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Module 2 - Mercantile Law B.com III
Module 2 - Mercantile Law B.com III
Module 2 - Mercantile Law B.com III
ACT -1930
Module - 2
Syllabus – 2nd Mid Term
• Definitions
• Essential characteristics of valid contract of sales
• Difference between sales and other analogous terms
• Goods and their classification
• Conditions and warranties
• Doctrine of caveat emptor
• Sales by non owner
• Unpaid seller and his rights
Introduction
The sales of goods Act contains the basic principles as well as the
legal framework of transactions of sale and purchase.
Sales of Goods Act,1930 came into force from 1 July 1930 .
It extends to whole of India except the state of Jammu and Kashmir.
Prior to sales of Goods Act, the law relating to sale of goods was
given in Indian contract Act
Definitions
Buyer - Section 2(1) – Buyer means a person who buys or agrees to
buy the goods.
Seller – Section 2(13) – Seller means a person who sells or agrees to
sell the goods.
Delivery – Section 2(2) – Delivery means voluntary transfer of the
possession of goods from one person to another. Usually the goods are
delivered from the seller to the buyer. Immediate delivery of goods is
not necessary or mandatory.
• Price – Section 2(10) – Price means the money consideration for
the sale of goods. The money here means the currency in
circulation. Any contract without consideration is not a valid
contract.
• Sale – where the transfer of property in goods takes place at the time
of contract of sale.
"document of title to goods" includes a
bill of lading,
dockwarrant,
wharfingers' certificate,
railway receipt,
Unascertained goods
Future goods
Contingent goods
Existing Goods
Existing goods are in actual existence at the time of contract of sale.
The existing goods are the goods which are owned and possessed by the
seller at the times of sale. Only the existing goods can be sold.
For Example: A car dealer has 10 cars. He contacts to sell one of the
car to B.
Types of existing Goods
Specificgoods
Ascertained goods
Unscertained goods
Specific Goods
The goods which are identified and agreed upon by the parties at
the time of contract of sale are specified goods. It should be noted
that the goods must be identified and agreed upon by the parties.
For example: if A shows a particular car UP85 – 0000 to B at the
time of contract of sale. It will be a contract for sale of specific
goods. If the car has been identified and agreed upon by the
parties at the time of contract of sale.
Ascertained goods
• Ascertained goods are the goods which are identified after the
formation of contract of sale. When the unascertained goods are
identified and agreed upon by the parties, the goods are called as
ascertained goods.
• However in practice no distinction has been made in specific and
ascertained goods.
For example: if after the contract of sale. A informs B that he will sell
UP-85-1111 and B consent to it , the car becomes ascertained goods
Unascertained goods
These are the goods which are not indentified and agreed upon at the
time of contract of sale. These goods are merely described by the
parties at the time of contract of sale.
For example: if at the time of contract of sale, or even subsequently
the parties have not agreed which of the cars has to be sold, the car
remains unascertained goods.
Future Goods
Future goods are those goods which do not exist at the time of contract
of sale. These goods are to be manufactured or acquired by the seller
after the contract of sale. The future goods cannot be sold but there
can be only an agreement to sell.
Contingent goods
It is a kind of future goods. These goods are those goods, the
acquisition of which is contingent upon the happening or non happening of
an uncertain event.
For example: A agrees to sell the cargo loaded on the ship “Vikrant”
which is coming from London to Mumbai. The ship may or may not
arrive. So these goods will be called as contingent goods.
It should be noted that there cannot be sale of future or contingent
goods as ownership in goods cannot pass unless they are owned or
possessed by the seller at the time of contract of sale. Therefore there
can only be an agreement to sale and not contract of sale.
Consequence or effects of destruction of goods
• A contract of sale becomes void on the destruction of goods.
Following are the consequences of destruction of specific goods which
are as follows:
1. If goods perish before making of contract of sale
sale.
3. If goods perish after the agreement to sell but befoe sale
Goods perish before making of contract of sale
Where there is a contract for sale of specific good, if at the time when
the contract was made, the goods have without the knowledge of the
seller perished or becomes so damaged as no longer answer to the
description in the contract, the contract becomes void.
It is noted that if the seller has knowledge about the destruction of
goods, even then he enters into the contract of sale with the buyer then
the seller is bound to compensate the buyer.
Where a part of the goods is perished before
making of contract of sale
The deciding factor in this case is that where the contract is divisible or
not. If the goods were divisible then the contract can be enforced
partly but if the goods were indivisible then the contract becomes
void.
For example: A contract to sell one wagon containing 600 bags of
groundnuts to B. Unknown to A bags had been stolen at the time of
sale. Therefore, A made a delivery of 550 bags. B is not bound to
accept as the sale becomes void
Price / Consideration
Price is the consideration for the contract of sale of goods. Under
section 2(10) price defined as “money consideration for sale of
goods”. Money here means currency in circulation.
The price must be paid or payable but it is not necessary that it must be
fixed before hand.
Modes of fixation of Price
Method 1 – the price is specified under the contract of sale. It is the
most common method of determining the price. Here the parties
decide the price in advance.
Method 2 – The price may be determined as per the method specified
in the contract. . Here the parties decided in advance the method of
determining the price.
• Method 3 - The price may be determined in accordance to the custom
or usage of the trade. This method is applicable if the parties regularly
trade.
where the price is not determined in accordance with the provisions,
the buyer shall pay the reasonable price. Reasonable price is a question
of fact and circumstances. Under contract of sale reasonable price means
the market price.
Method 4 - the price may be determined by the third party. If it is so,
the contract shall specify the name of the third party. If the third party
fails to specify the price the contract is void.
But it the goods are delivered to the buyer and used by him, he is
required to pay a reasonable price.
If third party is prevented from fixing the price the defaulting party is
liable for the damages.
For example: A agrees to sell certain goods to B at a price to be
fixed by C. if C fails to fix the price, the agreement can be avoided.
On the other hand, if C is prevented from fixing the price by B, A may
sue B to recover damages.
Formalities of contract of sale
The agreement may be express or implied from the conduct of the
parties.
Section 5 of sale of goods act 1930 lays down the rule as to how a
contract of sale may be and has nothing to do with the transfer or
passing of property in the goods. A contract of sale may be made in
any of the following manner:
There may be a immediate delivery of goods
There may be a immediate payment of price, but it may be agreed that
the delivery is to be made at some future date
there may be immediate delivery of goods and immediate payment of
price.
It may be agreed that the delivery or payment or both to be made in
installments
It may be agreed that the delivery or payment or both are to be made at
some future date.
Transfer of Property or Ownership
The main purpose of contract of sale is transfer property.
The property in the goods means ownership i.e., general property as
against special property.
Possession of goods means physical custody or control over the goods
Why it is necessary to know when property or
ownership passes from seller to buyer??
It is necessary to know, the precise moment of time of passing of
property from seller to buyer to set out various rights and liabilites of
buyer and seller.
For ascertaining risk and loss – “Risk follows Property”
For ascertaining right of action against the wrong doer.
Express Intentions : the parties may agree that the ownership will pass on payment or on
acceptance of the bill or in case of auction sale on falling of hammer etc.
Case of Sacks v. Tilley ( 1915): Certain diamonds were sold to the buyer with the
express condition that property in them would pass on the bill being accepted.
The diamonds were sent along with the bill and the invoice. The bill was never
accepted.
Held the property did not pass as the parties had intended it to pass only on
acceptance which was never there.
Implied Intentions : where the intention of the parties is not expressed, it may be
implied from the conduct of the parties or circumstances of the case.
Appleby v. Myers (1857) : A offered to sell a certain machine to B. B refused to buy
unless the machine was repaired. Thereupon the seller, agreed with the buyer that the
buyer would get the machine repaired and the repair charges be adjusted in the sale
price.
The buyer handed over the machine for repairs. Without any fault of the repairer, the
machine was destroyed during the course of repair.
Held that the circumstance implied that the property in the goods would pass only
when the machine was repaired.
When there is neither an express agreement nor it can be inferred
from the conduct or circumstances of the case, then intention of the
parties as to passing of property can be ascertained from the rules
given under sec. 20 to 24 of the act. These rules are as follows:
IN CASE OF SPECIFIC GOODS
IN CASE OF UNASCERTAINED OR FUTURE GOODS
In case of specific goods
When goods are in a deliverable state (Sec. 20)
When goods are not in delieverable state (Sec. 21)
When goods are in deliverabe state but the seller is bound to do
something in order to ascertain the price of the goods. (Sec 22)
In case of Unascertained goods or future goods
The rules relating to passing of property in unascertained or future goods are given in
sec 18 and 23 of the Act.
Where there is a contract for the sale of unascertained goods the property in the
goods is not transferred until and unless the goods are ascertained.
For passing of property in unascertained or future goods, there should be
There should be ascertainment of goods
By separating the quantity sold for the lot or other goods and
informing the buyer.
By putting the goods sold in suitable receptacles e.g. tins, bags,
etc and informing the buyer.
By delivery of goods to the carrier – appropriation of goods
may also be done by making delivery of the goods to the carrier
for transmission to the buyer.
Doctrine of Caveat Emptor
Caveat Emptor is a latin word. It means „ let the buyer beware‟. It is
the duty of the buyer to select the goods of his requirement and the
seller is not bound to supply the goods which shall be fit for any
particular purpose of the buyer. It suggest that the buyer, while
purchasing the goods must act with a third eye and ear i.e.,
He should be careful to see that the goods purchased will serve the purpose
well.
If the buyer is not careful and he finds later on that the goods do not serve
his purpose, he cannot hold the seller liable for it.
The seller is under no obligation to tell the defects of his article.
Exceptions of doctrine of Caveat Emptor
• If the buyer selects the goods as per his requirement and the goods
are not satisfying his requirement, he cannot claim anything against the
seller. However in the following exceptions, the doctrine of caveat
emptor is not applicable.
1. Where the implied conditions as to the quality or fitness for the buyer
purpose is applicable. It means when the buyer has specified his purpose
and relied on the skill of seller, the doctrine of caveat emptor is not
applicable.
2. When the goods are sold by description, it should be of merchantable
quality. In such case the doctrine of caveat emptor is not applicable.
3. In case of edible items, the implied conditions of wholesomeness is
applicable and the goods should be of merchantable quality. If the
goods are not fit for human consumption then the buyer is not liable
but the seller will be liable.
Custom may provide that a particular defect will amount to unfitness
and the buyer can reject the goods. Here the doctrine of caveat
emptor is not applicable.
When the consent of the buyer is obtained by fraud, the provision of
doctrine of caveat emptor is not applicable.
For example: A goes to B shop and purchase a silk saree, thinking that
it is made of banarasi silk. The shopkeeper knows that A thinking is
wrong. He however does not correct A‟s impression. Later on when A
discovers that the saree is not made of banarasi silk he can avoid the
contract.
Price/ Consideration
The price is the consideration for the contract of sale of goods. The
exchange of goods for goods is a barter. Exchange is partly for goods
and partly for money is a sale.
In case where the promissory note or the negotiable instrument is given in
exchange of the transfer of goods, it will be a sale since a negotiable
instrument is always paid in money.
Transfer of property
A transaction of sale involves transfer of property. Property is
of two types; General Property and special property. In sale,
General property, i.e., ownership is transferred from the seller
to the buyer whereas in bailment, only special property i.e.,
possession is transferred by the bailor to the bailee.
Form of contract of sale
No form of contract of sale is prescribed under the sales of
Goods Act. The contract of sale can be express or implied. The
contract of sale may be in writing or by word of mouth. The
contract of sale can be conditional or absolute.
Difference between sale and agreement to sell
Basis of difference Sale Agreement to sell
Transfer of Property In case of sale, the property passes In case of an agreement to sell
from the seller to the buyer at the property in the goods is to pass at a
time of contract so as to make him future time or subject to fulfilling
the owner of the goods certain conditions
Remedies for breach of contract In a sale if buyer fails to pay the In an agreement to sell, the
price or refuses to accept the seller has only one right i.e., to
delivery of goods, the seller has sue for damages and not for
a right to file a suit for the price price even if the goods are in
of the goods, even if the goods possession of the buyer.
are in the possession of the seller
himself.
General or particular property A sale create just in rem i.e., it An agreement to sell creates
gives the buyer a right to enjoy only just in personam i.e., gives
the goods against the whole the buyer a right against an
world. individual, as such in case of
breach,the buyer can sue the
seller for breach of contract.
Insolvency of buyer In case of sale, if the buyer In an agreement to sell, the
becomes insolvent before seller continues to be the owner
paying the price, the seller of the goods as no property
cannot retain the goods as the passes to the buyer. In such a
buyer becomes the owner of case seller can refuse to deliver
the goods. The seller in such a the goods to the official
case will only be entitled to assignee or Receiver.
rateable dividend, for the price
of goods from the estate of
insolvent buyer.
Scope of Agreement A sale includes a sale proper and an A hire purchase agreement includes
agreement to sell and agreement to sell and bailment.
Passing of ownership In a sale, ownership in the goods Like an agreement to sell, ownership
passes immediately. in a hire purchase agreement passes
on the fulfillment of certain conditions
i.e., payment of all installments.
Options to pay In a sale, there is no option not to In a hire purchase agreement there
pay the price. The ownership in is an option to pay. If all the
goods is transferred once for all. installments are paid, it becomes a
sale, otherwise the property goes
back to the seller.
Relationship of parties In case of sale the relationship In a hire purchase agreement, the
between the parties is of seller and relationship before payment of all the
buyer installment is that of bailor and
bailee and of after payment of all
the installments is that of buyer and
seller.
Adjustment of instalments In a sale also payment can In a hire purchase
towards price be made by installments. If agreement, if the buyer is
the buyer is not able to pay not able to pay all the
all the installments, installments these
installments paid are installments are not
adjusted towards the price adjusted towards the price
even. but are adjusted towards
the hire charge.
Applicable Act Sales of Goods Act 1930 Hire Purchase Act , 1970
Mode of framing contract A contract of sale can be The hire purchase agreement
made orally or in writing should always be in writing.
Return of goods The buyer cannot return the The hirer can return the
goods usually goods
Sales tax The sales tax is payable The sales tax is payable
immediately when all the installments
are paid
Risk The risk of loss passes to the The risk of loss does not
buyer passes the bailee as the
ownership is not transferred,
it will pass to the hirer when
the last installment is paid.
Sale by Non Owner – Section 27
however the seller is not an unpaid seller if the buyer has tendered the
price and the seller has refused to accept it.
Rights of unpaid seller
Rights of an unpaid seller can be divided into two parts:
Rights against the goods
Right against the buyer personally
Right against the goods
When property in the goods has transferred
Right of lien
Stoppage in transit
Right of resale
• When the buyer or his agent lawfully obtains possession of the goods
• When the seller waives his right of lien. For example: when the credit period
is extended by the seller.
It should be noted that the seller cannot exercise his right of lien where he has
already delivers the goods to the purchaser. It should be noted that the unpaid
seller of goods, having a lien thereon does not lose his lien by reason only
that he has obtained a decree for the price of the goods.
Right of stoppage in Transit – sec. 50-52
Right of stoppage in transit is the extension of the right of lien. It is
because of this reason it is remarked that the right of lien is a right to
retain possession while the right of stoppage in transit is a right to regain
possession.
A seller who has lost his right to retain possession may regain possession
of goods if the goods are in transit and the buyer has become insolvent in
the meantime. He may hold the goods until the price is paid or
tendered.
Essentials of Stoppage in Transit
Property must have passed to the buyer.
The seller must have lost possession.
The buyer must not have acquired possession.
The purchaser must have become insolvent.
The seller must be unpaid.
The goods must be in transit.
When right of stoppage in transit be exercised?
When the buyer has become insolvent.
The goods are in transit.
Duration of transit?
• A carrier may hold the goods in three capacities:
1. As seller’s Agent: in this case the seller has lien on the goods so the
question of the right of stoppage in transit arise.
2. As buyers’s Agent: In this case the seller cannot exercise the right of
stoppage in transit.
3. In a independent capacity: in this case the seller can exercise the
right of stoppage in transit. It is the question of fact determined by
the court in which capacity the carrier is holding the goods.
The goods are deemed to be in course of transit from the time they
are delivered to the carrier for the purpose of transmission to the
buyer until the buyer or his agent takes the delivery.
The goods are in transit even if the buyer asks the carrier to take them
to some other destination, until they are delivered to the buyer at
some other destination.
If the goods are rejected by the buyer and the goods are in
possession of the carrier, the transit is not at end, even if the seller has
also refused to take them back.
The right of stoppage of goods in transit can be
exercised either:
By taking the actual possession of the goods
By giving notice of his claim to the carrier who holds the goods.
By a notice of his claim to the bailee who is in possession of the goods.
Right of resale Sec. 54
• An unpaid seller has a limited right of re-sale. When the unpaid seller
has exercised his right of lien or right of stoppage in transit, he can
resell the goods coming into his possession.
• An unpaid seller has a right to resell the goods in the following cases:
1. When the goods are of perishable nature.
2. In any other case , by serving the notice to the buyer showing his
intention to re-sell the goods and the buyer does not within a
reasonable time, pay the price.
When the seller expressly reserves a right of re-sale in case the buyer
makes a default.
Notice of Resale
• Except in case of perishable goods or when the seller reserves a right of
re-sale, notice of resale to the buyer is necessary. It is necessary to give
the notice for the following reasons:
1. The buyer is given a reasonable opportunity to perform the contract.
If the notice is not given the seller cannot retain the surplus and cannot
recover the deficit from the first buyer.
Effects of resale
Where on re-sale there is a profit, the seller is entitled to retain it.
On the other hand if there is a loss, the seller can recover his loss from
the buyer.
By resale the original contract is not rescinded, as such a reference to
arbitration can still be made
Right of resale doesnot bar other remedies.
Right of unpaid seller when property in goods has
not passes
Right to withhold delivery – it is similar to that of right of lien
Right to stoppage in transit.
Right of unpaid seller against the buyer personally
• Such rights are in the nature of jus in personam i.e., right in personnam.
1. Suit for price
1. Where property has passed : where under a contract of sale, the property in
the goods has passed to the buyer and the buyer wrongfully neglects or refuses
to pay the price for the goods, the seller may sue him for the price of the goods.
2. Where property in the goods has not passed : as a rule, where
property in the goods has not passed the seller cannot file a suit for
price, he can only claim his damages.
However, where under the contract of sale, price is payable on a certain
day irrespective of delivery and the buyer wrongfully neglects or refuses
to pay such price, the seller may sue him for price although the
property in the goods has not passed.
Suit for damages for non acceptance
Where the buyer wrongfull neglects or refuses to accept and pay for
the goods, the seller may sue him for damages for non- acceptance.
Right to repudiate contract before the due date
Where either party to a contract repudiates the contract before the
date of delivery, the other party may either treat the contract as
subsisting and wait till the date of delivery. The seller may treat the
contract as rescinded and sue for damages for the breach.
Suit for Interest
As a rule, interest is not payable unless otherwise agreed. As such
interest may be recovered only when there is a specific agreeement in
this respect between the parties.
In case if there is no such agreement, the seller may give notice to the
buyer of his intention to charge interest on the price when it becomes
payable from the day as indicated in the above notice.
Rights of Buyer
1. Suit for damages for non- delivery of the goods: Just as the seller has
the right to recover the damages for non acceptance of goods in the
same way buyer also has a right to recover damages for non delivery
of the goods.
2. Suit for specific performance: where damages are not the adequate
remedy, the court may at its discretion order for the specific
performance of the contract.
3. Suit for breach of warranty
4. Suit for repudiation of contract before the date of contract.
5. Right to claim for interest.
Assignment -2
Difference between
„Jusin Personnam‟ and „Jus in Rem‟.
Right of lien and Right of stoppage in Transit
Auction Sale
It means a public sale. The seller invites the interested parties by
advertisement to offer the price.
The seller may hire the services of the auctioneer. An auctioneer is an
agent of the seller.
The advertisement of an auction sale is not an offer but an invitation
to offer, therefore if an auction sale is not held on the specified day
then the bidder cannot claim the auctioneer.
Every bid amount as an offer and the acceptance is given by the
auctioneer by some ususal mode of acceptance or in some customary
manner. For example: fall of hammer, one, two, three etc.
The auction sale starts with placing of bids. The auctioner accepts the
highest bids but he may accept the lower bid without giving reason.
When the bid is accepted, a valid contract is formed.
A bid once made can be withdrawn before the fall of hammer even if
expressly prohibited.
In case if the goods are damaged before completion of sale, the loss
will fall on the seller.
Reserve price in auction sale
It is usual for the auctioneer to notify the reserve price. Reserve price is
the lowest price below which the auctioneer will not sell the goods. This
reserve price is fixed by the auctioneer to protect himself from the
goods selling at extremely low price.
Where the sale is notified subject to reserve price, the buyer is bound
by the reserve price even if the auctioneer by mistake accepted a bid
lower than the reserve price.
Damping in auction sale
Damping is an act by which an intending bidder is discouraged from
bidding. Damping is an illegal act. It includes
Pointing out defects in the goods
Misleading the purchaser or doing any other act so that he may not
participate in the auction.
The damping empowers the auctioneer to withdraw the property from the
auction.
Knock out agreement in auction sale
In knock out agreement, the buyer join their hands to eliminate
competition among themselves at an auction sale. They agree that they
will not raise the bid against each other and only one of them will bid
at the auction. When the goods have been purchased, they will share
the profit.
Prima facia a knockout agreement is not illegal, but if the intention of
the parties to the agreement is to defraud a third party, this will be
illegal.
Conditions and warranties
Generally, at the time of sale, the seller makes some representations,
statements or stipulations for the praise of his goods.
Some of the representation are in the nature of opinion, while others
are in nature of facts.
The representation as to the facts which becomes a part of the
contract of sale is called stipulation.
The stipulation may be a condition or warranty depending upon its
importance in relation to the contract of sale.
The stipulation which is essential to the main purpose of a contract is
known as condition. The breach of condition gives the aggrieved party
the right to terminate the contract.
The stipulation which is collateral to the main purpose to the contract is
warranty. The breach of warranty gives rise to the aggrieved party
the right to claim damages but the contract cannot be terminated.
The conditions and warranties may be express or implied.
The implied condition are those which are implied by the law in the
absence of any agreement to the contrary
In case of a conflict between the express conditions and the implied
conditions, express conditions shall prevail.
Express and Implied conditions and warranties
Express conditions and warranties are those which the parties agrees
expressly- orally or in writing.
For example: cash to be paid on delivery of goods, cash and carry
i.e., pay cash and take delivery of the goods immediately
Implied conditions and warranties are those which are implied by the
law in the absence of any agreement between the parties. These are
given in section 14 to 17 of sales of goods Act
Implied conditions
1. Condition as to title – section 14(a): There is an implied on the part of the
seller that:
1. In case of a sale, the seller has a right to sell the goods.
2. In the agreement to sale, the seller will have a right to sell the goods at the time
of passing of the ownership in goods.
If the title of seller turns out to be defective, the buyer must return the goods to the
true owner and recover the price from the seller.
For example: A purchased a motor car from B and used it for four months. B has no
title to the car. A has to return the car to the true owner. Held A could get back
the price as there was a breach of implied conditions as to title.
Effect of acquiring title subsequent to sale
it should be noted that where the seller had no title to the goods at the
time of sale, subsequent acquistion of title to the goods by the seller
will purge the defect of title of both the original as well as subsequent
buyer.
Condition as to description – section 15
Where the goods are sold by description, there is an implied condition
that the goods shall correspond to the description. If later on, the
buyer finds that the goods are not as per description, he may reject
the goods and claim a refund for the price.
For example: A machine was sold. The buyer has not seen the machine
but the seller described it as a new one. However, it was found to be a
old one. Held the machine was not according to the description.
Nature and scope of description
It should be noted that the description must be of a facts and not of
opinion.
A manufacture of goods is bound to supply the goods of his own make
and not that of other manufacture, even if the goods are of the same
quality.
Where the seller has agreed to supply goods of a particular
brands,the goods must bear that brand. The buyer is not bound to
accept goods which do not bear the label, even if the goods of the
brand have been made by the same manufacturer.
The expression contract of sale of goods by description applies to all
cases where the buyer has not seen the goods, but solely relies on the
description given by the seller
Packaging of the goods must be according to description. If it is not so
the buyer is entitled to reject the goods.
Sale by sample – Section 17
Where the goods are sold by the sample, following are the implied
conditions:
The bulk shall corresponds to the sample in quality.
The buyer shall be given a reasonable opportunity to compare the goods
with the sample.
The goods shall be free from any defect rendering them un-merchantable. It
should be noted that this implied condition applies only in the case of latent
defectsi.e., those defects which cannot be discovered by an ordinary
inspection.
Sale by description as well as sample- Section
15
If the sale is by sample as well as description, both the conditions shall
be satisfied.
For example: A agreed to sell C some Oil described as foreign refined
oil and warranted only equal to sample. The goods supplied were
equal to sample but contained a mixture of other oil. Held, C could
reject the goods.
Condition as to quality and fitness for buyer
purpose – section 16
Where the buyer expressly or impliedly tell the seller the particular
purpose for which he needs the goods and relies on the skill or
judgment of the seller, there is an implied condition that the goods
shall be reasonably fit for such purpose.
It is not necessary that the purpose should be expressed in words. The
purpose can also be ascertained from the nature or description of the
goods.
When the article can be used only for one particular purpose, the
buyer need not to inform the seller the purpose for which the goods
are required.
For example: A purchased a hot water bottle from a chemist. While
the bottle was being used by A‟s wife, it burst and injured A‟s wife.
Held the seller was liable for damages as the bottle was not fit for the
purpose for which it was meant.
Exceptions as to quality of fitness
The condition as to quality of fitness will not apply, if the buyer is
suffering from an abnormality, which renders the goods unsuitable for
a particular purpose and the buyer does not inform the seller about
that abnormality.
For example: A purchased a coat. He had abnormally sensitive skin.
By wearing the coat, he got a skin complaint. Held there was no
breach of condition as he had not disclosed the abnormality of his skin
to the seller.
Where the goods are used for number of purposes, the buyer should
inform the particular purpose for which such goods were required. If
he does not disclose, there is no such condition of quality or fitness.
Condition as to wholesomeness
In the case of eatables and food stuff, there is an implied condition
that the goods shall be wholesomeness i.e., free from any defect which
render them unfit for human consumption. The implied condition as to
the wholesomeness of the goods is applicable for every type of goods
in the nature of food.
For example: A purchased a milk from B, a milk dealer. The milk
contains typhoid germs. A‟s wife on taking the milk got infected and
suffered from serious illness. A was entitled to get damages.
Condition as to merchantability Section -16
There is an implied condition that the goods shall be of
merchantability quanlity, where the goods are bought from a seller
who deals in the goods of the description.
Merchantability means that there is no defect in the goods, which