CONTRACT OF SALES OF GOODS

INTRODUCTION
Till 1930, transactions relating to sale and purchase of goods were regulated by the Indian Contract Act,1872.A separate act called The Indian Sales of Goods Act,1930 was passed.. It came into force on 1st July,1930.With effect from 22nd September, 1963,the word Indian was also removed. Now the present act is called the Sale of Goods Act,1930. This act extends to the whole of India except the Stats of Jammu and Kashmir

DEFINITION
Acc to Sec 4(1) of the Sale of Goods Act, 1930 defines a contract of sale of goods asA contract whereby the seller transfers or agrees to transfer the property in goods to the buyer of a price. Acc to this definition essentials of a sales of goods are: 1.Valid Contract 2.Two parties (Seller & Buyer) 3.Transfer of property 4.Goods 5.Price 5.Includes both Sale & Agreement to Sell.

1.VALID CONTRACT: All the essential elements of a valid contract should be there. 2.TWO PARTIES: There must be a seller as well as a buyer. Acc to Sec2(1) Buyer means a person who buys or agrees to buy goods. Acc to Sec2(13) Seller means a person who sells or agrees to sell goods. A person cannot be seller as well as a buyer.

3.TRANSER OF PROPERTY: Property here means Ownership. There must be either a transfer of ownership of goods or an agreement to transfer the ownership of goods. General propertyin goods means ownership of the goods. Special property in goods means possession of goods. 4.GOODS: Athe subject-matter of the contract of sale is GOODS. Acc to Sec 2(7): Goods means every kind of movable property other than actionable claim 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.Eg. Of goods: Goodwill, trademark,copyrights,patent rights, water, gas, electricity,shares,stock,growing crops,grassetc. Goods may be classified into the following types: 1.Existing goods: Goods which are physically in existence and which are in sellers ownership and/or possession, at the time of entering the contract of sale are called existing goods'. Existing goods may be either: a. Specific goods: Goods identified and agreed upon at the time of the making of the contract of sale are called specific goods or ascertained goods. b.Unascertained goods: The goods which are not separately identified or ascertained at the time of making the contract are known as unascertained contract.

2.Future goods: Goods to be manufactures, produced or acquired by the seller after the making of the contract of sale are called Future Goods'. These goods may be either not yet in existence or be in existence but not yet acquired by the seller. 3. Contingent Goods: Goods, the acquisition of which by the seller depends upon an uncertain contingency are called contingent goods. It is important to note that a contract of sale of contingent goods is enforceable only if the event on the happening of which the performance of the contract is dependent happens.

SALE: Where under a contract of sale the property in the goods is immediately transferred at the time of making the contract from the seller to the buyer, the contract is called a sale[Sec 4(3)]. It refers to an absolute sale'. It is an executed contract 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 agreement to sell[Sec4(3)].It is an executory contract. An agreement to sell becomes sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred.[Sec4(4)]

Difference between Sale and Agreement to Sell 1. Transfer of property (ownership) 2. Risk of loss 3. Consequences of breach 4. Right of resale 5. Insolvency of buyer before he pays for the goods 6. Insolvency of seller if the buyer has already paid the price

Hire Purchase: Under hire purchase agreements the goods are delivered to the hire purchaser for the use at the time of the agreement but the owner of the goods agrees to transfer the ownership of the goods to the hire purchaser only when a certain fixed no. of instalments of price are paid by the hirer. Till that time, the hirer remains the bailee and the instalments paid by him are regarded as the hire-charges for the use of the goods. If there is a default by the hire purchaser in paying an instalments, the owner has a right to take back the possession of goods without returning the amount received till then. Hire purchase is different from Instalment Purchase Method as this is a sale because in IPM the buyer is bound to buy with no option to return the ownership passes immediately to the buyer. In HP there is an option to purchase as well as to return the goods.

Difference between Sale and Hire Purchase: 1.In a sale, ownership is transferred immediately, whereas in HP the ownership can be transferred after last instalment. 2.In a sale, the position of the buyer is that of the owner of goods, but in HP the position of the hirer is that of bailee till he pays the last instalment. 3.In sale, the buyer cannot terminate the contract and is bound to pay the price. In HP, the hirer may terminate the contract by returning goods to its owner without paying the remaining instalments.

4.In Sale, the seller takes the risk of any loss resulting from the insolvency of the buyer. In HP, the owner takes no such risk because if the hirer fails to pay, the owner can take back the goods. 5. In sale, sales tax is levied at the time of the contract whereas in a hire-purchase sales tax is not leviable until the hirer gets the ownership.

PRICE
Acc to [Sec 2(10)] :The money consideration for a sale of goods is known as Price. The price should be paid or promised to be paid in in the form of cheque,hundi, bank deposit etc. Modes of Fixing the price: Acc to Sec 9 the price may be fixed in the following modes: 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 dealing 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. A reasonable price is mostly the prevailing market price. Earnest or Deposit Money deposited with the seller by the buyer as security for due fulfillment of the contract is called earnest or deposit'. Where the contract is carried through, earnest money counts as a part payment and only the balance of the price is required to be paid. But if the contract goes off because of the fault of the buyer, the seller is entitled to forfeit(fine or penalize) it and where it falls through because of the fault of the seller, the buyer is entitled to recover the earnest money in addition to damages for breach.

Stipulation As To Time Stipulation as to time in a contract of sale fall under the following two heads: 1.Stipulation relating to time of delivery of goods: To be the essence of the contract 2. Stipulation relating to time of payment of the price: It is not deemed to be the essence of the contract. Document of Title of Goods A document of title is a proof of the ownership of the goods. It authorizes its holder to receive goods mentioned therein or to further transfer such rights to another person by proper endorsement or delivery.

It is used in the ordinary course of business as proof of the possession or control of goods.For eg. Railway receipt, delivery order, other receipts are common documents of title