SALE OF GOODS ACT

OF 1930
Prof.(CS )Monica Suri
(Fellow Member of
The Institute of Company Secretaries
of India)
SECTION 4……definition

STATES SALE OF GOODS IS A

CONTRACT …..
WHEREBY THE SELLER :
•TRANSFERS OR AGREES TO TRANSFER THE
PROPERTY IN GOODS
•TO THE BUYER
•FOR MONEY CONSIDERATION.
•ALL ESSENTIAL ELEMENTS TO CONTRACT MUST
BE PRESENT.
Case State of Gujarat Vs Raman Lal
s. Co. 1965
Partnership dissolved and surplus
divided to show sale
 AGREEMENT TO SELL

An Agreement to sell does not involve

any transfer of property.

The transfer is said to take place at a

future date.

E.g.. Offering down payment for buying a

Microwave set and purchasing the Model
at a later date.
SALE & AGT. TO SELL

 Nature of Contract
 Nature of Rights( Ownership)
 Right to resell
 Risk of loss
 Remedy for breach ( personal/ suit)
 Effect of insolvency of the seller
 Transfer of owner ship
 Section 2(7)…..
…. Concept of Goods
SUBJECT MATTER OF GOODS ….

…..: WHAT ARE GOODS?

MEANS EVERY KIND OF MOVABLE PROPERTY OTHER THAN

ACTIONABLE CLAIMSAND MONEY / AND INCLUDES STOCKS,
GROWING CROPS, GRASS AND THINGS ATTACHED TO / OR FORMING
PART OF THE LAND AGREED TO BE SERVED ON SALE OR UNDER THE
CONTRACT OF SALE.
TYPES OF GOODS

-EXISTING :
1)MAY BE SPECIFIC OR GENERIC AND
2) ASCERTAINED OR UNASCERTAINED.
THESE ARE GOODS WHICH ARE EITHER EXISTING OR
POSSESSED BY THE SELLER AT THE TIME OF
CONTRACT. UNASCERTAINED GOODS BECOME
ASCERTAINED BEFORE SALE.
-FUTURE : GOODS MANUFACTURED OR PRODUCED OR
ACQUIRED AFTER THE AGREEMENT OF CONTRACT OF
SALE.

-CONTINGENT: DEPENDENT ON HAPPENING OF AN

EVENT…Eg Rice Crop dependent on Rain
 . Existing Goods
 Goods which physically exist and are owned or
possessed by the seller at the time of sale

 Can be :
 Specific Goods which are identified like buying a LG
Microwave
 Generic Goods which are defined by description like
choosing between LG, Samsung, whirlpool microwave.
 Ascertained goods: Specific goods identified at time of
sale.
 Unascertained goods: generic goods unidentified at the
time of sale.

 2. Future Goods
 These goods are to be produced or manufactured at a
latter point of time
 3. Contingent goods are like future and unascertained
goods. However execution of such contract is depended
on the happening or non-happeneing of an event.
TRANSFER OF PROPERTY

 TRANSFER OF PROPERTY
 Depends on three stages
 Transfer of Property in goods
 Transfer of possession of goods
 Passing of the risk
RULES FOR TRANSFER

 1. Goods must be ascertained : No

property in goods can pass if the goods
are unascertained goods.

 2. Intention to pass the property:

Intention depends on the terms of the
contract, conduct of the parties and the
circumstances of the situation
 The Principle:

 “ PROPERTY IN GOODS MEANS OWNERSHIP OF GOODS .

THE TERM PROPERTY IN GOODS MUST BE DISTINGUISHED
FROM POSSESSION OF GOODS WHICH REFERS TO
CUSTODY OR CONTROL OF GOODS “
 For eg : A carrier or servant entrusted with goods is
not the owner of the goods.
 DOCTRINE OF CAVEAT EMPTOR

IMPLIES “LET THE BUYER BE AWARE”

• IT STATES THAT THE BUYER SHOULD SATISFY HIMSELF

THAT THE GOODS HE IS PURCHASING ARE OF THE QUALITY
WHICH HE REQUIRES.
• NOT THE RESPONSIBILTY OF THE SELLER TO GIVE TO
BUYER THE GOODS WHICH ARE FIT FOR A SUITABLE
PURPOSE.
• THE BUYER SHOULD APPLY DUE DILLIGENCE IN
KNOWING THE SUBJECT MATTER, ELSE HE CANNOT BLAME
THE SELLER IF THE GOODS TURN OUT TO BE DEFECTIVE
OR DO NOT SERVE THE PURPOSE.
 CASE IN PT:
WARD
VS
HOBBS
FACTS :
-HOBBS AUCTIONED PIGS IN THE
MARKET.
-PIGS SUFFERED FROM TYPHOID FEVER
AND WERE UNHEALTHY.
-THERE WAS NO IMPLIED WAARRANTY
-WARD BOUGHT 32 PIGS
EXCEPTIONS TO THE
DOCTORINE

1. IMPLIED CONDITION AS TO FITNESS FOR BUYERS

PURPOSE
2. IMPLIED CONDITION AS TO MERCHNTABLE QUALITY.
3. IMPLIED CONDITION ANNEXED BY USAGE OF TRADE
 -SELLER MAKES FALSE REPRESNTATION.
 -SELLER CONCEALS MATERIAL FACTS.
 -GOODS BOUGHT FROM A SELLER WHO DEALS IN
THOSE GOODS.
 UNPAID SELLER SECTION 45

• WHEN WHOLE PRICE NOT PAID.

• SALE MADE BY A NEGOTIABLE INSTRUMENT AND

INSTRUMENT DISHONOURED.
Rights of an unpaid seller

 Sec 46
 1.Lien on goods
--Lien is a right to retain possession untill
payment is made

 2. Right to stoppage of goods

--The seller must not have been prevented
by other provision of the Act.
3. Right to resale
 Ifthe goods are of perishable
nature
 Ifthe unpaid seller who have
exercised right of lien gives
notice of his intention to the
buyer.
 RIGHTS AGAINST THE BUYER
1. SUIT FOR PRICE (SEC 55)

2. SUIT FOR DAMAGES FOR NON ACCEPTANCE (SEC

56)

3. SUIT FOR INTEREST ( SEC 61)

Conditions and Warranty

 Section 12(2)
 A condition is a stipulation essential to
the main purpose of the contract,
breach of which may lead to contract
being Repudiated.”
 Section 12(3) A Warranty is a stipulation
collateral to the main purpose, the
breach for which gives rise to claim for
damages but not to a right to reject the
goods and treat the contract
repudiated.
 Difference
 Defintion
 Essential requirement
 Repudiate contract/ Damages
 Breach of Contract
 Suit/ Damages
 LET
US TEST OUR
UNDERSTANDING
Lets Learn.

 Q1. Ownership of Goods is impotatnt for

Mortogaging Goods

 Q2. Define Doctrine of Caveat Emptor.

 Q3. Any two Rights of Unpaid seller

 Q4. Any two difference between Sale and agreement

to sell.
 Q5. Define Contingent Goods