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1. ADNAN
2. ARSHI

3. MAAZ
4. FARZANA

5. KARAN
6. SHAIZEEN

7. URMILA
8. ROSHNI

 THIS IS (7th jan 1930) INDIAN PARLIAMENT

INTRODUCTION.
The law as to sales of goods is basically

originated from the INDIAN CONTRACT ACT 1872.From sec 76 to 123.However as the provisions of section 76 to 123 were insufficient of growing merchandise transactions so this act was formed.

SALE
Defination of sale [sec4(1)]. It is a contract where by 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

ESSENTIAL ELEMENTS OF A CONTRACT OF SALES OF GOODS ACT

The following are the essential characteristics of a contract of sales of goods Two parties Goods Price Transfer of property Includes both a sales and agreement to sales Absolute and Conditional

TYPES OF GOODS.

SALE AND AGREEMENT TO SELL

Sale
1. 2. 3. 4.

Agreement to sell
1. 2. 3. 4.

Ownership is with the buyer Executed contract Sue for price, in case of breach Goods lost by accident then loss falls on the buyer.

Ownership is with the seller Executory contract Sue for damages only, in case of breach Goods lost by accident then loss falls on the Seller.

ESSENTIALS OF VALID SALE CONTRACT

Two parties:
There must be 2 distinct parties i.e., a buyer and a seller

Goods:
Goods which form the subject matter of the contract of sale must be movable.

Price:
The consideration for the contract of sale, called price, must be money

Essential elements of a valid contract: A contract is made by an offer to buy or sell goods for a price and the acceptance of such offer.
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CONDITION
What is a Condition? [Section 12 (2)] A condition is a stipulation essential to the main purpose of the contract, the breach of which gives rise to a right to treat it as repudiated or broken.

WARRANTY
What is Warranty? [Section 12 (3)] A warranty is a stipulation collateral to the main purpose of the contract, the breach of which gives rise to a claim for damages, but not to a right to reject the goods and treat the contract as repudiated or broken.

CONDITION AND WARRANTY

Condition
1.

Warranty
1.

Its is a term in contract which is essential. When condition breaches? Breach of condition can be breach of warranty

Its a term in contract which is collateral. When warranty breaches? Breach of warranty cannot be breach of condition.

2.

2.

3.

3.

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When breach of condition treated as breach of warranty [sec.13]

Voluntary waiver by buyer.

Acceptance of goods by buyer.

IMPLIED CONDITIONS
1) Condition as to title 2)Condition in a sale by description 3)Condition in a sale by sample 4)Condition in a sale by sample as well as by description 5)Condition as to fitness or quality 6)Condition as to merchantability 7)Condition as to wholesomeness

IMPLIED WARRANTY
1)Warranty of quiet possession
2)Warranty of freedom from encumbrances 3)Warranty of disclosing the dangerous nature of goods to the ignorant buyer

DOCTRINE OF CAVEAT EMPTOR

Caveat emptor means let the buyer be aware According to the doctrine of caveat emptor it is the duty of buyer to be careful while purchasing goods of his requirement and the seller is not bound to disclose every defect in goods of which he may be cognisant. While making purchase the buyer depends on his own skills and makes a bad choice and hence he cant hold the seller liable for the same, as there is no implied undertaking by the seller.

Rights of unpaid seller

Against the goods

Against the seller personally

Where the property in the goods has not passed

Where the property in the goods has passed

Suit for price

Repudiation of contract

Suit for damages

Suit for interest

With holding delivery

Lien

Stoppage in transit

Stoppage in transit

Re sale

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COST, INSURANCE, FREIGHT

Sellers duty: Make out an invoice of Buyers duty

the goods sold.

To pay unloading Procure a contract of

affreightment.
To arrange for an

charges, wharf age charges, etc.

To pay custom and

insurance.

import duties.
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AUCTION SALE :(sec 64)

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. The auctioneer who sells the goods by the auction is an agent of the seller, i.e. the owner.
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RULES OF AUCTION SALE

Completion of sale:

The sale is complete when the auctioneer announces its completion by the fall of the hammer or in some other customary manner like one two three or going going, gone
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Case law :

Mody v/s Gregson

Facts of the case : Instead of sale of Brandy by sample,

brandy coloured with dye was supplied.It was held that the buyer was entitled to reject the goods. Sale as per sample as well as description:( section 15) If sale is by sample as well as by description, it is not sufficient that the bulk of the goods correspond with the sample .If the goods does not correspond with description, where sale is by sample as well as by description, here the goods shall correspond both with sample as well as by description. Even if the bulk correspond with sample, but the bulk doesnot corespond with description , the contract is terminated

Case law
Facts of the case: When nicholas agreed

to sell to Gogts some oil describe as foreign refined grape oil warranted only egual to sample but contained an added mixture of hemp oil Held: it was held that Gogts could reject the goods Condition as to Merchandise Quality Sec16(2) The merchandice has not been defined in this Act but it means If one buys it for self use, there should be reasonable effect for which they are generally using If ther are not for resale, it should be commercially saleable underthe description by which they are known in the market at their full value

Nicholas V/s Gogts

Godley

Case law
Facts of the case : P sold catipult to a boy of

v/s

Perry

6 yrs , while the boy was using it the catipult broke & made the boy blind by one eye .

Held : the catipult was not of Mercandise

quality, so he had to refund for damages as compensation. Condition as to Wholesomeness:

It it applicable to eatables , foodstuffs that means goods shall be fit for human consumption

Case Law

Priest v/s Last

A brought a hot water bag from B a retail chemist. A examine bottle A asked B if it would stand boiling water. B told him that it was intended to hold hot water. The bottle burst after a few day of use & injured As wife .
Held : B was liable for breach of implied

condition that the bottle was unfit for the purpose for which it was made.

Doctrine of caveat Emptor

Caveat emptor means let the buyer beware that is the

buyer must take care as general rule, the buyer purchases goods after satisfying himself as to quality & fitness & therefore, the buyer purchases the goods at its own risk relying upon his own skill & judgement. This doctrine of caveat emptor implies that the person who bought the goods must keep his eyes open, his mind active & cautious while buying thIn other words, the buyer while buying the goods must examine them thoroughly. If the goods,

 Turns out to be defective

Does not serve this purpose ,

If he depends upon his skill &

judgement & makes a bad choice he cannot blame anybody but must thank himself for his own faults. In absence of any warranty/ misrepresentation

Case law :
Facts of the case: H sends pigs to

Wards v/s Hobbs (1878)

market, to be sold by auction. Pigs were sold to W with all fauits & errors of description. H knew the pigs were suffering from swine fever (typhoid fever)but he never disclosed this to W. Held: sale was valid, as there was no implied warranty/ condition for the sale. The house of lords (supreme court) held that sending infected . Pigs to the market was offence(crime). But the seller was not bound to disclose that the pigs were unhealthy. The buyer should not claim damages from seller on the principles of caveat Emptor

exceptions to cAveAt emptor

Doctrine of caveat Emptor does not imply under the

following circumstances The seller does not give an implied warranty as to quality & fitness of the goods & if the goods are not fit of sale the seller cannot take refence under the doctrine of caveat Emptor & he shall be liable for breach of warranty of quality & fitness.

i) Customs/Usage of trade:
An implied warranty/ condition as to quality & fitness

for particular purpose may be annexed by the custom/ usage of trade. However custom should not be unreasonable & should not be inconsistent with express terms of contract ii)Fraud: when the seller is guilty of fraud Eg: When the seller got consent of the buyer by fraud & conceals a defeat the seller is liable. In case law Wards V/s Hobbs

iii) For specific Purpose:

Where the goods are ordered & the

seller is made aware of it & when the buyer relies on skill & judgement of the seller, there is an implied condition that the goods shall be reasonably fit for such purpose iv) Merchantable Quality : Where the sale is by description & purchases is done from the seller . Who deals in goods of that description, there is an implied condition that the goods shall be of merchantable quality

Case law:

. Frost V/s Ayalsbury dairy co Ltd

Facts of the case: F brought milk from K. The

milk supplied by Davis (A) was contaminated with germs of typhoid fever, the plaintiffs wife (Fs wife) was infected & died. Held: The milk dealer was held liable (A was held liable )

Condition implied by trade usage:

Condition as to quality / fitness for particular purpose

may be annexed by usage of trade i.e an implied warranty or condition as to quality or fitness for particular purpose . Eg. Printing & manufacturing the expiry date for medicines

Condition as to quality / fitness for buyers purpose (sec 16(1)

It lays down when a buyer , expressly or by implication

makes known. To the seller that particular purpose for the goods are enquired so that the buyer relies on the sellers skill and judgement & the goods are of description which is in course of the sellers business to supply where he is the manufacturer or producer or not. There is implied condition that the goods shall be reasonably fit for such purpose This condition arises only when the following circumstances are proved:

 Where the buyer has made known to the seller for which

the goods were ordered. Where the buyer has relied upon the sellers skill & judgement Where the goods are brought by description. Which is in course of sellers business to sell Finally by custom & usage implied condition of fitness's & merchantible quality is annexed (attached) to contract of sale

Case law:
Facts of the case: A buys a machine described

Varley V/s Whipps

by the seller as it is good as new. But it was a old machine. The buyer buys it without seeing. It was found that it tuned out to be old & rusted. Held: Buyer could reject the machine Sale by Sample : (sec 17) The sale by sample means where there is a term of contract express or implied there are 3 implied transactions where the goods are supplied accordingly to the sample That the bulk shall correspond with the sample in quality That the bulk shall have reasonable opportunity for comparing the bulk with the sample That the goods shall be free from any defects

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