Sales of goods act,1930

Dr. Akansha Jain email:
dr.akanshajain@gmail.com blog –
http://drakanshajain.blogspot.in

•Sales of goods Act came into force on 1st July, 1930.
•Sale of Goods Act is one of very old mercantile law.

•Sale of Goods is one of the special types of Contract.

•The Sale of Goods Act is complimentary to Contract
Act.
•Basic requirements of contract i.e. offer and
acceptance, legally enforceable agreement, mutual
consent, parties competent to contract; free
consent, lawful object, consideration etc. apply to
contract of Sale of Goods also.


 A contract of sale of goods is a contract
whereby the seller transfers or agrees to
transfer the property in goods to the buyer
for a price. There may be a contract of sale
between one part-owner and another.
[section 4(1)].
 A contract of sale may be absolute or
conditional. [section 4(2)].


 Two parties: There must be 2 distinct parties i.e., a buyer
and a seller, to effect a contract of sale and they must be
competent to contract.
 Goods: There must be some goods the property in which
is or is to be transferred from the seller to the buyer.
 Price: The consideration for the contract of sale, called
price, must be money.
 Transfer of general property: There must be a transfer of
general property as distinguished from special property in
goods from the seller to the buyer. If A owns certain
goods, he has general property in the goods. If he pledges
them with B, B has special property in the goods.
 Essential elements of a valid contract: All the essential
elements of a valid contract must be present in the
contract of sale.


 When property is transferred from seller to
buyer at the time of formation of contract, an
absolute sale occurs.
 When property in the goods is to be
transferred at some future date and not at the
time of contract, the contract of sale is
termed as an agreement to sell.


Sale Agreement To Sale
1) The Property in the goods 1) Since property in the goods
passes to the buyer and does not pass to buyer, the
along therewith the risk. risk also does not pass to
2) It is an executed contract. him.
3) The seller can sue the buyer 2) It is an executory contract.
for the price of the goods 3) The aggrieved party can sue
because of the passage of the for damages only and not for
property therein to buyer. the price, unless the price
4) A subsequent loss or was payable at a stated date.
destruction of goods is 4) Such loss or destruction is
liability of buyer. the liability of the seller.
5) Breach on the part of the
sellers gives the buyer double 5) The seller, being still the
remedy; a suit for damages owner of the goods, may
against the seller and a dispose of them as he
proprietary remedy of likes, and the buyer’s remedy
recovering the goods from would be to file a suit for
third parties who bought damages only.
them. dr.akanshajain@gmail.com blog –

Contract can be made in any of the
following modes:
 There may be immediate delivery of goods.
 There may be immediate payment of
price, but it may be agreed that the delivery
is to be made at some future date.
 There may be immediate delivery of goods
and immediate payment of price.
 It may be agreed that delivery or payment or
both are to be made in installments.
 It may be agreed that delivery or payment or
both are to be made at some future date.


Condition: It is a stipulation essential to
main purpose of the contract, the breach of
which gives right to the repudiate the
contract and to claim damages.
Warranty: It is a stipulation collateral to
main purpose of the contract, the breach of
which gives rise to claim for damages but
not the right to reject the goods and treat
contract as repudiated.


Condition Warranty
1. A condition is essential to 1. It is only collateral to main
the main purpose of the purpose of contract.
contract. 2. The aggrieved party can
2. The aggrieved party can claim only the damages in
repudiate the contract or case of breach of
claim damages or both in warranty.
case of breach of
condition. 3. A breach of warranty
3. A breach of condition may cannot be treated as
be treated as breach of breach of condition.
warranty.


 A contract of sale can be performed by the two
ways.
1. Property in goods or ownership of goods and
2. Possession of the goods.
A person may have possession of goods but he
may not be the owner e.g. a servant, agent etc.
 On the other hand, a person may be the owner
but may not have the possession of goods. In the
contract of sale, when the ownership of goods is
transferred to the buyer from the sellers, he
becomes the owner of the goods.


 As per general rule, the transfer of ownership
depends on the intention of the parties to the
contract. But sometimes the intention of the
parties cannot be ascertained from the contract.
In that case, the intention of the parties is
ascertained on the basis of provisions laid down
in Sections 18 to 24 of the Sale of Goods Act.
These provisions are discussed as under—

1) Incase of the unascertained goods (Section 18
and 23);
2) Incase of specific goods (Section 20 to 22)
and
3) Incase of sale on approval (Section 24)


 TRANSFER OF OWNERSHIP IN CASE OF
UNASCERTAINED GOODS:

a) Unascertained Goods: Under Section 18 of the
Sale of Goods Act, the unascertained goods are
not transferred unless the goods are ascertained.
Theses goods are not specifically identified at the
time of contract of sale. It is identified and is set
apart for the purpose of delivering to the buyer.
b) The Intention of the parties: Under section 19
the transfer of ownership depends upon the
intention of both the parties and ownership
transfer from the seller to the buyer at the time
fixed by the parties.


 TRANSFER OF OWNERSHIP IN CASE OF SPECIFIC GOODS:
a) Specific goods: - Under Section 20, the goods are
deliverable state and the ownership transferred from the
seller to the buyer at the time of making of contract of
sale.
b) When seller has something to do:- Under Section 21
in case of sale of specific goods if the goods are not in a
deliverable state and the seller has to do something to
put the goods in a deliverable state, the ownership does
not passes until such thing is done and the buyer has
notice thereof.
c) When goods are to be measured, tested: Under
Section 22, in case of a contract of sale of specific goods
and the goods are in a deliverable state but, the seller
has to weight, measure, test or perform some other act
or thing with reference to the goods for ascertaining the
price, the ownership does not pass until such act or
thing is done and the buyer has noticed thereof.


TRANSFER OF OWNERSHIP IN CASE OF SALE
ON APPROVAL:

In case of sale on approval, the ownership to
the buyer is transferred in three ways:
· When the goods are accepted by the
buyer, or
· When the buyer performs some acts which
indicates implied acceptance of the buyer, or
· The buyer fails to return the goods within
a reasonable time


Caveat emptor is LATIN
word for "Let the buyer
beware


It is NOT part of the sellers duty to
point out the defects of the goods
which he offers for sale, rather it
is the duty of the buyer to satisfy
himself about the quality as well
as the suitability of goods.


EXCEPTIONS TO THE DOCTRINE OF CAVEAT
EMPTOR:
1) In case of misrepresentation by seller.
2) In case of concealment of defect.
3) In case of sale by description.
4) In case of sale by sample.
5) In case of sale by description and sample.
6) Fitness for a particular purpose: When the
buyer has disclosed the purpose for which
the goods are required and relied upon the
sellers skill or judgment of the seller.


The seller of goods is deemed
to be an unpaid seller if :
a) When the whole of the price
has not been paid or
b) When a negotiable
instrument is dishonoured.


1) Right against the goods:
a) if the property has passed to buyer:
 Right of lien
 Right of stoppage in transit
 Right of resale.
b) if the property in the goods has NOT
passed:
• Withholding delivery
• Stoppage in transit
• Resale

*Right to sue for price

*Right to sue for damages

*Rights to repudiation of contract

*Right to sue for interest


 A public sale where intending buyers
assemble at one place and offer the price at
which they are ready to buy the goods. The
offer of the price is known as ―bid‖ and the
person making the bid is ―bidder‖. The
person appointed to sell is called
―auctioneer‖. The relationship between
auctioneer and the owner of the goods is
that of the principle and agent. The goods
are sold to the highest bidder.

 An advertisement to sell the goods by
auction is simply an invitation to the public
to make offers and NOT an offer itself.


RULES REGARDING SALE BY AUCTION:
1) Each lot is deemed to be the subject of
a separate contract.
2) Sale is complete on the fall of the
hammer.
3) Before the completion, bidder may with
draw his bid.
4) A right to bid may be reserved
expressly and seller can also bid.
5) If a sale is notified to be subject to
reserve price then auctioneer has NO
power to sell, below the reserve price.
6) Pretended bidding to raise price, can be
voidable.


 1. Seller’s suits
◦ i) Suit for price (Sec. 55)
◦ ii) Suit for damages for non-acceptance of the goods (Sec. 56)
◦ iii) Suit for damages for repudiation of contract by the buyer
before due date (Sec. 60)
◦ iv) Suit for interest [Sec. 61 (2)(a)]
 2. Buyer’s suits
◦ i) Suit for damages for non-delivery of goods (Sec. 57)
◦ ii) Suit for specific performance (Sec. 58)
◦ iii) Suit for breach of warrenty(Sec.59)
◦ iv) Suit for damages for repudiation of contract by the seller
before due date (Sec. 60)
◦ v) Suit for interest [Sec. 61 (2)(b)]


Sales of goods act,1930

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