Contract of Sales

Meaning of Contract of sales of Goods

 When goods and money (price) are

exchanged between a seller and a buyer
there is a contract of sale of goods. This kinds
of contract aims to regulate the business
activities of a country.
 Sale of goods means Transfer of ownership
of goods for a price from a seller to a buyer.
The contract act of Nepal 2056 states :

 “Where a seller agrees to transfer any goods

immediately or in future against the price of
that goods, there is a contract of sale of
goods.”
Essential elements of a Contract of
Sale

1. Movable property/goods
2. Two parties
3. Price
4. Transfer of ownership
5. Terms of a contract
6. Essential of a valid contract
7. Include sale and agreement to sale
Conditions
 The conditions are the factors or stipulations of contract of
sale, which are essential for the main purpose of contract. In
case of a breach of the conditions , the aggrieved party has
the right to repudiate the contract. He can demand the
damage for the loss or price of the goods on the ground of
repudiation the whole contract.
 Example : A dealer of motorbike sells a 90cc motorbike with
the announcement of 100cc power to its clients. This is a
breach of a condition . It can be repudiated by the aggrieved
party.
Warranties
 Warranty is the stipulation which is collateral or auxiliary or
relating factor for the main purpose of the contract . But it is
not such a vital factor as a condition is. In case of breach of
warranty, the aggrieved party can only claim damage and
can not be treated as repudiated .
 Example : Syakar Company gives warranty to the purchaser
of Splender Hero Honda Bike for two years for any material
defect in normal use from the date of purchase and there is
also a warranty for replacement of any defective part of the
bike . Within the warranty period (2 years ), the company
replaces the part without any charge. But it is not adequate
to repudiate the contract .
Difference between Condition and
Warranty
S.N DIFFERS IN COSNDITION WARRANTY
1 As to value A condition is a A warranty is a
stipulation, which is stipulation , which
essential to the is collateral or
main purpose of auxiliary to the
the contract. main purpose of
the contract.
2 As to breach The aggrieved The aggrieved
party can repudiate party can claim
the contract of sale. damage for the loss
only.
3 As to treatment Breach of condition Breach of warranty
may be treated as a may not be treated
breach of contract. as breach of
contract.
4 As to liability In repudiation of In repudiation of
contract the contract the
aggrieved party aggrieved party
should not fulfill should not
obligations and be discharge from his
Doctrine of Caveat Emptor

 Caveat Emptor is one of the fundamental principles

of law of sale of goods. Caveat means a warning or
to be cautious . It is a Latin term and literally means
let he buyer beware. The phrase means that a buyer
must be aware and cautious , whether the goods is
fit for his purpose or not? The buyer is responsible
for checking whether what he buys is in good order.
It is no part of the seller’s duty to point out the
defects of his own goods. It is the buyer , who has to
inspect the goods to see if that will suit his purpose.
Example

 A lady goes to the market and buys a synthetic

pearl for a high price thinking that h=they are
natural pearls. The seller is not liable . But she
said –”I think the pearls are natural and
original , that is why I agree to pay your price .”
he keeps silent . After some days she came to
know the fact. The seller is liable. The contract
can be void, because there is a breach of
conditions as to the quality.