Act was originally a part of Indian Contract

Act,1872.Subsequently it was separated

and became a separate law in 1930

Act covers all commercial transactions

relating to sale of goods
Contract of sale of goods are subject to the general principles of
contract such as

• offer
• acceptance
• free consent
• competent to contract
• lawful consideration and
• lawful object.

Therefore the provisions of Indian Contract Act continue to

apply to the contracts for sale of goods so far they are not
inconsistent with the express provisions of the Sale of GoodsAct
1930.
Formation of the contract of sale

Conditions and warrantees

Transfer of ownership and delivery of goods

Unpaid seller
 Contract of sale:Contract
whereby seller, transfers or
agrees to transfer the
property in goods to the
buyer for a price.
Section 4(1)
Contract of sale is a generic term which includes both sale
as well as agreement to sell.

Sale: a contract whereby the seller transfers the property

in goods to the buyer for a price. This is a concluded
transaction i.e. executed contract.

Agreement to sell: a contract whereby the seller agrees to

transfer the property in goods to the buyer for a price. This
is a transaction to be concluded i.e. executory contract.
 Where under a contract of sale the
property in goods is transferred from the
seller to the buyer,the contract is called
SECTION
sale.
4(3)

Where under a contract of sale the

transfer of property in goods is to take
place at a future time or subject to some
condition thereafter to be fulfilled ,the
contract is called an agreement to sell.
There may be a contract of sale between one part
owner and another.

Contract of sale may be absolute or conditional.

Contract of sale may be express (oral) or in writing.

It may be implied from the conduct of the parties or
from the course of dealing between the parties.
Two parties: presence of two distinct
parties is essential for a germination of
a contractual alliance. There must be a
Buyer and a seller to make a sales
contract.
• Buyer: A person who buys or agreesto buy
goods.
• Seller: A person who sells or agrees to sell
goods.
 • The subject matter must
Goods: necessarily be goods.

• every kind of movable

property other than
Goods: actionable claims and money
and includes stocks.
Goods includes:
Stocks and shares

Growing crops

Grass

Things attached and forming part of the

land, which are agreed to be severed before
sale or under the contract of sale.
 • A Disputed claim(like debt)
Actionable which can be enforced through
claim: court of law and is excluded
from the definition of good.

• though it is movable is not a

good as per the Act since value
Money: of goods is always expressed in
terms of money as price.
 Goods

Existing Future Contingent

Goods Goods Goods
Goods which are in existence at the time of
contract of sale.

These goods are owned and possessed by the

seller.
 Existing goods

Ascertained Unascertained
Specific goods
goods goods
 Specific • Those which are identified and
agreed upon at the time of
goods: contract of sale.

• Though similar to specific goods

Ascertained are those goods which become
goods: ascertained subsequent to the
formation of a contract of sale.
 • Goods which are not identified and
agreed upon at the time of contract
Unascertained of sale. These goods also called
goods: generic goods are defined by
description only and may form part
of big lot of goods.
Goods not in existence at the time of contract of
sale.

Goods are to be manufactured or produced or

acquired by the seller after making the contract of
sale.

Contract to sell future goods is not sale but an

agreement to sell.
 Goods whose availability depends upon a contingency which may or
may not happen.

Contract to sell contingent goods is an agreement to sell similar to that

of future goods.
Example:

A contracts to sell laptop to B when the ship carrying electronic goods

arrives shore. This contract can be performed only when the ship arrives
shore.
Goods perishing before making of contract:
(Section 7) A contract for sale of
specific goods is void, if at the time the
contract was made the goods have without
the knowledge of the seller either perished
or became so damaged as no longer to
answer to the description in the contract.
• This is similar to the effect of mutual or bilateral
mistake.
(B) Goods perishing after agreement to sell but
before sale:
An agreement to sell specific goods becomes
void if subsequently the goods, without any fault
on the part of the seller or buyer perish or
become so damaged as no longer to answer to
the description in the agreement before the risk
passes to the buyer.
This rule is based on impossibility of
performance.
Value of goods expressed in terms of money is
called price.
Consideration for a sales contract shall be money
only.
Price in the contract of sale may be
-fixed in the contract itself (or)
-left to be fixed in an agreed manner (or)
-determined in the course of dealing between the
parties
In the absence of the above the buyer may pay a
reasonable price.
Sometimes the parties may agree that the price is to be
fixed by the valuation of a third party.

If such third party cannot or does not make such

valuation the agreement becomes void.

However if the goods have been delivered to and

appropriated by the buyer, he shall pay a reasonable price
to the seller.
There must be transfer of property in goods from the seller to the
buyer.

A distinction may be made between general property and special

property. If the seller owns certain goods, he has general ownership in
goods. If he pledges the goods then he has special property in goods.

The transfer of property under the contract of sale means transfer of

general property (ownership) in goods.

Ownership = Title + Possession

 DOCUMENT OF TITLE

It authorizes the possessor of document to receive or transfer

goods mentioned therein.

Eg: bill of lading, dock warrant, railway receipt,wharfinger’s

certificate and any other document used in the ordinary
course of business as proof of possession of goods.
DOCUMENT SHOWING
TITLE
It merely indicates the
entitlement in favor of a
person but doesn't allow
him transfer the goods
mentioned therein by mere
endorsement and delivery.

Eg:share certificate
Since contract of sale is a special type of contract all essential elements of contract
shall be fulfilled.

There is no prescribed form for making a contract of sale.

Contract of sale may be absoluteor conditional.

There may be immediate delivery of goods or there may be an immediate payment

of price but, delivery of goods may be agreed to be made at a future date.
There may be immediate delivery of goods
as well as immediate payment of price.

Delivery of goods or payment of price

may be postponed to a future date.

Delivery of goods or payment of price or

both may be made in installments.
 SALE AGREEMENT TO SELL

Transfer of Immediate transferof Property transfer at a future date

property to propertyat the time of subject to fulfillment of certain
buyer contract of sale conditions
Nature of Executed executory
contract
Nature of Existing and specific Existing goods,specific goods and
goods goods also future and contingent goods
involved
 Sale Agreement to sell
Loss or damage Risk falls on buyer since If the goods are destroyed loss
to goods he is the owner falls on seller

Breach of Seller can sue the buyer Seller can sue the buyer for
contract by buyer for price damages only and not for price.

Breach of Buyer can sue the seller Buyer can sue for damages.
contract by seller for damages and can
recover the goods
 Sale
right Sale creates right to the
buyer to enjoy the goods
against the whole world
including the seller
Insolvency of Seller has to deliver the
buyer before goods to the official receiver
payment of or assignee and claim rate
price able dividend for the price.
Agreement to sell
Creates only a right in person
am i.e. right to the buyer
against seller only, to claim
damages.
Seller is not bound to deliver
the goods to the official
receiver or assignee.
Insolvency of Buyer is entitled to recover the If the buyer has paid
seller goods from official receiver or the price, buyer can
assignee since he is the owner. claim only a rate able
dividend because the
ownership has not
passed on to him.
Transfer of Immediate transfer Transfer only when certain
ownership to agreed installments including the
buyer last installment are paid.

Title to goods Buyer becomes Buyer becomes an hirer and not

the owner of goods the owner of goods.

Termination of Buyer shall pay the Hire purchaser has the option to
contract agreed price and unilaterally terminate the
he cannot contract and return the goods.
terminate the He cannot be compelled to pay
contract the further installments of price.
Adjustment of In case of payment of The installments paid is
installments price in installments, treated as hire charges till
each installment is the option to purchase the
adjusted towards price. goods is executed by the
buyer.
Insolvency of The seller takes the risk Seller has no risk of loss
buyer/hirer of loss since he will get since he can take back the
only prorata dividend. goods.
Transfer of title Buyer being the owner Since hirer is not the owner
on subsequent can pass on a good title he cannot pass on good
sale by buyer to a bona fide title even to a bona fide
purchaser of goods purchaser of goods from
from him. him.
Point of taxation Levy of tax at the Tax not levied till
time of contract hire purchase
of sale becomes the
sale.
Governing laws Governed by Governed by
and regulation Sale of Goods Hire Purchase
Act 1930 Act 1972.
Transfer of Immediate There is only transfer of
ownership to
buyer
transfer possession of goods and
not ownership from bailor
to the bailee
Purpose Buyer can use Bailee can use the goods
of use of the goods for only for the purpose as
goods any lawful per the directions of the
purpose. bailor.
Consideration Sale is always for money
consideration
Return of goods Since the buyer is the
back owner of goods there is no
question of return of goods
back to the seller.
Bailment may or may
not be gratuitous.
Bailee must return the
goods back to the
bailor as soon as the
purpose is
accomplished.
To Sum up
Sale is an executed contract whereby property
in goods is immediately transferred to the buyer.
Agreement to sell is the executor contract where
in the property in goods will be transferred to the
buyer at a future date.
The price in the contract of sale may be fixed by
the seller or by the seller and buyer or allowed to
be fixed in the course of dealings by the parties or
on the valuation of third party.
Since contract of sale is a special type of contract
all the essential elements of valid contract of sale
has laid down in the contract act shall be full filled.
MCQ’s
1 A contract of sale is a contract where bythe
seller
a)Transfers the property in goods to the buyer
as a gift
b)Agrees to transfer the property in goods to
the buyer in exchange for Buyer’s goods.
c)Transfers the property in goods to the buyer for a
price
d)Agrees to transfer the property in goods to
the buyer without any consideration.
2 The term ‘goods’ under Sale of Goods Act, means
a)Any movable property
b) Any movable property or immovable property
c) Any property
d) Any movable property other than actionable claim
or money
3 The term ‘property in goods’ refers to
a)Possession
b) only title
c)Possession and Ownership
d)Goods
4 Contract of sale includes
a)Sale
b)Agreement to sell
c)Exchange
d)(a) and (b)
5 In the case of agreement to sell the ownership in
goods is transferred to the buyer
a) Immediately
b)At some future date
c)When the delivery of good is made
d)When the price in paid
6 Ascertained goods means
A) Goods specially identified at the time of contract
B) Goods which are in existence and apportioned
C)Goods not specially identified at the time of contract
of sale
D) None of these.
7 Contingent goods means
a)Goods which are not in existence
b) Goods which are yet to be manufactured
c)Existing or future goods the availability of which
depends upon happing of an event
d)Specific goods identified and agreed upon at the
time of contract of sale
8 The term
‘sale’ indicates a)Executed
contract b)Executory
contract c)Contingent
contract d)None of these
9 In the case of sale the responsibility for loss of
goods
a) Lies on the buyer
b) Lies on the seller
c) Needs to be shared by buyer and seller
d) None of these
10 A contract of sale without consideration is
a)Void
b)Voidable
c)Valid
d)Illegal
11 In a contract of sale consideration Shall
be a)money only
b)Goods
c)Anything positive
d)Any abstinence
12 A by a contract agrees to sell a TV to B in
consideration of B’s watch plus Rs. 1000/-.The contract is
a)Sale
b)Exchange
c)Transfer
d)None of these
13. Which of the following is not an essential element of a contract
of sale?
a)Transfer of title in goods
b)Consideration in the form of price
c) Three parties viz seller, buyer and guarantor
d) Transfer of possession goods
14. A contract of sale many provide for
a)Immediate payment of price
b)Immediate delivery of goods
c)Postponement of either delivery of goods or payment of price
or both to a future date
d) All of these
15 Which of the following is not a ‘good’?
a)Money
b)Stock in trade
c)Actionable claim
d)Both (a) and (c).
16 Which of the type of goods can form the subject
matter of contract?
a)Existing goods
b)Contingent goods
c)Future goods
d)All of these
17. A contract of sale of future good is
a) Sale
b)Voidable
c)Void
d)Agreement to sell
18 A agreed to sell a LCD TV to B on Arrival of A’s ship.It
is a contract of sale of
a)Future good
b)Contingent good
c)Unascertained good
d)None of these
19. A agreed to sell 10 bags of cement to B at certain price. Butunknown
to A the cement bags were already damaged due to rain water before
making the contract of sale. The agreement is
a)Valid
b)Void
c)Voidable
d)Contingent
20 In the case of contract of sale of specific goods, the goods perished
without the fault of the buyer before the agreement to sell becomes sale,
the contract of sale is
a)Valid
b)Voidable
c)Void
d)Illegal
21 A delivered a horse to B for trial for 8 days on an agreement that B
shall buy the horse if found suitable. The house died on the third day
without any fault on the part of B. The agreement became
a) Void and A cannot recover price fromB
b) Valid and enforceable and A can recoverprice
c) A quasi contract
d) None of these
22 Price in a contract of sale can be fixed
a)Entirely by parties themselves by mutual consent
b) In a manner provided in the contract of sale
c) By a course of dealings based an custom or trade practice
d) By any of these methods
23 In a contract of sale price may be allowed to be fixed
a)By the third party
b) By the valuation of a third party
c) Both (a) and (b)
d) None of these
24 In a contract of sale if the price is to be fixed by the valuation of
a third party and the third party fails to make valuation
a) The contract becomes void
b) The contract is voidable
c) The contract is valid and enforceable
d) None of them
25 . A agreed to sell certain furniture to B at a price to be fixed by
the valuation of C. But C failed to fix the price. The contract is
a)Valid
b)Void
c)Void able
d)None of these
26 When the price is to be fixed by the valuation of the third party
who has failed to do so, but the buyer has received and
appropriated the goods, the buyer is liable
a)To pay penalty
b)Damages
c) A reasonable price
d) Special damages and interest
27 In the installment purchase the buyer becomes the owner
a)When the goods are delivered to him
b) When the last installment is paid
c) Both (a) and (b)
d) None of these
28 In the hire purchase agreement the buyer
a)Must buy the good
b) has an option to buy the goods
c) Is not given the possession of goods
d) Is the owner of goods
29 Hire Purchase includes
a)sale
b)agreement to sell
c)agreement to sell and bailment
d) none of these
30 The main object of contract of sale is
a) Transfer of possession
b) Payment of price
c) Passing of property in goods
d) Both a) & b)
 PERFORMANCE
OF
CONTRACT OF SALE OF GOODS
MEANING
The performance of a contract of sale implies
delivery of goods by the seller and
acceptance of delivery of goods and
payment for them by the buyer, in
accordance with the contract.
1. Delivery of goods by the seller
2. Acceptance of delivery of goods and
payment of price by buyer
Delivery
Delivery of goods means voluntary transfer of
possession of goods from one person to another [Sec
2(2)]
MODES OF DELIVERY
1. Actual delivery
2. Symbolic delivery (When the good is bulky)
e.g. keys of the car or contents of godown.
3. Constructive delivery
Where a third person has the possession of goods on behalf of buyer.
e.g. A warehouse keeper, a carrier
RULES AS TO DELIVERY OF GOODS

1. Delivery may be Actual, Symbolic or

Constructive (Sec. 33)
2. Delivery and payment are concurrent
conditions (Sec. 32)
Unless otherwise agreed, delivery and payment must be made simultaneously.
3. Effect of part delivery (Sec. 34)
When a delivery of part of goods has been made with an intention to deliver the
whole goods, the property in the whole goods is deemed to pass to the buyer as
soon as a portion is delivered.(Dixon vs Yates)
When delivery of part of goods has been done without intention of delivering
the whole goods then property do not pass.
4. Buyer to apply for delivery (Sec. 35)
A seller is not bound to deliver the goods until the buyer ask for it.
5. Time of delivery [Sec. 36(2) & 4]
If the time of delivery is not mentioned then it should be delivered within reasonable time.
6. Place of delivery [Sec. 36(1)
In case of ‘Sale’ the goods must be delivered at the place where they are at the time of sale.
In case of Agreement to sale the goods must be delivered at a place where they are the time of
making the agreement.
In case of future goods, the goods are to be delivered at the place where they are manufactured
or produced.
7. Delivery of goods where they are in possession
of a third party
[Sec.36(3)]
The delivery is deemed when the third person acquires that he holds the goods on behalf of
buyer.
8. Expenses of delivery [Sec.36(5)]
Unless otherwise agreed, Expenses of putting the goods into deliverable state is
borne by the seller and expenses of delivery is borne by the buyer.
9. Delivery of wrong quantity (Sec. 37)
Shortage, Excess delivery Mix delivery
To reject the whole goods
To accept the whole goods
To accept the quantity or quality he ordered and reject the remaining.
10. Installment Deliveries [Sec 38]
Unless otherwise agreed, the seller is not entitled to deliver the goods in installment.
11. Delivery of goods to carrier or wharfinger
[Sec 39]
When goods are delivered to carrier for transmission, it is treated as delivery of goods
to the buyer.
ACCEPTANCE OF DELIVERY BY THE BUYER

According to sec. 42 a buyer is deemed to

have taken the delivery of goods in the
following circumstances:
1. When he intimates the seller that he has
accepted the goods.
2. When he does any act in relation to the
goods which amounts to acceptance of
goods, e.g. consumes, uses, pledges or
resells goods.
UNPAID SELLER
UNPAID SELLER

The definition of ‘unpaid seller’ is provided in

section 45 of the Sale of Goods Act.
“the seller of the goods deemed to be an
unpaid seller :
1. when the whole of the price has not been
paid
2. when a bill of exchange or other
negotiable instrument has been received
as conditional payment and the condition
on which it was received has not been
 RIGHT OF LIEN
Right to retain goods by unpaid seller till amount
is recovered from the buyer is called right of
lien. If unpaid seller wants to exercise right of
lien, he has to fulfill the following conditions.
▪There should be no credit terms in the Contract of Sale.
▪If there is a credit term, right of lien can be exercised after completion of
credit period.
▪Where the buyer becomes insolvent.

When Lien is lost

The unpaid seller loses his right of lien in the following cases
▪When goods are delivered to the carrier and seller does not retain the right of
disposal.
▪When agent of the buyer has obtained possession of the goods.
▪When unpaid seller waives his right of lien.
RIGHT OF STOPPAGE IN TRANSIT
Unpaid Seller has right to stop the goods in the transit itself. To exercise this
right the following conditions are to be fulfilled.
▪Buyer must be insolvent.
▪The property has passed to the buyer.
▪The goods are in the course of transit.

The transit comes to an end in the following cases:

▪When the buyer or his agent takes delivery of the goods after the goods have
reached the destination.
▪When the buyer or his agent obtains delivery of the goods before the arrival
of the goods to the destination.
▪When the goods have arrived at the destination and carrier acknowledges that
he holds goods on behalf of the buyer.
▪When the carrier wrongfully refuses to deliver the goods.
▪When part delivery has been made to the buyer, with an intention to deliver
the whole goods.
 RIGHT TO RE-SALE
The unpaid seller can re-sell the goods for non-payment of
price by buyer.
when the goods are of perishable nature the seller may sell the
goods without any notice to the buyer.
When the unpaid seller has exercised his right of lien or
stoppage in transit, he has to give a notice to the buyer about
his intention to sale the goods. There upon the buyer may pay
the price.
If the buyer does not pay seller can resell the goods and can
recover the damages from original buyer.
However, when the seller sells the goods without any notice to
the original buyer. He cannot claim damages.
The new buyer acquires a better title.
RIGHT OF UNPAID SELLER AGAINST BUYER
1. Suit for price (Sec. 55). When property in goods have been passed
to the buyer and the buyer refuses to pay the price according to terms
of contract, the seller is entitled to sue him for price.
2. Suit for damages for non-acceptance (Sec. 56). Where the buyer
wrongfully neglects or refuses to accept the goods, the seller can sue
him for damages. The seller can claim (a) any loss due to non-
acceptance (b) any reasonable charge for care and custody of goods.
3. Suit for interest (Sec. 61). When there is an agreement between
seller and buyer about payment of interest of the price of goods from
the date on which the payment becomes due, the seller may charge
interest from the buyer.
CONSEQUENCES OF BREACH OF THE CONTRACT

SELLER’S REMEDIES

➢Suit for price.

➢Suit for damages for non acceptance of the goods.
➢Suit for interest.
➢Suit for damages for repudiation of contract by the buyer before the due date.

•BUYER’S REMEDIES

➢Suit for damages for non delivery of the goods.

➢Suit for specific performance.
➢Suit for breach of warranty.
➢Suit for interest.
➢Suit for damages for repudiation of contract by the seller before the due date.
RULES OF AUCTION SALE
Completion of sale:-

The sale is complete when the

auctioneer announces its completion
by the fall of the hammer or in some
other customary manner like “one
two three” or “going going, gone”
RIGHT OF SELLER TO BID
A right to bid may be reserved
expressly by or on behalf of the
seller. Where such right is
expressly reserved, the seller or
any one person on his behalf
may bid at the auction.
SALE NOT NOTIFIED SUBJECT TO
A It
RIGHT
is not TO BID
lawful
1. For the seller to bid himself
or to employ any person to
bid at such sale.
2. For the auctioneer knowingly
to take any bid from the seller
or any such person.
3. Any sale against this rule
may be treated as fraudulent.
RESERVE
It is the pricePRICE
below which the auctioneer
will not sell.
Where the sale is subject to a reserve
price, every bid is accepted conditionally
on the reserve price being reached.
But where the sale is without reserve, the
goods will be sold to the highest bidder.
USE OF PRETENDED BIDDING

If the seller makes use of

pretended bidding to raise
the price, the sale is void
able at the option of the
buyer.
KNOCK OUT OR AGREEMENT NOT TO BID AGAINST
EACH OTHER
Where a group of persons form
a combination to prevent
competition between
themselves at an auction and
arrange that only one of them
will bid and share anything so
obtained among themselves.
This is called knock out which is
legal.
Damping
An act of dissuading the purchaser from
bidding. Such as
Pointing out defects in the goods
An act wherein the purchaser would not have proper estimate of the good
Scaring the purchaser
THANK YOU
The Sale Of Goods Acts,1930
(Conditions & Warranties)
Learning Objectives

Meaning and types of conditions and

warranties

Doctrine of Caveat Emptor and its

Exception

Distinguish between Conditions and

Warranties

2
Meaning of Stipulation
• A stipulation in a contract of sales of goods may be a
condition or warranty [Section 12(1)]

• (A) Meaning of Condition :-

• A condition is a stipulation –
(a) Which is essential to the main purpose of the contract
(b)The breach of which gives the aggrieved party a right
to terminate the contract. [Sec 12 (2)]
(B) Meaning of Warranty:-
• A warranty is a stipulation –
(a) Which is collateral to the main purpose of the
contract

(b) The breach of which gives the aggrieved party a right

to claim damages but not a right to reject goods and
to terminate the contract [Sec 12(3)]
 Conditions & Warranties

Stipulation

Conditions Warranties

Express Implied Express Implied

Conditions & Warranties Cont…
‘Conditions’ and ‘Warranties’ may be either expressed or implied.
They are “expressed” when the terms of the contract expressly
state them. They are implied when, not being expressly provided
for.

Express Condition Implied Condition

Express Warranties Implied Warranties

Express conditions are those, which are
agreed upon between the parties at the
time of contract and are expressly provided
in the contract.

The implied conditions, on the other hand,

are those, which are presumed by law to
be present in the contact.
 What are The Implied
Condition and Warranties
1. Condition as to title Sec 14 (a)

2. Sale by description Sec 15

3. Sale by sample

4. Sale by sample as well as by description

5. Condition as to merchantable quality

6. Sale as quality and fitness

7. Condition as to wholesomeness
 Sale by
description
Condition as to
Sec 15
title Sec 14 (a)

Sale by
sample as well
as by
description
Sale by
sample

Sale as
quality and
fitness

Condition as to
merchantable
quality Condition as to
wholesomeness
 Condition as to title [Section 14(a)]

(1) Condition as to title [Section 14(a)] implied condition on the

part of the seller is that (a) in case of a sale, he has a right to sell
the goods, and (b) in the case of an agreement to sell, he willhave
right to sell the goods at the time when the property is to pass.
In simple words, the condition impliedis that the seller has the
right to sell the goods at the time when the property is to pass.

Example:- X purchases a car from Y. After 6 months Z ,the true

owner of the car ,demanded it from X. X had to return it to its true
owner. X was entitled to recovery the full price even through
several months had passed
 (2) Condition as to description [Section 15]

(2) Condition as to description [Section 15] This rule is based on

the principle that “if you contract to sell peas, you cannot compel
the buyer to take beans.” The buyer is not bound to accept and
pay for the goods which are not in accordance with the description
of goods.

Example:- A ship was contracted to be sold as “copper-fastened

vessel” but actually it was only partly copper-fastened. Held that
goods did not correspond to description and hence could be
returned or if buyer took the goods, he could claim damages for
breach.
(3) Condition as to Sample [Sec 17]

Condition as to Sample [Sec 17] in a contract of sale by sample, there is a

implied contract:-

a) the bulk shall correspond with the sample in quality;

b) the buyer shall have a reasonable opportunity of comparing the bulk with
the sample, and
(3) Condition as to Sample [Sec 17]
Cont…

c) the goods shall be free from any defect

rendering them un-merchantable, which
would not be apparent on reasonable
examination of the sample. This condition
is applicable only with regard to defects,
which could not be discovered by an
ordinary examination of the goods. But if
the defects are latent, then the buyer can
avoid the contract.
Example:

A company sold certain shoes

made of special sole by sample
for the French Army. The shoes
were found to contain paper not
discoverable by ordinary
inspection. Held, the buyer was
entitled to the refund of the
price plus damages.
(4)(4)Condition as
Condition as to sample to sample
as well as
as by descriptionwell
[Sectionas
Where the goods are sold by sampleas well as by description the
15]

byimplied
description
condition is that [Section 15]
the bulk of the goods supplied must
correspond both with the sample and the description. In case the
goods correspond with the sample but do not tally with description
or vice versa or both, the buyer can repudiate the contract.

Example: A agreed with B to sell certain oil described as refined

sunflower oil, warranted only equal to sample. The goodstendered
were equal to sample, but contained a mixture of hemp oil. B can
reject the goods.
5. Condition as to merchantable
quality

• It is the implied condition that the goods delivered by

seller must satisfy the ordinary purpose of buying and
if not the buyer can repudiate the contract.

• Example: A sold a pencil without led. Thus buyer can

reject the goods as it is not able to satisfy the purpose
of buying.
(6)Condition as to quality or
(6)Condition as to quality or fitness [Section 16] : Ordinarily, there is no implied
condition as to the quality or fitness of the goods sold for any particular purpose.
However, the condition as to the reasonable fitness of goods for a particular

fitness [Section 16]

purpose may be implied if the buyer had made known to the seller the purpose of
his purchase and relied upon the skill and judgment of the seller to select the best
goods and the seller has ordinarily been dealing in those goods. Even this implied
condition will not apply if the goods have been sold under a trademark or a patent
name.

Example: A purchased a hot water bottle from a chemist. The bottle burst and
injured his wife. Held, breach of condition as to fitness was committed and thus
chemist was liable for refund of price and the damages.
As a general rule, it is the duty of the buyer to examine the goods thoroughly
before he buys them in order to satisfy himself that the goods will be suitable for
his purpose for which he is buying them. This is known as rule of caveat emptor
which means “Let the buyer beware”.
7)Condition as to wholesomeness:

(7)Condition as to wholesomeness: In the case of

eatables and provisions, in addition to the implied
condition as to merchantability, there is another
implied condition that the goods shall be
wholesome.

Example: A supplied F with milk. The milk

contained typhoid germs. F’s wife consumed the
milk and was infected and died. Held, there was a
breach of condition as to fitness and A was liable to
pay damages.
Implied Warranties:

(1) Warranty as to undisturbed possession

(2) Warranty as to non-existence of encumbrances

(3) Disclosure of dangerous nature of goods

(4)Warranty as to quality or fitness by usage of trade

[Section 16(4)]
Warranty
(1)Warranty as to undisturbed possession: An implied
warranty that the buyer shall have and enjoy quiet
possession of the goods. That is to say, if the buyer having
got possession of the goods, is later on disturbed in his
possession, he is entitled to sue the seller for the breach of
the warranty.

(2)Warranty as to non-existence of encumbrances: An

implied warranty that the goods shall be free from any
charge or encumbrance in favour of any third party not
declared or known to the buyer before or at the time the
contract is entered into.
Example:
A pledges his car with C for a loan of 15,000 and
promises him to give its possession the next day.
A, then sells the car immediately to B, who
purchased it on good faith, without knowing the
fact. B, may either ask A to clear the loan or
himself may pay the money and then, file a suit
against A for recovery of the money with interest.
(3) Disclosure of dangerous nature of goods:

There is another implied warranty on the

part of the seller that in case the goods
are inherently dangerous or they are likely
to be dangerous to the buyer and the
buyer is ignorant of the danger, the seller
must warn the buyer of the probable
danger. If there is breach of this warranty,
the seller will be liable in damages.
(4) Warranty as to quality or fitness by usage of
trade [Section 16(4)]:
An implied warranty as to
quality or fitness for a particular
purpose may be annexed or
attached by the usage of trade.
Example:

A drugs was sold by an auction and according

to the usage of trade it was to disclose in
advance of any vast damage caused in the
quality of the drugs. This will be taken as a
breach of warranty if no such disclosure has
been made and the goods found to be
defective.
Relationship between conditions and warranties

1. All conditions are warranties, and all

warranties are not conditions
2. All warranties are conditions, and all
conditions are not warranties
3. Both are independent
4. I don’t know
Caveat Emptor

In case of sale of goods, the doctrine

‘Caveat Emptor’ means ‘Let The Buyer
Beware’. When sellers display their goods
in the open market, it is for the buyers to
make a proper selection or choice of the
goods. If the goods turn out to be
defective he cannot hold the seller liable.
The seller is in no way responsible for the
bad selection of the buyer. The seller is
not bound to disclose the defects in the
goods which he is selling. It is the duty of
The rule of Caveat emptor
The rule of Caveat Emptor is laid down in the Section
16, which states that, “subject to the provisions of this
(Section 16)
Act or of any other law for the time being in force, there
is no implied warranty or condition as to the quality or
fitness for any particular purpose of goods supplied
under a contract of sale”.
Example:
• Example: A sold pigs to B. These pigs
being infected, caused typhoid to other
healthy pigs of the buyer. It was held that
the seller was not bound to disclose that
the pigs were unhealthy. The rule of the
law being “Caveat Emptor”.
• Exceptions: The doctrine of Caveat
Emptor is, however, subject to the
following exceptions:-
 Exeptions

1)When purpose of buying is in

sellers notice
• Where the buyer makes known to the seller
the particular purpose for which the goods are
required, so as to show that he relies on the
seller’s skill or judgment and the goods are of
a description which is in the course of seller’s
business to supply, it is the duty of the seller to
supply such goods as are reasonably fit for
that purpose [Section 16 (1)].
 Example
• An order was placed for some trucks to be used
for heavy traffic in a hilly country. The trucks
supplied by the seller were unfit for this purpose
and broke down. There is a breach of condition
as to fitness.
• (2) When goods are sold under brand
name
• In case where the goods are purchased under
its patent name or brand name, there is no
implied condition that the goods shall be fit for
any particular purpose [Section 16(1)].
Exeptions Cont…
• (3) When goods are sold under description
• Where the goods are sold by description
there is an implied condition that the
goods shall correspond with the
description [Section 15].
Example: In the sale of a refrigerator, the
name of the article itself implies that the
seller warrants that the machine is fit for
the particular purpose.
Exeptions Cont…
• (4) As regards to merchantable quality of goods
Where the goods are bought by description from a seller
who deals in goods of that description there is an implied
condition that the goods shall be of merchantable quality.
The rule of Caveat Emptor is not applicable. But where
the buyer has examined the goods this rule shall apply if
the defects were such which ought to have not been
revealed by ordinary examination [Section 16(2)].
•
Example: A bought a black velvet cloth from C and found
it to be damaged by white ants. Held, the condition as to
merchantability was broken.
Exeptions Cont…
• (5) When goods are bought by sample
• Where the goods are bought by sample,
this rule of Caveat Emptor does not apply
if the bulk does not correspond with the
sample [Section 17].
Exeptions Cont…
• (6) Where the goods are bought by sample as well as
description
• The rule of Caveat Emptor is not applicable in case the
goods do not correspond with both the sample and
description or either of the condition [Section 15].
• (7) As regards to an implied warranty or condition as to
quality or fitness
• An implied warranty or condition as to quality or fitness
for a particular purpose may be annexed by the usage of
trade and if the seller deviates from that, this rule of
Caveat Emptor is not applicable.
Exeptions Cont…
• (8) In case of Fraud
• Where the seller sells the goods by making
some misrepresentation or fraud and the buyer
relies on it or when the seller actively conceals
some defect in the goods so that the same could
not be discovered by the buyer on a reasonable
examination, then the rule of Caveat Emptor will
not apply. In such a case the buyer has a right to
avoid the contract and claim damages.
When Purpose Of Buying Is In Sellers Notice

When Goods Are Sold Under Brand Name

When Goods Are Sold Under Description

As Regards To Merchantable Quality Of Goods

When Goods Are Bought By Sample

Where The Goods Are Bought By Sample As Well As Description

As Regards To An Implied Warranty Or Condition As To Quality Or Fitness

Q3
(a) inThe doctrine
case of implied condition andof caveat
warranties

emptor applies:
(b)when the buyer does not intimate the purpose to the seller
and depends upon his own skills and judgment

(c) when goods are sold by sample

(d)when goods are sold by description

Answer: b
Q2 The expression
(a) Let the Vendor beware
‘Caveat
emptor’ means:
(b) Let the Buyer beware

(c) Let the Govt. beware

(d)Let the creditor beware

Answer: b
• following
The Conditionare important differences Warranty between
(1) conditions
A condition is essential
and to the main (1) It is only collateral to the main
warranties.
purpose of the contract. Purpose of the contract.

(2)The aggrieved party can repudiate (2)The aggrieved party can not
contract repudiate the contract

(3)The aggrieved party can not only (3)The aggrieved party can only claim the
repudiate the contract but also can claim damages.
damages in case of breach of condition.

(4) A breach of condition may be treated (4) The breach of warranty can not be
as breach of warranty treated as breach of warranty.
 MCQ’s

Question Time
Q1 Good must be correspond with
sample. This is:

(a) Condition as to description

(b) Condition as to sample

(c) Condition as to wholesomeness

(d)Condition as to title

Answer: b
 Q4 A stipulation which is collateral to the main
purpose of the contract, and if proves false, gives the
buyer only a right to claim damages, is known as

a) conditions.

b) guarantee.

c) warranty.
d)none of these.

Answer: c
Q5 Which of the following is not an implied
condition in a contract of sale?

(a) condition as to title.

(b) condition as to description.

(c) condition as to free from encumbrance.

(d)condition as to sample.

Answer: c
Q6 The conditions and warranties
may be in the form of

(a) express.

(b) implied.

(c) either (a) or (b).

(d)none of the above.

Answer: c
 Q7 The doctrine of Caveat
Emptor does not apply, when

(a) the goods are bought by sample.

(b) the goods are bought by sample as well as description.

(c) the goods are purchased under its brand name.

(d) all of the above.

Answer: c
Q8 A warranty is a stipulation essential to the
main purpose of the contract

(a) True.
(b)False.

Answer: b
Q9: A breach of warranty may be
treated as breach of condition

(a) False.
(b)True.

Answer:
Q10: Right to claim for damages exists both in
conditions & warranties
a) True.
b)False.

Answer:
Q11 A stipulation which is collateral to the main
purpose of the contract is
(a) Condition
(b)Warranty

Answer:
Q12: The term “goods” under Sale of
Goods Act, 1930 does not include

(a) goodwill.

(b) actionable claims.

(c) stocks and shares.

(d)harvested crops.

Answer:
 Additional questions
1. A stipulation in a contract of sale may be:
(a) Condition
(b) Warranty
(c) Both
(d) None of the above
2. A stipulation which is essential to the main purpose of
contract is:
(a) Condition
(b) Warranty
(c) Guarantee
(d) All of the above
 Additional questions
3. A stipulation which is agreed by the parties himself is :
(a) Express condition or warranty
(b) Warranty
(c) Guarantee
(d) All of the above

4. The conditions which are imposed by Law are:

(a)Implied Condition
(b)Express Condition
(c)Warranty
(d) Any of them
 Additional questions
5.The milk sold by a milkman contained germs of typhoid,this
is said to be breach of:
(a) Condition as to wholesomeness
(b) Condition as to merchantable quality
(c) Condition as to quality and fitness
(d) Condition as to Sample
6.In case of foodstuff and eatables implied condition as
to………………implied
(a) Sample
(b) Wholesomeness
(c) Merchantable Quality
(d) All of the above
 Additional questions
7.A’ p u rc hased 2 0 pieces of sharpeners wh i c h we re fo u n d blunt
a n d n o t a b l e t o s h a r p e n t h e pencils. This is s a i d t o b e b re a c h of
implied condition as to … … … … . .
(a) Merchantable Quality
(b) Wholesomeness
(c) Encumbrance
(d) N o n e of the above

8.In a contract of sa l e w h e r e g o o d s a re sol d o n t h e basis of

s a m p l e as well as description, g o o d s m u s t b e corresponding
with:
(a) Sample only
(b) Description only
(c) B o t h s a m p l e as well as description
(d) A ny of th em
Additional questions
9. In case of breach of warranty buyer can:
(a) Repudiate the contract
(b) Claim the damages
(c) Any of them
(d) None of them

10.The seller must have a right to sale the goods ,it is implied
condition as to…………….
(a) Quiet possession
(b) Title
(c) Sample
(d) Quality and Fitness
Which is correct

a. All warranties are conditions and all

conditions are not warranties

b. All conditions are warranties and all

warranties are not conditions

c. Both are independent of each other

d. None

e. I don’t know
Additional questions
11. A woman bought a fairness cream without disclosing the seller that her
skin is abnormally sensitive and consequently resulted into allergy. Is seller
liable for it ?
a) The seller is not liable.
b) The seller is liable.
c) The seller is liable for medical expenses
d) None of the above.

12. A purchased a car from B. After two months from buying he come to
know that it was a stolen car and had to be returned to the true owner. A
brought action against B. Will he succeed?
a) Buyer cannot recover the price.
b) Yes, buyer will succeed as it is a breach of implied condition as to title.
c) Yes, buyer will succeed as it is a breach of implied condition as to
wholesomeness.
d) None of the above.
Additional questions
13. A farmer exhibits rice in his farm. X buys the rice bag believing that it is
old rice although it was not. X wants to return the rice bag and refuse to
pay the price. Here
a) X can return the bag as there is breach of implied condition.
b) X can return the bag as there is breach of implied warranty.
c) X cannot return the bag as caveat emptor applies.
d) None of the above.

14. Remedies for breach of condition includes

a) Rejection of the goods.
b) Waiver of the condition.
c) No remedy when seller is excused by law.
d) All of the above.
Additional questions
15. ……………implies that the goods should be of such quality and in
such conditions that it can commercially be sold under the description by
which they are known in the market .
a. Merchantable quality
b. Wholesomeness
c. Encumbrance
d. Fitness and quality

16. X sell two parcels of certain goods on the basis of sample out of two
parcels . X allowed to inspect only one parcel and refuse to allow to
inspect the second parcel. After delivery buyer found that the goods
contained in second parcel is not according to sample. Here,
a) Buyer can reject the goods .
b) Buyer cannot reject the goods.
c) Buyer can reject only second parcel of the goods.
d) None of the above.
Additional questions
17. X supplied 10 bottles of cold drinks to Y. out of these one bottles burst
and injured Y. can y sue for damages ?
a) Yes, it is breach of implied condition.
b) Yes, it is a breach of implied warranty.
c) No, buyer himself is responsible.
d) None of the above.

18 A supplied thousand bags of cement to B. it becomes stone at the time

of delivery by rainfall. Can B reject the goods?
a) Yes, it is a breach of condition as to wholesomeness.
b) Yes, it is a breach of condition as to merchantable quality.
c) Yes, it is a breach of condition as to quality or fitness.
d) None of the above.
Points to remember:
✓ Condition

❖ Meaning: A condition is a stipulation.

• Essential to main purpose of the contract
• Breach of which gives a right to terminate the contract to
aggrieved party.

❖ A breach of condition is treated as breach of warranty in cases

stated below:
• buyer waives a condition
• buyer select to treat breach of condition as breach of warranty
• And where there contract is not several and the buyer has
accepted the goods or part thereof.

❖ Condition may be express or implied in a contract of sale.

 warranty
❖ Meaning : A warranty is a stipulation:

a) Which is collateral to the main purpose of the contract

b) The breach of which gives a right to claim damages but not a
right to reject goods and terminate to aggrieved party.

❖ Warranty may be implied or express.

 Implied conditions
1. Condition as to title → Seller must have right to sell.
2.Condition as to sale by description → Goods must correspond
with description whether or not seen by buyer and must be free from
latent defect
3.Condition as to sale by sample → Goods must be correspondent
to sample and must be free from latent defect
4.Condition as to quality and fitness → Not implied unless buyer
disclosed purpose of buying to seller and bought goods as per sellers
suggestion
5.Condition as to merchantable quality → Goods must be in
condition and of quality that can fulfill ordinary purpose of buying.
6.Condition as to wholesomeness → Goods must be fit for
consumption
Implied warranties
❑ Warranty as to quiet possession – buyer has a right to enjoy un
interrupted possession of goods

❑ Warranty as to free from encumbrance –the goods must be free

from any charges payable to third party
❑ Warranty as to dangerous nature of goods –seller must warn
the buyer for probable dangerous which may occur while using
the goods
❑ Warranty as per customary of trade – there may be a warranty
or condition as per the customs and usage of particular trade
Caveat emptor
Meaning : let the buyer beware
Buyer himself is liable for wrong selection of goods.
Exceptions :
When purpose of buying is in sellers notice
When goods are sold under brand name
When goods are sold on the basis of description
When goods are sold by sample
As regards to merchantable quality of goods
As regards to implied warranty as to quality and fitness
In case of fraud
Thank you
Passing or transfer of property constitutes the most
important element and factor to decide legal rights
and liabilities of sellers and buyers. Passing of
property implies passing of ownership. If the property
has passed to the buyer, the risk in the goods sold is
that of buyer and not of seller, though the goods may
still be in the seller’s possession.
 PASSING OF
SPECIFIC
OR
ASCERTAIN
ED GOODS

TRANSFER
OF
PASSING PASSING OF
PROPERTY IN
UNASCERTA
CASE OF OF INED
RESERVATIO PROPERTY
N OF RIGHT GOODS
TO DISPOSAL

GOODS
SENT ON
APPROVAL
OR “ON
SALES OR
RETURN”
A. Passing of property in case of Specific or AscertainedGoods

In a sale of specific or ascertained goods the property passes to the buyer at the time
when the parties intend it to pass. The intention must be gathered from the terms of the
contract, the conduct of the parties and the circumstances of the case (Section 19)

Unless a different intention appears the following rules are applicable for
ascertaining the intention of the parties as to the time at which the property in the
goods passes to the buyer:
 3. When
price has
to be
ascertain.

2. Goods are
not in a
deliverable
state.

1.Goods in a
deliverable
state.
In an unconditional contract for the sale of a specific goods in a
deliverable state, the property in goods passes to the buyer as soon as
contract is made.
Passing of property is not affected by the postponement of the time of
delivery or the time of payment of price.

Example: X goes into a shop and buys a television and asks

the shopkeeper for its home delivery. The shopkeeper agrees to
do it. The Television immediately becomes the property of X.
Where there is sale of specific goods and the seller is bound to
weigh, measure or to do something to the goods for
ascertaining the price for the purpose of putting them into a
deliverable state, the property in goods does not pass unless
something is done and the buyer has notice of it.

Example: A stock of wheat was sold at an agreed price per

quintal. The wheat was to be weighed by the seller for
ascertainment of the price. A part of the wheat was weighed
and carried by the buyer but the remaining was swept away by
the flood. Held, the loss of the remainder should be borne by
the seller since the property in the remainder has not passed
because the required weighing was not done.
In a contract for the sale of a specific goods which are not in a
deliverable state or the seller has to do something to the goods
to put them in a deliverable state, the property does not pass
until such thing is done and the buyer has notice thereof.

Example: A sold carpets to the Company which were required to be laid.

The carpet was delivered to the company’s premises but was stolen before
it could be laid. It was held that the carpet was not in deliverable state as it
was not laid, which was part of the contract and hence, the property had
not passed to the buyer company
In case of a contract for the sale of unascertained or future goods, ownership
will not pass to the buyer, unless and until the goods are ascertained.

The rules in respect of passing of property of unascertained goods are as follows:

GOODS BY
DESCRIPTION DELIVERY TO
THE CARRIER
In a contract for the sale of unascertained or future goods by description
ownership of goods transfers when the goods are unconditionally
appropriated to the contract either by the seller with the assent of the buyer or
by the buyer with the assent of the seller.

Example: A agrees to purchase 1000 quintals of cottonfrom warehouseman,

out of which he took delivery of 500 quintals and remaining to take later on.
The warehouseman weighed the cotton and kept the remaining separately
and informed A to take them and agreed to do so. Before he takes delivery of
the remaining goods the warehouse caught fire and destroyed the cotton.A,
is liable for the price to the warehouseman since he has appropriated the
goods, and the ownership is transferred to him.
Meaning: Appropriation of goods involves selection of
goods with the intention of using them in performance
of the contract and with the mutual consent of the
seller and the buyer.

The essentials are:

a) The goods should confirm to the description and
quality stated in the contract.
b)The goods must be in a deliverable state.
(c)The goods must be unconditionally (as
distinguished from an intention to appropriate)
appropriated to the contract either by delivery to the
buyer or his agent or the carrier.
(d) The appropriation must be made by:
(i) the seller with the assent of the buyer; or
(ii) the buyer with the assent of the seller.

(e) The assents may be express or implied.

(f)The assent may be given either before or after

appropriation.
Where the seller does not reserve the right of disposal of the property in the
goods will pass to the buyer as soon as the goods are delivered to the common
carrier or any other sort of bailee, for the purpose of transmission to the buyer.

Example: A bill of lading of railway parcel is made out in the name

of the buyer and is sent to him, the ownership in the goods passes
from the seller to the buyer. In case the goods are subjected to
accidental loss or by theft, the seller will not be liable.
"When the goods are delivered to the buyer on approval or on sale
or return or other similar terms the property passes to the buyer,
• (i) when he signifies his approval or acceptance to the seller,
• (ii) when he does any other act adopting the transaction, and
• (iii) if he does not signify his approval or acceptance to the seller but retains goods
beyond a reasonable time" (Section 24).

Example :- A, sends to B a water motor on approval or return in March 2012. B to

return it after trial in August, 2012. The water motor has not been returned within a
reasonable time, and therefore,A is not bound to accept it and B must pay the price.
Where there is contract of sale of specific goods or where the goods have been
subsequently appropriated to the contract, the seller may, by the terms of the
contract or appropriation, as the case may be, reserve the right to dispose of the
goods, until certain conditions have been fulfilled. In such a case in spite of the fact
that the goods have already been delivered to the buyer or to a carrier or other
bailee for the purpose of transmitting the same to the buyer, the property therein will
not pass to the buyer till the condition imposed, if any, by the seller has been
fulfilled.

If the goods are shipped or delivered to a railway administration for

carriage and by the bill of lading or railway receipt, as the case may be,
the goods are deliverable to the order of the seller or his agent, then the
seller will be prima facie deemed to have reserved to the right of disposal.
Where the seller draws a bills on the buyer for the price and
sends to him the bill of exchange together with the bill of
lading or (as the case may be) the railway receipt to secure
acceptance or payment thereof, the buyer must return the
bill of lading, if he does not accept or pay the bill.

And if he wrongfully retains the bill of lading or the railway

receipt, the property in the goods does not passes to him.
The general rule is, “unless otherwise agreed, the goods remain at the
seller’s risk until the property therein is transferred to the buyer, but when
the property therein is transferred to the buyer, the goods are at the
buyer’s risk whether delivery has been made or not” (Section 26).

However, Section 26 also lays down in exception to the rule that ‘risk follows
ownership.’ It provides that where delivery of the goods has been delayed
through the fault of either buyer or seller, the goods are at the risk of the party in
fault as regards any loss which might not have occurred but for such fault.

Thus in ordinary circumstances, risk is borne by the buyer only when

the property in the goods passes over to him. However, the parties
may by special agreement stipulate that ‘risk’ will pass sometime
after or before the ‘property’ has passed.
Risk passes with property:

Risk passes with property: The owner of goods must bear the loss or
damage of goods unless otherwise is agreed to. Under Section 26 of the
Sale of Goods Act, unless otherwise agreed, the goods remain at the
seller’s risk until property therein has passed to the buyer. After that event
they are at the buyer’s risk, whether delivery has been made or not.

Example: A bids for an antique painting at a sale by auction. After the bid, when
the auctioneer struck his hammer to signify acceptance of the bid, he hit the
antique which gets damaged. The loss will have to be borne by the seller, because
the ownership of goods has not yet passed from the seller to the buyer.
The aforesaid rule is, however, subject to two qualifications:

(i)If delivery has been delayed by the fault of the seller or the
buyer, the goods shall be at the risk of the party in default, as
regards loss which might not have arisen but for the default.

(ii)The duties and liabilities of the seller or the buyer as

bailee of goods for the other party remain unaffected even
when the risk has passed generally.
Example: A contracted to sell 100 bales of cotton to B to be delivered in February.
B took the delivery of the part of the cotton but made a default in accepting the
remaining bales. Consequently the cotton becomes unfit for use. The loss will have
to be borne by the buyer. It should, however, be remembered that the general rule
shall not affect the duties or liabilities of either seller or buyer as a bailee of goods
for the other, even when the risk has passed.

As noted above, the risk (i.e., the liability to bear the loss in case property
is destroyed, damaged or deteriorated) passes with ownership. The
parties may, however, agree to the contrary. For instance, the parties may
agree that risk will pass sometime after or before the property has
passed.
In general the seller sells only such goods of which he is the absolute owner. But
sometimes a person may sell goods of which he is not the owner, then the question
arises as to what is the position of the buyer who has bought the goods by paying
price. The general rule regarding the transfer of title is that the seller cannot
transfer to the buyer of goods a better title than he himself has. If the seller is not
the owner of goods, then the buyer also will not become the owner i.e. The title of
the buyer shall be the same as that of the seller. This rule is expressed in the Latin
maxim “NEMO DAT QUOD NON HABET” which means that no one can give what
he has not got.

Example:- P, the hirer of vehicle under a hire purchase agreement, sells them
to Q. Q, though a bona fide purchaser, does not acquire the ownership in the
vehicle. At the most he acquires the same right as that of the hirer.
Exceptions: In the following cases, a non-owner can convey better
title to the bona fide purchaser of goods for value.
(1) Sale by a MercantileAgent:
A sale made by a mercantile agent of the goods for document of
title to goods would pass a good title to the buyer in the following
circumstances; namely;
(a) If he was in possession of the goods or documents with the
consent of the owner;

(b) If the sale was made by him when acting in the ordinary courseof
business as a mercantile agent; and
(c) If the buyer had acted in good faith and has at
the time of the contract of sale, no notice of the
fact that the seller had no authority to sell (Proviso
to Section 27).
Example: A motor car agent for sale sold the car at
a price below the authorized price fixed by the
owner and misappropriated the proceeds. Held,
the innocent purchaser obtained a good title.
If one of the several joint owners of goods has the sole
possession of them with the permission of the others,
the property in the goods may be transferred to any
person who buys them from such a joint owner in
good faith and does not at the time of the contract of
sale have notice that the seller has no authority to sell
(Section 28).
Example: A, B, and C are three brothers and joint
owners of a T.V and VCR and with the consent of B
and C, the VCR was kept in possession of A. A sells
the T.V and VCR to P who buys it in good faith and
without notice that A had no authority to sell. P gets a
good title to VCR and TV.
A buyer would acquire a good title to the goods sold to him
by a seller who had obtained possession of the goods under
a contract voidable on the ground of coercion, fraud,
misrepresentation or undue influence provided that the
contract had not been rescinded until the time of the sale
(Section 29).

Example: X, fraudulently obtains a diamond ring from Y. This

contract is voidable at the option of Y. But before the
contract could be terminated, X sells the ring to Z, an
innocent purchaser. Z gets the good title and Y cannot
recover the ring from Z even if the contract is subsequently
set aside.
If a person has sold goods but continues to be in possession of them or
of the documents of title to them, he may sell them to a third person, and
if such person obtains the delivery thereof in good faith and without notice
of the previous sale, he would have good title to them, although the
property in the goods had passed to the first buyer earlier. A pledge or
other disposition of the goods or documents of title by the seller in
possession are equally valid [Section 30(1)].

Example: During ICL matches, P buys a TV set from R. R agrees to

deliver the same to P after some days. In meanwhile R sells the same to
S, at a higher price, who buys in good faith and without knowledge about
the previous sale. S gets a good title.
Where a buyer with the consent of the seller obtains possession of
the goods before the property in them has passed to him, he may sell,
pledge or otherwise dispose of the goods to a third person , and if
such person obtains delivery of the goods in good faith and without
notice of the lien or other right of the original seller in respect of the
goods, he would get a good title to them [Section 30(2)].

Example: A took a car from B on this condition that A would pay a

monthly instalment of `500 as hire charges with an option to purchase
it by payment of ` 10,000 in 24 instalments .After the payment of few
instalments. A sold the car to C. B can recover the car from C since A
had neither bought the car, nor had agreed to buy the car. He had
only an option to buy the car.
Where the owner is estopped by the
conduct from denying the seller's authority
to sell, the transferee will get a good title as
against the true owner. But before a good
title by estoppel can be made, it must be
shown that the true owner had actively
suffered or held out the other person in
question as the true owner or as a person
authorized to sell the goods.
Where an unpaid seller who had exercised
his right of lien or stoppage in transit resells
the goods, the buyer acquires a good title to
the goods as against the original buyer -
Section 54 (3).
Sale by an Official Receiver or Liquidator of the
Company will give the purchaser a valid title.

Purchase of goods from a finder of goods will

get a valid title under circumstances

A sale by pawnee can convey a good title to the

buyer under circumstances.
(1) Sale By A MercantileAgents

(2) sale By One Of The Joint Owners

(3)sales By A Person In Possession Under Voidable

Contract

(4)sale By One Who Has Already Sold The Goods But

Continues In Possession There Of
(5) sale By Buyer Obtaining Possession Before The Property
In The Goods Has Vested In Him

(6) effects Of Estoppel

(7) sales By An Unpaid Seller

(8) sale Under The Provision Of Other Acts

Delivery means voluntary transfer of possession from
one person to another. Thus if the possession is taken
through unfair means, there is no delivery of the
goods. Delivery of goods sold may be made by doing
anything which the parties agree, shall be treated as
delivery or putting the goods in the possession of the
buyer or of any person authorised to hold them on his
behalf.
RULES REGARDING DELIVERY OF GOODS
(SECTIONS 33 - 39)

(i) Effect of part delivery: A delivery of part of goods, taking place

in the course of the delivery of the whole, has the same effect for
the purpose of passing the property in such goods as delivery of
the whole. But such part delivery, with the intention of severing it
from the whole will not operate as a delivery of the remainder, it
will be construed as part delivery only (Section 34).
Example: Certain goods lying at wharf were sold
in a lot. The seller instructed the wharfinger to
deliver them to the buyer who had paid for them
and the buyer, thereafter, accepted them and
took away part. Held, there was delivery of the
whole.
(ii) Buyer to apply for delivery: The seller of the
goods is not obliged to deliver them until the buyer
has applied for delivery, unless otherwise agreed.
(Section 35).
(iii)Place of delivery: If there is no contract to
the contrary, goods must be delivered at the
place where they were at the time of sale,
and the goods agreed to be sold are
required to be delivered at the spot at which
they were lying at the time the agreement to
sale entered into or if not then in existence,
at the place where they would be
manufactured or produced. [Section 36(1)].
(iv) Time of delivery: When the time of sending the goods has not been fixed by
the parties, the seller must send them within a reasonable time. [Section 36(2)].

(v) Goods in possession of a third party: Where the goods at the time of
sale are in possession of a third person, there is no delivery unless and
until such third person acknowledges to the buyer that he holds the goods
on his behalf. The issue or transfer of any document of title to goods
operates as delivery, symbolic in character, even if the goods are in the
custody of a third person without such attornment. [Section 6(3)].
 (vi) Time for tender of delivery: Demand or
tender of delivery may be treated as ineffectual
unless made at a reasonable hour. What is
reasonable hour is a question of fact. [Section
36(4)].
(vii) Expenses for delivery: The expenses of and
incidental to putting the goods into a deliverable
state must be born by the seller, in the absence
of a contract to the contrary.[Section 36(5)].
(viii) Delivery of wrong quantity: In case of tender of
lesser quantity of goods, the buyer may either accept
the same and pay for it at the contract rate or reject it.
[Section 37(1)]. In case of excess delivery the buyer
may accept or reject the delivery, if he accepts the
whole of the goods, he shall pay for them at the contract
rate. [Section 37(2)]. In case the seller makes a delivery
of the goods contracted mixed with goods of a different
description, the buyer may accept the relevant goods
and reject the rest or reject the whole [Section 37(3)].
Mixing of goods with inferior quality does not amount to
a mixing of goods of different description.
Example: A agrees to sell 100
quintals of wheat to B at ` 1,000 per
quintal. A delivers 1,100 quintals. B
may reject the whole lot, or accept
only 1,000 quintals and reject the
rest or accept the whole lot and pay
for them at the contract of sale.
 (ix) Installment deliveries: Unless
otherwise agreed, the buyer is not bound
to accept delivery in installments. The
rights and liabilities in cases of delivery by
installments
Example: A agreesandtopayments
deliver to B, thereon may
100 quintals be
of sugar
in May. But A delivers
determined only
by the 90 quintals
parties in May and the
of contract.
remaining 10 quintals in the first week of June. B is
(Section
entitled 38). the whole 100 quintals.
to reject
(x) Delivery of carrier: Subject to the terms of
contract, the delivery of the goods to the carrier for
transmission to the buyer, is prima facie deemed to
be delivery to the buyer. [Section39(1)].

(xi) Deterioration during transit: Where goods are

delivered at a distant place, the liability for
deterioration necessarily incidental to the course of
transit will fall on the buyer, though the seller agrees
to deliver at his own risk. (Section 40).
(xii) Buyer’s right to examine the goods:
Where goods are delivered to the buyer, who
has not previously examined them, he is
entitled to a reasonable opportunity of
examining them in order to ascertain whether
they are in conformity with the contract.
Unless otherwise agreed, the seller is bound,
on request, to afford the buyer a reasonable
opportunity of examining the goods. (Section
41).
(1) Effect of Part Delivery

(2) Buyer to Apply For Delivery

(3) Place Of Delivery

(4) Time Of Delivery

(5) Goods In Possession Of A Third Party

(6) Times For Tender Of Delivery

(7) Expenses for Delivery

(8) Delivery Of Wrong Quality

(9) Installment Delivery

(10) Delivery Of Carrier

(11) DETERIORATION During Transit

(12) Buyer ‘S Right To Examine The Goods

Acceptance is deemed to take place when the buyer-

(a) intimates to the seller that he had accepted the goods; or

(b)does any act to the goods, which is inconsistent with the

ownership of the seller; or

(c)retains the goods after the lapse of a reasonable time, without

intimating to the seller that he has rejected them (Section 42).
Ordinarily, a seller cannot compel the buyer to
return the rejected goods; but the seller is entitled
to a notice of the rejection. Where the seller is
ready and willing to deliver the goods and
requests the buyer to take delivery, and the buyer
does not take delivery within a reasonable time,
he is liable to the seller for any loss occasioned
by the neglect or refusal to take delivery, and also
reasonable charge for the care and custody of the
goods (Sections 43 and 44).
MCQ,s
(a) railway receipt.

(b) wharfinger’s certificate.

(c) warehouse keeper’s certificate.

(d)all of the above

Answer:
(a) executory Contract.

(b) executed Contract.

(c) both of the above.

(d)none of the above.

Answer:
(a)property in the goods passes to the buyer when the contract is
made.

(b)property in the goods does not pass to the buyer when the
contract is made

(c)property in the goods remains with the seller when the contract
is made.

(d) ) none of the above

Answer:
(a) by estoppel.

(b) where seller waived the right of lien.

(c)where the buyer or his agent lawfully obtains

possession of the goods.

(d) any of the above..

(a) 15th March, 1930.

(b) 1st July, 1930.

(c) 30th July, 1930.

(d)30th June, 1930.

Answer:
(a) Contract of sale

(b) Agreement to sell

(c) Exchange
(d)) Barter

Answer:
a) transfer.

(b) possession

(c) delivery
(d)none of the above

Answer:
(a) consumer.

(b) buyer.

(c) both (a) and (b)

(d)none of the above.

Answer:
(a) possession of goods

(b) custody of goods

(c) ownership of goods

(d)both (a) and (b)

Answer:
a) Ownership of goods.

(b) Possession of goods.

(c) Custody of goods.

(d)both (b) and (c)

Answer:
a) Ownership of goods.

(b) Possession of goods.

(c) Custody of goods.

(d)both (b) and (c)

Answer:
1. “Res perit domine” means:
(a) Seller has a right to resale
(b) Risk follows ownership
(c) Buyer beware
(d) None of the above
2. In a contract of sale of specific goods ownership transfers:
(a) After delivery of goods
(b) After payment of price
(c) When parties intended
(d) None of the above
3. In a contract of sale of unascertained goods ownership
transfers:
(a) After delivery of goods
(b) After payment of price
(c) When parties intended
(d) After unconditional appropriation of goods
4. Goods are deemed to be in deliverable state……………..
(a) Packing
(b) Determination of price
(c) In a state that buyer would be bound to take delivery
of goods
(d) Any of the above
5. When goods sold on approval basis property in goods
passes on:
(a) Acceptance by buyer
(b) Retaining of goods by buyer after specified period
without notice
(c) Resale by buyer
(d) Any of the above
6. In case of sale on approval basis property in goods
transfers……………
(a) On acceptance
(b) On delivery
(c) On payment
(d) All of the above
7. Nemo dat quod non habet “ refers to……….
(a) Risk follows ownership
(b) Let the buyer beware
(c) No one can give the better title than he himself has
(d) Transfer of ownership
8. Transfer of property in goods means ……
(a) Transfer of ownership
(b) Transfer of possession
(c) Any of them
(d) None of them
 9. For appropriation ofgoods………………
(a) Goods must be according to description
(b) Goods must be in deliverable state
(c) It must be done with the consent of both parties
(d) All of the above
10.No one can transfer a better title then he himself has:
(a) Res perit domin
(b) Nemo dat quod non habet
(c) Quantum meruit
(d) None of the above
11.If goods are damaged by accident, who shall bear the
loss:
(a) Buyer
(b) Seller
(c) Owner
(d) None of the above
12sI.f seller reserves the right of disposal:
(a) Property in goods passes in specific goods
(b) Property in goods passes inunascertained goods
(c) Property in goods does not pass in specific or
unascertained goods
(d) None of the above
13.Until ownership passes risk remain with:
(a) Seller
(b) Buyer
(c) Third party
(d) Carrier

14.Appropriation can be done:

(a) By the seller with the consent of buyer
(b) By the buyer with the consent of seller
(c) By any of them
(d) None of the above
15. If delivery has been delayed by fault of any party:
(a) Risk will be of seller
(b) Risk will be of defaulter
(c) Risk will be of buyer
(d) None of the above
16. In case of sale through Super markett,he ownership of
goods transferred ……..
(a) On acceptance
(b) On delivery
(c) On payment
(d) All of the above
17. In case of sale by unpaid seller the buyer shall ………
(a) Get good title of goods
(b) Get bad title of goods
(c) Get partly title of goods
(d) None of the above
18.Which is not an exception of “Nemo dat quod non habet “
(a) Sale by mercantile agent
(b) Sale by co-owners
(c) Sale by Unpaid seller
(d) Sale by tenant
19.Where the goods are delivered to a common carrier goods ar
deemed to be…………….
(a) Appropriated
(b) Not appropriated
(c) Delivered to the buyer
(d) None of the above
20.Delivery of goods may be:
(a) Actual
(b) Symbolic
(c) Constructive
(d) Any of the above