The Rights and Duties of the Seller and Buyer under the Law of Sale of Goods

in Pakistan

Amr Ibn Munir

Abstract

This paper briefly discusses the what is a contract for sale of goods? How the same was originally

part of the Contract Act. How it was later removed from the Contract Act and legislated into a new

and updated legislation. This paper also discusses who is a seller? Who is a buyer? Who is an

unpaid seller? What are the rights and liabilities of the seller, unpaid seller and buyer in a contract

for sale of goods? The main findings of this paper are that the seller is a person who sells or agrees

to sell goods while the buyer is a person who buys or agrees to buy the goods. In a contract of sale

of goods, both the buyer and seller have their own respective rights and liabilities. The seller has

the duty of delivering the goods to the buyer while the buyer has the duty of accepting and paying

for said goods according to the terms and conditions of the contract. The seller owns a lot of duties

to the buyer, such as informing the buyer for any defects in the goods provided that said defect

cannot be reasonably made out. The seller is also to send the goods to the buyer within a reasonable

time when no fixed time has been agreed. Provided there is no contract to the contrary, the seller

is to bear all expenses for the delivery of the goods. The unpaid seller is a seller to whom who

despite having delivered goods has yet to receive full payment of the goods, that is to say, when

the whole price of the goods has yet to be paid or tendered by the buyer or when rather than money,


LLB student at the Department of Law, International Islamic University, Islamabad. Email:
[email protected].

Electronic copy available at: https://ssrn.com/abstract=4582143

he has received a bill of exchange or any other negotiable instrument as a conditional payment,

but the condition on which such document was received has not yet been fulfilled due to dishonour

on the part of the buyer on the title instrument or for any other reason and includes any person who

is in the position of the seller, such as an agent of the seller to whom the bill of lading has been

endorsed or a consignor or agent who has either paid himself or is directly responsible for the price

of the goods. The unpaid seller also has rights and duties. For example, when the goods have been

passed to the buyer, he has the right to lien the goods for the price while he is in possession of

them. In case the buyer is insolvent, the right of stopping the goods in transit after he has parted

with the possession of them. And lastly, he has the right of reselling the goods which is also limited

by this Act. Where the goods have not yet been passed to the buyer, he has the right to withhold

the delivery of the goods which is also co-extensive with his right of lien and any other remedy he

might possess. The buyer is to apply for delivery with necessary arrangements to take delivery. He

also has to take any risk of deterioration of the goods if any arise during the transit of such goods

even if the seller agrees to deliver the goods at his own risk at a place other than that where they

are when sold, provided there is no contract to the contrary. Communicating the acceptance or

rejection on the buyer’s part is absolutely necessary, especially in the latter case after a lapse of

reasonable time. Committing an act that is inconsistent with the seller’s ownership also causes an

acceptance from the buyer. He also has the right to reject the goods that are delivered to him, while

he is not bound to return the goods to the seller, it is sufficient if he communicates his rejection of

the goods to the seller, provided there is no contract to the contrary. Should the buyer not take

delivery of the goods after a reasonable time by refusing the seller’s request to do so after the seller

was ready and willing to deliver the goods, the buyer becomes liable to the seller for any loss that

occurs due to such neglect or refusal to take delivery of the goods and also for any reasonable

Electronic copy available at: https://ssrn.com/abstract=4582143

charge for the care and custody of the goods. The buyer also has the right to examine the goods

when the goods have been delivered to him and they have not yet been examined. In such a case,

the goods shall not have been deemed to be accepted by the buyer unless and until the buyer has

had a reasonable opportunity of examining them to ascertain whether they are in conformity with

the contract. Also, unless otherwise agreed, when the seller tenders the delivery of goods to the

buyer, he is bound by request of the buyer to grant him a reasonable opportunity of examining the

goods for the purpose of ascertaining whether they are in conformity with the contract. In cases

where the goods are delivered to the buyer on approval or on sale to return or other similar returns,

then the property passes to the buyer when he signifies his approval or acceptance to the seller or

does any other act that adopts the transaction.

Keywords:

Contract, Agreement, Sale of Goods, Agreement to Sell, Seller, Buyer, Unpaid Seller, Rights,

Liabilities

Introduction

This paper briefly discusses the what is a contract for sale of goods, how it was originally part of

the Contract Act; how it was later removed from the Contract Act and legislated into a new and

updated legislation; this paper also discusses who is a seller; who is a buyer; who is an unpaid

seller; what are the rights and liabilities of the seller, unpaid seller and buyer in a contract for sale

of goods; The methodology used in this paper is doctrinal.

Sale of Goods

A sale of goods is a contract in which the seller transfers or agrees to transfer the property in goods

to the buyer for a price. There may even be a contract of sale between one part-owner and another

Electronic copy available at: https://ssrn.com/abstract=4582143

as well. It may be absolute or conditional. However, where the contract for the sale of goods is to

take place at a future time or some condition has to be fulfilled for said sale of goods to take place,

then in this case, it shall no longer be called a contract for sale of goods but rather it shall be called

an agreement to sell. This was originally incorporated within Chapter VII of the Contract Act, but

the same has been repealed and since then has been enacted as an updated version of the law on

the sale of goods called the Sale of Goods 1930 (hereinafter referred to as the “Act”). This much

should suffice as anything more would be beyond the scope of this paper.1

Rights and Duties of the Seller

The seller is a person who sells or agrees to sell goods.2 The seller has the duty of delivering the

goods to the buyer while the buyer has the duty of accepting and paying for said goods according

to the terms and conditions of the contract.3 It is not necessary that an application for delivery

should always be accompanied by the tender of the contract price.4

In case there is a defect in the goods sold at the time of contract, the seller is obligated to inform

the buyer of said defect at the time of the contract, except in cases where the defect is obviously

known to the buyer, provided that there is no contract to the contrary.5 This provision shall also in

cases that come under Section 16 of the Sales of Goods Act, 19306 (hereinafter referred to as the

“Act”). Hence, there is also a duty of due diligence added to the buyer. Where the defect is

1
For more information on this, see this author’s, “Principle of the Sale of Goods under Pakistani Jurisprudence: A
Critical Evaluation”. Available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4581518 (Last visited 24th
September 2023).
2
See, Section 2(13) of the Act.
3
See, Section 31 of the Act. See also, Haji Suleman v. Messrs Eastern Rice Syndicate, PLD 1976 Karachi 277, at
para 7.
4
Syed A. & M. W Azir Ali v. Haji Abu Baker, PLD 1957 (W. P.) Karachi 913, 917.
5
See, Section 16A of the Act. See also, National Bank of Pakistan v. Fatima Food Industries (Pvt.) Ltd., 2000 CLC
729 [Lahore], 735.
6
Ibid.

Electronic copy available at: https://ssrn.com/abstract=4582143

obviously known, then the seller has no obligation to inform the buyer. Should the buyer still buy

such goods, then it would mean there was a contract to the contrary. Where the defect cannot be

reasonably made out, then in such a case, the seller is obligated to inform the buyer of said defect.

Where the seller is bound to send the goods to the buyer and there is no agreed upon or fixed time

for sending such goods, then the seller is to send them within a reasonable time. The seller is also

to bear all expenses for the delivery of the goods, provided there is no contract to the contrary.

Unpaid Seller

An unpaid seller is a seller who despite having delivered goods has yet to receive full payment of

the goods, that is to say, when the whole price of the goods has yet to be paid or tendered by the

buyer7 or when rather than money, he has received a bill of exchange or any other negotiable

instrument as a conditional payment, but the condition on which such document was received has

not yet been fulfilled due to dishonour on the part of the buyer on the title instrument or for any

other reason.8 This type of seller includes any person who is in the position of the seller, such as

an agent of the seller to whom the bill of lading has been endorsed or a consignor or agent who

has either paid himself or is directly responsible for the price of the goods.9

Rights of the Unpaid Seller

Section 46 of the Act provides that

7
See, Section 45(1)(a) of the Act. See also, Pakistan Chemical and Sodium Silicate Industries v. Lever Brothers
(Pak.) Ltd., 1987 MLD 1270 [Karachi], J. S. Bank Limited, Karachi v. Province of Punjab, 2021 SCMR 1617, at
para 40.
8
See, Section 45(1)(b) of the Act. See also, Pakistan Chemical and Sodium Silicate Industries v. Lever Brothers
(Pak.) Ltd., 1987 MLD 1270 [Karachi].
9
See, Section 45(2) of the Act.

Electronic copy available at: https://ssrn.com/abstract=4582143

 “(1) Subject to the provisions of the Act and of any law for the time being in force,

notwithstanding that the property in the goods may have passed to the buyer, the unpaid

seller of goods, as such, has by implication of law:

(a) a lien on the goods for the price while he is in possession of them;

(b) in case of the insolvency of the buyer a right of stopping the goods in transit after he

has parted with the possession of them;

(c) a right of resale as limited by this Act

(2) Where the property in goods has not passed to the buyer, the unpaid seller has, in

addition to his other remedies, a might of withholding delivery similar to and coextensive

with his right of lien and stoppage in transit where the property his passed to the buyer.”

Hence, notwithstanding that the property in the goods may have passed to the buyer, the unpaid

seller has the following rights:

1. A lien on the goods for the price while he is in possession of them10

2. In case the buyer is insolvent, the right of stopping the goods in transit after he has

parted with the possession of them11

3. A right of re-sale as limited by this Act12

Where the property in the goods has not passed to the buyer, then the unpaid seller has the

following rights:

1. Withholding of the delivery of the goods (co-extensive with his right of lien)13

10
Messrs Arag Ltd. v. Messrs Muhammad Ismail Muhammad Ashraf (Firm), PLD 1958 Karachi 686, at para 11.
11
Ibid.
12
Ibid.
13
Ibid.

Electronic copy available at: https://ssrn.com/abstract=4582143

 2. Stopping the transit of the goods where the property in goods has passed to the buyer14

3. Any other remedy he might possess15

The Unpaid Seller’s Right to Lien

The unpaid seller has the right of lien in regards to his goods as well. A lien is “a right given to

another by the owner of property to secure a debt, or one created by law in favor of certain

creditors.”16 It is also referred to as “an encumbrance on one person’s property to secure a debt

the property owner owes to another person.”17 Hence, a lien quite simply a right to keep or possess

the property of another person until that person is able to pay the debt that he owes. There are three

circumstances in which the unpaid seller is entitled to lien the goods until the payment or tender

of the price of the goods.18 They are:

1. Where the goods have been sold without any stipulation as to credit19

2. Where the goods have been sold on credit, but the term of credit has expired20

3. Where the buyer becomes insolvent.21

It should also be noted that this right is subject to the provisions of the Act.22 This right can be

exercised notwithstanding that he possesses the goods as an agent or as a bailee for the buyer.23

Thus, in order to exercise this right of lien, there are two conditions that have to be fulfilled: The

first is that the seller must be an unpaid seller and the second is that he must be in possession of

14
Ibid.
15
Ibid.
16
West’s Encyclopedia of American Law, (Thomson Gale, 2nd ed., Vol. 6., 2005), 315.
17
Ibid.
18
See, Section 47(1) of the Act. See also, Krishna Rao Keshav v State of U.P., 1997 CriLJ 1129, at para 6.
19
Ibid.
20
Ibid.
21
Ibid.
22
Ibid.
23
See, Section 47(2) of the Act. See also, Balaji Paper Agency v. Mysore Paper and Board Co., ILR 1991 KAR
2563, at para 23.

Electronic copy available at: https://ssrn.com/abstract=4582143

the goods.24 This right can also be exercised in cases where the unpaid seller has partly delivered

the goods, he may lien the remaining goods, provided that such delivery has been made under such

circumstances which so as to show an agreement to waive the lien.25 This right of lien can be

terminated under the following circumstances:

1. When the seller delivers the goods to a carrier or another bailee for the purpose of

transmission to the buyer without reserving the right of disposal of the goods26

2. When the buyer or his agent lawfully obtains possession of the goods27

3. By waiver thereof.28

The right of lien however cannot be terminated by the seller obtaining a decree for the price of the

goods.29

Stoppage in Transit

We have already discussed the unpaid seller’s right to stop the goods from transit. When the buyer

becomes insolvent, the unpaid seller who no longer possesses the goods or has parted with the

goods in possession has the right to stop them in transit, that is to say, he has the right to repossess

the goods as long as they are in the course of transit and may retain them until payment or tender

of the price.30

24
Balaji Paper Agency v. Mysore Paper and Board Co., ILR 1991 KAR 2563, at para 23.
25
See, Section 48 of the Act.
26
See, Section 49(1) of the Act.
27
Ibid.
28
Ibid.
29
See, Section 49(2) of the Act.
30
See, Section 50 of the Act.

Electronic copy available at: https://ssrn.com/abstract=4582143

The goods are to be deemed to be in the course of transit from the time they are delivered to the

carrier or their bailee for the purpose of transmission to the buyer, until the buyer or his agent on

his behalf takes possession of the goods or takes delivery of the goods from the carrier or bailee.31

Should the goods be delivered by a ship that has been chartered by the buyer, then whether or not

such a ship shall be considered either the carrier of the goods or the buyer’s agent shall depend

entirely upon the facts and circumstances of the case.32

Where the goods have been delivered partly to the buyer or his agent, the remaining goods may be

stopped in transit, unless such partial delivery has been made in such circumstances as to show an

agreement to give up the possession of the whole of the goods.33

The End of the Transit

The transit ends should the buyer or his agent obtain possession or delivery of the goods before

their arrival at the appointed destination.34 Similarly, if the goods arrive at their appointed

destination and the carrier or bailee acknowledges to the buyer or his agent that he holds the goods

on his behalf and retains possession of the goods as a bailee for the buyer or his agent, the transit

will end.35 It does not matter whether the buyer has indicated a further destination for the goods.36

31
See, Section 51(1) of the Act.
32
See, Section 51(5) of the Act.
33
See, Section 51(7) of the Act.
34
See, Section 51(2) of the Act.
35
See, Section 51(3) of the Act.
36
Ibid.

Electronic copy available at: https://ssrn.com/abstract=4582143

Should the buyer reject the goods and the carrier or bailee continues possessing the goods, then in

this case, the transit shall be deemed to have ended even if the seller refuses to receive the goods

back.37 The transit also ends when the carrier or bailee to the buyer or his agent.38

How the Unpaid Seller can Stop the Goods in Transit

The unpaid seller may exercise his right of stopping the goods in transit by committing the

following:

1. Taking actual possession of the goods; or39

2. Giving notice of his claim to the carrier or other bailee in whose possession the goods

are40

In the latter case, the notice may be given to the person who actually possesses the goods or this

principal.41 In case the notice is given to the principal, then in order for such notice to be valid or

effectual, it must be given at such time and circumstances that the principal may by exercising

reasonable due diligence may communicate the same to his servant or agent in time to prevent the

delivery to the buyer.42

When the notice is sent to the carrier or bailee in possession of the goods, then he shall re-deliver

the goods as per the directions of the seller.43 The seller is also to bear the expenses of the re-

delivery in such a case.44

37
See, Section 51(4) of the Act.
38
See, Section 51(6) of the Act.
39
See, Section 52(1) of the Act.
40
Ibid.
41
Ibid.
42
Ibid.
43
See, Section 52(2) of the Act.
44
Ibid.

Electronic copy available at: https://ssrn.com/abstract=4582143

Subject to the provisions of the Act, the unpaid seller’s right of lien or right of stopping transit is

not affected by any sale or other disposition of the goods which the buyer may have made unless

the seller assents to the same.45 In case the document of the title of the goods has been issued or

lawfully transferred to any person as the buyer or owner of the goods and that person transfers the

documents to a person who takes the document in good faith and for consideration and such

transfer was done through sale, the unpaid seller’s right of lien or right of stopping transit of goods

is defeated.46 If such transfer was made by pledge or any other disposition, the right of lien or

stoppage in transit can only be exercised subject to the right of the transferee.47 In the case of the

latter, the unpaid seller may require the pledgee to have the amount secured by the pledge satisfied

in the first instance, as far as possible, out of any other goods or securities of the buyer in the hands

of the pledgee and available against the buyer.48

Subject to the provisions of this Act, a contract of sale is not rescinded due to the unpaid seller

exercising his right to lien or stoppage of transit of goods.49 In case the goods are of perishable

nature or where the unpaid seller has exercised his right of lien or stoppage of the transit of goods

gives notice to the buyer of his intention to re-sell the goods, should the buyer not pay the price or

tender payment of the goods within a reasonable time, the unpaid seller may resell the goods within

a reasonable time and recover from the original buyer damages for any loss that occurs by his

breach of the contract.50 However, the buyer shall not be entitled to any profit which may occur at

45
See, Section 53(1) of the Act.
46
Ibid.
47
Ibid.
48
See, Section 53(2) of the Act. J. S. Bank Limited, Karachi v. Province of Punjab, 2021 SCMR 1617, at para 41.
49
See, Section 54(1) of the Act. See also, Government of N.W.F.P. v. Syed Akhtar Hussain Shah, PLD 1997
Peshawar 59, at para 7.
50
See, Section 54(2) of the Act. See also, Arning & Company Ltd. v. Haroon A. Soorty Brothers, PLD 1964 (W. P.)
Karachi 133, at para 13. See also, The Provincial Government, N.W.F.P. (Now, Government of West Pakistan) v. M.K.
Musafir, PLD 1965 Supreme Court 489, 493-94, Messrs Continental Syndicate of Trade v. Lloyds Bank Ltd., PLD
1966 (W. P.) Karachi 556, at para 10, Messrs Aslam Saeed & Co. v. Messrs Trading Corporation of Pakistan Ltd.,

Electronic copy available at: https://ssrn.com/abstract=4582143

the re-sale.51 If such notice is not given, the unpaid seller shall not be entitled to recover such

damages and the buyer shall be entitled to the profit, if any, on the re-sale of the goods.52 Where

the unpaid seller exercises his right of lien or stoppage of transit of the goods and resells the goods,

the buyer in this case acquires a good title to the goods against the original buyer, notwithstanding

that no notice of the re-sale has been given to the original buyer.53 Where the seller expressly

reserves a right of re-sale of the goods and sells them in case the buyer defaults in the payment of

the goods, the original contract or sale is rescinded as a result but this shall not affect any claim

the seller may have for damages.54 It should also be noted that the reasonable time discussed

hereinabove is a question of fact.55

Rights and Duties of the Buyer

The buyer is the person who buys or agrees to buy the goods.56 As discussed hereinabove, the

seller has the duty of delivering the goods to the buyer while the buyer has the duty of accepting

and paying for said goods according to the terms and conditions of the contract. The buyer also

has to apply for delivery, if he does not apply for delivery then the seller is not bound to sell the

goods.57 Hence, the buyer is to apply for delivery with necessary arrangements to take delivery.58

PLD 1985 SC 69, at paras 9 & 12, Government of N.W.F.P. v. Syed Akhtar Hussain Shah, PLD 1997 Peshawar 59, at
para 7, Ghee Corporation of Pakistan (Pvt.) Limited v. Punjab Oil Mills Ltd., 2003 CLD 535 [Lahore], at para 7.
51
Ibid.
52
Ibid.
53
See, Section 54(3) of the Act. See also, The Provincial Government, N.W.F.P. (Now, Government of West Pakistan)
v. M.K. Musafir, PLD 1965 Supreme Court 489, 493-94, Messrs Haji Hasham Haji Ahmed & Bros v. Messrs Trading
Corporation of Pakistan Ltd., Karachi, PLD 1977 Karachi 480, at paras 23-24.
54
See, Section 54(4) of the Act. See also, Amin Agencies Ltd. v. Haji Moosa Haji Oomar, PLD 1953 Sind 57, 61.
55
See, Section 63 of the Act.
56
See, Section 2(1) of the Act.
57
See, Section 35 of the Act. See also, Hussain Trading Co. v. Haji Moosa-Haji Oomar, PLD 1957 (W. P.) Karachi
311, 313-14. See also, Messrs A.C. Yusuf & Co. v. Messrs K. B. H. M. Habibullah & Co., PLD 1965 (W. P.) Karachi
374, at para 27, Messrs Hafiz Abdul Aziz Yousufani & Co. v. Messrs Rauf Mills and Soap Industries, PLD 1967
Karachi 714, 723, Messrs Muhammad Amin Muhammad Bashir Ltd. v. Messrs Muhammad Amin Bros. Ltd., PLD
1969 Karachi 233, Haji Suleman v. Messrs Eastern Rice Syndicate, PLD 1976 Karachi 277, 284.
58
M/s. Pakistan Khopra Mills v. M/s. Abdul Rashid Siddiki & Sons, PLD 1957 (W. P.) Karachi 781, 786.

Electronic copy available at: https://ssrn.com/abstract=4582143

If he only says to give me delivery and he is not ready with necessary arrangements to take such

delivery, then the mere word of his request is a farce and not an application as the same is not an

effective application.59 Also, under this principle, there is no mention of the time at which the

buyer has to apply for delivery.60 Therefore, the point of time at which the application is to be

made must depend on the circumstances of each case and may be postponed if the facts indicate

it.61 There is also no obligation imposed on the buyer for applying for delivery after breach of

contract had been committed by the seller.62

Where the seller agrees to deliver the goods at his own risk at a place other than that where they

are when sold, the buyer shall nevertheless take any risk of deterioration of the goods if any arise

during the transit of such goods, provided there is no contract to the contrary.63

As discussed hereinabove, a contract of sale occurs when the seller offers to sell the goods and the

buyer accepts such goods. By acceptance, we mean the buyer intimating to the seller that he has

accepted the goods, or when the goods have been delivered to him and he does any act in relation

to them which is inconsistent with the seller’s ownership or when after the lapse of a reasonable

time, he retains the goods without intimating to the seller that he has rejected the goods.64 Hence,

communicating the acceptance or rejection on the buyer’s part is absolutely necessary, especially

59
Ibid.
60
Abdul Shakoor v. Karachi Trading Co., PLD 1962 (W. P.) Karachi 50, at paras 14-17.
61
Ibid.
62
Messrs A.C. Yusuf & Co. v. Messrs K. B. H. M. Habibullah & Co., PLD 1965 (W. P.) Karachi 374, at para 25.
63
See, Section 40 of the Act.
64
See, Section 42 of the Act. See also, Messrs Yusuf and Razak v. Abdullah, PLD 1957 (W. P.) Karachi 747, Ahmed
Corporation v. Messrs The International Food Grain and Oil Seed, Karachi, PLD 1973 Karachi 361, Messrs Liberty
Cloth Stores v. Messrs Yakub & Sons, 1984 CLC 2809 [Karachi], at para 18, Messrs Asian Associated Agencies v.
Pakistan, 1988 SCMR 789, 795, National Bank of Pakistan v. Fatima Food Industries (Pvt.) Ltd., 2000 CLC 729
[Lahore], 738,

Electronic copy available at: https://ssrn.com/abstract=4582143

in the latter case after a lapse of reasonable time. Committing an act that is inconsistent with the

seller’s ownership also causes an acceptance from the buyer.

In “Badruddin H. Mavani v. Government of Pakistan”65, where there was a dispute as to the types

of bags used for the delivery of rice, the court held that

“the appellants will be deemed to have accepted the goods as soon as the bags of rice were

tied up to the ship's tackle and the goods were shipped to buyer abroad, which is admittedly

an act of the appellants inconsistent to the right of ownership of the respondent No. 1 in

respect of the goods in question.”66

This observation is laudable.

The buyer also has the right to reject the goods that are delivered to him, while he is not bound to

return the goods to the seller, it is sufficient if he communicates his rejection of the goods to the

seller, provided there is no contract to the contrary.67

Should the buyer not take delivery of the goods after a reasonable time by refusing the seller’s

request to do so after the seller was ready and willing to deliver the goods, the buyer becomes

liable to the seller for any loss that occurs due to such neglect or refusal to take delivery of the

goods and also for any reasonable charge for the care and custody of the goods.68 That is to say,

he is to pay the seller for the care he took for the goods. This principle shall not affect the rights of

65
1982 CLC 44 [Karachi].
66
Ibid, at para 17.
67
See, Section 43 of the Act. See also, Messrs Asian Associated Agencies v. Pakistan, 1988 SCMR 789, 795.
68
See, Section 44 of the Act. See also, Messrs Jaffer Bros. Ltd. v. Islamic Republic of Pakistan, PLD 1978 Karachi
585, at para 12, Messrs Burma Oil Mills Ltd. v. Messrs Zamindar Cotton Factory, Karachi, PLD 1981 Karachi 143,
148,

Electronic copy available at: https://ssrn.com/abstract=4582143

the seller in case where the refusal or neglect of the buyer to take delivery amounts to a repudiation

of the contract.69

Buyer’s Right of Examination

The buyer also has the right to examine the goods when the goods have been delivered to him and

they have not yet been examined.70 Thus, in such a case, the goods shall not have been deemed to

be accepted by the buyer unless and until the buyer has had a reasonable opportunity of examining

them to ascertain whether they are in conformity with the contract.71 Also, unless agreed otherwise,

when the seller tenders the delivery of goods to the buyer, he is bound by request of the buyer to

grant him a reasonable opportunity of examining the goods for the purpose of ascertaining whether

they are in conformity with the contract.72

Goods Sent on Approval or on Sale to Return

Section 24 of the Act provides that

“When goods are delivered to the buyer on approval or “on sale or return” or other similar

terms, the property therein passes to the buyer__

69
Ibid.
70
See, Section 41(1) of the Act. See also, Rahim Bakhsh Piracha v. Muhammad Ibrahim, 1978 SCMR 220, 225,
Messrs Agha Brothers v. Tharparker District B. Association, Mirpurkhas, 1979 CLC 831 [Karachi], at para 6,
Messrs Mahmood Industries v. West Pakistan Water and Power Development Authority, 1987 CLC 1196 [Lahore], at
para 5. It should be noted that the court has incorrectly applied Sections 15 and 17 of the Act in this case. See also,
Pan Ocean Enterprises (Pvt.) Limited v. Thai Rayon Company Limited, 1991 CLC 1837 [Karachi], 1842, PLD 1990
Karachi 395, 399, Islamic Republic of Pakistan v. Messrs Sheikh Muhammad Sadiq Muhammad Afzal, 2007 CLD
257 [Lahore], 261, Messrs Allied Plastic Industries (Pvt.) Ltd. v. Messrs ICC Chemical Corporation, 2020 CLD 720
[Sindh], at para 3.
71
Ibid.
72
See, Section 41(2) of the Act. See also, Rahim Bakhsh Piracha v. Muhammad Ibrahim, 1978 SCMR 220, 225,
Islamic Republic of Pakistan v. Messrs Sheikh Muhammad Sadiq Muhammad Afzal, 2007 CLD 257 [Lahore], 261.

Electronic copy available at: https://ssrn.com/abstract=4582143

 (a) when he signifies his approval or acceptance to the seller or does any other act adopting

the transaction;

(b) if he does not signify his approval or acceptance to the seller but retains the goods

without giving notice of rejection, then, if a time has been fixed for the return of the goods,

on the expiration of such time, and, if no time has been fixed, on the expiration of a

reasonable time.”

Hence, in cases where the goods are delivered to the buyer on approval or on sale to return or other

similar returns, then the property passes to the buyer when he signifies his approval or acceptance

to the seller or does any other act that adopts the transaction.73 However, in case he does not signify

his approval or acceptance to the seller but retains the goods without giving the notice of rejection,

then in such a case the goods shall be deemed to have been delivered to the buyer. The same goes

for the case where a time has been fixed for the return of such goods and the buyer still does not

return the goods. If no time has been fixed, then in such a case, the goods shall stand delivered to

the buyer if the buyer does not return the goods within the expiration of a reasonable time.

Conclusion

From the discussion hereinabove we can conclude the seller is a person who sells or agrees to sell

goods while the buyer is a person who buys or agrees to buy the goods. In a contract of sale of

goods, both the buyer and seller have their own respective rights and liabilities. The seller has the

duty of delivering the goods to the buyer while the buyer has the duty of accepting and paying for

said goods according to the terms and conditions of the contract. The seller owns a lot of duties to

73
Al-Baraka Bank (Pakistan) Ltd. v. Province of Punjab, 2018 CLD 626 [Lahore], PLD 2018 Lahore 450, at para
33. See also, Messrs Mahmood Industries v. West Pakistan Water and Power Development Authority, 1987 CLC
1196 [Lahore], 1200.

Electronic copy available at: https://ssrn.com/abstract=4582143

the buyer, such as informing the buyer for any defects in the goods provided that said defect cannot

be reasonably made out. The seller is also to send the goods to the buyer within a reasonable time

when no fixed time has been agreed. Provided there is no contract to the contrary, the seller is to

bear all expenses for the delivery of the goods. The unpaid seller is a seller to whom who despite

having delivered goods has yet to receive full payment of the goods, that is to say, when the whole

price of the goods has yet to be paid or tendered by the buyer or when rather than money, he has

received a bill of exchange or any other negotiable instrument as a conditional payment, but the

condition on which such document was received has not yet been fulfilled due to dishonour on the

part of the buyer on the title instrument or for any other reason and includes any person who is in

the position of the seller, such as an agent of the seller to whom the bill of lading has been endorsed

or a consignor or agent who has either paid himself or is directly responsible for the price of the

goods. The unpaid seller also has rights and duties. For example, when the goods have been passed

to the buyer, he has the right to lien the goods for the price while he is in possession of them. In

case the buyer is insolvent, the right of stopping the goods in transit after he has parted with the

possession of them. And lastly, he has the right of reselling the goods which is also limited by this

Act. Where the goods have not yet been passed to the buyer, he has the right to withhold the

delivery of the goods which is also co-extensive with his right of lien and any other remedy he

might possess. The buyer is to apply for delivery with necessary arrangements to take delivery. He

also has to take any risk of deterioration of the goods if any arise during the transit of such goods

even if the seller agrees to deliver the goods at his own risk at a place other than that where they

are when sold, provided there is no contract to the contrary. Communicating the acceptance or

rejection on the buyer’s part is absolutely necessary, especially in the latter case after a lapse of

reasonable time. Committing an act that is inconsistent with the seller’s ownership also causes an

Electronic copy available at: https://ssrn.com/abstract=4582143

acceptance from the buyer. He also has the right to reject the goods that are delivered to him, while

he is not bound to return the goods to the seller, it is sufficient if he communicates his rejection of

the goods to the seller, provided there is no contract to the contrary. Should the buyer not take

delivery of the goods after a reasonable time by refusing the seller’s request to do so after the seller

was ready and willing to deliver the goods, the buyer becomes liable to the seller for any loss that

occurs due to such neglect or refusal to take delivery of the goods and also for any reasonable

charge for the care and custody of the goods. The buyer also has the right to examine the goods

when the goods have been delivered to him and they have not yet been examined. In such a case,

the goods shall not have been deemed to be accepted by the buyer unless and until the buyer has

had a reasonable opportunity of examining them to ascertain whether they are in conformity with

the contract. Also, unless otherwise agreed, when the seller tenders the delivery of goods to the

buyer, he is bound by request of the buyer to grant him a reasonable opportunity of examining the

goods for the purpose of ascertaining whether they are in conformity with the contract. In cases

where the goods are delivered to the buyer on approval or on sale to return or other similar returns,

then the property passes to the buyer when he signifies his approval or acceptance to the seller or

does any other act that adopts the transaction.

Electronic copy available at: https://ssrn.com/abstract=4582143