SALES OF GOODS ACT, 1930

HISTORY
 Sale of goods act was enacted in 1930.

 Borrowed from the English act.

 Came into force in July, 1930.

 Priorto the act, the law of sale of goods was

contained in chapter VII of the Indian contract
act,1872.
 FORMATION
OF
CONTRACT OF SALE
DEFINITION

 Sec 4(1) of the Indian Sale of Goods Act, 1930

defines the contract of the sale of goods in the
following manner:

“ 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”.
The term “Contract of sale of goods’ is a generic term and it
includes:

a. Sale and
b. An agreement to sell

where the seller transfers the ownership rights to the

buyer immediately on making the contract, it is the
contract of sale, but where the ownership rights are to
pass on some future date upon the fulfillment of certain
conditions then it is called an agreement to sell.
 ESSENTIALS OF A CONTRACT OF SALE
 Two parties- buyer and seller- Undivided joint owners

 Goods: every kind of movable property except actionable

claims(book debt) and money

 Price: Goods for goods( Transfer property Act)

- Partly goods and partly cash-Sale of Goods

 Transfer of general property(Ownership)-Special property

 Includes both sale and agreement to sell

 DIFFERENCE BETWEEN
Sale Agreement to sell

 Ownership passes to the  Ownership remains with

buyer. the seller.
 It is a executed contract.  It is a executory contract.

 Risk of loss falls on the  Risk of loss falls on the

buyer. seller.
 Seller cannot resell the  Seller can sell goods to

goods. third party.

 It can be in case of  It can be in case of future

existing and specific and unascertained goods.

goods.
 Sale
 In case of breach of a
contract, seller can sue for
the price of the goods .
 The seller is only entitled to
the ratable dividend of the
price due if the buyer
becomes insolvent.
 The buyer is entitled to
recover the specific property
from the assignee if the
seller becomes insolvent.
Agreement to sell
 In case of breach of a
contract, seller can sue only
for damages not for the price.
 The seller may refuse to sell
the goods to the buyer w/o
payments if the buyer
becomes insolvent.
 Buyer can claim only ratable
dividend for the money paid.
 TYPES OF GOODS
 Existing Goods: Goods which are physically in existence and
which are in seller’s ownership at the time of entering into
contract.
 Specific Goods

 Unascertained Goods

 Future Goods: Goods to be manufactured, produced or

acquired by the seller after making the contract of sale

 Contingent Goods: Goods, the acquisition of which by the

seller depends upon an uncertain contingency
CONDITIONS AND
WARRANTIES [SEC 12]
TERMS
 Representation: Statement made by the seller
before entering into a contract.

 Stipulation: If such representation forms an

integral part of the contract and other party relies
upon it.

 No Representation: CAVEAT EMPTOR’ i.e., Let

the Buyer Beware – is applied
 CONDITION AND WARRANTY

 “A stipulation in a contract of sale with reference to goods

which are subject matter there of, may be a condition or a
warranty.”

 These stipulations forms a part of the contract of sale and

breach of it provides a remedy to the buyer against the
seller.
CONDITION [SEC12(2)]
“ 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 goes to the root of the contract.

 Itsnon fulfillment upsets the very basis of the

contract.
 Example :- [Behn v. Burness,1863]

 By charter party( a contract by which a ship is hired

for the carriage of goods), it was agreed that ship of
420 tons “now in port of Amsterdam” should
proceed direct to new port to load a cargo. In fact at
the time of the contract the ship was not in the port of
Amsterdam and when the ship reached Newport, the
charterer refused to load. Held, the words “now in
the port of Amsterdam” amounted to a condition, the
breach of which entitled the charterer to repudiate the
contract.
WARRANTY : SEC.12(3)

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 right to reject the
goods and treat the contract as repudiated.
 DISTINCTION BETWEEN
Condition
 It is a stipulation which is
essential for the main
purpose of the contract.
 In case of breach of a
condition, the aggrieved
party can repudiate the
contract of sale.
Warranty
 It is a stipulation which is
collateral to the main
purpose of the contract.
 In case of breach of
warranty, the aggrieved
party can claim damages
only.
Condition Warranty
 A breach of condition  The breach of warranty
may be treated as breach cannot be treated as a
of warranty. breach of a condition.
RIGHTS OF UNPAID
SELLER
 UNPAID SELLER (SEC.45)
 A seller of goods is deemed to be an unpaid seller when:-

• The whole of the price has not been paid or tendered

• A bill of exchange or other negotiable instrument has been

received as a conditional payment, and the condition on which
it was received has not been fulfilled by reason of the dishonour
of the instrument or otherwise
CONDITIONS
 The term "seller" includes any person who is in the position of a
seller, as, for instance, an agent of the seller to whom the bill of
lading has been endorsed, or a consignor or agent who has
himself paid, or is directly responsible for, the price.

 The seller shall be called an unpaid seller even when only a small
portion of the price remains to be unpaid.

 It is for the non payment of the price and not for other expenses
that a seller is termed as an unpaid seller.

 Where the full price has been tendered by the buyer and the seller
refused to accept it, the seller cannot be called as unpaid seller.
CONTINUED ……..
 Where the goods have been sold on credit, the seller cannot
be called as an unpaid seller. Unless :

 If during the credit period seller becomes insolvent, or

On the expiry of the credit period, if the price remains

unpaid,
Then, only the seller will become an unpaid seller.
1) Right against goods:
Where the property in the goods has passed
 Lien on goods

 A right of stoppage-in-transit

 A right of Re-sale

Where the property in the goods has not passed

 Withholding delivery

 Stoppage in transit

2) Right against the buyer:

 Suit for price

 Suit for damages

 Repudiation of contract

 Suit for interest

RIGHT OF LIEN (SEC.47-49) :
 Right to retain possession of goods and refuse to
deliver them to buyer until the price due in respect
of them is paid or tendered

 The goods are not sold on credit

 The goods have been sold on credit, but the period of

credit has expired

 The buyer becomes insolvent

RIGHT OF LIEN (SEC.47-49) :
 When Lien is Lost???

 In the following cases:

 When the seller delivers the goods to carrier without
reserving the right of disposal of goods.
 When the buyer or his agent lawfully obtains possession of
goods
 When the seller expressly or impliedly waives his right of
lien
 RIGHT OF STOPPAGE IN TRANSIT (SEC.50-
52)
 The right of stopping further transit of goods while they
are with a carrier.

When can this right be exercised?

 The buyer becomes insolvent

 The property has passed to the buyer(Right of withholding

delivery)

 The goods are in course of transit( The agent is neither of seller or

buyer)
 RIGHT OF STOPPAGE IN TRANSIT (SEC.50-
52)

 The transit is end in following cases:

 When the buyer or agents take possession on reaching destination

 If the buyer obtains the possession of the goods before its arrival
at the destination
 If, after the arrival at their destination, the carrier acknowledges
to the buyer that he holds on his behalf
 On request of buyer, carrier transits to other destination

 If the carrier wrongfully refuses to deliver the goods to the buyer

RIGHT OF RE-SALE (SEC.54)

 Where the goods are of perishable nature

 When the buyer does not pay the price or default

 Where the seller has given a notice to the buyer of his intention

to resell and the buyer does not pay or tender the price within

the reasonable time (Loss or profit)

 RIGHTS OF UNPAID SELLER AGAINST SELLER
PERSONALLY

 Suit for the price: Property has been passed

 Suit for damages for non acceptance: buyer wrongfully

neglects or refuses to accept and pay for the goods

 Suit for special damages and interest: the loss ‘which the
parties knew when they made the contract
 BUYER’S RIGHTS AGAINST SELLER

 Suit for damages for non delivery

 Suit for specific performance

 Suit for damage for breach of warranty

 Suit for damage for breach of condition

 Suit for recovery of the price together with interest