SALE OF GOODS ACT 1930

 According to section 4 of the act a contract of sale of goods means “A contract where the
seller transfers or agrees to transfer the property in goods to buyer for a price”
 Thus a contract of sale may be of two types:
1. Sale: where under a contract the property in the good is immediately transferred from the
seller to the buyer,the contract is called sale.
2. Agreement to sale : where under a contract of the sale ,the transfer of property is to take
place at a future time or subject to fulfillment of certain conditions ,the contract is called
an agreement to sale.
Essentials of a contract of sale
1. Two parties
2. Goods
3. Transfer of general property
4. Price

Distinction between sale and agreement to sell

 Nature of contract
 Transfer of ownership
 General and particular property
 Sellers right of resale
 Right to recover prices and damages
 Incidence of risk of loss
 Insolvency of the buyer
 Insolvency of seller.
Sale distinguished from other contracts
 Sale & bailment
 Sale & Gift
 Sale, barter & Exchange
 Sale , Mortgage & hypothecation
 Sale & contract of work & Labour
 Sale & hire purchase agreement
1. Transfer of ownership
2. Buyers status
3. Buyer's option
4. Useful of installment payment
Formation of a contract of sale
 A contract of sale is just like any other contract and therefore it must satisfy all the
essentials of a valid contract as laid down in the section 10 of the Indian contract act.
Concept Of Goods: According to Section2(7) of term “good” means “every kind of immoveable
property other than actionable claims and money & includes stocks and shares, growing crops
and things attached to or forming part of the land which are agreed to be severed before sale or
under contract of sale”
Goods
 Types of goods :
1. Existing Goods
a) Specific Goods
 b) Ascertained Goods
c) Unascertained Goods
d) Unascertained Goods
2. Future Goods
3. Contingent Goods
Perishing Of Goods
 Perishing of goods making of the contract
 Goods perishing before sale but after agreement to sale
Price
 Section 2(10) defines price “As money consideration for sale of goods” money means
“Legal tender money in circulation”
 Ascertainment of Price:
1. May be fixed by the contract or may be left to be fixed in the manner agreed or
determined by course of dealing between parties
2. If aforementioned system fails a reasonable price
3. Where there is an agreement to sell goods on the terms that the price is to be fixed by
third party & such third party does not oblige,the agreement is thereby avoided.
4. In the third party above is prevented by any party, the party not in fault may sue for
damages
Some important terms
 Document of title of goods
 Insolvent
 Mercantile Agent
Conditions & Warranties
 It is usual for the seller to make certain statements about the goods he is willing to sell
before a contract of sale is concluded.
 These statements and representations may or may not form part of the contract depending
upon whether they amount to stipulation or mere expression of opinion.
 The stipulation is considered to be part of the contract of sale and its breach provides
remedy to the buyer against a seller.The nature of ready depends upon whether the
stipulation is condition or warranty.
 While an expression of opinion is not considered to be part of the contract & therefore
creates no obligation on the investor.
Condition : “ A condition is a stipulation essential to the main purpose of the contract, the
breach of which gives rise to a right to reject goods and treat the contract as repudiated.”
Warranty: “A warranty is a stipulation collateral to the main purpose of the contract , the breach
of which gives rise to claim for damages but not a right to reject the goods and treat the contract
as repudiated”
 Whether a stipulation in a contract of sale is a condition or warranty depends in each case
on the construction of the contract. A stipulation may be condition , though called a
warranty in the contract”.
Stipulation as to time: unless different intentions appear from the terms of the contract ,
stipulation as to the time of payment are not deemed to be the essence in a contract of sale.
Whether any other stipulation as to time is the essence of the contract or not depends upon the
terms of the contract. But in mercantile contracts ,time for delivery of goods is always taken as
essence unless otherwise agreed.
Difference between Condition & Warranty:
1. Nature
2. Remedies for Breach
3. Condition As Warranty & vice versa
When a breach of condition is treated as a breach of warranty:
1. Voluntary Waiver
2. Compulsory treatment of a condition as warranty.
Express & Implied Conditions & Warranties
 Express conditions and warranties are those which have been expressly agreed upon by
the parties at the time of contract of sale.
 Implied conditions and warranties are those which the law incorporates in the contract
unless parties stipulate to the contrary. This may be cancelled or varied by an express
agreement or by the course of dealing or by usage or custom
Implied conditions :
1. As to title
2. As to description
3. As to sample
4. As to quality & fitness
5. As to merchantability
6. As to wholesomeness
Implied Warranties:
1. Warranty of quiet possession
2. Warranty of freedom from encumbrances
3. Warranty of usage of trade
4. Warranty as to disclose dangerous nature of goods
Doctrine Of Caveat Emptor: ( Let the buyer beware)
1. Implied condition as to quality & fitness
2. Sale of goods by description
3. Usage of trade
4. Consent by fraud
Transfer Of Ownership
 Importance Of Transfer Of Ownership:
1. Risk prima facie passes with ownership
2. Action against third parties
3. Insolvency of the seller or buyer.
Rules regarding transfer of ownership:
Passing of property or ownership in case of specific or ascertained goods
1.When goods are in a deliverable state
2.When seller has to do something
3.When goods are to be measured etc
4.When goods are sold on sale or approval
Passing of property in case of unascertained goods
Transfer of Title by Non Owner
1. Title by estoppel
2. Sale by mercantile agent
3. Sale by co-owner
 4. Sale by person in possession of goods under voidable contract
5. Sale be seller in possession after sale
6. Sale by buyer in possession of goods
7. Unpaid seller’s right of resale
8. Sale under the provisions of other act.
Performance of a contract of sale
 Payment & Delivery are concurrent conditions
 Delivery :-
1. Actual
2. Symbolic
3. Constructive
Rules regarding delivery:
1. Buyer should be in a position to exercise control over the goods
2. Effect of part delivery
3. Buyer to apply for delivery
4. Expenses of delivery
5. Place of delivery
6. Where goods are with third person
7. Delivery of wrong quantity
8. Installment deliveries
9. Delivery to carrier or wharfinger
10. Buyer’ right of examining the goods
UNPAID SELLER
 Meaning of Unpaid Seller :
1. Who has not been paid or tendered the whole of the price of the goods
2. Who had received a bill of exchange or any other negotiable instrument as a conditional
payment which is dishonoured.
RIGHT OF UNPAID SELLER
 The unpaid seller has the following rights:
1. Rights of an unpaid seller against the goods:
a) When the property in the goods has been transferred:
i) Right Of lien
ii) Right of stoppage of goods in transit
iii) Right of resale
a) When the property in the goods has not been transferred
i) Right of withholding delivery
2. Rights of an unpaid seller against buyer personally:
a) Right to sue for price
b) Right to sue for damages
c) Right to sue for interest