If you don’t build your dream, someone else will hire you to help them build theirs.”

-Dhirubhai Ambani

Outline of the chapter Definitions Sales & Agreement to sale Sales & Hire purchase agreement Sales & Barter exchange Sales & Bailment Sales & Contract for work materials Subject matter contract of sell Document of title of goods Stipulation as to time

Definitions Buyer and Seller:

‘Buyer’ means a person who buys or agrees to buy goods [Sub Section(1)]

‘Seller’ means a person who sells or agrees to sell goods [Sub Section (13 )].

The two terms, ‘buyer’ and ‘seller’ are complementary and represent the two parties to a contract of sale of goods. Both the terms are, however, used in a sense wider than their common meaning.

Contract for sales

Contract of Sale of Goods is a contract between buyer and seller intending to exchange property in goods for a price. Section 4 (1) of the Sale of Goods Act,

1930

Essentials of contract of sale There must be at least two parties. The subject matter of the contract must

necessarily be goods. A price in money (not in kind) should be paid

or promised. A transfer of property in goods from seller to

the buyer must take place. A contract of sale must be absolute or

conditional All other essential elements of a valid contract

must be present in the contract of sale.

Sale and an agreement to sell

“where under a contract of sale the property in the

goods is transferred from the seller to the buyer, the contract is called a sale.”

the Section 4(3) of the Sale of Goods Act, 1930

Sale Vs an agreement to sell The property in the goods

passes to the buyer and along therewith the risk.

It is an executed contract. i.e. Contract for which consideration has been paid.

The seller can sue the buyer for the price of the goods because of the passage of the property therein to the buyer.

Since property in the goods does not pass to the buyer, the risk also does not pass to him.

It is an executor contract, i.e. Contract for which consideration is to be paid at a future date.

The aggrieved party can sue for damages only and not for the price, unless the price was payable at a stated date.

Sale Vs an agreement to sell A subsequent loss or

destruction of the goods is the liability of the buyer.

Breach on the part of the seller gives the buyer double remedy; a suit for damages against the seller and a proprietary remedy of recovering the goods from third parties who bought them

Such loss or destruction is the liability of the seller.

The seller, being still the owner of the goods, may dispose of them as he likes, and the buyer’s remedy would be to file a suit for damages only.

Sales & Hire purchase agreement Property in the goods

is transferred to the buyer immediately at the time of contract.

The position of the buyer is that of the owner of the goods.

The buyer cannot terminate the contract and is bound to pay the price of the goods.

The goods passes to the hirer upon payment of the last installment.

The position of the hirer is that of a bailee till he pays the last installment.

The hirer may, if he so likes, terminate the contract by returning the goods to its owner without any liability to pay the remaining installments.

Cont… The seller takes the

risk of any loss resulting from the insolvency of the buyer.

The buyer can pass a good title to a bonafide purchaser from him.

Tax is levied at the time of the contract.

The owner takes no such risk, for if the hirer fails to pay an installment the owner has right to take back the goods.

The hirer cannot pass any title even to a bonafide purchaser.

Tax is not livable until it eventually matures into a sale.

Sales & Bailment The property in goods

is transferred from the seller to the buyer.

The return of goods in contract of sale is not possible.

The consideration is the price in terms of money.

There is only transfer of possession of goods from the bail or to the bailee for any of the reasons like safe custody, carriage, etc.

The bailee must return the goods to the bailor on the accomplishment of the purpose for which the bailment was made.

The consideration may be unwarranted

Sales & Contract for work materialsA

contract of sale contemplates the delivery of goods whereas

a contract for work and material involves exercise of

skill and labour by one party in respect of materials supplied

by another

Subject-matter of Contract of Sale Goods:

“Goods” means every kind of movable property other than actionable claims and money & 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[Sub Section 2 (7)].

Existing goods Such goods as are in existence at the time of

the contract of sale, like those owned or possessed by the seller

Cont... Specific goods means goods identified and agreed

upon at the time the contract of a sale has been made.

Ascertained goods means commonly use as similar in meaning to specific goods

Generic goods defined only by description and not identified and agreed upon.

Future goods

means goods to be manufactured or produced or acquired by the seller after making the contract of sale [Section 2 (6)]

Cont… Contingent goods

These are the goods the acquisition of which by the seller depends upon a contingency which may or may not happen

Contingent & future goods

The procurement of contingent goods depends upon a contingency whereas it is not so in case of future goods

Document of title of goods Bill of lading

Acknowledges receipt of goods on board a ship and is signed by the captain of the ship or duly authorized representative

Dock warrant Issued by a dock owner, giving details of the goods and

certifying that goods are held to the order of the person

Warehouse-keeper’s certificate Document issued by the warehouse-keeper stating

goods specified in the document are in his warehouse

Cont… Railway receipt

Acknowledge receipt of the goods. Presented by the holder at he destination to take deliver of the goods

Delivery order Document containing an order by the owner of the

goods to the holder of the goods on his behalf, asking him to delver the goods to the person named in the document

Stipulations as to time

Stipulations relating to time of payment

There are not of the essence of a contract of sale, unless a different intention appears from the contract

Stipulations not relating to time of payment but on delivery of goods

The delivery must be made at the fixed time, otherwise the other party is entitled to put an end to the contract