sale of goods act

sale of goods act

1. Sale of Goods Act 1930 UNIT-II Sale of goods Act 1930 Dr.D.Joel Jebadurai AP, MBA, SJCE

2. Important terms in sale of goods act 1930 Sale It is a contract where the ownership in the goods is transferred by seller to the buyer immediately at the conclusion contract. Thus, strictly speaking, sale takes place when there is a transfer of property in goods from the seller to the buyer. A sale is an executed contract. It must be noted here that the payment of price is immaterial to the transfer of property in goods. Buyer - As per the sec 2(1) of the Act, a buyer is someone who buys or has agreed to buy goods. Seller- The Act defines seller in sec 2(13). A seller is someone who sells or has agreed to sell goods.

3. Goods Goods - Every kind of movable property other than actionable claims 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 will be considered goods” Types of goods : Existing goods- Specific goods, Ascertained goods, Unascertained goods Future goods Contingent goods

4. Types of goods Existing goods It means the goods which are either owned or possessed by the seller at the time of contract of sale. Specific goods- These are the goods that are identified and agreed upon at the time when a contract of sale is made. Ascertained goods- Goods are said to be ascertained when out of the mass of unascertained goods, the quantity extracted is identified and set aside for a given contract. Unascertained goods – These are the goods that are not identified and agreed upon at the time when a contract of sale is made. 2. Future goods- It means goods to be manufactured or produced or acquired by the seller after making the contract of sale. There can be an agreement to sell only. 3. Contingent goods- These are the goods the acquisition of which the seller depends upon a contingency which may or may not happen.

5. Distinguish Sale and Agreement to Sell BASIS SALE AGREEMENT TO SELL Meaning When in a contract of sale, the exchange of goods for money consideration takes place immediately, it is known as Sale. When in a contract of sale the parties to contract agree to exchange the goods for a price at a future specified date is known as an Agreement to Sell. Nature Absolute Conditional Type of Contract Executed Contract Executory Contract Transfer of risk Yes No Title In sale, the title of goods transfers to the buyer with the transfer of goods. In an agreement to sell, the title of goods remains with the seller as there is no transfer of goods. Right to sell Buyer Seller Consequences of subsequent loss or damage to the goods Responsibility of buyer Responsibility of seller Tax VAT is charged at the time of sale. No tax is levied. Suit for breach of contract by the seller The buyer can claim damages from the seller and proprietary remedy from the party to whom the goods are sold. Here the buyer has the right to claim damages only. Right of unpaid seller Right to sue for the price. Right to sue for damages.

6. Essentials for contract of sale (Section 4) 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 price". There must be at least two parties Transfer or Agreement to transfer the ownership of goods . The subject matter of the contract must necessarily be 'goods' . The consideration is Price . A Contract of sale may be in writing or by words All other essentials of a valid contract must be present

7. Document of title to goods From the Sec 2(4) of the act, we can say that this “includes the  Bill of lading, Dock-warrant, Warehouse keeper’s certificate Railway receipt, Multimodal transport document Warrant or order for the delivery of goods and any other document used in the ordinary course of business as proof of the possession or control of goods or authorizing or purporting to authorize, either by endorsement or by delivery, the possessor of the document to transfer or receive goods thereby represented.”

8. Documents of title to goods A document of title to goods is a document representing goods and is used— - in the ordinary course of business - as proof of the ownership, possession or control of goods. It authorises the possessor of such document to receive or transfer the goods represented thereby Document of title is a document, which is the evidence of full ownership of goods represented by the document. Delivery of document of title is as good as giving delivery of goods. Transfer of document of title is a symbolic delivery of goods to the purchaser. The document of title to goods is transferred by endorsement or by mere delivery and it confers a good title to the transferee if he receives it in good faith. E.g. Delivery of railway receipt is enough to constitute delivery of goods represented by railway receipt.

9. BASIS FOR COMPARISON CONDITION WARRANTY Meaning It is a stipulation which forms the very basis of the contract. It is additional stipulation complementary to the main purpose of the contract. Provision Section 12(2) of the Sale of Goods Act, 1930 defines Condition. Section 12(3) of the Sale of Goods Act, 1930 defines Condition. Purpose Condition is basic for the formulation of the contract. It is a written guarantee for assuring the party. Result of Breach of Contract The whole contract may be treated as repudiated. Only damages can be claimed in case of a breach. Remedies available to the aggrieved party Repudiation, as well as damages, can be claimed. Only damages can be claimed.

10. BASIS FOR COMPARISON GUARANTEE WARRANTY Meaning The guarantee serves as a promise made by the manufacturer, to the buyer, that in case the product below quality, it will be repaired, replaced or the money deposited will be refunded. Warranty is a written assurance that the facts specified in the product is true and genuine, but if they are not it will be repaired or replaced. What is it? Commitment Assurance Applicable to Product, service and persons. Product only. Condition of sale May or may not be a condition of sale Subsidiary condition of sale, which may be expressed or implied. Validity It can either be oral or written. It is generally written and so it is easy to prove. Cost Free of cost The buyer has to pay for warranty. Term Varies from item to item Long term Money back (in case of default) Yes No

11. Doctrine of caveat emptor It means Let the buyer beware. Exceptions In case of misrepresentation by the seller In case of concealment of latent defect In case of sale by description In case of sale by sample In case of a sample as well as a description Fitness for a particular purpose Merchantable quality

12. Rules relating to passing of property from seller to buyer 1Rules relating to the transfer of ownership of specific or ascertained goods-[ Sec 19 - 22] The ownership is transferred immediately at the time of making the contract if all the following conditions are satisfied: . The contract is for the specific goods. . The goods are in a deliverable state. . The goods are not required to be weight or measured for determining price. 2 Rules relating to the transfer of ownership of unascertained goods or future goods-sec [18 and 23] Unascertained goods means goods which have not been identified and agreed upon at the time when contract of sale is made. The ownership of unascertained goods is transferred to the buyer when the following condition are satisfied: . The goods must have been ascertained. . The goods must have been unconditionally appropriated by the seller or the buyer. . The contract to sell unascertained goods is not a complete sale. It is the agreement to sell. 3. Rules relating to the transfer of ownership of goods sale on approval or on sale or return basis— The term sale on approval basis may be defined as the sale in which the buyer may return the goods within reasonable time. This is also known as sale on return basis. It means the buyer has the option either to return or retain the goods. Here, the property in goods does not pass from the seller to the buyer.

13. TRANSFER OF TITLE BY NON - OWNERS General rule- NEMO DAT NON HABET • -No one can give that which has not • -To protect property rights Exceptions Transfer of title by Estoppel [Sec 27] Sale by mercantile agent [Sec 27] Sale by Joint owners.[ Sec 28] Sale by a person in possession under voidable contract.[Sec 29] Sale by a seller in possession after sale.[Sec 30 (1)] Sale by a buyer in possession before the transfer of ownership.[Sec 30 (2)] Sale by an unpaid seller [Sec 54]

14. Performance of contract of sale The Duty of the Buyer and Seller (Section 31) Concurrency of Payment and Delivery (Section 32)

15. The Duty of the Buyer and Seller (Section 31) Rights of the Seller  (Section 31) He can reserve the rights of the goods until and unless payment of goods is done.  He can assume that the buyer has accepted the goods or not. He will only deliver the goods when the buyer would apply for the delivery. He can make the goods delivered in instalments when so agreed by the buyer. He can have the possession of the goods until the buyer hasn’t paid for the goods.  He can stop the delivery of goods and resume possession of the goods unless and until the payment is done for the goods. He can resell the goods under certain conditions. He can bring the goods back if it is not delivered to the buyer. He can sue the buyer if the buyer fails to make the payment on a certain day, in terms of the contract.

16. Duties of seller He should make an arrangement for the transfer of property to the buyer. He should check whether the goods are delivered properly or not. He should give a proper title to the goods which he has to pass to the buyer. He should deliver the goods according to the terms of the agreement. He should ensure that the goods supplied should be agreed to the implied condition and warranties. He should keep the goods in a deliverable state and deliver the goods when the buyer asks for it. He should deliver the goods within a specific time fixed in the contract. He should bear all the expenses for which the good should be delivered. He should deliver the goods as said by the buyer in the contract in an agreed quantity.  To deliver the goods in instalments only when the buyer wants. He should make arrangements for the goods while they are in the custody of the carrier.

17. Rights of the Buyer (Section 31) He should get the delivery of the goods as per contract. He can reject the goods if the quality and quantity are not as specified in the contract. To deny the contract when goods are delivered in instalments without any agreement to the effects. The seller should inform him when the goods are to be sent by sea route, so that the buyer may arrange for their insurance. He can examine the goods for checking whether they are in the agreement with the contract. If he has already paid he can sue the seller for recovery of the price if the seller fails to deliver the goods. He can also sue the seller for damages or the seller’s wrongful neglect or the seller refuses to deliver the goods to the buyer. He can sue the seller for damages for breach of a warranty or for breach of a condition. He can sue the seller for the damages of breach of contract.

18. Duties of the Buyer He should accept the delivery of goods when the seller is prepared to make the delivery as per the contract. To have possession on it he should pay the price for the goods as per the contract. He should apply for the delivery of the goods. He can ask to deliver the goods at a particular time. He should accept delivery of the goods in instalments and pay for it according to the contract. He should bear the risk of failure of delivery of goods if the delivery point is a distant place. He should pay the price on the transfer of possession of the goods as given in the term of the contract. He has to pay for not accepting the goods.

19. Delivery Actual Constructive Symbolic

20. Rules as to Delivery Delivery (Section 33) means voluntary transfer of possession from one person to another; Effect of part-delivery (Section 34) Buyer to apply for delivery (Section 35) Place of delivery [Section 36 (1)]  Time of Delivery [Section 36 (2)] Goods in possession of a third party [Section 36 (3)]  Time for tender of delivery [Section 36 (4)] Expenses for delivery [Section 36 (5)] Delivery of wrong quantity (Section 37) Installment deliveries (Section 38) Delivery to carrier [Section 36 (1)] Deterioration during transit (Section 40) Buyers right to examine the goods (Section 41) Acceptance of Delivery of Goods (Section 42) Return of Rejected Goods (Section 43) Refusing Delivery of Goods (Section 44)

21. Unpaid seller unpaid seller is a person who has not been paid yet either by cash or other negotiable instruments. The following conditions must be fulfilled before a seller of goods can be deemed to be an unpaid seller: 1. He must be unpaid and the price is due. 2. He must have an immediate right of action for the price 3. A bill of exchange or other negotiable instrument was received but the same has been dishonored.

22. Rights of Unpaid seller