Sales of goods act 1930 .Hemlata Chatlani .pptx

BUSINESS LAW
Introduction, Essential Characteristics', Difference between Sale and Agreement to sell, Types of goods, condition and warranty, transfer of property, Hire purchase agreement, sale by Auction, Caveat Emptor, Unpaid seller

1. SALES OF GOODS ACT 1930 PROF. HEMLATA S CHATLANI 4/8/2020

2. INTRODUCTION In our daily transactions sale of goods is a contract. In the year 1930, the act regarding sale of goods was passed from 1 July 1930 and came into force. Sec 4(1)Contract of sale of goods means when contract where by the seller transfers the property in goods to the buyer for a price.

3. ESSENTIAL CHARACTERISTICS Two parties : Every contract with legal attachment should have two parties. Without minimum qualification there cannot be a contract of sale of goods Transfer of property: In case of contract of sale there is transfer of property, after selling the goods there cannot be any ownership. Goods : There is need of goods in the process of transaction. There is no consideration of money and immovable property.

4. 4. Price : There should be contract in terms with money regarding the selling of goods. In value of goods should be only paid in monetary terms only. 5. An Agreement to sell : There should be an agreement of sell in a contract of sale of goods, without agreement there is no use of contract. 6 . Legal formalities : There should be consideration of all the legal formalities in the contract of sale of goods. And as per the contract act it should be in written and registered

5. CONTRACT OF SALE CAN BE CLASSIFIED IN TWO GROUPS SALE AN AGREEMENT TO SELL

6. Basis Transfer of ownership Implementation of promise Re-selling of goods Ownership of assets Sale There is transfer of ownership There is actual implementation of promise There cannot be reselling of goods There is ownership of assets An agreement to sell There is no transfer of ownership There is no actual implementation of promise There can be reselling of goods Such transfer of ownership is done in future

7. Responsibility regarding damages Sue for price Claim by buyer Type of contract The seller is not responsible for the damages regarding goods The seller can sue for the price A buyer can claim for the goods if the seller is insolvent It is an executed contract The seller is responsible for any damages regarding goods The seller cannot sue for the price A buyer cannot claim for the goods if the seller is insolvent It is an executory contract

8. Section 2(7) of the Sale of Goods Act 1930 defines Goods. There are three types of Goods: Existing Goods, Future Goods and Contingent Goods According to Section 2(7) of the Said Act 1930 "Goods" means 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. The Scope of the definition of the word "goods" under the Indian Sale of Goods Act is wider than that under the English Act.

9. TYPES OF GOODS TYPES OF GOODS EXISTING GOODS FUTURE GOODS CONTINGENT GOODS EXISTING GOODS SPECIFIC GOODS UNASCERTAINED GOODS ASCERTAIN GOODS

10. TYPES OF GOODS: ( a) Existing Goods - In these types of goods, Goods are owned and possessed by the Seller at the time of the making of the Contract of Sale. Illustration - A sells 5 bags of Sugar to B, which is lying down in the Godown... The Sugar Bags are called existing goods. Existing goods may be divided into specific goods and Uncertain Goods. i) Specific Goods - Goods identified and agreed upon at the time of sale is made are called "specific goods" ii) Uncertain Goods - Goods which are not identified at the time of making the contract of sale are called uncertain Goods.

11. b) Future Goods According to Section 2(6) of the said Act, "future goods" means goods to be manufactured or produced or acquired by the seller after the making of the contract of sale. Illustration - X agrees to Sell Y, the grass to be grown on his land next month. (c) Contingent Goods - Contingent Goods means "goods" the acquisition of which by the seller depends upon a contingency of happening or non-happening of an event. Illustration - "ABC" agrees to sell a land to "XYZ" if he wins the race. ABC's title is subject to the contingency of winning and hence the land is called Contingent Goods.

12. CONDITION AND WARRANTY In the act of sale of goods, a purchaser or buyer should be conscious while purchasing a commodity, he should be careful and fully aware regarding the quality of goods and utilities of goods. A seller is not responsible after selling the goods There may be a situation where there may be defects in the goods, if there is assurance which is given by a seller to the buyer and if there are some defects then the seller is responsible for such transaction There is no need to buyer to be careful when there are some conditions in the process of sale of goods.

13. Condition: If there is any problem through which there can be a situation , through which a contract can be broken but the buyer cannot claim for damages Conditions are mostly given on consumable or perishable goods Warranty: If there is any problem in case when there is warranty , the buyer can claim for damages and demand for compensation. Warranty is mostly given on electronic goods and cellular phones.

14. TRANSFER OF PROPERTY There are 3 stages in the performance of a contract of sale of goods by a seller: Transfer of property in goods : It means the transfer of goods with immediate ownership of goods. Transfer of possession in goods [ownership] : It means possession of goods, it refers to the custody or control of goods Eg: An article may belong to Mr.A although it may not be in his possession and Mr.B may be in possession of that article although he may be not be his owner.

15. 3. The passing of risk : It means transfer of ownership with risk whether the property in goods has been transferred or not to the buyer from the seller Risk follows ownership (sec 26 ): unless otherwise agreed risk follows ownership whether delivery has been made or not and whether price has been paid or not, thus the risk of loss as a rule lies on the owner Illustration: Abhinav agrees to purchase 30 tons of apple juice from Abhishek and orders him to keep the juice cans ready in 3 days . Abhishek crushes the apples and fills it in the cans and keeps them ready for the delivery on due date . Abhinav however delays to take the delivery and the juice gets rotten and has to be thrown away. Abhinav is liable to pay the price.

16. b. Action against the third party: when the goods are in any way damaged or destroyed by the action of the third party, it is only the owner of the goods who can take action against them c. Insolvency of the seller or the buyer: In the event of insolvency either the buyer or the seller, the question whether the official receiver or the assignee can take over the goods or not depends on whether the property in goods has been transferred from the seller to the buyer. d. Suit for the price: Seller can sue for the price, unless otherwise agreed and only if the goods have become the property of the buyer.

17. HIRE PURCHASE AGREEMENT The possession of the goods passes to the buyer who promises to pay the price of the goods in certain instalments, unless full price of the goods is paid, the ownership of the goods remain with the seller. It is both bailment and agreement to sell. The buyer has an option to buy the goods by the way of payment by stipulation instalment. After he pays all the instalment with hire charges, he becomes owner of the goods. Eg: A sells a refrigerator to B with the stipulation instalment, a sum fixed shall be paid every month by B to A till the full price is paid. Refrigerator is taken away by B, but the ownership still lies in the hands of A.

18. SALE BY AUCTION A sale by Auction is a public sale, where the goods are offered to be taken by the highest bidder. It is a proceeding at which people are invited to compete for the purchase of property. A sale by a way of auction is complete when the auctioneer announces so by the fall of hammer. A bidder can withdraw his bid at any time before it is accepted by the auctioneer. Condition in the auction sale is that bidding once made cannot be withdrawn, once it is enforced. Agreements not to bid against each other are called knock-out agreements and they are valid. A seller may protect himself through a reserve bid ( name not to be disclosed in auction) In case of sale through the court, it would be subject to the confirmation of the court. The auctioneer gives certain implied warranties in the auction sale

19. CAVEAT EMPTOR Caveat Emptor means “ let the buyer be aware”, that means the buyer must be aware while buying the things. As a general rule the buyer must purchase the goods after satisfying himself as to the quality and fitness and therefore the buyer must purchase the goods at his own risk, Relying upon his judgement and skill. In a contract of sale of goods there is no implied warranty or condition as to quality or fitness for any particular purpose of goods and therefore the buyer should purchase the goods at his risk and on the basis of his own judgement and skill.

20. UNPAID SELLER AND HIS RIGHTS Meaning of an Unpaid Seller [Sec 45(1)(2)] The seller of goods is deemed to be an ‘unpaid seller’- When the whole of the price has not been paid or tendered When a bill of exchange or other negotiable instrument(such as cheque) has been received as conditional payment, and it has been dishonoured[Section 45(1)]. The term ‘seller 'includes any person who is in the position of a seller(for instance, an agent of the seller to whom the bill of lading has been endorsed, or a consignor or agent who has himself paid, or is directly responsible for the price) [Section 45(2)].

21. UNPAID SELLER RIGHTS The  rights of an unpaid seller can broadly classified under the following two categories: 1.Rights against the goods 2.Rights against the buyer personally 1.Rights against the goods: a. Rights against the goods where the property in the goods has passed to the buyer b. Rights against the goods where the property in the goods has not  passed to the buyer

22. Rights against the goods When goods are passed Stoppage in transit Re-sale When the goods are not passed Other rights Lien

23. I. RIGHTS AGAINST THE GOODS WHERE THE PROPERTY IN THE GOODS HAS PASSED TO THE BUYER a) Right of Lien [Section 47,48 and 49] Meaning of Right of Lien: The  right of lien means the right to retain the possession of the goods until the full price is received. Three circumstance under which right of lien can be exercised[Section 47(1)] 1.Where the goods have been sold without any stipulation to credit; 2.Where the goods have been sold on credit, but the term of credit has expired; 3.Where the buyer becomes insolvent.

24. b) Right of Stoppage of Goods in Transit The right of stoppage of goods means the right of stopping the goods while they are in transit, to regain possession and to retain them till the full price is paid. Conditions under which right of stoppage in transit can be exercised[Section 50] The unpaid seller can exercise the right of stoppage in transit only if the following conditions are fulfilled: 1.The seller must have parted with the possession of goods, i.e. the goods must not be in the possession of seller. 2.The goods must be in the course of transit. 3.The buyer must have become insolvent.

25. c)Right of Resale[Section 46(1) and 54] An unpaid seller can resell the goods under the following three circumstance: 1.Where the goods are of a perishable nature. 2.Where the seller expressly reserves a right of resale if the buyer commits a default in making payment. 3.Where the unpaid seller who has exercised his right of lien or stoppage in transit gives a notice to the buyer about his intention to resell and buyer does not pay or tender within a reasonable time.  

26. II. RIGHTS AGAINST THE GOODS WHERE THE PROPERTY IN THE GOODS HAS NOT  PASSED TO THE BUYER Right of withholding delivery[Section 46(2)] Where the property in the goods has not been passed to the buyer, the unpaid seller, cannot exercise right of lien, but get a right of withholding the delivery of goods, similar to and co-extensive with lien and stoppage in transit where the property has passed to the buyer.

27. RIGHTS OF UNPAID SELLER AGAINST THE BUYER PERSONALLY The unpaid seller, in addition to his rights against the goods as discussed above, has the following three rights of action against the buyer personally: 1. Suit for price (Sec. 55). Where property in goods has passed to the buyer; or where the sale price is payable ‘on a day certain’, although the property in goods has not passed; and the buyer wrongfully neglects or refuses to pay the price according to the terms of the contract, the seller is entitled to sue the buyer for price, irrespective of the delivery of goods. Where the goods have not been delivered, the seller would file a suit for price normally when the goods have been manufactured to some special order and thus are unsalable otherwise.

28. 2. Suit for damages for non-acceptance (Sec. 56): Where the buyer wrongfully neglects or refuses to accept and pay for the goods, the seller may sue him for damages for non-acceptance. The seller’s remedy in this case is a suit for damages rather than an action for the full price of the goods. 3. Suit for Interest[Section 61(2)]: In case of breach of the contract on the part of seller, the buyer may sue the seller for interest from the date on which the payment was made.