LEGAL ASPECTS OF BUSINESS - UNIT 3 (1).pdf

Law of Sale of Goods Act,1930 Definition - Difference between Sale andAgreement - Types of Goods - Agreement to sell - Law of sale of goods - Pricing of Goods - Documents of Title of Goods - Classification of goods - Conditions Definition- Warranties Definition - Distinguished between Conditionand warranties - Doctrine of
Caveat Emptor - Transfer of property - Title of goods -Rights of unpaid Seller - Rights and duties of Buyer - Discharge of Contract Meaning & Definition - DischargeBy Performance - Discharge By Agreement - Discharge by Impossibilityof
performance - Discharge by Lapse of Time - Discharge by Operation of Law- Discharge by Breach of Contract - Distinction between Novation and Alteration- Distinction between Recession and Remission - Remedies for Breach of contract
Meaning & Definition - Recession of Contract - Damage - Rules regarding Damages - Suit upon Quantum Merit.

1. LEGALASPECTSOFBUSINESS-UNIT3
LawofSaleofGoodsAct,1930Definition-DifferencebetweenSaleandAgreement-
TypesofGoods-Agreementtosell-Lawofsaleofgoods-PricingofGoods-
DocumentsofTitleofGoods-Classificationofgoods-ConditionsDefinition-
WarrantiesDefinition-DistinguishedbetweenConditionandwarranties-Doctrineof
CaveatEmptor-Transferofproperty-Titleofgoods-RightsofunpaidSeller-
RightsanddutiesofBuyer-DischargeofContractMeaning&Definition-Discharge
ByPerformance-DischargeByAgreement-DischargebyImpossibilityof
performance-DischargebyLapseofTime-DischargebyOperationofLaw-
DischargebyBreachofContract-DistinctionbetweenNovationandAlteration-
DistinctionbetweenRecessionandRemission-RemediesforBreachofcontract
Meaning&Definition-RecessionofContract-Damage-RulesregardingDamages-
SuituponQuantumMerit.
LAWOFSALEOFGOODSACT,1930DEFINITION
AccordingtoSection4(1),acontractofsaleofgoodsisacontractwherebytheseller
transfersoragreestotransferthepropertyingoodstothebuyerforaprice.Acontract
ofsalemaybeabsoluteorconditional.Theterm'contractofsale'isageneralterm
andcomprisesof:(1)Sale;and(2)Agreementtosell
ESSENTIALSOFACONTRACTOFSALE
1. Bilateralcontract:Itisabilateralcontractbecausethepropertyingoods
hastopassfromonepartytoanother.Apersoncannotbuythegoodshimself.
2. Transferofproperty:Theobjectofacontractofsalemustbethetransfer
ofproperty(meaningownership)ingoodsfromonepersontoanother.
3. Goods:Thesubjectmattermustbesomegoods.
4. Priceormoneyconsideration:Thegoodsmustbesoldforsomeprice,
wherethegoodsareexchangedforgoodsitisbarter,notsale.
5. Allessentialelementsofavalidcontractmustbepresentinacontractof
sale.

2. DIFFERENCEBETWEENSALEANDAGREEMENT
TYPESOFGOODS
AccordingtoSection2(7),"goodsmeanseverykindofmovablepropertyotherthan
actionableclaimsandmoney;andincludesstockandshares,growingcrops,grass,
andthingsattachedtoorformingpartofthelandwhichareagreedtobeservedbefore
saleorunderthecontractofsale."Goodwill,trademarks,copyrights,patentsright,
water,gas,electricity,decreeofacourtoflaw,areallregardedasgoods.Sharesand
stockarealsoincludedingoods.

3. Existinggoods:Goodswhicharephysicallyinexistenceandwhichareinseller's
ownershipand/orpossession,atthetimeofenteringthecontractofsalearecalled
'existinggoods'
(a)Specificgoods:Goodsidentifiedandagreeduponatthetimeofthemakingofthe
contractofsalearecalled'specificgoods'[Sec.2(14)].Forexample,whereAagrees
toselltoBaparticularphone,bearingadistinctivenumber,thereisacontractofsale
ofspecificorascertainedgoods.
(b)Unascertainedgoods:Thegoodswhicharenotseparatelyidentifiedorascertained
atthetimeofthemakingofthecontractareknownas'unascertainedgoods.Theyare
indicatedordefinedonlybydescription.Forexample,ifAagreestoselltoBonebag
ofsugaroutofthelotofonehundredbagslyinginhisgodown,itisasaleof
unascertainedgoodsbecauseitisnotknownwhichbagistobedelivered.
Futuregoods:Goodstobemanufactured,producedoracquiredbythesellerafterthe
makingofthecontractofsalearecalled'futuregoods'[Sec.2(6)].eg)Xagreestosell
toYallthemangoeswhichwillbeproducedinhisgardennextyear.Itiscontractof
saleoffuturegoods,amountingto'anagreementtosell!
Contingentgoods:Goods,theacquisitionofwhichbythesellerdependsuponan
uncertaincontingencyarecalled
'contingentgoods'[Sec.6(2)].Examples:AagreestoselltoBaspecificrarepainting
providedheisabletopurchaseitfromitspresentowner.contingentgoodsalso
operatesas'anagreementtosell'andnota'sale'.

4. PRICINGOFGOODS
Pricingofgoodsinbusinesslawreferstothelegalprinciplesandregulationsthat
governhowbusinessessetthepricesfortheirproducts.Theselawsensurefair
competition,preventdeceptivepractices,andprotectconsumersfromprice
exploitation.
1.PriceFixing:Pricefixingoccurswhentwoormorecompetingcompaniesagreeto
setpricesatacertainlevelratherthanallowingcompetitiontodeterminethem.
Example:Iftwomajorairlinesagreetosetthepriceofaround-tripticketbetween
twocitiesat$500,regardlessofmarketconditions,theyareengaginginpricefixing.
Thisisillegalunderantitrustlawsbecauseitunderminescompetitionandharms
consumersbykeepingpricesartificiallyhigh.
2.PredatoryPricing:Predatorypricinginvolvessettingpricesextremelylowwiththe
intenttoeliminatecompetitorsandthenraisingpricesoncethecompetitionhasbeen
drivenoutofthemarket.
Example:Alargesupermarketchainstartssellingmilkat$0.50pergallon,
significantlybelowthecostofproduction,withthegoalofdrivingasmallerlocal
dairyoutofbusiness.Oncethelocaldairygoesbankrupt,thesupermarketraisesthe
priceofmilkto$3.00pergallon.Thispracticeisillegalbecauseitaimstounfairly
eliminatecompetitionandcreateamonopoly.
3.PriceDiscrimination:Pricediscriminationoccurswhenasellerchargesdifferent
pricestodifferentbuyersforthesamegoodsorservices,wherethepricedifferences
arenotjustifiedbydifferencesincost.
Example:AmanufacturersellsidenticalproductstotworetailersbutchargesRetailer
A$10perunitandRetailerB$15perunitwithoutanycost-basedjustification.This
canbeillegalundertheRobinson-PatmanActifitharmscompetitionorcreatesa
monopoly.

5. 4.DeceptivePricing:Deceptivepricinginvolvesmisleadingconsumersaboutthe
truepriceofaproductorthenatureofapricereduction.
Example:Aretaileradvertisesa"50%off"saleonaproduct,butinreality,the
productwasneversoldatthehigheroriginalprice.Thispracticeisconsidered
deceptivebecauseitmisleadsconsumersaboutthevalueofthediscount.
5.MinimumResalePriceMaintenance:Minimumresalepricemaintenance(RPM)
involvesamanufacturersettingaminimumpricethatretailersmustchargeforits
products,preventingretailersfromsellingbelowthatprice.
Example:Aclothingmanufacturerrequiresallretailerstosellaspecificlineof
jacketsfornolessthan$200.Ifaretailertriestosellthejacketfor$180,theyare
violatingtheRPMagreement.WhileRPMagreementsarescrutinizedunderantitrust
laws,theycansometimesbelegaliftheypromotecompetitionbyimprovingservice
orproductquality.
6.SuggestedRetailPrice(SRP):SuggestedRetailPrice(SRP)isthepricea
manufacturerrecommendsretailerschargeforaproduct.UnlikeRPM,itisnot
binding.
Example:Asmartphonemanufacturersuggeststhatretailerssellitsnewmodelfor
$799.Retailerscanchoosetosellthesmartphoneatthisprice,higher,orlower,
dependingontheirownpricingstrategy.
DOCUMENTSOFTITLEOFGOODS
Documentsoftitleofgoodsarelegaldocumentsthatprovideproofofownershipor
entitlementtothepossessionofgoods.Thesedocumentsplayacrucialrolein
commercialtransactions,particularlyininternationaltrade.Theyfacilitatethetransfer
ofownershipandpossessionofgoodswithoutphysicallymovingthegoods
themselves.

6. 1.BillofLading:Abillofladingisadocumentissuedbyacarriertoashipper,
acknowledgingthatgoodshavebeenreceivedfortransportandoutliningthetermsof
theshipment.Itservesasareceiptforthegoods,adocumentoftitle,andacontractof
carriage.
Example:AcompanyinChinashipselectronicstoabuyerintheUnitedStates.The
shippingcompanyissuesabillofladingtotheseller,detailingthequantityandtype
ofelectronics,thedestination,andthetermsofdelivery.Thebuyercanusethebillof
ladingtoclaimthegoodsuponarrival.
2.WarehouseReceipt:Awarehousereceiptisissuedbyawarehouseoperatoror
storagefacility,acknowledgingthatgoodshavebeenreceivedandarebeingstored.It
canbenegotiableornon-negotiable.
Example:Afarmerdepositsalargequantityofgraininastoragefacility.Thefacility
issuesawarehousereceipttothefarmer,confirmingthetypeandamountofgrain
stored.Thefarmercanusethereceiptascollateralforaloanortransferittoanother
partyasproofofownership.
3.DockWarrant:Adockwarrantisadocumentissuedbydockauthoritiesor
warehouseoperators,indicatingthatspecificgoodshavebeendepositedinadock
warehouse.Itservesasadocumentoftitleandisoftenusedincommoditytrading.
Example:Atraderimportsashipmentofcoffeebeans,whicharestoredatadock
warehouseuponarrival.Thedockauthorityissuesadockwarranttothetrader,which
thetradercanthenusetosellortransferownershipofthecoffeebeans.
4.DeliveryOrder:Adeliveryorderisadocumentissuedbyashipper,carrier,or
freightforwarderinstructingawarehouseorterminaltoreleasegoodstoaspecified
party.
Example:Aretailerordersclothingfromamanufactureroverseas.Uponarrivalatthe
port,thefreightforwarderissuesadeliveryordertotheportwarehouse,instructing
themtoreleasetheclothingtotheretailerortheirrepresentative.

7. 5.AirwayBill:Anairwaybillisadocumentissuedbyanairlineoritsagent,
acknowledgingthereceiptofgoodsforairtransportandoutliningthetermsand
conditionsofthecarriage.
Example:AnexportershipsaconsignmentofpharmaceuticalsbyairfromIndiato
theUnitedKingdom.Theairlineissuesanairwaybill,detailingtheshipment's
contents,destination,andterms.
CLASSIFICATIONOFGOODS
1.ClassificationBasedonPhysicalCharacteristics:
a.TangibleGoods:Tangiblegoodsarephysicalitemsthatcanbetouched,seen,and
measured.Examples:Furniture,electronics,clothing,vehicles.
b.IntangibleGoods:Intangiblegoodsarenon-physicalitemsthatcannotbetouched
buthavevalue.Examples:Software,patents,copyrights,trademarks.
2.ClassificationBasedonUsage:
a.ConsumerGoods:Consumergoodsareproductspurchasedbyindividualsfor
personalorhouseholduse.Examples:Groceries,appliances,personalcareproducts.
b.IndustrialGoods:Industrialgoodsareproductsusedintheproductionofother
goodsorinbusinessoperations.Examples:Machinery,rawmaterials,officesupplies.
3.ClassificationBasedonDurability:
a.DurableGoods:Durablegoodsareitemsthathavealonglifespananddonotneed
tobepurchasedfrequently.Examples:Cars,furniture,appliances.
b.Non-DurableGoods:Non-durablegoodsareitemsthatareconsumedquicklyand
needtobereplacedoften.Examples:Food,beverages,paperproducts.
4.ClassificationBasedonRelationshiptoProduction:
a.CapitalGoods:Capitalgoodsarelong-termassetsusedbybusinessestoproduce
goodsandservices.Examples:Factoryequipment,buildings,machinery.
b.IntermediateGoods:Intermediategoodsareproductsusedasinputsinthe

8. productionofothergoods.Examples:Steel(usedtomakecars),flour(usedtomake
bread).
c.FinishedGoods:Finishedgoodsareproductsthathavecompletedthe
manufacturingprocessandarereadyforsaletoconsumersorbusinesses.Examples:
Smartphones,packagedfoodproducts,clothing.
5.ClassificationBasedonMobility:
a.MovableGoods:Movablegoodsareitemsthatcanbemovedfromonelocationto
another.Examples:Vehicles,furniture,electronics.
b.ImmovableGoods:Immovablegoodsareitemsthatareattachedtotheearthand
cannotbemoved.Examples:Land,buildings,realestate.
6.ClassificationBasedonOwnershipandUse:
a.PrivateGoods:Privategoodsareownedbyindividualsorbusinessesandtheiruse
isrestrictedtotheowner.Examples:Personalvehicles,privately-ownedbusinesses,
personalbelongings.
b.PublicGoods:Publicgoodsareownedbythegovernmentorthecommunityand
areavailableforpublicuse.Examples:Publicparks,highways,streetlighting.
7.ClassificationBasedonLegalFramework:
a.SpecificGoods:Specificgoodsareidentifiedandagreeduponatthetimeofthe
contractofsale.Examples:AparticularcarwithaspecificVIN,aspecificpieceof
artwork.
b.UnascertainedGoods:Unascertainedgoodsarenotidentifiedoragreeduponatthe
timeofthecontractofsale.Examples:Abulkorderofagenericproductlikegrainor
oil.
8.ClassificationBasedonTradePractices:
a.MerchantableGoods:Merchantablegoodsarethosethatarefitforsaleandmeet
thestandardsexpectedbythemarket.Examples:Freshproduce,factory-sealed
electronics.
b.Non-MerchantableGoods:Non-merchantablegoodsarethosethatdonotmeetthe
marketstandardsandarenotfitforsale.Examples:Defectiveproducts,spoiledfood
items.

9. CONDITIONSDEFINITION
AccordingtoSection12(2)oftheSaleofGoodsAct,1930:
"Aconditionisastipulationessentialtothemainpurposeofthecontract,thebreach
ofwithgivestheaggrievedpartyarighttotreatthecontractasrepudiated".
Forexample:xconsultsy,awaterpurifierdealerforagoodpurifier.Shamsuggestz
andaccordinglybuysitfromx.Thezturnsouttobeunfitfordrinkingpurposes.
WARRANTIESDEFINITION
Warranty(Section12(3))
Warrantyistheadditionalstipulationandawrittenguaranteethatiscollateraltothe
mainpurposeofthecontract.Theeffectofabreachofawarrantyisthatthe
aggrievedpartycannotrepudiatethewholecontracthowever,canclaimforthe
damages.
DISTINGUISHEDBETWEENCONDITIONANDWARRANTIES

10. DOCTRINEOFCAVEATEMPTOR
DoctrineofCaveatEmptor(buyerisresponsibleforwhathedo)
Theterm"CaveatEmptor"isaLatintermwhichmeans,letthebuyerbeware.Inother
wordsitisnopartoftheseller'sdutytopointoutdefectofthegoodwitchheoffers
forsale,ratheritisthedutyofthebuyertosatisfyhimselfaboutthequalityaswellas
thesuitabilityofthegoods.
Thepersonwhobuysgoodsmustkeephiseyesopen,hismindactiveandshouldbe
cautionswhilebuyingthegoods.Ifhemakesabadchoicehemustsufferthe
consequencesoflackofskillandjudgementintheabsenceofanymisrepresentation
orguaranteebytheseller.
EssentialsofDoctrineofCaveatEmptor:
1.Itisthedutyofthebuyertothoroughlyexaminethegoods
2.Buyercan'tblameanyoneifgoodsturnouttobedefectiveordonotservehis
purpose
3.Sellerisundernoobligationtorevealdefects
4.Thereisnoimpliedundertakingbythesellerthatheshallsupplythegoodswhich
willsuitthebuyer'spurpose
TRANSFEROFPROPERTY
Thetransferofpropertyreferstothelegalprocessoftransferringownershiporan
interestinpropertyfromonepartytoanother.Thiscanincluderealproperty(landand
buildings)orpersonalproperty(movableobjects).
1. TransferofPropertyAct,1882:InIndia,theTransferofPropertyAct,1882,
governsthetransferofproperty.Itoutlinesthevariouswayspropertycanbe
transferred,includingsale,lease,mortgage,gift,andexchange.
2. ModesofTransfer:
Sale:Transferofownershipinexchangeforapricepaidorpromised.

11. Lease:Transferoftherighttoenjoypropertyforacertainperiodin
exchangeforrent.
Mortgage:Transferofaninterestinpropertyassecurityforaloan.
Gift:Transferofpropertywithoutconsideration.
Exchange:Mutualtransferofownershipofonethingforthe
ownershipofanother.
TITLEOFGOODS
Thetitleofgoodsreferstothelegalownershipofgoods.Thetitledetermineswhohas
therighttopossess,use,anddisposeofthegoods.
1. PassingofTitle:Thepointatwhichownershipofgoodspassesfrom
thesellertothebuyer.Thisiscrucialindeterminingtheriskandliability
associatedwiththegoods.
2. SaleofGoodsAct,1930:InIndia,theSaleofGoodsAct,1930,
governsthetransferoftitleingoods.Itspecifiesconditionsunderwhichthe
titleistransferred.
3. ConditionsandWarranties:Conditionsarestipulationsessentialto
themainpurposeofthecontract,whilewarrantiesarestipulationscollateralto
themainpurpose.Breachofconditionscanleadtotherepudiationofthe
contract,whilebreachofwarrantiesmayleadtodamages.
4. SpecificGoodsvs.UnascertainedGoods:
1. SpecificGoods:Goodsidentifiedandagreeduponatthetimea
contractofsaleismade.
2. UnascertainedGoods:Goodsthatarenotidentifiedand
agreeduponatthetimeofthecontractofsale.
RIGHTSOFUNPAIDSELLER
Thesellertowhomthefullpriceofthegoodssoldhasnotbeenpaidthepriceis
knownasanunpaidseller.
Asellerofgoodsisdeemedtobeunpaidinthefollowingcases:
Thepricemustbeduebutnotpaid.

12. Anegotiableinstrumentlikechequeandbillofexchangewasreceivedbutthe
samehasbeendishonoured.
Whenthesellerhasbeenpaidalargeamountbutasmallportionofthepayment
remainstobepaid.
Whenthepricehasbeenpaidbutsomeotherexpenseswhichwerepayabletothe
sellerhasnotbeenpaid.
Example:AsellsgoodsworthRs1,00,000toBonthecreditofsixmonths.Aftersix
months,Bdidnotpaytheprice.Ashallberegardedasanunpaidseller.
Rightofpossession/lien
TheRightofLienmeans,therighttoretainthepossessionofthegoodsuntilthe
chargesorthefullpricehasbeenpaid.
Thisrightisavailabletotheunpaidsellerwherethegoodshavebeentransferredto
thebuyer.Thisisbecauseliendependsonpossession.Evenifthesellerhashanded
overthedocumentsoftitletothebuyer,thelienisnotaffected.
"AccordingtoSection47,theunpaidsellercanexercisealien,onlywhenthe
followingconditionsaresatisfied:
o Wherethegoodshavebeensoldwithoutstipulationastocredit;or
o Wherethegoodshavebeensoldoncreditbutthetermofcredithas
expired;or
o Whenthebuyerhasbecomeinsolvent."

13. RightofStoppageinTransit
Therightofstoppageintransitisanextensionoftherightoflien.Therightoflienis
arighttoretainthepossession,whereastherightofstoppageintransitisarightto
regainthepossession.
Durationoftransit(Section51)
o AsSeller'sAgent:Inthiscase,thesellerhasalienonthegoods,soquestion
ofrightofstoppageintransitdoesnotarise.
o AsBuyer'sAgent:Inthiscase,thesellercannotexercisetherightofstoppage
intransit.
o InanIndependentCapacity:Inthiscase,sitfromthetimetheyaredelivered
toacarrierforthepurposeoftransmissiontothebuyer,untilthebuyerorhisagent
takestheirdelivery.
RightofResale
Section54indicatesthat"theunpaidsellerhastherightofresale."Whentheseller
useshisrightoflienorstoppageintransit,thecontractcontinuestoremaininforce
andthebuyercanclaimdeliveryofgoodsbypayingforthegoods.Thesellerisnot
expectedtowaitindefinitelyforthebuyertomakethepayment.However,just
becausethesellerisunpaid,thepropertyinthegoodscannotpasstotheunpaidseller
again.Thebuyerhastherighttotheproperty,andhehastheoptiontopaytheprice
andtakethedeliveryofgoodsatanytime.
Thesellerhastherighttoresellthegoodsinthefollowingcase:
Wherethegoodsareofperishableandwilllosevalueinashorttime:theunpaid
sellercanresellthegoods,insuchasituationwherebuyerfailstopaytheprice
withinareasonabletime.
Wheretheunpaidsellerhasusedhisrightoflienorofstoppageintransitand
givesnoticetothebuyerofhisdecisiontoresellthegoods:theunpaidsellermay,
ifthebuyerdoesnotpayortenderthepricewithinareasonabletime,resellthe
goods.

14. RIGHTSOFTHEUNPAIDSELLERAGAINSTTHEBUYER
SuitforPrice:Itisthefirstandforemostrightofanunpaidselleragainstthe
buyer.Itisusedwheneverthesellerhasdeliveredallhisgoalstothebuyer,and
thebuyerrefusestopaytheamountthenhecanmakeuseofhisrightandfilea
caseagainstthebuyerbysuingforprice.Thesalesofgoodsactclearlytoexplain
thatthesellerhastoreceivethepaymentfromthebuyerafterdeliveringthe
goods.
SuitforDamages:Thisrightisbeneficialtothesellerwhenthebuyerrefusesto
takethegoods,anditcausescertaindamagetothegoodsthenthesellercanfile
againstthebuyerforthedamageofgoodsbecauseofhisnon-acceptance.For
instance,foodproducts,dairyproductswillgetdamagedifthebuyerrefusesto
takethem,oncetheorderhasbeenplaced.
SuitforInterest:Generally,thebuyerandsellerwillmakeacontractor
agreementtoprovidegoodsatoneparticulartime,andthepaymentwillbemade
afterbeingsure.Oftimewithinterestrate.Thiscontractismadewiththe
acceptanceofbothparties.Butifthebuyerrefusestopayinterestorlessrateof
interestduringthetimeofpayment,thenthesellerhasarighttosueforthe
interestforgoodsthathehasdeliveredearlier.
RejectionofContract:Ifthebuyerrefusestocontinuethecontractorifherejects
thecontractinthemiddleitselfwithoutanypriornoticeandgenuinereason,the
sellerhastherighttosueforthecontradictionofthecontractbeforetheduedate.
ItisalsoavailableintheIndiancontractactduetothenameofanticipatory
breachofcontract.
RIGHTSANDDUTIESOFBUYER
RightsoftheBuyer
1.RighttoReceiveGoods:
-Thebuyerhastherighttoreceivethegoodsasperthecontractofsale.
-Thegoodsmustconformtothedescription,quality,andquantityagreedupon.

15. 2.RighttoExamineGoods:
-Thebuyerhastherighttoexaminethegoodstoensuretheymeetthecontractual
terms.
-Thisrightisparticularlyimportantifthegoodsaredeliveredinbulk.
3.RighttoRejectGoods:
-Ifthegoodsdonotconformtothecontract,thebuyerhastherighttorejectthem.
-Thisincludesgoodsthataredefective,ofinferiorquality,ornotasperthe
description.
4.RighttoClaimDamages:
-Ifthesellerbreachesthecontract,thebuyerhastherighttoclaimdamagesforany
losssuffered.
-Thismayincludecompensationfordirectlossesaswellasconsequentialdamages.
5.RighttoDeliveryofGoods:
-Thebuyerhastherighttodemanddeliveryofgoodswithintheagreedtimeframe.
-Ifthesellerfailstodeliverontime,thebuyermayclaimdamagesorcancelthe
contract.
6.RighttoSueforSpecificPerformance:
-Incertaincases,thebuyercansuethesellertocompelthemtoperformthe
contractasagreed.
-Thisisusuallyapplicablewhenthegoodsareuniqueorirreplaceable.
7.RighttoClaimRefund:
-Ifthebuyerhaspaidforthegoodsandthesellerfailstodeliver,thebuyerhasthe
righttoclaimarefund.
DutiesoftheBuyer
1.DutytoAcceptandPayforGoods:
-Theprimarydutyofthebuyeristoacceptthegoodsandpayforthemasperthe
contract.

16. -Paymentshouldbemadeattheagreedtimeandplace.
2.DutytoTakeDelivery:
-Thebuyermusttakedeliveryofthegoodswithinthetimespecifiedinthecontract.
-Failuretotakedeliverymayleadtoadditionalcostsforstorageorriskof
deterioration.
3.DutytoExamineGoods:
-Upondelivery,thebuyermustexaminethegoodstoensuretheyconformtothe
contract.
-Thisdutyhelpsinidentifyinganydefectsordiscrepanciespromptly.
4.DutytoNotifySellerofRejection:
-Ifthebuyerrejectsthegoods,theymustnotifythesellerwithinareasonabletime.
-Thenoticeshouldspecifythereasonsforrejection.
5.DutytoPayDamagesforWrongfulRefusal:
-Ifthebuyerwrongfullyrefusestoacceptandpayforthegoods,theymaybeliable
topaydamagestotheseller.
-Thisincludescompensationforanylosssufferedbythesellerduetothebuyer’s
breach.
6.DutytoBearRiskPost-Delivery:
-Oncethegoodsaredeliveredandaccepted,theriskoflossordamagepassestothe
buyer.
-Thebuyermustbearanyriskassociatedwiththegoodsafteracceptance.
7.DutytoCooperatewiththeSeller:
-Thebuyermustcooperatewiththesellerinfulfillinganytermsofthecontractthat
requirejointaction.
-Thisincludesprovidingnecessaryinformationandfacilitatingthedeliveryprocess.

17. DISCHARGEOFCONTRACTMEANING&DEFINITION
Thedischargeofacontractreferstotheterminationofthecontractualobligations
betweenthepartiesinvolved.Whenacontractisdischarged,thepartiesarenolonger
boundbythetermsofthecontractandarereleasedfromtheirduties.Thiscanoccur
inseveralways,eachofwhichhasspecificlegalimplications.
Meaning&Definition
DischargeofContract:Thedischargeofacontractoccurswhenthepartiestothe
contractarefreedfromtheirmutualobligations.Thiscanbeachievedthroughvarious
means,includingperformance,agreement,frustration,breach,oroperationoflaw.
Oncedischarged,thecontractceasestohaveanylegaleffect,andthepartiesareno
longerliabletoperformtheircontractualduties.
DISCHARGEBYPERFORMANCE
ActualPerformanceWhenboththepartiesperformtheirperformance,thenthe
contractissaidtobedischarged.Majorityofthecontractsaredischargedby
performanceinthismanner.
AttemptedPerformanceAttemptedperformanceisonlyanoffertoperformthe
obligationunderthecontract.Whenthepromisoragreestoperformthecontractbut
thepromiserefusestoaccepttheperformance,theninsuchcase,itistermedas
dischargeofcontractbyattemptedperformanceortender.
DISCHARGEBYAGREEMENT
Novation:Thetermnovationmeansthesubstitutionofthenewcontractbythe
originalone.Thenewagreementmaybewiththesamepartiesorwiththenewparties.
Alterationmeanschangeinoneormoreofthematerialtermsofacontractwhich
leadstoformationofnewcontractsbutthepartiestoitremainthesame.

18. Remission:Thismeanstheacceptancebythepromiseofalessersumthanwhatwas
mentionedinthecontract,oralesserfulfillmentofthepromisemade.
Recession:Thetermrecessionreferstocancellationofallorsomeofthematerial
termsofthecontract.Ifthepartiesenteredintothecontract,mutuallyagreedtodoso,
theninsuchcasetherespectivecontractualagreementofthepartiesgetsterminated.
Waiver:Thewaiverreferstoavoluntaryabandonmentorsurrenderoftherightsor
privilegeofthecontract.
DISCHARGEBYIMPOSSIBILITYOFPERFORMANCE
Ifitisimpossibleforanyofthepartiesenteredinthecontracttoperformtheir
obligations,thentheimpossibilityofperformanceofcontractleadstodischargeof
contract.
1.Destructionofsubject-matter.
1. Failureofultimatepurpose.
2. Deathorpersonalincapacityofpromisor.
3. Changeoflaw.
4. Outbreakofwar.
Example:JohnentersintothecontractwiththisfriendTomtomarryhissisterwithin6
months.Howbere,Johnmetwithanaccidentandbecameinsane.
DISCHARGEBYLAPSEOFTIME
Therewillbeadischargeofthecontractiftheperformanceisnotcompletedwithin
thegivenperiod.Ifthepromisorfailedtoperformhisdutiesandthepromisefailedto
takeactionwithinthisspecifiedperiod,thenthepromiseinsuchacasecannotbe
deprivedofhisremedythroughlaw.

19. DISCHARGEBYOPERATIONOFLAW
DischargeofContractByOperationofLaw
o ByUnauthorizedMaterialAlterationofWrittenDocument
o ByInsolvency
o ByDeath
DISCHARGEBYBREACHOFCONTRACT
Actualbreachofcontractreferstofailuretoperformtheobligationwhenthe
performanceisdue.Forexample,ifasellerfailstodeliverthegoodsbytheappointed
time,orthegoodsaredeliveredbutnotuptothemarkintermsofqualityorquantity
specifiedinthecontract.
AnticipatoryBreachtakesplacewhenonepartybeforethearrivalofthefixeddatefor
performancestatesthatitcannotorwillnotabletoperformmaterialpartofthe
contractualobligationonthespecifieddateoritaimstoperformthecontractinaway
thatisinconsistentwiththedeedsspecifiedinthecontractattheinitiation.
DISTINCTIONBETWEENNOVATIONANDALTERATION

20. DISTINCTIONBETWEENRECESSIONANDREMISSION
REMEDIESFORBREACHOFCONTRACTMEANING&
DEFINITION
REMEDIESFORBREACHOFCONTRACT:Aremedyisthecourseofaction
availabletoanaggrievedparty(i.e.thepartynotatdefault)fortheenforcementofa
rightunderacontract.
1. Rescissionofthecontract
2. Suitforspecifiedperformanceofthecontract.
3. Suitforaninjuction
4. Suitfordamages.
5. Suituponquantummeruit

21. RECESSIONOFCONTRACT
RescissionoftheContract:Whenthereisabreachofcontractbyoneparty,theother
partymayrescind(cancel)thecontractandneednotperformhispartyofobligations
underthecontract.
Example:Acontactstosupply100kgoftealeavesforRs.8000toBon15April.If
Adoesnotsupplythetealeavesontheappointedday,Bneednotpaytheprice,B
maytreatthecontractasrescindandmaysitquietlyathome.Bmayalsofileasuit
for'rescission'andclaimdamages.
DAMAGE
SuitforDamagesDamagesareamonetarycompensationallowedtotheinjuredparty
forthelossorinjurysufferedbyhimasaresultofthebreachofcontract.
Damagesmaybeoffourkinds:
1. OrdinaryorGeneralorCompensatorydamages(i.e.damagesarising
naturallyfromthebreach)
2. Specialdamages(i.e.,damagesincontemplation(delay)oftheparties
atthetimeofcontract).
3. Exemplary,PunitiveorVindictivedamages.Thisclaimisforthe
mentalsufferingoremotionalsuffering,suchsufferingcanalsobeduetothe
breach.Generally,thecourttakescareofsuchdamages.
4. Nominaldamages.Nolosses,butawardforloss.
RULESREGARDINGDAMAGES
1.CompensatoryDamages:
Rule:Compensatorydamagesaimtoputtheinjuredpartyinthepositionthey
wouldhavebeeninhadthecontractbeenperformed.
Example:Ifacontractorfailstocompleteabuildingproject,theownermay
recoverthecostsofhiringanothercontractortofinishthework.

22. 2.ConsequentialDamages:
Rule:Consequentialdamagescoverindirectandforeseeablelossesthatresult
fromthebreach.Thebreachingpartymusthavebeenawareofthepotentialfor
suchlosses.
Example:Ifasupplierfailstodeliverrawmaterialsontime,causingafactoryto
shutdownandloseprofits,thefactorymayrecoverthoselostprofitsas
consequentialdamages.
3.PunitiveDamages:
Rule:Punitivedamagesareawardedtopunishthebreachingpartyforegregious
orwillfulmisconductandtodeterfuturesimilarconduct.Theyarenotcommon
incontractlawandareusuallyawardedincasesinvolvingfraudormalice.
Example:Ifacompanyintentionallysellsdefectiveproductsknowingtheywill
causeharm,thecourtmayawardpunitivedamagesinadditiontocompensatory
damages.
4.NominalDamages:
Rule:Nominaldamagesareasmallmonetaryawardgivenwhenabreach
occurred,butnoactualfinanciallosswassuffered.Itacknowledgesthebreach
andthenon-breachingparty'srights.
Example:Ifasellerfailstodelivergoodsontheexactagreeddatebutthebuyer
suffersnolossbecausetheyreceivedthegoodsthenextday,thecourtmight
awardnominaldamages.
5.LiquidatedDamages:
Rule:Liquidateddamagesareapre-determinedamountspecifiedinthecontract,
payableuponbreach.Theymustrepresentareasonableestimateofthepotential
lossandnotbeapenalty.
Example:Aconstructioncontractmightspecifythatthecontractormustpay
$500foreachdaytheprojectisdelayedpastthedeadline.

23. 6.MitigationofDamages:
Rule:Thenon-breachingpartyhasadutytomitigate(reduce)theirdamages.
Theycannotrecoverforlossesthatcouldhavebeenavoidedwithreasonable
efforts.
Example:Ifanemployeeiswrongfullyterminated,theymustseekother
employment.Iftheyfindanewjobwithsimilarpay,theemployermayonlybe
liablefordamagesduringtheperiodtheemployeewasunemployed.
SUITUPONQUANTUMMERIT
SuituponQuantumMerit(Sections65and70)Anotherremedyforabreachof
contractavailabletoaninjuredpartyagainsttheguiltypartyistofileasuitupon
quantummerit.Thephrasequantummeritliterallymeans"asmuchasisearned"or
"inproportiontotheworkdone.
AengagesMr.Bacontractor,tobuildathreestoriedhouse.Afterapartisconstructed
'A'prevents'B'fromworkinganymore.'B'thecontractor,isentitledtogetreasonable
compensationforworkdone.