BS COMMERCE BUSINESS LAW 3RD SEMESTER
CHAPTER # 02
Sale of Goods Act 1930
Q# 1: Describe Contract of Sales. Its Essentials and formalities?
Sale of Goods Act
The law relating to sale of Goods is contained in the sale of Goods Act, 1930. This law came into
force on 1 July 1930. The Act contains 66 sections and extends to the whole of Pakistan.
It is like any other contract. In order to be valid, it must also possess all the essentials of a valid
contract.
Contract of Sale:
Section 4(1) of the sale of Goods Act, 1930, defines a contract of sale of goods as “a Contract
whereby the seller transfers or agrees to transfer the property in Goods to buyer for a price”
In other words, a contract to transfer the ownership of Goods from the seller to the buyer is
known as contract of sale.
There are two parts of definition
An Actual Sale ------- An Agreement to Sell
1: An Actual sale:
When under a contract of sale of property in goods is transferred from the seller to the buyer the
contract is called a sale. If there is no price for the goods, which are agreed to be transferred, it
will be known a gift and not a sale of goods.
Example: Mr. A buys a watch from a shop and pays the whole price to the shopkeeper. It is a
sale.
2: An Agreement to Sell (Sec-4(2))
“Where under a contract of sale the transfer of property in the goods is to take place at a future,
time or subject to some condition thereafter to be fulfilled the contractor is called agreement to
sell”
Example: A agree with B to sell his TV for Rs.5000/- after its repair at the end of next year. It
called agreement to sell.
Essential Elements of Contract of Sale
1: Contract:
The words contract means an agreement enforceable by law. All the essentials of a valid contract
like capacity of parties, free consent, legality of object, etc., should also be present in a contract
of sale. It may be oral or in writing.
By: Mohammad Akram (((((Govt college of commerce, Quetta)))))
BS COMMERCE BUSINESS LAW 3RD SEMESTER
CHAPTER # 02
2: Two Parties:
There should be two parties to a contract of sale that is a buyer and a seller. One person cannot
act as a buyer and seller because a person cannot buy his own goods and similarly a person
cannot sell his goods to himself.
However, an owner of one part can sell his share to the owner of other part. Similarly, a partner
may buy the goods from the firm in which he is a partner and vice-versa.
Example:
A sells his computer to B for Rs.40000. A is a seller and B is a buyer.
A and B jointly own a typewriter. A sells his share to B. B will become sole owner of the
typewriter.
3: Transfer of property:
Transfer of property is the second essential of contract of sale. Property here means ownership.
A simple transfer of possession of the goods cannot be termed as sale. To constitute a contract of
sale the seller must either transfer or agree to transfer the property ownership in the goods to the
buyer.
Example:
A sells his A.C to B for Rs.20000. The ownership and the possession of the A.C. will transfer
from A to B.
4: Goods:
There must be some goods. Goods means every kind of movable property other than actionable
claims and money and includes stock and shares, growing crops, grass and thing attached to or
forming part of the land which are agreed to be served before sale or under the contract of sale
( section2(7). It may be noted that the contract relating to actionable claims immovable property
and services are not covered by this Act.
Example:
A sells his car to M for Rs.3 lac. It is a contract of sale because here the subject matter that is a
car is a moveable thing.
5: Price:
The consideration in a contract of sale must be the price. When goods are sold or exchanged for
other goods, the transaction is barter, and not a contract of sale of goods. If goods are sold
partially for goods and partially for money, the contact is sale. (Sec-2(10)).
Example: A sells his chair to B for Rs.2000. it is a contract of sale.
X sells his horse to B against B’s promise to give 100 banks of wheat. It is not a contract of sale.
By: Mohammad Akram (((((Govt college of commerce, Quetta)))))
BS COMMERCE BUSINESS LAW 3RD SEMESTER
CHAPTER # 02
Formalities of contract of Sale (sec-5)
Offer and Acceptance
A contract of sale is made by an offer to buy or sell the goods for a price and acceptance of such
offer.
Delivery and payment
Express or Implied
All the essential of valid contract like capacity of parties, free consent, legality of object etc.
should also be there in a contract of sale. It may be oral or in writing (sec-5).
By: Mohammad Akram (((((Govt college of commerce, Quetta)))))
