SALE OF GOODS ACT [For LL.B, Students of Various Universities of india; and Civivsudicial Services Aspirants} (Based on New Syllabus of 3 Years and 5 Years LL.B. Course) by Krishan Keshav B.Sc. (Hons.), LL.B, LLM,, UGC NET (Lam) University af Doi dvocate Dethi High Court SincHat Law PUBLICATIONS | i i i2008 2010 2012 2014 2015 2016 Seventh Edition :2017 Reprint 1 2019 Reprint 2 2020-21 © All nghis reserved Published by Singhal Law Publications Li’ Bunk Setters & Publishers A-2/157, Bhagat Colony, s sat, Delhi-110 084 Mobile: 9810486750, 9910188323, Visit at: wow dinketlawbooks.com Sale Distribinoes Ms Universal Book Traders 80, Gokhale Market, Opp. Tis Hazari Court, Delhi-110054 Ph, 011-2391 1966, 23961288, 23991487 © 1980 ‘vey aor hs beta made 10 aid errors or omissans in thie publicerion. In apie of this rr ought fave evept a. 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Nether he author nor the publisher ‘e taok holes ony responsibly for any mistake that may have Inadverenty crept 1 dispates are subjec) © the Del jurisdesion en Shohdara, Delhi Chapters CONTENTS i Pages 1, Introduction ... Legislative Competence. Scheme of the Act Scope of the Act... Definitions.. : : Concept of Goods—The Subject Matter of the Contract of Sale.. 1 2 2 3 3 4 What are Goods under the Sale of Goods Act, 1930 5 Are Incorporeal Righis ‘Goods’? in What are not Goods under the Act 12 Leading Case Laws. ‘Types of Goods.. : Difference between Specific Goods & Unascertained Goods. Contract of Sale.. Essential Elements of Contract of Sal Absolute and Conditional Conttracts of Sale (Section 42(2)] How Sale is Effected (Sections 5-6). Contract of Sale {Section 43)] Distinction between Sale and Agreement of Sell Sale and Agreement to Sale (Distinction)....... Distinction between Sale and Agreement to Sell. Leading Case Laws.. Sale Distinguished from other Transactions Sale and Statutory Orders/Statutory Transactions Leading Case Laws. acts Sale of Contract for Work & Material... Material Affixed on Building, Land etc... Leaditig Case Laws... Hire-Purchase Agreement : Distinction between Contract of Sale and Hi a) Chapters Leading Case’ Laws. Auction Sales .. Leading Case Lews.. Effect of Perishing of Goods...... Leading Case Laws. Questions and Answers.. 2. Conditions and Warranties (Sections 11-17 and 62 & 63) nom. Stipulations Leading Case Laws... Waiver of Stipulations Condition & Warranty... Warranty [Section 1263]. Distinction between Condition & Warranty 92 Consequences of the Breach of a Condition or a Warraty or When condition is to be treated as Warranty or Change of a Condition into Warranty . tne 9B When Breach of Conditions is 10 be treated as breach of Warranty {Section 13) ot Change of a Condition into Werranty Liability of the seller under Law of Tort. Once @ condition always & condition. Implied Conditions... Implied conditions in a sale by sample [Section 170) Difference between Sale by Sample and Sale by Description Implied Warranties... le of Coveat Emptor (Section 16)! Leading Case Law . : Exception of the rile of Caveat Emptor Distinction between First & Second Exception Leading Case Law : “Caveat Emptor” Replaced by “caveat Vendor”... 7 Excolsion of Implied Terms and Conditions (Section 62) sm... 121 Implied terms regarding increase or decrease of taxes (Sec. 644) 2 Questions and Answers. 1) Chapters 3. Effects of the Contract: Passing of Property (eetions 18-26 & 63) ‘Time when property passes Rules governing pessing of propery (Sed Transfer of property from seller to buyer (& ‘Transfer of property in Specific Goods. Leading Case LaWS.eunn Some Important Questions On this Opi ven When passing of property is delayed poi of ae beyond the date of contract. : Passing oF transfer of propesty in the case of gee ot unascertained goods (Sections 18 and 23)... Ways of making apptopriation [Section 23¢ Leading Case Law Reservation of right to disposal (Section 25 Leading Case Laws.. : Passing or transfer of property in case, of goods sent on approval or “or sale or retum” term (Sections 24 and 63) Doctrine of Reputed Ownership «ne 4 Effect of passing of property (Section 2¢).... Exceptions to Section 26... Questions & Answers . no 18-24 and 63} tions 18-24) 4, Effects of Contract: Transfer of Title by Non-owners (Sections 27-3) Exception to Section 27.. 349 Exception 1, Sale with consent or authority of owner «._. {Section 27} 150 Bxcepton 2. Sale under implied authorty cf owmer (Transfer of title by estoppel) [Section 27} nnn 150 Exception 3. Sale by a Mercantile Agent (Prviso to See. Meaning of Proviso & Explanation... Leading Case Laws... Exception 4. Sale by one ofthe joint ovr (Section 28 Exception 5. Sale by a person in possession under a voidable contract (Section 28) | { 1 ‘ i | | i : i i 10 Chapters Pages Exception 6. Seller in possession after sale (Section 30(1)}.... 157 Some Questions on Section 30(1) 138 7. Buyer in possession before eae has vested ion 302)] : ling, Case Law 159 ions and Answers. Performance of the Contract (Sections 31-44] Rules a5 a Delivery... Delivery how made... Effect of Part Delivery (Section 34) Buyer's Duty to Apply for Delivery (Section 35) s as to Delivery (Section 36).. Rule 1: Place and Mode of Delivery. Rule 2: Time for Delivery. sle 3: Delivery by attachment Rule 4: Tne e 5 or Tender of Delivery. penses Of DEHVEEY sansa Delivery of Wrong Quantity (Section 37) Delivery of Less or Short Delivery. Delivery of More or Excess Delivery... instalment Deliveries (Section 38} ing Case Law ae Delivery fo Carrier or Wharfinger [Section 39]. F.O.B. Contract... steno Duties of the Seller in F.O.B. Contract ities of the Buyer in a F.O.B. Contract... Rules ag to Acceptance of Delivery {Section 41. 44). Time and Place of Examination Acceptance [Section 42] Chapters tne REET BEBE ee ip Lsbilty of Buyer for Neglecting or Reusing Delivery of Goods [Section 44] nn. ‘Questions Rights of Unpaid Seller Against the Goods.. Who is unpaid seller?... Rights of Unpaid Seller [Section 49} ... Unpaid seller's tien (Section 47] wan Distinction between’ Lien and Pledge Lien and Part Delivery under instalment contract How stoppage in transit is effected .. Stoppage in ‘Transit How Effected (Section 52).. Right of stoppage in transit (Section 50-52).. Right when Exercised (Section 50) Duration of Transit (Section 51]. Goods wien said to be “in transit” [Section 5100) Lieh and Stoppage in Transit Distinguished Difference between Lien end Stoppage in Transit... Delivery to the buyer [Section 51(1)} ovum Interpretation by the buyer {Section 51(2)] Acknowledgement to the buyer [Section 51(3)}.. Rejection by the buyer [Section 51(4)]... Deilvery to ship chartered by the buyer [Seation 51¢3)] ‘Wrongful refusal to deliver (Section 516} . Part delivery (Section 51(7)] Carriage by more than one cartier. Some Probieins on this topic Effect of sub sale or Pledge by buyer [Section 53] Seller's consent [Section 51(1)}. : ‘Transfer of document of Tite (Section 53(1) Proviso] Some Problems on this topic a Sale mot generally rescined by lien or stoppage in transit: Section 54. Right of resale of unpaid Seller (Section $4). _ Right of Re-sale [Section $42) & GY}...Chapters cA (vii Notice on resale Loss of-profit on resale Leading Case Law Resale when properly made?... Reservation of right of resale... Questions... ‘Suit/Remedies for Breach of Contract Gections 55-59 & 61) . Suit/Remedies for Breach of Contract. Damages for Breach of Contract Suit for demages (Sections $6.57) : Suit for breach of warranty (Section 59).. Notice to Seller of Defective Condition Resale by Buyer. Acceptance of Goods without Inspection .. Repudiation of Contract of sale before the Date of Delivery (Section 60) 222 Measure of Damages.. 223 Inferest by way of damages and special damages (Sec. 61) ....223 Leading Case Laws. : 224 | ACampbell & Co. v. Bullen & TABLE O Gatenby. 115 AMP. Arunachalam. A.R. Krishna Murthy .. : AR. Tobacco Growers Coop, Union Lid. v. Anjaneya Tobecco Co... 20 AY, Thomas & Co. Lid. v.Dy. Commissioner, Agr... 6 ACL. v. Commissioner of Customs 6 Agricultural Market Committee v Shalimar Chemical Works... 125 Aldridge ¥. JOMDS08 ..usnavondnsonese Aryavart Overseas Pvt. Lid. v. Mis Kay) ‘Aer Biscuits... m7 Ashok Vandhan Bhagat v. West Bengal Basen Commediy Supply Corporation Ltd, ennmmenne 219] Associated Power Co: Lid. v. Ram ‘Taran Roy.. lS) Badri Prasad v, State of Madhya Pradesh... . | Beldry v. Marshal... 94,104, 115] Boretto v. Price 1) Barletv, Sidney Marous Ltd... 107) Beer v, Walker. 185 Bence Graphics International Ltd. v. Fasson UK Ltd. nn ps Bevington v. Dale... 143} ‘Bharat Sanchar Nigam L¢é, v. Union of India ao io Birdy. Brown i ns 05} Bowes v. Shand... -- 89,98} Bradley v. H. Newson Sons & Co... 22| Bristo! Tramways Co. v. Fiat Motors Lid... British Paints (india) Lt, w. Union of FF CASES Builders Association of India & C ‘Union of ira and Ors. a Burn & Co. v. Mori State on 8 |CE.B, Draper & Sons Lid. v. Edvard ‘Tamer & S-a Ltd... 8 | Ceramesl Laird & Co. v. Manganese Bronzeand Brass Co have NV v. Fireraer Handelsgevsilschaft Gmbt.... U8 |Champanhac & Co, Ltd. v. Waller & Co. Lad. es ‘1 [Chao v. British Traders & Shippers Lad. 88 fee Board, Kasnatake v. Commissioner of Commercial ‘Taxes [Commissioner of Commercial Taxes v. Hindustan Aeronautics £10, 0.039 | Commissioner »fincome Tax (CIT), Mysore v. Mysore Chromite th Se Br (Commissioner of Income Tex v. Bhurengya Coal Co. 6 Commissioner of Sales Tax, Madhya Pradesh v. Madiaya Procesh Electricity Board, Jabalpur vos 6 (Commissioner of Sales Tax, MP v. MP. Electricity Board, Tebalpur 4 | Consolidated Coffee Lid. v. Coftee Board, Bangalore 4 (County of Dwham Blectrieat & Co. v. Inland Revenue. Deinly Hamniltun and Co. Lid. y. Base! = Endeavour Wire /Dennant v. Skinner 104} Donoghue v. Stevenson ... IB. &S. Ruben Ltd INI 7! Flphick v, Bes ne (ay { i i | | j | i i@ Gs ‘Mobile Communication Ltd.v. | [ofa Malv. Bihart Lal wu 221| Niblett Ltd. v, Confectioner's Materials |i Gopal Jalan & Co. v. Cafoutta Stock. Gnion of india . 12[Rursel v. Timber Operators Cote 91) Exchange Association Lid. ing 154 Lake v. Simmons Nichol v. Godt... sonnone 102] Staff Motors Guarantee Ltd. v. British stv. Aylesburg Diary Co, Ltd... 109]Larsen & Toubro Ltd v. State of sy Nicholsba & Venn v. Smith Marriott 58] Wagon Ltd... 132 i : ‘Northern India Caterers (India) Ltd. v. Lt] State Bank of India v. Neeta Ashok Naile | Rly Coy, Magmandas n. 197,208| -Kamatiea A Gena v. Winkel sain. 140] Lee v, Butter Govemor of Delhi ......0i 4B] 9 Gos, Pary .... 101 Leonard y, Fowler. Official Assignee of Madras v, [State of A.P. v. Kone Elevators (India) Golden Colour Labs and Stadio and Ors {Larymarv Smith Mercantile Bank ofindia Lid... 161] Ltd vn 55 ¥. The Commissioner of Commercial {Lyons v. Huffaumg ac P.SNS. Ambalavana Chettair v. Express] State of Andhra Pradesh v. Kone ‘Taxes . : 61/M.S. Madbusoodhanan v. Kerala Newspaper... 135] Blevators (India) Ltd. .oe-sonmene SS Gomathi Neyagan v. Dalaiiswarni 871 Kaumudi Pve bed vvomonn8} | Pearson. Rose & Young Ltd, i... 154| Stale of Gujarat. Kailash Engincering Gopsia Keisne Pilla v. KM. Mani 225 Mis Kone Btectorindia Pt Ld. State | Peter Devtngton Partners Le v.Getho | Conn seen H.Anraj v.Government of Tamil Naduti] of Tamil Nadu 95,56 Co. Lid. 109} State of Gujarat v. Ramanal & Sons Co, Polsky v.8.& A. Services... nl 9 Poole Smih'sCarSales aha) | State of Karate & Ors. v ro Labend Ltd si soon FAL] OF. Prekins v. Bell -vosmnnene 100] State of Karnatakc v. Udupi Krishna Priest v. Last sone 108] Bhawan 45 RC Thakur. NCBC Comp... 107] State of Madras v. Gannon Dunkerley & RD. Goyal v.Reliance Industries Ltd. 10] Co. Ltd. Fi, Aara)y Govsimmentof Tamil Nad | Mis Vishau Sues Melle Lid we Hardy & Co. v.Hillems & Fowler... 187] Remeshwar Jute Mills Lid. Herlington Ltd. v, Hull Fine Art Ltd... 98 | Mahabir Commercial Co. Ltd, v, Harrison v, Knowles and Foster... 2} CLT. i Tarvey v. Hymans | Mahadeo v. State of Bombay lelby vb 65 | Materkotla Power Supply-Company v iam Lillico | ‘The Excise and Taxation Officer, @ ‘Kendall & Sona v. Wi 11,27.38 ESONS Ld sun vw 107] Sangrur... . ROD, Saxena. Balram Prasad State of Maharashtra v. Chatapalal.. Hindustan Construction Co, v. State of [Maple Flock Ga. Ltd v. Univossl Sha 9,13 State of Orissa v. Titeghar Paper Mills Bihar aH 88} Furniture Products Ltd... RV. Ward Ltd. v. Bignall 2a Co.Ltd. 6 Hoo Rim Seing v. Maung Ba Chit.... 31] Martindale v. Smith... . 149] Masoa v. Burningham.... s~- 39| Ma. Habidullah v. Bird & Co. Raheja Developnicat v, State of ISTO v. ls Bud Prakash Jai Prakasa Kamataka .. » 9 Storia Gansta SA v Latvian Shipping Rainbow Colour Lab & Ant. v. State of 27 Mis Ltd. Commissioner |Mekenzi & Co, v Nagendta Nath 17 ‘Madhya Pradesh & Ors. 61 suns 33| Moore & Co. v. Landaver & Ramdas Vithaldas Durbar v.S us indian Stel and Wire Bross Lad a |e cee 98,175 Amerchand & C0, .scunssnw 46L|Sundaramn Finance Lid. v. State of f Madras. --roun 38 Mordaunt Bros. v. British Oil & Cake Rash Behari v. Narayatwcewewne IT]. Kerala. <0 Jyors &Co.v. May & Baker 191} Mills... Poi Richard Thorold Grant v. Australian _|Sunrise Associates v. Government of nv. Rotax Motor & CycieCo. | Morvi Mercantile Bank Ltd. v. Union of Knitting Mills, Ltd. .... 16} NCTofDelhi verse BAD a snore 106] India ted | Roper v. Johason 2} Tesingv. Bator. re Drummond & Sons. EH. Van _|Motiial. The Netha Coop, Spining Rowiand v. Diva 95} Tata Consultaney Services v. State of 01) Milts Ld 77 | Sentine| Rolling Shutters & Engineering} Andhra Pradesh... 0 203 [Mysore Sugar Co. Ltd., Bangalore v. Company Lid. v. CST. ..40| Tata Consultancy Services v. State of son 108] Manohar Metal Industries, Chikpes, Shask Moban Pal v. Nobo Crishto.. 134] Andhra Pradesh... 4 ~ 103,114] Bangalore... 2 ‘Sheo Narain v. New Seven Sugar & Gur {Tempest v. Fitzerald ......... 2B 11 [National Trades w Hindustan Soap Refining C0. eesenn 233 | Thomnett and Fehr v. Beers & Sons. 168 jones v. Pa 103] Works. coe Sitmmons v. Swit 1» 133] Underwood v.B.C.B. Cement KL. Johar & Co. leat Sugar Mills Lea. v. ‘Sitaram Srigopal v. DaulaifDevi......218] Syndicate. H 12 140] Commissioner of Sales Tax .....31 South Eastern Coalfields Ltd. v. Union of india v. ALL. Rallia Ram ... 224 199,207 | Niblett Led. v. Confectioners Materials ‘Subhash Kamar Gupta v.son 219) epee ssn HO -ei) Unity Co, Pvt. Ltd. v.Diamond Suger Vishnu Agencies (P) Ltd v. Commiérial Mills cmon TL OPBE ene remsienen BL Vanden Hark v, R. Matte & Co... 187 Vishnu Sugar Mills Ltd, v. F.C.I....... 166 Vanguard Rolling Shutters & Steel, Wallis, Pat cows we ‘Woris v. Commissioner of Sales Tax Ward v. Hobbs... “18 4 ‘Waseo Enterprises v. M/s J.J. Mls . 8 Varley ¥. Whipp vnmnnnnnncennn 98 Weiner ¥. Gill 1B Vilas Sales Corporation ¥-COT «9 Whiteliead v, Anderson sooo. 204 ie ‘Vilas Sales Corporation v. Commissioner Zagury v>Furnell.. ‘of Commercial Taxes a) CHAPTER 1 INTRODUCTION ‘Trade and traders have existed for centuries. Transact traders sometime becomes complex and needs rgulation, This led to the enactment of law of contract. However, with the passage of time and development of trade, commerce and industry, « general law of contract felt insufficient to deal with all the complex issues waich may arcse deting the course of trade. Thereafter, the first specialised ‘aw to emerge was Sale af Goods Act. Itrelates to sale of goods of movable properties or chat! jong these In India, the law rdlating to Sale of Goods was originally contained in Chapter Vit (Sections 716 to 123) of Indian Contract Act, 1872. But with the development of trade, commerce and industry in the nineteenth century it required amendment, thus in 1930 by Section 65 af the Sale of Goods Act, 1930 Chapter VII containing Sections 76 to 123 was repealed and a separ Act “The Indian Sales of Goods Act, 1980 was passed. It received the assent on 15th March, 1930 and came into force on*ist Suly, 1930. ft extends to the Whole of indie, except the State of Jammu & Kashmir. With effect f September, 1963 the word ‘Indian’ was delcted from the name of the Act and currently it stands as the Sale of Goods Act, 1936. The Act contains all the rules and regulations relating to various types o: contracts for the sale of ‘ontracts Property Act goods. The Act, however, deals with sale of only movable goods dealing with iminovable properties are regulated by Transfer 1882, . It should also be noted that as the law of sale of goods is built on the foundation of contract laws so the general principles and rates wich applies, to contract will apply to the contracts of sale of goods uniess itis inconsistent swith the principles and rules laid down in the Contract Act, This is clear from Section 3 of the Sale of Goods Act, 1930 which arovides “The wnrepeated provisions of the Indian Contract Act, 1872, save in so far they are incons! with the express provisions of this Act shall continue to apply to contracts for the sale of goods”. Further, sub-section (15) of Section 2 also provides that “In this Act, unless there is anything repugnant in the subject or context expressions used but not defined in this Act and dlefined in Indian Contract Act, 1872, have the meanings assigned to them in that Act.” i2 Dale of Goods Act Leyistative Competence ‘The subject of contracts is placed at entry 7 of the concurrent list in the seventh schedule to the Constitution of Ladia. 7 The subject of transfer of property other than an agriculteral land falls in the concurrent list at entry 7 of the seventh schedule ‘Therefore, both the Parliament and State legislatures are empowered to make las with respect io contract of sale of goods, ‘The Act contains-no itustrations ‘he legislature bas not used any illustration and has left it to the courts to onstruct each section asit stands: The Act, therefore contains no illustrations, -ver examples av® given are actual decisions of English or indian and, whi courts. The Act contains no special rules of evidence or procedure or penal provisions Sale of Goods Act, 1930 does not contain any penal prévisions, nor it lays dawn apy special rules of evidence or, procedure, As a measure of consumer protection, various statutes aad regulations impose some form of criminal penalty for breach of duties imposed by the Act. Scheme of the Act ‘The Act contains 66 Sections divided into VIT chapters. Chapter 1 comprising Sections 1 to 3 contains preliminary aspects i.c. Short title, Definitions and Application of te Act, Chapter If containing Section 4 to 17 deals with the provisions relating to the formiation.of the contract of sale. ‘Chapter 111 containing Sections 18 to 30 deals with effect of the cBntract with regard (o transfer of property as between seller and buyer, Chapter IV containing Sections 3 1 to 44 lays dowin the provisions relating > performance of the contract: The fourth chapter is the keystone of the whole Act. This chepter enunciates the consensual nature of the contract and this is confirmed by Section 62 of the Act which says that “where any right, duty or t would arise under a coritract of sale by implication of law", it may be negatived ot varied by express agreement or by the course of dealing between the parties, or by usage, if the usage be such as fo bind both the parties to the cont : ‘Chapter V containing Sections 45 to-54 deals’ with rights of the unpaid ler against the goods. Chapter VI containing Sections 5S to 61 makes provisions for suits for breach of the'contract and finally Chapter VII rising Sections 62 to 66 contains auction sale and miscellaneous ss Mnsngpnasansnsninaaaasanaandsunnasannssnannasisenn="”snncnssnanansrenanaeaina Introduetion Scope of the Act The Sale of Goods Act deals with ‘sale” but not with ‘mortgage’ or ‘pledge’. It deals only with “goods” but not with other movable property, €g,, actionable claims and money. in other words, this Act docs not deal with: movable property other than goods, and immovable property. Definitions In this Act, unless there is anything repugnaint jn the subject or context, — () “buyer” means 2 person who buys or egrets to buy goods; @) “delivery” means voluntary transfer of possession from one person to another, ) goods are said to be in a “deliverable state” when they are int such state that the buyer would under the contract be bound to take delivery of them; (4) “document of ttle to goods” includes a bill of lading, dock-warrant, warehouse keeper's certificate, wharfingers’ certificate, railway receipt, multimodal transport document, warrant.or otder for the delivery of goods and any other document used in the ordinary course of business as proof of the possession or control of goods, or authorising or purpocting to authorise, either by endorsement or by Gelivery, the possessor of the document to transfer or receive goods thereby represented; (S) “fault” means wrongful set o default; (©) “future goods” means goods to be manufactured or produced or sequired by the seller after the making of the contract of sale; (D) “goods” means every kind of movable property other than actionable claims ad money; and includes stock and shares, growing crops, g7ass, and things attached to or forming part of the land which are agreed to be sbvered before sale or under the contract of sale; (8) @ person is said to be “insolvent” who has ceased to pay his debts in ‘the ordinary course of bysiness, or cannot pay his debts as they become ue, whether he has committed an act of insolvency or not: (9) “mercantile agent” means amercantile agent having in the customary course of business as such agent authority either to sell goods, or to consign: goods for the purposes of sale, or to buy gods, of to raise money on the security of goods; 7 (10) “price” means the money consideration for a sale of goods; (11)~“property” means the general property in goods, and not merely. special property;Sale of Goods Act (2) “quality of goods” includes their state ot condition; (03) “seller” means a person who sells or agrees to sell goods? (14) “specific goods” means goods identified-rid agreed-upon atthe tine a contract of sale is made; and D8 (15) expressions used but not definechin this Act and defined in the Indian Contract Act, 1872 (9 of 1872), have the meanings assigned to them in that Act. In Section 2 of the Act, itis observed that in some of its sub-sections the word ‘means’ js used while in others the word “includes? is used, The word ‘menns* makes definition exhaustive while the word ‘includes? makes definition somewhat more elestic, and inclusive. ‘The object of the definition clause is not to establish a rute of law. Thoy serve the purpose of exactly defining the meaning of the word, in. order to ensure that the terms, which are stated in other sections of the Act, may be definite. Generally the definitions are self-explanatory and require no further clarification, Concept of Goods—The Subject Matter of the Contract of Sale® Section 2 (7) of the Sale of Goods Act, 1930‘defines good in the following ways: “Goods means every kind of movable property other than actionable claims 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.” Section 2, Clause (7) is analogous to Section 61 of the (English) Sale of Goods Act, 1979. It defines goods in the following words: “goods” includes all personal chattels other than things in action and money, and in Scotland all corporeal movables except money, and in particulat “goods” inchides emblements, industrial growing crops, and things attached 10 or forming part of the land which are agreed to be severed before sale or under contract of sale. ; ‘The scope of the definition of the word “goods” under the Indian Sale of Goods Act is wider than that under the English Act, as the English Act does not expressly include ‘stock and shares". In Tata Consultancy Services v, State of Andhra Pradesh, AIR 2005 SC371, the Apex Court observed that the definition of the “goods” in the Act is of wide import which means every kind of movable property. ‘2. Can the following be the subject matter of sale under the Sale of Goods Act, 1990? () Electricity (i) Actionabie claim, (ii) Standing timber [D.U., LLB., 2018) Introduction 3 ‘Thus, ‘Goods’ under Section 2(7) of the Sale of Goods Ac kinds of movable (and not immovable) property, other then act ‘and money. It includes stocks and shares, growing crops, grass things attaches to or forming part of the land (and not the fand itself, as it an immovable property), which are agreed to be severed from the land before the sale or under the contract of sale, Section 334) of General Clauses Act, 1897 defines property of every description except immovable property. Thus, under Sal of Goods Act, except actionable claims and money, every movable pr 15 goods. € atte 1. Stock and Shares In Unity Co. Pvt. Ltd, v. Diamond Sugas Mills, AIR (47), the court held that « shate in a company is movable prop: “goods” within the meaning of the Act and as soon as the prop: shares is intended to be transferred to the buyer, the sale, beck In A.M. Arunachalam v. A.R. Krishas Murthy, 1979 (49) Comp. ‘Cases 662 at p. 670, it was held that exhaustive definition of “goods the Indian Act makes it clear that even “Stack and Shares” can be treated as ‘goods’ and dealt with as such, Whether the shares for which an application is made for allotme would be ‘goods’. in Morgan Stanley Mutual Fund v. Kart! Das, (1994) the Supreme Court heid that till the allotment of Shares takes Shares do not exist. Therefore, they can never he called goods, Shares before Pending Allotment’ In Sri Gopal Jalan & Co. v. Caleutta Stock Exchange Assoc Ltd,, AIR 1964 SC 250, the Supreme Court held that in compan allofment means the appropriation out of the previously unappropria capital of a company of a certain number of shares to & person. Till suck allotment, the shares do not existence as such, It is en allotment in this sense that the shares come into sense. In view of this, it was held th shares pending allotment is not 2 good 2. Growing Crops, Grass and Things attached to or Forming Part the Land which are Agreed to be Severed before Sale Jn State of Maharashtra v, Champatal, AIR 1971 SC 908, it was held that the words “growing crops, grass and things attached to or part of land which are agreed to be severed before sale are intanded to6 Sale of Goods det w that the things attached to immovable propery would be mavable y hey are agreed to be severed from the land or immovable raperty before sale. Thus, ‘standing timber" on land agread to be severed trom the Jand before the sale was held to be Goods under Section 2(7) of gs attached to the lend are called fixtures. Ceiling fans in @ house xtures, If they are agreed to be severed from the land before sale, they can be treated as movable property. are Commissioner of Income Tax v. Bhurangya Coal Co,, AIR 1959 4, ites held thet fixture could be held to be movable goods, under lov 2(7) of the Act, only if such things were intended to be severed ately. | __ In Badri Prasad v, State of Madhya Pradesh, AIR 1970 $C 706, ‘he Supreme Court held that the definition of goods under Section 2(7) makes it plain that things fixed to the land may, notwithstanding tion of movable and immovable property in the General Clauses Act, be subject matter of.a contract of sale of goods, provided that by the erms of contract it is clear that they are fo be severed from the land. hus trees, doors and windows could be severed from land and sold as goods in State of Orissa v. Titaghar Paper Mills Co. Ltd, AIR 1985 $C {be court held that things attached to or forming part of land may be ods provided they are agreed to be severed under the contract, ther held that planks, leans and rafters would also be timber. > Oil, Gas, Air and Mineral . Benjamin in Sale af Goods has said that water, oil, gas and even air n the form of compressed ait), and minerals if severed from soil are goods However right to take water or to extract oil or gas or several rinerals from sojl ean be granted by landowmer as a disposition of an interest in land and not as Sale of Goods. Jn Mahadeo v. State of Bombay, AIR 1959 SC 735, the Supreme | Cour held that contracts by which things forming part of the soil itself such 88 God or other minerals, or gravel ot saad which may be removed by the buyer are-not contracts af Sale of Goods, ‘ | 4. Electricity and Mechanical Energy 129 3. Wat the Commissioner of Sales Tax, Madhya Pradesh v. Madhya ‘ectricity Board, Jabalpur, AIR 1970 SC 732, the Supreme Court obs served that the definition of goods under Section 2(7) of the Act nn remeron OF BOOMS under Section 2(7),of the Act | ern rine Introduction 7 | is very wide, according to, which “goods” means all kinds of movable | property and the term “movable property” when considered with reference | t© “goods” as defined for the purpose of sales tax cannot be take in & narrow sense and merely because electric energy is not tangible or cannot be moved or touched by a piece of wood or a book, it cannot be considered | immovable property as it has all the attributes of movable propery. Iris | needless to repeat tha, itis capable of abstraction, consumption and use, | lt can be transtnitted, transferred, delivered, stored, possessed etc, in the | same way as any other movable property, Thus, electric energy is covered under the definition of goods. 5. Lottery Tickets In H, Anraj v, Government of Tamil Nadu, AIR 1986 SC 63, ithes been held by the Supreme Court that lottery tickets are goods (and not actionable claims) and therefore, the levying of tax on the sale of lottery tickets would be valid as it is falling within the legislative competence of the concerned State Legislature. in this case, it was observed that a sale of lottery ticket confers two rights on the purchaser, (@ Firstly, e right to participate in the draw, and (il) Secondly, a right to claim prize, if successful in the draw. ‘The transfer of the.tight to participate in the draw, which takes place on the sale of lottery ticket would be transfer of benoficiel interest in the movable property to the purchaser. if was also observed that so far as a right to claini the prize is concerned that is an actionable claim and transfer of this right will amount to assignment of an actionable claim. H. Anraj devision was referred and relied by three-judge bench of Supreme Court in Vikas Sales Corporation v. Commissioner of Commercial ‘Taxes, (AIR 1996 SC 2082), where sale of replenishment licences (REP) was held as goods. This decision was referred to a larger bench in the year 2000 and reconsidered by the Special Bench of the Supreme Court in Sunrise Associates v. Governmetit of NCT of Dethi, (2000) 10 SCC 420, where the three Judges, Bench overtumed the decision of the H. Anraj case, holding that the sale-oP lottery tickets is, at best, only a transfer of an | actionable claim. The key point in the Sunrise decision’ was the argument | theta lower ticket represents only one righ, the chance to win a prize, The’ |Sale of Goods Act ‘The Supreme Court itseif has also relied and referred to thedveision ] of H, Anraj case inthe case of Vikas Sales Corporation v. Commissioner of Commercial Taxes (AIR 1996 SC 2082) while holding that sale of replenishment (REP) licenses are “goods”. Likewise the Supreme Court in the case of Fscotel Mobile Communications Ltd. v. Union of India (2002) 126 STC 475, while determining the exigibilty of sales tax onsale | of SIM cards, The Supreme Court also made a reference to this casein its decision in the case of Tata Consultancy Services y. State of Andhra Pradesh (AIR 2005 SC 371} when it examined and held that the branded. software would be liable to sales tax. However, the Supreme Court decision in Sunrise Associates v. Government of NCT of Delhi (2006) 5 SCC 603, a Constitution Bench of the Supreme Court overturned the decision of the H. Anraj case, holding that the sale of lowtery tickets is, at best, only a transfer of an actionable claim. The key point in the Sunrise decision was the argument that «lottery ‘icket represents only one right, the chance to win a prize. The division of this into two rights, as in the Anraj case, was specious. The lottery ticket thus, represented a chance to win a prize, which wes nothing but an actionable claim, In the end, the Supreme Coun’s decision in Sunrise Associates did tot examine the taxability of incorporeal rights in the general coniext. Since then there continues to be no consistent general principles for taxability of incorporeal rights, it appears that the same will continue to be taxed and litigated on @ case by case basis. (Source: Business Standard), f WHAT ARE NOT GOODS UNDER THE ACT Actionable claims and Money: These are not goods and cannot be bought and sold under this Act. The transfer of actionable claims has been dealt with by Chapter VIII (Sections 130 to 137) of the Transfer of Property Act, 1882, and therefore, the transfer of this has been specifically excluded by the Sale of Goods Act. Section 3 of the Transfer of Property Act defines actionable claim as:— “actionable claim’ means a claim to any debt, other than a debt secured by mortgage of immovable property or by hypothecation or pledge of movable property, or to ay beneficial interest in movable property not in the possession, either actual or constructive, of the claimant, which the Civil Courts recognise as affording grounds for relief, whether such debt or beneficial interest be existent, accruing, conditional or contingent. Therefore, actionable claim mmeacis either, Introduetion {® any unsecured debt, or (i) any beneficial interest in movable property, not of the claimant. Actionable claim is what a person cannot make a present us but what can be recovered by him by means of a suit or action. Example: A claim for the arrears of rent, or a claim in respect of selary or a claim in respect of a prize on a lottery ticket or a claim on insurance policy are examples of actionable claims which could be transferred by assignment under the Transfer of Property Act. ‘Money means current money i. the recognised currency in in the country but not old and rare coins which nay be treated as ga Similarly, foreign currency may also be bought and sold as goods, LEADING CASE LAWS RD. Saxena v. Balram Prasad Sharma {(2000) 7 SCC 264] Facts: The appellant was a practicing advocate and he was appointed as legal advisor to MP State Cooperative Bank Ltd, He was engaged by the bank to conduct eases in whieh the bank was 2 party sid stsnership did ot lst tong and ban einated the fetnersip of she appellant and requested him to retum ail the case tiles relating to Tenead of rturing the files the appellant forward a consti il 0 the benk as balence payable by the bank towards the legal remuneration to which he is entitled. Issue: Whether the advocate has alien for is fees on the entrusted to him by his client and whether files containing o: can be equated with goods? : Observation: It was observed that files containing records ¢ equated with the goods. As per Section 148 Indian Contrast Act bai delivery of goods by one person to another for some purpose, upon 2 contr that they shall be returned or otherwise disposed of according to the ofthe person delivering therm, when the purpose is aocomplished, Incase of litigation papers in the hands of the advocate there .s neither delivery of goods nor any contract that they shall be returned or otherwise dispose Ifany such lien in permitted, it would become susceptibie 10 great al and exploitation. In any case itis impermissible for the erstwhile counse retain the case bundle on the premise that fees were yet to be paid in the possedsion ‘or enjoy ipation papers pies or records of be Iment is ‘A social duty is cast upon the legel professior to show the people b light by their conduct and actions, No effort should be made or allowed 20 bx made by which a litigant could be deprived of his rights, statutory as well» i i i i“4 Sale of Goods Act unstitutional, by an advocate only on account of the exalted position caferted upon him under the judiial system prevalent in the country. A ‘gant must heve the freedom to change his advocate if he feels that the advocate engaged by him is not capable of espousing his cause efficiently ‘hat his conduct is prejudicial to the interest involved in the lis, or for any or reason G" a Senior Advocate of the Supreme Court, Re (AIR 1954 SC S57), the Court observed that it was highly reprehensible for an advocate to stipulate for or receive a remuneration proportioned to the result of litigation ‘sim whether in the form of share in the subject matter, a percentage otherwise. ifany advocate commits this type of professional misconduct in fiature he would be liable to such quanturn of punishment as the bar council will determine, But like any other citizen, an’ advocate has a right to recover the © or otheramounts payable to him by ths litigant by way of legei proceedings. Decision: Itis tue that an advocate is competent to settle the terms ofthe engagement and his fee by private agreetnent with his elient but itis equally ‘tue that if such fee is not paid he has no right to retain the case papers and other documents belongi Commissioner of Sales Tax, MP v. M.P. Electricity Board, Jabalpur [(1969) 1 scc 200) the M.P. Electricity Board is a dealer of not? And steam fe saleable good or not for the purpose of sale tax, Assue: Whether ‘Observation: The Court relied on cettain decision in which the question was on same point namely, whether electricity is good for purpose of sale tax or not in Kumbakonam Electric Supply Corporation Ltd. v. Joint ‘ial Tax Officer, Exptanade Diviston, Madras (14 STC 600), served that good must be a property and moveable which can be transferable and used not necessarily in tangible and veater. air, g05, steam, could be incluged in the definition face capable of sale as property, as it was sold, purchased nd consumed everywher ods? which ® County of Durham Electrical Ete. Co, v. Inland Revenue [(1909)2 504] it was assumed that electric energy are goods, if there oun be sale st like any other movable object. Introduction A It also cannot be denied that elcctricity board carried on principally the ‘business of selling, supplying or distributing electric energy. ‘The similar view was expressed in Associated Power Co. Ltd. v. Ram ‘Taran Roy (AIR 1970 Cat 75) and in Malerkotia Power Supply Company v. The Excise and Taxation Officer, Sangrur (22 STC 325) On similar reasoning it was held that electric energy fell within the definition of goods as it can be stored, transmitted, and also capable of theft, Temay not be tangible as it cannot be touched without considerable danger of destruction or injury but itis perceptible as fuel and energy. So it may not be property in sense of movable property but it must fall within the ambit of goods, even if't is intangible and invisible. Decision: Thus, thet the arrangement relating to supply of steam in return ‘for water supplied by mills on payment of actual cost was not one of sale but ‘was more in the nature of works contract. In the result it is held that clectricity board is dealer in respect of its activities of generation, distribution, sale and supply of electric energy. TYPES OF GOODS Goods which form the subject-matter of any contract of sale can be ‘slassified into various categories. The classification helps in determining 8s to when does the property in goods pass from the seller to the buyer. Goods Existing Future "Contingent Specific -Ascertained Unascertained © Existing Goods [Section 6] As per Section 6 of the Act, existing goods are thase goods which are owned or possessed by the seller at the time of contract of sale. For example A, a manufacturer of fans, sells ¢ fan to B. It is a contract of sale of existing goods because A ows the fan. Similarly, when a person sells goods possessed but not owned by him such.as sale by an agent, it is a sale of existing goods For instance in the above example, if the manufacturer sends the fans to his agent in Delhi-aiid sells them through the agent itis a sale of existing goods because the dealer possesses the goods, although he is not the owner of them at the tine’ of the contract of sale. The existing goods may be specific, ascertained or unascertained.Sale of Goods det The lottery ticket thus, represented a chance to win a prize. which was nothing but an actionable claim, s 6. Decree ‘A decree comes within the meaning of goods’ undér tiie Sele of Goods Act, 1930. Therefore, the sale of decree is also a sale of goods within the ‘meaning of clause (7) of Section 2 ofthe Sale of Goods Act [Vithaldas . | ivan, AIR 1939 Bom, 84] 7. Animals As regards animals, the opinion appears to be in favour of treating domestic animals as goods but not living wild animals not in captivity or under physical contro! because they are not otherwise capable of being ‘ovmed absolutely. [Hamps v. Darby, (1948) 2 KB 311, 321, Kearry ¥. Pattinson, (1939) | KB 47} 8. Human Tissues & Organs The law recognises no right to property in a dead body or any part ‘thereof and for this reason human remains cannot be considered “goods”* capable of being bought and sold. But it is doubtful whether there is any universal rule to this effect: for in practice skeletons are commonly bought and sofd by medical students The Jaw relating to human tissues and organs (e.g. kidneys used for transplants) & bodily produets (eg, hair, blood, urine, etc.) and genetic raterial (¢.g. ova, sperm & embryos) has developed rapidly in recent years. Many of these items appear to be capable of being sold. The provision of a blood transfusion has been held in am American case to be a contract for the supply of services, but there is authority also that blood supplied by 2 blood bank is 9 sale of goods. Human hair hes, of course, been bought and sold for wig-making for centuries. ‘The sale of human organs and other commercial dealings in such ‘organs is forbidden by the Human Organs Trenspoct Act, 1989 (English) and the related Indian Act. 9. Instruction Manual Instruction Manual on maintenance and repair of a cat may be considered as goods. If instructions are wrong and anybody who follows ‘those instructions is likely to cause serious damage 0 the engine of his car; instructions are integral part of the manual. The manual including instructions, whether a book or a yideo cassette would be goods within ‘the meaning of Sale of Goods Act and defective instructions would result in.a breach of the implied terms. | Introduction | of Goods Act, 1930. | 12. Replenishment (REP) Licences the company is liable to pay a specifie 10. Paper of Clients In RD, Saxena v. Balram Prasad Sharma, (2000) 7 SCC 264, the ‘Supreme Court held that files containing copies of the records cannot be held as goods. It observed that to become “goods” something which can ordinarily come to the markers to be b ‘Thus, case papers entrusted by the client to his counsel aze not goods under Section 171 of Indian Contract Act, 1872 and it cannot by any imagination under Section 171 be stretched to mean case papers so as fo ofaim them as fien for the purposes of realising lawyer’s ‘ee. To fall within preview of Section 171 of Indian Contract Act, 1872, “goods” should have markevability and the person to whom they are bailed should be i. a position to dispose of them in consideration of money. In other words, tie goods referred to it Section 171 of the Contract Act are saleable goods. There is no scope for converting:the ease files into money, nor can they bs sold to any third party. Court further held that even under the common lav; no lien can be claimed with respect to the case file and such documents which are necessary for the further progress ofthe case is filed in the Court 11, Fixed Deposit Receipts In State Bank of India v. Neeta Ashok Nailt, AIK 2000 Bom :51, the Court held the fixed deposit receipts as “goods” within the meaning of Section 176 of the Indian Contract Act, 1872 and Section 2(7) of th iole must be | | | | | | | Replenishment licences give permission to en exporter to take credit for the exports made, These licenses are made freely transferable and do not require any endorsement or permission from the licensing authority. It nly requires a letter from the transferor, recording and evidencing the | ‘transfer. On that basis, the transferee, becomes the due and lawful holder | of the licence and could either import the goods permitted thereunder or | sell ft to another is tum. | In Vikas Sales Corporation v. CCT, (All! 1996 $C 2082), the Supreme Court held that the transfer oF REP licence by the holder to another person constitutes sale of goods and therefore liaole to sales tax. he that REP licences are not in the nature of actionable claim but are goods. 13, Debentare Debenture is an instrument of debt executed by the comp: acknowledging its receipt to repay the same at 2 specified rate and carrying an interest So, debenture is a certificate of loan or bond evidencing the fact th i | i i { j i i jnab 1 Sale of Goods Act RD. Goyal v. Reliuace Industries Lid,, (003) 1 SCO 81, the Supreme Court has held Ghat, a debenture would not come within the ‘evr of goods. Debertture having regard to the definition of “actionable lai’ as defined in Section3 of the Transfer of Property Act, 1882 would constitute actionable claim except where they are secured by mortgage of immovable property or hypothecation or pledge of immovable property. 414, Telephone Services (Mobile or Fixed) Bharat Sanchar Nigam Ltd. v. Union of India, the Supreme Court held that. (1) electromagnetic waves are not ‘goods’ either in Article 366(12) or Articte 255(29A\(d) or Schedule Vil List II Entry 540 of the Constitution or in Section 2(7) of the Sale of Goods Act, 1930 or other State legislations as the electronic waves are neither abstracted for consurmed in the sense they are not extinguished by their user. ‘They are not detivered, stored or possessed by the user and are not | narketable too, They are merely the medium of communication. | ‘What is transmitted is not an electronic wave but the signal through | h means. Further, a subscriber to a telephone service could not reasonably be taken fo have intended to purchase or obtain any Tight to use electro-magnetic waves or radio frequencies when a (ephone connection is given. “Goods” in tole-communication exe finnited to hand sets supplied by the service providers, (2) A telephone service is nothing but a service. There is no sale element apart from the obvious one relating to handset, if any, and other ace ‘y supplied by the service provider can be taxed under the state sales tax laws, ; (3) As regards SIM cards, the issue was left for determination by the assessing authorities, ln Tats Consultancy Services v. State of Andhra Pradesh, (AIR 2005 SC 371), the Supreme Court held that a sofware program on a | CD/Floppy Disc is ‘goods’ and as such is assessable to sales tax. The ‘court noted that the term ‘goods’ in Article 366(12) of the Constitution of India is very wide and includes all types of movable properties, tangible or intangible. A sofware program consist of various commands which tis computer Co perform designated task. The copyright in thet | ain withthe originator ofthe program. But the moment | de anc marketed it becomes goods which ere susceptible | er Introduction u | ARE INCORPOREAL RIGHTS ‘GOODS’? Conceptually, taxation of sale and purchase of goods stems from Article 366 of the Indian Constitution. The Supreme Court observed in the case of State of Madras v. Gannon Dunkerley & Co. Ltd. (1958 SCR 379), that before imposing tax on a sale transaction, the same required certain ingredients, namely first, an agreement to tratisfer ttle, second consideration, and third, an actual transfer in ttle of goods, However, Article 366 was amended by the Constitution (46th Amendment) Act, 1982, whith read down the decision in-the Gannon Dunkerley ease. The narrow definition laid down in this regard was set aside and the ingredients that emerged for qualifying a “sale” were that there had to be firstly, goods, secondly, a transfer of property in the goods and thirdly, valuable consideration, Saies tax or value added tax (VAT) in most Indian staies hes always been levied only on the sale or purchase ‘of “goods”, which has been generally defined to mean movable property of all kinds, with a general exclusion for actionable claims, stock/shares and secutities.‘It is iy this context that the courts have demonstrated inconsistencies on the treatment of iticorporeal rights for VAT/sales tax purposes, ‘The Supreme Court, in the case of H. Anraj v. Goverament of Tamil Nadu (AIR 1986 SC 63) examined whether the sale of lottery would amount to the sale of goods, liable to sales tax under the Tamil Nadu General Sales Tax Act, 1959. The key contentions put forth against levying of sales tax on lottery tickets were firstly, that the essencé of a lottery is a ‘chance for a prizo for a price and that a sale of such chance is not a sale of goods. The second contention was that lottery tickets are actionable claims and by definition, are outside the purview of sale tax. Interestingly; these arguments were countered by an argument that a sale of lottery ticket conferred two rights on the purchaser, namely first, 8 right to participate in a draw, and secondly, a right to claim e prize if ‘successful in the draw. While the later would be an actionable claim, the formér constitutes beneficial interest in movable property (incorporeal in | character) in possession of the holder of the ticket and hence, "goods", ‘The Supreme Court held that lottery tickets, to the extent they comprise 2n entitlement to.participate in a draw, are “goods” as they constitute a Gealer’s (in lottery tickets) stock in trade, which is capable of being bought | ond sold in the micker {and that there isa transfer of property in goods in every salé of the same). | |16 (a) Specific Goods According to Section 2(14) of the Act, Specific goads are gdods which are identified and agreed upon atthe time when a cofitract of sale is made. For ‘eg, A has number of horses and out of which he sells his ivhite horse to B, the Particular horse being identified and agreed upon at te time of contract, itis Considered to be specific goods. Similarly, if A agrees to sell 100 bags of ‘Wheat to B and for the purpose of thst contract out of 1,000 bags which he has inthis godown, he earmarks 100 bags at the time of making his contract with B, the goods sold are specific. For specific gooiis itis necessary that such goods must be identified and agreed upon at the time of making of contract and not subsequently. Actual sale can take plece only of specific goods aind Property in goods passes from seller to buyer at the time. of the contract Provided the goods are in a deliverable state and the contract is unconditional, Ifthe goods are not identified and agreed upon at the time of making of the contract, they are known as unaseertained goods e.g. A having 1,000 bags of ‘Wheat in his godown sells only 100 bags to B without specifying those which hhe wants to deliver to B, itis a sale of unescertained goods, @) Ascertained Goods Sale of Goods Aet ‘The goods which are identified only after the formation of the contract of sale are known as ascertained goods. In re Wait, Lord Atkin observed that «ascertained probably means “identified in accordance with the agreemest after the time a contract of sale is made.” As amatter of fact, when the ‘unascertained ‘g00d5" aro identified and agreed upon by the parties, the goods are called the ‘ascertained goods’. For e.g., A owns 10 cars of different companies. B contracts with A to buy one cat out of them. Aer the contract, A keeps out that car to be given to B. This car is now an ascertained goods. Thus, when ‘out of a mass of unascertained goods, the quantity contracted for is identified and set aside for a given contract, the goods are said to be ascertained, (©) Generic or Unascertained Goods ‘These are the goods which are not identified and agreed upon et the time when the contract is miade. They arc identified only by description, For ‘example, A, who owns Ambassador car show room, has 50 cass and agrees to sell any one of them to B. The contract is for unascertained goods, because. which particular car shall be sold to B has not been identified at the time of the contract of sale, Unascertained goods are sometimes termed as generic goods. Introduction 7 Difference between Specific Goods & Unascertained Goods Specific Goods LSpecific goods do not mean 1, Goods defined only by descr ‘ascertained goods, nor goods which have been examined by the buyer. 2.Under a contract for specific goods 2. Under « contract for generic goods the seller doesnot fulfilhis contract the seller may deliver aay 200 bby delivering any goods other than which answer to the description, ‘those agreed upon. 3.The property in specific goods may 3, No property can be transferred so be transferred by the contractitself. long as ts2 goods are unascertainod 4. Specific goods may be the subject 4. As regaris unescertained yoodst of ane action for specific maxim {genus nunguam perit) performance where thereis contract would apply. for specific goods, and goods have perished at the date of the contract or subsequently perish before the risk passes to the buyer, the contract becomes void or is avoided respectively. @) Future Goods As per (Section 2(6)] of the Act ‘Future Goods’ means goods 1 be manufactured or produced or acquired by the seller after making the contr af sale (Section 2(6)}. Thus, future gogds are goods Which do aot eist beau they are yet to be manufactured or because the seller does not possess thm. ‘These are to be manufactured, produced or acquired ® Her after making contract of sate ‘Section 6(1) makes it possible for a person 1° sell or offer to sell fasta goods, For example, $ agrees to buy the entire oro of wheat th in B’s farm, at the rate of rupees 200 per quinta. This is an agree of future goods. As future goods are not in the pessession of the seller at te time of contract, they can become the subject-matter of an agreement (9 .< ‘only and not the contract of sale, For a man existence, although he can agree to assign property which i existence in the fiture. Again, only those goods which can inaiter of ownership, £e., tamed enimals, birds in a cage, fis fish caught by the fisherman, can be sold; but wild animals % birds in the ai, fish in the sea of river, being free and not owned by anyone, of sate ome inte i i i i i i 4 i ] i 1 | ‘ i i i“ Sale of;Goods Aer atter of safe. Thus, a contract for sale of the future may or may not happen (Section 6(2)}. Thus, oni goods are 2lso a type of future goods but with minor difference, opoause future goods are more certain to come into existence, whereas goods ate less certain to come into existence. Hence, a contract of cs also operates as an “agreement to sel!” and not sale ‘of ownership from the seller te buyer. Such a contract is currence of the contingency, otherwise the contract For eg, A agreed to sell to B certain goods which are to be ip. In this case, the contract is for the sale of contingent goods ity of goods depends upon the arrival of the ship. CONTRACT OF SALE® Definition of Contract of Sale antived by a as the avallab >vable goods is transferred from the seller to the buyer. Section 4(1) of the "in the following words: “A coutract 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.” " ‘The analysis of above definition provides that, 2 ‘Contract of Sale’ is a contract whereby the selle (0) transfers or agrees to transfer the property in goods (ie. legal ownership of goods) (i) to the buyer Gi) for a money consideration called the price. The expression “Contract of Sale” is a generic term and includes both sale and agreement to sell. iract of sale becomes a sale only when the property In the goods is transferred to the buyer under tarms of contract.” Discuss. Q. What are the essential of a sale? Examine and state whether any “sale, of goods! is involved in the following transaction? A coment retalor eppointed by the Govemment under the coment control (pucehase and sale} order gate 2,000 baga of cement ata price fixed by {ig statutory authority under the order. [D.U,, LL.B., 2008 Supp.) ' person cannct make a contract to purchase his own goods". imple term, ‘Contract of Sale’ is a contract by which the ownership of Introduction 19 Contract of Sale 5 Sale Agreement to Self Where the selicr transfer the Where the ownership of goods is to ownership of goods to the buyer. be transferred at a future time or [Section 20 of the Act desis with subject to some conditions to be Sale) fulfilled later on. [Section 21 and 24 of Act deals with agreement to Sell} Essential elements of Contract of Sale ‘The essential elements of ‘Contract of Sale’ which an be culled from Section 4(1) of the Act are as follows: (Existence of minimum two patties.ie. seller and buyer. (ii) Transfer or Agreement to transfer the ownership of Goods. Gil) The subject matter of the contract must necessarily be some goods. Gv) Consideration has to be in Price ie. in terms of money. (9) Allessential elements of a valid contract must be present in Contract of Sale, () Existence of minimum two parties Le, seller and buyer A contract of sale is a contract between a seller and a buyer. The ‘seller" means a person who sells or agrees to sell goods {Section 2(13)] and the “buyer” means a person who buys or agrees to buy the goods [Section 2(1)} ‘Thus, to constitute sale there must be two parties, viz. the buyer and the «aller, who have to be two different persons as, no-one can sell the property in goods to himself, nor he can buy his own property. Ifa person purchases his own goods, it is no sale, [State of Gujarat v. Ramanlals & Co. AIR 1965 Guj. 60} (except when he purchases his own poods being sold in execution of a decree). + Similarly, a bankrupt may buy back his own goods from his trustee, but the trustee, the distrain or the sheriff cannot be the buyer. [King vy, England (1864) 4 B&S 782}. + In the case of sale by auction, the Act permits the selier of goods to reserve a right of himself making a bid at the auction and purchasing his own goods. “ However, there may be contract of sale between one part-owner and fother. A partner and the firm may sell goods to-each other. In State of Gufarat v, Ramantal & Sons Co., (AIR 1965 Guj 60) where fiom waa.dissolved and the surplus assets inctuding goods were ‘G, Write short note’on assentials of Contract of Sale under Sais of Goods ‘Act,1930, [D.U,, LLB, 2017]20 Sale of Goods Act divided among partners in specie, Sales Tax officer sought to tax this but was disallowed by court on the ground that partners are themselvesthe joint owner Of the goods aiid they could not be both sellers and buyers. Moreover, no money-consideration was proinised or paidby any pattnes to the firm as consideration for the goods allotted to him and. cichange of property for something other than money is not sale, Co-owner distributing goods between themselves is no transfer as it is release and relinquishment, Only co-owner can release and relinquish i) Transfer or Agreement to Transfer the Ownership of Goods The object of a contract of sale must be transfer of property (meaning ownership) in goods from one person to another not merely delivery of| possession. According to the Act, “property” means general property in the ‘goods rather than mere special property [Section 2(1 1)]. The general property ‘means ownership and special property means only some of rights e.g, right of possession and use, Thus a contract of sale occurs wien ownership in goods is transferred and not when mere right of possession is transferred by way off hire or pledge, ’ (Gi) The Subject Matter of the Contract must necessarily be some “Goods” ‘The subject matter of Contract of Sale must necessarily be some ‘goods’, ‘The word goods is of very wide, general and quiie indefinite import and primarily derives its meaning from the context in which itis used. Acostding to Section 2(7) of the Act, “Goods’ means every kind of movable property + other than actionable claims and money and includes stock and share, growing crops, grass and things attached to or forming part of the land whic are agreed to be severed before sale or under the contract of sale. The Act applies to movable property only. the defnition of “sped” under the Act is wider than the dation ‘contained in the English Act. For instance, stocks and shares, which are | expressly included in the definition, are not “goods” under English Low. (iv) Consideration has to be in Price i. in terms of Money No sale can take place without a price, Price here means the money consideration for a sale of goods [Section 2(10)]. Thus, if there is no valuable consideration to support a voluntary surrenders of goods by the real owner to another person, the transaction is a gift and is not governed by the Sale of Goods Act. Therefore, price which is money consideration for the sale of sz00ds constitutes the essence for a contract of sale. It may be money actually paid or promised to be paid, If consideration other than money isto be given, its not a sae. Introduction Accordingly, when goods are exchanged for goods itis not @ coi sale but a contract of barter or exchange. Where there iy no consideration and transfer is gratuitous, the transaction will be by way of gift. However, it should be noted that in case of 2 sale of any property goods, in consideration of a certain amount of maney (cash or cheque, oF ‘bank draft), and such settied price is paid partly in terms of money and partly by way of some goods (ie. in kind). Such transaction will also be deemed to bea sale in the eye of law. In Aldridge v. Johnson, 26 L.J. Q.B. 296, 52 bullocks were ‘exchanged at an agreed price of 6 pound sterling each (Le. egeregating $2 x 6 = 312 pound sterling). The term ‘exchanged’ was deliberately used because the payment was to be settled partly against the exchange (delivery) of 100 quarters of barley at the rate of two pounds sterling, and the balence amount of $12 Pound sterling was to be paid in cash. This agreement was declared by the Court as a valid agreement of sale, ‘Thus, consideration can be paid partly in money and partly in goods because law does not prohibit as suck, (¥) Essential elements of Contract must be Prescat A contract of Sale of Goods, to be valid must be made by 1, Free consent ofthe parties (Sections 13-22 Indian Contract Act, 1872). Competent to contract (Sections 10-12 Indian Contract Act, For lawful consideration [Sections 23-24 fndian Contract Act, 1872 With a fawful object, and should not be expressly declared vai by lew, ae ‘Thus, there can be no agreement of sale of goods which restricts tend (Section 27), or restrains legal proceedings (Scotian 28), (Gcotion 29) or in the nature of a wagering contrac: (Section 30} An agreement to sell goods contingent on impossible e or to do some impossible act (Section 56) (precedent or subsequent) to the contract by the parti may have to be fulfilled by the seller or the buy. | |Sale of Goods Act 1 ‘An example of condition precedent is where goods are delivered to {he buyer on approval ie. “on sale or retum” basis. Another example of thet is where A agrees to buy fiom B a quantity of nitrate of soda to arrive at certain ship. This is an agreement for sale subject fo the conditions of | ip arriving and that too with the specified cargo. Asn example of condition subsequent is where there is an actual sale passing the property to the buyer, but subject to defeasance on the happening of some specified event. Thus on a sale of goods by auction ‘here is usually a condition that ifthe price are not paid for within specified id A contract of sale is made by an offer to buy or sell goods for a price nd the acceptance of such offer. The contract may provide for the immediate delivery of the goods or immediate payment of the price (or both) or for the delivery of payment by instalments, or that the delivery or payment (or both) are-to Be traded at some further dase. Further, a contract of sele may be made in writing or by word af mouth (or partly in writing end partly by word of mouth), ot may even be implied from the conduct of the parties, goods which form the subject of a contract of sale may be either existing goods owned or possessed by the seller or future goods. There may also be a contract for the sale of goods, the acquisition of which by spends upon a contingency which may ot may not happen, Where; under a contract of sale, the seller purports to effect a present sele of future goods, the contract operates as an agreement (o sell the ods. Thus, when A agrees to supply B witha specified quantity of vegetable seeds, and B agrees to sow those seeds on his farm and sell the vegetables obtained therefrom to A at given price. This is an agreement for the sale of goods by B to A. (Watts v. Friend 1830 10 B&C 446). in short in a contract of sale, shree important elements are to be distinguished: (1) offer and acceptance; (2) goods to be bought or sold; ind (3) price. Needless to say, a contract of sale, like other contracts, must e made with the free consent of parties competent to contract, and for a «ful object, lanfid consideration, ete. a Introduction 23 Sale v. Agreeinent to Sell (Section 4(3)] Section 4(3) of the Act provides that where under a contract of sele the property in the goods is transferred from the seller to the buyer, the contract is called ‘sale’, but where the transfer of the property in the goods Is to take place at a futuré time or subject of some condition thereafter to-be fulfilled, the contract is called an ‘agreement to sell”. Contract of Sale [Section 4(3)] Sale f [Where the ownership in goods is ‘ansferred to the buyer] Agreement to Sell (Where the transfer of owner- ship in goods is to take place at a future time or subject to fulfillment of some condition} Distinction between Sale and Agreement to Sell® As noted above, the contract of sale includes both ‘sale’ as well as ‘agreement to sell’. These two terms, however, are legally different in teir subject matter. Sale: Where undér @ contract of sale, the property in the goods is ‘rensferred from the seller to the buyer, the contract is called a sale. [Section 4) ‘Thus, in ‘sale* owmership of the goods i seller to a buyer. Its an executed contract. immediately transferred from a Eg, A sells 10 bags of wheat to B fora sum of Rs, 5,000. Its a sale since the ownership of 10 bags of wheat has been transferred from A to B. Further, payment of price is immaterial to transfer of property in goods, because price ‘can be paid at a later date, andthis will not render the transaction as ari agreement to self, it sill will be ‘sale’. 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 coriditions ‘thereafle to be fulfilled, the contract is called an ‘agreement to sell? (Section, 4Q)). . Distinguish between a contract of sale and agreement to sell Q. How will you distinguish between ‘sale’ and ‘agreement to sell? fs the distinction important ana if so, in what respects? ©. "Am Koreement to sell is a contract pure and simplarwhereas 2 sale isa contract plus & conveyance.” Discuss the above statement PEE {D.U., LL.B. 2010)| on Sale of Goods Act Thus, in agrgement to sell ownership in goods is not immediately transferred from seller to buyer, but it transfers'at some future date. It is an executory contract and refers to a conditional sale,~ E.g., On 1th March, A agrées with B that he will Sal’ his car on 30th March for a sum of Rs, 50,000: itis an\agreement to sel, since A agrees to ‘transfer the ownership of the car to B at a future time. ‘When does an Agreement to Sell becomds Sale {Section 4(4)] Seotion 4(4) of the Act provides that an agreement to sell becomes sale if the followings conditions are satisfied @ Where an agreement to sell provides that the ownership of the goods shall be transferred at some future date, it becomes sale when that ate arrives, and Gi) Where an agreement to sell provides that ownership of the goods is to be transferred on the fulfillment of some conditions, it becomes sale when those conditions are fulfilled. SALE AND AGREEMENT TO SALE (BISTINCTION)* 1, Executed, exeeutory: A sale is an executed contract, whereas an ‘agreement to sell is an executory coitract. It follows therefore, that a sale is a Contract plus conveyance whereas an agreement to sell isa Contract pure aid simple, 2: General & particular propeity: A sale effects a transfer ofthe general Property in the goods to the buyer; in other words, it oreates a just (cight) in rem. An agreement to sell gives to either party a remedy against the person and the general estate of the other for any defeul in fulfiling his part of the agreement in other words it oreates just (right) in personam. 3. Remedies in case f breach of contract by the buyer: Ia sale, since ownership has passed, the seller is entitled to sue for the price of the goods sold, even though the goods may still remain in the seller’s possession. Jn an agreement to sell, in case of a breath of contract by the buyer, the seller is entitled fo damages, since ownership has not passed to buyer. In other words, if there has been a sale and the buyer fails to pay for the ‘200ds, the seller may sue for the price. [Section 55 (suit for price)}. But where ‘there is merely an agreement to sell, and the buyer fils to accept and pay for G. Write short note on distinction between sale and agreement to sel. {0.U., LLB,, 2016 are vastly cfferent [D.U,, LLB, 2010) Q. Tho legal incidents of Sale and Agreement to Discuss. Introduction 2 ‘the goods, the seller can only sue for damages, See Section 56 (damages for non-acceptance), 4, Remedies in case of breach of contract by the seller: if the ‘greementto sell, and the seller commits a breach, the buyer has only’a personal remedy against the seller, namely a claim for damages. The goods are still th property of the seller and he can deal with them as he likes. But if there is a sale and the seller commits a breach, the buyer has not only a personal remedy against the seller, but also the remedies which an ovmer has in vespect of the goods themselves such as a sult for conversion or detinuc. in many cas can also follow the goods in the hands of third person. The reasoa is that on a sale, the property in the goods passes to the buyer and he becomes the over of the goods, 5. Right to re-sell: In an agreement to sel, since ownership has not passed to the buyer, the seller is at Hberty to sell the goods to third parties and the buyer can only claim damages from the seller. Ina sale, since ownership has passed to the buyer, the seller will be guilty of conversion if ke sells the goods to third parties and the buyer cen sue and recover those goods as owner, even from a third person. 6. Risk of loss: In an agroement to sell, since ownership does not pass «0 the buyer, ifthe goods are destroyed by an decident, the loss will be seller even though the goods happen to be in buyer's pos: since ownership has passed to the buyer, even thoug the goods are lost by an accident while in the seller's possession the loss will be of th 7. Effect of insolvency of the seller: In an agreement to sell, ifthe buyer who has paid for the goods finds that the seller nas become insolvent, the buyer's right would be to prove the amount he has paid, in the seller's insolvency. Ina sale, since ovmership has passed to the buyer, ifthe seller becomes insolvent, the buyer is entitled to recover the goods from the official Ass: or Receiver as the case may be. 8, Effect of insolvency of the buyer: In en agreement to seti, if th buyer becomes insolvent without paying for the goods, s rot passed to the buyer, the seller may refuse to do for. In a sale since ownership has passed to the buyer, ifthe buyer becomes insolvent without having paid for the goods, the s ler must unless he is entitled to the right of lien or stoppage in transit ov. and will be entitled only to claim ratably for the price due,Sale of Goods Aet DISTINCTION BETWEEN SALE AND AGREEMENT TO SELL” ‘The important points of distinction between a sale and an agreement to ted as follows:— Sale tuted contract, he. @ 1 contract plus conveyance. Nitis an 2. eff sfer of the general 2. propery in the goods to the buyer land creates e right in rem ifthe buyer commits a breach, the 3. seller can sue for the price of the ‘20085, since ownership has passed. 4.1? the ercotmits abreach 4, (a) The buyer has a personal remedy against the seller for damages, () The buyer hes all the remedies which an owner of s e.g. a suit for conversion or detinue, (©) In some cases, the buyer can follow goods in the hands of person also, he seller wrongfully resetls, be 5. guilty of conversion and the buyer oan recover the goods, third person, ost by accident, 6, tin the seller's possession, the eller becomes insofvent, the 7. is entitled to recover the ¢ official Assignee or Receiver, Agreement to Sell It is an executory contract, fe. a contract pure’ and simpie, 4 does not effect a transfer of the general property in the goods, it merely creates a right in personam. Ifthe buyer commits a breach, the seller can sue for damages, since ownership has not passed to the buyer f the seller commits a breach, the buyer has only @ personal remedy against the seller for damages. The seller may re-sell the goods to third person but in that case, the buyer can claim damages fiom him. If the goods are lost by accident, ‘whilst in the buyec's possession, the loss will be that of seller. If the seller becomes insolvent, the buyer has to prove the amount paid in the seller’s insolvency. 4, “An agreement to sell is a contract pure and simple whereas a sele is a contract pits a conveyance.” Examine the above statement and discuss the difference between sale and agreement to sel. {0.U., LL.B, 2008] } troduction a Sale Agreement to Se 8. Ifthe buyer becomes insolvent, the 8. If the buyer becomes insolvent the seller must deliver the goods and seller may refuse to deliver the claim rateably for the price due goods. unless he has a right of lien or stoppage in transit. eee eee LEADING CASE LAWS State of Madras ¥. Gannén Dunkerley & Co. (Madras) Ltd. {1959 SCR 379) Facts: Madras General Sales Tax Act, 1939 was amended by the f legislature through the Madras General Sales Tax (Amendment) Act, 1947, f, which introduced several new provisions in the Act. After amendment the definition of goods under Section 2(h) of the Act was enlarged to include [ materials used in the construction, fitting out, improvement or repair of immovable property or in the fitting out, improvement or repair of movable property i.e, Section 2(h) was enlarged to include a ‘transfer of property in | e00ds involved in the execution of a work contract’, Following the ameridment rules were tae to give powers to the administration to work out the cost of material in a work contract for application of the sales tax. M/s Gantion Dunkeriey and Co. was a company engaged in works contracts including ‘onstruction of buildings, roads, and other wérks-and in the sale of sanitary wares and other sundry goods, Following the-amendment, the state started imposing taxes on materials used on construction work. The Company Ganon Dunkerley was also taxed. The company contended that power of the Madras [Legislature to impose a tax on sale under Entry 48 in List Il in Schedule VIL of the Government of Indian Act, 1935 does not extend to imposing & tax on she value of materials used in the works, as there is no transaction of sale in ‘spect of those goods. Thus, the amendment was ultra vires. The Sales Tax Appellate Tribunal rejected this contention, After this, it was challenged before Supreme Court, Issue: Soope of the term ‘Sale of Goods' under Entry 48 in List If, Schedule VI of the Government of India Act, 1935. Decision: The Apex Court exainined vasious legal authorities on sale lke Benjamin on.sale, Chalmer’s Sile of Goods Act, Halsbury's Law of | England Corpus Juris*etc. and ocncluded that the meaning of the term ‘Sale’ in legat sense is always ofi¢ atising from a contract leading to passing of the ownership, Court further held that in its popular sense, a sale is said to take place when the bargain is settled between the parties, though property in the| | | Sale of Goods set foods may not pess at that stage, as where the contract relates #9 fatore orf Linascertained goods, and its that sense that the eared Judge. would appear to have had in-his inind when he spoke of a commercial or business sense, ¢ But apart ftom the fact that these observations were obiver, this Court bay | consistently held that though the word “sale” in its popular sense is not |. restricted to passing of title, and haS,a wider connotation as meaning th. ‘transaction of sale, and that in that sense an agreement t0 sell would, as one | of the essential ingredients of sale, furnish sufficient nexus for a State to impose a tax, such levy could, nevertheless, be made only whea the transaction 's one of sale, and it would be a sele only when it has resulted in the passing | of property in the goods to the purchaser. : Court then referred the case STO v. Mis Budh Prakash Jai Prakash, £41955) 1 SCR 243] where it was held thatthe sale conteniplated by Entry 48, of the-Government of India Act was a transaction in which title to the good Passes and @ mere executory agreement was not a sale within that enty. ‘Therefore, the expression “sale of goods” in Entry 48 cannot be construed in its popular seise, and that it must be interpreted in its legal sense, ‘Thus, according to the law of England and of India, in order to constitute © asale itis necessary that there should be an agreement between the parties for the purpose of transferring tile to goods which of equrse presupposes capacity ‘to contract, that it must be supported by money consideration, and that as a result of the transaction property must actually pass in the goods, Unless all ‘bese elements are preset, there can be no sale. Thus, if merely te tothe | Bods passes but not as a result of any contract between the parties, express or implied, there is no sale. So also if the consideration for the transfer was not money but otier valuable consideration, it may then be exchenge or barter but not a sale. And if under the contract of Sale, title to the goods has not passed, then there is an agréement to sell end not a completed sale, ‘Thus, the term ‘sale of goods” was to be interpreted with reference to the transfer of owmership in goods, A contract can be formed only between fo istinet individuals. Peopie cannot form # contract with themselves. A transaction of this nature would not be considered as sale, on which sales tax ‘could be levied. In a building contract, the agreement between the parties is that the § Contractor should construct a building accordingto the sp-eifications contained in the agreement, and in consideration therefor receive payment as provided | therein, andas will presently be shown there is in such an agréement neither 2 contract to-sell the materials used in the construction, nor does property paso therein as movables. It is therefore impossible to maintain that there is ‘implicit in a building contract a sale of materials as understood in law. Introduction oa Finally Cout held that the expression “sale of goods” in Entry 48 is nomen juris, its escenial ingredients being an egr’ement to sell movabies for a price and property passing therein pursuant to that agreement. In a'building contract which is, as in the present cese, one, enfre and indivisible ~ a is its norm, there is no sale of goods, and itis no’ within the compete the Provincial Legisiature uncer Entry 48 to impose a tax op the supply oft materials used in stich a contract teating it as a sae. under peer This conclusion entails that none of the legislaures consti Government of India Act, 1935 was competent in the exercise of 2 conferred by Section 100 to make laws with respect to the matters em in the lists, to impose a tax on construction contracts and thet bef Jaw could be enacted it would have been necessary to have had recourse to the residual powers of the Governor-General under Section 104 of the Act And it must be conceded that a construction which leads to 3 ust, if thit is possible, be avoided, SALE DISTINGUISHED FROM OTHER TRANSACTION ‘As the transfer of owmership by the seller tothe buyer for a price paid | cor payable in money is an essential ingredient of sale, it differs from several | other classes of contracts, which resemble sale in some resp Sale of Goods Act applies only 10 contracts of sale of goods and to no | others, it is expedient to note here the points of distinction betwees sele and other contracts | Sale and Bailment: In the case of bailment, there is delivery of goods by one person (alo to another (bails) fr some specific purpose p00 | & contract thet they shall, when the purpose is accomplished, be returned | or otherwise disposed of according to the directions of the person delivering | them. Thus, in bailment the ownership does not pass to the beiles, only | possession is given to im, Inthe ease of sale the delivery of goods is | made by the seller o the buyer for a price, and the buyer becomes owner of the goods, and can deal with them any way he likes, Sale and Gift: A gift is a transaction whereby zoods are by one person to-another without any price or other o is nota sale, the price element is missing Pledge, Mortgage and Salo: A pledge isa bailment of goods person to another to secure payment ofa debt and ifthe pledger defy in payment of the debt, the pledgee can sell the goods after dus noties to tenth onnetsip ine cte ofa i pases ot done ga. AS |