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Sale of Goods Act, 1930

Sale: Transfer of ownership


Essential ingredients:

TRANSFER

BUYER

FOR A CONSIDERATION (PRICE)

CHECKPOINTS FOR A CONTRACT OF SALES:

Bilateral contract Transfer of property in goods Subject matter --- necessarily goods Price / money / consideration All essential elements of a valid contract Indian Contract Act, 1872

Sale & Agreement to sell


Transfer of property Type of contract Risk

Immediate & future Executed & executory Agreement is purely a contract but sale is with conveyance

Liability in case of loss In agreement it passes on to In case of Breach by seller


seller. In sale, passes on buyer In agreement, buyer has only personal remedy against seller, i.e., to claim for damages In sale, as a owner of goods buyer can file a suit against seller beyond the personal remedy of claiming for damages

Differences:

Sale and bailment Sale and contract for work and labor Sale and hire purchase

Subject matter: GOODS

Section 2(7) : goods is 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 sale. Classification of goods: Existing goods (1) specific or generic (2) ascertained or unascertained Future goods Contingent goods

Price / consideration

Constitutes the essence for a contract of sale. Can be either paid or promised to be paid If a consideration other than money is to be given, it is not a sale

Modes of fixing price. Section 9 & 10


1. 2.

3. 4.

by the parties @ the time of contract Left to be determined by the course of dealings b/w parties Left to be fixed in some way stipulated in contract By third parties

Conditions and warranties


Situations when condition sink to the level of warranty:

Condition turns to be warranty where buyer waives the condition Where buyer treats breach of condition as breach of warranty

Implied conditions as to title:


Implied conditions can differ from the kind of contract itself. That is., under sale of goods by description, or sale by sample or otherwise. There is an implied condition that the seller, in an actual sale, has the right to sell the goods, and in an agreement to sell, he will have a right to sell the goods at the time when property is to pass. As a result, if the title of seller turns out to be defective the buyer is entitled to reject the goods and can recover full price paid by him. Case: Rowland Vs. Divall : A had bought a second hand motor car from B and paid for it. After he had used it for six months, he was deprived of it because the seller had no title to it. It was held that B had broken the condition as to title and A was therefore, entitled to recover the purchase money from B

Implied conditions under a sale by description

Goods must correspond with description 2. Goods must be of merchantable quality 3. Condition as to wholesomeness 4. Condition as to quality or fitness for a particular purpose Case: Priest Vs Last: a hot water bottle was bought by the
1.

plaintiff, a draper, who could not be expected to have special skill knowledge with regard to hot water bottles, from a chemist, who sold such article stating that the bottle will not stand boiling water but was intended to hold hot water. While being used by the plaintiffs wife, the bottle bursted and injured her. It was held that the seller was responsible for damages as the bottle was not fit for use as a hot water bottle.

Implied conditions under sale by samples. u/s 14


Warranty as to quiet possession Warranty as to freedom from encumbrances Warranty as to disclose dangerous nature of goods Warranties implied by custom or usage of trade

Doctrine of caveat emptor Case: Ward Vs. Hobbs : certain pigs were sold by auction and no warranty was given by seller in respect of any fault or error of description. Buyer paid the price for healthy pigs. But, they were ill and all but one died of typhoid fever. They also infected some of the own pigs of the buyer. It was held that there was no implied condition or warranty that the pigs were of good health. It was the buyers duty to satisfy himself regarding the health of the pigs.

Passing of property or passing of ownership.Sec 18-20

1. 2.

3.

4.

Risk follows ownership Where there is a danger of goods to be damaged by a third party, it is generally the owner who can take action Right of third party may come into being only upon the passing of the property if the buyer resells the goods to a third party. Insolvency of either parties

Passing of property in specific goods

Where there is an unconditional contract for the sale of specific goods in a deliverable condition. Here the property in goods passes at the time when the contract is made. Where there is a contract for the sale of specific goods not in a deliverable state. That means, the seller shall do something to the goods to put them into a deliverable state Case: Rugg Vs Minett : certain quantity of oil was brought. Oil was filled into casks by the seller and then taken away by the buyer. Some casks were filled in the presence of buyer but, before the remainder could be filled, fire broke out and the entire quantity of oil was destroyed. Held, the buyer must bear the loss of the old which was put into the casks and the seller must bear the loss of the remainder. Sale of specific goods in deliverable state, its duty of seller to weigh, measure, test or do something with reference to the goods for the purpose of ascertaining the price Where goods are delivered to buyer on approval or on sale of return or other similar terms the property therein passes to buyer

Transfer of title by person not the owner

Maxim : nemo dat quod non habet no one can pass a better title than he himself has. Exceptions to this rule:
1. 2. 3.

4. 5. 6. 7.

Sale by mercantile agent Sale by co-owner Sale by a person in possession under a voidable contract Sale by seller in possession after sale Sale by buyer in possession Sale by an unpaid seller Sale by a person under other laws

Performance of the contract of sale

Delivery should have the effect of putting buyer in possession Delivery of goods according to the contract Delivery at the prescribed place and time Seller to bear the cost of delivery unless the contract otherwise provides If goods to be delivered at a different place and the nature of goods is of deteriorating, then unless otherwise provided be borne by the buyer Buyer shall not accept delivery in tranches unless agreed upon

Acceptance of goods by buyer

Intimating the acceptance Retaining the goods received By doing certain acts inconsistent with the ownership

Unpaid seller & his rights. Sec 45-54

Right as to lien of retention Right of stoppage in transit Right of resale


Where goods are of perishable in nature Such right to resell is expressly reserved in contract Proper notice shall be service upon before doing such act

Right to withhold delivery of goods Right against the buyer Sec 55 & 56

(1) Suit for price (2) suit for damages