Introduction and Formation of the Contract of Sale section is started with some definitic ions related with the Sale of Goods Act, 1930 which will help to understand all the matters in better way. However, these definitions are : In common sense, sales means the transfer of ownership. A contract of sale is a legal contract: It contract for the exchange of goods, services or (or vendor) to buyer (or purchaser) for an a the promise to pay same. isa Property that are the subject of exchange from seller greed upon value in money (or money equivalent) paid or Contract of Sales nn to section 4 of the Sale of Goods Act, 1930 a contract ofthe sale of goods is a contract whereby the seller transfers, or agrees to transfer, the property in (i.e, ownership of) goods to the buyer fora price. A contract of sale may be (i) absolute or (ji) conditional i according to the wishes of the parties to the contract. The term “contractof sale” is @ generic term. It includes an ‘actual sale’ as well as an ‘agreement to sell’. Where under a co: in the goods (ie, the mntract ofsale the property ownership has passed from the seller to the buyer, the contract is called a sale. 3A.1.3. Agreement to sale Where under a contract of sale the property in the goods is transferred from the seller to the buyer, the contract is called a sale, but where the transfer of the Property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell. An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred, 3A.1.4. Buyer and Seller aie ae ae ees) Buyer and seller are the two poles of any transaction. “Buyer” means a person who buys or agrees to buy goods and “Seller” means a person who sells or agrees to sell goods.Gea 4> The Sale of Goods Act, 1930 J) 3A. Formation of the contract A contract for the Sale of Goods is formed according to the ordinary principles of the common law thatis to say by offer and acceptance. We can get detail discussion about formation of the contract in sections 3 and 4 of Sale of Goods Act, 1930. 3A. Goods As per section 2(7), ‘Goods’ means every kind of movable property other than actionable claims and money, and includes the following: @ Stock and share @ Growing crops, grass and thing attached to or forming part of the land which are agreed to be served before sale or under the contract of sale. In other way, we can also define ‘Goods’ as every kind of movable property other than actionable claims and money; and includes stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale. 3A.1.7. Existing goods Existing goods mean the goods which are either owned or possessed by the seller at the time of contract of sale. 3A.1.8. Future Goods [Section 2(6)] As per section 2(6) of the Sale of Goods Act, 1930, ‘future goods’ means goods to be manufactured or produced or acquired by the seller after making of the contract of sale. As the goods are future goods, it is not possible for the buyer to be an owner the goods at the time of making the contract. These goods cannot be sold, but there can only be an agreement to sell. The future goods are in midways between specific and unascertained goods. For example, Mr. Lipul agrees to sell 250 quintals rice to Mr. Bipul that will be grown in future. a 3A. Ascertained Goods . Specific goods which become ascertained subsequent to the formation of a contract of sale. All ascertained goods are not always the same as specific goods, For example, if Mr Sourav of Behala Chowrasta agrees to sell to Mr. Rahul of Baramati, Pune 1 cartoon of biscuits out of a lot of 100 cartoons of his godown. If itis possible to separate this particular cartoon from the lot for delivery, then it is known as ascertained goods. 3A.1.10. Unascertained or Generic Goods These are not identified and agreed upon at the time of sale but defined only by description and may form part of the lot. These are also called ‘generic’ goods. For example, Mr. Tanay wants to sale from his godown 50 bags of Rice out of 500 bags of Rice without specifying the particular bags. 3A.1.11. Effect of Goods Perishing Sections 7 and 8 of the Sale of Goods Act, 1930 deal with the effect of perishing of goods on the rights and obligations of the parties to a contract of sale. To illustrate the matter, say, Mr. Monoj Jaiswal agrees to sell to Mr. Rahaman Mallik 15 bales of Indian Jute (manufactured at Budge Budge,342 | ‘An Introduction to Business Law €& aX) West Bengal) out of 50 bales lying in his godown and the bales in the godown are completely destroyed by fire, the contract does not become void. Mr Monoj Jaiswal has to supply 15 bales of Jute after purchasing from the market or pay damages for the breach. 3A.1.12. Contingent Goods [Section 6(2)] Contingent goods are those, the acquisition of which by the seller depends upon an uncertain contingency which may happen or may not happen. For example, Mr. Goutam agrees to sell 100 pieces of Trousers which he imported from China provided that the goods are arrived airport safely in time. This is an agreement for the sale of contingent goods. 3A.1.13. Specific Goods [Section 2(14)] These are the goods which are identified and agreed upon at the time when a contract of sale is made. For example, specified TV, Music System, Branded Computer eteNOL DE apparent UN LeasyiIAVIE CAMMUAAUEE UE Ute camp. 3A.2. Concept and definition of contract of sales As per section 4(1) of the Sale of Goods Act, 1930 “ a contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price”.Ga, 4> The Sale of Goods Act, 1930 j In other words, under a contract of sale, a seller in the capacity of the owner, or part-owner of the goods, transfers or agrees to transfer the title or ownership of the goods to the buyer or makes an agreement to transfer for an agreed upon value in money (or money equivalent), called the price, paid or the promise to pay same. A contract of sale is made by an offer to buy or sell goods for a specific price and the acceptance of such offer by the other party. The contract may be cither in oral or may be in writing, As per section 4(2), a contract of sale may be absolute or conditional depending upon the desire of contracting parties. 3A.3. Basic elements of contract of sales The following six are essential elements of any contract of sale of goods which are being discussed below with examples : Essential Elements Explanation Examples 1. Two parties A contract of sale of goods is bilateral in nature wherein property in the goods has to pass from one party to another, The seller means a person who sells or agrees to sells and buyer means a person who buys or agrees to buy the goods. One cannot buy his or her own goods. If you purchase a Samsung J7 Mobile Phone for ® 13,900 from Metro Enterprise of Behala. Here, Metro Enterprise is the seller and you are the buyer. Here, two parties are You and Metro Enterprise respectively. 2. Subject-matter of a contract of sale of goods Every kind of movable property other than actionable and money is regarded as ‘goods’. The sale of immovable property is dealt with in the transfer of Property Act, 1882. If you want to buy grain, you can only buy grain from the farmer and not the land of the farmer where the grain is being cultivated as the land is an immovable property. 3. Measurable in terms of money ‘According to section 2(10), “price means the money consideration for a sale of goods”. If the consideration is not in terms of money, it may be a contract other than that of sale, The buyer must pay some price for goods. In explicit terms, goods must be sold. for a definite amount of money, called the price, ‘Manas buys a Business Law book from ABS Publishing House and pays price for it, which is measurable in terms the money. 4. Transfer of ownership In every contract of sale there should be an agreement to be transfer of property in the goods from seller to the buyer. According to section 2(11) of the Sale of Goods Act, 1930 “property means the general property in goods and not merely fa special property” Say, You owned a computer and itis treated as a general property, You pledge the computer to a pawn shop. Now, the shop owner is in possession of your property which is actually owned by you. So, itis a special property for the shop owner.l Essential Elements Explanation An Introduction to Business La) Examples The principles of valid contract are applicable to sale of contract. For validity of contract of sale of goods, it must have all the essential elements of a valid contract. A contract of sale will be invalid if important elements are missing. 5. Valid contract Mr. X agreed to sell ja Y because Mr. Y es hss i Me] so by means of undue ing i this contract of sale i not vai since there is no free Consent io the part of the transferor a¢ er Indian Contract Act, 187, dy ence | 6 ‘Sale’ and ‘An The ‘contract of sale’ is a generic Agreement to Sell’ | term and includes both sale and i an agreement to sell. The sale is an executed or absolute contract whereas ‘an agreement to sell’ is an executory contract and implies a conditional sale. Mr. PG purchases a Bulldingfog Mr. BP. Itis an example of sale On the other hand, Mr. PG agrees to buy a building and pay for, if his lawyer approves, then it would be an example of an agreement to sell for MrPG. | 3A. 4, Formalities of contract Section 5 of the Sale of Goods Act, 1930 Provides the inf Contract of sale, which are mentioned at below : 1.” Formation of the contract- As per section 5(1), a contract of sale is made by — @ An offer to buy.or sell @) The contract may provide for the immediate or both shall be postponed. 2. Howitis made- As per section 5 sale may be: () made in writing or ' (ii) “made by word.of mouth, or. : (Gi) partly in writing and partly by word of mouth or (W) may be implied from the conduct of the parties, 3A5, Difference between Sale and Agreement to'sale Section 7 of the. Contract Act,“ is : t involves the transfer of the ownership of the ares delivery of the the delivery or paymentby instalments (2), subject to the provisions of any law for the time being in force, exchange of m the seller to the buyer", formation regarding how to formula Boods fora price and the acceptance of such offer. 80ods or immediate payment of or that the delivery or payment a contract of English Sale of Goods Actas including nd agreement to sale then we We can say that - to Sale Property for a price. It So, sale is(EIR, & the sate of Goods Act, 1980 \ defined as the exchange of property for money or for property capable of being valued in money. So, the term ‘sale’ may be defined as an agreement whereby one party, called the seller, transfer to the other party, called the buyer pays or agrees to pay. Agreement to sale : {As per section 4(3), where under a contract of sale the property in the goods is transferred from the seller to the buyer, the contract is called a sale, but where the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called. an agreement to sell. Example : Mr. PG purchases a Building from Mr. BP- it is an example of sale. But when, Mr. PG agrees to buy a Building and pay for it, if his lawyer approves then it is an agreement to sell for Mr. PG. However, distinction between sale and agreement to sell are as follows : Points of difference Sale Agreement to sale 1. Nature of contract It is an executed contract, where one of the parties has already performed the contract. It is an executory contract. Both the parties have agreed but are yet to perform the contract. 2. Nature of rights It creates rights in rem. It creates rights in personam. 3. Transfer of property The property in the goods transfers from the seller to buyer immediately. The property in the goods does not transfer from the seller to buyer immediately, until the conditions are fulfilled. 4, Nature of transaction _Itmay be absolute or conditional. Itis always conditional. 5. Risk of loss If the goods are damaged by accident, loss borne by the buyer, even the goods are in the possession of the seller. The loss will be borne by the seller since the ownership is not yet transferred to the buyer 6. Right to resale ‘The buyer is the owner. Even if the goods are with the seller, he cannot resale. The seller may resale the goods ashe wish. The original buyer can claim only damages. 7, Insolvency of buyer Seller is entitled to sue for the price of the goods and can exercise right of lien, stoppage in transit, and resale. The seller cannot refuse to deliver the goods. If the buyer becomes unable to pay the price, the seller may refuse to deliver the goods. 8. Remedies on breach of contract ‘The seller has the right to sue for the price of goods, lien, and stoppage. The seller has the right only to damages to performance of the contract. eS)36] | An Introduction to Business Law << g JAMS) 3A.6. Differences between Sale and Hire Purchase Agreement ee ane Site Purchase Agreement Following are the differences betwee ale and Hire Purchase agreement : le Points of Difference Hire Purchase Agreement 1._Applicable Act 2._Category of contract 3. Possession of goods Sale of Goods Act, 1930, Hire Purchase Act, 1972. Itis an agreement to sell. Itis a contract of sale. Possession of goods need not be Possession of goodsis transferred transferred immediately. immediately. Position of ownership Ownership of goods is of goods Ownership of goods is transferred transferred immediately. on the payment of the last installment. 5. Right tobe The buyer has no right to end the | The hirer can end the agreement established contract of sale. at any time before the ownership is transferred, 6 Right to repossess the | The seller has no right to | Thesellerhasa Tight to repossess Boods Tepossess the goods. He can sue | the §00ds if the hire-purchaser for the price. defaults. 7. Transfer to third party The buyer can transfer the titleto | The hire purchaser cannot goods to third Party because | transfer the title to goods to third ownership of goods has been Party because ownership of goods transferred. has not been transferred. As per English Dictionary, ‘Goods’ meane any items for sale or term ‘Goods’ was defined by the tepealed section 76 of the Cont includes every kind of movable Property.” The English Sale of Goods Act, 1893 defines Personal other than things in action The term includes emblements, in the land which are agreed to be ser Possessions that can be moved. The tract Act, 1872 as, “goods means and ‘Goods’ in section 62 as " and money, and in Scotl dustrial growing crops, -vered before sale or und Now, ‘Goods’ have been defined under section 2 (7) of th movable property other than actionable claims and money crops, grass, and things attached to or forming part of the | sale or under the contract of sale.” ler the contract of sale”, Sale of Goods Act, and includes stock land which are agree 1930, “every kind of and shares, growing d to be severed before From the above definition we are givin; Act: 1, Lottery Tickets [H. Anraj Vs. Govt of Tamil Nadu, AIR1986 $C63] 2 Fixed deposit receipt [State bank of India Vs. Smt Neela Ashok Naik, AIR2000 Bom.151 : ip Buildi 649] i ;. Bede Ship Buildings Co.(1972) 1 KB are meee and ew from the soil {Anglo-Iranian oil Co, Vs, Jaffrate (1953) WLR 4, Mineral oil ex! 5, Patents, copyrights, goodwill, trademark are all treated as goods. { Hooper Vs. Gumm, (1867)2 , Bt , tradems 3, COPYTIg} Ch AP282] etc. 6 the few examples of goods in the light of Sale of Goods, 346] || Following are the diffe An Introduction to Business Law <\_ag faa} 3A.6. Differences between Sale and Hire Purchase Agreement betw Ie and Hire Purchase agreement : Points of Difference Sale Hire Purchase Agreement . Applicable Act Sale of Goods Act, 1930. Hire Purchase Act, 1972. 2. Category of contract It is a contract of sale. Itis an agreement to sell. 3. Pos ssion of goods Possession of goods need not be transferred immediately. Possession of goods is transferred immediately. 4. Position of ownership of goods Ownership of goods is transferred immediately. ‘Ownership of goods is transferred on the payment of the last installment. 5. Right to be established The buyer has no right toend the contract of sale. ‘The hirer can end the agreement | at any time before the ownership is transferred. 6. Right to repossess the goods The seller has no right to repossess the goods. He can sue for the price. The seller has a right to repossess the goods if the hire-purchaser defaults, 7. Transfer to third party ‘The buyer can transfer the title to goods to third party because ownership of goods has been transferred. The hire purchaser cannot transfer the title to goods to third party because ownership of goods has not been transferred. As per English Dictionary, ‘Goods’ means any items for sile or term ‘Goods’ was defined by the repeale includes every kind of movable property.” The English Sale of Goods personal other than things in action and money, The term includes emblements, industrial growing crops, the land which are agreed to be severed before sale or und Act, 1893 defines sale or under the contract of sale.” and includes stock and shares, possessions that can be moved. The d section 76 of the Contract Act, 1872 as, “goods means and ‘Goods’ in section 62 as " goods include all chattels and in Scotland all co1 rporeal moveables except mon and things attached to or forming part of ler the contract of sale”. Now, ‘Goods’ have been defined under section 2 (7).of the Sale of G movable property other than actionable claims and money; crops, grass, and things attached to or forming part of the land which are agreed to be sever }oods Act, 1930, “every kind of growing ed before From the above definition we are giving the few examples of goods in the light of Sale of Goods Act: Lottery Tickets [H. Anraj Vs. Govt of Tamil Nadu, AIR1986 SC63] Fixed deposit receipt [State bank of India Vs. Smt Necla Ashok Naik, A1R2000 Bom.151] 1 ‘ Buildings Co.(1972) 1 KB 649] i ke Vs. Bede Ship Buildings Co, any sian and removed from the soil ,[Anglo-Iranian oil Co, Vs. Jaffrate (1953)IWLR 4. Mineral oil ext 246) Ch AP282] etc. Patents, copyrights, goodwill, trademark are all treated as goods. { Hooper Vs. Gumm, (1867)2Sen) en tea os (ee, 4> The Sale of Goods Act, 1930 J 347 So, it can be said that every type of movable property is to be considered as goods except money and actionable claims. 3A.8. Classification of Goods ‘According to section 6 of Sale of Goods Act, 1930, goods which form the subject mater of any contract of sale initially may be classified into three categories: Existing goods, Future poate ane Contingent goods and there is further classification. However, the whole classification has bee shown by the following chart : Goods Future Goods Contingent Goods Specific Goods Ascertained Unascertained Goods of Generic Goods} Existing Goods Eaisting goods : These are the goods which are owned or possessed by the seller at the time of sale or making of contract. The goods are physically present or where the seller is in possession of the goods. Trample Mr. X agrees to supply 10 kgs rice to Mr. P which lying in his shop. Here, such tice wil be considered as existing goods. Existing goods may be classified into three categories. Such as: (Specific goods As per section 2(14)of the Sale of Goods Act,1930, these are identified and agreed upon at the time of a contract of sale is made. ‘Example: Mr. Tapan has a number of mobile phone and out of them he sells two Nokia sets to Mr. Swapan, here these two particular sets are being identified and that’s why these two sets are considered as specific goods.- (i) Ascertained goods Specific goods which become ascertained subsequent to the formation of a contract of sale. All ‘Ascertained goods are not always the same as specific goods. a Example : Mr. Sourav of Behala Chowrasta agrees to sell to Mr. Rahul of Baramati, Pune one ‘cartoon of biscuits out of a lot of one hundred cartoons lying in his godown. If it is possible to separate this particular cartoon from that lot for delivery, then it is known as ascertained goods. (ii) Unascertained or generic goods These are not identified and agreed upon at the time of sale but defined only by description and may form part of the lot. These are also called ‘generic’ goods. Example : Mr. Sourav of Behala Chowrasta agrees to sell to Mr. Rahul of Baramati, Pune one cartoon of biscuits out of a lot of one hundred cartoons lying in his godown. It is a sale of unascertained goods because it is not known which cartoon is to be delivered.Future Goods As per section 26) of the sale of Goods Act, 1930, ‘Future goods’ means g: produced or acquired by the seller after making of the contract of sale. As it is not possible for the buyer to be an owner the goods at the time of making goods cannot be sold, but there can only be an agreement to sell. The future goods are An Introduction to Business Lai between specific and unascertained goods. cultivated and produced in hi Contingent Goods an uncertain future incident. 3A. Example : Mr. Dinesh (a farmer) agrees to sell 100 quintals of rice to Metro Rice iis land in future. Contingent goods are those, the acquisition of which by the seller depends upon an contingency which may happen or may not happen in future. Example : Mr. Ajit agrees to sell 100 pieces of imported shirts provided that the goods are arvived airport safely in time. This is an agreement for the sale of contingent goods because it depends on | Future goods and contingent goods both are related with future happenings but they are no! The differences between future goods and contingent goods are : < i) Differences between Future Goods and Contingent Goods Basis Futures Goods Contingent Goods 1. Meaning Goods that are yot to be manufactured produced or acquired by the seller after makin; Goods, the acquisition of which by the seller depends upon 2 contingency, which may or may contract of sale. not happen. 2, Element of uncertainty | Acquisition of future goods does | The procurement of contingent | not depend upon and-| goods is dependent upon an uncertainty. “uncertain event. Future goods do not include 3. Scope They are wider in scope, it] contingent goods because of the | includes future goods. | element of certainty. | 4. Effect of Contract Where by a contract of sale, the | There may be a “contract for] seller purports to effecta present | sale” of goods, the acquisition of | sale of Future Goods, the contract | which by the seller depends upon | operatesas an “agreementtosell” | a contingency which may or may the goods[Sec.6(3)]. not happen [Sec.6(2)]. 5. Example Bhaskar agrees to buy the entire crop of wheat that would yield in Sandip’s farm, at the rate of % 1,000 per quintal. painting only if Chandan, its present owner, sellsit to him. The sale is contingent upon the sale A agrees to sell to Bijay a certain | by Chandan. |(2. 4> The Sale of Goods Act, 1930 \) Sections 7 and 8 of the Sale of Goods Act, 1930 deal with the effect of peri hing of goods on the rights and obligations of the parties to a contract of sale. Under these sections, the word ‘perishing, means not only physical destruction of the goods but it also covers: (a) Damage to goods so that the goods have ceased to exist in the commercial sense, (b) Loss of goods by theft (Barrow Ltd. Vs. Phillips Ltd.); (©) Where the goods have been lawfully requisitioned by the government Co.). It may also be mentioned that it is only the perishing of specifi contract of sale, Where, therefore, unascertained goods form th« their perishing does not affect the contract. The seller is bound to supp! likes, otherwise be liable for breach of contract. (Re Shipton, Anderson & cand ascertained goods that affects a e subject-matter of a contract of sale, ly the goods from wherever he Example : Mr Mega Dhamaka agrees to sell to Mrs. Chaitrasale 15 bales of Indian Jute (manufactured at Budge Budge) out of 50 bales lying in his godown and the bales in the godown are completely destroyed by fire, the contract does not become void. Mr. Mega Dhamaka has to supply 15 bales of Jute after purchasing from the market or pay damages for the breach. 3 Goods perishing before making of contract Section 7 of Sale of Goods Act provides “ where there is a contract for the sale of specific goods, the contract is void if the goods without the knowledge of the seller have, at the time when the contract was made, perished or become so damaged asno longer to answer to their description in the contract”. Example : Mr. Abinash Choudhury, a Kerosene Oil Dealer of Kolkata agrees to sell 100 litres of Kerosene Gil to Mr. Bimal Nath Pandit which were kept in his godown but this fact is totally unknown to Mr. Abinash Choudhury. In the mean time, the whole stock has been damaged and at that time this contract was made. Held, the agreement is void as there is nothing to give the description about the product (Kerosene Oil) in the contract”. SA. Section 8 of Sale of Goods Act, 1930 provides “where there is an agreement to sell specific goods, and subsequently the goods without any fault on the part of the seller or buyer perish or become so damaged as no longer to answer to their description in the agreement before the risk passes to the buyer, the agreement is thereby avoided”. 3 This provision is applicable when ‘sold goods’ are specific and there is merely agreement to sell. Goods perishing before sale but after agreement to sell Example : Professor Jayanta Talukder takes a new car (ALTO 800) for test driving and suddenly the car has got damaged without any fault of him, Here, the contract, which was in form of an’ ‘agreement to sell’, will become void as it is the earlier stage of sale.The Sale of Goods Act, 1930 lection: 3B Conditions and Warranties 3B.1. Some Important Definitions The section is started with some definitions related with the Sale of Goods Act, 1930 which will help students to understand all the matters which have been discussed later on in better way. These definitions are : 3B.1.1. Condition As per section 12(2) of the Sale of Goods Act, 1930, a condition is a stipulation which is essential to the main purpose of contract is known as condition. Breach of condition gives the aggrieved party right to terminate the contract. For example, Mr. Barman sells a mobile set to Mr. Chakraborty saying that the set is Nokia branded. Hence the condition of contract is that the set must belong to Nokia. If the mobile set is not a Nokia set then Mr. Chakraborty can reject the contract. 31 Warranty {As per section 12(3) of the Sale of Goods Act, 1930, “a warranty is a stipulation collateral to the main purpose of the contract, the breach of which gives rise to a claim for damages but not to a right to reject the goods and treat the contract as repudiated”. 3B.1.3. Express Conditions Express conditions are those, which the parties agree expressly, i.e. orally or in writing. 3B.1.4. Express Warranties This is same as express conditions, only it is for warranties. So, express warranties are those, which the parties agree expressly, ice, orally or in writing. 3B.1.5. Implied Conditions Implied conditions are those, which are implied by the law in the absence of any agreement to the contrary. That means there is no need to express these conditions verbally or in writing. 3B.1.6. Implied Warranties een eee This is same as implied conditions, only it will be used for warranties. So, implied conditions are those, which are implied by the law in the absence of any agreement to the contrary.Ga, 4> The Sale of Goods Act, 1930 )) 3B.1 The doctrine of ‘Caveat Emptor’ means “let the buyer beware”: It means that the buyer while purchasing goods must act with a “third eye and ear”, i, He should be careful to check whether the goods purchased will serve his purpose well or not. If the buyer is not careful and he finds later on that the goods do not serve his purpose, he cannot hold the seller liable for it. The seller is not bound to tell the defects of his goods. 3B. There is an implied condition on the part of the seller that in the case of sale, the seller has a right eI sell the goods, and in the agreement to sell, the seller will have a right to sell the goods at the time o! passing of ownership in goods.If the title of seller out to be defective, the buyer must return the goods to the true owner and recover the price from the seller. 3B.1.9. Conditions as to description — Section 15 The Doctrine of Caveat Emptor Conditions as to title - Section 14(a) Where the goods are sold by description, there is an implied condition that the goods shall correspond to the description. A computer was sold and the buyer has not seen the computer, but the seller Gescribed it as a new one. However, it was found as a very old one. Here, the computer was not according to the description. So, this is an example of conditions as to description. 3B.1.10. Sale by sample — Section 17. ‘The tendering product must be as per sample. Sample means a representative unit ic, it representing the whole goods. So, if there is any mismatch between sample unit and the whole units — that is definitely not acceptable. However, where the goods are sold by sample, the following are implied conditions. ¢ The buyer shall correspond to sample in quality. ‘¢ The buyer shall be given a reasonable opportunity to compare the goods with the sample. The goods shall be free from any defect, 3.1.11. Sale by description as well as sample — Section 15 a Sy Cie serription as well as sample ~ Section 15 Uf the sale is made by sample as well as description, both conditions shall be satisfied, Goods must correspond with sample as well as description. For example, Sri Amit Das agreed to sell 100 copies of a book for B.Com. to Sri Chandan Bhowmik described as “whole syllabus of the course covered” and warranted only equal to sample. The goods supplied were equal to sample, but book wae not contained the whole syllabus. Here, Sri Chandan Bhowmik could reject the goods, 38.1.12. Conditions as to quality and fitness for buyer's purpose ~ Section 16 Where the buyer, expressly or impliedly, tells the seller the particular purpose for which he needs the goods and relies on the skill or judgment of the seller, there is an implied condition that the goods shall be reasonably fit for such purpose When the goods can be used only for one particular purpose, the buyer need not inform the seller the purpose for which the goods are required, For example, Mr. Amit Basu purchased a mobile battery from a shop. While the battery was being used by Mr. Amit Basu, it was blown up and he got injured very much. Held, the shopkeeper was liable for damages as the battery was not fit for the purpose for which it was meant as it was not properly checked. (although there is no way for the seller to identify the defective one in advance, specifically in case of electronic goods).ll ‘An Introduction to Business Law << wee) 3B.1.13. Conditions as to merchantabili ction 16 (2) Where goods are bought by description from a seller, who deals in goods of that description, there should be an implied condition that the goods shall be of merchantable quality which is acceptable.’Merchantability’ means that there is no defect in the goods, which renders them unfit for sale. Thus, a fan that will not passing air and a pen that will not write cannot be regarded as merchantable, For example, A DVD player was sold to a layman. The set was defective. Even it did not work after repairing, Held, the buyer can return the set and claim refund. 3B.1.14. Condition as to wholesomeness In the case of eatable food stuff, there is an implied condition that the goods shall be wholesomeness, ice, free from any defect which renders them unfit for human consumption. For example, Mr. Rana Purchased milk from Mr. Bapi, a milk dealer. The milk contained typhoid germs. Mr. Rana’s son on taking the milk got infected. Here, Mr. Rana was entitled to get damages. 38.1.15. Warranty as to quiet possession — Section14(b) In the absence to any contract showing contrary intention, there is an implied warranty that the buyer shall enjoy quiet possession of the goods. If the buyer feels disturbance in the enjoyment of the possession of goods, he can claim damages from the seller. 3B.1.16. Warranty against encumbrances — Section14(c) Unless the circumstances of the case are such as to show a contrary intension, there is an implied warranty that the goods shall be free from any charge or encumbrance in favour of any party not declared to the buyer before or at the time contract is made. However, there will not be any such warranty if charge is declared to buyer at the time of sale. 3B.1.17. Warranty as to quality and fitness by usage of trade — Section 16 Quality as well as fitness both are important for any transaction. An implied warranty as to quality or fitness for a particular purpose may be annexed by the usage of trade. For example, A Television set was sold in an auction and according to the usage of trade, it was to disclose in advance any sea- damages, otherwise it will be taken as a breach of warranty if no such disclosure has been made and the goods found to be defective. 3B.1.18. Warranty to disclose the dangerous nature of goods a ee OL GOOCS. In case of sale of dangerous goods, the seller is under an obli probable danger. Failure to do so will make the seller liable to pay damages. For example, Bipul sold a tin of disinfectant to Mita, knowing that.it was likely to be dangerous to the tin, whereupon disinfectant powder went into her eyes, causing her injury. Held, Bipul was liable in da Mita, as he failed to warn Mita about the probable danger. igation to warn the buyer about the mages to 3B.2. Definition and concept of Condi Condition is much stronger than warranty in case of sale of goods. Condition is that obligation which is mandatory to perform from the end of the seller and this ‘compulsion’ makes the difference with warranty. In law, we can get the definition of it. As per section 12(2) of the Sale of Goods Act, 1930, “a condition is a stipulation essential to the main purpose of the contract, the breach of which gives rise to a right to treat the contract as repudiated”. It is regarded as the foundation of the(TRgy > _ The Sate 0f Goods Act, 1990 (8s contract. If there is a breach of condition, the aggrieved party gets the right to treat the contract as void and can claim damages. ‘Example : Mr. Barman sells a mobile set to Mr. Chakraborty sai Hence the condition is that the set must be belonging to then Mr. Chakraborty can cancel the contract. 3B.3. Definition and concept of Warranty ‘After knowing the concept of condition, now, we may discuss of the Sale of Goods Act, 1930, “a warranty is a stipulation c contract, the breach of which gives rise to a claim and treat the contract as repudiated”. If we consi example supports it. Hoping that through thi warranty will be cleared. ‘Example : Say, you want to pur Metro Enterprise of Behala. Met have sold the different set then it woul which you may reject the contract. But he this the contract may not be rejected. So, ig are the differences between condi for damages ‘der warranty in general e following example the concep’ chase a white coloured Samsung iro Enterprise delivers the same mo That means Metro Enterprise sold the same produc Id have been an example re, the colour difference is a this can be treated as an example of ‘warranty’ ying that the set is Nokia branded. ‘Nokia. If the mobile set is not a Nokia set about warranty. As per section 12(3) collateral to the main purpose of the but not to a right to reject the goods sense then the following, of condition and 7 mobile phone for & 13,900 from pile set but it is black coloured. f with different colour, So, here if they would ‘of breach of condition’ and for Jess important issue and for | ns and Warranties ns and warranties : Condition Warranty 1. It is essential to the main purpose of the contract. So; it is of a fundamental in nature. 2. Breach of any condition may lead to the termination of the contract of sale. 3. It goes direct to the root of the contract. 4, Violating of condition of sale of goods may amounts to violating of a warranty. 5, The term condition is defined in section 12 {Q) of the Indian Sale of Goods, Act 1930. 1. It is collateral to the main purpose of contract. So, it is of an ancillary in nature. 2. Breach of warranty gives rise to a claim for damages but not to right to reject. 3. Itdoesnot go direct to the root of the contract. 4, This isnot applicable in case with warranty. 5, The term warranty is defined in section 12 (Q)of the said Act. 38.5. When Conditions to be treated as Warranty verted into a warranty. Generally, Sometimes, a condition may be cor claim damages only Goods Act, 1930, under the () Voluntary waiver of condition [As per section 13(1), “where a contract of sal the buyer may wai and not as a ground for treating the con but not to reject the contract following situations con Je is subject to any co! ive the condition or elect to treat the breach of the condition as a breach of warranty tract as repudiated”. in this regard, the party may ‘wholly. According to section 13 of the Sale of dition is treated as warranty — ndition to be fulfilled by the seller,——=ag [364] ll An Introduction to Business Law <& al) ior qua 275 per k Example : Mr. Mohon agrees to supply100 bags of wheat of superior quality @ Per kg to Mr Nabin, But Mr. Mohon supplies 100 bags of wheat of inferior quality @ €55 per kg against that Contract, This is a breach of condition and Mr. Nabin can reject the goods. Otherwise, Mr. Nabin May accept the goods and can claim damages from the seller @ € 20 per kg. Gi) Acceptance of goods by the buyer As per section 13(2), “where a contract of sale is not severable and the buyer has accepted the Goods or part thereof, the breach of any condition to be fulfilled by the seller can only be treated asa breach of warranty and not as a ground for rejecting the goods and treating the contract as repudiated, ness there isa term of the contract, express or implied, to that effect” Example : Ram agrees to supply 10 mobile phones to Shyam on 31st December, 2017 but Ram failed to supply on the agreed date! After 15 days, Ram sent mobile phones to Shyam. Held, Shyam can accept these goods by treating ‘breach of condition’ as ‘breach of warranty‘or can claim damages. Gi) By impossibility As per section 13(3), “nothing in this section shall affect the case of any condition or ‘warranty fulfilment of which is excused by law by reason of impossibility or otherwise”. Example : Now a day, we can get 4 facilities in 1 Printer. That means, You will get Printing, Scanning, Photocopying and Faxing facilities ina single printer. Say, you have purchased a printer of that kind from E-Mall, Kolkata. After purchasing that you are trying to watch video in this Printer: But there is no such facility at all. Now, regarding this facility there is nothing which can be identified as condition and warranty. So, here, we will not be able to treat the condition ae Warranty because it is impossible to find out the condition and warranty on watching video in this printer. 3B.6. Consequences of breach of condition me each Of condition The consequences of breach of condition are as follows — 1 Repudiation of contract According to section 12(2) of the Sale of Goods Act, 1930, a condition is a stipulation essential to the main purpose of the contract, the breach of which gives rise toa Tight to treat the contract as repudiated. 2 According to section 60 of the Sale of Goods repudiates the contract before the date of delivery, the other ma Repudiation of contract before due date Act, 1930, where either party to a contract of sale y either treat the contract as subsisting oF wait till the date of delivery, or he may treat the contract as rescinded and sue for damages for the breach. ‘ 3B.7. Consequences of breach of warranty 1 According to section 12(3) of the Sale of Goods Act, 1930, a warran the main purpose of the contract, the breach of which gives rise a right to reject the goods and treat the contract as repudiated. According to section 13(3) of the Sale of Goods Act, 1930, icthing in this section shall afectth€ case of any condition or warranty fulfilment of which is excused by law by reason of impossibility or otherwise. ty is a stipulation collateral to toa claim for damages but not 0(a, » The Sale of Goods Act, 1930 ) 3. According to section 59(1) of the Sale of Goods Act, 1930, where there is a breach of warranty by the seller, or where the buyer clects or is compelled to treat any breach of a condition on the part of the seller as a breach of warranty, the buyer is not by reason only of such breach of warranty entitled to reject the goods; but he may- (a) Set up against the seller the breach of warranty in diminu (©) Sue the seller for damages for breach of warranty. 3B.8. Express conditions and warranties ee eeilons/and warranties: mn or extinction of the price, or An ‘Express Condition’ is a condition which should be entered by clear words in any contract and has been expressly stated in the terms of the contract and failure of which may allow one party to either repudiate the contract in whole or claim for damages. Whereas an express warranty is a warranty that an offerer makes. It may be written or oral. So, when any stipulation is inserted in the contract at the will of the parties, it is said to be expressed conditions and warranties. They are expressly provided in the contract of sale. Example : Mr. X buys a Washing Machine which has two years warranty against any defect. This is an expressly written warranty that is going to be binding to the manufacturer of Washing Machine. If it is found that within two years the Washing Machine is not working properly, the manufacturer has to either repair or replace the defective Washing Machine. 3B.9. Implied conditions and warranties Implied conditions and warranties are those laws which may be incorporated into the contract unless the parties agree to the contrary. These are implied by law or custom, these have not been expressly stated but are included automatically as apart of the contract and the terms are to be understood by the partiers. So, it can be said that implied conditions and warranties are deemed to be incorporated in every contract of sale of goods unless the terms of the contract show a different intention. 38.9.1. Implied.conditions- : Section 14 to 17 of the Sale of Goods Act, 1930, contained the following conditions which are implied in the contract for the sale of goods, unless the terms of the contract show a different intention: These conditions are : 1. Condition as to title of goods’ According to section 14(a) of the Sale of Goods‘Act, 1930, in a contract of sale there is an implied condition on the part ofthe seller that, in the case ofa sale, he has aright to sell the goods and thet in the case of an agreement to sell, he will have a right to sell the goods at the time wher the property is to pass. Example : Ranjan (a customer) purchased a car from Debabrata (a sales executive of Balaji Motors) fora certain price and used it for four months. But Debabrata had no ttle to the car. Consequently, Ranjan had returned back the car to the true owner. It was held that Ranjan could recover the full price paid to Debabrata, 2. Sale by description According to section 15 of the Sale of Goods Act, 1930, where there is a contract for the sale of goods by description, there is an implied condition that the goods shall correspond with the description, and, if the sale is by sample as well as by description, it is not sufficient that the bulk of the goodsEa ll An Introduction to Business Law <& Pe ei) corresponels with the sample ifthe goods do not also correspond with the des ption. ‘The implied condition is that the goods lelivered must correspond with the description where the purchaser has mich scene gone ules app yall as unascertained goods ‘able for both specific a Amit Das agreed to sell 100 coy ‘of a book for B.Com. to Sri Chandan Bhowmik described as “the whole syllabus of the course should be covered”. The goed supplied were equal to description and this is an example of ‘Sale by description’. 3. Sale by sample According to section 17 of the Sale of Goods Act, (1) A contract of sale is a contract for sale by sample where imp! to that effect, (2) in the case of a contract for sale by sample there is (a) that the bulk shall correspond with the sample in qu (b) that the buyer shall have a re sonable opportunity of compa (c)_ that the goods shall be free from any defect, rendering them un-merchantable, which would not be apparent on reasonable examination of the sample. sample but not suitable ‘was supplied corresponding with the it was held that the buyer was entitled to reject the goods.( Ref: 1930, the implied condition as — there is a term in the contract, express or an implied condition ~ ality; ing, the bulk with the sample; Example : Where worsted coating for stitching due toa latent defect, Drummond & Sons Vs. Van Ingen & Co). 4, Sale by sample as well as description ‘According to section 15 of the Sale of Goods Act, 1930, in the case of sale of goods by sample as well ds description, the goods delivered must correspond with both sample as well as description. If the goods supplies as per sample and not with similar to the description or vice versa, The buyer can repudiate the contract, Txample 1 Sei Amit Das agreed to sell 100 copies of a book for B.Com. to Sri Chandan Bhowmik described as “the whole syllabus of the course should be covered” and warranted only equal to sample. The goods supplied were ‘equal to sample, but books were not contained the whole syllabus. Hore, Sri Chandan Bhowmik could reject the goods. 5. Condition as to quality of fitness There is an implied condition as to quality of fitness in the following cases — According to section 16(1) of the Sale of Goods Act, 1930, (where the buyer, expressly or by implication, makes known to the seller the particular purpos for which the goods are required, (ii) where the buyer relies on the seller's skill orjuclgement, and the goods are ofa description which iLis in the course of the seller's business to supply (whether he is the manufacturer oF producet br not), there is an implied condition thatthe goods shall be reasonably fit for such purpose (2) Where goods are bought by description from a seller who deals in goods of that description (whether he is the manufacturer or producer or not), there is an implied condition that the goo shall be of merchantable quality. warranty or condition as to quality or fitness for a particular purpose may be So, an implied Le by the usage of trade nameGea. 4> The Sale of Goods Act, 1930 \) 367 Example: Mr. PG purchased a motor car from Mr. SG for using as a tourist car. Mr. SG, the seller knew the purpose. The car turned out to be unfit for the purpose. It was held, Mr. PG, the buyer could repudiate the contract. 6. Condition as to merchantability According to section 16(2) of the Sale of Goods Act, 1930, where goods are bought by description from a seller who deals in goods of that description (whether he is the manufacturer or producer or not), there is an implied condition that the goods shall be of merchantable quality. “Merchantability’ means which has acceptability in the market. ‘Merchantable quality’ means seeds Which are fit for the purpose for which it was bought. ‘Merchantability’ is satisfied when the goo s does not differ the normal quality of the described goods. The goods must be free from any hidden. defects. Example: A DVD player set was sold to a layman. The set was defective. Even it did not work after repairing, Held, the buyer could return the set and claim refund. 7. Condition as to wholesomeness ‘There are no separate provisions provided under Sale of Goods Act for wholesomeness. This condition is included in the condition of merchantability. In case of sale of eatables and provisions, goods must be merchantable and wholesome. In other words it must be free from any hidden defects. Example : Mr. Subhadeep purchased bread from a shop. It contained a stone which broke Mr. Subhadeep's teeth. It was held that the seller was liable to damage as he violated the condition of wholesomeness. 3B.9.2. Implied warranties Following warranties are implied in a contract of sale of goods, subject to the contract to the contrary : 1. Warranty of quiet possession According to section 14(b) of the Sale of Goods Act, 1930, there is an implied warranty by that the buyer shall enjoy quiet possession of the goods. That is to say, if the buyer is having possession of the goods and get disturbed in his possession by the seller, he is entitled to sue the seller for the breach of the warranty. Example : Mr purchased a second hand motor car from Mr. X and Mr. Y thereafter spent some money on its repair and used it for a month, Unknown to the parties the motor car has stolen one and Mr. Y was compelled to return to its owner. Mr. Y was held entitled to recover from the sellers for the breach of this warranty damages not only the price but also the cost of repair. 2. The goods must be free from encumbrance According to section 14(b) of the Sale of Goods Act, 1930, there is an implied warranty that the goods shall be free from encumbrance(legal burden) or charges in favour of any third party not declared or known to the buyer before or at the time of contract is entered into, Example: A pledges his car with C for a loan of € 25,000 and promises him to give his possession the next day. A then sells the car immediately to B, who purchased it on good faith, without knowing the fact. B, may eith¢r 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.ey lM a) Warranty of disclosure of dangerous nature of goods = There is an implied warranty on the party of the seller in case of the goods, inherently dangerous myer and the buyer is ignorant of the danger or the probable denen I then Is breach of thi, warranty, the seller will be liable in damages i ari 0 i masa ¢ in damages ie, the buyer is entitled to claim compen ‘An Introduction to Business Law 3. On for the fi ; Eample :Chanchal purchases an Emergency Light from Amit. Amit knows that it isdefective and He tuses without care it might be dangerous, but tells nothing to Chanchal. When. Chanchal tries | {0 use it, causes injury. Amit is liable in damages to Chanchal-as he should be warned Chanchal of the probable danger. 4. Warranty as to quality or fitness by the usage of trade According to section 16(3) of the Sale of Goods Act, 1930, an implied warranty or condition as to quality or fitness for a particular purpose may be annexed by the usage of trade. Example : A Television set was sold in an auction according to the usage of trade. It was to disclose inadvance any sea-damages, otherwise it will be taken asa breach of warranty ifno such disclosure has been made and the goods found to be defective. 3B.10. The Doctrine of Caveat Emptor te of Caveat Emptor Caveat emptor means ‘let the buyer beware’ ie. in any contract of sale of goods the seller of goods is under no duty to confess unflattering truths about the goods sold. So, when a person buys some g00ds, he or she must examine them thoroughly based on his or her experience and judgment. If the goods are defective or not suit his or her purpose and makes a bad selection, then he or she can’t blame the seller. The doctrine of caveat emptor is contained in section 16 of the Sale of Goods Act, 1930. This doctrine of caveat emptor is based on the basic principle that once a buyer is satisfied with the products quality, then he or she has no subsequent right to reject such product and he cannot blame the seller for a bad selection. The objective of introducing this provision was to ensure that the buyer buys the product at his own risk after being assured of the quality of the product. He is required to use his own experience and judgment except in cases of fraud where the doctrine of caveat emptor does not apply. : Example : Say, you want to purchase mango pickle from Malda, West Bengal. Before purchasing the pickle jar, as a purchaser you have to be confirmed about its taste as well as quality. If you do not do the same and if you get any discrepancy from your expectation about its quality and taste, then you could not blame the seller about this bad selection. 3B.10.1. Exceptions to the rule of Caveat Emptor rr There are certain important exceptions to the doctrine of caveat emptor under the Sale of Goods A‘ These exceptions are given below : 1. Misrepresentation by the seller ae Where the seller makes a mis-representation and the buyer relies on that tepresentation, the eae of caveat emptor does not apply. Hence the seller canniot claim the protection of caveat emp Hence buyer can repudiate the contract.Example : Gita bought a car form Sushanta who showed the documents of the sited himself as the original owner when the car did not actually belong to him, C made the initial payment for the purchase of the ear, In thi mis-representation by Sushanta, and Gita has the right to claim the refund of the payment. Gita can also cancel the con repres acl. 2, Deliberate concealment of defect If the seller intentionally conceals the defect, which could not be discovered on a reasonable examination by the buyer, The seller, who is guilty of frauid, shall have no protection of the doctrine of caveat emptor i.e, the doctrine of caveat emptor does not apply. Example : Basu bought a Mobile Phone from a Mobile Store. The storekeeper did not disclose the fact that the Mobile Phone is having a little defect: When Basu started to use the phone, he discovered that it is defective and could not be used properly. Here, Basu shall enjoy the legal right to return the phone to the shopkeeper because there was an invisible defect. 3. Sale by Sample as well as description [Section 15] Where there is a contract for the sale of goods by description, there is an implied condition that the goods shall correspond with the description, and if the sale is by sample as well as by description. It is not sufficient that the bulk of the goods corresponds with the sample if the goods do not also correspond with the description. If the goods are sold by sample as well as description, and the supplied goods should be both as per the sample as well as description. The doctrine of caveat emptor does not apply in this case also. Example : Tania entered into a contract with Seema to supply 500 leather jackets. Tania showed one sample of the jacket which is made of sheep leather. Here, the sale was both by sample and by description. However, when the 500 jackets were delivered to Seema, she rejected them because the leather was not of the quality that had been showed in the sample and the stitching was also improper. Seema has the right to reject the leather jackets supplied by Tinia as the jackets had been sold by sample as well as description. 3 4. Implied Conditions as to quality or fitness [Section 16(1)] Wheye the seller or the manufacturer is a dealer of the type of goods sold by him and the buyer has disclosed the purpose for which goods are required and relied upon the seller's skill or judgment, There will be an implied condition that the goods should be fit for the purpose.Where the buyer of goods, expressly or by implication, makes known to the seller the particular purpose for whick he or she requires the goods and totally relies on the seller's skill, experience and judgment and the goods are of a particular description which it is in the course of the seller business te supply. There is an implied condition that the goods supplied in such circumstance, must have’merchantable quality and shall be reasonably fit for the purpose of buyer. Example: A buyer asked the seller that he wanted a comfortable car suitable for tour purpose, The dealer suggested for buying’a ‘Maruti 800 car’, The buyer bought the car, but after some time he felt that it is not suitable for the said purpose at all. It was held, the buyer was having right to reject the car as relied on the skill and judgement of the dealer. 5. Merchantable quality [Section 16(2)] Where the goods are bought by description from a seller, who deals in goods of that description (whether he is the manufacturer, producer or not), there is an implied condition that goods shall be of merchantable quality. Hence the doctrine of caveat emptor does not apply. Business Law -24370] || An Introduction to Business Law €& XS) Example : Ram ordered some parts of motor car to Tarun, a manufacturer of motors parts and the parts supplied by Tarun were in damaged condition. It was held that the buyer was entitled to Teject the parts as these were not having merchantable quality. 6. Usage of trade [Section 16(3)] An implied warranty or condition as to quality or fitness for a particular purpose may be annexed by the usage of trade. When the usage of trade implies a condition as to quality or fitness for particular Purpose, the rule of caveat emptor does not apply. Example : Mr. Pakira of Bhubaneshwar want to purchase some plastic materials from South Africa. In this contract, Mr. Andrews of Capetown is the seller who did not disclose that the goods were not damaged by sea water. Because of the custom of this particular trade, that the seller, Mr. Andrews, should disclose this particular information. If it is not happen, Mr. Pakira can rescind. [Inspired by Jones Vs. Bowden (1813)] 3 Relevance of Caveat Emptor in present context In the past, when the scope of business was small and communication was made frequently with buyer and seller, and buyer had every opportunity to examine the goods before buying the goods, on that time, the doctrine of Caveat Emptor was considered very significant and relevant. In modem times, on account of the complex structure of modern goods, it is only the sellers who can assure the contents and the quality of the goods when the pace of sale and purchase as well as the methods adopted in trade are highly advanced and when laws protecting the consumer have been enacted, the doctrine is of less importance. In addition, the duty of séller is now to deliver appropriate goods and also to provide appropriate information about them. Thus, it has led to the birth of ‘caveat venditor’ which means ‘Iet the seller beware’ in contrast to caveat emptor. Wawel asta ais ad aa3C.4. Sale or transfer of title by non-owners (Maxim “nemodat quid non-habit” - no seller of goods can give the buyer of the goods a better title of those goods than himself) The general rule is that only the owner of goods can transfer a good title to the buyer of the goods. No one can give a better title than he himself has, The rule is expressed by ‘maxim’; ‘nemo dat quad non habit’ which means that no one can give what he himself has not. Ifa seller himself or herself is not the owner of goods, he or she can’t transfer it to the buyer. If the seller's ownership in goods is defective, then the buyer also gets defective ttle ofthe goods even though the buyer of goods may be bonafied buyer. Itis difficult task to protect a true owner whose goods are sold by illegal means by fraudlent person and a bonafied purchaser who have purchased the goods on believing the words of the fraudlent person who has no right to sell the goods at all. Section 27 of the Sale of Goods Act, 1930, has enlighten this matter legally in following manner? According to section 27 of the Sale of Goods Act, 1930, “subject to the provisions of this Act and of any other law for the time being in force, where goods are sold by a person who is not the owner thereof and who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the seller's authority to sell”. So, the following elements are contained in this section likely — Business Law ~25[ses] | An Introduction to Business Law << ggfeSST) Goods are sold by a person. The person is not the owner of the goods. He does not sell them under the authority or with the consent of the owner. The buyer acquires no better title to the goods than the seller had, unless the owner of the goods is-by his conduct precluded from denying the seller's authority to sell. Bene ‘There are certain exceptions to the above rule which are given below as per section 27 to 30 of the sale of goods act : 1, Transfer of title by Estoppel [Section 27] Generally estoppel is the prevention of a claim of law. conduct precluded from denying the seller's authority to sell”. Thus, when a person makes another believe that a particular thing or fact is true, and afterwards then, he cannot be allowed to deny the truth of that thing or fact. Here the owner by his conduct makes it appear to the buyer that the person who sells the goods has his authority to do so and the buyer relies on that conduct and convinces the buyer to buy them, the buyer obtains a good title that is better than that of the seller. 2. Sale by a Mercantile Agent [Section 27] ‘A mercantile agent who himself or herself is not and in that case the buyer gets a good title if he o “Unless the owner of the goods is by his an owner of the goods can sell the goods to the buyer r she purchases in good faith and for value. A buyer who is in good faith buys goods from an auctioneer will get good title in goods even though the seller had exceeded his or her authority has been revoked by the true owner of the sale. Mercantile agent ‘means an agent who has the authority either to sell the goods, or to consign the goods for the purpose of sale, or to buy the goods or to raise money on the security of the goods. A mercantile agent can transfer a valid title if the following conditions are satisfied: (1) Heisin possession of the goods or documents of title of the goods (i.e., proof of possession), with the consent of the owner, (2). The sale is made by him while acting in the ordinary course of his business, and ) The buyer acts in good faith believing that he has authority to make the sale. Such a rule is valid even if the agent has no‘actual authority to sell. 3. Sale by Joint Owner [Section 28] Section 28 of the Sale of Goods Act has contained regarding the sale by one of the joint owners like “if one of several joint owners of goods has the sole possession of them by permission of the >” owners, the property in the goods in transferred to any person who buys them of such joint owner in good faith and has not at the time of the contract of sale notice that the seller has no authority to sell”. When there are several joint owners of goods and one of them is in sole possession of the goods with the consent of others owners. If a buyer purchases such goods from joint owner who is in possession of goods, then the buyer obtains a good title to the goods although the goods are of joint owner: aico-owner cari transfer his share only, but a sale by one of the several joint owners can P if the following conditions are fulfilled: ely: Generally, es a good title to the buyer, (a) The co-owner is in sole possesion of the goods by permission of other co-owners. (b) The purchaser acts in good faith. (co) The purchaser had no notice at the time sell. of the contract of sale that the seller had no authority?Ga. 4> Sale of Goods Act, 1930 ) [ae 5. Sale by a person in possession under a Voidable Contract [Section 29] According to section 29, when the seller of goods has obtained possession thereof under a contract voidable under section 19 or section 19A of the Indian Contract Act, 1872, but the contract has not rescinded at the time of the sale, the buyer acquires a good title to the goods, provided he buys them in good faith and without notice of the seller's defect of title A person possessing the goods under a voidable contract can transfer a valid title if the following conditions are satisfied: x 1. The possession must have been obtained under a voidable contract and not under a void contract. The voidable contract must not have been rescinded (i.e., put to an end) by the time of sale. The buyer must have acted in good faith, and without the notice of the seller’s defective title. This provision is not applicable to a contract which is void and where the seller has no title of goods at all. : Bey 6. Sale by a seller in possession of goods after sale [Section 30(1)] According to section 30(1), “where a person, having sold goods continues or is in possession of the goods or of the documents of title to the goods, the delivery or transfer by that person or by a mercantile agent acting for him of the goods or documents of title under any sale, pledge or other disposition thereof to any person receiving the same in good faith and without notice of the previous sale shall have the same effect as if the person making the delivery or transfer were expressly authorised by the owner of the goods to make the same”, We can say that the seller who is in possession of the goods or of the documents of title to the goods can transfer a good title to'a second buyer . The first buyer can obtain compensation from the seller but cannot recover the goods from the second buyer. 7. Sale by a buyer in possession of-goods before sale [Section 30(2)] According to section 30(2), ” where a person, having bought or agreed to buy goods, obtains with the consent of the seller, possession of the goods or the documents of title to the goods, the delivery or transfer by that person or by a mercantile agent acting for him, of the goods or documents of title under any sale, pledge or other disposition thereof to any person receiving the same in good faith and without notice of any lien or other right of the original seller in respect of the goods shall have effect as if such lien or right did not exist. “At times, a buyer obtains possession of goods where the seller still has some rights over the goods. In such a situation, if the buyer sells these goods to another person (i.e. second buyer), he can pass a good title to him provided”. So, we can say - () the first buyer must have obtained possession of the goods under ‘an agreement to sell’, and not under ‘an option to buy’ as is done under a hire purchase agreement, and i) the second buyer acts in good faith, and without notice of any lien, or other right of the original seller in respect of those goods. This section is designed to protect an innocent buyer who has received the property in good faith and without notice of lien or other right of the original seller in respect of the goods. 8. Resale by an Unpaid Seller [Section 54(3)] According to section 54(3), “where an unpaid seller who has exercised his right of lien or stoppage in transit, resells the goods, the buyer acquires a good title thereto as against the original buyer, notwithstanding that no notice of the resale has been given to the original buyer.”