the seller wrongfully refuses to take the same, he ceases to be an unpaid seller.
Repudiation of contract
Re sale
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Rights of Buyer