Chapter1

GENERAL PRINCIPLES

LEARNING OBJECTIVES
enable you to:
study of this chapter will
careful
A a contract of sale;
the meaning of
.understand
between sale and agreement to'sell;
.differentiate
term goods and its types; and
describe the
of certain key terms.
.explain the meaning
and
extends to the whole of India except the State of Jammu
Act came into force July 1,1930. It
The Sale of Goods
ashmir.

MEANING OF cONTRACT OF SALE

the seller transfers or agrees to transfer
means "a contract where
to Section 4 of the Act, a contract of sale
According contract of sale may be of two types
in goods to thc buyer for price."
Thus, a
theproperty
Sale

cONTRACT OF SALE
Agreement to Sell

transferred from the seller to the

Where under a contract of sale the property in the goods is immediately
e
buyer, the contract is called a 'sale'. or nce
10 bags
100. It is a sale since the ownership of
15th 10 baas of rice to B for a sum of Rs.
le:On
has been March, A sells
transferred from A to B. at a future
in goods is to take place
the transfer of property
time or Suihi o sell: Where under a contract of sale, contract is called an agreement to sel.
is an
to the fulfilment of certain conditions, the
t for a sum of Rs. 1,000. It
Exa mpl horse on 21st of March
a9Teement to calt"tn March, A agrees with B that he will sell to B, his
Ce A the horse to B in future.
agrees to transfer the ownership of which the
are fulfilled subject to
or the conditions
erty in to sell becomes a sale when the time elapses
Pperty in th
the goods will be transfered.
OF SALE
ESSENTIALS OF CONTRACT
essential characterist a
tenistics of contract of sale can be summarised as
follows
. same person
seller-to constitute a contract of sale. The
and a
Two Parties: There must
Doth a Tere mus be two parties-a buyer
purchaser and a seller.
 G e n e r a l P r i n c i p l
iples 2.5
the
owne of those
to
be goods ana
ends seller commits a breach of
sale, if the contract, the buyer may compel the seller to deliver him the goods
as the seller. For (1 damage
armnages on the basis of difference between the contract
well him price and price prevaiing in the market on the date
a
ass
contract.
buyer In a
example in or
ontract. But
But iin the case of breach of an agreement to sell, since the ownership in goods has not been
buyer

money.
ch o pay of
, .e, his breach
case tne
p a W n e e
and pawne o tthe buyer, the
h e buyer, the buyer can only sue the seller for damages
jactnespaymento f of to
tne
transferred
buyer. One
n
persons, also sell his share to ce of risk of loss: In a sale, buyer is to bear, as a rule, the risk of subsequent loss of or damages to
cidence
non can
o"
7 dillere
part-owner
R m

6.
the ot
a n : t h
1sed by caused
A not
by the fault of the seller, even though the goods may be in poGsession of the seller. In an agreement
amaY

pmepal.
t h e g

p e n
Nhj to make B th
goods is to bear this risk.
so as to seller
A u s
B Tne
nis
sne
the t
the
in t
bags make the
e s h a r e
sell,
SN. xvgay
owner , to a
no sale.
Members a to S of the buyer : On the insolvency of the buyer in Assrigneesale, the Official of Receiver can claim
there
Riw AY hus lvency
to there 1s
S e l
gaes
B payment P e r t y on from the seller, who will be entitled to a rateable dividend for the price of the goods out of the property
C a n
4 pua the
n2yment rty the basis of nsov from 1
A g e his
A of goods
dy against
consuming
asv Ng. The delivery ent to sell, the seller can refuse to deliver the goods to the Receiver of the insolvent buyer
a t

r e m o e r s
15 profit
o

out t

of him. ode of undey I n a n agreement

Pent uyer.
4arthe a c t ,

to
s
or
m a k e
any member on his admission
payment of the Duy
M G Aa e t , by. for in ful.
nater to paid
w r
n a k s
N d a g r e e d
to he is
a a not unless
m u i s

mbet
ds w e r e
property. Transactions involving Transactio
seller
ler :
Ae: cluo15 W r u c h
On the insolvency of the seller in a sale, buyer can compel the Recaiver to deliver the
s p p d e s

£vey
onsumed. Ine Insolvency
olving purcha an ofthe.
,»rs
a cuo
p r o p e r t y .
Tra dse 8. to
aur
of agreement
Tules regulated
bhat
*
m o v a b l e
by the ransfer of Pro an
sell, the buyer cannot compel the Receiver to sell and deliver the goods to him.
e the a re
are him. In
B uain iud an can a reteable dividend
Aur
ae
e u i d t e u d
by i.e., Act.
They
They sale o d s to some advance to the seller in agreement to sell he only claim
tr Act. contract
w n S
R t v e
th gooas,
goods, boods
Goods c o n t r a c t
for the ods. ha huver had made
araneinet to " Moreover,,
f the b
relates
of
Sale a
ass aa
taken
tAr n sale the
Sale of taken made a
t h a hotelier account.
ar
untena ef ot c a n n o t
De
be customers,
the cons
n t a t purview cannot customers, that
s e r v r i c e
mae e r e
acident s i d e n t
question
beina
a r etheron
out certain Un
On
and taken.
are hoteuer
OTHER cONTRACTS
not
oftheà
groperty

provnding the waS

was
sen SALE DISTINGUISHED FROM
10oa
food not taken. of goods but simply
between sale
movahle ir
a l o w e a

alowed if taken
a
ass
iartconcrartsfor c o n t r a c t
taken saleof in ane or the other wau fom
was
wES ot be
be useussed sale of goods differs
to a rebate cCould
uld nnot cnaractenstics earuer, a contract of
Arding No ot food.
food. sale essential
Sompie:
food any contract of work and
m n v o L v e

supply
of supply of o Dacaluse of the coLdet Dalunent, gt, barter, mortgage. hypothecation,
and
transfer
of general property as diski ds d
s e r c e s
thatthe not transfer of
held did be the
and
esdene
ae" it nas
s e r n c e s
contract
must
contracts suer O
amounter proDertu refers to ownershin nathet types of
of the general neral property etc.
a curtract term
ndivnsihk
ofmultiple Ihe object a n o t n e r .
Ine hire purchase
: labour,
w2s 2 property to called 'price goodsareer
c o n s i d e r a t i o n

person nsideration pice. Where

Îransfer
ofgeneral one
considera
. some money
in the gods by case the consideration consists pan Sale and Bailment
property
for But in
from special
take place delivered for a specific
must barter tiarisacuon. does not
a bailment the ownership pass to the bailee. The goods are
.Price: contract of
Tansierofproperty
but simply sale." of a
contract of sale contract of In the case bailor or otherwise disposed of according
a shall be returned back to the
it is not taken as a the same goods that
for goodis it will be to the with the condition
AGREEMENT Thus, in TO SELL
in the case of bailment, oniy possession passes Durpose
goods
and partiy of money, accompishment of the purpose.
a c c o m p u s h m e n t of purpose. Thus
SALE AND directions the +ho he likes. airecuons on t h e
his
his passes t o who can use the goods in any way
BETWEEN to
to
DISTINCTION
to sell 1s an executory conte n t n e case
the ownership which passes to the buyer,
or sale it is the ownership
case of
w n t e in
while
contract,
whereas an agreement Gbuver, uyer,
Sale is an executed while in an a n t
Nature ofcontract: to the buyer immediately,
in the goods passes r u l n l m e n t of some condit
In a sale, property
time or on the Sale and Gift
2. Transfer ofownership: some future for a consideration termed as price, while
the is agreed to be passed at
to sel the property
in goods in the goods. Itge of goods is transferred to another person
conveyance of ownership In the of sale, the ownership
Sale implies contract plus
3. General and particular property: cain without any consideration.
He becomes the absolute owner
or tne goods anu urin the case of gift, ownership passes
the buyer jus in rem (right against the whole world). n personam (
the way he likes. But an agreement to sell is a mere
contract which secures to the buyer only jus
party can sue ue Sale, Barter and Exchange for goods; and in the
against a particular individual), In case, a breach of contract is committed, the aggrieved
party cnly tor damages.
in a barter dealings, goods are exchanged
In the case of sale, goods are exchanged for money: transactions are not contracts
oods to thet case of for money. Thus, barter and exchange
of : In a sale, since there is inmediate transfer of the property in tne exchange transactions, money is exchanged
.Sellers right resale in the form or go0as and party un moEy.
yoo
n of sale. But, as stated before, where consideration for goods is received partly
icin naceeca a el those g0ods even though the goods may be in his possession. Wne
the sale sells it to another, he will be 'guilty of conversion' and it will be taken as a contract of sale.
a eo t tegosate
the buyer may ask the seller to
compensate him. In certain cases, e.g., where the new buyer nas
and tor
in good faith, the
onginal buyer can recover the i
to sell, Mortgage and Hypothecation the propaSale,
goods remains with the seller, who may deal goods from the new buyer. In an
with those o he will be runig agreementin the case of mortgage only special
risk of committing a breach of the goods in any way he may like
thnoug gh of sale, general property in goods is
transferred to the buyer, while
the
agreement. Since the in in an ag Case continues to be the owner ot
to sell, goods can be
disposed ot by the sele. property the goods does not pass the buyer the mortgagee. Mortgager
They can also
pass to n e goods is transfened by the mortgager to
immovable property, whule sale
5. Right to recover be attached in execution of
execution of aa decree againstuenE ame is the case of pledge or hypothecation. Mortgage is
done in respect of
case he refuses to
price and damages : In dtached ae of the gol but in the case of pledge,
pay the pnce though the (0) a sale, buyer can be sued for and hypothecation relate to movable properties,
sell, buyer goods the vaDle property. Both pledge
the property hypothecated
can be sued only for the losS caused may still be in the the seller. But in
of the while in the case of hypothecation conaD
Metford v. Edwards (1915). 1 K.B.
to seller
by his se possession
property pledged is given to the creditor, Ontin the
2. 119. default. Onanues to be in the
Associated Hotels of India v. possession of the debtor.
3.
v.
Excise and Taxalion Officer,,
A.IR
ALR
Aldidge Johnson (1857), 7 E. &B.
885. (1966). Punjab 249.
 General Principles
l a b o .

and
difficult to make.
w o i k

laho

Labour tor and

and. contract of cchase
(oMMact w o z k
kandlabour A agreement, is an
and
of o n e whose main
nain hirho
of the condition
1 conlact Is condition by the theretore, 2.1
and
Hork
objec salise. Ne fulfilment intending irrevocable offer for
stle a
of sale chattel tho on
buyer, ii.e., sale, which will
botn
for ol antract as a chattel to the the any Ownership rights on tne
nership rights of
Cvntract cwatat item) ercise goods, payment all the hire
i.e.,
become a contract of
invwlvng sale
movable traned he will right to instalment. on the
and
a transrer
of continue to Use
wev: p e o l (a chattel as a
attel
A l e
the
vwnvwe
not cannot
one dlal the goods for resell or pledge the go0ds till Unlike a seller, ahirer
Ntewnr isnot
the prine:
The difference
ce 1 his benefit till he has
all
ncteo s pnce
object of thechattel,
transaction between a contract paid
of. a r i r eis
the the
the prnncipal
Duyer.the of sale and
a
they are in his
case
the instalments
aiee
w t ' a Ys a sin ot of
each
N R t t s 1. Tra a
sala
neach case
payee
or a contract for ownership: in hire-purchase
of as
contract can be possession.
8 w
thepayee contract
of sale the
nand
eye rht by
the outm work mmediately or on fulfilment of certain contract
conditions. follows
urndertaken to
iS a
contract sale5
and affixin ownership of the g0ods put
is
ysNTh have a sale' but making ng aand
cocktalab In a hire-purchase
mezk be a the
tte e mouldhaantract 15
unueuld court
a w h e t h e r
held
to
rchase contract transferred to the
buyer either
a'
buyer becomes
The been
edar 2. Buyer's status
the owner of the
l a d u r .

dietermining
has status: In a contract of
ant coat
Da which to sale the goods only when he
9N avk A.
for mink which B entrusted
manuscipt,
pays all the instalnent.
s O

parties matenals
nuscript, contract tne buyer 1s position of the buyer is that
the supply
ofa or
hite-purchase of the owner of
For that yu, in the
NenNr
af the work and copres P only capacity of the
the goods
hr tor bailee.
wncat

c o n t v a t to
antion: The no
The buyer has no
delver 5500 3. Buyers option:
e a n v e
nar
*a and o wn
own paper and:
ink for printir option to put and end to the contract.
Ae uses
his
to praint
the option to set aside the
r
MS p r o m i s e s
sale'
though
A
supply
of,
als is books The buyer has
He is, therefore,
bound to pay the
of
contuact. În case he decides
4 contract because
and to do so, price.
pirter
Ape
tie
only subsidiary anda he cannot be held
this a for sale or iable to
byA.
s contract e x p e n e n e
price. pay the
ppied fee of
*
not a and 4.
c o n t r a c t a .
is isskil
present
contract
mouth of
mouth
of a customer IS a contract of .
instalments paymentn case the buyer nas to pay the price in
e in the taken as a part paymen' towards the price of the
s u b s t a n c e
ofthe teeth
to i t goods. instalment, each instalment's payment
the condition
that and canvas e willbe
te
them artihcial
on the
paint wi be paid by the will be
set suplie
of promisee
taken as a part
make a payment towards the
to
Theinstalments article. buyerS
dentdist for the In case, he decides
of goods.
a portrait
tion to buy the only when the buyer exercises
promise bya of sale
contract
4 nis optio otherwise, it be taken as hire for price
to paint Court use of the article.
(08 a painter a ry
agreement by labour
and not the Supreme
Bukiders;"
ar and
well differentiated
Sur Buildo t
Contract
of wozk ilders OF
Ter s a VarietyBody case M/s Vanety Body entered into three to FORMATION CONTRACT OF SALE
case
State
v. labour. In this
ofGuyjaratwork and on under-fram
Ina recent of railwa
railway coaches a f sale is
construction
contact for
A co
other contract and, therefore, it ied by the just like any
sale and a for
must satisfy all the essentials of
contract of Administration
transactions as of sales
of theca
nese coaches
a by a valid contract as
the
the Varich d down in Section 10 or tne itnalan onudct Act. It May be verbal or in
Westem Railway Oificer held writing or partly in
wth the lax before the Court which held that that
hefore writing and partly oral.
The Sale
Administration.
came Supreme the r Tis not necessary price
The case De paid or delivery of goods should be snouta nmedlarely
Ralnay accordingly. there should ild hde an immediately made. In case the
on them transaction of sale, of to in
leviedsalestax constitute
Buildes and
agreement a celler transfers agrees ransier tne ownersnug goods tor a price it is a contract of sale, even
observed, "To ere though the payment
labour. It title in
26sing of ttle those goods. It
in those it is of
or the essence of this of prce and the delivery of goods might have been fixed for a later date.
wEs 2 contract
for work and passing or
to be completed by the true interpretati
to the goods matter. On of theexqpen
ar implied relating to the same subject
and sale should relate the sale of very goods in which eventual
that both the agreement between the parties
for the GOODS
be an agreement a completed railway coach.
saile of goods there must
there is àn
is an agreement to Supply
suppy matter
It cannot beeaid
said that agreement compe E dway Coacn wihuchn
Definition: The subject or a contract ot sale must be
passes. In the instant case,
goods. According to Section 2(7) the term 'goods means
produced will be the property of the contractor. Along with those of contractors, maternals and labour of then az "every kind of movable property other than actionable claims and money and includes stock and shares, growing crops
coach." and things attached to or forming part of the land which are
Tequired to be put in for production of the completed railway agreed to be severed before sale or under the contracto
sale."
Sale and Hire Purchase Agreement Thus, every type of movable property comes within the definition of the term 'goods. Goodwill,gatents,tra
Ahüre purchase agreement difers from a contract of sale. An ordinary hire purchase agreement is a contz: marks,water,gas, electncity" etc.are alsoconsidaredmovable properties and are, therefore, treated as goods. Actiona
baline. difesfom a contact f an outight sale since in kire purchase the ownership or property in the gok1 elaims and money have been excluded from the definition of the term goods. The actionahble claim means a claim wh
a hene pa f Altestipuiatedinstalments An a matter of iact, in the case of hiepuhcan be recowered onily by means of a suit or an action in the court of law, eg. debt. Adebt is not gods. It canno
te tmedfmak t utue to buy the goods. The goods are delivered to the bu_r iats sold though it can be assigned. Money curentily in circulation is not induded in the definition of godsbutodand
rmaking the contract. It is not a contract for sale since the hirer eniovs a rnaht to terminate the aqeee coins easily be treated as goods and can be the subject matter of a contract ot sale.
a peasure oy stoppung to pay further instalment of rent. Hirer may return the
choice. Though the seller delivers the goods to the property hired at any time d Types of goods : Goods may be of the following types
possession of the buyer, yet he retains with him
unnlthehe receves all the stipulated instalments of hire.
Seller continues to eniov two owt
onhim as fallure 0t the purchaser to pay any of the rights (i) to take Datk Existing
hire charge for the use
of the instalument and (i) to keep all the instalments
goods by the buyer. paia by u
4. State of Punjab v.
5.
Associated Hotels of India GOODS Future
Marcell Ltd. v. Tapper (1953). Ltd. (1972), S.C.C. 476-478.
6. Brooks Robinson Ltd.
7. Robinson v. Greaves v. Rockfield (1951).
8. Lee v. Griffin (1955), 1 RB. 579. Contingent
9.
(1861), LJ.B. 252.
(1976) S.c. 2108.

sup are within the meaning of the descnpuon

the and gas is governed by special Acts, but they goods
Sale of Goods Eecticity
Act.
 time.
naking General Princlples
the
act ot
at Possessed buB not owned
seller

possessed
by the sal A
the a e
are to render the contract
yAds g o o U s
dy
seller t destroyed
ronder the contract void. I1
the
pasesred ne

1 9f converted into
into syrup
uerted are so 2.9
pawnee

onnnder
Guqar is syrup on account ofgoods
the
u
damaged that do not answer to
k

apent Specitic
mixing of sea water, they the
goods:
an
Example A aqrees to sell to B a specific the contract will deseription, e.g.. where
dy of bargain, the ship Car cargo of gonds be void
Bxisting
sale hefore the day bargain,
12 catrying the supposed to be on its
c a s e
al is void.
had
cargo way from to
In
been cast
swndk
greement ways and England Bombay. t turns out
goods lost. Neither
eaisting

Ascertained
ace
only a part of the goods are party was aware of that the facts. Tne
destroyed or
the o
ofhoContract,
nature
or
whether it can be avoided damaged the performance of the contract will
goods which are in good depend upon the
E N I S T I N GG O O D S
conditions. If the contract is not. If the contract is divisible, the buyer
Unascertained
whole contract void. indivisible, destruction or will have to accept the
of damage goods in part will render the
. A agreed to
supply one wagon
of the contract of 591
contairning 700 bags of groundnuts to B.
ime
ot making he rest 109 bags
had been stolen. It was held that B
was not bound Only. bags could be delüvered because
tne
c o n t r a s
to accept
at
sale ot q 59 bags
upon
f o r m a t i o n
ofthe of sale. The he noted that Section applies only to
i d e n t i h e d
and agreed specific goods and not to
a
of unascertalnea
terms, astt the unascertained
to the af destruction goods, contract will goods, and therefore, in the
us subsequent
not be void.
:

adentiñed

amnles: (1) of
6vnds
Senhegervak ofgoods. of A agreed to sell 100 bales
(el kind at the time Egyptian cotton, a
nni': same
upon making of the bearing particular mark, to
the or agree
Band lying in his
Acertarmac useu o r identiied Cont h o narties, the bales had already been destroyed on accOunt ot a fhre in the godawn. Unknown
commony
Goods not and therefore, void. godown. Held, the contract was for the sale of
are
and specaihc gands: ho specific goods,
macertarina
Seenc only. it out to Yat
Y at tthe time of . or
descnption pointing Goods h A agreed to sell 20 bales t9ypuan cotton or 5. Un account ot ire the cotton
(d them to ,
detined by of
bales in the godown were
one goods not vod 0ECauSe i e Sae was completely
are goos to sell specific not or of a
They sale of dactroved. Held that the contidct a s speaie goods, but
saie He promises
certain quartity of unascertained qoods
ows contract of
te cow
üch cou he will
I has thereiore,
it is à not specify which
Aaple Dut does
s a k ani, cows, 2. Goods perishing before sale but after agreement to sell (Sec. 3)
e
sell, sacote
one ot the as to which cow he will s
mind as
adentihed ar the to sell Makes up his
wnen A
exumpe
I only agrees
the above become ascertained
Fa COW WZll "where there is an agreement to sell speciic goods, and subsequently the good without any tault on the part of
unascerrained goods. IN
sae of a d or aCquired after or the.
after the making of the contract are cales the seller or buyer pensh or become so damaged as no longer to answer to their description in the agreement before the
s a e t theEto. acquired
manmufactured,
produced or is
6oods to be risk passes to the buyer, the agreement thereby avoided."
Fatare good's: an . Thus, according to Section 8, contract can be avoided on the ground of supervening impossibility of the performance
delivered and paid for te 1st Me
Reuance Ltd., tO be
goods. 50 shares in contad conditions
:4 comtract. an
1st Jamuary, to sell B of any shares. The contract is a
if it satisfies following
Exmple contract, A 15 not in possession ofthe contract,
the time of making of the (1) the contract is an agreement to sell and not an actual sale
the same yEal. At
o ruture goo5 an uncertain contince (2) the loss is specific,
of which by the seller, depends upon
3.Contingentgoods: Goods, the acquisition (3)the loss is not caused by the wrongful act or default of any party.
are also
goods. a type of future
called 'contingent goods. They (4)the goods have perished before the risk passed to the buyer.
:
Example Aagres to sell 100 units of an article provided the ship which is bringing them, reaches the port safely.Tan Example : () Adelivered a horse to Bupon trial for 8 days. It was agreedthatif found suitabiefo intending buyers pupose
agreement for the sale of contingent goods.
the bargain then would become absolute. The horse died within 8 days without any fault of either party. Held, the contract was void
t is to be remembered that only those things which are owned by some one can be the subject matter ot ac
and the seller must bear the loss."
of sale. Birds fiying in the ai, wild animals in a
jungle, fish in a river are no one's and therefore, tau the course of the work
property, X had contracted to erect machinery on Ys premises. The price was to be paid on completion. Dunng
)
urchased and sod. A peson nay also agree to sell those goods which are not in existence provided theyaes held that both parties were excused from further
nere was a tire, which completely destroyed the premises and machinery. t was
natural or expected increase of
something to which the seller will ot as the specific sum was payable on the completion of the entire work.
has a present right, for example woo pertormance. X was not entitled to any remuneration
the sheep in the comung uidt the
winter, fruits that may grow on the trees in the coming season etc., cal alidly ection 8 also applies to the sale of ascertained goods. In the case
of a contract of sale of unascertained goods,
be sold. A fisherman
may o not him from his
sell, agree to the seller will of discharge
even before casting his net, all fish which may be caugnt hisnet. whole quantity of such goods in the possession
A contract for the sale of
futuue goods is clon of even the
assign what is not in existence. always as agreement to sell. It is never actual sale
actual sa
because a nanobligation.
or vaned by an express agreement.
proviSions of these sections can, however, be negatived

PERISEDNG OF GOODS PRICE

1. cucuauon.
Perishing of goods before means "legal tender money in
dennes sale of goods." Money
consideration for a
making of the contract 0l price "as money
are dnd rare coins are not included in the definition of the term money.
(a) Where specific (Sec. 7)
the mabn
contract. IF the goodsgoods the subject matter of of
mistake of fact pernsh at or sale, the
the time of goods must
must be in existence at thetime
regarding the existencebefore the ground. 12.
of the the Contract Hastley v. Conturire (1853), 5 H.L. Cas. 6/5
>82.
subject matter.contract, contra will be void on the bephys should K.B. 5/4,
11. Moti It is not Ods
& Co. Ltd. (1927),
Ram v. Xnyali Lane and Ballard Ltd. v. Philip Philips
Ram, A.LR. Elphick v.
5
necessary that-u Barense (1880), C.P.D.
(1967). 484 (B). 321
 The Sale of Goods benera Principles
Act,
2.10 Claim.A : A clait
g Actionable claim which can be
Ascertainment of Price in a manner th :sio
n Documents of Titte :-
be fixed Documents
the contract or may be left to nereby aq-
de fiNed by of the goods. Documents which in recovered only the by
contract of sale may of a
in a parties [Sec. 9(1)].
between the suit
The price a Insolvent: A person
cean who ha ordinary coursemeans or an
course of dealings #h. of trade
determined by the
with the foregoing
provisions, the buyer shall Dau e sela who has areaction in 2 2.11
may be in accordance his debts as they become due. court sf
as
determined circumstances
o of each n.
ceased to pay regarded
is not on the amstances of his debts
ot fact depending particula
2. Where the price in the aprof of la.
is a question
reasonable pnce ownerstin
What is a Mercarcantile Agent:.An ordinary course of
reasonable pnce. agent who in the business or
af .
is to be fixed by the valuation of at
dispose of the goods on behalf of his who cannot
Sec. 9(2) sell goods on the terms that the price
ordinary course of his
principal. pay
is an agreement to is thereby avoided [Sec business has
3 Where there or does not make such valuation, the agreement 10(1| authority to sell or
third party cannot otherwise
party and such to and appropriated by the buyer, he chali
or any part thereof have been delivered TEST QUESTIONS-
Provided that if the goods objective Type: fest Your Knowledae
thereo.
a reasonable pice the fault of the seller or buver. theaparty
from making the valuation by
4.
whether each of the following statements
Where such third party is prevented
fault 10(2)]. is True or Folse
the party in [Sec.
in fault may
maintain a suit for damages against () In case of "sale" the property in goods is
C. In case C refuses to ix the price, the contract h transterred to the
ten casks of oil to B at a price to be fixed by (i) The term goods include actionable claims. buyer immediatel
Example: A agreed to sell but i5 prevented either by
A or B Tom dong so, the aggnieved u
is to fix up the pnce sin A person would be deemed to be
A or 5 will be void. If however C willing insolvent under the Sale of
sue the defaulting party for damages. Goods Act if he
will be enitled to (i) Contract of sale requires immediate
fixation of price. commits an act of
I n case of an agreement to sell, the insalivanc
SOME IMPORTANT LEGAL
TERMS of
ownership goods passes to the
(vi) The Hire Purchase transaction is buyer at a Future
date.
(vi Property in the goods can pass romregulated by Sales of Goods Act.
seler to the (LLWA
buyer even if the
Document of Title to Goods [Sec. 2(4) (vit) A contract for the sale of future buyer has not paid the price. Fourdation, Dec. 2000)
(Cunianon, Der. 198)
goods 15 always knoWs as an
goods of the are agreement to sell
Documents, which in the ordinary course of trade, are regarded
as proof of the ownership (ix) Old coins may be treated as goods. (CS June 1999, Foundaton. Dec
or receive goods which are mentioned therein. Tl
documents of title. They authorise the holder thereof to transfer of a
() Future goods can be the subject matter "sale" (3.Com. (Homs), Deihi 201: 2022
documents contain an undertaking on the part of the issuing authornty
to deliver the goods to the possessor odl (xi) In the case of an 'agreement to sell', (Foundaion, Dec 2007 Dec. 2008)
warehouse certificate, ownership in the goods passes ftom seler to the buyer
documents unconditionally. Bill of lading, dock warrants, railway receipts keeper's wharñing immediarely
can easily be cited as a few exama i) A contract of sale of (Foundamer June 2008)
certificate, multimodal transport document order for the delivery of goods etc., goods is a
bilateral contract.
the documents of title. It is presumed that the holder of document of title shall have the right to claim possessn (S Founaanom, Dec 2012)
the goods trom every other person. Since they are regarded as equivalent to possession of goods, they can be traist Ans. (i) True; (ii) False; (iü) False: (iv) False: () True: () False: (vi) True: (vni) Tme: ( True: (t) Fas
(It wall be an agreement to sel) (a) Fase: (ar) Inue
like negotiable instruments.
just goods. However, it is not necessary that these documents of title should be .Select the most appropnate answer
Atransaction involving exchange of goods for goods is termed as
Insolvent [Sec. 2(8)) a) bailnent
(6) exchange Cbarter.
The meaning of the term 'insolvent' under The Sale of Goods Act is different from what has been given u b00ds identified and agreed upon at ot the sale ale
an the time of the making
teue
Insolvency law. According of the Insolvency Law, a person is deemed to be insolvent if he has commte (o) specific goods 6) ascertained goods (c)genenegoods.
tap n)
insolvency and has been declared as an insolvent by a competent court. But according to The Sale or uoou e do Acontract of sale includes:
is said to be insolvent if he has ceased to pay his debts in the ordinary course of business, or cannot pay (a) sale only an agreement to sell oniy
()
they become due, whether he has committed an act of insolvency or not. 9both sale and
agreement to sell
There is a
Mercantile Agent [Sec. 2(9)1 contract for sale of goods
when
A agrees to give his horse to Bon his givnng a A.
1ority to sell goo 0 A supplies artificial teeth to fit into the mouthtow
of B tor KS. >
Mercantle agent means an agent who has, in the customary course of his business, authonty
hispnin
consign on A
purposes of sale or to buy goods or to raise money on the security of goods
goods for benauo agrees to paint a with the matenals suppuea oy o.
on a canvas
(d) A picture
e.g.. a broker of jewellery, who is given the jewellery by the owners for sale, is a mercantile agent to d
agreesConstruct a building with the
matenals to be suppued by s
)The term 'good does notincuue
under the Sale of Goods Act, 1930 (6) Actionable claims
KEY TERMS us
(0) Harvested crops (Foundation,
S , June2007
shares Dec 2008)
in Stocks and Foundation,
the property i goods Grass (d) (CS
Contract of Sale : A contract whether the seller transfers or agrees to transfer the property Act, 1930. lakh to
Which of the Sale of Goods for Rs. 10
buyer for a price. the of contract sale under sell to
his buling
not a
G o o d s : The term includes every type of moveable property other than actionable claim anu money (a) Ap followin (0) agreed
fim. (s7) (o))
M agreed t o sell
eed 20
to kgs
buy goods
nce worth
fromRs.the1,000 ona future date (0): (0) (0).
) Mäaran (m) (2): (")
4) (c): () (a): Ans (9
15. V. Sulaiman v. Ma Ywet A.I.R. (1934) Rang. 198.
P
agreed to sell 100 shares for Rs. 20,000 to
 Chapter2
CONDITIONS AND WARRANTIES

LEARNING OBJECTIVES)
to:
A careful of this chapter will enable you
study
the terms conditions and warranties;
understand the meaning of
differentiate between conditions and warranties;
warranties in a contract of sale;
describe different implied conditions and
conditions and warranties in a contract of sale;
appreciate the importance of
and
explain the doctrine of Caveat Emptor;
terms.
explain the meaning of certain key
WARRANTIES
MEANING OF CONDITIONS AND
contract of sale is concluded.
statements
about the goods he is selling before a
make certain
lt is usual for the seller to form part of the contract depending on this fact whether they
hese statements or representations may or may not
A representation made by the seller will be taken as a stipulation
cOUnt to stipulations or mere expression of opinion. However, if he merely states a judgment upon a matter of
ne assumes to assert a fact of which the buyer is ignorant. also be expected to have an opinion, representation
wncn he has no special knowledge and on which the buyer mayA
Dy him will simply amount to an expression of an opinion. seller. stipulation is considered to be a part of the contract
and its breach provides remedy to the buyer against the The nature of remedy depends on whether the
3dle considered to be a part of the contract,
uation is a condition or a warranty. While an expression of an opinion is not
and
therefore, it creates no obligation on the seller.
Ex "The horse is a beauty and is worth Rs. 1,000". In
A wants to sell his horse. He says to B, an intending buyer,
A is
this caseles:(1) The buyer in such a case will
simply commending his goods and his representation is a mere expression of an opinion.
not haveSimply
any remedy against the seller if later on the representation proves to be incorrect.
e he bought it for Rs. 1,000. Here in the later part
case A says B, "the horse is a beauty and only yesterday
of his s2the above seller about which the is ignorant. This amounts to a stipulation. The remedy of
the buyer in he is making an assertion buyer
this fact whether it is a condition or a waranty.
case of the stipulation proving to be untrue will depend upon
The the Sale of Goods Act as under :
C Condition' and 'warranty' have been defined by
'A condition is a essential to the main purpose contract, the breach of which gives
dition: stipulation ofthe
goods and treat the contract as repudiated' [Sec. 12(2)1.
toreject A the breach otf which gives i s e
aim for warranty is stipulation collateral to the main purpose of the contract,
g e s but not a right to reject qoods and treat the contract as repudiated" |Sec. 12(3)|
of the a
a
act of sale is condition or a a warranty depends in each case on the construction
Whether stipulation in contract
t . A stipulation may be a condition, though called a warranty in the contract" [Sec. 12(91
points Examples: (i) A¢ a speed of 40 m.p.h." The horse dealer
a
of 30 m.p.h.
ut at a s to B,
parti.S e horse dealer, and says, "I want a horse which can ru at
and says, "This will suit you." A buys the horse. Later on, A tinds that horse can run only at the speed
 t p n d i o n s
a n aW a r r a
a n d W a r r a n t i e s

2.14 The Sale of Goods

Act, bale of hoties from
a
bought
.1930 Band resold it to C. C
here s a bieach ot cvndition derause the stipulation made by the seller toms the, very Dasis or the contiact. found the bale
i )A 2.15
Was
deemed to have accepted infested with
goods, ànd
A goes to S a him a horse and says,
"it can thereto1e, he could not white ants, and
(2 horse deale: and says
"I want a good horse." The horse dealer shows an anyuamages therefore, teturned
SgEeu or 6U m.p h.A buys the horse Late: on A finds that the horse can run at a speed or s0 m.p.h. TUN at regdiate the contract but could
EXPRESS,AND caim
here s a was only a collateral one. IMP
breach of warzanty because the stipulation made by the seller
n d i b i o n s a n a W a r r a n t i e s

terms of mav be or
express
CONDITIONS AND WARRANTIES
tipulations as to time : Unless a different intention appears from the the contract, stipulatione implüed. Express conditions
ae or pay1ment are not deemed te be of essence in a contract of sale. Whether any other stipulation as to tima non by the parties at the time of the and warranties
contract of sale. are those which have
eypressly
the essence of the contract or not depends on the terms of the contract (Sec. 11). But in mercantle contracts, time d warranties are those been
me for mplied iod Conal which the law
deuvery of goods is always taken as of essence unless otherwise agreed. may he or
Ihey cancelled varied by àn
incorporates into the contract unless the
c o n t i a y . express agreement or by parties stipulate
the
Eamples: (0 There was a sale of goods C.1.E. Antwerp to be shupped in October. Thebuyerwas toreject deivery even if the the course of
to Sec 62). dealings or
asdny alrerenre m the type or value or grade specified. The goods could not be shipped till Novemoer on account of stnike s by usage and
exclusion hy an
by an express or
port. t was held that the buyer could refuse to take delivery of the goods."
at the such But
agreement
a
otherwise does not entitle
uCn
qation under the ntract. For example, if a
person agrees to deliver a car, he party to give up his fundamental
(n There was a sale of some cak trees on the term that the trees mightremainon the sellersland lor tour months and the parties
arties might
might har
have agreed to exclude all cannot escape his
to thougn condittons and
buyer should pay fo: them wathin twelve weeks from the date, the contract was made. The on due even
iability by delivening
dat Dig
warranties express or
Further time for payment was asked for, but it was not granted by the seller who treated the contract
buyer taled pay theend.pice
The impied.
asat an
tendered the pnce which the seller refused to accept. The seller then sold away the oak trees to some other buyer. It was held thas
buyer then conditions (Secs.
14 to 17)
i m p l i e a

lied
the first buyer was entitled to was a are the impied conditions:
damages as there wrongful avoidance of the contract.
Thefollowing
DIFTERENCE BETWEEN CONDITION AND WARRANTY
As to Title
Ihe difference between a condition and a waanty can be summarised as follow: :
1. Nature: Condition is essential to the main purpose As to Description
of the contract. It is of a fundamental nature. The main
purpose of the contract cannot be fulfilled without the prior fulfilment of this stipulation.
As to Sample
Waranty is only collateral to the main purpose of the contract. It is of a subsidiary of inferior character. Fulfilment
of the main purpose of the contract does not depend upon the fulfilment of the warranty. IMPLIEDCONDITIONS
As to Quality or Fitness
2. Remedies for Breach: Breach of condition gives right to the party not at fault either to repudiate the contract
or to claim damages or to do both.
As to Merchantability
Breach of wamanty entitles party not at fault only to claim damages. Right to rescind the contract is not available
to such a party. As to Wholesomeness
3. Condition as versa :
A breach of condition may be treated
warranty and vice as a breach of warranty.
Each of the above conditions are discussed below in the following pages:
A breach of warranty cannot be treated as a breach of condition.
1.Condition as to title: Unless a different intention appears from the contract, thereisan impüed condition that
When a breach of condition is taken as a breach of warranty te seler has a right to sell the goods in the case of a sale, and he will have a right to sell the goods in the case of an
enent to sell at the time when the property is to pass. Buyer is entitled to repudiate the contact if he finds the tite
In the following two cases a breach of condition will be taken as a breach of warranty ot the seller to the defective [Sec. 14(a)]. If the goods delivered can only be sold by infringing a trade mark, the
goods
he so treat the breach of a cohdition by the seller as a breach of seler shall be deemed to have broken the condition that he has a right to sell the goods.
1. Voluntary waiver :The buyer may, if desires,
wamanty and make him iable only for paying damages [Sec 13(1)]. However, if the buyer prevents the possibility of the R was forced to return the
Examples: () R bought a motor car from D and used it for four months. D had no title to the car.
seller fulfilling the conditions he will be deemed to have waived it. months because
true owner. R can claim back the to D notwithstanding the fact that he had used the car for four
ao the prce paid
It is to be noted that once the buyer decides to waive the condition, he cannot afterwards insist on its fulfilment. dte beach of implied condition as to
2. Compulsory treatment
title were labelled in such a way as to infinge
Neselle's trade mark.
of a condition as a warranty:
Where a contract is not severable and the buyer has U.S.A. The tins
..ADOught 3,000 tonnes of preserved milk fromTo the clearance from the custom authonties, A had to remove the labels
get sold
accepted the goods or part thereof, the breach of any condition to be fulfiled by the seller can only be treated as a breach
a to sell because goods could be
the condition that he had right
of warranty, unless there is a contrary term in the contract, e y were detained by custom authorities. broken
express or implied to that effect [Sec. 13(2) Sell the tins at a loss. Held, the seller had
title to
Examples: () B agrees to buy from A twenty five sacks of flour by sample, the flour is delivered to B who y by infringing the trade
upon examination, finds it not equal to sample but uses two sacks and sells one. He
pays the price. B, mark. at the time ofsale, subsequently acquires
cannot now rescind the contract and recover enoted that if a
seller who had no title to the goods owner leads the
the price. But he is entitled to get compensation from A for ta and the sub-buyer. Similarly, if the true
any loss caused by the breach of
warranty. Punty both the title of the original buyer

Aron and Co. v. Comptoir Wegmont (1921), 3 K.B. 435. Lal Narain v. Suraj Piasad, M.I.R. (1932) Lah. 52.
kowand v. Divall (1932), 500. 2 K.B.
2. Martindale v. Smith (1841), 1 Q.B. 389.
Nidlett v. LOntectioners Materials Co. Ltd. (1921). 2 K.B. 387
3. Mackey v. Dick (1881), 6 A.C. 251.
Butter WOrth v. Kingsway Motors (1954), 1 W.L.R. 1280.
 o n s a n d W a r r a n t i e s

2.16 The Sale of Goods Act,

193 r e a s o n a
on
o
1 Lord
o w n

buyer to beleve that the seller is either the owner ot the goods o has the authority to sell the goods, the bs. his reasonantion also
Macanaughten
form aning and intenti
of the parties with observed, "The office of a 2.17
n regard to the
purchasing the goods in good faith shall acquire a good title." uyer ay be
may be difficu
language, t difficult or
of impossible to
subject matter of thesample is to present to the
he etion aecline
to sell by it, and require the in
express words. contract eye
2.Condition as to deseription: Where there is a contract of sale of goods by description there is an implk.s
but

condtion that the goods shall correspond with the description (Sec. 15). The term 'conespond to description' meanstha anmple
hut dec the seller to give a specific buyer to purchase at his Own risk.It is open for the seller to show
sample
warranty to that effect.
the buyer must get the article that was descnded n the contract. Thus, where a seller desCibed a car as of 10 h.p. who t o quality or fit
auality or Similarly, the buyer may not the
fitness (Sec. 16) : trust
it was of 8 en Condition as Normally in a
h.p.. it was held that there was a breach of . article for any contract of sale there
condition. or
fitness or thie article
any particular
purpose. It is the is no
In Bowes
v. Shand the leamed judge observed: "if you contract to sell peas you caninot oblige a party to ta ality
Hy oh suitable for the purpose for which
he requires.
duty of the buyer to see and implied condition as
beans. If the
satisfy himselfvwhether
description of the article tendered is different in any respect, it is not the article bargained for and the
er othe ardice oints in this connection are important to note:
party is not bound to take it." anads are
are required fo
the goods forrequired a
Example: () A wants to sell his typewnter. He says to B, intending buyer who has not seen the machine, that it is a ba here parkcular
Drand 1./a)
pliedly, (6)
the bbuyer relies on the sellers purpose which the buyer makes known
or
B can
skill and to the seller
new machue. B agrees to purchase 5 finds that the machine is old and repaired. repudlate the either
it. On delvery contract he is the (whether or
judgment and (c) it is the
(12) In a contract sale of a
that eanably
desbereasonably fit for the manu-facturer producer or not), there will be sellers
an
business to supply
must
for the quantity of seed described as "Common English Sainfoin" the seed suppuedwasof a different impied condition that
kind. though the difference was not discoverable except by sowing. The delect also existed in the sample. Hela, the buyer was
purpose intended. The buyer cannot be
he goouban he selects the article nimselr after inspection. said to rely on the
sellers skail and
entitied to recover damages for the breach of condition."
(7)
o r was placed for six lornes to be used
a a
In contract for the sale of quantity of cases Brample tor heavy trafic in a
ofAustralian canned fruit, the goods were stated in cases containing thity 10r this purpose
for this
tins were unht y
purpose àand broke down. it was held that there washilly country. Five lornes were suppi-d the
The seller a breach of
each. tende red the whole quantity but nearly half the cases contained twenty-four tins each. On the buyer refusina
to take delvery. it was held that the buyer was entitled to reject the whole consignment." ellerwhlch #icle can be used for only one condition as to iness.
particular purpose, the buyer need not to tell
The condition as to description is applicable in all those cases where the buyer has not seen the goods but relies the goods. the seller the purpose
he requires
fpr which
solely on the description given by the seller. It is also applicable in those cases where the buyer has seen the goods but niurDOse' is not some purpose necessanly distinct frOm a
relies not on what he has seen but what was stated to him and the "deviation of the goods from the description is not general purpose In the case of food items.
eitng 1S
Lth 2 general as well as a paruculdr inus, even if the is not expressiy made known to
ele, it Do
will be deemed to be known to nim r purpose.it can be readily gathered purpose
from a description of the goods. the
apparent.
Example: A set af line napkins and table cloths, described as of seventeenth century, was sold at an auction sale to an antique nurcha sed a hot water bottle from B, a chemist. A was who could not be
dealer who had seen the set. Later on, it was found by the dealer that the set was of eighteenth century and, therefore, he wanted Exanup uater bottles. While being used by A's wite, the bottledraper, expected to have spedal knowiedge
h regard to burst and injured her Held, the
to reject the set. Held. he could do so since he relied on the descnption given by the auctioneer and the discrepancy between the seller was resporsibie for
actual qualüty and the description could not have been discovered by a casual examination." danages.
3. In case the article can be used for a number or purposes, the buyer should tell the seller the purpose for which
3. Condition as to sample : A contract of sale is a contract of sale by sample when there is a tem in the contract
b equires the goods if he wants to make the seller responsible.
express or implied to that effect. In the case of a contract for the sale of goods by sample, there is an impied condition:
Example: There was a sale by sample or indig0 cloth to a tailor who requred the cloth for the purpose af making it into ivenes.
(a)that the bulk of the goods shall comespond with the sample quality; e upose was not made known to the seller. Thecloth was unft for that purpose oming to a latent defect but could be used fio
(6) that the buyer shall have reasonable opportunity of comparing the bulk with sample; the buyer could not reject the contract.18
otherpurposes. Hela,
(c)that the goods shall be free from any defect, rendering them unmerchantable, which would not be apparent 4. In case the goods are purchased under a patent or other trade name, there is no impied condition as to their
on reasonable examination of the sample (Sec 17). fitness for any particular purpose.
were sold by sample. It was found that owing to a
latent defect, coats made out of Example: A, the owner of a brewery, placed an order with B, a manufacturer, to supply him his patent smoke consuning
Example:
Et to
Some mixed worsted coatings defect same
itHeld,
werethenotbuyer stand ordinary wear. The appeared in the sample but could not be detected on reasonable examination. umace for fitting up in his (A's) brewery. The furmace was supplied but it was not it for the buyers purpase. Held. the purchase
could reject the
goods, s of a defined and well known type of furnace and B, the seller, was not lable for its unsuitability for the buyers purpese.
In case goods have been sold by description as well as by sample, they must correspond to both.
Itis to be noted that the mere fact that an article sold is described in the contract by does not necessarly
its tradearticle
be equal to the sample. The sugar when e sale, a sale under a trade name. For this it is necessary that the specify
Example:
suppied, Aseller
corresponds
undertakes to supply
to the sample but is not Java sugar. The Java
100 tonnes of buyersugar
can repudiate
warrantedthe
to contract. the buyer should the under is trade
R in such a way as to indicate that he is satisfied, rightly or wrongly that it will answeris purpose.and that he
It a
takes the goods
is to be noted that it does not follow merely because sample is exhibited that the seller intends to sell by sample n g on the skill or judgment of seller, however great skill or judgment may be. "If the buyer
because he may by express waranty exclude its operation or may exhibit the specimen merely to enable the purchaser kause t de for the intended, there is an Lmpued condinon
recommended by the seller as being suitable purpose
itness for the
8 Eastern Distributors Ltd. v Goldring (1957). 2 0.B. 600. purpose. sellet
9. Mloor v. Mickie (1953). S.L.J. 53. recommended Bugatta
r
ample A went to a car dealer and said that he wanted a car for tounng purposes. Ine the
tha Held, that buyer can claim camages
10. (1877). 2 App. Cas. 455. The buyer ordered for one. The car was found unfit for the purpose.
ka Puse.
n i t i o n as to fitness had been broken though the sale was under as trdae t
11. Varley v Whipp (1900). 1 0.B. 513.
12. Walus etc. v Pratt & Haynes (1911) A.C. 394.
13. Johnson v. Raytto
5. ardiner v. Grav. 4 Camp. 143.
7 0.8.D. 438.
Fnest v. Last (1903), 2 K.B. 148.
14, Nicholson and Venn v Smith Masriott (1947), 177 L.T. 189.
unes . Padgett (1890), 24 Q.B.D. 650.
15. James Drimmond and Sons v. E.H. Van Ingen and Co. (1887), 12 A.C. 284.
adiry w.
Marshall (1925), 1 K.B. 260.
 2.19
yndisons
a dW a r rinties
an

the basis of breach of an implied condiluon as to merchantability Merchantabrüty does rot merely
aild be ma the market because it apparently looks all nght. An article may be considered to be unmerchantabe
saleable.
of use. In the an watch
The Sale Goods Act, is 1LnAt for its only proper instant case Bhad opportunity to ezamine that
l a t e n tdetects rendering
thing
193 tound out by a
üke B. Therefore, B must succeed.
buyer
could ,
not have been
W h i c h

that
a could
Buggatti car for to l a t e n t

e n for a particular purpose ana mercnantabiuty must be construed reasonably, and

recommended
by some one was as to fitness
u n n t for
purpose. the
been louna
defect state of affairs relating to the buying of which
2.18 that he had c a r is fit unsuitabiity of the article anses from
the seller hen the
u a b l e
o r trade r ied con
the buver had told not be uable if the
u n d e r 1ts patent
should
who is allergic to it, there is a duty on the
example it The seller deals, nam be when an article is sold to a cus to mer
the above usually e 1 o t aware,
s u h cai.
e.a., When
used.
(11) In have one which he H a l
e.9., 28
would
u s e to in generaly
descniption it is peculiarity
and he not made K i t o w n
purposes article of the for whuch that the selr
ler W a s
ltselr impues
supphes an arucle it. She was
l e r

the seller for the purpose or the

eller disclose sensitive skin bought a Haris tweed coat and got
rashes through weanng
5. In c a s e will be fit The n a m e rith
with abnormally abnormally sensitive
that gocds
conaition to B. to skin being
refngerator r Gawoman was no condition as she had not disclosed the act of her
breach of
a n mpued Godrej' There
t h e r e 1s sells a annexed ues mDe nsation.
by the comipe
dealer in r e t n g e i a t o r s fixed or xanple:
: a also be usage any
EXarple A, a parteula:
purpose purpose may to claim
machane to be ht tor particular o tallowed d and foodstuffs. The provisions
the for a SItive.
warrants fitness Tnis condition appues in the case of provisions
or
to quality inqoodo whole
wholesomeness: suitabie
c o n d i t o n as seller who deals to
from a
ods of as
t o merchantable but also wholesome, pure unadulterated and
dnon
b. An impued enall se and be
description t h a t the goods sh 6 . C o n d i t i o n
to description
10(6)). are brought by shall r anSwer
of trade [Sec goods impúed conaition niy
: Where there 1s an 9Ypuedm u s t n
merchantability be or a merchantahi. tme
of sale.
to or not), must s
C o n d i t i o n as or producer mark tne merchant. The salmon was poisoncus and A and
5. manufacturer trade at and provisions
he is the patent or salmon grocer
(whether sold under a cosumption tinned frOm B, a
Even goods nsumpu rhased the eftects or the po1SOn. A claimed damages against
16(2)]. from his ilness, trom
condition that a
tnat descnption quaity [Sec reasonahl recovere his ife died A was entitled co get
be of merchantable such a nplesi hile AA recovered rendered by her. Held,
and in fell
t. wnle of his
his wife, which deprived him of the services
death
circumstances
be of such quality whether he b ate, the 30
should same the seller.
who and was volated
that the goods under the illness
1or wholesomeriess by
gquauty examination e
Merchantable quality implies saleable
under the description h
after a full by condition of on the mulk, got infection and
reasonably hforhis Ene taking
Ise Ihe miik contained typhoid gems. AS wite,
accept the goods be such as are to by the goods ar
man acting
reasonably would should buyers ready milk dealer.
In other words, goods that there will be Anges De od milk from Y, a
or reselling."" mean
this does not G o o d s will be unmerchantabla
tor his own use itle,
itled to get damages.
market. However, saleable there.
known in the order to be of their Held, w a s wartanties can as follows
which they are country r e a s o n a b l e person knowing
in be put
that a The impued of the
with the law ofa foreign such Warranties:
will comply use or are enjoy quiet possession
that the goods unft for ordinary anlied nis buyer shall have and
make them mpü waanty impues the
defect which will enjoyment:
if they have The fhrst instalment wa arranty of quiet
them." Nar.
delivered
conditions would not buy were to be by instalments.
Held, the
horms. Goods as
buyer was
some motor to bad packing. nds [Sec 14(C)].
A agreed to sell B were damaged owing
Examples: () quantity of horns which
substantial gods
a merchantable quauty.
but contained of a
were not ingredients
the second as the goods Tonic, among the IMPLIED WARRANTIES
acceptecto whole lment,
insta Webb's Indian
entttled reject the quantity of
in England a large aware that the purchase
waters sold F.0.B. The seller was
manufacturer of mineral was 1gnorant.
(0) A a fact of
which the buyer article of food containing
of saücyic acid, the sale or any
certain percentage
was a of a law
of whuch the country, authorities, finding that
supment to Argentina, in Argentine the
where, however,Onbythe amval of the goods
purpose oft circumstance unknown to him. of implied condition as
Was tor the a there was no breach Usage of Dangerous
saicyic acad was prohibited, human consumption. Held, Quiet Freedom from
condemned them as unit for Nature
contained Encumbrance Irade
they salicyüc aad, Enjoyment
wine. While M was drawing the
to merchantabiity. which was licensed for the sale of
Stone's Ginger Wine at fs shop, recover to him that
(7) M asked for bottle of
the bottle was unmerchantable,
and M was entitled to damages. to B. Soon
it to C without disclosing
broke and M was injured. Held, on hire for a period of ten days after Asold
care the bottle his bicycle disturbed. He is entitled
cork with due have been revealed if the from C. Cs possession is
those defects which could Bample:A had given of the hire agreement.
B claims the bicycle
is no implied condition as regards account
It is to be noted that there reveal the defects and he approves and use bicycle on
does not rs entitled to
But if the examination of the buyer from A. The buyer.
buyer had examined the goods. condition of merchantability. to quiet possession.
to work the goods are found to
be defective, there is breach of bget damages result in breach of warranty as
accepts the goods but when put was given condition as to title may also
stored in the sellers The breach of implied a condition as well as a warranty.
was
warehouse in barrels. Every facility both
The glue for breach of
wanted to purchase some glue. was found to have recover compensation of
Examples: ()X have the barrels opened, but only looked
at the outside of the barels. The glue tkefore, will be entitled to on its repairs but
was dispossessed it after
to X for its inspection. X did not no breach of any implued from B. M spent some money
the contents of the cases. Held, there was a second-hand typewriter but also cost of repar
defects which would have been found out if X has inspected recover from B not only pice paid
Example : M purchased to
condition as to merchartabiuty. OnLIS Dy the true owner. It was
held that M was entitled trom any charge
usual of keeping the watch the goods shall be free
watch to B, a layman with the guarantee This waranty implies that when the contract
(i) A, a dea ler in watches of a particular make, sells one watcn Z. of freedom from encumbrance at the time :
within one year. B wanted a new Wartanty before or
in running condition for a period of one year. The watch was found to be very unsatisfactory or known to the buyer encumorance at tne
or its price. State on what basis such a claim can be made. Can B succeed?
of a third party not declared the charge or
urance in favour if the seller had disclosed
have no right of action
eec16(3)J. Buyer shall
20. E.W. Ewans v. Stella Benjamin, 1951, Cal. 470.
ie of contract.
21. Bristol Tramiway etc. Co. Ltd. v Fiat Motors, (1910), 2 K.B. 831.
22. Bristol Tramway etc. Co. Ltd. . Fiat Motois Ltd., ib1d.
ngham . Emem (1955), 2 Q.B. 300.
23. Taylor v Combined Buyers Ltd. (1924).
24. Jackson v. Rotex Motor and Cycle Co. (1910). 2 K.B. 937.
uraffiths v. Peter Conway Ltd. (1939), 1 All E.K. 685.
25. Summer Permain and Co. v. Webb and Co. (1922), 1 K.E. 55 CA. ackson v. Watson and Sons (1909), 2 K.B. 193.
26. Morellv htch and Gibbons (1928), 2 K.B. 636. Aylesbury Dairy Co. Ltd., (1905), 1 K.B. o08.
27. Thornett and Fehu. v. Beers and Sons (1919). 1 K.B. 486. Maron v. Burnigham (1949), 2 K.8.
9*2
 ons a n d W a r r a n t i e s
( a n d l t i o n sa n d W a

The Sale of Goods

2.20
KEY TERMS-
Act 1930
Example: A pledges his bicycle with C for a loan of Rs. 100 and promises him to give its possession the next day. Soon. A 2.21
stipulation essenual to the main
he selis the bicycle to B, an innocent buyer whe tioes not know about the tact of bicycle being pledged. B may either ask A to condi A stipu
purpose of the contract.
to clea Warranty: ctipulation collateral to
the main
this money with nterest, purpose of the
the loan Or himselt a suit against A to recover caveat Emptor : It implies "let the buyer be aware." contract.
may pay the money and then file
or fitness for a paricular
of trade : An or condition as to quality purpose
3.By usage impled wananty may be
annexed by the usage of trade [Sec. 16(3)1
betorehand any
TEST QUESTIONS-
it is a
to disclose sea-damage
Wnere dnugs are sold by auction and where usage of tuade
are found to De derecuve, it Test
:
Test Your Knowledge
will be tauch
disclosure must be made. In case no such disclosure has been made the goods 1y pe
pe:
taken abjective
blanks
as a breach of warranty. he
fill n
seller knows that the buyer is 1gnorant aboutt the an may be expressed O. n a contract of sale.
4. Dangerous goods: Where the goods are dangerous and the
( O ..
f breach of
of the seller should wam the buyer about the probable danger otherwse, he will be lah I n ca .. The buyer has a nght to rescind
the contract.
dangerous nature the goods.
in The condition as to wholesomeness is applicable in case of provisions and..
because of the dangerous quauty or the goods.
damages to the buyer tor the injury caused to the buyer 1tur of qoods of their being or the
that the tin was to be opened
with special care otherwise it might
it minl descnption by the which
they are
Example :A sold a tin of disinfectant powder to C. A knew o r . . . * * . l i i d y DE Lreated as a
known in the market is termed as.
did not warm C.C opened the
tin ana i s eyes were injured by breach of...
about it. He d A breach
prove dangerous. He also knew that C was ignorant will sink to the level of
() A condit warranty where the
powder. Reld, A was Lable as he should have wamed C of the probable danger. buyer treats the breach of condition
as a breach of..
EMPTOR" is a stipulation which to the main
(CS Foundation. Dec 2000)
DOCTRINE OF "CAVEAT warranty s.. .. purpose of the contract.
(vi) A [Ans. (1) impüed; (1) condition; (in) food stuffs; (iv) (CS Foundation, Dec. 2012)
must take care of his own interest while purchasinn merchantability: (v) condition, wamanty,
The maxim Caveat Emptor (let the buyer beware) means that the buyer
will them at his own nsk as regards the quality or fitnese (Vn) waraity; (Vn) collateal]
the goods. Buyer in a contract of sale of specific goods purchase appropnate answer
the most
effect is laid down in the contract itself. Buyer cannat 2 Select main
essential to the purpose of the
of the goods except in case of fraud or where a condition to that tinulation contract is known as
not suit his purpose or if the buyer makes a mistake stip
hold the seller liable if the goods turm out to be defective or do (a) condition
the goods conform to (6) waranty
to ensure at the time of purchase that
n assessing the qualüty of the goods. If is for the buyer
(c)mere expression opinion. of
his requirements. contract of sale of goods there is mplued warTanty and not implied condition that

Section 16 of the Indian Sale of Goods Act has enunciated

this principle in the followWing words: "Subject to the shall correspond with the sample in quality.
in there is no implued warranty or condition as to
() the bulk
provisions of this Act and of any other law for the time being force, () the buyer shall have and enjoy quiet position of the goods.
When a person sells
the quaity or ftness for any paticular purpose of goods supplied
under contract of sale.
t h e goods shall correspond with the description as given in the contract.
be fit for will be fit for any
goods, he only warrants that they shall some purpose but he does not warrant that they
a nght to sell the goods.
(d) the seller has
otherwise agreed upon, cannot reject the goods on the basis of latent defect unless
particular purpose. The buyer, unless There is an
impied condition in a contract of sale that
had deliberately concealed such defects. (it)
they render the goods unmerchantable or the seller goods would be fit for the purpose the buyer requires.
(o)
Following are
important exceptions to this general rule : (6) the goods shall correspond the deseription given by the seller.
1. Implied condition as to quality or fitness: Where the buyer has made known to the seller the purposefor the goods will be free from all encumbrances.
(c)
condition that the (CS Foundation, Dec 2008)
which he requires the goods and depends on the skill and judgment of the seller, there is an impied () Caveat emptor means
goods will be fit for the purpose for which the buyer requizes them. This condition is not applicable in those cases whee Let the seller beware (b) Let the buyer beware
()
the goods have been sold under a patent mark or trade name. L e t the govt. beware (d) None of the above
2. Sale the are a who deals in suc Ans.(i) (a): (i) (6); (iüi) (6): and (iv) (6)]
of goods by description : Where goods purchased by description from seller,
class of goods, there will be an implied condition that the goods shall be of a merchantable quality.
3. :
Proof of reasonable usage or custom of trade may also establish an implied condition as to
EsayDype: For Review, Discussion and Practice
Usage of trade DIstngush between a 'condition' and a
are impüed in a contract of sale
'warranty. What conditions and warranties
quality or fitness of goods for a particular purpose. CS Foundation, Dec. 2012)
(C.A. Foundaion, May 1998; May 2001;
is such a
4. Consent by fraud: The doctrine of CaveatEmptor shall not apply to all those purchases which have been mae
Wnat 1s meant by 'sale by sample'? What are the condition implied sale or the goods or their ntness
by a buyer under a contract where his consent was obtained by the seller by fraud i.e., where the buyer relies on tase no condition or warranty as to the quality
aCOntiact for the sale of goods, there is implied
representation of the seller and suffers damage. A seller, who is guilty of fraud, shall have no protection of the docEnie for any purpose." Comment. 1991)
Inter, 86, Nov. 98 and May (C.A Nov.
of caveat emptor. xplain the doctrine of 'Caveat Emptor with its excephons it is nt or any
he does not warrant tnat
fa pe fit for some purpose, but
seus an article he thereby warrants that it is shouid be recevea.
to which this preposition June 2007)
State the various qualifications subject
uupose. June 1999; S Foundation, Dec 1998;
P (ICWA Foundation,
Dstinguish between condition and warranty (ICWA Foundation, Dec. 1998)
le. 1999; S Foundation, June 2000)
33. Jones v. Bowden (1813), 4 Taunt 847. 1.Whatare the
rules regarding sale by Foundaton, Dec.
sample (ICWA
34. Clarke v Army and Navy Co-operative Society Ltd. (1903). 1 KB. 155. BCUss the Rule of
CaveatEmptor and state its exceptions
 Chapter5
REMEDIAL MIEASURES

LEARNING OBJECTIVES

enable you t o :
chapter will
study ofthis
A careful an unpaid seller;
meaning of
understand the
of an unpaid seller;
describe the rights the Sales of Goods Act; and
of an aggrieved party under
enumerate the rights
certain terms.
of key
explain the meaning
MEANING OF UNPAID SELLER

means a seller :
seller or
Unpaid price of the goods sold,
or tendered the whole of the
() who has not been paid instrument as a conditional payment but which is
or any other negotiable
had received a bill of exchange
(ii) who
subsequently dishonoured. whom
of a seller, e.g., an agent of the seller to
person in the position
The term seller in this case will include every or is
or who has himself paid, directly responsible for the price
the bill of lading has been endorsed, or consignor agent
(Sec. 45).
name on behalf of his principalB.
B refuses to pay the price of the goods.
Example: A purchased some goods in his personal will be taken as that of a seller and a buyer.
between him and his principal
unce A has incurred personal liability, the relationship
AWIll be taken as unpaid seller under the provisions of section 45.
the price, rejects the goods. He will,
term unpaid seller however does not include a buyer, who after having paid
EetOre,
he be not entitled to the right of lien on rejected goods as available to an unpaid seller.

RIGHTS OF UNPAID SELLER

a d seller has the following two types of rights under the Sale of Goods Act:
.
Rights of an unpaid seller against the goods
9When
the property in the goods has been transferred
() Right of lien.
(i) Right of stoppage of goods in transit.
(ii) Right of resale.
(6) the property in the goods has not been transferred.
Right of
1. Hiralal Chimar
withholding delivery.
nmanlal v. Pehladrai & Co.
2.Shah (1929), 31 Bom. L.R. 900
nanc Poosaji v. Crystal Co., A.I.R. (1955), Mad. 481.
 The Sale of
R e m e d i a l M e a s u r e s
Goods Act, 1u
2.44
the duyer personally lost the opportunity inortunity of exercising the of 2.45
an unpaid seller against the nght uer,
no
2. Rights of npaid seller in a position similar to that1.e., go0ds are more under his
sue for pnce. wnich ne had l0st physical possession
(a) Right to amount
This to rescinding
placena of the contract of sale. An unpaid seler can by parting with the
goods. It eKercise ngnt ot does not
sue for damages. conditions are satisfied stoppage of
(6) Right to of the following goods in transit
when
for interest. each had parted with the possession of the
()Right tosue Seller goods.
discussed in the following pages 1.
L a in tthe
Each of the above rights are being Goods a r e
course of transmission to the buyer, i.e., they
2. have not reached in the
out or the seller's actual possession of the
gone buyer
1. Rights against goods tho.
thought they have
of the goods has become insolvent.
has been transferrea. 3. The buyer
() When property in goods eeller must not have been prevented by any other provision of the Act from
his right where the buyer wno nas obtained document of title
exercising this right, eg., seller
(Secs. 47 to 49) assigns or
()Right of Lien
on the goods which are under his actual Doscae
pledges or sells the goods for value
Lien is a of an unpaid seller to retain possession to a bona
fae uaisiEe
right are in the actual possession of the seller. tranef
nt
tendered the price of goods. those If the goods Tnnaid seller may resume posSession or the gooas So long asS they are in the courSe of transit and
1S paid or exerCise or the llen on the goods hu thet c 15
may retain those
will be immatenal for the us pald or tendered the price thereaf.
title or ownership in those goods to the buyer P o
the seller parting with a document capable of transfermina til goods under
seller. Right of lien will not also be affected by
of Lading or
any other type of delivery order, provided the goods reman in tne actualpossesson of the seller. The unpi Duration of Transit (Sec. 51)
be holding the goods with the consent
seller may exercise the buye
his right of lien notwithstanding that he may Coods are deemed to be in the course of transit from the time when they are delivered to a carrier or other bailee
as his agent or bailee. nurpose of
he transmission to the buyer, till the buyer or his agent on his behalf takes delivery of them from such
Uapaid sellers ghteflienwilletendtotheshole ofthegoodsin i s possession. He may refuze to deliverapeanierar baile. Folowing are the cases where transit is presumed to be at an end and theselleranight f stopping the
of the goods on payment of a proportionate part of the price by the buyer.
transit terminates
goodsin
Unpaid seiler's right of lien extends only to the price, and not for any other type of maintenance or custody chae 1.When the buyer or his agent obtains delivery of the goods before their arrival at the fixed destination. Such an
etc. Wharehousing charges for keeping the goods in a godown in exercise of lien for the price will not be unauthorised deivery by the carrier to the buyer may make him liable to the seller for damages but so far as seller's right
allowed.
Unpaid seller is entitled to exercise his right of lien on the remainder of the goods if part of them have already hea of stoppage in transit is concerned, it will terminate.
delivered to the buyer, except when such part delivery has been made under such circumstances as to show an agreenet the carrier or
2. When after the arrival of the goods at the appointed destination, other bailee acknowledges to the
to waive the lien (Sec 48).
buyer or his agent that he holds the goods on his behalf.
When can lien be exercised? Following are the cases where an may exercise his of lien on te
unpaid seller right 3. When goods are delivered to the carrier hired
by the buyer and who acts as an agent of the buyer.
goods sold until price is paid or tendered for them :
4. Where the carrier or other bailee
1. Where on
wrongfully refuses to deliver the goods to the buyer or his agent.
out payment of price.
goods have been sold credit, but the period of credit has expired

within the
4 Wnere thne ofbuyer becomes insolvent. It may be noted that an unpaid seller can
S. Where part delivery of the goods has been made to the buyer or his agent under such circumstances as to show
exercise his right of lien evean agreement to give up possession of the whole of the goods, the transit will be at an end tor the remainder or the gooas
period credit if the buyer becomes insolvent within
which are course
that period (Sec. 47). yet in the of transit.
When lien is lost? Unpaid seller will lose
his right of lien on the
goods in the following three cases not come to an end where the goods have been rejected by the buyer and the carrier the bailee or
out resenvingthe ndtofdi d sto a carier or other bailee for the purpose
ransit
of transmission to theboentnues in does
their possession. The fact that the seler rehuses to take them back wnill be immaterial for ascertaining the
without reserving the nght of disposal of the goods. duration of the transit.
2. When the or
buyer his agent
lawhully
seller for some
obtains possession of the ered to the
specific purpose e.g., goods. In case the goods are reaeu aOw
repair etc. it does not revive the Stoppage in Transit can be Effected? (Sec. 52)
3. When the seller unpaid sellers ien.
expressly or implied vaives his are two to the buyer which are in the course of
negotiable instrument from the buyer for the right of lien, e.g., grants fresh term of crealt or accep transmission:
nere modes of effecting stoppages of the delivery of the goods
Seller is entitled to exercise payment of price of the goods (Sec.
right of lien until the 49).
by the court alone will not seller taking actual possession
an end to the
lien
destroy lien until it is satisfiedpayment or tender of price. A decree for
by payment ofof the amount due. A tender
ythe of the goods, or
t
revive
hif theebuyer even though the seller
eventhough seller may
may hahave ypayment neof thenice
price will
will nby
g0ods.
the seller giving notice of his claim to the carrier or other bailee who has the actual possession over the
lien, 1r ost, will
redelivers the goods to him for declined to receive the money. Right oftenaer
any particular
purpose. o Where notice
(i) Right of stopping the (servant or agent) other than the prrncipal camer,
Goods in Transit goods are in the actual possession of a personcircumstances
o be effective that the pnncipal or the employer, by the
(Sec. 50 to must be at such time and under such
50 ACTCise of Teac De given or agent in time to prevent
the delivery of the goods
communicate it to his servant
Pight of stupping the goods in transit
the buver dle diligence may
3. v.
is just an extension of the
unpaid seller's right of uen. anses when i
buyer.
Eduljec Ju Bros. (1944), I.L.R.
Nag. 37.
 e a s u r e s

Remedial
Meas,
2.46 The Sale of Goods
Act, 19
Distinction Between Right of Lien and Right of Stoppage in Transit 1930 shall
t h eu n p a i ds e l l e r pntitled to recover such
Tesale.
2.47
damages and the buyer
the shall be
can
(o) Though both
be exercised the rights arise only when to the huver has been made entitled to the
are while of
property in the goods has passed to the buyer yet the iaht.of ien he notice
only when the goods in the actual possession of seller, nght stoppage in transit obligatory on profit, if any. on
buyer gels one
ane more oPportunity of fulfit
more
so e of two reasons
entorced long as the goods have not reached the possession of the buyer though the seller has partedwis (i)The a if he
opportunity of fulhtlung theaccount
contract
possession. Both of these nghts will terminate if the buyer obtains possession of the goods. their may, if he is
is enable to
enable by paying the
i)The buyer pay the price, see price at the last
that the moment, and
() Right of stopping the goods in transit anises only when the buyer has become insolvent, while a s be
hat default in
ted that default giving
notice to the goods are sold at a
seller t is to no of
proper price.
exercise lien so long as the price of the goods has not been paid or tendered to him. Buyers solvency or other second the same oniginal buyer by the
nerwise is nd title
of the purchaser goods which have been unpaid seller will not
immaternal in this respect. affect the rights
when he expressly reserves a right of resale: Where the resold to him.
of the or of
(0) seller
() The right of lien is exercised to retain possession goods while ngnt stoppage goods in transit the seller may resell the
chould mak default, goods in the expressly reserves right of resale in
event of such a
exercised to retain possession of
goods from the carrner of the goods. such as. Thea case.
original
original contra
sary in contract of sale shall default. No notice to the case the
c from the buyer for the loss suffered by him. thereby be rescinded, but the seller buyer will
will be entitled to
Effect of Sub-sale or get
Pledge by Buyer (Sec. 53) (u) wWhen the property in goods has not been transferred.
The unpaid
seller's night of lien or stoppage of goods in transit is not at all affected even if the buyer has sold a
made any other disposition of the goods unless the seller has given his assent thereto. withholding Deliver
Right of
Example: X sold 80quintals of barley out of a granary to Y, who sold 60 quintals to K betore the goods had been in the g0ods
ods has not passed to the
X. K paid and obtained a
ascertained b If the property buyer, the unpaid seller cannot exercise
Y' delvery order and presented it to X who consented to forward barley on beng requested to do so. Held ngntaf withholding the deuvery or go0ds, similar to and co-extensive with lien. night of lien, but gets
X the unpaid seller had recognised the title of K, the sub-buyer, and therefore, was estopped from exercising the lien which
had waived. he
2, Rights against the Buyer personally
But, where a document of title to goods has been issued or lawfully transterred to
any person as buyer or owner
of the goods, and that person transfers the document to a The following rights are available to the unpaid seller against the
person who takes the document in good faith and for consideration, buyer personally
then, if such last mentioned transfer was by way of sale, the unpaid seller's night of ien or
stoppage in transit is defeated, (Right to sue for price (Sec. 55).
and, if such last mentioned transfer was by way of pledge other than disposition for value, the
unpaid sellers right of (i) Right to sue for damages (Sec. 56).
lien or stoppage in transit can only be exercised subject to the
right of the transferee. (i) Right to sue for interest (Sec. 61).
Examples: () A sends and consigns certain goods to B and sends him the bill of
lading. A is still an unpaid seller. While the
goods are
in transit, B becomes insolvent, B assigns the bill of These rights have been discussed below under the heading 'Suits for Breach of Contract.
lading for cash to Cwho is not aware of his insolverncy. A cannot stop
the goods in transit.
i) If in the above example, the goods are worth Rs. 10,000 and B pledges them with C for a sum of Rs. 6,000. A can exerCise
Suits for the Breach of Contract
his nght of stoppage of goods in transit provided he pays C Rs. 6,000 with interest thereon. to an
Where the transfer is by way of pledge, the
olowing rights have been given to the aggieved party by the Sale of Goods Act, in addition to the ights
unpaidseller as discussed above:
unpaid seller may require the pledgee to have the amount secured by
the pledge satisfied in the first instance, as far as
possible, out of any other goods or securities of the buyer in the hands 1. Suit for price (Sec. 55) : (1) Where under a contract of sale, the property in the goods has passed to the buyer
of the pledgee and available against the buyer.
ne buyer Wrongful neglects or refuses to pay for the goods according to the terms of the contract, the seller may
e him for the
Example: A sells some goods to B and sends him the bill of lading. B pledges the bill of together with some
lading government price of the goods.
secunties with C for a loan of Rs. 5,000. As a matter of fact B has become insolvent
faith. A can
by that time. Caccepts the documents in absoue 2)Where under a contract of sale, the price is payable on a certain day inespective of àeivery ard the buyer
good exercise his right of stoppage of goods in transit
only when he pays the loan of Cto B. However, he may
satisfy his claim first out of government secunties and make him iable only for the balance. ask ly
TOongful*iects or refuses to
pay such price, the seller may sue him
for the price although the property in the goods
and to the contract.
assed the goods have not been appropriated to and pay tor
(iii) Right of Resale (Sec. 54) wrongfully neglects or refuses accept
ads Or non-acceptance (Sec. 56) : Where the buyer
n e seller may sue him for damages for non-acceptance
An unpaid of events from
arise in the ordinary course
seller who has the possession of goods can resell them under the The
following circumstances for
damages will be such as directly and naturally is
(a) When the goods are of a perishable nature : The term perishable has not been defined in the AC but it On-acceptance non-a damage ajair price to
R breach amd in question. Ihe measure of
tice * 1S an available market for the goods at the time when the goods
means perishable not only physically buy also commercially, e.g., deterioration in the market value by delay. NO e the market curent price or
certained by r the
yerence between
berwe the contract price and
or resale to the buyer is necessary in case of these goods. gnt to have difference
goods to
or to deliver the
3
been accepted.
(b) When he gives notice of his intention to resell : An unpaid seller after neglects refuses
having exercised
his ight of ue the seller wrongfully
:
E amages for 1On-delivery (Sec. 57) Where
stoppage in transit may give notice to the buyer asking him to pay the price within a reasonable time failing which e Duyer, the non-delivery (Sec. for non-deuvery court
ascertained goods, the
sue the seller for damages or
will be reselling the goods. In case the buyer fais so to pay price after such notice the enpaid sellr should sell aN 4. deiver specihic
Sno buyer may of contract to specifically.
y i performance (Jec. 58):: In
(Sec. S8) any for
In any I breach be performed
the goods within a reasonable time. He will be to recover from the original ce direct that the contract be unconditional,
shall
entitled buyer any loss occasioned by l tiinks on fit its decree, The decree may
ppucation of the plaintiff, by of damages.
breach of contract, but the buyer shall not be entitled to any profit which may occur on resale. If such notice is not on payment
give 9Ving the da the goods
ddntthe
retaining option of
 e d i a l M e a s u r e s
The Sale of Goods Act
2.48
otlherwise, as
urt the cor
the price or
as to damages
payment of s m just, y TEST QUESTIONS
and conditions to De usea suo0Ject to nules contai 2.49
0r upon such terms is contained deCm
in such a case in the
order specific perfornaance Test Your Knowledge
power ot the court to contract. pe :
Relief Act regarding specifie
perfomance of the objective of the
Where there is a
breach of warranty by the sellor or
seller, each followina.statements
is True or False
(Sec. 59): of the seller as a breach ofwar
where the State whether
5. Remedy for breach oI warranty on the part who
who after having
after having pai
breach of a condition anty, the buerbuy A buyer,
paid the pñce, rejects the
an goods is also
elects or is compelled to treat any the goods; but may: unpaid seller.
entitled to reject ctoDDing the
(i) Rig
breach of warranty
goods in transit is just an extension of the
not reason only of such extinction of price:
the unpaid
(i The unpaid seller lost his right of lien in the event of the buyer making asellers
sub-sale.
by in diminution or or right of lien.
set the breach of warranty, deemed
(a) up against the seller transit 1s
**is deemed to be at an end when the or his
The buyer agent obtains
for breach of warranty. (iv) fixed destination. delvery of goods befcre ther arnval
() sue the seller for damages good new growng seeds. Soon after at the
with a warranty that they were and out th tne
Example:A sold cingfoin seeds to B seeds and sold the remain ho ridht of stopping
gooas n transit anses only when
sowed a part of the tainder. I buyer has become insolvent.
He afterwards A seller may deliver goods to a carrier with right of disposal
the seeds did not correspond with the warranty. to SOW the seeas to show that the seeds did dn action
was competent
was held that B CO
A to recover the price of the seeds, it it. He had not precluded himselffrom aht of an unpaid seller for stoppage in transit can be (ICWA Foundation, June 1998)
the seeds without using 1espot exercised along with the
not bound to return ng an at right of lien.
in order to show that the seed wae
with the wamanty. B was alsoor from breach in an action by A
tor breach of the warranty, insisting on such lvi) An unpai seller can also stop in transit even in those cases where the buyer is solvent.
TCWA Foundation, June 2001)
the seller represented it to be. (CS
to a contract of sale
6. Repudiation of contract before due
date (Sec. 60): Where either party [Ans. (i) False; (i) True; (i) False: (iv) True: (v) True: (r) True: Foundation, Dec 2004)
(vi) False: (nii) False.]
either treat the contract as subsisting and wait till the daland most appropnate answer
contract before the date of the other
delivery, may t deliven, 2. Select the
the breach. seller of goods has no
Or he may treat the contract as rescinded and sue for damages (a Unpaid night of len where
The seller or (a) the goods have been sold without any stipulation as to credit
7. Interest
by way of damages and special damages (Sec. 61): the buyer is entitled t
with the possession of the
interest or special damages may be recoverable. te or he has parted goods,
nterest or special damages in any case, where under the law, (b)
it has failed.
Tecove become insolvent,
the consideration for the payment of (c) buyer
money paid where the
In the absence of a contract to the contrary, the court may award interest at such rate as it thinks fit on the a (d) the goods have been sold on credit but the term of credit has expired.
amount (The unpaid seller can exercise the right ofresale ofthe goods when:
of the price-
are of a perishable nature
(a) to the seller in a suit by him for the amount of the price--from the date of the tender of the goods 0r te (a) goods
(b) property in goods has not been transterred to the buyer
the date on which the prce was payable;
(6) to the buyer in a suit by him for the refund or the price in a case of a breach of the contract on the partd (c)the buyer has become insolvent.
(i) The
right of lien is exercised
the seller--from the date on which the payment was made.
(a) to retain possession of goods
Effect of increase or decrease in taxes appcars from the tems
[Sec. 64(a)]: Uness a different intention oft (6) to regain possession of goods
contract in the event of any taxes of the nature of customs or excise duty on goods or taxes on sale or purchaseofgond
(c) to resell the goods. Ans. () (b). (7) (a). () (a)]
being imposedis increased or decreased in respect of any goods after the making of any contract for the saleofpurche
of stipulation as to the payment of tax where tax was not chargeable at the time of making Esay Type : For Review, Discussion and Practice
or
such goodsforwithout
contract, the sale or of such
ofte the nght of ben over the
purchase goods tax-paid where tax was chargeable at that time,- 1. When can
seller of goods be deemed to be an unpaid seller? What conditions must be satisãed before
(a) If such imposition or increase so takes effect that the tax or goods sold may be exercised by the seller?
Sale of Goods Act.
increased tax, as the case may be, of p any
of such tax is paid or is Explain the rights of a buyer against the seller for breach of contract under the
Act? When can an unpaid seller re-sell goods?
payable, the seller may add so much to the contract price as will be equivalent wu
amount paid or payable in seller of goods deemed to be an Unpaid Seller under the Sale of Goods
respect of such taxes or increase of tax, and he shall be entitled to be paid anu u| Wnen 1s a
sue for and recover such addition and Explain. (B.Com. (Hons), Delhi 2012)
in transit an unpaid seller.
6) if such decrease or remission so taken
effect nguish between right of lien and nght of stoppage case ofofbreach of contract (CA. Foundanon, May 1998)
or
that the decreased tax only or no tax, as the case
may De, remedies available to seller against the buyer in of sales.
is payable, the buyer deduct so
may much from the contract price as will be to tne
LSSthe
6. Who is an (CWA Foundation, Dec. 2000;
tax or remitted tax, and he shall not be liable to equivalent ue unpaid seller? State his nghts. SFoundation, June 2007; Dec. 2007)
pay, or be sued or in for, of, suchrespect deuu (CS Foundation, Dec 2000)
in transit.
note on Unpaid Seller's right for stoppage of goods (S Foundation, June 1998;
KEY TERMS eshort
d n unpaid seller? Can unpaid seller resell the goods? If so when B.Com. (Hons), Delhi 2011)
Lien: A exercise his
nght to retain goods belonging to another Act? Can he
the under the Sale or Goods
person till satisfaction of certain outstanding ta of lien over goods
terminated? Can he exercise his right
the a
OSub-sale: A subsequent sale nght is
made by original buyer of the goods to a third party. e n can an unpaid seller of goods exercise his rightto the buyer? When such
goods r the property in has passed (ICAL, PE II, May 2005)
court?
O Unpaid Seller: A seller who has not been
paid the whole en rom
price of the sold. he 1930? When can an unpaid seller exercise
goods has obtained a decree for the price of goods uie of Goods Act,
10 dter seller" under the Sale (ICA, PEE IL May 2004)
at do you understand by the term "unpaid
the
u
e nght of stoppage of goods in transit Act?
(GGSIPU. BBA (H), June 2001)
4. Poulton 9 B & C. 259.
Sale of Goods
v. Lattimole (1829), bnefly discuss the rights of an unpaid seller under the (GGSIPU, BBA (4), May 2002)
12, Explaint and (6) The buyei pei50 -
The goods,
4gnts (a)
of unpaid seller against