Sale of Goods Act, 1930

UNIT III
Contract of Sale
Sec 4(2)
 “A Contract of Sale is a contract
whereby the seller transfers or agrees
to transfer the property in the goods to
the buyer for a price.”
 Contract of sale includes agreement to
sell.
Sale Vs. Agreement to sell.
1. Transfer of property is 1. Transfer of property is
immediate at a future date.
2. Goods are existing or 2. Goods are future and
specific. contingent goods
3. Risk of loss is of the 3. Risk of loss is of the
buyer even though the seller even though the
possession of the goods possession of the goods
is with the seller. is with the buyer.
4. The buyer has a right 4. The buyer has a right
against the whole world only against the seller.
Sale Agreement to sell
5. If the buyer fails to 5. The seller can only sue
pay the price of the for damages and not for
goods the seller can the price even though
sue for the price the goods are in the
possession of the buyer.
even though the
goods are in his
possession
6. The seller has a right to
6. The seller has no
resell because
right to resell the ownership has not
goods. passed on.
 Sale Agreement to sell
7. In case of insolvency of 7. In case of insolvency of
the buyer, the seller the buyer, the seller is not
must give the goods to bound to part with the
the official receiver goods

8. In case of insolvency of 8. In case of insolvency of

the seller, the buyer is the seller, the buyer who
entitled to recover the has paid the price cannot
goods from the official claim for the goods
receiver
Sale Vs hire purchase agreement
1. Ownership is 1. Ownership is transferred
transferred from a seller to hire
purchaser only after
immediately paying certain
2. The position of the installments.
buyer is that of the 2. The position of the hire
owner. purchaser is that of a
bailee.
3. The buyer cannot 3. The hire purchaser has
terminate a contract an option to terminate
4. If the payment is made the contract at any
stage.
in installments, the
4. The installments are
amount to be paid gets rentals till the option to
reduced. purchase the property is
availed.
Essentials of sale
1. Two parties- buyer and seller
2. Transfer of ownership (general
property)
3. Goods
4. Price
5. Essentials of a valid contract
Goods.
 Sec 2(7)
 every kind of moveable property other
than actionable claims and money is
goods; and includes stocks and shares,
growing crops and grass and anything
attached to land which can be detached
from land at the time of sale.
Classification of goods:-

Contingent
Existing goods Future goods
goods

Specific Ascertained Unascertained

goods goods goods
Conditions and Warranties

 Sec 12(2) “A condition is a stipulation

which is essential to the main purpose
of the contract.”
 Sec12(3) a warranty is a stipulation
collateral to the main purpose of the
contract.
Difference between condition and
warranty
 Difference as to value.
 Difference as to breach.
 Difference as to treatment.
 Express and implied conditions
and warranties
 Dooo Express conditions – those expressly
provided in the contract
 Implied conditions:- those which the law implies
into a contract unless the parties stipulate
otherwise
1. Condition as to title. sec 14
2. Sale by description. Sec15
3. Condition as to quality and fitness. sec 16.
4. Condition as to merchantability.
5. Condition implied by custom
6. Sale by sample
7. Condition as to wholesomeness.
Condition as to title
 Contracts have an implied condition on the
part of the seller that
• In the case of sale, he has a right to sell
the goods and
• In the case of an agreement to sell, he
will have a right to sell at the time when
property is to pass
Sale by description. Sec15
Implied condition that the goods shall correspond
with the description. It may include the
following situations:-
1. Where the buyer has not seen the goods but
relies on the description of the seller.
2. When the buyer has seen the goods but relies
on the description given by the seller.
3. Packing of goods may sometimes be a part of
the description.
4. Sale by description as well as by sample
Condition as to quality and fitness:-

 No implied condition as to quality – buyer must

examine them for suitability

 Points to be noted.:-
1. Where the buyer makes known to the seller the
purpose for which he needs the goods and
depends on the skill and judgment of the seller.

2. If the buyer purchasing an article for a particular

use is suffering from an abnormality and it is not
made known to the seller implied condition as to
fitness does not apply.
Condition as to quality and
fitness:- contd.
 In case the goods can be used for a number of
purposes, the buyer must tell the seller the
particular purpose for which he requires the
goods.
 If the buyer purchases an article under its
patent or trade name, the implied condition
that articles are fit shall not apply, unless the
buyer relies on seller’s skill or judgment and
informs the seller that he so relies on him.
Condition as to merchantability
 Where goods are bought by description from a
seller who deals in goods of that description –
implied condition – merchantable quality, i.e.
commercially saleable under the description.

 Where the buyer has examined goods, there

is no implied condition, if the examination
would have revealed defects.
Condition implied by custom
 The purpose for which goods are required
may be ascertained from the acts/conduct of
the parties or description of the article
purchased.
 In such cases the buyer need not tell the
seller the purpose for which he buys the
goods.
Sale by sample
The following are the implied conditions:
 The bulk shall correspond with sample
 Buyer shall have reasonable opportunity of
comparing bulk with sample
 That goods shall be free from defect
Implied warranties
 Warranty of quiet possession
 Warranty of freedom from encumbrances.
 Warranty to disclose the dangerous nature
of goods.
Caveat emptor
 ‘Means buyer beware’
Exceptions :-
 Fitness for buyer’s purpose.
 Merchantable quality
 Consent by fraud.
Performance of a contract of sale
 Meaning of performance.
Delivery of goods
 ‘it means voluntary transfer of
possession of goods from one person to
the other.’

{
Actual delivery
 Symbolic delivery
Delivery of goods may be Constructive
delivery.
Rules of delivery
1. Mode of delivery
2. Delivery and payment are concurrent .
3. Effect of part delivery is same as that of whole delivery if
it is so intended and agreed
4. Buyer to apply for delivery.
5. Place of delivery
6. Time of delivery
7. Goods in the possession of the third party.
8. Cost of delivery.
9. Delivery of a wrong quantity.
10. Installment deliveries.
11. Delivery to a carrier.
Rights and duties of the buyer.
 Rights:-
 Right to have delivery as per the contract.
 Right to reject the goods
 Right to repudiate
 Right to notice of insurance.
 Right to examine.
 Right against the seller for breach of contract:-
1. Suit for damages
2. Suit for price
3. Suit for specific performance.
4. Suit for breach of warranty.
5. Suit for interest.
6. Repudiation of the contract before the due date.
Duties of the buyer
 Duty to accept the goods and pay for
them.
 Duty to apply for delivery.
 Duty to demand delivery at reasonable
hour.
 Duty to intimate to the seller when he
rejects the goods.
 Duty to pay damages for breach.
Rights of an unpaid seller
 A seller of goods will be deemed to be
an unpaid seller if :
 The whole of the price has not been made.
 The payment has been made by a bill of
exchange or other negotiable instrument
that has got dishonored.
 Rights of an Unpaid Seller

Against the goods Against the buyer personally

Withholding
When the When the delivery
property property in
in goods goods has not
has passed
passed
Stoppage
in transit
Lien Re-sale
Stoppage in transit

Suit for price Suit for Damages Repudiation of Suit for

for non acceptance contract before interest
due date