- Transfer of Property - Performance of Contract of Sale - Rights of Unpaid Seller

Submitted by: Vikram Datta (2502) Namrata Sethi (2532) Prachi Ahuja (2553)

MFC (1st Semester) Department of Financial Studies University of Delhi

Sale means the primary transfer of property in goods by the seller to the buyer. Transfer of property in goods means the transfer of ownership of goods 'Property in goods is different from possession of goods. Possession refers to the custody. So the property in goods may pass from the seller to the buyer but the goods may be in possession of the seller either as unpaid seller or as a bailee for the buyer.

Risk 'prima-facie' passes with the property (Sec. 26) Suit for prices Insolvency of the seller or the buyer Action against the third party.

Unless otherwise agreed, the goods remain at the seller's risk until the property therein is transferred to the buyer, but when the property therein is transferred to buyer, the goods are at the buyer's risk whether delivery has been made or not"

Thus, if after the contract the goods are destroyed or damaged the question who is to bear the loss is to be decided not on the basis of possession of the goods but on the basis of ownership of goods. The owner must bear the loss. A buys goods from B and the property has passed to him, but the goods remain in the warehouse of B. before the delivery of the goods there is a fire in the warehouse and all goods are destroyed. A must bear the loss and pay the price of goods to B, if he has not paid so far.

An exception:

It provides that where delivery of the goods has been delayed through the fault of either the buyer or the seller, the goods are at the risk of the party in fault as regards any loss which might not have occurred but for such fault.

A contracted to purchase 30 tons of apple juice from B. B crushed the apples and filled 30 tons of juice in casks and kept them ready for delivery. After a few casks had been delivered A refused to take further delivery. The juice became putrid and had to be thrown away. Held, although the good was still with B, yet the loss had to be borne by A

Specified or Ascertained goods Transfer of property

At the time of making the contract When the good is paid for

Unascertained or Future goods

When the goods are delivered

Where there is an unconditional contract for the sale of specific goods in a deliverable state, the property in the goods passes to the buyer when the contract is made, and it is immaterial whether the time of payment of the price or the time of delivery of the goods, or both, is postponed.

Where there is a contract for the sale of specific goods and the seller is bound to do something to the goods for the purpose of putting them into a deliverable state, the property does not pass until such thing is done and the buyer has notice thereof.

agrees to sell to B the whole of turpentine oil lying in a cistern. It is further agreed that the oil is to be put into casks by A and then B is to take them away. Some of the casks are filled in the presence of B, but before any are removed or the remainder filled, the whole lot is destroyed by fire.

Held that, B must bear the loss of oil which had been put into cask because the property has passed to him but the remainder of the oil not put into casks remained to be the sellers property, at whose risk they continued.

Where there is a contract for the sale of specific goods in a deliverable state, but the seller is bound to weigh, measure, test or do some other act or thing with reference to the goods for the purpose of ascertaining the price, the property does not pass until such act or thing is done and the buyer has notice thereof.

A sold to B 289 bales of goat skins, each bale containing five dozens, and the price was for certain sum per dozen skins. It was the duty of A to count the goatskins in each bale. Before A could do the same, the bales were destroyed by fire. Held, that the property in the goods had not passed to the buyer (i.e. ,B) as something still remained to be done by the seller (i.e., A)for ascertaining the price, and as such the loss caused by fire had to be borne by the seller (i.e., A).

Approval or acceptance

No approval/acceptance but no notice of rejection over reasonable period of time

Property in goods passes to the buyer

A delivered a horse to B on the terms of sale of return, within 8 days. The horse died on the third day without any fault on the part of B. Held, A was to bear the loss as the horse was still his property when it perished.

A delivered a horse to B on trial for 8 days. B continued to retain the horse even after the expiry of 8 days without giving notice of rejection to A. B had automatically become the owner of the horse on the expiry of 8 days.

Appropriation of goods (i) Quality (ii) Quantity

The rules pertaining to transfer of property in unascertained and future goods is contained in Section 18 and 23.
Essentials of valid appropriation for unascertained/ future goods

Unconditional

Intention not accident

Assent of both parties

does not reserve the right of disposal

for the purpose of transmission to the buyer

delivers the goods to the buyer or to a carrier or other bailee

Goods are unconditionally appropriated to the contract

The seller may by contract or appropriation reserve the right of disposal of goods until certain conditions are fulfilled. Property in the goods does not pass to the buyer until conditions imposed are fulfilled irrespective of delivery of goods.

The seller cannot transfer to the buyer of goods a better title than he himself has. If a thief disposes stolen property, the buyer acquires no title though he may have purchased the goods bonafide for the value, and the real owner of the goods is entitled to recover the possession of goods without paying anything to the buyer. Thus a buyer will not get a good title to the goods unless he purchases goods from a person who is the owner thereof or who sells them under the authority or consent of the buyer.

An unauthorized sale by a mercantile agent Transfer of title by estoppel Sale by a joint owner Sale by a person in possession under voidable contract Sale by a seller in possession after sale Sale by buyer in possession after agreement to buy Resale by an unpaid seller

When acting in ordinary course of business

Should be in possession of goods or documents of title

Unauthorized sale by a mercantile agent

The buyer acts in good faith at the time of the contract

Estoppel means that a person who by his conduct or words leads another to believe that certain state of affair existed, would not be estopped from denying later on that such a state of affairs did not exist.

When the true owner of the goods by his conduct or words or by any act or omission leads the buyer to believe that the seller is the owner of the goods or has the authority to sell them, he cannot afterwards deny the sellers authority to sell. In such a situation the buyer gets a title better than the seller.

Estoppel may arise in any of the following ways:

The owner standing by, when the sale is effected, or Still more, by assisting the sale, or By permitting goods to go into the possession of another with all insignia of possession thereof and apparent title, or

If he has otherwise acted or made representations so as to induce the buyer to alter his position to his prejudice

Illustration:

M, the owner of a wagon allowed one of his employees K, to have his name painted on it. M did so for the purpose of inducing the public to believe that the wagon belonged to K. C purchased the wagon from K in good faith. C acquired a good title as M is estopped from denying Ks authority to sell.

If one of several joint owners of goods has the sole possession of them by permission of the co-owners, the property in the goods is transferred to any person who buys them of such joint owner in good faith and has not at the time of the contract of sale notice that the seller has not authority to sell.

Illustration:

A,B and C joint owners

A entrusted to look after the cow

A sells the cow to D

D gets a goods title for bona fide purchase

Possession of goods obtained under a voidable contract Goods further sold before the contract is rescinded. Buyer acquires good title if he acts in good faith

Illustration

A, by misrepresentation induces B to sell and deliver to him a cow. A sells the cow to C before B has rescinded the contract. C purchases the title of the cow in good faith and without notice of the sellers defective title. C acquires a good title

Seller in possession of goods or of the documents of title to them after sale of goods Seller pledges or again sells either himself or through a mercantile agent He will convey a good title to the buyer or pledgee provided the buyer or pledgee acts in good faith without notice of previous sale.

Buyer has agreed to buy goods and obtains possession of the same or the documents of title with sellers consent Resells or pledges himself or by mercantile agent He will convey a good title to the buyer or pledgee provided the buyer or pledgee acts in good faith without notice of any lien or other right of the original seller in respect to those goods.

Illustration:

A buys some furniture and agrees to pay for that in two monthly installments, the ownership to pass to him on payment of the second installment. Having obtained possession of the furniture, A sells the furniture to B before paying the second installment. B buys the furniture bona fide. Subsequently, A does not pay the second installment. The furniture dealer cannot take back furniture from B, who obtains a good title to the same. The dealer can, of course, sue A for breach of the contract.

When an unpaid seller, who has exercised his right of lien or stoppage in transit, resells the goods (of which ownership has passed to the buyer), the subsequent buyer acquires a good title thereto as against the original buyer, even though the resale may not be justified in the circumstances, i.e., no notice of resale has been given to the buyer.

Sale by finder of lost goods under certain circumstances (Sec. 169, The Indian Contract Act).
Sale by pawnee or pledgee under certain circumstances (Sec. 176, The Indian Contract Act). Sale by official receiver or assignee in case of insolvency of an individual and liquidators of companies. Under negotiable instruments act, a holder in due course gets a better title what his endorser had. In other words, a person who takes a negotiable instrument in good faith and for value becomes the true owner even if he takes it from a thief or a finder.

Performance of contract of sale

Delivery of goods by the seller

Acceptance of the delivery of goods and payment for them by the buyer

The parties are free to provide any terms they like in their contract about the time, place and manner of delivery of goods, acceptance thereof and payment of the price. But if the parties are silent and do not provide any thing regarding these matters in the contract then the rules contained in the Sale of Goods Act are applicable.

Delivery of goods means voluntary transfer of possession of goods from one person to another [Sec. 2(2)]. If transfer of possession of goods is not voluntary, i.e, possession is obtained under pistol point or theft, there is no delivery.

Actual Delivery

Symbolic Delivery

Constructive Delivery or Delivery by Attornment

Where the goods are physically handed over by the seller (or his authorized agent) to the buyer (or his authorized agent) , the delivery is said to be actual.

Here the goods remain where they are (probably because they are bulky), but the means of obtaining possession of goods is delivered.

Such a delivery takes place when the person in possession of the goods of the seller acknowledges, in accordance with the sellers order, that he holds the goods on behalf of the buyer and the buyer has assented to it.

1. Delivery may be either actual or symbolic or constructive (Sec. 33)

Delivery of goods sold may be made by doing anything which the parties agree shall be treated as delivery or which has the effect of putting the goods in the possession of the buyer or of any person authorized to hold them on his behalf. 2. Delivery and payment are concurrent conditions (Sec .32) Unless otherwise agreed, delivery of the goods and payment of the price are concurrent conditions, that is, the seller should be ready and willing to deliver the goods to the buyer in exchange for the price and the buyer should be ready and willing to pay the price in exchange for possession of the goods simultaneously, just like in a cash sale over a shop counter.

3. Effect of part delivery, when property in goods is to pass on delivery (Sec. 34)
A delivery of part of the goods, in progress of the delivery of the whole, has the same effect, for the purpose of passing the property in such goods, as a delivery of the whole.

4. Buyer to apply for delivery (Sec. 35) - Although it is the duty of the seller to deliver the goods according to the contract, yet he is not bound to deliver them until the buyer applies for delivery.
It is the duty of the buyer to demand delivery, and if he fails to do so, he cannot blame the seller for the non-delivery. The parties may however, agree otherwise. 5. Time of delivery [Sec. 36(2) and (4)] - Where under the contract of sale the seller is bound to send the goods to the buyer, but no time for sending them is fixed, the seller is bound to send them within a reasonable time.

Demand of delivery by the buyer or the tender of delivery by the seller should be made at a reasonable hour.

6. Place of Delivery [Sec. 36(1)] - The place of delivery may be stated in the contract of sale, and where it is so stated, the goods must be delivered at the named place during business hours on a working day.
But, where no place is mentioned in the contract, the following rules must be followed: (i) In the case of sale, the goods are to be delivered at the place at which they are at the time of the sale. (ii) In an agreement to sell, the goods are to be delivered at the place where they are at the time of the agreement to sell. (iii) In the case of future goods, the goods are to be delivered at the place at which they are manufactured or produced.

7. Delivery of goods where they are in possession of a third party [Sec. 36(3)]
Where the goods at the time of sale are in the possession of a third person, there is no delivery by the seller to the buyer unless and until such third person acknowledges to the buyer that he holds the goods on his behalf. Such a delivery is known as constructive delivery or delivery by attornment and requires the consent of all the three parties, the seller, the buyer and the person having possession of the goods. Where the seller hands over the delivery order to the buyer, there is no delivery unless the sellers agent holding the goods has assented thereto.

But, where the goods have been sold by the transfer of the document title to goods, e.g., railway receipt or bill of lading, the buyer is deemed to be in possession of the goods represented by such document, and the assent of the third party is not required.
8. Expenses of delivery [Sec. 36(5)] - Unless otherwise agreed, the expenses of and incidental to putting the goods into a deliverable state must be borne by the seller.

9. Delivery of wrong quantity or different quality (Sec. 37) A seller is duty bound to deliver the goods to the buyer strictly in accordance with the terms of the contract. A defective delivery, i.e .,delivery of a quantity less or more than that contracted for or delivery of goods mixed with the goods of a different description not included in the contract, entitles the buyer: (i) to reject the whole, or (ii) to accept the whole, or (iii) to accept the quantity and quality he ordered and reject the rest of the goods so delivered.

In case of rejection of goods because of defective delivery the buyer is not bound to return them to the seller, but it is sufficient if he intimates to the seller that he refuses to accept them (Sec. 43).
The right to reject the goods is not equivalent to right to cancel the contract. If the buyer rejects the goods, the seller has a right to tender again goods of contract quality and quantity subject to the terms and conditions of the contract and buyer is bound to accept the same. (Vilas Udyog Limited vs Prag Vanaspati)

Where the buyer accepts the goods, he must pay for what he has actually accepted at the contract rate. Short Delivery: Entitlement to claim damages from the seller. Deficiency / Small Excess: Buyer must accept the goods. (Based on the maxim that The law does not take trivial deviations into account) Above provisions are subject to any usage of trade, special agreement or course of dealing between the parties. [Sec.37(4)].

10. Installment Deliveries (Sec.38) - Unless otherwise agreed the buyer of goods is not bound to accept delivery thereof by installments.
If the parties so agree only the delivery of the goods may be made by installments.

When the parties agree that the delivery is to be made by installments and each installment is to be separately paid for, and either buyer or seller commits a breach of contract in respect of on or more installments, there arises a question as to whether such a breach amounts to a breach of the whole of contract or a breach of only a part of it? The answer to this question depends upon the terms of the contract and the circumstances of the case.

Unless otherwise agreed the following two factors must be borne in mind in deciding the whole matter: (a) The quantitative proportion which the breach bears to the contract as a whole, and

(b) The degree of probability of the repetition of the breach (Maple Flock co. ltd. v/s Universal Furniture Products Limited)

Illustration A sold to B 1,500 tons of meat of a specified quality to be shipped 125 tons monthly in equal weekly installments. After about half the meat was delivered and paid for, B discovered that it was not of the contract quality and could have been rejected, and therefore he refused to take further deliveries. Held that B was entitled to do so (Robert A. Munroe and Co. Ltd. v/s Meyer) If B might have discovered the defect just after the 1st installment he would not have been allowed to repudiate the whole contract but only the damages for the loss in that particular installment delivery would have been allowed.

11. Delivery to carrier or wharfinger (Sec. 39) - Where the seller is authorized or required to send the goods to the buyer, delivery of the goods to a carrier whether named by the buyer or not for the purpose of transmission to the buyer, or the delivery of the goods to a wharfinger for safe custody, is prima facie deemed to be a delivery of the goods to the buyer. Sellers Duty: Unless the buyer requires to dispatch the goods at owners risk it is the duty of the seller when he delivers the goods to the carrier or wharfinger to enter into a reasonable contract on behalf of the buyer for the safety of the goods, if he fails to do so, and the goods are lost or damaged, the buyer may decline to treat the delivery to the carrier or wharfinger as a delivery to himself or may hold the seller responsible in damages.

Sea transit: Unless otherwise agreed where goods are sent by the seller to the buyer by a route involving sea transit, where it is usual to insure, the seller must inform the buyer in time to get the goods insured during their sea transit, and if the seller fails to do so the goods shall be deemed to be at his risk during such sea transit.
12. Liability of the buyer for neglecting or refusing to take delivery of goods (Sec. 44) When the seller is ready and willing to deliver the goods and request the buyer to take delivery, and the buyer does not within a reasonable time after such request take delivery of the goods, he becomes liable to the seller for any loss occasioned by his neglect or refusal to take delivery, and also for a reasonable charge for the care and custody of the goods.

According to Section 42 the buyer is deemed to have accepted the goods in either of the following circumstances namely: i) When he intimates to the seller that he has accepted the goods: Before intimating about acceptance the buyer has a right, under Sec. 41, to examine and test the goods in order to be sure as to whether they are in conformity with the contract regarding quality etc. ii) When he does any act in relation to any goods which is inconsistent with the ownership of the seller e.g. consumer, uses, pledges or resells the goods or puts his mark on them.

Illustration Where the buyer having seen that samples drawn from bulk where inferior to the samples originally shown to him, offered the goods for sale by auction at reduced price and the auction having failed to produce a purchaser, the buyer purported to reject the goods, it was held that the buyer could not do so as he had in law accepted the goods (Parker v/s Parmer) .

iii)

When after the lapse of a reasonable time, he retains the goods without intimating the seller that he has rejected them.

If the time for rejection is stipulated, rejection must be within that period .
On rejection of goods because of defective delivery, mere informing the sellers and the buyer is not bound to return the rejected goods to the seller.

Definition: The seller of goods is deemed to be an unpaid seller: a) When the whole of the price is not been paid or tendered; or b) Where a bill of exchange or other negotiable instrument has been received as a conditional payment

This definition emphasizes the following characteristics of an unpaid seller:

i) He must sell goods on cash terms and not on credit, and he must be unpaid. ii) He must be unpaid either wholly or partly even if only a portion of the price, however small remains unpaid, hes deemed to be an unpaid seller where the price is paid through a bill of exchange or other negotiable instrument the same must be dishonored. iii) He must not refuse to accept payments when tendered. If the price has been tendered by the buyer but the seller wrongfully refuses to take the same he ceases to be an unpaid seller.

Rights of an Unpaid Seller

Against the goods Where the property in the goods has not passed
Withholding Delivery

Against the buyer personally

Suit for price Suit for damages

Where the property in the goods has passed

Lien Stoppage in transit Re-sale

Repudiation of contract

Suit for interest

Right of unpaid seller: Sec

46(1)

A lien on the goods for the price while he is in possession of them

In case of the insolvency of the buyer a right of stopping the goods in transit after he has parted with the possession of them

A right of re- sale as limited by this Act.

Section 46(1)(a)

A lien is a right to retain the possession of goods until the payment of price.

The legal provisions regarding the right of lien of an unpaid seller has been stated from Sections 47 to 49 of the Sale of Goods Act, 1930 which may be enumerated as follows : According to Section 47(1) the unpaid seller of the goods who is in possession of them is entitled to retain possession of them until payment or tender of the price in the following cases namely : (a) where the goods have been sold without any stipulation as to credit. (b) where the goods have been sold on credit, but the term of credit has expired; or (c) where the buyer becomes insolvent.

Right of lien: Sec 47(1)

Right of lien: Sec 47(1)

This right can be exercised by the unpaid seller if the following 2 conditions are satisfied:

Unpaid seller must be in actual possession of the goods sold.

Unpaid seller can retain the goods only for the payment of the price of the goods.

Right of lien

Right of lien: Sec 47(1)

(a)

Where the goods are sold without any stipulations as to credit (i.e. in cash sales), the unpaid seller may retain the goods if the buyer fails to pay the whole price. He cannot retain the goods for any other charge e.g. maintenance, charge of storage during the exercise of lien. Where the goods are sold on credit, the unpaid seller may retain the goods if the buyer fails to pay the whole price after the expiry of the credit period. Where the buyer becomes insolvent, the unpaid seller may retain the possession of the goods until the whole price is paid. It is so because, the law does not compel a person to deliver the goods to an insolvent.

(b)

(c)

Right of lien: Sec 48

Unpaid Seller Right Of Lien Legal Provisions

Sec 48: Where an unpaid seller has delivered a part of the goods, he may exercise his lien on the remaining part of the goods. But where a part delivery is made under the circumstances which show an agreement to waive a lien, the seller cannot retain the goods. The right of lien is indivisible in nature and the seller cannot be compelled to deliver a part of the goods on payment of the proportionate price of the goods.

Right of lien: Sec 47(2)

The right of lien is linked with the possession of the goods and not with the title of the goods. Thus, the goods must be in actual possession of the seller. It is however, not necessary that he should possess the goods as an owner. He can exercise the right of lien, even if he is possessing the goods as an agent or the bailee for the buyer.

Right of lien: Sec 49(1)

By delivery of goods to carrier or bailee for transmission without reserving the right of disposal of the goods. [Sec 49(1)(a)]

When the buyer or the agent obtains the possession of the goods as buyer. [Sec 49(1)(b)]

By waiving the right of lien : a) Express Waiver

b) Implied waiver
[Sec49(1)(c)]

Termination or loss of lien [Sec 49 (1)]

Right of lien: Sec 49(1)

[ Knights v. Wiffen (1870)]

Sells but not delivers

Right of lien not lost

Lends for use

Right of lien: Sec 49(1)

(c) By the waiver of the lien: The right of lien is for the benefit of the seller. If he likes he may waive his rights and by the waiver the lien is lost. The waiver may be expressed or implied:
When the contract of sale provides in express terms that the seller shall not retain possession of the goods even if the price has not been paid.

Express Waiver

Implied Waiver

When the seller sells the goods on credit or grants a fresh term of credit on the expiry of the original term of credit, lien is waived until the expiry of the term of credit.

Sec 50 - Subject to the provisions of this Act, when the buyer of goods becomes insolvent, the unpaid seller who has parted with the possession of the goods has the right of stopping them in transit, that is to say, he may resume possession of the goods as long as they are in the course of transit, and may retain them until payment or tender of the price.
Retain the possession if still in transit till price received.

Seller

Buyer

Parted with the possession of the goods

Insolvent

Ram sells 200 bales of cloth to Shyam and sends 100 bales by lorry and 100 bales by Railway. Shyam receives delivery of 100 bales sent by lorry, but before he receives the delivery of the bales sent by railway, he becomes bankrupt. Ram being still unpaid, stops the goods in transit.

Right of stoppage : Sec 51

Goods are deemed to be in course of transit from the time when they are delivered to a carrier or other bailee for the purpose of transmission to the buyer, until the buyer or his agent in that behalf takes delivery of them from such carrier or other bailee. The carrier may hold goods as: 1. Sellers agent 2. Buyers agent 3. Independent capacity

Right of stoppage : Sec 51

If the goods are rejected by the buyer and the carrier or other bailee continues in possession of them, the transit is not deemed to be at an end, even if the seller has refused to receive them back. [ Sec 51 (4)]
Where part delivery of the goods has been made to the buyer or his agent in that behalf, the remainder of the goods may be stopped in transit, unless such part delivery has been given in such circum- stances as to show an agreement to give up possession of the whole of the goods. In such a case goods cannot be stopped in transit. [ Sec 51 (7)]

Right of stoppage : Sec 51

Sec 51 (2)

Interception by the buyer: If the buyer or his agent in that behalf obtains delivery of the goods before their arrival at the appointed destination, the transit is at an end.

Sec 51 (3)

Carriers acknowledgement to the buyer: If, after the arrival of the goods at the appointed destination, the carrier or other bailee acknowledges to the buyer or his agent that he holds the goods on his behalf and continues in possession of them as bailee for the buyer or his agent, the transit is at an end.

Sec 51 (6)

Carriers wrongful refusal to deliver the goods to the buyer: Where the carrier or other bailee wrongfully refuses to deliver the goods to the buyer or his agent in that behalf, the transit is deemed to be at an end. Eg: If the carrier refuses to deliver the goods because of non payment of freight charges, the refusal is not wrongful.

Right of Resale : Sec 54

Seller expressly reserves the right of resale in case the buyer makes a default.

Seller gives notice of intention to resell providing reasonable time to pay the price.

Goods are of perishable nature

Right of Resale : Sec 54(2)

Right of Resale
Loss: Can claim from the buyer as damages for breach of contract.

Profit: He is not bound to hand it over to buyer.

In case notice is not given the unpaid seller is not entitled to: 1. To recover any loss on resale of goods. 2. To retain any surplus arising on resale of goods.

Right of Withholding Delivery : Sec 46(2)

Ownership of goods not transferred to buyer.

Buyer failing to pay the price.

Right of withholding delivery.

Right of Withholdi ng Delivery : Sec 46(2)

Right of Withholding Delivery

Case: Mohiuddin vs. Ajay

Full payment or no goods.

Suit for Price [Sec 55] : a) Where the property has passed. [Sec 55(1)]. b) Where the property has not passed. [Sec 55(2)].

Suit for damages for non-acceptance [Sec 56]: - Measures of damages, Sec 73 of the Indian Contract Act, 1872 applies.

Rights in

Personam
Repudiation of contract before due date [Sec 60]:
a) Treating contract as subsisting. b) Rule of anticipatory breach of contract.

Suit for interest [Sec 61(2)(a)]:

a) Where specific agreement with regard to interest exists. b) Where no specific agreement with regard to interest exists.

Suraj sold his car to Sohan for Rs. 75,000. After inspection and satisfaction, Sohan paid Rs. 25,000 and took possession of the car and promised to pay the remaining amount within a month. Later on Sohan refuses to give the remaining amount on the ground that the car was not in a good condition. Advise Suraj as to what remedy is available to him against Sohan.

 A sale by auction is a public sale where different intending buyers try to outbid each other. The goods are ultimately sold to the highest bidder.

Proposed auction is duly advertised & a printed catalogue of the goods together with terms of sale is circulated.

On the appointed day the auctioneer puts different lots to auction & invites bid from the intended buyers. Every bid is an offer.

The auction goes in favor of the highest bidder. The fall of hammer or other customary announcement constitutes the acceptance of the offer by the auctioneer.

Goods put up for sale in lots. [Sec 64(1)] Completion of sale. [Sec 64(2)] Right of seller to bid. [Sec 64(3)] Sale not notified subject to a right to bid. [Sec 64(4)] Reserve price. [Sec 64(5)] Use of pretended bidding. [Sec 64(6)] Knock out or agreement not to bid against each other. [Sec 64(7)]

At an auction sale, C made the highest bid for an article of P. State the legal positions in the following cases:

If C withdrew the bid before the fall of the hammer though he knew that one of the condition of sale was bid once made cannot be withdrawn. Ans: Payne vs Cave, Section 64(2).
a)

If P refuses to accept the highest bid. The sale was not notified subject to a reserve price. Ans: Fenwick vs Macdonald.
b)

If P appointed 2 persons A & B to bid on his behalf. The sale was notified subject to right to bid. Ans: Thornett vs Haines,.
c)

d) If C was allowed to take it away on (i) giving a cheque for the price (ii) signing an agreement that the ownership should not pass to him until the cheque was cleared. The cheque was dishonored but in the meantime C sold the article to Z. Ans: Dennant vs Skinner e) If the sale was notified subject to a reserve price and the auctioneer by mistake accepted the Cs highest bid (which was lower than the reserve price) by striking the hammer. Later the auctioneer refused to deliver the goods. Ans: Manas vs Fortesque