Legal Aspects of Business Mba Topic

1. Subject: Legal Aspects of Business (103)
Submitted To: Submitted By:
Dr. Jyoti Anish

2. 
 “A contract of sale of goods is a contract whereby a
seller transfers or agrees to transfer the property in
goods to the buyer for a price”
 Contract of sale is a generic term which includes
both a sale as well as an agreement to sell.
The Contract of Sale

3. 
 There must be at least two parties
 Transfer or agreement to transfer the ownership of
goods
 The subject-matter of the contract must necessarily
be ‘Goods’
 The consideration is price
 A contract of sale may be absolute or conditional
 All other essentials of a valid contract must be
present
Main Features

4. SALE AGREE.TO SELL
It creates right in REM Right in Personam
It is Executed contract Executory contract
If the goods are destroyed the loss
falls on the buyer even if the goods
are in the possession of seller
Seller/buyer
Seller can sue for the price of the
goods
In case of breach by the buyer the
seller is entitled only to damages
The seller can not sell to third
parties
It can
The buyer is entitled to recover the
specific property from the assignee
if the seller becomes insolvent
Buyer can claim only ratable
dividend for the money paid
The seller is only entitled to the
ratable dividend of the price due if
the buyer becomes insolvent
The seller may refuse to sell the
goods to the buyer w/o payments if
the buyer becomes insolvent
Ownership passes to the buyer Ownership remains with the seller
Sale & Agreement to Sell

5. 
Subject Matter of
Contract of Sale
 According to Sec 2(7), ‘goods’ means every kind of
movable property other than actionable claims and
money; and includes stocks and shares.
 Classification of Goods [Sec 6(2)]
 Existing Goods
 Specific Goods.
 Ascertained Goods.
 Unascertained/Generic Goods.
 Future Goods
 Contingent Goods

6. 
 Representation: Statement made by the seller before
entering into a contract.
 Stipulation: If such representation forms an integral
part of the contract and other party relies upon it.
 No Representation: CAVEAT EMPTOR’
i.e, Let the Buyer Beware – is applied
Conditions & Warrants

7. 
Condition: [Sec. 12(2)]
 A condition is a stipulation essential to the main
purpose of the contract breach of which gives rise to
a right to treat the contract as repudiated.
Warranty: [Sec. 12(3)]
 A warranty is a stipulation collateral to the main
purpose of the contract the breach of which gives rise
to a claim for damages but not right to reject the
goods and treat the contract as repudiated.

8.  Difference as to value
 Difference as to Breach
 Difference as to Treatment
Difference b/w Condition & Warranty
When condition is to be treated as
warranty: Sec.13(1)-13(3)
 Voluntary waiver of condition.
 Acceptance of goods by buyer.

9. 
 Express Conditions : Expressly provided in the
contract.
 Implied conditions & warranty : which the law
implies in a contract of sale.
Expressed & Implied
Conditions and Warrantiies

10. 
 Conditions as to title [Sec. 14(a)]
 Sale by description:
 Goods must correspond to description (Sec. 15)
 Sale by sample as well as by description (Sec. 15)
 Conditions as to fitness for a particular purpose
[Sec. 16(1)]
 Conditions as to Merchantability [Sec. 16(2)]
 Sale by Sample (Sec.17)
 Conditions as to wholesomeness
Implied Conditions

11. 
 Warranty of Quiet possession-Sec.14(6)
 Warranty against encumbrances-Sec.14(c)
 Warranty to disclose dangerous natures of goods.
Implied Warranties

12. 
 Let the ‘Buyer Beware’
 The maxim Caveat Emptor does not apply & the
contract will be subject to the implied conditions
under the following circumstances :
1. Sale under fitness for buyers purpose
2. Sale under merchandable quality
3. Sale under usage of trade
4. Consent by Fraud
CAVEAT EMPTOR

13. 
 Property in Goods mean?
 Property in goods Vs. Possession of Goods
 When does the property in goods pass from the
seller to buyer ?
 1.If the goods are lost or damaged
 2.Damage to goods by third party
 3.Insolvency
Transfer of Title/Property
in Goods – Sec.18-25

14. 
 Specific goods in Deliverable State (Sec.20)
 Goods are said to be in D/S when they are in such
state that the buyer would under the contract be
bound to take delivery of them
 Specific goods not in a Deliverable state (Sec.21)
 Where there is a contract for the sale of specific
goods in a deliverable state but the seller is bound to
weigh, measure, test or to do some other thing with
reference to them, for ascertaining the price , the
property does not pass till such act or thing is done
and the buyer has notice of it.
Rules as regards Ascertaining
Intention (Sec.20-24)

15. 
 Unascertained or future goods (Sec.18)
 Sale “On Approval” or “Sale or Return” basis
 When he signifies his approval or acceptance to the
seller or does any other act, adopting the transaction
 If he does not signify his approval or acceptance to
the seller but retains the goods w/o giving notice of
rejection, then, if a time has been fixed for the return
of the goods, on the expiration of such time, and if
no time has been fixed on the expiration of a
reasonable time.

16. 
 Voluntary transfer of possession of goods from one
person to another’
 1) Physical or Actual Delivery: Physical possession of
the good is handed over by the seller to the buyer
 2) Constructive Delivery: When a third person who
is in possession of the goods acknowledges that he
holds the goods on behalf of the buyer
 Symbolic Delivery: Delivery is made by indicating or
giving a symbol e.g: Handing over the key of a
godown to the buyer
Delivery [Sec. 2(2)]

17. 
 Mode of delivery
 Delivery & payment
 Effect of part delivery
 Buyer to apply for delivery
 Place of delivery
 Goods in possession of a third party
 Time of delivery
 Expense of delivery
 Instalment delivery
 Delivery to a carrier or wharfinger
Rules as to Delivery (Sec.39) :

18. 
 A seller is deemed to be an U/S when:
 1) The whole of the price has not been paid or
tendered.
 2) A bill of exchange or other negotiable instrument
has been received as a conditional payment & the
condition on which it was received has not been
fulfilled by reason of dishonor of the instrument.
Unpaid Seller (Sec.45) :

19. 
Rights of an Unpaid Seller :
 1) Right against goods:
 a) Lien on goods
 b) A right of stoppage-in-transit
 c) A right of Re-sale
 2.Rights of an U/S against the buyer personally:
 Suit for price (Sec.55)
 Suit for damages for Non Acceptance (Sec.56)
 Suit for damages for Breach of contract
 Suit for Interest (Sec.61)

20. 
Thank You