Aligarh Muslim University Malappuram centre,kerala Assignment report as General Class Test_-1 In the subject of Business Law Course code: BLLB404 Submitted to- Submitted by- Dr.Azmat Ali. Vaibhav Teotia Asst. Prof. 18Ballb03 Dept. of Law. Gj3957Question: What is meant by contract of sale? Define goods and state the effect of the destruction or perishing of goods to the contract of sale. Answer- Introduction- To suit these developments, in modern trade and commerce, Sections 76 to 123 of the Indian Contract Act were repealed, and a new Act, known as The Sale of Goods Act, 1930 was enacted for the contracts dealing exclusively with the sale of movable goods. This Act does not deal with the sale of immovable property. Contract of sale-_According to Section 4(1) of the Sale of Goods Act 1930, “Contract of Sale of Goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price.” ‘Thus, a contract of sale is a contract by which the ownership of movable goods is transferred from the buyer to the seller. ‘The term “contract of sale” is a generic term. It includes an agreement to sell as well as a sale, formerly, known as a “bargain and sale.” A contract of sale may be absolute or conditional. Where under a contract of sale the property in the goods is transferred from the seller to the buyer, the contract is called a sale, but where the transfer of the 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, 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. illustrations: (1) A agrees to buy B a haystack on B’s land with liberty to go to B’s land to take it away. This isa sale.1 (2) A agrees to buy from B a quantity of nitrate of soda to arrive ex a certain ship. This is an agreement for sale subject to the two conditions of the ship arriving and that too with the specified eargo.2 ‘The above definition brings out the following elements of contract of sale. Thes Itisa contract as specified in the Indian contract Act 1872, 2Existence of two parties: a buyer and a seller. 3.Goods for exchange between two parties. Transfer or ageeement to transfer property. ‘SPrice as mutually determined. Good: Definition of goods- “Goods" means every kind of movable property other than tionable claims and monev and inch k and sh wing cro snd thin attached to or forming part of, the land, which are agreed to be severed before sale or under the contract of sale” [Section 2(7)]. It may be noted that the contracts relating to actionable claims. immovable property and servives are not covered by this Act. ‘A “Actionable claims” are the claims, which can be enforced through law, e.g, a debt due from one person to another is an actionable claim. B “Money” here means legal tender (i.e. currency of the country), Rare coins can be treated as goods and sold. Ilustration: Akash agrees to sell to Bhasker the wheat crop which is grown in his (Akash’s) field. They agreed that upon the payment of the price, Bhakser may cut the crop and take it away. It is a valid contract of sale as the growing crop is included in the term goods, and can be validly sold. Case Law 1- Kuresell Vs Timber Operators & Contractors Ltd ‘Some trees were sold so that they could be cut down and separated from the land and then. taken away by the buyer. The court held that it was sale of goods Destruction of Goods When goods have perished or have deteriorated to an extent that they can not be put to the use they were meant for, they are considered to be destroyed. According to sections 7 &8 the word perishing means not only physical destruction of goods but it also covers:- a) physical destruction of good; b) damage of good, for example, perishing of vegetables or spoiling of juices ete;©) loss of goods by theft; and 4) acquisition of goods by the government. Perishing of goods before making of contract:- According to sec 7 Where there is a contract for the sale of specific goods, the contract is void if the goods without the knowledge of the seller have, at the time when the contract was made, perished or become so damage as no longer to answer to their description in the contract, The section is confined to the case of a specific sports section does not apply on On unascertained goods packaging before making of contract of sale. ‘This section is founded on the rule that where both the parties to a contact or under a mistake as to the matter of facts essential to the contract, the contract is void, As per Indian contract act 1872 ,section 20. This section goes further and relies upon the ignorance of the seller only the words * without the knowledge of the seller” refer to the ignorance of seller only and not of the purchaser. The ignorance of sellers is more important consideration to this section. Mustration:- 1. Aaagrees to sell to B specific cargo of goods, supposed to be on its way from England to Bombay. It tums out that, before the day of bargain, the ship conveying a cargo had been cast away and a good lost. Neither party was aware of the fact. The contract is void. . A agrees to buy from B a certain horse. It turns out that the horse was dead at the time of the bargain, though neither party was aware of the fact. ‘The contract is void. Where goods have become damages The section also says that if the goods without the knowledge of the seller have become so damaged as no longer to answer to their description in the contract, the contract is void. A. agrees to sell to B a specific cargo of corn while at sea, Itturns out that, before the day of the bargain, the ship had stranded and the corn had been so damaged as not to answer to its description in the contract. The contract is void.69 But if the goods, though damaged, answer to the description, the buyer must, apart from the warranty express or implied, take the risk as to their quality and condition and must pay the price. The contract is not void in such a case.Where part of the goods have perished.—This section applies where the contract is one and indivisible and part of the goods have perished at the time when the contract was made, Case law 2- Barrow Lane & Ballard Ltd. Vs. Phillips & Co -: _A agrees to sell to Ba parcel of 700 bags of groundnuts lying at a particular place, and at the date of the contract there ‘were not 700 bags in the parcel but only 591 bags, the remaining 109 bags having been abstracted by a third party before the date of the contract without the knowledge of the seller, ‘the contract is void under this section.71 It was held that the section was applicable even when a part of the goods have perished at the time when contract was made. As it was a contract for parcel of 700 bags and not for $91 bags, the subject matter of bargain did not exist as the entire parcel of 700 bags had to be delivered to buyer. A contract for a parcel of 700 bags is different from a contract for 591 bags. The Court thought that position was no way different from what it would have been if the whole 700 bags had ceased to exist. Further, as the contract was void ‘the buyer who had given bills in payment of the price of the whole 700 bags was entitled to repudiate the whole contract and cannot be compelled to accept what was left with the seller. Similarly, the seller also could not be compelled to deliver what was left with him. But if the contract is divisible the destruction of the part will not avoid the contract for the remainder of the goods. Knowledge of the parties — ‘The Seller's knowledge is relevant. If the Seller knowing the goods to have perished agreed to sell them, he would be liable for damages. Effect of Destruction of Goods after agreement of Sale- section 8 states that-: Where there is an agreement to sell specific goods, and subsequently the goods without any fault on the part of the seller or buyer perish or become so damaged as no longer to answer to their description in the agreement before the risk passes to the buyer, the agreement is thereby avoided, ‘When an agreement is made for the sale of some specific goods but the goods are destroyed before the final sale, the contract of sale becomes void and both sides are not liable. Here, the following points are important: i. There must be an agreement to sell and not an actual sale. ii, There must not be any fault of either party, ie, the buyer or the seller.iii, The goods must be specific goods, and iv. Ifonly the part of goods have been destroyed and contract is indivisible then the whole contract is void. However, in case the contract is divisible then the part of the contract which applies to the goods that are in usable condition can be implemented. Case Law 3- Appleby Vs. Myers:- A agreed to erect a machinery on the premises of M, where the price was agreed to be paid on completion of the work. While the work was in progress, a fire broke out, and whatever machinery was erected by then, got destroyed. The court held that the contract was indivi because price was to be paid on completion of the work, and hence void. Thus, A could not recover the price of the work already done before the fire. Effect of Destruction of future goods ‘When the goods are future goods because they have not been acquired by the seller then the destruction of such goods will result in the contract becoming void. When specific goods perished then Section 8 will apply to the contract.A present sale of future goods always operates as an agreement to sell, Case law 4- Howell Vs Coupland C agreed to sell H 200 tonnes of regent potatoes to be grown on C’s land, C cultivated sufficient land to grow more than 200 tonnes of potatoes, but a disease attacked the crop with ‘the result that he got only about 10 tonnes from the land. ‘The court held that the contract could be avoided. Conclusion Hence, we can say the whenever there is contract of sale all essentials of valid contract must present in that.But , goods is the most essential element of contract of sale.Goods are defined as movable property in the Sales Of Goods Act 1930. And , when these goods ic. specific goods are being perished without knowledge of seller the contract of sale become void. This rule applied to both sale and agreement to sell.End