SALE OF GOODS ACT, 1930
The law relating to sale of goods is contained in the Sale of Goods Act, 1930. It has to be read as part of the Indian ontract Act, 1!"# $Sections #%&' and %3'(.
Contract of Sale of Goods Accordin) to Section *, a contract of sale of )oods is i s a contract +hereb the seller%i' transfers or a)rees to transfer the propert in )oods %ii' to the ber, %iii' for a /one consideration called the price. It sho+s that the epression contract of sale incldes both a sale +here the the sell seller er tran transf sfer ers s the the o+ne o+ners rshi hip p of the the )ood )oods s to the the be berr, and and an a)ree/ent to sell +here the o+nership of )oods is to be transferred at a ftre ti/e or sb2ect to so/e conditions to be flfilled later on. he follo+in) are ths the essentials of a contract of sale of )oods%i' Bilateral Bilateral contract: contract: It is a bilateral contract becase the propert in )oods has to pass fro/ one part to another. A person cannot b the )oods hi/self. %ii'T %ii' Transfer ransfer of property: property: he ob2ect of a contract of sale /st be the transfer of propert %/eanin) o+nership' in )oods fro/ one person to another. %iii' Goods: he sb2ect /atter /st be so/e )oods. %i4' Price or money money considera consideration: tion: he )oods /st be sold for so/e price, +here the )oods are echan)ed for )oods it is barter, not sale. %4' All essen essentia tiall ele/en ele/ents ts of a 4alid 4alid contr contract act /st be presen presentt in a contract of sale. Distinction between Sale and Agreement to Sell he follo+in) points +ill brin) ot the distinction bet+een sale and an a)ree/ent to sell%a' In a sale, the propert in the )oods sold passes to the ber at the ti/e of cont contra ract ct so that that he beco beco/e /es s the the o+ne o+nerr of the the )ood )oods. s. In an a)ree/ent to sell, the o+nership does not pass to the ber at the ti/e of the contract, bt it passes onl +hen it beco/es sale on the epir of certain ti/e or the flfil/ent of so/e conditions sb2ect to +hich the propert in the )oods is to be transferred. %b' An a)ree/ent to sell is an eector contract, a sale is an eected contract. %c'An a)ree/ent to sell is a contract pre and si/ple, bt a sale is contract pls con4eance.
(d) (d) If the therre is an an agr agreeme eement nt to to sell sell and and the the good goods s are are dest destrroyed oyed by accident, the loss falls on the seller. In a sale, the loss falls on the buyer,
even though the goods are with the seller. (e) If there is an agreement to sell and the seller commits a breach, the buyer has only a personal personal remedy against against the seller, namely, namely, a claim for damages. damages. But if there has been a sale, and the seller commits a breach by refusing to deliver the goods, the buyer has not only a personal remedy against him but also the other remedies which an owner has in respect of goods themselves such as a suit for conversion or detinue, etc. Sale and Bailment
A "bailment" is a transaction under which goods are delivered by one person (the bailor) to another (the bailee) for some purpose, upon a contract that they be returned or disposed of as directed after the prpose is acco/plished %Section 1*! of the Indian ontact Act, Act, 1!"#'.
he he prop proper ert t in the )oods s is not not inte intend nded ed to and and does does not pass pass on the )ood delivery tho)h it /a so/eti/es be the intention of the parties that it shold pass in de corse. 5t +here )oods are deli4ered to another on ter/s +hich indicate that the property is to pass at once the contract /st be one of sale and not bailment. Sale and Contract for Work and Labour
The distinction between a "sale" and a "contract for work and labour" becomes passin in) ) of prop proper ert t aris arises es for for impo import rtan antt when when ques questi tion on of pass consideration.
6o+e4er, these t+o are difficlt to distin)ish. he test )enerall applied is that if as a reslt of the contract, propert in an article is transferred to one +ho had no propert therein pre4iosl, for a /one consideration, it is a sale. Other+ise it is a contract for +or7 and labor. labor. Sale and Hire Purchase Agreement
Sale is a contract b +hich propert in goods passes fro/ the seller to the ber for a price. A hire prchase a)ree/ent8 is basicall a contract of hire, bt in addition, it )i4es the hirer an option to prchase the )oods at the end of the hirin) period. onseentl, ntil the final pa/ent, the hirer is /erel a bailee of )oods and o+nership re/ains 4ested in the bailor. :nder sch a contract, the o+ner of )oods deli4e deli4ers rs the )oods )oods to perso person n +ho +ho a)ree a)rees s to pa pa certai certain n stipl stiplate ated d perio periodic dical al pa/ents as hire char)es. ho)h the possession is +ith the hirer, the o+nership of the )oods re/ains +ith the ori)inal o+ner. he essence of hire prchase a)ree/ent is that there is no a)ree/ent to b, bt onl an option is )i4en to the hirer to b b pain) all the instal/ents or pt an end to the hirin) and retrn the )oods to the o+ner, at an ti/e before the eercise of the option. Since the hirer does not beco/e o+ner of the )oods ntil he has eercised his option to b, he cannot pass an title e4en to an innocent and bona fide
prchaser. he transa transacti ction on of hire; hire;pr prcha chase se protec protects ts the o+ner o+ner of the )oods )oods a)ain a)ainst st the insol insol4en 4enc c of the ber ber, for if the ber ber beco/e beco/es s insol insol4en 4entt or fails fails to pa pa the
instal/ents, he can ta7e bac7 the )oods, as o+ner. It is i/portant to note the difference bet+een a hire prchase a)ree/ent and /ere pa/ent of the price b instal/ents, becase the latter is a sale, onl the pa/ent of price is to be /ade b instal/ents. he distinction bet+een the t+o is 4er i/portant becase, in a hire;prchase a)ree/ent the ris7 of loss or deterioration of the )oods hired lies +ith the o+ner and the hirer +ill be absol4ed of an responsibilit therefore, if he has ta7en reasonable care to protect the sa/e as a bailee. 5t it is other+ise in the case of a sale +here the price is to be paid in instal/ents.
Subject matter of Contract of Sale of Goods
Goods he sb2ect /atter of the contract of sale is essentiall )oods. Accordin) to Section #%"' )oods< /eans e4er 7ind of /o4able propert other than actionable clai/s and /one and incldes stoc7 and shares, )ro+in) crops, )rass and thin)s attached to or for/in) part of the land +hich are a)reed to be se4ered before sale or nder the contract of sale. . Actionable clai/s and /one are not )oods and cannot be bo)ht and sold nder this Act. =one /eans crrent /one, i.e., the reco)nised crrenc in circlation in the contr, bt not old and rare coins +hich /a be treated as )oods. An actionable clai/ is +hat a person cannot /a7e a present se of or en2o, bt +hat can be reco4ered b hi/ b /eans of a sit or an action. hs, a debt de to a /an fro/ another is an actionable clai/ and cannot be sold as )oods, altho)h it can be assi)ned. :nder the pro4isions of the ransfer of >ropert Act, 1!!#, )ood+ill, trade /ar7s, copri)hts, patents are all )oods, so is a ship. As re)ards +ater, )as, electricit, it is dobtfl +hether the are )oods (Rash Behari 4. Emperor ? =.5. Electric Supply Co. Ltd. 4. State of Rajasthan'.
Goods /a be %a' eistin), %b' ftre, or %c' contin)ent. he eistin) )oods /a be %i' specific or )eneric, %ii' ascertained or nascertained. Eistin! Goods Eistin) )oods are )oods +hich are either o+ned or possessed b the seller at the ti/e of the contract. Sale of )oods possessed bt not o+ned b the seller +old be b an a)ent or pled)ee. Eistin) )oods are specific )oods +hich are identified and a)reed pon at the ti/e of the contract of sale. Ascertained )oods are either specific )oods at the ti/e of the contract or are ascertained or identified to the contract later on i.e. /ade specific.
Generic or nascertained )oods are )oods +hich are not specificall identified bt are indicated b description. If a /erchant a)rees to sppl a radioset fro/ his stoc7 of radio sets, it is a contract of sale of nascertained )oods becase it is not 7no+n +hich set +ill be deli4ered. As soon as a particlar set is separated or identified for deli4er< and the ber has notice of it, the )oods
are ascertained and beco/e specific )oods. "uture Goods Ftre )oods are )oods to be /anfactred or prodced or acired b the seller after the /a7in) of the contract of sale. A a)rees to sell all the /an)oes +hich +ill be prodced in his )arden net season. his is an a)ree/ent for the sale of ftre )oods. $Section #%@'( Contin!ent Goods here there is a contract for the sale of )oods, the acisition of +hich b the seller depends pon a contin)enc +hich /a or /a not happen ; sch )oods are 7no+n as contin)ent )oods. ontin)ent )oods fall in the class of ftre )oods. A a)rees to sell a certain B set pro4ided he is able to )et it fro/ its present o+ner. his is an a)ree/ent to sell conti)ent )oods. In sch a case, if the contin)enc; does not happen for no falt of the seller, he +ill not be liable for da/a)es. Actal sale can ta7e place onl of specific )oods and propert in )oods passes fro/ the seller to ber at the ti/e of the contract, pro4ided the )oods are in a deli4erable state and the contract is nconditional. here can be an a)ree/ent to sell onl in respect of ftre or contin)ent )oods. Effect of Perishing of Goods In a contract of sale of )oods, the )oods /a perish before sale is co/plete. Sch a sta)e /a arise in the follo+in) cases#i$ Goods perishin! before ma%in! a contract here in a contract of sale of specific )oods, the )oods +ithot the 7no+led)e of the seller ha4e, at the ti/e of /a7in) the contract perished or beco/e so da/a)edas no lon)er to their description in the contract, the contract is 4oid. his is based on the rle that /tal /ista7e of fact essential to the contract renders the contract 4oid. %Section "' If the seller +as a+are of the destrction and still entered into the contract, he is estopped fro/ disptin) the contract. =oreo4er, perishin) of )oods not onl incldes loss b theft bt also +here the )oods ha4e lost their co//ercial 4ale. #ii$ Goods perishin! atter a!reement to sell here there is an a)ree/ent to sell specific )oods and sbseentl, the )oods +ithot an falt of an part perish or are so da/a)ed as no lon)er to ans+er to their description in the a)ree/ent before the ris7 passes to the ber, the a)ree/ent is thereb a4oided. he pro4ision applies onl to sale of specific )oods. If the sale is of unascertained goods. the perishing of the whole
quantity of such goods in the possession of the seller will not relieve him of his obligation to deliver. (Section 8)
Price
No sale can take place without a price. Thus, if there is no valuable consideration to support a voluntary surrender of goods by the real owner to another person, the transaction is a gift, and is not governed by the Sale of Goods Act. Therefore, price. which is money consideration for the sale of goods, constitutes the essence for a contract of sale. It may be money actually paid or promised to b/3 paid. If a consideration other than money is to be given, it is not a sale. Modes of Fixing Price (Sections 9 and 10) The price may be fixed:
(i) at the time of contract by the parties themselves, or (ii) may be left to be determined by the course of dealings between the parties, or (iii) may be left to be fixed in some way stipulated in the contract, or (iv) may be left to be fixed by some third-party. Where the contract states that the price is to be fixed by a third-party and he fails to do so, the contract is void. But if the buyer has already taken the benefit of the goods, he must pay a reasonable price for them. If the third-party's failure to fix the price is due to the fault of one of the parties, then that party is liable for an action for damages. Where nothing is said by the parties regarding price, the buyer must pay a reasonable price, and the market price would be a reasonable price. Conditions and Warranties (Sections 10-17)
The. parties are at liberty to enter into a contract with any terms they please. As a rule, before a contract of sale is concluded, certain statements are made by the parties to each other. The statement may amount to a stipulation, forming part of the contract or a mere expression of opinion which is not part of the contract. If it is a statement by the seller on the reliance of which the buyer makes the contract, it will amount to a stipulation. If it is a mere commendation by the seller of his goods it does not amount to a stipulation and does not give the right of action. . The stipulation may either be a condition or a warranty. Section 12 draws a clear distinction between a condition and a warranty. Whether a stipulation is a condition or only a warranty is a matter of substance rather than the form of the words used. A stipulation may be a condition though called a warranty and vice versa. Conditions
If the stipulation forms the very basis of the contract or is essential to the main purpose of the contract. it is a condition. The breach of the condition gives the aggrieved party a right to treat the contract as repudiated. Thus, if the seller fails to fulfil a condition, t he ber /a treat the contract as repdiated, refse the )oods and. if he
has alread paid for the/, reco4er the price. 6e can also clai/ da/a)es for the breach of contract. &arranties If the stiplation is collateral to the /ain prpose of the contract, i.e.. is a sbsidiar pro/ise, it is a +arrant. he effect of a breach of a +arrant is that the a))rie4ed part cannot repdiate the contract bt can onl clai/ da/a)es. hs, if the seller does not flfil a +arrant. the ber /st accept the )oods and clai/ da/a)es for breach of +arrant. Section 11 states that the stiplation as to ti/e of pa/ent are not to be dee/ed conditions %and hence not to be of the essence of a contract of sale' nless sch an intention appears fro/ the contract. hether an other stiplation as to ti/e %e.)., ti/e of deli4er' is the essence of the contract or not depends on the ter/s of the contract.
&hen condition sinks to the le'el of (arranty In so/e cases a condition sin7s or descends. to the le4el of a +arrant. he first t+o cases depend pon the +ill of the ber. bt the third is co/plsor and acts as estoppel a)ainst hi/. %a' A condition +ill beco/e a +arrant +here the ber +ai4es the condition, or %b' A cond ition +ill sin7 to the le4el of a +arrant +here the ber treats the breach of condition as a breach of +arrant? or %c' here the contract is indi4isible and the ber has accepted the )oods or part thereof. the breach of condition can onl be treated as breach of +arrant- he ber can onl clai/ da/a)es and cannot re2ect the )oods or treat the contract as repdiated. So/eti/es the seller /a be ecsed b la+ fro/ flfillin) an condition or +arrant and the ber +ill not then ha4e a re/ed in da/a)es. )mplied &arranties*Conditions E4en +here no definite representations ha4e been /ade, the la+ i/plies certain representations as ha4in) been /ade +hich /a be +arranties or conditions. An epress +arrant or condition does not ne)ati4e an i/plied +arrant or condition nless inconsistent there+ith. here are t+o i/plied +arranties)mplied &arranties $Section 1*%b', 1*%c' and 1@%3'( %a' )mplied (arranty of +uiet possession: If the circ/stances of the contract are sch as there is an i/plied +arrant that the ber shall ha4e and en2o iet
possession of the )oods. %b' )mplied (arranty a!ainst encumbrances: here is a frther +arrant that the )oods are not sb2ect to an ri)ht in fa4or of a third;part, or the ber
a/ont of the enc/brance, there is breach of +arrant, and he is entitled to clai/ da/a)es fro/ the seller. )mplied Conditions $Sections 14(a), 15(1), (2), 16(1) and Proviso 16(2), and Proviso 16(3) and 12(b) and 12(c)]. Different i/plied conditions appl nder different tpes of contracts of sale of goods, sch as sale b description, or sale b sa/ple, or sale b description as +ell as sa/ple. he condition, as to title to goods applies to all tpes of contracts, sb2ect to that there is apparentl no other intention. )mplied Conditions as to title here is an i/plied condition that the seller, in an actal sale, has the ri)ht to sell the )oods, and, in an a)ree/ent to sell, he +ill ha4e to it +hen propert is to pass. As a reslt, if the title of the seller trns ot to be defecti4e, the ber is entitled to re2ect the )oods and can reco4er the fll price paid b hi/. In Ro(land ' . Divali (1923) 2 K.B. SOD, 'A' had bought a second hand /otor car fro/ 'B' and paid for it. After he had sed it for si /onths, he +as depri4ed of it becase the seller had no title to it. It +as held that
re)ards defects +hich sch ea/ination o)ht to ha4e re4ealed. If, ho+e4er, ea/ination b the ber does not re4eal the defect, and he appro4es and accepts the )oods, bt +hen pt to +or7, the )oods are fond to be defecti4e, there is a breach of condition of /erchantable alit. The buyer is given a right to examine the goods before accepting them. But a mere opportunity without an actual examination, however, cursory, would not suffice to deprive him of this right. (c) Condition as to wholesomeness: The provisions, (i.e., eatables) supplied must not only answer the description, but they must also be merchantable and wholesome or sound. 'F' bought milk from 'A' and the milk contained typhoid. germs. 'F's wife became infected and died. 'A' was liable for damages. Again, 'C' bought a bun at 'M's bakery, and broke one of his teeth by biting on a stone present in the bun. 'M' was held liable. (d) Condition as to fitness for a particular purpose: Ordinarily, in a contract of sale, there is no implied warranty or condition as to the quality of fitness for any particular purpose of goods supplied. But there is an implied condition that the goods are reasonably fit for the purpose for which they are required if: (i) the buyer expressly or i,mpliedly makes known the intended purpose, so as to show that he relies on the seller's skill and judgement, and (ii) the goods are of a description which it is in the course of the seller's business to supply (whether he be the manufacturer or not). There is no such condition if the goods are bought under a patent or trade name. In Priest v. Last (1903) 2 K.B. 148, a hot water bottle was bought by t he 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 articles. While being used by the plaintiff's wife, the bottle bursted and injured her. Held, the seller was responsible for damages. In Grant v. Australian Knitting Mills (1936) 70 MLJ 513, 'G' purchased woollen underpants from 'M' a retailer whose business was to sell gCJods of that description. After wearing the underpants, G developed some skin diseases. Held, the goods were not fit for their only use and 'G' was entitled to avoid the contract and claim damages. Implied conditions under a sale by sample (Section 15)
In a sale by sample: (a) there is an implied condition that the bulk shall correspond with the sample in quality; (b) there is another implied condition that the buyer shall have a reasonable opportunity of comparing the bulk with the sample; (c) it is further an implied condition of merchantability, as regards latent or hidden defects in the goods which would not be apparent on reasonable examination
of the sa/ple. orsted coatin) alit eal to sa/ple +as sold to
tailors, the cloth +as fond to ha4e a defect in the fitre renderin)
condition as to the alit or fitness for an particlar prpose of )oods spplied nder a contract of sale. In si/ple +ords, it is not the seller
here the seller /a7es a false representation and the ber
relies on it. %#'
hen the seller acti4el conceals a defect in the )oods +hich is not 4isible on a reasonable ea/ination of the sa/e.
%3' hen the ber, relin) pon the s7ill and 2d)e/ent of the seller, has epressl or i/pliedl co//nicated to hi/ the prpose for +hich the )oods are reired. %*' here )oods are bo)ht b description fro/ a seller +ho deals in )oods of that description.
Passing of Property or Transfer of Ownership %Sections 1!;#0' he sole prpose of a sale is the transfer of o+ne-ship of )oods fro/ the seller to the ber. It is i/portant to 7no+ the precise /o/ent of ti/e at +hich the propert in the )oods passes fro/ the seller to the ber for the follo+in) reasons%a' he )eneral rle is that ris7 follo+s the o+nership, +hether the deli4er has been /ade or not. If the )oods are lost or da/a)ed b accident or other+ise, then, sb2ect to certain eceptions, the loss falls on the o+ner of the )oods at the ti/e the are lost or da/a)ed. %b' hen there is a dan)er of the )oods bein) da/a)ed b the action of third parties it is )enerall the o+ner +ho can ta7e action. %c' he ri)hts of third parties /a depend pon the passin) of the propert if the ber resells the )oods to a third;part, the third;part +ill onl obtain a )ood title if the propert in the )oods has passed to the ber before or at the ti/e of the resale. Si/ilarl, if the seller, in breach of his contract +ith the ber, atte/pts to sell the )oods to a
third part in the )oods, has not passed to the ber, e.)., +here there is onl an a)ree/ent to sell. %d' In case of insol4enc of either the seller or the ber, it is necessar to 7no+ +hether the )oods can be ta7en o4er b the official assi)nee or the official recei4er. It +ill depend pon +hether the propert in the )oods +as +ith the part ad2d)ed insol4ent. hs in this contet, o+nership and possession are t+o distinct concepts and these t+o can at ti/es re/ain separatel +ith t+o different persons. Passing of property in specific !oods
In a sale of specific or ascertained )oods, the propert passes to the ber as and +hen the parties intended to pass. he intention /st be )athered fro/ the ter/s of the contract, the condct of the parties, and the circ/stances of the case. :nless a contrar intention appears, the follo+in) rles are applicable for ascertainin) the intention of the parties%a' here there is an nconditional contract fr the sale of specific )oods in a deli4erable state, the propert passes to the ber +hen the contract is /ade. Deli4erable state /eans sch a state that the ber +old be bond to ta7e deli4er of the )oods. he fact that the ti/e of deli4er or the ti/e of pa/ent is postponed does not pre4ent the propert fro/ passin) at once. %Section #0' %b' here there is a contract for the sale of specific )oods not in a deli4erable state, i.e., the selle has to do so/ethin) to the )oods to pt the/ in a deli4erable state, the propert does not pass ntil tpat thin) H is done and the ber has notice of it. %Section #1' A certain antit of oil +as bro)ht. he oil +as to be filled into cas7s b the seller and then ta7en a+a b the ber. So/e cas7s +ere filled in the presence of ber bt, before the re/ained cold be filled, a fire bro7e ot and the entire antit of oil has destroed, 1eld2 the ber /st bear the loss of the oil +hich +as pt into the cas7s %i.e., pt in deli4erable state' and. the seller /st bear the loss of the re/ainder #Ru!! 4. ,inett %1!09' 11 East 10'. %c' here there is a sale of specific )oods. in a deli4erable state, bt the seller is bond to +ei)h, /easre, test or do so/ethin) +ith reference to the )oods for the prpose of ascertainin) the ;price, the propert to the )oods for the prpose of ascertainin) the price, does not pass ntil that thin) is done and the ber has notice of it. %Section ##' %d'hen )oods are deli4ered to the ber on appro4al or on sale.of retrn, the propert therein passes to the ber-
%i' +hen he si)nified his appro4al or acceptance to the seller, or does an other act adoptin) the transaction? %ii' if he retains the )oods, +ithot )i4in) notice of re2ection, beond the ti/e fied for the retrn of )oods, or if no ti/e is fied, beond a reasonable ti/e. 3(nership in unascertained !oods he propert in nascertained or ftre )oods does not pass ntil the )oods are ascertained. :nascertained )oods are )oods defined b description onl, for ea/ple, 100 intals of +heat, and not )oods identified and a)reed pon +hen the contract is /ade. :nless a different intention
Passin! of Ris% %Section #@' he )eneral rle is that )oods re/ain at the seller
rle is resperit demino4 the loss falls on the o(ner. But the parties may a!ree that ris% (ill pass at the time different from the time (hen o(nership passed. "or e!. the seller may a!ree to be responsible for the !oods e'en after the o(nership is passed to the buyer or 'ice 'ersa. In Consolidated Coffee Ltd. v. Coffee Board, %19!03 see 3&!', one of the ter/s adopted b coffee board for action of coffee +as the propert in the coffee<,7noc7ed do(n to a bidder (ould not pass until the p5yment of price and in the "-$eantime the . !oods (ould remain (ith the seller but at the ris% of the buyer2 )n such cases2 ris% and property passes on at diffenmt sta!es. In ,ultanmal Champalal 4. Shah Co.2 AIC %19"0' =sore 10@, )oods +ere despatched b the seller fro/ 5o/ba to 5ellar thro)h a pblic carrier. Accordin) to the ter/s of the contract, the )oods +ere to re/ain the propert of the seller till the price +as paid tho)h the ris7 +as to pass to the ber +hen the +ere deli4ered to pblic carrier for despatch. hen the )oods +ere sbseentl lost before the pa/ent of the price %and the conseent to the passin) of the propert to the ber', the ort held that the loss +as to be borne b the ber.
It +as frther held in the sa/e case that the ber +as at falt in delain) deli4er nreasonabl and therefore on that )rond also he +as liable for the loss, becase sch loss +old not ha4e arisen bt for sch dela. hs, +here deli4er has been delaed thro)h the falt of either the ber or the seller, the )oods are at the ris7 of the part at falt, as re)ards an loss +hich /i)ht not ha4e occrred bt for sch falt. Transfer of Title by Person not the Owner %Section #";30' he )eneral rle is that onl the o+ner of )oods. can sell th )oods. on4ersel, the sale of an article b a person +ho is not or +ho has not the athorit of the o+ner, )i4es no title to ttie ber. he rle is epressed b the /ai/? 67emo dot +uod non habet6 Le. no one can pass a better title than +hat he hi/self has. As applied to the sale of )oods, the rle /eans that a seller of )oods cannot )i4e a better title o the ber than he hi/self possess. hs, e4en bona fide ber +ho bs stolen )oods fro/ a thief or fro/ a transfree fro/ sch a thief can )et no 4alid title to the/, since the thief has no title, nor cold he )i4e one to an transferee. Eample: 1. A, the hirer of )oods nder a hire prchase a)ree/ent, sells the/ to 5, then 5 tho)h, a bonafide prchaser, does not acire the propert in the )oods. At /ost he can acire sch an i nterest as the hirer had. #. A finds a rin) of 5 and sells it to a third person +ho prchases it for 4ale and in )ood faith. he tre o+ner, Le. 5 can reco4er fro/ that person, for A ha4in) no title to the rin) cold pass none the
better. Eception to the General Rule he Act +hile reco)niJin) the )eneral rle that no one can )i4e a better title than +hat he hi/self has, laid do+n i/portant eceptions to it. :nder the eceptions the. ber )ets a better title of the )oods than the seller hi/self. hese eceptions are )i4en belo+%a' Sale by a mercantile a!ent: A ber +ill )et a )ood title if he bs in )ood faith fro/ a /ercantile a)ent +ho is in posession either of the )oods or< doc/ents of title of )oods +ith the consent of the o+ner, and +ho sells the )oods in the ordinar corse of his bsiness. (b) Sale by a co-owner: A ber +ho bllKs in )ood faith fro/ one of the se4eral 2oint o+ners +ho is in sale possession of the )oodo +ith the per/ission of his co4o(ners (ill !et !ood title to the !oods. %c' Sale by a person in possession under a 'oidable contract: A ber bs in good faith fro/ a person in possession of )oods nder a contract +hich is 4oidable, bt has not been. rescinded at the ti/e of the sale. %d' Sale by seller in possession after sale: here a seller, after ha4in) sold the )oods, contines in possession of )oods, or doc/ents of title to the )oods . and a)ain sells the/ b hi/self or thro)h his /ercantile a)ent to a person +ho bs in )ood faith and +ithot notice of the pre4ios sale, sch a ber )ets a )ood title to the )oods. %e' Sale by buyer in possession: If a person has bro)ht or a)reed to b )oods obtains, +ith the seller
It is the dt of the seller and ber that the contract is perfor/ed. he dt of the sellers is to deli4er the )oods and that of the ber to accept the )oods and pa for the/ in accordance +ith the contract of sale. :nless other+ise a)reed, pa/ent of the price and the deli4er of the )oods and concrrent conditions, i.e.2 the both ta7e place at the sa/e ti/e as in a cash sale o4er a shop conter., 8eli'ery %Sections 33;39' 8eli'ery is the 'oluntary transfer of possession from one person to another. 8eli'ery may be actual2 constructi'e or symbolic. 9ctual or physical deli'ery ta%es place (here the !oods are handed o'er by the seller to the buyer or his a!ent authorised to ta%e possession of the !oods. Constructi'e deli'ery ta%es place (hen the person in possession of the !oods ac%no(led!es that he holds the !oods on behalf of and at the disposal of the buyer. "or eample2 (here the seller2 after ha'in! sold the !oods2may hold them as bailee for the buyer2 there is constructi'e deli'ery. Symbolic deli'ery is made by indicatin! or !i'in! a symbol. 1ere the !oods themsel'es are not deli'ered. but the 6means of obtainin! possession6 of !oods is deli'ered2 e.!2 by deli'erin! the %ey of the (arehouse (here the !oods are stored2 bill of ladin! (hich (ill entitle the holder to recei'e the !oods on the arri'al of the ship. Rules as to deli'ery he follo+in) rles appl re)ardin) deli4er of )oods%a' Deli4er shold ha4e the effect of pttin) the ber in possession. %b' he seller /st deli4er the )oods accordin) to the contract. %c' he seller is to deli4er the )oods +hen the ber applies for deli4er? it is the dt of the ber to clai/ deli4er. %d' here the )oods at the ti/e of t he sale are in the possession of a third person, there +ill be deli4er onl +hen that person ac7no+led)es to the ber that he holds the )oods on his. behalf. . %e' he seller shold tender deli4er so that the ber ca ta7e the )oods. It is no dt of the seller to send or carr the )oods to the ber nless the contract so pro4ides. 5t the )oods /st be in a deli4erable state at the ti/e of deli4er or tender of deli4er. If b the contract the seller is bond to send the )oods to the ber, bt no ti/e is fied, the seller is bond to send the/ +ithin a reas9nable ti/e. %f' he place of deli4er is sall stated in the contract. here it is so stated, the )oods /st be deli4ered at the specified place drin) +or7in) hors on a +or7in) da. here no place is /entioned, the )oods are to be deli4ered at a place at +hich the happen to be at the ti/e of the contract. of sale and if not then in eistence the are to be deli4ered at the price the are prodced. %)' he seller has to bear the cost of deli4er less the contract other+ise pro4ides. hile the cost of obtainin) deli4er is said to be of the ber, the cost of the pttin) the )oods into deli4erable state /st be borne b theeseller. In other +ords. in the absence of an a)ree/ent to the contrar,
the epenses of and incidental to /a7in) deli4er of the )oods /st be borne b the seller, the epenses of and incidental to recei4in) deli4er /st
be borne b the ber. %h' If the )oods are to be deli4ered at a place other than +here the are, the ris7 of deterioration in transit +ill, nless other+ise a)reed, be borne b the ber. %i' :nless other+ise a)reed, the ber is not bond to accept deli4er in instal/ents.
9cceptance of Goods by the Buyer Acceptance of the )oods b the ber ta7es place +hen the ber%a' inti/ates to the seller that he has accepted the )oods? or %b' retains the )oods, after the lapse of a reasonable ti/e +ithot inti/atin) to the seller that he has rejected them or
(c) does any act on the goods which is inconsistent with the ownership of the seller, e.g., pledges or resells. If the seller sends the buyer a larger or smaller quantity of goods than ordered, the buyer may: (a) reject the whole; or (b) accept the whole; or (c) accept the quantity be ordered and reject the rest. If the seller delivers, with the goods ordered goods of a wrong description, the buyer may accept the goods ordered and reject the rest, or reject the whole. Where the buyer rightly rejects the goods, he is not bound to return the rejected goods to the seller. It is sufficient if he intimates to seller that he refuses to accept them. In that case, the seller has to remove them. Instalment Deliveries
When there is a contract for the sale of goods to be delivered in stated instalments which are to be separately paid for, and either the buyer or the seller commits a breach of contract, it depends on the terms of the contract whether the breach is a repudiation of the whole contract or a severable breach merely giving right to claim for damages. Suits for Breach of Contract
Were the property in the goods has passed to the buyer, the seller may sue him for the price. Where the price is payable on a certain day regardless of delivery, the seller may sue for the price, if it is not paid on that day, although the property in the goods has not passed. Where the buyer wrongfully neglects or refuses to accept the goods and pay for them, the seller may sue the buyer for damages for non-acceptance. Where the seller wrongfully neglects or refuses to deliver the goods to the buyer,
the buyer may sue him for damages for non-delivery. Where there is a breach of warranty or where the buyer elects or is compelled to treat the breach of condition as a breach of warranty, the buyer cannot reject the goods. He can set breach of warranty in extinction or dimunition of the price payable by him and if loss suffered by him is more than the price he may sue for the damages. If the buyer has paid the price and the goods are not delivered, the buyer can sue the seller for the recovery of the amount paid. In appropriate cases the buyer can also get an order from the Court that the specific goods ought to be delivered. Anticipatory Breach
Where either party to a contract of sale repudiates the contract before the date of delivery, the other party may,either treat the contract as still subsisting and wait till the date of delivery, or he may treat the contract as rescinded and sue for damages for the breach. In case the contract is treated as still subsisting it would be for the benefit of both the parties and the party who had originally repudiated will not be deprived of: (a) his right of performance on the due date in spite of his prior repudiation or (b) his rights to set up any defence for non-performance which might have actually arisen after the date of the prior repudiation. Measure of Damages
The Act does not specifically provide for rules as regards the measure of damages except stating that nothing in the Act shall affect the r ight of the seller or the buyer to recover interest or special damages in any case were by law they are entitled to the same. The inference is that the rules laid down in Section 73 of the Indian Contract Act will apply.
Unpaid Seller (Sections 45-54) Who is an unpaid seller? (Section 45)
The seller of goods is deemed to be unpaid seller: (a) When the whole of the price has not been paid or tendered; or (b) When a conditional payment was made by a bill of exchange or other negotiable instrument, and the instrument has been dishonoured. Rights of an Unpaid Seller a!ainst the Goods
An unpaid seller's right against the goods are: (a) A lien or right of retention (b) The right of stoppage in transit. (c) The right of resale. (d) The right to withhold delivery. (a) Lien (Sections 47-49 and 54) An unpaid seller in possession of goods
sold, may exercise his lien on the goods, i.e., keep the goods in his possession and refuse to deliver them to the buyer until the fulfilment or tender of the price in cases where:
%i' the )oods ha4e been sold +ithot stiplation as to credit? or %ii'
the )oods ha4e been sold on credit, bt the ter/ of credit has epired? or
%iii'
the ber beco/es insol4ent.
The lien depends on physical possession. The seller's lien is possessory lien, so that it can be exercised only so long as the seller is in possession of the goods. It can only be exercised for the non-payment of the price and not for any other charges. A lien is lost
.
%i' hen the seller deli4ers the )oods to a carrier or other bailee for the prpose of trans/ission to the ber, +ithot reser4in) the ri)ht of disposal of the )oods? %ii' When the ber or his a)ent la+fll obtains possession of the )oods? %iii'
5 +ai4er of his lien b the npaid seller.
%b' Stoppa!e in transit %Sections &0;&#' he ri)ht of stoppa)e in transit is a ri)ht of stoppin) the )oods +hile the are in transit, res/in) possession of the/ and retainin) possession ntil pa/ent of the price. he ri)ht to stop )oods is a4ailable to an npaid seller %i' +hen the ber beco/es insol4ent? and %ii' the )oods are in transit. he ber is insol4ent if he has ceased to pa his debts in the ordinar corse of bsiness, or cannot pa his debts as the beco/e de. It is not necessar that he has actall been declared insol4ent b the ort. he )oods are in transit fro/ the ti/e the are deli4ered to a carrier or other bailee li7e a +harfin)er or +arehose7eeper for the prpose of trans/ission to the ber and ntil the ber ta7es deli4er of the/. he transit co/es to an end in the follo+in) cases%i' If the ber obtains deli4er before the arri4al of the )oods at their destination? %ii' If, after the arri4al of the )oods at their destination, the carrier ac7no+led)es to the ber that he holds the )oods on his behalf, e4en if frther destination of the )oods is indicated b the ber. %iii' If the carrier +ron)fll refses to deli4er the )oods to the ber. If the )oods are re2ected b the ber and the carrier or other bailee holds the/, the transit +ill be dee/ed to contine e4en if the seller has
refsed to recei4e the/ bac7. he ri)ht to stop in transit /a be eercised b the npaid seller either b ta7in) actal possession of the )oods or b )i4in) notice of the seller
%ii' +here the ri)ht is epressl reser4ed in the contract? %iii' +here in eercise of ri)ht of lien or stoppa)e in transit, the seller )i4es notice to the ber of his intention to re;sell, and the ber, does not paor tender the price +ithin a reasonable ti/e. < If on a re;sale, there is a deficienc bet+een the price de and a/ont realised, the re;seller is entitled to reco4er it fro/ the ber. If there is a srpls, he can 7eep it. 6e +ill not ha4e these ri)hts if he has not )i4en an notice and he +ill ha4e to pa the ber an profits. %d' Ri!hts to (ithhold deli'ery: If the propert in the )oods has passed, the npaid seller has ri)ht as described abo4e. If, ho+e4er, the propert has not passed, the npaid seller has a ri)ht of +ithholdin) deli4er si/ilar to and co;e..1ensi4e +ith his ri)hts of lien and stoppa)e in transit. Ri!hts of an unpaid seller a!ainst the buyer %Sections && and &@' An npaid seller /a se the ber for the price of the )oods in case of breach of contract +here the propert in the )oods has passed to the ber or he has +ron)fll refsed to pa the price accordin) to the ter/s of the contract. he seller /a se the ber e4en if the propert in the )oods has not passed +here the price is paable on a certain da. :nder Section &@, the seller /a se the ber for da/a)es or breach of contract +here the ber +ron)fll ne)lects or refses to accept and pa for the )oods. hs an npaid sellers ri)hts a)ainst the ber personall are%a' a sit for the price. %b' a -sit for da/a)es. Auction Sales %Section @*' A sale b action is a pblic sale +here )oods are offered to be ta7en b
bidders. It is a proceedin) at +hich people are in4ited to co/plete for the prchase of propert b sccessi4e offer of ad4ancin) s/s. Section @* las do+n the rles re)latin) action sales. here )oods are pt p for sale in lots, each, lot is prima facie dee/ed to be the sb2ect of a separate contract of sale. he sale is co/plete +hen the actioneer annonces its co/pletion b the fall of the ha//er or in other csto/ar /anner. :ntil sch annonce/ent is /ade, an bidder /a retract his bid. A ri)ht to bid /a be reser4ed epressl b or on behalf of the seller. here sch ri)ht is epressl so reser4ed, the seller or an other person on his behalf /a bid at the action. here the sale is not notified to be sb2ect to a ri)ht to bid on behalf of the seller, it shall not be la+fl for the seller to bid hi/self or to e/plo an person to bid at sch sale, or for the actioneer 7no+in)l to ta7e an bid fro/ the seller or an sch person. An sale in contra4ention of this rle /a be treated as fradlent b the ber. he sale /a be notified to be sb2ect to a reser4ed price. here there is sch notification, e4er bid is a conditional offer sb2ect to its bein) p to the reser4e price. here an actioneer inad4ertentl 7noc7s do+n to a bidder +ho has bid less than the reser4ed price, there is no contract of sale. If the seller /a7es se of pretended biddin) to raise the price, the sale is 4oidable at the option of the ber.
Trading Contracts inoling rail or Sea Transit In the case of a contract for the sale of )oods +hich are to be shipped b sea a n/ber of conditions are attached b the parties or b csto/ and practice of /erchants. So/e of the i/portant tpes of sch contracts are )i4en belo+%a' F.O.5%Free on 5oard'- :nder an F.O.5. contract, it is the dt of the seller to pt the )oods on board a ship at his o+n epenses. he propert in )oods passes to the ber onl after the )oods ha4e been pt on board the ship, sall na/ed b the ber. he seller /st notif the ber i//ediatel that the )oods ha4e been deli4ered on board, so that the ber /a insre the/. If he fails to do so the )oods shall be dee/ed to be at seller
In sch tpes of contracts, the seller not onl bears all the epenses of ptin) the )oods on board the ship as in an F.O.5. contract bt also to bear the frei)ht and insrance char)es. 6e +ill arran)e for an insrance of the )oods for the benefit of the ber. On the tender of doc/ents, the ber is reired to pa and then ta7e deli4er. 6e has a ri)ht to re2ect the )oods if the are not accordin) to the contract. %d' E;Ship- 6ere the seller is bond to arran)e the ship/ent of the )oods to the port of destination, and to sch frther inland destination as the ber /a stiplate. he ber is not bond to pa ntil the )oods are read for nloadin) fro/ the ship and all frei)ht char)es paid. he )oods tra4el at the seller
