LEB MOD 2.pptx for master of business administration

Syllabus

1. MODULE 2 Sale of Goods

2. CONTENTS Sale of Goods Act Sale of goods Act, 1930- Contract of sale of goods-Meaning essentials of a contract for sale Formalities of a Contract of sale - Provisions relating to Conditions and Warranties Provisions Relating to Transfer of Property or Ownership - Provisions Relating to performance of contract of sale Rights of unpaid Seller - Rules as to delivery of Goods.

3. DEFINITION AND ESSENTIALS OF A CONTRACT OF SALE A contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price At least 2 parties Subject matter: goods Price is the consideration Ownership is involved

4. ESSENTIALS OF A CONTRACT OF SALE 1. There must be 2 parties 2. Transfer or agreement to transfer the ownership of goods 3. Subject matter of the contract must necessarily be goods 4. Price is the consideration of the contract of sale 5. A contract of sale may be absolute or conditional 6. All other essentials of a valid contract

5. 1. THERE MUST BE 2 PARTIES Sale has to be bilateral Property in goods has to pass from one person to another The seller and buyer cannot be the same person Example: A is the owner of a grocery shop. If he supplies goods (from the stock meant for sale) to his family, it does not amount to sale Exception: There can be a contract of sale between a part owner and another part owner Example: A and B jointly own a television set. A may transfer his ownership in the television set to anyone including B. A partner may buy goods from the firm in which he is a partner

6. 2. TRANSFER OR AGREEMENT TO TRANSFER In a contract of sale, Ownership is transferred – Sale Ownership is agreed to be transferred – Agreement to sell It is not mere transfer of goods – Eg: Pledge Hence the usage “Property in goods” An absolute transfer of ownership – Physical delivery of goods is not essential

7. SUBJECT MATTER : GOODS Subject matter of a contract of sale must be goods Goods – Every kind of movable property other than actionable claims (a claim which can be enforced by law: eg: book debt) and money 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 Every kind of movable property except actionable claims and money Contracts related to services are not considered to be contract of sale Sale and purchase of immovable property is governed by The Transfer of Property Act 1882

8. PRICE IS THE CONSIDERATION The buyer must pay some price for the goods Price – money consideration for a sale of goods Consideration in a contract of sale has necessarily to be in money When goods are offered in exchange of goods, it will not be sale but barter or exchange If a person offers goods to somebody else without consideration, it amounts to gift or charity and not sale Exception: Consideration can be partly in money and partly in valued up goods Payment is not necessary at the time of making the contract of sale

9. MAY BE ABSOLUTE OR CONDITIONAL Absolute : When the property is actually sold to the buyer and transferred completely, it is considered absolute Conditional : If the parties annex conditions to the contract, it is conditional.  Example: It is common for an auction sale of goods to include a clause stating that if the purchase price is not made within a certain period of time, the item may be resold. In this scenario, there is a real sale when the property is transferred to the buyer, but if the transaction is not completed, the seller retains ownership of the goods.

10. ALL OTHER ESSENTIALS OF A VALID CONTRACT Free consent, capacity to contract, lawful object etc.

11. GOODS AND THEIR CLASSIFICATION

12. GOODS Goods are every kind of movable property other than actionable claims and money Includes stock, shares, growing crops, grass and things attached to, or forming part of land, which are agreed to be severed before sale or under contract of sale Money and actionable claims, although movable, cannot be treated goods Exclusion: old coinage Need not be tangible – Goodwill, patents, copyrights, trademarks, gas, water etc. are all treated as goods

13. CLASSIFICATION OF GOODS Existing goods Future goods Contingent goods

14. EXISTING GOODS These are goods that are physically in existence at the time of entering the contract of sale Existing goods are those goods that are owned/possessed by the seller at the time of the contract of sale The seller is the owner – He has the general property in them The seller is in possession of the goods- he, as an agent, has the right to sell them even though the goods are not owned by him Existing goods may be Specific goods Ascertained goods Unascertained goods

15. Specific Goods Goods identified and agreed upon at the time of making the contract of sale Goods are not considered to be specific merely because they are identifiable, rather they must actually be identified Eg: If A agrees to sell his car to B, it will be specific goods only if A has only one car Ascertained goods The goods that have been ascertained or identified subsequent to the formation of the contract of sale Involves unconditional appropriation of the goods as the subject matter of a particular contract Eg: A deals with Enfield bikes and has 100 bikes in his showroom. He agrees to sell 40 bikes to Delhi police under an agreement to sell. If the buyer selects the 40 bikes and sets aside these 40 bikes – they are ascertained goods Unascertained goods These are goods that are not specifically identified or ascertained at the time of entering the contract of sale Identified or defined only by description Example: A timber merchant agrees to supply 40 chairs to a school. He has 100 chairs in his shop. Which of the chairs would be delivered is not identified

16. 2. FUTURE GOODS Goods that have to be manufactured, produced or acquired by the seller after making the contract of sale Goods that may not exist at the time of contract or They exist but have to be acquired by the seller at the time of contract Example A enters into a contract with B to buy all the apples that would be produced in B’s orchard over the next year Future goods can become a subject matter of an Agreement to sell and not a sale

17. 3. CONTINGENT GOODS Goods whose acquisition by the seller depends on a contingency, which may or may not happen A type of future goods with a minor difference that the future good are more certain to come to existence whereas contingent goods are less certain to come to existence Operates as an agreement to sell and not a sale Such a contract is enforceable only at the occurrence of the contingency – otherwise the contract is void Example A agrees to sell B a vintage car only if C, its present owner sells it to him.

18. CLASSIFICATION OF GOODS Existing goods Contingent Goods Future Goods Specific Goods Ascertained goods Unascertained goods

19. CONDITIONS AND WARRANTIES

20. Every contract is subject to terms and conditions to ensure consumer protection May be related to quality, use, utility, suitability, price, delivery etc Conditions – the terms which form the very basis of the contract of sale Warranties – Those obligations collateral to the main purpose of the contract 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 Hard core part of the contract Failure to fulfil can give the right to repudiate

21. EXAMPLE : CONDITION X goes to Y, a horse dealer and tells him that he wants a horse that can run 35 km/hr. Y points to a particular horse and says that this will suit his purpose. X buys the horse relying on his representation. Subsequently he finds that the horse can run only at 25 km/hr. This is a breach of condition. He can reject the horse and get back the price paid

22. KINDS OF CONDITION Express condition Implied condition 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 Condition as to merchantability Condition as to wholesomeness

23. EXPRESS VS. IMPLIED CONDITION Express Conditions: Conditions expressly provided or agreed upon by both the parties at the time of entering into a contract of sale Implied conditions: Conditions which the law incorporates as implicit to a contract od sale unless otherwise agreed upon by the parties Express condition does not negate an implied condition unless inconsistent therewith In case of conflict, express terms shall prevail over the implied ones To remember

24. 7 TYPES OF 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 Condition as to merchantability Condition as to wholesomeness

25. CONDITION AS TO TITLE A bought a tractor from B for a price. A goes on to use it for 3 months when C claims and proves to be the legal owner of the tractor. C demands the tractor back from A. The law holds that A is bound within the law to hand over the tractor to the real owner of the tractor. A has the right to sue B, for the recovery of the purchase price.

26. 1. CONDITION AS TO TITLE Applicable when the sale involves transfer of property in goods and possession Section 14(a) Unless the circumstances of the contract are such as to show a different intention, there is an implied condition that the seller in an actual sale has the right to sell the goods and in an agreement to sell , he/she will have the right to sell when the property is to pass. One cannot give what one does not have – Nemo dat quod non habet Exception: Can be disproved by express stipulation. Eg: Customs authorities disposing off any confiscated items

27. CONDITION AS TO DESCRIPTION

28. CONDITIONS AS TO DESCRIPTION Sometimes, goods are sold by description Section 15 Where there is a sale of contract for the sale of goods, there is an implied condition that the goods shall correspond with its description The goods supplied by the seller must be the same as described If subsequently, it was found that the goods supplied do not match the description the buyer has the right to reject the goods and claim the refund of the price if already paid Even if the buyer has seen the goods but he purchases relying on the description may be treated as a sale by description. Method of packing may also be part of the description

29. CONDITION AS TO SAMPLE The seller shows a sample of the goods to the buyer and agrees to supply the goods according to the sample In such a case, since the buyer buys the goods relying on the quality of goods from the sample, there is an implied condition that the goods supplied will be in accordance with the sample in quality There is an implied condition that: 1. The bulk shall correspond to the sample 2. The buyer shall be given a reasonable opportunity to examine the sample 3. The goods shall be free from any defect which may render them unmerchantable which would not be apparent on a reasonable examination of the sample

30. CONDITION AS TO SAMPLE AS WELL AS DESCRIPTION Where the goods are sold by a sample as well as by description the implied condition is that the bulk of the goods supplied must correspond both with the sample and the description In case the goods correspond with the sample but do not tally with the description or vice versa, the buyer can repudiate the contract. For example, A agrees to sell a certain oil described as refined rapeseed oil to B, warranted only equal to sample. The goods that A tenders are found to be equal to the sample but containing a mixture of hemp oil. In such a case B can reject the goods.

31. CONDITION AS TO QUALITY/FITNESS (SECTION 16) Generally there are no condition as to quality and fitness of goods that are sold for a particular purpose. The condition as to the reasonable fitness of goods for a particular purpose may be implied on the part of the seller for which the buyer wants them. Applicability If the buyer had made known to the seller the purpose of his purchase The buyer relied on the seller’s skill and judgment seller’s business is to supply goods of that description. Example A purchases a hot water bottle from a chemist. The bottle burst and injured A’s wife. A breach of condition as to the fitness was thus committed. Hence A is liable for a refund of the price and also the damages.

32. CONDITION AS TO MERCHANTABILITY Implied only when the sale is by description Goods should be of merchantable quality The goods must be such as are reasonably saleable under the description by which they are known in the market. Example A purchases a certain quantity of black yarn from B who is a dealer in yarn. A finds the black yarn to be damaged by the white ants. Thus the condition as to merchantability has been broken and A is entitled to reject it as unmerchantable.

33. CONDITIONS AS TO WHOLESOMENESS In the case of eatables and provisions, there is another implied condition that the goods shall be wholesome, in addition to the implied condition as to merchantability. Example A supplies B with milk. The milk contains bacteria and B’s wife consumes the milk and is diagnosed with a disease. She later succumbs to the disease. Hence, there was a breach of condition as to the fitness of the supplies and A was liable to pay damages to B in this case.

34. WARRANTY Warranty is a stipulation collateral to the main purpose of the contract the beach of which give rise to a claim for damages but not a right to reject the goods and treat the contract as repudiated Not essential to the main purpose of the contract Breach of warranty gives rise to claims for damages Does not give the right to reject the goods or repudiate the contract A (buyer) told B (shop keeper) that he wants to buy a good watch. B showed him a watch saying that it is made in Thailand. A buys the watch and later on realized that watch is made in China and not Thailand. There is breach of warranty because the stipulation made by the seller was not correct

35. KINDS OF WARRANTIES Express Warranty Warranty provided explicitly by the term of the contract of sale Implied Warranty Warranty which the law incorporates into a contract of sale Warranty as to quiet possession Warranty against encumbrances Warranty to disclose the dangerous nature of goods

36. 1. WARRANTY AS TO QUIET POSSESSION The buyer shall have the freedom to a possessed property without interference He is entitled to use the goods in the way he likes Implies that if the right of possession is disturbed by the seller or any other person, the buyer shall be entitled to sue the seller for damages Breach of this warranty is likely to occur where the seller’s title is defective or he has not conferred a clear right to effect sale Example: A purchased second hand typewriter from B. A thereafter spend some money on its repair and maintenance and used it for some time. Unknown to both the parties the type writer later turned out to be a stolen one. A had to return it to the owner. A was held entitled to recover damages from B amounting to not merely the price paid but also the cost of repair

37. 2. WARRANTY AGAINST ENCUMBRANCES Warranty that the goods are not subject to any charge or encumbrance in favour of a third party If the buyer’s possession is disturbed by the reason of existence of encumbrances, he can claim damage from the seller Example A old his scooter to B for Rs. 5000. The scooter was already hypothecated as security against a loan of Rs.3000. B was not aware of this. Consequently B had to pay Rs.3000 to X in order to enjoy the goods. Now B is entitled to claim this amount from A

38. 3. WARRANTY TO DISCLOSE DANGEROUS NATURE OF GOODS If the goods sold are inherently dangerous or likely to cause a mishap, the seller must warn the innocent buyer of the probable danger If there is a breach of this warranty, the buyer shall be entitled to claim compensation from the seller for any injury suffered by him on this count

39. WHAT IS ACCEPTANCE? Not mere possession of the goods 1. Buyer intimates to the seller that the goods are accepted 2. When the goods have been delivered to the buyer and the buyer does not act in relation to them which is not inconsistent with ownership 3. When after the lapse of time, the buyer retains the goods without intimating to the seller that the goods were rejected

40. CONDITION AND WARRANTY Condition Express Implied 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 Condition as to merchantability Condition as to wholesomeness Warranty Express Implied Warranty as to quiet possession Warranty against encumbrances Warranty to disclose the dangerous nature of goods

41. DOCTRINE OF CAVEAT EMPTOR “let the buyer beware” A principle that often places on buyers the burden to reasonably examine goods before purchase and take responsibility for its condition post purchase It is for the buyer to satisfy himself about the quality of the goods while entering into a deal with the seller. It is no part of the seller’s duty to point out the defects of the goods offered for sale.

42. EXCEPTION TO CAVEAT EMPTOR 1. Where the seller makes a misrepresentation and the buyer relies on it 2. Where the seller actively conceals a defect which is not visible on a reasonable examination 3. Where the buyer relying on the skills of the seller has expressly communicated the purpose of the goods and the goods does not fit the purpose 4. Where goods are bought by description 5. Where goods are sold by sample and the goods supplied does not correspond with the sample in quality 6. Sale of goods by sample as well as by description

43. DOCTRINE OF CAVEAT VENDITOR “Let the seller beware” Encourages seller to take responsibility for the product and discourages them to sell products of unreasonable quality The seller shall be under an obligation to inform the buyer of any defect in the goods sold at the time of the contract except in the case where the defect was obviously known to the buyer

44. TRANSFER OF OWNERSHIP AND DELIVERY

45. SIGNIFICANCE OF TRANSFER OF OWNERSHIPS The precise moment at which the transfer of ownership happens is very important 1. Risk ‘prima facie’ passes with property 2. Action against third parties 3. Suit for price 4. Insolvency of the buyer or seller

46. 1. RISK ‘PRIMA FACIE’ PASSES WITH PROPERTY Risk ‘prima facie’ follows ownership Section 26 of the act – Unless otherwise agreed the goods remain at the seller’s risk until the property therein is transferred to the buyer Once the property transferred the goods are at buyer’s risk whether the delivery is made or not If goods are lost in some accident whoever is the owner of the goods at that time shall bear the loss Exception Where the delivery has been delayed through the fault of either the buyer or seller, the goods are at risk of the party in fault as regard any loss which might not have occurred but for such fault

47. 2. ACTION AGAINST THIRD PARTY If after the contract of sale, there is a risk of the goods being damaged by the action of third parties, it is generally the owner who can take actions and not the person who is merely in possession of the goods 3. SUIT FOR PRICE Price being an integral part of the contract of sale the seller can sue the buyer for price when the property of good has passed to the latter

48. 4. INSOLVENCY OF BUYER OR SELLER If the buyer or seller becomes insolvent it is necessary to ascertain whether goods can be taken over by the ‘official receiver’ or ‘official assignee’ This depends on whether the property in goods was with the party adjudged insolvent If the buyer is adjudged insolvent, the buyer’s official assignee shall be entitled to take possession of the goods even though the goods have not been delivered by the seller If the seller becomes insolvent before delivery but the property in goods has been passed, the seller’s official assignee shall have no claim on the goods

49. PERFORMANCE OF A CONTRACT OF SALE OF GOODS

50. 1. DUTIES OF THE BUYER AND SELLER It is the duty of the seller to deliver the goods and the buyer to accept and pay for them (Section 31) If the buyer is not willing to pay the price, no delivery need to be given The buyer need not pay the price unless the seller is ready and willing to give delivery Unless otherwise agreed, delivery of the goods and payment of the price are concurrent conditions the seller shall be ready and willing to give possession of the goods to the buyer in exchange for the price, and the buyer shall be ready and willing to pay the price in exchange for possession of the goods.

51. 2. DELIVERY The voluntary transfer of possession from one person to another Anything that has the effect of putting the goods in possession of the buyer or any other person authorized Delivery can be Actual, symbolic or constructive Actual – The possession of the goods is handed over by the seller to the buyer Symbolic – Delivering some symbol that carries with it real possession or control over the goods (Eg: delivery of key) Constructive – There is neither change of physical possession of goods nor delivery of a symbol but there is only an acknowledgement by the person in possession (Eg: already in possession now owner)

52. RULES REGARDING DELIVERY 1. Delivery of part of goods sold may amount to delivery of the whole if it is so intended and agreed 2. Unless agreed otherwise, the seller is not bound to deliver goods, till the buyer applies for delivery 3. Place of delivery : Whether it is for the buyer to take possession of the goods or the seller to send them to the buyer is a question depending on each case of the contract – express or implied between the parties 4. Time of delivery : When no time is fixed, the seller is bound to send them within a reasonable time 5. Unless otherwise agreed the expenses of and incidental to putting the goods into a deliverable state shall be borne by the seller

53. 6. Demand for and tender of delivery must be at a reasonable hour 7. Delivery of wrong quantity : When the seller delivers a quantity less than he contracted to sell, the buyer can reject them. But, if the buyer accepts the goods he shall be required to pay for them at contract rates Where larger quantity is delivered, the buyer may accept gods included in the contract and reject the rest or he may reject the whole. If he accepts the whole, he has to pay the contract rates Where the goods of contract description are mixed with other goods , the buyer may accept the goods which are in accordance with the contract and reject the rest or may reject the whole 8. Instalment delivery – the buyer is not bound to accept instalment delivery unless otherwise agreed 9. Delivery to the carrier or wharfinger – Delivery of goods by the seller to a carrier or wharfinger for safe custody is deemed to be a delivery of the goods to the buyer unless the right of disposal is retained by the seller

54. 10. Where goods are delivered to buyer which he has not personally examined – he is not deemed to have accepted them unless he has reasonable opportunity of examining them 11. Buyer not bound to return the rejected goods – Unless otherwise agreed, when the goods are delivered to a buyer on sale or return basis and the buyer refuses to accept them, he is not bound to return them to the seller but it is his duty to inform that he has refused them 12. liability of the buyer – When the seller is ready and willing to deliver the goods and requests buyer to take delivery and the buyer does not, within a reasonable time after such requests, he is liable to seller for any loss occasioned by his neglect or refusal to take delivery and also for a reasonable charge for care and custody of goods

55. RIGHTS OF UNPAID SELLER

56. UNPAID SELLER Unpaid seller is a seller who has not received the full price of the goods sold by him The seller is deemed to be unpaid seller 1. When whole of the price has not been paid or rendered 2. When a bill of exchange or other negotiable instrument has been reeived as conditional payment and the condition has not been fulfilled by reason of dishonor of the instrument or otherwise NB Where a major part of the price has been paid and only a small portion remain unpaid, the seller is still deemed to be unpaid The seller ceases to be unpaid if the buyer has tendered whole of the price but the seller has refused to accept it A seller in terms of credit sales cannot be termed as unpaid unless the credit period has expired and the buyer has not paid the price in full During the credit period, if the buyer becomes insolvent the seller becomes an unpaid seller even before the expiry of the credit period If the price has been paid in full but some other expenses incidental to delivery remain unpaid, the seller cannot be termed unpaid

57. RIGHTS OF AN UNPAID SELLER Right against Goods Right against Buyer Right of lien or retention Right of stoppage in transit Right of resale Right to withhold delivery Suit for price Suit for damages for non acceptance Suit for repudiating contract before due date Suit for interest and special damage

58. 1. RIGHT OF LIEN OR RETENTION Lien – retaining the possession of the goods until the price due in respect of the same is paid or tendered Applicable only when the property of goods has been passed to the buyer An unpaid seller of goods who is in possession of the goods is entitled to retain them until payment or tender of price under the following conditions: 1. Where goods have been sold without any stipulation as to credit 2. Where the goods have been sold on credit but the term of credit has expired 3. Where the buyer becomes insolvent

59. RULES REGARDING THE RIGHT OF LIEN 1. The seller must possess the goods – Right of lien is lost with the possession of goods 2. In case of cash sale : When goods are sold without any stipulation of credit, the unpaid seller can retain the goods if the buyer fails to make full payment on delivery 3. In case of credit sale: The seller may retain goods if the buyer fails to pay the whole price upon expiry of the credit period 4. In case of buyer insolvency: When the buyer becomes insolvent, the seller can retain the goods 5. In case of part delivery: When the unpaid seller has made part delivery of the goods, he may exercise his right of lien on the remainder 6. Subject matter price: The right of lien can be exercised only against non payment of price 7. Right of lien is absolute : Unpaid seller is entitled to refuse to deliver a part of the goods against payment of a proportionate price by the buyer 8. Where the seller has obtained a decree for the price of goods: Unpaid seller does not lose his lien by the reason that he has obtained a decree for the recovery of price

60. TERMINATION OF LIEN 1. When the unpaid seller delivers the goods to a carrier or other bailee for subsequent transmission of the same without reserving the right of disposal of goods 2. when the buyer or his agent obtains lawful possession of the goods 3. The lien is lost by waiver thereof 4. by tender of price by the buyer 5. By subsequent sale by the buyer – the property of goods has been passed to the buyer and it transfers to someone else who obtains it for consideration and the seller has assented to it

61. 2. RIGHT OF STOPPAGE IN TRANSIT Implies preventing the goods from being delivered to the buyer, resuming possession thereof, while in transit and retaining them until payment or tender of the price The right is earned only when the right of lien is lost When the buyer of the goods become insolvent, the unpaid seller who has parted with the possession of goods has the right to stopping them in transit and may retain them until payment Conditions 1. The seller is unpaid 2. The property has passed to the buyer 3. The buyer becomes insolvent 4. The goods are in transit How? 1. By taking actual possession of goods 2. By giving notice of his claim to the carrier or other bailee in whose possession the goods are

62. 3. RIGHT OF RESALE Section 54 – A seller who is in possession of the self sold goods that have not been paid for by the buyer is entitled to resell them in the following circumstances Where the goods are of perishable nature Where the seller expressly reserves such right Where the unpaid seller gives notice to the buyer of his intention to resell

63. 4.RIGHT TO WITHHOLD DELIVERY Where the property in goods has not passed to the buyer the unpaid seller has a right to withhold delivery

64. Right against Goods Right of lien or retention Right of stoppage in transit Right of resale Right to withhold delivery

65. Right against Buyer Suit for price Suit for damages for non acceptance Suit for repudiating contract before due date Suit for interest and special damage

66. 1. SUIT FOR PRICE Where under a contract of sale the property in goods has passed to the buyer and he/she wrongfully neglects or refuses to pay for the goods as per the terms of the contract the seller may sue him/her for the price of goods If the property in goods has not passed to the buyer, the seller can only sue for damages; he cannot file a suit for price Section 55(2) – Where under a contract of sale the price is payable on a certain day irrespective of the delivery and the buyer wrongfully neglects or refuses to pay such price, the seller may sue him for price although the property in goods has not passed

67. 2. SUIT FOR DAMAGES OF NON ACCEPTANCE Where the buyer wrongfully neglects or refuses to pay for the goods, the seller may sue him for the damages for non acceptance Sections 73 and 74 Where the goods have a ready market the seller may recover from the buyer damages equal to the difference between contract price and market price on the date of breach of contract if the market price exceed the contract price Where the goods do not have a ready market the measure of damages will depend on the facts of each case – The damages will be equal to the estimated loss arising directly and naturally in the ordinary course of events

68. 3. SUIT FOR DAMAGES FOR REPUDIATING CONTRACT BEFORE DUE DATE If the buyer repudiates the contract before the due date of delivery of goods, the seller may either treat the contract as subsisting or wait until the due date of delivery, or he may treat the contract as rescinded and sue for damages for the breach Treat the contract as subsisting and wait for due date – the buyer may demand the goods when the date of delivery arrives and the seller will be bound to deliver the goods. In such a case, the seller can claim damages only if the buyer repudiates the contract on the due date of delivery of goods

69. 4. SUIT FOR INTEREST AND SPECIAL DAMAGES Section 61 – entails an unpaid seller to recover interest or special damages in any case where by law, interest or special damages may be recoverable In the absence of a contract to the contrary the court may award interest at a reasonable rate to the seller on the amount he is entitled to recover from the buyer Applicable only when he is entitled to recover the price not when he has only claim to damages

70. END OF MODULE 2