THE SALE OF
GOODS ACT,
1930
INTRODUCTION
This Act may be called the Sale of
Goods Act, 1930.
It extends to the whole of India (except
the State of Jammu and Kashmir).
Came into force on 1st JULY,1930.
DEFINITION
It is a contract by which the ownership of movable goods is
transferred from the seller to the buyer. The term ‘contract of sale’
is defined in Section 4(1) of the Sale of Goods Act as-
“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”
ESSENTIALS OF VALID SALE
CONTRACT
(i) All requirements of a valid contract must be fulfilled
(ii) Two Parties – Buyer and a seller
(iii) Goods- Must be movable
(iv) Transfer of Property
(v) Price
(vi) Includes both a ‘sale’ and ‘agreement to sale’
(vii) No formalities are required
(viii) Payment by installments
SALE AND AGREEMENT TO SELL
Property in the goods is transferred from the seller
to the buyer- sale
Transfer of the property in the goods is to be taken
place at some future date or after fulfillment of
some condition, -AGREEMENT TO SALE
SALE AND AGREEMENT TO SELL
Sale Agreement to sell
1. Ownership is with 1. Ownership is with
the buyer the seller
2. Executed contract 2. Executory contract
3. Sue for price, in case 3. Sue for damages
of breach only, in case of
4. Goods lost by breach
accident then loss 4. Goods lost by
falls on the buyer. accident then loss
falls on the Seller.
GOODS
Goods' means every kind of moveable property and
includes stock and shares, growing crops, grass, and
things attached to or forming part of the land, which are
agreed to be severed before sale or under the contract of
sale.
GOODS
Actionable claims and money are not included in the
definition of goods.
Example - goodwill, copyright, trademark, patents,
water, gas, and electricity are all goods and may be the
subject matter of a contract of sale.
CLASSIFICATION OF GOODS
1. Existing Goods - Existing goods are those, which are
owned or possessed by the seller at the time of the
contract.
Specific and Ascertained - goods identified and
agreed upon at the time a contract of sale is made;
Generic and Unascertained - goods indicated by
description and not specifically identified.
CLASSIFICATION OF GOODS
2. Future Goods - Future goods" means goods to be
manufactured or produced or acquired by the seller
after making the contract of sale.
3. Contingent Goods - Contingent goods are the goods
the acquisition of which by the seller depends upon
a contingency which may or may not happen.
Contingent goods are a part of future goods.
PRICE
'Price' means the money consideration for sale of the goods. 'Price' is an
integral part of a contract of sale.
If it is not fixed or is not capable of being fixed, the whole contract is void .
The Act provides that the price may be fixed :
Either by the contract or
May be agreed to be fixed in a manner provided by the contract, e.g., By a
valuer, or
It may be determined by the course of dealings between the parties.
In case, price is not capable of being fixed in any of the above ways, the
buyer is bound to pay reasonable price.
****What is reasonable price will vary from case to case
CONDITION & WARRANTY
In a contract of sale, parties make certain stipulations,
i.e., agree to certain terms regarding the quality of the
goods, the price and the mode of its payment, the
delivery of goods and its time and place
All stipulations cannot be treated on the same footing
Some may be intended by the parties to be of a
fundamental nature
Some may be intended by the parties to be binding, but
of a subsidiary or inferior character
STIPULATIONS AS TO TIME
Stipulations as to time in a contract of sale fall under the following
two heads:
1. Stipulation relating to time of delivery of goods
2. Stipulation relating to time of payment of the price
As regards the time fixed for the delivery of goods, time is usually
held to be the essence of the contract’. Thus if time is fixed for delivery
of the goods and the seller makes a delay, the contract is voidable at
the option of the buyer. In case of late delivery, therefore, the buyer
may refuse to accept the delivery and may put an end to the contract.
CONDITION & WARRANTY
A stipulation in a contract of sale with reference to
goods which are the subject thereof may be a
condition or a warranty.
A stipulation which is most important for formation
of the contract of sale is known as a ‘condition’.
A stipulation which is collateral or of least
importance for the formation of the contract of sale, is
known as a ‘warranty’.
CONDITION AND WARRANTY
CONDITION WARRANTY
1. Its is a term in 1. Its a term in contract
contract which is which is collateral.
essential.
2. When warranty
2. When condition breaches: Breach of
breaches: Breach of warranty cannot be
condition can be breach of condition.
breach of warranty
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CONDITION AND WARRANTY
The effect of a breach of a ‘condition’ is to give the
aggrieved party a right to treat the contract repudiated,
i.e., if price has been paid, the buyer can claim the
refund of price plus damages for breach
In case of breach of ‘warranty’, only damages can be
claimed, i.e., the buyer must accept the goods and claim
damages for the breach of warranty
EXPRESSED OR IMPLIED
‘CONDITIONS’ AND ‘WARRANTIES
Conditions’ and ‘Warranties’ may be either
expressed or implied.
They are “expressed” when the terms of the
contract expressly state them.
They are implied when, not being expressly
provided for.
IMPLIED CONDITIONS
Condition as to Title
Condition as to Description
Condition as to Sample
Condition as to Sample as well as Description
Condition as to Quality or Fitness for Buyer’s
purpose
Condition as to Merchantability
Condition as to Wholesomeness
IMPLIED ‘CONDITIONS
Condition as to Title [Sec 14(a)]
Example: A purchased a tractor from B who had no title to it. After 2
months, the true owner spotted the tractor and demanded it from A.
Held that A was bound to hand over the tractor to its true owner and
that A could sue B, the seller without title, for the recovery of the
purchase price.
Condition as to Description [Sec 15]
Example: A ship was contracted to be sold as “copper-fastened vessel”
but actually it was only partly copper-fastened. Held that goods did not
correspond to description and hence could be returned or if buyer took
the goods, he could claim damages for breach
Condition as to Sample [Sec 17(2)]
Example: A company sold certain shoes made of special sole
by sample for the French Army. The shoes were found to
contain paper not discoverable by ordinary inspection.
Held, the buyer was entitled to the refund of the price plus
damages.
Condition as to Sample as well as Description [Sec 15]
Example: A agreed with B to sell certain oil described as
refined sunflower oil, warranted only equal to sample. The
goods tendered were equal to sample, but contained a
mixture of hemp oil. B can reject the goods
Condition as to Quality or Fitness for Buyer’s
purpose [Section 16(1)]
Example: A purchased a hot water bottle from a
chemist. The bottle burst and injured his wife.
Held, breach of condition as to fitness was
committed and thus chemist was liable for
refund of price and the damages.
Condition as to Merchantability [Section 16(2)]
Example: When shoes are sold, merchantability
requires that the shoes have their heels attached
well enough, that they will not break of under the
normal use.
Condition as to Wholesomeness
Example: A supplied F with milk. The milk
contained typhoid germs. F’s wife consumed the
milk and was infected and died. Held, there was a
breach of condition as to fitness and A was liable to
pay damages.
CAVEAT EMPTOR
This means “LET THE BUYER BEWARE” i.e., the seller is
under no duty to reveal unflattering truths about the goods
sold.
Therefore, when a person buys some goods, be must examine
them thoroughly.
If the goods turn out to be defective or do not suit his purpose
or he depends upon his own skills and makes a bad decision,
he cannot blame the seller.
WHO IS AN UNPAID SELLER
A seller of goods is deemed to be an unpaid seller:-
When the whole of the price has not been paid or
tendered
When any negotiable instrument is dishonored
AUCTION SALE
A sale by auction is a public sale where different
intending buyers try to outbid each other.
Thegoods are ultimately sold to the highest
bidder.
The auctioneer who sells the goods by the
auction is an agent of the seller, i.e. the owner.
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