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Sale of Goods Act Key Points
1. Sale of Goods Act
•Important points
Agreement of Sale
Sale
Hire Purchase Agreement
Unpaid seller & his rights
Transfer of Ownership
Caveat Emptor
Conditions and Warranty
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2. Important Definitions
S-2 (7) "goods" means every
kind of moveable property other
than actionable claims and money;
and includes stock and shares,
growing crops, grass,
S-2(10) "price" means the money
consideration for a sale of goods;
S-2 (13) "seller" means a person
who sells or agrees to sell goods;
S-2(1) "buyer" means a person
who buys or agrees to buy goods;
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3. Sale Vs. Agreement to sell
S-4(3)
Where under a contract of sale the
property in the goods is transferred
from the seller to the buyer, the
contract is called a sale,
Where the transfer of the property
in the goods is to take place at a
future time or subject to some
condition thereafter to be fulfilled,
the contract is called an agreement
to sell.
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4. Conditions & Warranty
S-12 (2) A condition is a
stipulation essential to the main
purpose of the contract, the breach
of which gives rise to a right to
treat the contract as repudiated.
(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 to a right to reject the
goods and treat the contract as
repudiated.
5. Implied Conditions
1) S-14 (a) Seller has right to sell.
2) S-15. Goods shall correspond
with the description
3) S-17 Goods will correspond
with the sample
4) Goods are reasonably fit for the
purpose for which buyer has
purchased the goods by informing
the seller.
5) Goods shall be of merchantable
quality I.e. commercially saleable.
6) Goods shall be wholesome, pure
and unadulterated
7) Any other condition as per
customer and usage.
7. Transfer of Ownership
20. In case of the sale of goods in
a deliverable state, the property in
the goods passes to the buyer
when the contract is made, and it
is immaterial whether the time of
payment of the price or the time of
delivery of the goods, or both, is
postponed.
21. If the seller is bound to do
something to put them into a
deliverable state, the property
does not pass until such thing is
done and the buyer has notice
thereof.
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8. Risk in case of loss
26. The goods remain at the
seller's risk until the property
therein is transferred to the buyer,
but when the property therein is
transferred to the buyer, the goods
are at the buyer's risk whether
delivery has been made or not:
Where delivery has been delayed
through the fault of either buyer or
seller, the goods are at the risk of
the party in fault
The duties or liabilities of either
seller or buyer as a bailee of the
goods will continue.
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9. 31. It is the duty of the seller to
deliver the goods and of the buyer
to accept and pay for them.
32. Payment and delivery are
concurrent conditions
Delivery of the goods and payment
of the price are concurrent
conditions. Both the parties should
be ready to perform their part.
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Duties of Buyer & SellerDuties of buyer & seller
10. "Unpaid seller"
45. "Unpaid seller" defined
(1) The seller of goods is
deemed to be an "unpaid seller"
within the meaning of this Act.-
(a) When the whole of the
price has not been paid or
tendered;
(b) When a bill of exchange or
other negotiable instrument has
been received as payment and the
same is dishonoured by drawee.
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11. Unpaid seller's rights
46. (1) the unpaid seller of goods
has
(a) a lien on the goods for the
price while he is in possession of
them;
(b) a right of stopping the goods in
transit after he has parted with the
possession of them;
(c) a right of re-sale
(2) a right of withholding delivery
similar to and co-extensive with his
rights of lien and stoppage in
transit where the property has
passed to the buyer.
Rights against buyer: Suit for price,
damages and interest. Repudiation
of contract.
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12. Hire Purchase Agreement
It is a combination of 2
agreements.
1) Hiring Agreement +
2) Agreement of Sale
Hire Purchaser has to pay
instalments for a certain period.
After paying the last instalment,
he will become the owner.
If he does not pay the
instalment, the seller can take
back the goods and need not
refund the amount already
received. Purchaser can exit
from the contract by returning
the goods.
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13. Caveat Emptor
Let the Buyer beware.
A buyer must exercise care in his
own interest and he must satisfy
himself about the suitability of
goods purchased by him.
Doctrine of Caveat Emptor is not
applicable in case of implied
conditions and warranties.
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14. Unpaid seller's rights
46. (1) the unpaid seller of
goods has
(a) a lien on the goods for the
price while he is in possession of
them;
(b) a right of stopping the goods in
transit after he has parted with the
possession of them;
(c) a right of re-sale
(2) a right of withholding delivery
similar to and co-extensive with his
rights of lien and stoppage in
transit where the property has
passed to the buyer.
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