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BY:
SHWETA SINGH
MBA- IB.
 

˜ îA contract of sale of goods is a contract

whereby the seller transfers or agrees to
transfer the property in goods to the buyer
for price". (Section 4)
˜ Originally, the law relating to sale of goods
was contained in Chapter VII of the Indian
Contract Act, 1872. The same was repealed
and re-enacted by the Sale of Goods Act, III
of 1930.
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ESSENTIALS OF CONTRACT OF SALE

1. There must be    
2. Transfer or Agreement   
  .
3. The subject matter of the  !
" # $$.
4. The   %.
5. A Contract of sale may be #! 

6.      &  must be
present.
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A $ '(  |

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o It is a contract where the ownership in the goods is transferred
by seller to the buyer immediately at the conclusion contract.
Thus, strictly speaking, sale takes place when there is a
transfer of property in goods from the seller to the buyer. A sale
is an executed contract.
o It must be noted here that the payment of price is immaterial to
the transfer of property in goods.
,-
o A sells his Yamaha Motor Bicycle to B for Rs. 10,000. It is a
sale since the ownership of the motorcycle has been
transferred from A to B.
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A $ '(  
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It is a contract of sale where the transfer of property in goods is to
take place at a future date or subject to some condition thereafter to
be fulfilled.
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˜ A agreed to buy from B a certain quantity of nitrate of soda. The ship
carrying the nitrate of soda was yet to arrive. This is `an agreement
to sale`. In this case, the ownership of nitrate of soda is to be to
transferred to A on the arrival of the ship containing the specified
goods (i.e. nitrate of soda) [â.(/
˜ On 1st March 1998, A agreed to sell his car to B for Rs. 80,000. It
was agreed between themselves that the ownership of the car will
transfer to B on 31st March 1998 when the car is got registered in
B`s name. It is an agreement to sell and it will become sale on 31st
March when the car is registered in the name of B.
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Sale Agreement to sell

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˜ Hire Purchase Agreement ˜ ln case of sale, the

˜ It is an agreement for hire, with an option property passes as
to purchase. soon as sale is
made though price
˜ The hirer, under this agreement, is has not been fully
required to pay every month a particular paid.
sum of money, and if he pays in that way ˜ In determining as to
for a fixed number of months, the hirer will whether a particular
become the owner of the goods on the contract belongs to
payment of the last instalment. one type or the
˜ But, if the hirer fails to pay any particular other, regard shall
instalment, the owner can terminate the have to be paid to
contract and take away the goods, the fact whether the
because the ownership continues to hirer has merely an
remain in the owner. A "Hire-purchase option to purchase,
agreement" is distinct from "Sale" in or whether he has
which price is payable by instalments bought or agreed to
buy the goods.
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˜ ÎGoodsÎ means every kind of moveable property 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.
˜ Actionable claims and money are not included in the
definition of goods.
˜ Thus, ë
 
  
 
  


other than actionable claim
money. ,  -
goodwill, copyright, trademark, patents, water, gas, and
electricity are all goods and may be the sub-ject matter of
a contract of sale.
˜ The test is if the property on shifting its situation, does not
lose its character, the said property shall be movable and
fall within the definition of `Goods`.
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˜ A document of title to goods may be described as any

document used as proof of the possession or con-trol of goods,
authorising
purporting to authorise, either by endorsement

by delivery, the possessor of the document to transfer

receive goods thereby represented.
˜ The following are documents of title to goods:
± Bill of Lading;
± Dock Warrant;
± WarehousekeeperÎs Certificate;
± WharfingerÎs Certificate;
± Railway Receipt;
± Warrant
order for the delivery of goods; and
± any other document used in the ordinary course of business
as a document of title .

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O, - Existing goods are those, which are owned

possessed by the seller at the time of the contract. Instances
of sale of goods possessed but not owned by the sellers fire
sales by agents and pledgees.
Existing goods may be either:
(a) Specific and Ascertained - goods identified and agreed
upon at the time a contract sale is made; or
(b) Generic and Unascertained - goods arc goods indicated
by descrip-tion and not specifically identified.
r !! - Future goods" means goods  be
manufactured or produced or acquired by the seller after
making the contract sale.
  ! Contingent goods are the goods the
acquisition which by the seller depends upon a contingency
which mayor may not happen. Contingent goods are a part 
future goods.
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˜ ÎPriceÎ means   


  for sale of the goods.
ÎPriceÎ is an integral part a contract of sale. If it is not fixed
or is not capable of being fixed, the whole contract is void
! O
˜ The Act provides that the price may be fixed
˜ either by the contract or
˜ may be agreed to be fixed in a manner provided by the contract,
e.g., by a valuer, or
˜ it may be determined by the course of dealings between the
parties.
˜ in case, price is not capable of being fixed in any of the
above ways, the buyer is bound to pay reasonable price.
What is reasonable price will vary from case to case
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˜ In a contract of sale, parties make certain stipulations, i.e.,

agree to certain terms. Some of them may be intended by the
parties to be of a fundamental nature, e.g., quality of the goods
to be supplied. The stipulation essential to the main purpose of
the contract, the breach of which gives rise to a right to treat the
contract as repudiated. Such stipulations are known as
`Conditions`.
˜ In contrast, some may be intended by the parties to be binding,
but of a subsidiary or inferior char-acter, e.g., time of payment.
Thus, 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. Here the stipulations are known as
`warrantiesÎ.
˜ A condition is a stipulation (in a contract), which is essential to
the main purpose of the contract.A breach of condition gives
the aggrieved party a right to sue for damages as well as the
right to repudiate the contract.A breach of condition may be
treated as a breach of warranty in certain circumstances.
˜ A warranty is a stipulation, which is only collateral or
subsidiary to the main purpose of the contract. A breach of
warranty gives only the right to sue for damages. a 

 


.
˜ A breach of warranty cannot be treated as a breach of
condition.
˜ ,-
˜ A man buys a particular horse, which is warranted
quiet to ride and drive. If the horse turns out to be
vicious, the buyerÎs only remedy is to claim
damages.
˜ 2! instead of buying a particular horse, a man
asks a dealer to supply him with a quiet horse and
the horse turns out to be vicious, the stipulation is a
condition and the buyer can reject the horse, or keep
the horse and claim damages.
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˜ Under the following circumstances a breach of condition is to

be treated as a breach of warranty, i.e., the right to repudiate
the contract is deemed to have been lost:[SECTION 13]
˜ O 
  
 
˜ O 

 
  
 
 


O
˜ EXPRESS AND IMPLIED CONDITIONS AND WARRANTIES
˜ Conditions and Warranties may be either 
or 
O
˜ They are said to be "," when the terms of the contract
expressly provide for them. They are said to be $ $ when
the law deems their existence in the contract even without their
actually having been put in the contract.
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The following are the implied conditions

(1) Condition as to Title
(2) Sale by Description
(3) Condition as to Quality or Fitness
(4) Merchantable Quality
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 - A contract of sale is a contract for sale by
sample where there is a term in the contract, express or
implied, to that effect.
In a sale by sample, the following are the implied conditions:
1. The bulk shall correspond with the sample in quality;
2. That the buyer shall have a reasonable opportunity of
comparing the bulk with the sample; and
3. That the goods shall be free from any defects rendering them
unmerchantable, which would not be apparent on reasonable
examination of the sample.
˜ ,-
˜ Certain shoes were sold by sample for the French Army. The
shoes were found to contain paper not discoverable by ordinary
inspection. á
the buyer was entitled to the refund of price
plus damages.
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˜ There are two implied warranties. These are:

1. Warranty of Quiet Possession
2. Warranty of Freedom from Encumbrances
˜ ,3
˜ A purchased a second hand typewriter from B. A used it for
sometime and also spend some money on its repairs. The
typewriter turned out to be stolen one and as such A had to
return it to the true owner. It was held that A could recover
damages from B amounting to the price paid and the cost of
repair Ë(& 2!  /
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Ë|r
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˜ The general rule is that only the owner of goods can transfer a
good title. No one can give a better title than he himself has.
This rule is expressed by the maxim º  

 
ºwhich means "that no one can give what he himself has
not"
˜ If the seller, therefore, has no title, or a defective title, the
buyerÎs title will be equally wanting or defective as the case
may be, though he may be a purchaser - bonafide and for
value.
,-
˜ A finds a ring of B and sells it to a third person who purchases it
for value and in good faith. The true owner, i.e., B can recover
from that person, for A having no title could pass none the
better. Ë!4!& 5 ).
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˜ O
ë
˜ O ! 

˜ !O"
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# 
 

˜ $O
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- Where
a seller having sold goods, continues in possession thereof or
of documents or title to the goods, such seller will pass a good
title to the (second) buyer, if that buyer has acted in good faith
and without notice of the previous sale.
˜ üO

- a seller who has exercised his
right of lien or stoppage in transit can, resell the goods and
convey a valid title to another buyer, though no notice of re-sale
has been given to the original buyer.
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2)1'

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˜ To deliver the goods, in accordance with the terms of the
contract of sale.
˜ Delivery and payment of price are concurrent conditions.
˜ The seller of goods has the duty of giving delivery according to
the terms of the contract.
à
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˜ Pay for the goods;
˜ Accept delivery; and
˜ Pay compensation to the seller in case he wrongfully refuses to
accept delivery.

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It has been defined as a voluntary transfer of possession from one person

to another..
Delivery of the goods may, be:
I. ! 


à
#!
O |! 
à
#! -   , delivery of a railway receipt properly
endorsed, or deliv-ery of the key of a warehouse;
3.  
#à
#! - only an acknowledgement by
the person in possession that he holds them on behalf of another.
$

  
#!
1. The 
  
 
 
ë

 for
delivery in terms of the contract.
2. " & 
 - goods sold are to be delivered at the place agreed
for delivery in the contract.
3. a & 
 ± as per contract otherwise within reasonable time.
4. The  of and incidental to putting the goods into a deliverable
state shall be borne by the seller, as per the terms of the contact.
5. &



   
   
- What is a
reasonable hour is a question of fact.
6. D 
 
ë ' - Where the seller delivers to the
buyer a quantity of goods less than he contracted to sell, the
buyer may reject them. But, if the buyer accepts the goods so
delivered he shall be required to pay
them at the contracted
rate.
7. ( & 
 - The buyer is not bound to accept
delivery by instalment, unless otherwise agreed.
)O & 
   




ë
- Delivery of goods by the
seller to a carrier for transmis-sion to buyer or to wharfinger for
safe custody is 
  deemed to be a delivery of the
goods to the buyer.
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'
˜ A contract is comprised of reciprocal promises, in a contract of sale, if
seller is under an obligation to deliver goods; buyer has to pay for it. In
case buyer fails or refuses to pay, the seller, as an unpaid seller, shall
have certain rights.
˜  


˜ An unpaid seller of goods is a person who has not been paid the whole
of the price or to whom the whole of the price has not been tendered.
The term "seller" includes an agent of the seller.
˜ The seller of goods is deemed to be an "unpaid seller" if:
˜ (a) the whole of the price, has not been paid or tendered;
˜ (b) 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 fulfilled by reason of the dishonour of the
instrument or otherwise. .
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Rights of an unpaid seller may broadly be classified under two heads

namely:
1. ëëë

An unpaid seller has the following rights against the goods:
*+, ë

*+
ë  ë

*+
ë 
!
2. ëë-
"
 
An unpaid seller, besides his rights against goods, has the following rights
against the buyer personally:
(i) Right to sue for the price; and
(ii) the right to sue the buyer for damages for non-acceptance.
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u In the case of sale by auction the following rules apply:

1. When the goods are put up for sale in lots, each lot is deemed,

  to be the subject matter of a separate contract of
sale;
2. At an auction, the sale is complete when the auctioneer
announces its completion by the fall of the hammer or in other
customary manner; until such completion any bidder may
withdraw his bid.
3. The sale may be notified to be subject to a reserved or upset
price.
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