BBA Mercantile Law

Sale of Goods Act

Case for Discussion

The contract was for the manufacture and supply of wagons. It was provided that the contract would be
governed by the standard conditions in so far as they are not inconsistent with the correspondence
exchanged between the parties. Under the standard conditions, 90 per cent of the payment had to be
made against the company submitting the bill to the purchaser together with the completion certificate
and on payment of such 90 per cent price the vehicle in question would become the property of the
purchaser. The balance of 10 per cent was to be treated as security for the due fulfillment of the
contract. The balance was to be received on the receipt of certificate from the purchaser to the effect
that the actual delivery of the vehicle was taken and that the delivery was made in due time. The
respondents contended that there was nothing in the special conditions which militated or was
inconsistent with the standard condition no. 15. The special conditions, read as a whole, show that the
raw materials purchased by the company against 90 per cent of advance payment do not become the
property of the railway board or the Union of India because under the express terms of the contract,
such advance payment is made towards the contract price of the wagons and not towards price of the
materials.
Relevant facts

Analysis

Interpretation

BBA Mercantile Law

Sale of Goods Act

Case for Discussion

The appellant entered into a contract in respect of certain forests in a jagir in Madhya Pradesh. He was
entitled to cut teak trees with over 12-inch girth. After the passing of the Abolition of Proprietary Rights
(Estates, Mahals. Alienated Lands) Act, 1950, a notification was issued vesting the estate in the State.
The appellant was prohibited from cutting timber in exercise of his rights under the contract. After some
negotiations, a letter was written on 1 February 1955, to the appellant, on behalf of the State, that the
appellants claim to cut trees under the contract would be considered only if he gave up his claim to a
sum of `17,000 which he had already paid under the contract and was willing to pay a further sum of
`17,000. The appellant, by his letter dated 5 February 1955 expressed his willingness to pay the
additional sum but reserved his right to claim a refund of the first sum. The state government rejected
the appellants right to cut trees. He then filed a suit claiming specific performance of the contract on
the grounds: (1) The forest and trees did not vest in the State under the Act; (2) Even if they vested, the
standing timber, having been sold to the appellant, did not vest in the State; and (3) In any event a new
contract was completed on 5 February 1955, and the appellant was entitled to its specific performance.
Relevant facts

Analysis

Interpretation