1 contract of goods

8/3/2019 1 Contract of Goods

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CONTRACT OF SALE

OF GOODS


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Meaning of CONTRACT OF SALE OF GOODS

Contract where by the seller transfer oragree to transfer the property ingoods to buyer for price. Contract ofsale they may be between one partyowner and another sec.4 (1).


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ESSENTIAL ELEMENT OFCONTRACT OF SALE

1. Two parties

2. Goods

3. Price4. Transfer of general property

5. A contract of sale may be

I) Absolute orII) Conditional

6. Essential elements of a valid contract


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SALE AND AGREEMENT OF

SALE

Sale- under contract of sale, the

property in the goods is transferredfrom the seller to buyer.

But where the transfer of the propertyin goods is take place at a future timecalled an agreement to sale.


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DIFFERENCES BETWEEN SALE AND

AGREEMENT OF SALE

SALE AGREEMENT OF SALE1 The property in the goods passes

from the seller to the buyer nomore the owner of goods soldimmediately so that the seller is

The transfer of property in thegoods is to take place at a futuretime.

2 Type of goods. A sale can only Bein case of existing and specificgoods only.

Is mostly in case of future andcontingent goods although in samecases it may refer to unascertainedexisting goods.

3 Risk of loss. In a sale, if the goodsare destroyed, the loss falls on thebuyer even though the goods arein the possession of the seller.

If the goods are destroyed, the lossfalls on the seller even though theseller is in the possession of thebuyer.


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AGREEMENT OF SALE

4

Consequences of breach. In a sale,

if the buyer fails to pay the priceof the goods or if there is a breachof contract by the buyer, the sellercan sue for the price even though

the goods are still in his

possession.

If there is a breach of contract by

the buyer, the seller can only suefor damage and not for the price

even though goods are in thepossession of buyer.

5 Right to re-sell, the seller cannotre-sell the goods (except in acertain cases, as for example, a

sale by a seller in possession aftersale in Sec.30. or a sale by anunpaid seller under Sec.54.). If hedoes so the subsequent buyerdoes not acquire title to the goods.

In ca of re-sale, the buyer, who takethe goods for consideration andwithout notice of the prior

agreement, get a good title. In sucha case, the original buyer can onlysue the seller for damages.


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AGREEMENT OF SALE

6General and particular

property. A sale is a contractplus conveyance, and

creates jus in rem, i.e., givesright to the buyer to enjoy

the goods as against theworld at large including

seller.

Is merely a contract, pure andsimple, and creates jus in

personam, i.e., gives a rightto the buyer against the seller

to sue for damages.

7 If seller become insolventbuyer can claim the goods. .

Buyer cans one claim rateable dividend.


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DISTINCTION BETWEEN A SALE AND A HIREPURCHASE AGREEMENT.

SALE HIRE PURCHASE AGREEMENT

1 Ownership is transferred fromthe seller to the buyer as soon asthe contract is interred into.

Ownership is transferred from theseller to the hire purchaser only whena certain agreed number ofinstallments are paid.

2 The position of the buyer is thatof the owner.

The position of hire purchaser is thatof the bailee.

3 The buyer cannot terminate thecontract and as such is bound topay the price of the goods.

The hire purchaser has an option toterminate the contract at any stage,and cannot be forced to pay the

further instalments.4 If the payment is made by buyer

in instalments, the amountpayable by buyer to the seller isreduce, for the payment made by

the buyer is toward the price ofthe goods.

The instalments paid by the hirepurchaser are regarded as hirecharges and not as payment towardthe price of the goods till option to

purchase the goods is exercised.


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SUBJECT- MATTER OF CONTRACT OF SALE

Goods form the subject-matter of a contract of sale.According to Sec.1 (7)goods means every kind of movableproperty other than actionable claim and money; andincluding stocks and shares, growing crops, grass and thingsattached to our forming part of the land which are agreed tobe serve before sale or under the contract of sale. Trade mark;copy right, good will. Electricity water, gas, is all goods.

Actionable claim and money are not goods. An actionableclaim means a claim to any debt or any beneficial interest in

movable property not possession (Sec. 3 of the Transfer ofthe property Act, 1882). It is something which can only beenforced by action in a court law. A debt due from oneperson to another is an actionable claim and cannot bebought or sold as goods. It can only be assigned. Money here

means current money and not old rare coins.


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CLASSIFICATION OF GOODS

The goods which form the subject of a contract ofsale may be either goods, or future.

Goods [Sec. 6 (1)], or contingent goods [Sec. 6 (2)].

(I). Existing of goods.

(II). Future goods

(III). Contingent goods


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(I). Existing of goods.

These are goods which are owned or possessedby seller at the

time of sale. Only existing goods can be the

subject of a sale, the existing goods can be:

(a). Specific goods

(b).Ascertained goods

(c). Unascertained or generic goods


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(II). Future goods

These are the goods which a seller does not possess atthe time of the contract but which will bemanufactured or produced or acquired by him afterthe making of the contract of sale [Sec. 2 (6)]. Acontract of present sale of future goods, though

expressed as an actual sale, purports to operate as anagreement to sell the goods and not a sale [Sec. 6 (3)].This is because the ownership of a thing can not betransferred before that thing comes into existence

Example, A railway administration antlered into a contractfor sale of coal ash that might accumulate during theperiod of contract. Held, the contract amounted to toan agreement to sell [Union of India v. Tara Chand,

A.I.R. (1976) M.P 101]


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(III). Contingent goods

Though a type of future goods, there are thegoods the acquisition of which by the sellerdepends upon a contingency which may ormay not happen [Sec. 6 (2)].

Example;A agrees to sell specific goods in particular ship to B tobe delivered on the arrival of the ship. If the ship arrives butwith no such goods on board, the seller is not liable, for thecontract is to deliver the goods should they arrive.

Contingent and Future goods- The procurement of contingentgoods depends upon a contingency whereas it is not so incase of future goods. On non acquisition of contingent goods,the parties are discharged whereas on non acquisition ornon-production of future goods the parties are not

discharges.


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EFFECT OF DESTRUCTION OF GOODS:

1). Goods perishing before making of

contract (Sec 7).

2. Goods perishing after theagreement to sell but before thesale is effected (Sec. 8).


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1). Goods perishing before making ofcontract (Sec 7).

A contract for the sale of specific goods is void ifat the time when the contract was made, thegoods have, without the knowledge of the

seller perished. The same would be the casewhere the goods become so damaged as nolonger to answer to their description in the

contract. The rule is based on the ground ofmutual mistake or impossibility ofperformance [Couturier Vs Hastie, (1856)5 H.L.C. 673].

2 G d i hi ft th t t


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2. Goods perishing after the agreement tosell but before the sale is effected

(Sec. 8).

An agreement to sell specific goods become void if subsequentlythe goods, without any fault on the part of the seller or buyer,perish or become so damaged as no longer to answer to theirdescription in the agreement before the risk passes to thebuyer. Faultmeans wrongful act or default [Sec. 2 5)].Thisrule is base on the group of impossibility of performance[Howell v. Coupland , (1876) Q.B.D. 258].

Secs. 7 and 8 apply only to specific goods and not to

unascertained goods. If the agreement is to sell certainquality of unascertained goods, the perishing of even the

whole quantity of such goods in possession of the seller willnot relieve him of his obligation to deliver the goods.

1 contract of goods

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