2. INTRODUCTIONINTRODUCTION
The law relating to sale and purchase of goods, prior toThe law relating to sale and purchase of goods, prior to
1930 were dealt by the Indian Contract Act, 1872.1930 were dealt by the Indian Contract Act, 1872.
In 1930, Sections 76 to 123 of the Contract Act wasIn 1930, Sections 76 to 123 of the Contract Act was
repealed and a separate Act known as the Sale ofrepealed and a separate Act known as the Sale of
Goods Act, 1930 was passedGoods Act, 1930 was passed
This act lays down special provisions governing theThis act lays down special provisions governing the
contract of sales of goods .The general law of contractcontract of sales of goods .The general law of contract
is also applicable to the contracts for the sale of goodsis also applicable to the contracts for the sale of goods
unless they are inconsistent with the expressunless they are inconsistent with the express
provisions of the Sale of Goods Actprovisions of the Sale of Goods Act
2
3. GENERALGENERAL PRINCIPLESPRINCIPLES
MEANING OF CONTRACT OF SALEMEANING OF CONTRACT OF SALE
According to Section 4 of the Act, a contract of SaleAccording to Section 4 of the Act, a contract of Sale
means “a contract where the seller transfers or agrees tomeans “a contract where the seller transfers or agrees to
transfer the property in goods to the buyer for price”transfer the property in goods to the buyer for price”
Contract of Sale may be of two typesContract of Sale may be of two types
SALE AGREEMENT TO SELL
CONTRACT
OF
SALE
3
4. 4
SALESALE ::
It is a contract where the ownership in the goods is transferred by seller toIt is a contract where the ownership in the goods is transferred by seller to
the buyer immediately at the conclusion contractthe buyer immediately at the conclusion contract
EXAMPLEEXAMPLE: A sells his house to B for Rs. 10,00,000. It is a sale since the: A sells his house to B for Rs. 10,00,000. It is a sale since the
ownership of the house has been transferred from A to B.ownership of the house has been transferred from A to B.
AGREEMENT TO SELLAGREEMENT TO SELL ::
It is a contract of sale where the transfer of property in goods is to take placeIt is a contract of sale where the transfer of property in goods is to take place
at a future date or subject to some condition thereafter to be fulfilled.at a future date or subject to some condition thereafter to be fulfilled.
EXAMPLEEXAMPLE: A agreed to buy from B a certain quantity of nitrate of soda. The: A agreed to buy from B a certain quantity of nitrate of soda. The
ship carrying the nitrate of soda was yet to arrive. This is `an agreement toship carrying the nitrate of soda was yet to arrive. This is `an agreement to
sale`. In this case, the ownership of nitrate of soda is to be to transferred tosale`. In this case, the ownership of nitrate of soda is to be to transferred to
A on the arrival of the ship containing the specified goods (i.e. nitrate ofA on the arrival of the ship containing the specified goods (i.e. nitrate of
soda) [soda) [Johnson V McDonaldJohnson V McDonald (1842) 9 M & W 600, 60 RR 838](1842) 9 M & W 600, 60 RR 838]
5. DISTINCTION BETWEEN SALE ANDDISTINCTION BETWEEN SALE AND
AGREEMENT TO SELLAGREEMENT TO SELL
BASIS SALE AGREEMENT TO SELL
1. Transfer of
property
The property of goods passes
from the seller to the buyer
immediately. So the seller is
no more owner of the goods
sold. It is an executed
contract.
The transfer of property of the
goods is to take place at a
future time or subject to
certain conditions to be
fulfilled. It is an executory
contract.
2. Type of
goods
A sale can only be in case of
existing and specific goods
only.
An agreement to sell is mostly
in case of future and
contingent goods ( associated
or dependent ). Although it
may refer to uncertain existing
goods.
3. Risk of loss
In a sale if the goods are
destroyed , the loss falls on
the buyer even though the
goods are in the posssession
of the seller.
In an Agreement to Sell if the
goods are destroyed the loss
falls on the seller even though
the goods are in the
posssession of the buyer.
5
6. BASIS SALE AGREEMENT TO SELL
4.Consequence
s
of the
breach
In a sale the buyer fails to pay
the price of goods (or) if there
is a breach of contract by the
buyer the seller can sue for the
price even though the goods
are still in his possession
If there is a breach of
contract by the buyer the
seller can only sue for the
damages and not for the
price.
5. Right to re-
sell
In a sale the seller cannot re-
sell the goods.
The buyer who takes the
goods for consideration and
without notice of the prior
agreement gets him a good
title. The original buyer can
only sue the seller for
damages.
6. General and
particular
property
The sale of contract plus
conveyance and creates ‘Jus
in rem’ i.e., gives right to the
buyer to enjoy the goods as
against the word and large
including the seller.
An agreement to sell is
merely a contract pure and
simple and creates ‘Jus in
personam’ i.e., gives a right
to the buyer against the
seller to sue for the
damages.
6
7. BASIS SALE
AGREEMENT TO
SELL
7. Insolvency of
buyer
In a sale if the buyer
becomes insolvent before
he pays for goods, the
seller in the absence of
the lien over the goods,
must return them to the
official receiver or
assignee. He can only
claim the reteable
dividend for the price of
the goods.
In an Agreement to Sell ,
If the buyer becomes
insolvent and has not yet
paid the price the seller is
not bound to part with the
goods until he is paid for.
8. Insolvency of the
seller
In a sale the seller
becomes insolvent, the
buyer being the owner is
entitled to recover the
goods from the official
receiver of the assignee.
If the buyer who has paid
the price, finds that the
seller has become
insolvent he can only
claim a reteable dividend
and not the goods
because property in them
has not yet passed to 7
8. ESSENTIALS OF CONTRACT OF SALEESSENTIALS OF CONTRACT OF SALE
Two partiesTwo parties :: There must be two parties- a buyer and a seller to constitute aThere must be two parties- a buyer and a seller to constitute a
contract of sale.contract of sale.
GoodsGoods:: Contract of sale relates to goods i.e., movable property . TransactionContract of sale relates to goods i.e., movable property . Transaction
involving purchase and sale of immovable property are out of the purview of theinvolving purchase and sale of immovable property are out of the purview of the
Sale of Goods Act.Sale of Goods Act.
Transfer of general propertyTransfer of general property :: The object of the contract must be the transfer ofThe object of the contract must be the transfer of
general property as distinguished from the special property in the goods by onegeneral property as distinguished from the special property in the goods by one
person to another. The term ‘general property’ refers to ownership of goods.person to another. The term ‘general property’ refers to ownership of goods.
PricePrice:: The consideration for the contract of sale called price must be money.The consideration for the contract of sale called price must be money.
Essential elements of a valid contractEssential elements of a valid contract :: All the essential elements of a validAll the essential elements of a valid
contract must be present in the contract of sale.contract must be present in the contract of sale.
8
9. 9
TRANSFERTRANSFER OFOF OWNERSHIPOWNERSHIP
A contract of sale of goods involves transfer ofA contract of sale of goods involves transfer of
ownership from the seller to the buyer. Transferownership from the seller to the buyer. Transfer
of ownership or property in goods is in fact theof ownership or property in goods is in fact the
main object of making a contract of sale.main object of making a contract of sale.
10. 10
It is important to know the precise moment ofIt is important to know the precise moment of
time at which the property in goods passes fromtime at which the property in goods passes from
the seller to the buyer for the following reasons:-the seller to the buyer for the following reasons:-
1.1. RiskRisk prima facieprima facie passes with ownershippasses with ownership:: InIn
case of destruction of or damage to the goods, it iscase of destruction of or damage to the goods, it is
the owner who has to bear the loss because thethe owner who has to bear the loss because the
general rule is ‘general rule is ‘res perit domino’ risk follows ownershipres perit domino’ risk follows ownership
or whosoever is the owner must bear the loss. Theor whosoever is the owner must bear the loss. The
payment of the price or possession of goods ispayment of the price or possession of goods is
immaterial.immaterial.
IMPORTANCE OF TRANSFER OF OWNERSHIPIMPORTANCE OF TRANSFER OF OWNERSHIP
11. EXAMPLEEXAMPLE:‘A’ contracts to purchase 30 tons of apple:‘A’ contracts to purchase 30 tons of apple
juice from ‘B’.B crushes the apple, puts juice injuice from ‘B’.B crushes the apple, puts juice in
casks and keeps them ready for delivery. A ,casks and keeps them ready for delivery. A ,
however , delays to take the delivery and the juicehowever , delays to take the delivery and the juice
goes putrid and has to be thrown away. A is liable to pay thegoes putrid and has to be thrown away. A is liable to pay the
price[price[Demby Hamilton & Co.Demby Hamilton & Co. Ltd. v. Barden,(1949) All E R. 435]Ltd. v. Barden,(1949) All E R. 435]
2.2. Action against third partiesAction against third parties: In case the goods have: In case the goods have
damaged by a third party, it is the only the owner whodamaged by a third party, it is the only the owner who
can take action against him.can take action against him.
3.3. Insolvency of the seller or the buyerInsolvency of the seller or the buyer: In the: In the
event of insolvency of either the seller or the buyer,event of insolvency of either the seller or the buyer,
the question whether the Official Receiver orthe question whether the Official Receiver or
Assignee can take over the goods or not depends onAssignee can take over the goods or not depends on
whether the property in the goods has passed fromwhether the property in the goods has passed from
the seller to the buyer.the seller to the buyer. 12
12. RULES REGARDING TRANSFER OFRULES REGARDING TRANSFER OF
OWNERSHIPOWNERSHIP Goods must be ascertainedGoods must be ascertained
Property passes when intended to pass.Property passes when intended to pass.
For Specific goodsFor Specific goods (Sec. 20 to 22)(Sec. 20 to 22)
Passing of property at the time of contractPassing of property at the time of contract(Sec.20)(Sec.20)
Where there is an unconditional contract for the sale ofWhere there is an unconditional contract for the sale of
specific goods in a deliverable state, the property in thespecific goods in a deliverable state, the property in the
goods passes to the buyer when the contract is madegoods passes to the buyer when the contract is made..
EXAMPLEEXAMPLE: B offers A for his horse a sum of: B offers A for his horse a sum of
Rs.1000.The horse is to be delivered to B on a fixed dayRs.1000.The horse is to be delivered to B on a fixed day
and the price is to be paid on another fixed day. Aand the price is to be paid on another fixed day. A
accepts the offer. The horse becomes B’s property asaccepts the offer. The horse becomes B’s property as
soon as the offer is accepted.soon as the offer is accepted.
12
13. Passing of property delayed beyond the date of the contractPassing of property delayed beyond the date of the contract
Goods not in a deliverable stateGoods not in a deliverable state(Sec.21)(Sec.21)
Where there is a contract for sale of specific goods notWhere there is a contract for sale of specific goods not
in a deliverable state, i.e., the seller has to do somethingin a deliverable state, i.e., the seller has to do something
to the goods to put them into the deliverable state, theto the goods to put them into the deliverable state, the
property does not pass until such thing is done and theproperty does not pass until such thing is done and the
buyer has notice of it.buyer has notice of it.
When the price of goods is to be ascertained by weighingWhen the price of goods is to be ascertained by weighing
(Sec. 22)(Sec. 22)
Where there is a contract for sale of specific goods in aWhere there is a contract for sale of specific goods in a
deliverable state, but the seller is bound to weigh,deliverable state, but the seller is bound to weigh,
measure, test or do some other act or thing withmeasure, test or do some other act or thing with
reference to the goods for the purpose of ascertainingreference to the goods for the purpose of ascertaining
the price, the property does not pass until such act orthe price, the property does not pass until such act or
13
14. For unascertained/ ‘future’ goodsFor unascertained/ ‘future’ goods Sec.23Sec.23
In the case of a contract for a sale of unascertained or futureIn the case of a contract for a sale of unascertained or future
goods by description , property will pass from the seller to thegoods by description , property will pass from the seller to the
buyer when the goods of the same description, in a deliverablebuyer when the goods of the same description, in a deliverable
state, are unconditionally appropriated to the contract by onestate, are unconditionally appropriated to the contract by one
party with the consent of the other.party with the consent of the other.
Goods sent on approval or ‘sale or return’Goods sent on approval or ‘sale or return’
Sec.24Sec.24
When the goods are delivered to the buyer on ‘approval’ or onWhen the goods are delivered to the buyer on ‘approval’ or on
‘sale or return’ basis, the property in the goods will pass from‘sale or return’ basis, the property in the goods will pass from
seller to the buyer, when any of the following conditions areseller to the buyer, when any of the following conditions are
satisfied.satisfied.
The buyer accepts the goods, orThe buyer accepts the goods, or
The buyer does something which is similar to his act of accepting theThe buyer does something which is similar to his act of accepting the
goods, e.g., pledges the goods or sells away the goods, orgoods, e.g., pledges the goods or sells away the goods, or
The buyer retains the goods without giving notice of rejection beyondThe buyer retains the goods without giving notice of rejection beyond
the period fixed or reasonable period if no time is fixed.the period fixed or reasonable period if no time is fixed. 14
15. TRANSFERTRANSFER OF TITLE BY NON-OWNERSOF TITLE BY NON-OWNERS
GENERAL RULE - NEMO DAT NON HABETGENERAL RULE - NEMO DAT NON HABET
No one can give that which he has notNo one can give that which he has not
To protect property rights.To protect property rights.
EXCEPTIONSEXCEPTIONS::
Transfer of title by Estoppel.(Sec.27)Transfer of title by Estoppel.(Sec.27)
Sale by Mercantile Agent.(Sec. 27)Sale by Mercantile Agent.(Sec. 27)
Sale by joint owner/co-owner(Sec.28)Sale by joint owner/co-owner(Sec.28)
Sale by person in possession under voidable contract.Sale by person in possession under voidable contract.
(Sec.29)(Sec.29)
Sale by a seller in possession after sale.(Sec.30(1))Sale by a seller in possession after sale.(Sec.30(1))
Sale by a buyer in possession of goods.(Sec.30(2))Sale by a buyer in possession of goods.(Sec.30(2))
Sale by an Unpaid Seller.(Sec. 54)Sale by an Unpaid Seller.(Sec. 54)
15
16. 16
UNPAID SELLER AND HIS RIGHTSUNPAID SELLER AND HIS RIGHTS
UNPAID SELLER:-
SellerSeller :-:- A person who sells the goods or agrees to A person who sells the goods or agrees to
sell the goods is called seller. sell the goods is called seller.
UnpaidUnpaid :-:- It means payment is not made or without It means payment is not made or without
payment. In simple words, "Unpaid seller" means a person who has soldpayment. In simple words, "Unpaid seller" means a person who has sold
the goods for a price but price has not been paid to him. the goods for a price but price has not been paid to him.
Sales act defines the "unpaid seller" in the following wordsSales act defines the "unpaid seller" in the following words : :
Unpaid Seller Is A PersonUnpaid Seller Is A Person :- :-
i.i. To whom the whole price has not been paid or tendered. To whom the whole price has not been paid or tendered.
ii.ii. And where a bill of exchange or other negotiable instruments has And where a bill of exchange or other negotiable instruments has
been accepted by him as a condition on which it was received hasbeen accepted by him as a condition on which it was received has
not been fulfilled by reason of dishonor of the instrument ornot been fulfilled by reason of dishonor of the instrument or
otherwise. otherwise.
EXAMPLEEXAMPLE: Party A sells a car on cash basis to party B: Party A sells a car on cash basis to party B
and the price has not been received yet.and the price has not been received yet.
17. RIGHTS OF UNPAID SELLERRIGHTS OF UNPAID SELLER
Rights of unpaid seller
Right against goods Right against the buyer personally
When the property in the
goods has been transferred
Right of Lien
Right of stoppage in
goods in transit
Right to resale
When the property in the goods
has not been transferred
Right of withholding delivery
Suit for price
Suit for damages for non
acceptance
Suit for special damage
and interest
17
18. REMEDIES FOR BREACH OF CONTRACT OF SALEREMEDIES FOR BREACH OF CONTRACT OF SALE
The Sale of Goods Act gives the following remedies to aThe Sale of Goods Act gives the following remedies to a
seller and buyer for a breach of a contract of sale:seller and buyer for a breach of a contract of sale:
Seller’s suitsSeller’s suits
Suit for price(Sec. 55)Suit for price(Sec. 55)
Suit for damages for non-acceptance of the goods(Sec.56)Suit for damages for non-acceptance of the goods(Sec.56)
Suit for interest[Sec. 61(2)(a)]Suit for interest[Sec. 61(2)(a)]
Buyer’s suitsBuyer’s suits
Suit for damages for non-delivery of the goods(Sec.57)Suit for damages for non-delivery of the goods(Sec.57)
Suit for specific performance(Sec.58)Suit for specific performance(Sec.58)
Suit for breach of warranty(Sec.59)Suit for breach of warranty(Sec.59)
Suit for interest[Sec.61(2)(a)]Suit for interest[Sec.61(2)(a)]
18
19. CONDITIONS AND WARRANTIESCONDITIONS AND WARRANTIES
MEANING OF CONDITION AND WARRANTYMEANING OF CONDITION AND WARRANTY
A stipulation in a contract of sale with reference toA stipulation in a contract of sale with reference to
goods which are the subject thereof may be agoods which are the subject thereof may be a
condition or a warranty[Sec. 12(1)].condition or a warranty[Sec. 12(1)].
ConditionCondition::
A condition is a stipulation essential to the main purposeA condition is a stipulation essential to the main purpose
of the contract, the breach of which gives rise to a right toof the contract, the breach of which gives rise to a right to
treat the contract as repudiated. [Sec 12(2)]treat the contract as repudiated. [Sec 12(2)]
WarrantyWarranty::
A warranty is a stipulation collateral to the main purposeA warranty is a stipulation collateral to the main purpose
of the contract, breach of which gives rise to a claim forof the contract, breach of which gives rise to a claim for
damages, but not a right to reject the goods and treat thedamages, but not a right to reject the goods and treat the
contract as repudiated. [Sec 12(3)]contract as repudiated. [Sec 12(3)]
19
20. When condition to be treated as warrantyWhen condition to be treated as warranty[Sec.13][Sec.13]
o Where a contract of sale is subject to any conditionWhere a contract of sale is subject to any condition
to be fulfilled by the seller, the buyer may waive theto be fulfilled by the seller, the buyer may waive the
condition or elect to treat the breach of the conditioncondition or elect to treat the breach of the condition
as a breach of warranty. [section 13(1)].as a breach of warranty. [section 13(1)].
o Where a contract of sale is not severable and theWhere a contract of sale is not severable and the
buyer has accepted the goods or part thereof, thebuyer has accepted the goods or part thereof, the
breach of any condition to be fulfilled by the sellerbreach of any condition to be fulfilled by the seller
can only be treated as a breach of warranty ,unlesscan only be treated as a breach of warranty ,unless
there is a term of the contract, express or implied,there is a term of the contract, express or implied,
to that effect. [section 13(2)].to that effect. [section 13(2)].
o Nothing in this section shall affect the case of anyNothing in this section shall affect the case of any
condition or warranty fulfillment of which is excusedcondition or warranty fulfillment of which is excused
by law by reason of impossibility or otherwise.by law by reason of impossibility or otherwise.
[section 13(3)].[section 13(3)]. 20
21. EXPRESS AND IMPLIEDEXPRESS AND IMPLIED
CONDITION AND WARRANTIESCONDITION AND WARRANTIES
CConditions and warranties may be express oronditions and warranties may be express or
implied.implied.
Express condition and warrantiesExpress condition and warranties ::
Express condition and warranties are those which haveExpress condition and warranties are those which have
been expressly agreed upon by the parties at the time ofbeen expressly agreed upon by the parties at the time of
contract of salecontract of sale
Implied condition and warrantiesImplied condition and warranties ::
Implied condition and warranties are those which theImplied condition and warranties are those which the
law incorporates into the contract unless the partieslaw incorporates into the contract unless the parties
stipulate to the contrary.stipulate to the contrary.
21
22. 22
IMPLIED CONDITION (Secs. 14 to 17)IMPLIED CONDITION (Secs. 14 to 17)
IMPLIED
CONDITION
As to
Title
As to
Title
As to
Description
As to
Description
As to
Sample
As to
Sample
As to Quality or
Fitness
As to Quality or
Fitness
As to
Merchantability
As to
Merchantability As to
Wholesomeness
As to
Wholesomeness
23. Condition as to titleCondition as to title [Sec. 14(a)][Sec. 14(a)]
In a contract of sale, unless the circumstances of the contractIn a contract of sale, unless the circumstances of the contract
are such as to show a different intention, there is an impliedare such as to show a different intention, there is an implied
condition on the part of the seller that –condition on the part of the seller that –
a)In the case of a sale, he has a right to sale the goods, anda)In the case of a sale, he has a right to sale the goods, and
b)In the case of an agreement to sell, he will have a right tob)In the case of an agreement to sell, he will have a right to
sell the goods at the time when the property is to pass.sell the goods at the time when the property is to pass.
ExampleExample: R: R bought a car frombought a car from DD and used it for 4 months.and used it for 4 months. DD had nohad no
title to the car and consequently R had to hand it over to the true owner.title to the car and consequently R had to hand it over to the true owner.
Held,Held, RR could recover the price paid [could recover the price paid [Rowland v. Divall(1923)2 K.B. 500]Rowland v. Divall(1923)2 K.B. 500]
Condition a to descriptionCondition a to description (Sec. 15)(Sec. 15)
In sale by description there is an implied condition that theIn sale by description there is an implied condition that the
goods shall correspond with description.goods shall correspond with description.
This means “if you contract to sell peas, you cannot oblige theThis means “if you contract to sell peas, you cannot oblige the
party to take beans.”party to take beans.”
Hence if the description of the article tendered is different thenHence if the description of the article tendered is different then
the buyer may not buy the goodsthe buyer may not buy the goods.. 23
24. ExampleExample:: A want to sell his typewriter. He says to B , intending buyerA want to sell his typewriter. He says to B , intending buyer
who has not have seen the machine, that it is a brand new machine. Bwho has not have seen the machine, that it is a brand new machine. B
agrees to purchase it . On delivery B finds that the machine is old andagrees to purchase it . On delivery B finds that the machine is old and
repaired. B can repudiate the contract.repaired. B can repudiate the contract.
Condition as to sampleCondition as to sample (Sec. 17)(Sec. 17)
A contract of sale is a contract for sale by sample whereA contract of sale is a contract for sale by sample where
there is a term in the contract, express or implied, tothere is a term in the contract, express or implied, to
that effect.that effect.
In a sale by sample, the following are the implied conditions:In a sale by sample, the following are the implied conditions:
1.The bulk shall correspond with the sample in quality;1.The bulk shall correspond with the sample in quality;
2.That the buyer shall have a reasonable opportunity2.That the buyer shall have a reasonable opportunity
of comparing the bulk with the sample; andof comparing the bulk with the sample; and
3.That the goods shall be free from any defects rendering3.That the goods shall be free from any defects rendering
them unmerchantable, which would not be apparent onthem unmerchantable, which would not be apparent on
reasonable examination of the samplereasonable examination of the sample.. 24
25. ExampleExample:: Certain shoes were sold by sample for the French Army. TheCertain shoes were sold by sample for the French Army. The
shoes were found to contain paper not discoverable by ordinary inspection.shoes were found to contain paper not discoverable by ordinary inspection.
Held,Held, the buyer was entitled to the refund of price plus damages.the buyer was entitled to the refund of price plus damages.
Condition as to quality or fitnessCondition as to quality or fitness [Sec. 16 (1)][Sec. 16 (1)]
Normally, in a contract of sale there is no implied condition as toNormally, in a contract of sale there is no implied condition as to
quality or fitness of the goods for a particular purpose. Thequality or fitness of the goods for a particular purpose. The
buyer must examine the goods thoroughly before he buys thembuyer must examine the goods thoroughly before he buys them
in order to satisfy himself.in order to satisfy himself.
ExampleExample:: An order was placed for some lorries to beAn order was placed for some lorries to be
used “for heavy traffic in a hilly area”. The lorries suppliedused “for heavy traffic in a hilly area”. The lorries supplied
were unfit and breakdown. There is a breach of condition as to fitness.were unfit and breakdown. There is a breach of condition as to fitness.
Condition as to merchantabilityCondition as to merchantability [Sec. 16(2)][Sec. 16(2)]
Where goods are bought by description from a seller whoWhere goods are bought by description from a seller who
deals in goods of that description there is an implieddeals in goods of that description there is an implied
condition that the goods are of merchantable quality.condition that the goods are of merchantable quality. 25
26. This means goods should be such that they areThis means goods should be such that they are
commercially saleable, as per the description by which theycommercially saleable, as per the description by which they
are known in the market at their full valueare known in the market at their full value..
Condition as to wholesomenessCondition as to wholesomeness
In the case of eatables and provisions, in addition to theIn the case of eatables and provisions, in addition to the
implied condition as to merchantability, there is anotherimplied condition as to merchantability, there is another
implied condition that the good shall be wholesome.implied condition that the good shall be wholesome.
ExampleExample:: X purchased milk from Y , a milk dealer. The milkX purchased milk from Y , a milk dealer. The milk
contained typhoid germs. X’s wife, on taking the milk, got infection andcontained typhoid germs. X’s wife, on taking the milk, got infection and
died. Held, X can entitled for damages.died. Held, X can entitled for damages.
26
28. Warranty of quiet possessionWarranty of quiet possession [Sec. 14(b)].[Sec. 14(b)].
In a contract of sale, unless there is a contrary intention, there is an impliedIn a contract of sale, unless there is a contrary intention, there is an implied
warranty that the buyer shall have and enjoy quiet possession of the goods.warranty 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 inIf the buyer is in any way disturbed in the enjoyment of the goods in
consequence of seller’s defective title to sell, he can claim damages fromconsequence of seller’s defective title to sell, he can claim damages from
the seller.the seller.
Warranty of freedom from encumbrancesWarranty of freedom from encumbrances [Sec. 14 (c)].[Sec. 14 (c)].
The goods are not subject to any change or right in favour of a third partyThe goods are not subject to any change or right in favour of a third party..
Warranty as to quality or fitness by usage of tradeWarranty as to quality or fitness by usage of trade
[Sec. 16 (4)][Sec. 16 (4)] ..
An implied warranty as to quality or fitness for a particular purpose may beAn implied warranty as to quality or fitness for a particular purpose may be
annexed by the usage of trade.annexed by the usage of trade.
Warranty to disclose dangerous nature of goodsWarranty to disclose dangerous nature of goods
Where a person sell goods, knowing that the goods are inherentlyWhere a person sell goods, knowing that the goods are inherently
dangerous or they are likely to be dangerous to the buyer and that the buyerdangerous or they are likely to be dangerous to the buyer and that the buyer
is ignorant of the danger, he must warn the buyer of the probable danger,is ignorant of the danger, he must warn the buyer of the probable danger,
otherwise he will be liable in damages.otherwise he will be liable in damages.
28
29. DOCTRINE OF “CAVEAT EMPTOR”DOCTRINE OF “CAVEAT EMPTOR”
Caveat Emptor is a Latin phrase meaningCaveat Emptor is a Latin phrase meaning
““let the buyer bewarelet the buyer beware ”.”.
Let the buyer bewareLet the buyer beware : the principle that the seller: the principle that the seller
of a product cannot be held responsible for its qualityof a product cannot be held responsible for its quality
unless it is guaranteed in a warranty.unless it is guaranteed in a warranty.
For example, you buy a used car which you are told isFor example, you buy a used car which you are told is
in perfect condition, but it immediately breaksin perfect condition, but it immediately breaks
down OR you buy a house, but it has termites.down OR you buy a house, but it has termites.
Under this doctrineUnder this doctrine the buyer takes the risk on anthe buyer takes the risk on an
item he purchases and cannot complain of a defect.item he purchases and cannot complain of a defect.
Unless there is either fraud or warranty (guarantee) byUnless there is either fraud or warranty (guarantee) by
the seller, the rule applies to the sale of personalthe seller, the rule applies to the sale of personal
property.property. 29
30. EXCEPTION OF CAVEAT EMPTOREXCEPTION OF CAVEAT EMPTOR
Implied condition as to quality or fitness.Implied condition as to quality or fitness.
Where the buyer has made know to the seller theWhere the buyer has made know to the seller the
purpose for which he requires the goods and depends onpurpose for which he requires the goods and depends on
the seller’s skill and judgment, there is an impliedthe seller’s skill and judgment, there is an implied
condition that the seller will supply the goods which are fitcondition that the seller will supply the goods which are fit
for that purpose. Section 16(1)for that purpose. Section 16(1)
ExampleExample: A buys a black yarn from B and finds that it: A buys a black yarn from B and finds that it
has been damaged by white ants. The condition as tohas been damaged by white ants. The condition as to
merchantable quality is broken and therefore, themerchantable quality is broken and therefore, the
doctrine of broken and therefore, the doctrinedoctrine of broken and therefore, the doctrine
of caveat emptor does not hold good.of caveat emptor does not hold good.
Sale of goods by description.Sale of goods by description.
Where the goods are purchased by description from aWhere the goods are purchased by description from a
seller, who deals in such class of goods, there will be anseller, who deals in such class of goods, there will be an
implied condition that the goods shall be of merchantableimplied condition that the goods shall be of merchantable
quality.quality. 30
31. AUCTION OF SALEAUCTION OF SALE
MEANINGMEANING::
Sale of auction is the public sale where the goodsSale of auction is the public sale where the goods
are generally sold to the highest bidderare generally sold to the highest bidder
RULES OF AUCTION SALERULES OF AUCTION SALE::
The law on auction sales is contained in Sec.64 of theThe law on auction sales is contained in Sec.64 of the
Sale of Goods Act. According to it, in the case of aSale of Goods Act. According to it, in the case of a
sale of auction the following rules apply :sale of auction the following rules apply :
Where goods are put up for sale in lots, each lotWhere goods are put up for sale in lots, each lot
is is prima facieprima facie deemed to be the subject of a deemed to be the subject of a
separate contract of sale;separate contract of sale;
31
32. The sale is complete when the auctioneer announcesThe sale is complete when the auctioneer announces
its completion by the fall of the hammer or in otherits completion by the fall of the hammer or in other
customary manner; and, until such announcement iscustomary manner; and, until such announcement is
made, any bidder may retract his bid;made, any bidder may retract his bid;
A right to bid may be reserved expressly by or onA right to bid may be reserved expressly by or on
behalf of the seller and, where such right is expresslybehalf of the seller and, where such right is expressly
so reserved, but not otherwise, the seller or any oneso reserved, but not otherwise, the seller or any one
person on his behalf may, subject to the provisionsperson on his behalf may, subject to the provisions
hereinafter contained, bid at the auction; hereinafter contained, bid at the auction;
Where the sale is not notified to be subject to a right toWhere the sale is not notified to be subject to a right to
bid on behalf of the seller, it shall not be lawful for thebid on behalf of the seller, it shall not be lawful for the
seller to bid himself or to employ any person to bid atseller to bid himself or to employ any person to bid at
such sale, or for the auctioneer knowingly to take anysuch sale, or for the auctioneer knowingly to take any
bid from the seller or any such person;bid from the seller or any such person;
32
33. and any sale contravening this rule may be treatedand any sale contravening this rule may be treated
as fraudulent by the buyer;as fraudulent by the buyer;
The sale may be notified to be subject to a reservedThe sale may be notified to be subject to a reserved
or upset price;or upset price;
If the seller makes use of pretended bidding to raiseIf the seller makes use of pretended bidding to raise
the price, the sale is voidable at the option of thethe price, the sale is voidable at the option of the
buyer.buyer.
33
