Unit V

Sale of Goods Act 1930

Unit V
The Sale of Goods Act, 1930- Definition of Goods, Sale and Agreement
to Sell, Conditions and Warranties, Rights & Liabilities of a Buyer &
Seller, Rights of an Unpaid Seller.

The Negotiable Instruments Act, 1881- Statutory definitions,

promissory note, bill of exchange or cheque payable. Dishonor of
Negotiable Instrument. Types of Offences and penalty.
 Important Concepts
1. Buyer [Section.2(1)]:
• Buyer means a person who buys or agrees to buy the goods.
2. Seller:-[Section 2(13)] :
• Seller means a person who sells or agrees to sell the goods.
• Example: - Mr. Kashif sells the shop to Mr. Zahir. Mr. Kashif is a seller and Mr. Zahir is a
buyer in this case.
3. Goods: - [Section 2(7)]:
• Goods have been defined by Section 2, sub-section 7 of the Sale of Goods Act 1930 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 land which are agreed to be severed before sale or under a contract of sale.
4. Delivery [Section 2(2)]:
• Delivery means voluntary transfer of the possession of goods from one person to another.
Actionable Claims: https://margcompusoft.com/m/actionable-claim/#:~:text=Examples%20of%20Actionable%20Claims&text=A%20lends%20money%20to%20B,to
%20pay%20rent%20every%20month.
 Important Concepts
5. Price:
• Price must be the consideration in the contract of sale. If goods are exchanged with
goods, it is barter and not a contract of sale.
• Example :- “X” sells a book to “Y” for Rs. 300. It is a contract of sale.
6. Transfer of Ownership:
• To constitute the sale contract, the seller must transfer or agree to transfer the
property ownership to the buyers. So, possession and ownership both will be
transferred to buyer.
• Example :- “X” sells the car to “Y” for 6 lac. The possession and ownership both
will transfer to “Y”.
7. Sale:
• When ownership and possession of the goods is immediately transferred from seller
to buyer it is called contract of sale.
• Example:- “X” buys a pen from “Y” and pays the whole price on his hand. It is a
sale.
 Important Concepts
8. Agreement to Sell:
• The contract is called agreement to sell, when the transfer of ownership in
the goods is to take place at a future date.
• Example :- Mr. X agrees to purchase Mr. Nitin’s bus for Rs. 30 lac. But the
transfer of bus will take place after one year. It is agreement to sell.
• Where under a contract of sale, the transfer of 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’ [Sec. 4(3)]. It is an
executory contract and refers to a conditional sale.
• Illustrations:
• (a) On 1st Feb, A agrees with B that he will sell B his scooter on 15 Feb for a sum of Rs. 3,000. It is an
agreement to sell, since A agrees to transfer the ownership of the scooter to B at a future time.
• (b) A agrees to purchase B’s car for Rs. 50000, provided B stands surety for him with C. It is an agreement
to sell for B. It becomes a sale when the condition is fulfilled by B.
 Sale of Goods Act
• The sale of Goods Act 1930 deals with the law relating to sale of goods. The term
Goods means every kind of movable property, other than Money and
Actionable claims.
• According to Section 2(7), “goods means every kind of movable property
other than actionable claim 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.

• Goodwill, trademarks, copyrights, patents right, water, gas, electricity, are all regarded as
goods. Shares and stock are also included in goods.
 Contract of Sale of Goods
• “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.” [Sec. (4) 1].

• ‘Contract of sale’ is a generic term which includes both a sale as well

as an agreement to sell.
 Contract of Sale of Goods Definition
• Section 2(1) of the Act defines a contract of sale of goods as: a contract by which
the seller transfers or agrees to transfer the property in goods to the buyer for
a money consideration, called the price.

Subsections (3) and (4) give different names to two transactions:

• (3) Where under a contract of sale, the property in the goods is transferred
immediately from the seller to the buyer the contract is called a sale.

• (4) Where under a contract of sale, the transfer of the property in the goods is to
take place at a future time or subject to some condition later to be fulfilled the
contract is called an agreement to sell.
 Essentials of Contract of Sale
1. Two parties:
• The first essential is that there must be two definite parties to a contract of sale, viz.., a buyer and a seller,
as a person cannot buy his own goods.
2. Parties:
• A minor or lunatic cannot be a transferor / vendor as he is not competent to contract under Section II of
the Indian Contract Act, 1872. It has been held that a minor or a lunatic can be a transferee or purchaser in
the case of transfer by way of sale or mortgage, represented by his Guardian.
3. Transfer of property:
• ‘Property’ here means ownership. Transfer of property in the goods is another essential of a contract of sale
of goods. A mere transfer of possession of the goods cannot be termed as sale. To form a contract of
sale the seller must either transfer or agree to transfer the property in the goods to the buyer.
 Essentials of Contract of Sale
4. Goods:
• The subject-matter of the contract of sale must be ‘goods’, According to Section 2(7), “goods
means every kind of movable property other than actionable claim 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.

• Goodwill, trademarks, copyrights, patents right, water, gas, electricity, are all regarded as goods.
Shares and stock are also included in goods.
 Essentials of Contract of Sale
5. Consideration:
• The consideration for a contract of sale must be money consideration called the price. If goods
are sold or exchanged for other goods, the transaction is barter, governed by the Transfer of
Property Act and not a sale of goods under this Act. If goods are sold partly for money and
partly for goods, this is the contract of sale.

6. Sale:
• Where under a contract of sale, the property in the goods is immediately transferred at the time
of making the contract from the seller to the buyer, the contract is called a ‘sale’ [Sec. 4(3)]. It
refers to an absolute sale. There is immediate transfer of the ownership and mostly of the
subject-matter of the sale (delivery may also be given in future). It is an executed contract.
Differences between Sale and Agreement to Sale
• Transfer of Ownership: In a sale, the ownership of goods is immediately transferred from the seller to the
buyer. On the other hand, in an agreement to sell, the ownership is agreed to be transferred in the future,
upon the occurrence of certain conditions or fulfilment of specific terms.
• Risk and Responsibility: In a sale, once the ownership is transferred, the buyer bears the risk and
responsibility associated with the goods. In contrast, in an agreement to sell, the seller continues to bear the
risk until the ownership is actually transferred.
• Legal Status: A sale is a completed transaction, resulting in a legally binding contract (executed contract), and
the transfer of ownership. Conversely, an agreement to sell is a contract that promises a future transfer of
ownership, and until that transfer occurs, it remains an executory contract.
• Insolvency or Default: If the seller becomes insolvent or defaults on the agreement before the transfer of
ownership in a sale, the buyer's rights are protected, and they can take legal action to recover the goods.
However, in an agreement to sell, the buyer's rights are limited, as they are considered an unsecured creditor until
the ownership is transferred.
• Price Fluctuations: In a sale, any fluctuations in the price of goods after the ownership transfer does not
affect the buyer. However, in an agreement to sell, if the price of goods changes before the transfer of
ownership, the buyer and seller may need to renegotiate the terms to reflect the new price.

• A sale involves an immediate transfer of ownership, whereas an agreement to sell signifies a future transfer
of ownership contingent upon certain conditions.
https://testbook.com/key-differences/difference-between-sale-and-agreement-to-sell#:~:text=Legal%20Status%3A%20A%20sale%20is,it%20remains%20an%20executory
%20contract.
https://testbook.com/key-differences/difference-between-sale-and-agreement-to-sell#:~:text=Legal%20Status%3A%20A%20sale%20is,it%20remains%20an%20executory
%20contract.
Conditions and Warranties
In a contract of sale,
• parties may make certain statements about the stipulation or the course of trade.
• These stipulations in the contract of sale are made with reference to the subject matter of
the sale.
• These stipulations may either be a condition or in the form of a warranty.

The provisions of the conditions and warranty are provided in the sections 11 to 17 of the Act. The
stipulations are the essence of the contract of sale and a breach of these stipulations provides a
remedy to the grieved party.

https://www.toppr.com/guides/business-laws/the-sale-of-goods-act-1930/concept-of-condition-and-warranty /
Conditions and Warranties
Conditions and Warranties in the Sale of Goods Act, 1930 (India)
• The Sale of Goods Act, 1930 governs contracts for the sale of goods in India. It includes provisions for both
conditions and warranties, which protect the buyer's interests in different ways:

Conditions:
• Definition: A condition is a term of the contract that is essential to its performance. If a condition is
breached, the buyer has the right to reject the goods or treat the contract as repudiated.
• Examples of conditions include:
• Title: The seller must have the legal right to sell the goods.
• Description: The goods must conform to the description given by the seller.
• Merchantability: The goods must be fit for the purpose for which they are normally used (unless
sold "as is").
• Delivery: The goods must be delivered within a reasonable time.
• Example: A buyer purchases a laptop for office work. The laptop arrives with a faulty keyboard. As the
keyboard is essential for its intended use, the buyer has the right to reject the laptop or claim a full refund.
Condition Vs Warranty
Condition
• Title: The seller must have
the legal right to sell the
goods.
• Description: The goods must
conform to the description
given by the seller.
• Merchantability: The goods
must be fit for the purpose
for which they are normally
used (unless sold "as is").
• Delivery: The goods must be
delivered within a
reasonable time.
Warranty
• Quality: The goods will be of
satisfactory quality.
• Durability: The goods will last
for a reasonable period.
• Fitness for a particular
purpose: The goods will be fit
for the specific purpose
agreed upon by the buyer and
seller.
Conditions and Warranties
Warranties:
• Definition: A warranty is a promise made by the seller about the quality or performance of
the goods. If a warranty is breached, the buyer is entitled to damages, but not necessarily
to reject the goods.
• Examples of warranties include:
• Quality: The goods will be of satisfactory quality.
• Durability: The goods will last for a reasonable period.
• Fitness for a particular purpose: The goods will be fit for the specific purpose agreed upon by the
buyer and seller.
• Example: A buyer purchases a new car with a warranty that covers the engine for 5 years. If
the engine malfunctions within the warranty period, the buyer is entitled to repairs or
replacement of the engine, but not necessarily to return the car.
Conditions and Warranties
Key Differences:
• Breach of condition: Entitles the buyer to reject the goods or treat the contract as
repudiated.
• Breach of warranty: Entitles the buyer to damages, but not necessarily to reject the goods.
• Burden of proof: In a breach of condition, the seller must prove the goods conformed to the
contract. In a breach of warranty, the buyer must prove the warranty was breached.

Additional Considerations:
• Certain terms may be both conditions and warranties. For example, a term that the goods will be
"new" can be considered both a condition (essential to the contract) and a warranty
(promise about quality).
• The Act also allows for implied conditions and warranties, which arise from the nature of the
goods and the circumstances of the sale.
Conditions and Warranties
• In the Sale of Goods Act, 1930, the terms "condition" and "warranty" play crucial roles in
determining the rights and remedies available to parties in case of a breach. While they may
seem similar, they have distinct legal implications:
Conditions:
• Fundamental terms: Conditions are essential terms that go to the root of the contract. They
form the basis on which the buyer agrees to purchase the goods.
• Breach entitles termination: If a seller breaches a condition, the buyer has the right
to treat the contract as repudiated and refuse to accept the goods. They can also claim
damages.
• Example: A buyer purchases a refrigerator under the condition that it is frost-free. Upon
delivery, the refrigerator turns out to be a regular one. This is a breach of a condition, and the
buyer can reject the refrigerator and claim a refund.
Conditions and Warranties
Warranties:
• Collateral terms: Warranties are less crucial terms that provide additional assurances
about the goods. They are not essential to the buyer's decision to purchase.
• Breach entitles compensation: If a seller breaches a warranty, the buyer cannot reject the
goods. However, they can claim damages for the loss suffered due to the breach.
• Example: A seller warrants that a washing machine will have a noise level below 50 decibels.
If the machine operates at 60 decibels, the buyer cannot reject it. However, they can claim
compensation for the inconvenience caused by the excessive noise.
Conditions and Warranties
Remember:
• The distinction between a condition and a warranty can be subjective and depend on the
specific circumstances of the contract. Courts will consider the nature of the goods, the
parties' intentions, and the surrounding circumstances when determining whether a term
is a condition or a warranty.
• Express vs. implied: Both conditions and warranties can be expressly stated in the
contract or implied by law. The Sale of Goods Act implies certain conditions and warranties in
specific situations, such as conditions of title, description, and merchantability.
• By understanding the differences between conditions and warranties, buyers and sellers can
protect their rights and avoid disputes under the Sale of Goods Act, 1930.
Conditions and Warranties
More Examples of Conditions vs. Warranties in the Sale of Goods Act:
1. Fitness for a particular purpose:
• Condition: A buyer purchases a lawnmower specifically for cutting thick grass. The seller assures it can
handle the job. If the mower struggles with thick grass, it's a breach of condition as it fails a specific
purpose agreed upon.
• Warranty: A seller generically warrants a car engine to be “most powerful." If the engine
underperforms compared to similar engines, it's a breach of warranty. The buyer can claim
compensation for the inconvenience, but not reject the car itself.
2. Description:
• Condition: A seller describes a laptop as having 16GB RAM. If it only has 8GB, it's a breach of
condition as the description directly influenced the purchase decision.
• Warranty: A seller warrants 3 free service for a used car. If it is breached, it's a breach of warranty.
The buyer can claim compensation for service, but not necessarily reject the car .
Conditions and Warranties
More Examples of Conditions vs. Warranties in the Sale of Goods Act:
3. Merchantability:
• Condition: The Sale of Goods Act implies a condition that goods are "of merchantable quality." This
means they are fit for the ordinary purposes for which goods of that kind are used. If a winter jacket
is not warm enough, it breaches this condition.
• Warranty: A seller offers a specific warranty on the color of a raincoat. If the color fades in rain
within few months of its use, it's a breach of this specific warranty.
4. Title:
• Condition: The Sale of Goods Act implies a condition that the seller has the right to sell the goods. If
the seller doesn't own the goods, it's a breach of this condition, and the buyer can recover the
price paid and claim damages.
• Warranty: A seller warrants that a painting is an original by a famous artist. If it turns out to be a
copy, it's a breach of this specific warranty. The buyer can claim compensation for the difference
in value, but not necessarily return the painting.
Note: specific facts of each case will determine whether a term is a condition or a warranty.
 Conditions and Warranties
Feature Condition Warranty

Importance Essential Less crucial, additional assurance

Breach
consequence Contract termination & damages Damages only

Buyer's right
upon breach Reject goods & claim damages Claim damages only, keep goods

Nature of term Fundamental, goes to the root of the contract Collateral, not essential to the buyer's decision

- Refrigerator not frost-free (breach of condition for
Examples: specific purpose)
- Laptop described with 16GB RAM but only having
8GB (breach of condition of description)
- Washing machine exceeding noise limit (breach of
warranty)
- Used car with hidden engine problems (breach of
implied condition of merchantability)

- Seller doesn't own the goods sold (breach of implied - Seller warrants a painting as an original but it's a copy
condition of title) (breach of warranty)
Provisions of Conditions and Warranties in Sections 11-17 of the Sale of Goods Act, 1930
(India)

Section 11: Stipulations as to Time (Payment) (Time is not always money)

Under Section 11, unless the contract explicitly states that timely delivery is crucial (e.g.,
perishable goods), the seller can still fulfill their obligation even with a delay. However, if the
delay significantly impacts you, like causing food spoilage, then you may have a case.
• Example 1: A contract for vegetables specifies delivery at 10 AM for a market stall opening
at 11 AM. Late delivery would be a breach of a crucial condition, allowing rejection.
• Example 2: A contract for furniture specifies delivery within 30 days. A delay of a week
might not be a breach if the furniture can still be used for its intended purpose.
Provisions of Conditions and Warranties in Sections 11-17 of the Sale of
Goods Act, 1930 (India)

Section 12: Condition vs. Warranty (Statement vs. Promise)

• Example 1: A used car contract states "Engine in excellent condition"
(condition). If the engine is faulty, it's a breach allowing rejection or repair
demand.
• Example 2: A laptop contract states "10-year battery life" (warranty). If the
battery lasts only 7 years, it's a breach, and may claim for compensation, but not
the rejection of laptop.
Provisions of Conditions and Warranties in Sections 11-17 of the Sale of
Goods Act, 1930 (India)

Section 13: Condition to Warranty (Buyer's Choice)

• Example: A buyer accepts clothes with a "30-day return policy"
(condition). After 20 days, they discover a defect. They can choose to
return based on the condition.

Section 14: Implied Undertaking as to Title (Right to Sell)

• Example 1: A seller sells a stolen bike. The buyer has no valid title and
can claim compensation or return the bike to the rightful owner.
• Example 2: A seller sells a car with a hidden financial lien. The buyer
has a burdened title and can demand cancellation or price reduction.
Provisions of Conditions and Warranties in Sections 11-17 of the Sale of
Goods Act, 1930 (India)

Section 15: Sale by Description (Matching the Description)

• Example : A furniture contract describes a sofa as "leather." If it's faux leather, it's
a breach even if it looks similar.

Section 16: Implied Conditions as to Quality or Fitness (Suitability for Purpose)

• Example 1: A buyer purchases hiking boots for a mountain trek. They fall apart
halfway through. The implied condition of fitness for purpose is breached,
allowing compensation.
• Example 2: A restaurant buys a blender for making smoothies. It can't handle
frozen fruits. The implied condition of merchantable quality is breached,
allowing compensation or replacement.
Provisions of Conditions and Warranties in Sections 11-17 of the Sale of
Goods Act, 1930 (India)

Section 17: Sale by Sample (Matching the Sample)

• Example 1: A buyer selects a fabric sample for a dress. The delivered fabric
has a different shade. It's a breach of the sample, allowing rejection or
replacement.
• Example 2: A buyer chooses a paint sample for their house. The delivered paint
has a different sheen. If the difference is minimal and doesn't affect the overall
look, it might not be a breach.
Amazon’s Case
• Amazon Seller Services Pvt Ltd v. Vijay Kumar (2022): Case Details
• In the 2022 case of Amazon Seller Services Pvt Ltd v. Vijay Kumar,
the Supreme Court of India upheld an order directing Amazon to
refund a customer for a defective product, even though it was
sold by a third-party seller on the platform. This case established
several important principles regarding e-commerce platforms'
responsibility for product quality and customer satisfaction.
Case Details:
• Plaintiff: Vijay Kumar (customer)
• Defendant: Amazon Seller Services Pvt Ltd (e-commerce platform)
• Product: A mobile phone purchased on Amazon from a third-party seller.
• Issue: The phone was defective (overheating and battery issues).
• Customer Action: Vijay Kumar requested a refund from the seller, but the seller
refused. He then filed a complaint with the Consumer Forum.
• Consumer Forum Order: The Consumer Forum directed Amazon to refund the
customer for the defective phone, holding the platform responsible for ensuring
product quality on its platform.
• Amazon's Appeal: Amazon appealed the Consumer Forum order to the State
Commission and then to the Supreme Court, arguing that they were not liable
for defects in products sold by third-party sellers.
• Supreme Court Judgment: The Supreme Court upheld the Consumer
Forum order, stating that:
• Amazon, as the platform facilitating the sale, has a duty to ensure the
quality of products sold on its platform, regardless of whether they are
sold by Amazon itself or by third-party sellers.
• Amazon's responsibility includes ensuring accurate product descriptions,
providing grievance redressal mechanisms for customers, and taking
action against sellers who violate consumer protection laws.
• The customer's right to a refund for a defective product cannot be denied
based on technicalities like the seller being a third party.
Significance of the Case:
• This case has significant implications for e-commerce platforms in India, as it
clarifies their responsibility for product quality and customer satisfaction. It
strengthens consumer protection by holding platforms accountable for ensuring
the quality of products sold on their platforms, even if they are sold by third-
party sellers.

Additional Points:
• The specific details of the phone's defect and the nature of the seller's refusal to
refund are not publicly available.
• This case has been cited in subsequent rulings related to e-commerce and
consumer protection in India.
Rights of a Buyer
Right to Goods of Satisfactory Quality and Fitness: (Section 16): This includes implied
warranties regarding merchantability, and description. If the goods are not of satisfactory
quality, the buyer can reject them (Section 38), claim damages (Section 59), or demand a
replacement (Section 60).
Right to Delivery: (Sections 31-39): The buyer has the right to receive the goods within a
reasonable timeframe according to the agreed-upon terms of the contract. If the delivery is
delayed, the buyer may claim damages for any losses incurred due to the delay (Section 59).
Right to Examine Goods: (Section 39): The buyer has the right to examine the goods within
a reasonable time after delivery to ensure they comply with the contract. If the goods are
found to be defective or not as described, the buyer can reject them (Section 38) or claim
damages (Section 59).
Right to Return Goods: (Sections 39 & 60): In the case of breach of warranty or condition,
the buyer may return the goods within a reasonable time and claim a refund (Section 61) or
replacement (Section 60).
Right to Sue for Damages: (Section 59): If the seller breaches the contract in any way, the
buyer has the right to sue for damages arising from the breach.
Liabilities of a Buyer
Liability to Pay the Price: (Section 41): The buyer is liable to pay the agreed-upon price for the goods
within the stipulated timeframe. If they fail to pay, the seller may claim the price through legal means
(Section 55) or exercise other remedies, such as stopping the goods in transit (Section 52) or claiming a
lien on the goods (Section 55A).
Liability to Accept Delivery: (Section 35): The buyer is liable to accept delivery of the goods within a
reasonable time and at the specified place. Refusal to accept delivery without valid reason may lead to
claims for damages from the seller (Section 59).
Liability for Damage to Goods: (Section 97): If the buyer damages the goods after receiving them,
they are liable to compensate the seller for the loss.
Liability for Misrepresentation: (Section 19): If the buyer misrepresents their identity or intention
while purchasing the goods, they may be liable for damages or legal action from the seller (Section 19).

Additional Points:
• The specific rights and liabilities of the buyer can vary depending on the terms of the contract and the circumstances of
the sale.
• The buyer has a duty to cooperate with the seller in fulfilling the contract, such as providing necessary information or
instructions.
• The buyer may also have additional rights and liabilities under other laws and regulations, such as consumer protection
laws.
Rights of a Seller
Right to payment: (Section 41): The seller is entitled to the price of the goods when they are
delivered and accepted by the buyer, unless otherwise agreed. If the buyer fails to pay, the
seller can sue for the price under Section 55.
Right to deliver the goods: (Sections 31-39): The seller has the duty to deliver the goods
according to the contract, at the time and place agreed upon. This includes:
• Delivery within a reasonable time (Section 36(2)).
• Delivery in the agreed quantity and quality (Section 35).
• Delivery at the agreed place, or if no place is agreed, at the seller's premises (Section
36(1)).
Right to pass good title: (Section 25): When the property in the goods passes to the buyer
(usually upon delivery and payment), the seller transfers legal ownership of the goods to the
buyer.
Right to claim damages: (Section 59): If the buyer breaches the contract, such as refusing to
accept delivery or pay the price, the seller can claim damages for any losses incurred due to the
breach.
Liabilities of a Seller
Liability to deliver goods of satisfactory quality: (Section 16): The seller has an implied
condition to sell goods of satisfactory quality and fit for the purpose for which they were
bought. If the goods are not of satisfactory quality, the buyer can reject them or claim
damages.
Liability for non-delivery: (Section 34): If the seller fails to deliver the goods within a
reasonable time, the buyer can refuse to accept them, claim damages for the delay, or
cancel the contract.
Liability for misrepresentation: (Section 19): If the seller makes false or misleading
statements about the goods, the buyer can claim damages or cancel the contract.
Liability for breach of warranty: (Sections 11-15): If the seller breaches any express or
implied warranty, the buyer can claim damages, reject the goods, or demand a replacement.

Additional Points:
• The specific rights and liabilities of the seller can vary depending on the terms of the contract and the circumstances of the sale.
• The seller has a duty to cooperate with the buyer in fulfilling the contract, such as providing necessary information or documents.
• The seller may also have additional rights and liabilities under other laws and regulations, such as consumer protection laws.
Unpaid Seller

In the context of the Sale of Goods Act, 1930,

an unpaid seller is someone who has sold goods to a buyer but has not yet
received the full payment as agreed upon in the contract of sale.
Rights of an Unpaid Seller
The Act protects the interests of unpaid sellers by granting them certain rights, which they can exercise to
recover the payment or minimize their losses. These rights include:

1. Right of Lien:

• Section 47(1): This gives the seller the right to retain possession of the goods as long as the price remains
unpaid. This applies only if the goods are still in the seller's possession (before delivery).
• Example: A Car seller completes a customer's order, but they haven't paid yet. The seller can withhold
delivery until the payment is received.

2. Right of Stoppage in Transit:

• Section 49(1): If the goods have already been dispatched but are in transit (e.g., being transported by
courier), the seller can instruct the carrier to stop them and return them until payment is received.
• Example: A clothing manufacturer sends a shipment of clothes to a retailer, but the retailer informs them of
bankruptcy before receiving the goods. The manufacturer can instruct the shipping company to stop the
delivery and prevent the retailer from taking possession until the payment is settled.
Rights of an Unpaid Seller
3. Right to Resell the Goods:

• Section 52: If the buyer fails to take delivery or pay the price within a reasonable time, the
seller can resell the goods and recover any loss incurred from the original buyer.
• Example: A fruit seller ships produce to a buyer, but the buyer refuses to accept the shipment.
The seller can resell the fruits to another buyer and claim damages from the first buyer for any
loss in price.

4. Right to Sue for the Price:

• Section 55: The seller can file a lawsuit against the buyer to recover the full price of the
goods, even if the goods have already been delivered.
• Example: A farmer sells a truckload of vegetables to a restaurant but doesn't receive
payment. They can sue the restaurant for the agreed-upon price.
Rights of an Unpaid Seller
5. Right to Claim Damages:

• Section 57: In addition to the price, the seller can also claim compensation for any additional
losses due to the buyer's non-payment, such as storage costs or loss of value of the goods.
• Example: A farmer sells fresh produce to a supermarket but the buyer cancels the order last
minute without notice. The produce starts to spoil. The seller can claim damages for the lost
product and any related storage costs.
Case 1: The Defective Fridge and the Frustrated Buyer
Sarika purchases a high-end refrigerator from CoolTech Electronics for
Rs. 50,000 which is advertised as the best in class in terms of Frost Free and Low
Noise. The sale agreement specifies a one-year warranty on the appliance. Within
six months, the refrigerator starts malfunctioning: excessive frost buildup, loud
compressor noise, and inconsistent cooling. Sarika complains to CoolTech, but
their technicians only perform superficial repairs that fail to resolve the issues.
Frustrated, Sarika demands a full refund or replacement.
Sl. No. Case Questions:

1. Does Sarika have a right to claim a full refund or replacement under the Sale of Goods Act,
1930?
2. Can Sarika claim compensation for additional expenses incurred due to the faulty fridge?

3. Could this case have implications for CoolTech's future business practices?
Sl. No. Case Questions:

1. Does Sarika have a right to claim a full refund or replacement under the Sale of Goods
Act, 1930?

Yes, Sarika has a strong case for claiming a full refund or replacement under the Sale of Goods Act,
1930.

Breach of Condition: The Act implies a condition on the seller to deliver goods that match the description
and are fit for the purpose advertised. CoolTech advertised the refrigerator as "best in class" with specific
features like Frost Free and Low Noise. Sarika's experience clearly indicates a breach of these implied
conditions.

Breach of Warranty (Specific): The written agreement also specifies a one-year warranty. CoolTech's
technicians failing to resolve the issues despite complaints constitutes a breach of this specific warranty.

Right to Reject: As per Section 17 of the Act, if goods delivered are not as per the contract, the buyer has
the right to reject them within a reasonable time. Sarika's complaint and subsequent demand for a
refund/replacement fall within this timeframe.

However, the specific option she can claim (refund or replacement) depends on the severity of the
breach:
Minor Breach: If the malfunctioning is minor and easily fixable, CoolTech might be given a chance to rectify
the issue within a reasonable time.
Substantial Breach: If the malfunction is significant, affecting the core functionality of the refrigerator and not
easily fixable, Sarika can choose a full refund or replacement.
Sl. No. Case Questions:

2. Can Sarika claim compensation for additional expenses incurred due to the faulty fridge?
Priya can potentially claim compensation for additional expenses incurred due to the faulty fridge, but
the success depends on the specific expenses and how they are connected to the malfunction.

Direct/Consequential Loss: The Act generally doesn't compensate for indirect or consequential losses
unless they were reasonably foreseeable by the seller at the time of sale. Priya needs to prove that:
CoolTech knew about potential additional expenses due to the malfunction.
This information wasn't disclosed to her, and she wouldn't have bought the product if known.

Alternative Argument: Priya might argue that the expenses were a direct result of the malfunctioning
refrigerator, not an indirect consequence. In this case, she needs to demonstrate a clear causal link between
the malfunction and the expenses.

Examples of potentially claimable expenses:

• Cost of spoiled food due to inconsistent cooling.
• Repair costs for other appliances damaged by the malfunctioning fridge (e.g., water leakage).
• Increased electricity bills due to inefficient operation.
Sl. No. Case Questions:

3. Could this case have implications for CoolTech's future business practices?

This case could have significant implications for CoolTech's business practices:

Customer Satisfaction: Unresolved customer complaints and potential legal issues can damage brand
reputation and customer trust.

Stricter Quality Control: The case highlights the importance of stricter quality control measures to ensure
products meet advertised standards and warranties.

Clearer Communication: CoolTech should clearly communicate product features, warranties, and potential
risks to avoid misleading customers and potential legal disputes.

Improved After-Sales Service: Investing in efficient and effective after-sales service can help resolve
customer issues promptly and minimize damage.

Additionally, CoolTech should be aware of potential legal consequences, including:

• Fines and penalties for violating the Sale of Goods Act.
• Compensation awarded to customers in court cases.
Case 2: Rusted Vacuum Cleaner and the frustrated Homemaker
Priya purchases a high-end robot vacuum cleaner ("RoboClean") with a one-year
warranty. RoboClean is advertised as water-resistant and suitable for mopping
hardwood floors. Within months, Priya notices rust developing on RoboClean's
internal components, leading to malfunctioning and streaks on her floors. She
contacts the seller TechWorld, but they claim the damage is due to "improper user
maintenance." Priya disputes this and demands a replacement or refund.

Sl. No. Case Questions:

1. Does Priya have a strong case for claiming a refund or replacement under the Sale of Goods Act, 1930?

2. Can Priya claim compensation for damaged floors due to the malfunctioning RoboClean?

3. Could this case have implications for TechWorld's future business practices?
Sl. No. Case Questions:

1. Does Priya have a strong case for claiming a refund or replacement under the Sale of Goods Act,
1930?

Yes, Priya potentially has a strong case for claiming a refund or replacement based on several
provisions of the Act

Breach of Condition: Section 15 implies a condition of quality and fitness for purpose in every sale of goods.
RoboClean's advertised water resistance and mopping functionality suggest implied warranties that the
device could handle cleaning with moisture. Its rusting and malfunctioning constitute a breach of these
warranties.

Non-conformity: Section 85 allows rejection of non-conforming goods within a reasonable timeframe. Priya's
prompt complaint falls within this timeframe, and the rusting significantly deviates from the promised
functionality of a water-resistant robot vacuum.

Potential Misrepresentation: If TechWorld's advertising or product manuals explicitly mentioned

RoboClean's suitability for mopping without any caveats about potential rusting, Priya could argue for
misrepresentation under Section 18, further strengthening her case.
Sl. No. Case Questions:

2. Can Priya claim compensation for damaged floors due to the malfunctioning RoboClean?
Arguments for Compensation:

Direct Link: If Priya can establish a direct causal link between the RoboClean's malfunction (e.g., leaking
water) and the floor damage, her claim becomes stronger.
Foreseeable: If the advertised capabilities of RoboClean ("water-resistant" and "suitable for mopping")
implied minimal risk to floors, TechWorld might be held liable for any unforeseen damage caused by a
malfunction.
Negligence: If TechWorld knew or should have known about the potential for floor damage due to
malfunctions but failed to warn Priya or take adequate precautions, it could strengthen her claim.

Challenges for Priya:

Indirect/Consequential Loss: The Sale of Goods Act generally doesn't compensate for indirect or
consequential losses unless they were reasonably foreseeable by the seller at the time of sale. Priya needs
to demonstrate foreseeability in this case.
Proof of Damage: Clear evidence of the damage and its connection to RoboClean's malfunction is
crucial. Photos, videos, repair estimates, or expert opinions can help.
User Maintenance: TechWorld might argue that improper user maintenance contributed to the
damage, shifting the burden back to Priya. She needs to counter this effectively.
Additional Considerations:
Type of Damage: The nature and extent of the floor damage are important. Superficial scratches might be
harder to claim for than permanent stains or warping.
Product Warnings: Check if RoboClean's manual or packaging mentioned any potential risks to floors. The
absence of warnings could support Priya's case.
Sl. No. Case Questions:

3. Could this case have implications for TechWorld's future business practices?
Yes, Priya's case could significantly reshape TechWorld's future:

Downside:

Stained Reputation: Negative publicity from dissatisfied customers could erode trust and dent sales.
Legal Liabilities: Lawsuits or fines for misleading advertising or faulty products could drain resources.
Investor Jitters: Negative publicity and legal battles could shake investor confidence, impacting stock prices
and future funding opportunities.
Regulatory Scrutiny: Priya's case might attract government investigation into TechWorld's warranty
practices, leading to stricter regulations and compliance costs.

Upside:

Quality Upgrade: Improved manufacturing and testing to avoid future rust and malfunctions could solidify
brand value.
Customer Focus: Clearer warranties and better customer service could build loyalty and reduce warranty
claims.
Innovation Spark: Addressing Priya's concerns could inspire TechWorld to develop more durable and user-
friendly robot cleaners, boosting their market edge.
Customer Advocacy: Proactively resolving Priya's issue could turn her into a brand ambassador, generating
positive word-of-mouth and attracting new customers.
Thank You!