1.Sale of Goods Act, 1930PradeepSinghaDSBS

2. History Sale of goods act was enacted in 1930. Borrowed from the English act. Came into force in July, 1930.2 3. Definition Sec 4(1) of the Indian Sale of Goods Act, 1930defines the contract of he sale of goods in thefollowing manner: A contract of sale of goods is a contractwhereby the seller transfers or agrees to transferthe property in goods to the buyer for a price. 4. The term Contract of sale of goods is a generic term and it includes:a. Sale andb. An agreement to sellwhere the seller transfers the ownershiprights to the buyer immediately on makingthe contract, it is the contract of sale, butwhere the ownership rights are to pass onsome future date upon the fulfillment ofcertain conditions then it is called anagreement to sell. 5. Definitions Buyer -- a person who buys or agrees to buy goods Delivery voluntary transfer of possession from one person to the other Goods are said to be in deliverable state when the buyer under the contract is bound to take their delivery Caveat emptor i.e let the buyer beware is universally applicable as far as quality is5concerned. 6. Contd/- Fault -- means wrongful act or default Future goods -- means goods to be manufactured or produced or acquired by the seller after the making of the contract of sale Goods -- means 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 the land which are agreed to be severed before sale or under the contract of sale6 7. Contd/- A person is said to be "insolvent" who has ceased to pay his debts in the ordinary course of business, or cannot pay his debts as they become due, whether he has committed an act of insolvency or not Mercantile agent" means a mercantile agent having in the customary course of business as such agent authority either to sell goods, or to consign goods for the purposes of sale, or to buy goods, or to raise money on the security of goods7 Price" means the money consideration for a sale 8. Contd/- Property" means the general property in goods, and not merely a special property Quality of goods" includes their state or condition Seller" means a person who sells or agrees to sell goods Specific goods" means goods identified and8agreed upon at the time a contract of sale is 9. Contd/- Expressions used but not defined in this Act and defined in the Indian Contract Act, 1872, have the meanings assigned to them in that Act.Application of provisions of Act 9 of 1872. The unrepealed provisions of the Indian Contract Act, 1872, save in so far as they are inconsistent with the express provisions of this Act, shall continue to apply to contracts for the sale of goods.9 10. ESSENTAILS OF A CONTRACT OFSALEIn a contract of sale, there should be:a. A contractb. Between the two parties (i.e. the buyer and the seller)c. To transfer or agree to transfer,d. The property in goodse. From the seller to the buyer,f.for a price (i.e money in consideration) 11. FORMATION OF THE CONTRACT 12. CONTRACT OF SALESale and agreement to sell : Its is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price.There may be a contract of sale between one part-owner and another.Contract is consensual and bilateralA contract of sale may be absolute or conditional.Where under a contract of sale the property in the goods is transferred from the seller to the buyer, its a sale, but where the transfer 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. 13. CONTRACT OF SALE (Contd) An agreement to sell becomes a salewhen the time elapses or the conditionsare fulfilled subject to which theproperty in the goods is to betransferred Money Consideration Default and damage cases 14. Formalities of ContractContract of sale made A contract of sale is made by an offer to buy or sell goods for a price and the acceptance of such offer. It may provide for the immediate delivery of the goods or immediate payment of the price or both, or for the delivery or payment by installments, or that the delivery or payment or both shall be postponed. Subject to the provisions of any law for the time being in force, a contract of sale may be made in writing or by word of mouth, or partly in writing and partly by word of mouth or may be implied from the conduct of the parties. 15. Subject-matter of ContractExisting or future goods: The goods which form the subject of a contract of sale may beeither existing goods, owned or possessed by the seller, orfuture goods. There may be a contract for the sale of goods the acquisition ofwhich by the seller depends upon a contingency which may ormay not happen. Where by a contract of sale the seller purports to effect apresent sale of future goods, the contract operates as anagreement to sell the goods. 16. Goods perishing before making of contract: Where there is a contract-for the sale of specific goods, its void if the goods without the knowledge of the seller have perished or become so damaged as no longer to answer to their description in the contract, at the time when the contract was madeGoods perishing before sale but after agreement to sell: Where there is an agreement to sell specific goods, and subsequently thegoods without any fault on the part of the seller or buyer perish or becomeso damaged as no longer to answer to their description in the agreementbefore the risk passes to the buyer, the agreement is thereby avoided. 17. The PriceAscertainment of price: The price in a contract of sale may be fixed by the contract ormay be left to be fixed in manner thereby agreed or may bedetermined by the course of dealing between the parties. Where the price is not determined in accordance with theforegoing provisions, the buyer shall pay the seller areasonable price. What is a reason-able price is a question of fact dependent onthe circumstances of each particular case 18. Relevant CaseGanganagar Sugar Mills Ltd. Vs. Rameshwar Das Tara Chand AIR 1992 Raj 14 Sugar in specific quantity and of the given lot and indeliverable state was knocked down to a bidder at anauction. It was deemed property passed at the verymoment.Subsequent imposition of price control did not make thecontract unlawful and hence bid price was recoverable. 19. Agreement to sell at valuation: Where there is an agreement to sell goods on the terms thatthe price is to be fixed by the valuation of a third party andsuch third party cannot or does not make such valuation, theagreement is thereby avoided,Provided that, if the goods or any part thereof have beendelivered to, and appropriated by, the buyer, he shall pay areasonable price therefore Where such third party is prevented from making thevaluation by the fault of the seller or buyer, the party not infault may maintain a suit for damages against the party infault. 20. CONDITIONS AND WARRANTIES 21. CONDITIONS A condition is a basic and important part of the contract. If one party breaches a condition then the other party may End the contract Refuse to perform their part of the contract Continue with the contract but then sue for damages 22. WARRANTIES On the other hand, a warranty is not vital to the contract. If one party breaches a warranty then the other party can only continue with the contract and then sue for damages 23. IMPLIED UNDERTAKINGRIGHT TO TITLE(section 14) Seller has the right to sell. The buyer shall have and enjoy quiet possession of the goods. Goods shall be free from any charge or encumbrance in favour of any third party not declared or known to the buyer before or at the time when the contract is made. 24. Relevant CaseUnited India Insurance vs. Kanchan Bai. AIR 1981 MP 225 A truck involved in an accident was sold to another party, while not fulfilling the requirements of the Motor Vehicle Act, relating to delivery and payment of full consideration. The owner was held responsible for the accident and its consequences. 25. Sale by description Impose obligation on seller and manufacturer wheresale made in course of business. Where the purchaser has not seen the good andrelies on the description alone, the buyer must getwhat has been described. Provided that, in the case of a contract for the saleof a specified article under its patent or other tradename, there is no implied condition as to its fitnessfor any particular purpose 26. Description with examination Where goods are bought by description from a seller who deals in goods of that description (whether he is the manufacturer or producer or not), there is an implied condition that the goods shall be of merchantable quality, Provided that, if the buyer has examined the goods, there shall be no implied condition as regards defects which such examination ought to have revealed. 27. Implied conditionsSection 16 Implied conditions as to fitness for purpose goods must be reasonably fit for the purpose for whichthey were bought Implied conditions as to merchantable quality goods are capable of function they are made to performor function reasonably expected by buyer 28. SALE BY SAMPLEIn the case of a contract for sale by sample there is animplied condition (a) that the bulk shall correspond with the sample in quality ; (b) that the buyer shall have a reasonable opportunity of comparing the bulk with the sample; (c) that the goods shall be free from any defect, rendering them unmerchantable, which would not be apparent on reasonable examination of the sample. 29. Remedies for breach of contract ofsale For unpaid seller has not received full payment has rights against goods, but differ depending on whethergoods have already passed to buyer has rights against buyer where buyer refuses or neglects toaccept delivery 30. Remedies for breach of contract ofsale For buyer purchaser of goods from seller has rights against seller where seller has not delivered goods or goods have defect claim damages specific performance buyer may rescind from contract 31. Buyer beware CAVEAT EMPTOR- a buyer buys at his own risk. Now we have consumer protection act (1986) 32. EFFECTS OF CONTRACT 33. Transfer of Property between Buyerand Seller1. Goods must be ascertained- No property in the goods is transferred to the buyer until they are ascertained.2. Property passes when intended to pass For the purpose of ascertaining intention, termsof contract, conduct of parties & circumstances ofcase to be considered. Sections 20 to 24 to be considered to ascertainintention of parties. 34. Relevant Case Abdul Aziz vs. Jogendra Krishna Roy,(1917)ILR 44 Cal 98 The sale had taken place, but still the goods werenot passed as the custom of the trade was thatthe goods should be selected, tested andweighed by the buyer.Even if the sale is unconditional, the court canrule not in favour of the seller. 35. 3.Specific goods in a deliverable state In such a case, property passes to the buyer when contract is made, irrespective of the time of payment of price or delivery of goods.4.Specific goods to be put in deliverable state When seller is bound to do something, property passes only when such thing is done and buyer takes notice thereof. 36. 5.Sale of unascertained goods & appropriation Where there is sale of unascertained goods and goods of that description are unconditionally appropriated to the contract, the property thereupon passes to the buyer. Where seller transfers the goods to bailee or carrier for transmission to buyer, he is deemed to have unconditionally appropriated the goods to the contract. 37. 6.Goods sent on approval or on sale or returnIn such cases, property passes to the buyer When he signifies approval or acceptance to the seller; When he does not signify acceptance, but retains the goods without giving notice of rejection, 38. Risk prima facie passes withproperty When property in the goods is transferred to the buyer, the goods are at the buyers risk whether delivery has been made or not. Provided that, where delivery has been delayedthrough the fault of either buyer or seller, the goodsare at the risk of the party in fault. 39. Relevant CaseDigambar Pershad Kirti Prasad vs. State of UP,(1996) All LJ 158 Auction of a forest knocked down to highest bidder, approved byconservator of forests. Purchaser commenced felling andcollecting at a central point for transport. The forest wasdestroyed by fire. Purchaser liable to pay full bid money and not merely the priceof forest harvested. The contract was unconditional, the goodswere specific and in deliverable state. The property passed asthe contract was made. 40. Transfer of title1.Sale by person not the ownerIn case a person, who is not the owner of thegoods, sells them thereof without the authority orthe consent of the seller, the buyer acquires nobetter title than what the seller had. Exception: where a mercantile agent is, with the consent of the owner, in possession of the goods, any sale made by him, shall be valid, provided that the buyer has acted in good faith and was not aware, at the time of purchase that seller has no authority to sell. 41. Relevant CaseState of M.P vs. G.L Patel & Co. AIR 1997 MP 74 Auction of forest produce to be sanctioned for final approval by Conservator of Forests. Acceptance of the bid by Divisional Forest officer had no binding efficacy, sale incomplete, so was cancelled by the state govt. 42. 2.Sale by one of joint owners If one of several joint owners of goods has sole possession of them by permission of the co-owners, the property transfers to the buyer who buys the goods from such joint owner, provided he bought the goods in good faith and had not noticed at the time of purchase that the seller has no authority to sell. 43. 3.Sale by person in possession of goods under voidablecontract When the seller has obtained possession under a contractvoidable under section 19 or 19A,but the contract has not beenrescinded at the time of contract, the buyer acquires a good title tothe goods, provided he acted in good faith.4. Seller or buyer in possession after sale If a person, having sold goods, continue to be in possession ofsuch goods, and sells them to some other person, in that case thesubsequent buyer acquires a good title to such goods, provided heacted in good faith and without notice of the previous sale. 44. Also where a person, having bought or agreed to buy goods, obtains possession of the goods or documents of title, and subsequently sells them to some other person, who receives them in good faith and without notice of any lien or other right of the original seller, shall have effect as if such lien or right did not exist. 45. Performance of the contract 46. Seller and Buyer Duty of seller to deliver the goods Duty of buyer to accept and pay for them 47. Delivery Payment and delivery are concurrent conditions Seller willing to give possession of the goods to the buyer inexchange for the price Buyer shall be willing to pay the price in exchange forpossession of the goods. doing anything which the parties agree shall be treated asdelivery putting the goods in the possession of the buyer or of anyperson authorized to hold them on his behalf 48. Effects of Part Delivery A delivery of part of goods, in progress of thedelivery of the whole, has the same effect, for thepurpose of passing the property in such goods,as a delivery of the whole; but a delivery of part of the goods, with anintention of severing it from the whole, does notoperate as a delivery of the remainder. 49. Buyer to apply for delivery Apart from any express contract, the seller of goods is not bound to deliver them until the buyer applies for delivery. 50. Rules as to delivery(1)Question depending in each case on the contract,express or implied, between the parties.Apart from any such contract, goods sold are to be delivered at the place at which they are at the time of the sale, and goods agreed to be sold are to be delivered at the place at which they are at the time of the agreement to sell, or, if not then in existence, at the place at which they are manufactured or produced. 51. (2) 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.(3) Where the goods at the time of sale are in the possession of a third person, there is no delivery by seller to buyer unless and until such third person acknowledges to the buyer that he holds the goods on his behalf: 52. Rules as to Delivery Contd(4) Demand or tender of delivery may be treated asineffectual unless made at a reasonable hour.What is a reasonable hour is a question of fact.(5) Unless otherwise agreed, the expenses of andincidental to putting the goods into a deliverablestate shall be borne by the seller. 53. Delivery of wrong quantity Short Delivery - Where the seller delivers to the buyer a lesser quantity of goods, the buyer may reject them, but if the buyer accepts the goods so delivered he shall pay for them at the contract rate. Excess Delivery - Where the seller delivers to the buyer a greater quantity of goods, the buyer may accept the goods included in the contract and reject the rest, or he may reject the whole. If the buyer accepts the whole of the goods so delivered, he shall pay for them at the contract rate. 54. Delivery of Mixed Goods - Where the seller delivers to the buyer the goods he contracted to sell mixed with goods of a different description not included in the contract, the buyer may accept the goods which are in accordance with the contract and reject the rest, or may reject the whole. The provisions of this section are subject to any usage of trade, special agreement or course of dealing between the parties. 55. Delivery to carrier Where, in pursuance of a contract of sale 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 delivery of the goods to a wharfinger for safe custody, is prima facie deemed to be a delivery of the goods to the buyer. Unless otherwise authorized by the buyer, the seller shall make such contract with the carrier on behalf of the buyer as may be reasonable having regard to the nature of the goods. If the seller omits so to do, and the goods are lost or damaged in course of transit, the buyer may decline to treat the delivery to the carrier as a delivery to himself. 56. Unless otherwise agreed, where goods are sent by the seller to the buyer by a route involving sea transit, in circumstances in which it is usual to insure, the seller shall give such notice to the buyer as may enable him to insure them during their sea transit, and if the seller fails so to do, the goods shall be deemed to be at his risk during such sea transit. 57. Buyers Right Mayank Rai Roll No. 381 58. Buyers right of examining the goods Where goods are delivered to the buyer which he has not previously examined, he is not deemed to have accepted them unless and until he has had a reasonable opportunity of examining them for the purpose of ascertain-ing whether they are in conformity with the contract. Unless otherwise agreed, when the seller tenders delivery of goods to the buyer, he is bound, on request, to afford the buyer a reasonable opportunity of examining the goods for the purpose of ascertaining whether they are in conformity with the contract. 59. Acceptance The buyer is deemed to have accepted the goods when he intimates to the seller that he has accepted them, or when the goods have been delivered to him and he does any act in relation to them which is inconsistent with the ownership of the seller, or when, after the lapse of a reasonable time, he retains the goods without intimating to the seller that he has rejected them. 60. Rejection of GoodsBuyer not bound to return rejected goods Unless otherwise agreed, where goods are delivered to thebuyer and he refuses to accept them, having the right so to do,he is not bound to return them to the seller, but it is sufficient if heintimates to the seller that he refuses to accept them.Liability of buyer for neglecting or refusing delivery of goods When the seller is ready and willing to deliver the goods andrequests the buyer to take delivery, and the buyer does not withina reasonable time after such request take delivery of the goods,he is liable to the seller for any loss occasioned by his neglect orrefusal to take delivery, and also for a reasonable charge for thecare and custody of the goods 61. Relevant Case National Small Industries Corporation Limited vs.Ramchandra Raghunath Joshi, (1995) ALHC400(Bom): (1994)4 Bom LR 598 The buyer refused to take delivery of goods. Seller resold thegoods. The difference between the contract price and resale price wasallowed by way of damages. The buyers neglect does not entitlethe seller to put an end to the contract. 62. Rights of the Unpaid Seller Mohit JainRoll No. 326 63. RIGHTS OF THE UNPAID SELLER AGAINST THEGOODSDEFINITION: UNPAID SELLERa) when the whole of the price has not been paid or tenderedb) when a bill of exchange or other negotiable instrument has been received as conditional payment, and the condition on which it was received has not been fulfilled by reason of the dishonour of the instrument or otherwise 64. SELLERThe term "seller" includes any person who is inthe position of a seller, as, for instance, an agentof the seller to whom the bill of lading has beenendorsed, or a consignor or agent who hashimself paid, or is directly responsible for, theprice. 65. Unpaid sellers rights a lien on the goods for the price while he is inpossession of them in case of the insolvency of the buyer a right ofstopping the goods in transit after he has partedwith the possession of them a right of re-sale as limited by this Act 66. Unpaid sellers lien Sellers lien. Part delivery. Termination of lien. Stoppage in transit Right of stoppage in transit. Duration of transit. How stoppage in transit is effected. 67. Transfer by buyer and seller Effect of sub-sale or pledge by buyer Sale not generally rescinded by lien or stoppage in transit. 68. SUITS FOR BREACH OF THE CONTRACTMandeep Singh GroverRoll No. 317 69. Suits for Breach of the Contract Sellers Remedies Against Buyer Suit for Price Damages for non-acceptance Buyers Remedies Against Seller Damages for non-delivery Specific Performance Remedy for Breach of Warranty Repudiation of contract before due date Interest by way of damages and specialdamages 70. Suit for price Where under a contract of sale the property in the goods has passedto the buyer and the buyer wrongfully neglects or refuses to pay for thegoods according to the terms of the contract, the seller may sue himfor the price of the goods. Where under a contract of sale the price is payable on a day certainirrespective of delivery and the buyer wrongfully neglects or refuses topay such price, the seller may sue him for the price although theproperty in the goods has not passed and the goods have not beenappropriated to the contract. Price in Foreign Currency Case : Khusalbhai Vs Mohmad Hussain 71. Damages for non-acceptance Where the buyer wrongfully neglects or refusesto accept and pay for the goods, the seller maysue the buyer for damages for non-acceptance. Damages Assessed acc. to Sections 73 & 74 ofcontract act Duty of Mitigation : Losses to be calculated on theday of the breach Case: Jamal V Moola Dawood Sons Co. 72. Damages for non-delivery Where the seller wrongfully neglects or refusesto deliver the goods to the buyer, the buyer maysue the seller for damages for non-delivery. Duty of Mitigation: Losses to be calculated on theday of the breach Case: Patrick Vs. Russo British Grain Export Co. 73. Specific performanceSubject to the provisions of Chapter II of the Specific ReliefAct, 1877 (1 of 1877), in any suit for breach of contract todeliver specific or ascertained goods, the Court may, if it thinksfit, on the application of the plaintiff, by its decree direct that thecontract shall be performed specifically, without giving thedefendant the option of retaining the goods on payment ofdamages. The decree may be unconditional, or upon such terms andconditions as to damages, payment of the price or otherwise,as the Court may deem just, and the application of the plaintiffmay be made at any time before the decree. 74. Remedy for breach of warrantyWhere there is a breach of warranty by the seller, or wherethe buyer elects or is compelled to treat any breach of acondition on the part of the seller as a breach of warranty, thebuyer is not by reason only of such breach of warrantyentitled to reject the goods; but he may(a) set up against the seller the breach of warranty in diminution or extinction of the price; or(b) sue the seller for damages for breach of warrantyThe fact that a buyer has set up a breach of warranty in diminution or extinction of the price does not prevent him from suing for the same breach of warranty if he has suffered further damage.Case: Mason Vs. Burningham 75. Repudiation of contract before duedate Where either party to a contract of sale repudiatesthe contract before the date of delivery, the othermay either treat the contract as subsisting and waittill the date of delivery, or he may treat the contractas rescinded and sue for damages for the breach. Damages to be assessed on the day stipulated fordelivery Case: Hochester V. De La Tour 76. Interest by way of damages andspecial damages Nothing in this act shall affect the right of theseller or the buyer to recover interest or specialdamages may be recoverable, or to recover themoney paid where the consideration for thepayment of it has failed In the absence of a contract to the contrary,court may award interest at such rate it thinks fiton the amount of the price. 77. Special Damages &MiscellaneousSaurabh NatuRoll No. 343 78. Interest by way of damages and specialdamages Nothing in this Act shall affect the right of the seller or the buyer torecover interest or special damages in any case where by lawinterest or special damages may be recoverable, or to recover themoney paid where the consideration for the payment of it has failed. In the absence of a contract to the contrary, the Court may awardinterest at such rate as it thinks fit on the amount of the price(a) to the seller in a suit by him for the amount of the pricefrom thedate of the tender of the goods or from the date on which the pricewas payable;(a) to the buyer in a suit by him for the refund of the price in a case of abreach of the contract on the part of the sellerfrom the date onwhich the payment was made 79. Miscellaneous Exclusion of Implied Terms and Conditions By Express Contract Course of Dealing Trade Usage Reasonable Time 80. Miscellaneous Auction Sale Right to Impose Conditions Formation of Ring or Knock Out Bidders right to withdraw bid Auctioneers right not to accept any bid Acceptance by Proper Authority Incidence of Taxation Repeal and Savings 81. Thank you