The Sale of Goods Act, 1930

PRESENTATION

ON

BUSINESS LAW

INTRODUCTION

Sale of goods actSale of goods act

Definition:Definition:

“Contract where by the seller Transfers or agrees to transfer the property in goods to the buyer for a price”

Characteristics of a Characteristics of a contract of a sale of contract of a sale of

goods:goods:

Two parties (Bilateral contract) * Buyer * Seller

Case:State of Gujarat VS Raman Case:State of Gujarat VS Raman Lal and company.Lal and company.

Transfer of property:Transfer of property:

ExampleExample: If “A” who owns certain : If “A” who owns certain goods pledges them to “B” , “A” goods pledges them to “B” , “A” has a general property in the has a general property in the goods where as “B” has special goods where as “B” has special property or interest in the goods property or interest in the goods to the extent of the amount of the to the extent of the amount of the advance made by him.advance made by him.

GOODS:GOODS:

* Transfer of Property act 1882 * Actionable claims

For Example: A debt is not treated as goods because it can only be assigned as per the transfer of property act but cannot be sold.

MONEY:MONEY:

PRICE:PRICE:

Case:

““Aldridge Vs Johnson(1857)”Aldridge Vs Johnson(1857)”

SALE AND AGREEMENT TO SELL:SALE AND AGREEMENT TO SELL:

Under the contract of sale” The property in the goods is immediately transferred at the time of making the contract from the seller to the buyer, the contract is called a Sale.”

Under the contract of sale” The property in the goods is to take place at a future time or subject to some condition there after to be fulfilled, the contract is called an Agreement to sale.”

DISTINCTION BETWEEN SALE DISTINCTION BETWEEN SALE

AND AGREEMENT TO SALE :AND AGREEMENT TO SALE :

Transfer of Property:Transfer of Property: Risk of loss:Risk of loss: Consequences of breach:Consequences of breach: Right to re sale:Right to re sale: General and Particular property:General and Particular property: Insolvency of Buyer:Insolvency of Buyer: Insolvency of Seller:Insolvency of Seller:

Rights of buyer First right of buyer is to have delivery of goods

as per the terms of contract(sec.37) Right to reject goods for defective delivery

/excess/ short. Right to notice of insurance. Right to examine the delivered. (suit for

damages ) Right to sue for breach of contract

suit for price.

suit for specific performance.

suit for interest.

suit for breach of contract.

Duties of buyer:- 1. To take delivery of , and pay for the

goods. 2. To apply for delivery. 3.to demand for delivery at a reasonable

hour(sec.36(4)) 4. To take risk of deteoration. 5. Liabality of buyer for neglecting or

reducing delivery of goods.(sec 44) 6.duty to accept installment delivery and

pay for it. 7.duty to pay damages for non-acceptance. 8. Examine the goods delivered. 9. Accept the goods delivered.

Liabality of buyer for refusing deliverLiabality of buyer for refusing deliver :- :-

If the buyer neglects or If the buyer neglects or refuse to take delivery of goods within a refuse to take delivery of goods within a reasonable time , he is liable to the seller reasonable time , he is liable to the seller for loss and charges for the care and for loss and charges for the care and custody of the goods. custody of the goods.

Right of unpaid seller

1.when the property in the goods has passed A. RIGHT OF LIEN. B. Right of stoppage in transit. C. Right of resale.

2. When the property in the goods has not passed

A. Right of withholding delivery.

B. Right of lien.

C. Right of stoppage in transit.

D. Right of resale.

Against the buyer personally

Right to sue for price. Right to sue for damages. Right to sue for interest. Un-paid sellers right against the goods: Un-paid sellers had a particular lien. Stoppage in transit. Right of resale. Right of with holding delivery.

CONDITIONS AND CONDITIONS AND WARRENTIESWARRENTIES

CONDITIONS AND CONDITIONS AND WARRENTIESWARRENTIES

Conditions:-

Meaning:

According to Section 12(2) of the sale of goods act,1930 “ A condition is a stipulations essential to the main purpose of the contract, the breach of of which gives rise to treat the contract as repudiated.”

WARRANTIES:-WARRANTIES:-Meaning:Meaning: As per section 12(3) As per section 12(3)

of the sale of goods act 1930,of the sale of goods act 1930,““A warranty is a A warranty is a

stipulation collateral to the stipulation collateral to the main purpose of the contract, main purpose of the contract, the breach of which gives rise the breach of which gives rise to only claim for damages but to only claim for damages but not to a right to reject the not to a right to reject the goods and treat the contract goods and treat the contract as repudiated ”.as repudiated ”.

Characteristics of Conditions

A condition is a stipulation or term regarding goods forming part of the contract of sale.

A condition is a stipulation in a contract of a sale, Essential to the main purpose of the contract.

The breach of condition gives the aggrieved party the right to treat the contract as repudiated, and also entitles him to claim damages.

If a condition in a contract of sale is broken, no doubt aggrieved party can treat the contract as repudiated and reject the goods, Alternatively option is that he can treat the breach of condition as a breach of warranty.

Characteristics of Warranty

A warranty is a stipulation or term regarding goods forming part of the contract of sale.

A warranty is a stipulation or term which is not essential to the main purpose of the contract of the sale, is only collateral to the main purpose of the contract.

The breach of warranty gives the aggrieved party only the right to sue for damages.

Case regarding Warranty:

HARTLEY Vs HYMANS

A man buys a particular horse which is warranted quite to ride and drive. If the horse turns out to be vicious, the buyers only remedy is to claim damages.

Case regarding condition: BALDRY Vs MARSHALL(1925)

Baldry consulted Marshall a car dealer for a car suitable for a touring purpose. Marshall suggested that a “Bugatti” car would be appropriate. Relaying upon the recommendation Baldry purchased a Bugatti car. Later on, the car turned out to be unsuitable for touring purposes. Baldry wanted to reject the car and refund of the price paid.

When breach of condition is to be treated as breach of warranty (Section 13).

Voluntary waiver by buyer:

Acceptance of goods by buyer.

DIFFERENCES BETWEEN CONDITION AND WARRANTY:

Relation to main purpose. Importance. Difference as to breach. Difference as to treatment.

Express and Implied Condition & Warranties

In a contract of sale, condition and warranties may be express or implied.

Express condition and warranties are those which are expressly provide in the contract.

Implied condition and warranties are those which the law incorporates in to the contract ,unless the parties stipulate to the contrary.

Various Implied Condition in a Various Implied Condition in a contract of sales of goodcontract of sales of good

In the absence of any contract to the contrary .The condition implied in every contract of sales of goods.

1. Condition as to sellers title to the goods sold :- (sec-14)

-In the case of a sales ,the seller has a right to sell the goods.

-In the case of an agreement to sell, he will have right to sell the goods at the time when the property is to pass.

2. Condition in the case of sale description: 2. Condition in the case of sale description: (sec-15(sec-15))

--There is an implied condition that the goods There is an implied condition that the goods shall correspond with the description.shall correspond with the description.

-The description of good may be in the term of -The description of good may be in the term of the, qualities, characteristics of good .the the, qualities, characteristics of good .the trade mark, trade name, brand, or label trade mark, trade name, brand, or label under which they are sold or any other under which they are sold or any other aspect of the good. aspect of the good.

Sales of good by Sales of good by description includes such situation.description includes such situation.

(A)(A) Where the buyers has not seen the goods Where the buyers has not seen the goods but relies on their description give by the but relies on their description give by the seller.seller.

(B) Where the buyer has seen the goods, but (B) Where the buyer has seen the goods, but relies not on what he has seen, but what is relies not on what he has seen, but what is stated to him by the seller, and the deviation stated to him by the seller, and the deviation of the goods from the description is not of the goods from the description is not apparent.apparent.

3.Condition in the case of sale by sample: (sec-17)

(a) That the bulk of the goods delivered should correspond with the sample in quality .

(b) That the buyer should have a reasonable opportunity to compare the bulk with the sample.

(c) That the goods should be free from any latent defect, rendering the good, unmerchantable or unusable.

4. Condition in the case of sale by 4. Condition in the case of sale by description as well as by sample: (sec-description as well as by sample: (sec-

15)15)

when the good are sold by description as well as sample .There is an implied condition that the bulk of good shall correspond both with the description and with the sample, if the goods correspond only with the description and not with sample or vice-versa the buyer is entitled to reject the good.

5. Condition as to fitness or quality: (sec-16-1-)

The buyer must examine the goods before he buys them in order to satisfy him self as to the suitability of the good for the while he is buying them.

(a) -Where the goods are required for a particular purpose which the buyer ,expressly or make know to the seller.

-Where the buyer relies on the sellers skills or judgment.

-Where it is the sellers business to deal in such good implied condition that the goods supplied shall be reasonable fit for the purpose intended.

((b) Where the article can be used for b) Where the article can be used for only one particular purpose ,the only one particular purpose ,the buyer need not tell the seller the buyer need not tell the seller the purpose.purpose.

(c) Where the article can be used for (c) Where the article can be used for a number of purpose the buyer must a number of purpose the buyer must tell the seller the particular purpose tell the seller the particular purpose for which he required the goods.for which he required the goods.

(d) In the case the good are (d) In the case the good are purchased under a patent or trade purchased under a patent or trade name ,there is no implied condition name ,there is no implied condition as to their fitness for any particular as to their fitness for any particular purpose.purpose.

6. Condition as to the merchantable quality of 6. Condition as to the merchantable quality of the good supplied: (sec-16-2-)the good supplied: (sec-16-2-)

Where the good are bought by Where the good are bought by description from a seller who deal in goods of description from a seller who deal in goods of that description there is an implied condition that description there is an implied condition that the goods are of merchantable quality.that the goods are of merchantable quality.

7. Condition as to wholesomeness:-7. Condition as to wholesomeness:-This condition is implied only in the This condition is implied only in the

case of a contract of sale of eatables and case of a contract of sale of eatables and provisions .i such cases, the goods supplied must provisions .i such cases, the goods supplied must not only answer description and be merchantable not only answer description and be merchantable but also be wholesome .but also be wholesome .

Implied Warranties

1.Warranty of quiet possession: (sec-14.a,b)

There is an implied warty that the buyer shall have and enjoy quiet possession of the goods. If the buyer is in any way disturbed in the enjoyment of the goods by a person having a superior right than that of seller ,to the buyer can claim damages from the seller.

2. Warranty of freedom from encumbrances or charges: (sec-14.c)

‘ The goods shall be free from any charger or encumbrance in favors of any third party not declared or know to the buyer before or at the time when the contract is made ’ if the possession of the buyer is in any way disturbed by reason of the existence of such charge the buyer shall have a right to claim damages for breach of this warranty.

3. Warranty of disclosing the dangerous nature of goods to the ignorant party:

When the goods are dangerous and the seller know that the buyer is ignorant about the dangerous natures of the goods, the seller should warn the buyer about the probable dangers.

Where the seller know that the goods are inherent dangerous or they are likely to be dangerous to be buyer, and that the buyer is ignorant of such danger ,the seller must warn the buyer of the of the probable danger ,other wise he is liable for damages.

CAVEAT EMPTORCAVEAT EMPTOR Meaning of Caveat Emptor:Meaning of Caveat Emptor:

The maxim “caveat emptor’’ The maxim “caveat emptor’’ means ‘let the buyer beware’. This doctrine means ‘let the buyer beware’. This doctrine implied that the buyer must be careful while implied that the buyer must be careful while purchasing goods of his requirement .while purchasing goods of his requirement .while purchasing goods he must examine the purchasing goods he must examine the goods thoroughly and satisfy himself that the goods thoroughly and satisfy himself that the goods he buys are not defective ,and they are goods he buys are not defective ,and they are of the quality which he requires and they will of the quality which he requires and they will suit the purpose for which he purchases suit the purpose for which he purchases them. This principle also implied that if the them. This principle also implied that if the buyer depends on his own skill and judgment buyer depends on his own skill and judgment and if the goods purchased by him turn out and if the goods purchased by him turn out to be defective or of poor quality or do not to be defective or of poor quality or do not suit the purpose for which he has purchased suit the purpose for which he has purchased them ,he cannot hold the seller liable or them ,he cannot hold the seller liable or recover damages from him. recover damages from him.

Exceptions:-

1.Sales by misrepresentation.2.Consent by fraud.3.Sale by description.4.Merchantable quality.5.Sales by sample.6.Sales by sample & description.7.Fitness for the buyer’s propose.8.Usage of trade.

PERFORMANCE OF PERFORMANCE OF CONTRACT OF SALECONTRACT OF SALE

The term ‘The term ‘performance of performance of the contract of sale’ the contract of sale’ may be defined may be defined as the performance of the respective as the performance of the respective duties of seller & buyer as per the duties of seller & buyer as per the terms of the contract.terms of the contract.

Performance of the contract of Performance of the contract of sale comprises the two parts, sale comprises the two parts,

1. Sellers duty to deliver the goods 1. Sellers duty to deliver the goods

2. Buyers duty to accept the goods & 2. Buyers duty to accept the goods & pay the pricepay the price

DELIVERY OF GOODS

“ Delivery of goods sold may by doing anything which the parties agrees shall be treated as delivery or which has no effect of putting the goods in the possession of the buyer or any person authorize to hold them on his behalf “

RULES AS TO DELIVERY OF GOODS

Mode of delivery Delivery & Payment are

concurrent conditions Effect of part delivery Buyer to apply for delivery Place of delivery Time of delivery

Manner of deliveryExpenses of deliveryDelivery of wrong qualityInstallment deliveriesDelivery of wrong qualitiesGoods delivered at distant

placeExamining the goods on

delivery

TRANSFER OF PROPERTY, POSSESSION AND RISK:

There are 3 stages in the performance of a contract of sale of goods by seller

The Transfer of property in the goods :

It is important to know the precise moment of time at which the property in goods passes from seller to the buyer for the following reasons.

1. Risk follows ownership

2. Owner to take action against third parties

3. Insolvency of the seller or the buyer

4. Sellers right to suit price

Passing of property

1. Goods must be ascertained

2. Intention of the parties

Transfer of property:

1. Passing of property at the time of contract

2. Passing of property delayed beyond the date of contract

Goods not in deliverable state When the price of goods is to be

ascertained by weighing, etc

Unascertained goods:

Delivery to carrier:Delivery to carrier:

Absolutely for the buyerAbsolutely for the buyer

Absolutely for the sellerAbsolutely for the seller

Goods sent on approval or Goods sent on approval or

‘‘on Sale or Return’on Sale or Return’

TRANSFER OF TITLE BY NON-OWNERS

The general rule as to transfer of title is that only the owner of goods can transfer a good title. The rule is expressed by the maxim “Nemo dat quod non habet”, which means “no one can give what he himself has not”.

Exceptions Under the state of goods Act, 1930

Estoppels

Sale by mercantile agent

Sale by one of several joint owners

Sale by unpaid seller

Sale by seller in possession after sale