UNIT IV THE SALE OF GOODS ACT, 1930.docx

The Sale of Goods Act, 1930 governs contracts where goods are sold or agreed to be sold. It came into force on 1st July 1930, and was originally a part of the Indian Contract Act, 1872, but was later separated due to its specialized nature.
This Act defines the rights, duties, and remedies of buyers and sellers.

1. UNIT IV – THE SALE OF GOODS ACT, 1930
1. Introduction
The Sale of Goods Act, 1930 governs contracts where goods are sold or
agreed to be sold. It came into force on 1st July 1930, and was originally a
part of the Indian Contract Act, 1872, but was later separated due to its
specialized nature.
This Act defines the rights, duties, and remedies of buyers and sellers.
2. Meaning and Definition of a Contract of Sale
Section 4(1) of the Sale of Goods Act defines:
“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.”
Key Points
Seller – Person who sells or agrees to sell goods.
Buyer – Person who buys or agrees to buy goods.
Goods – Every kind of movable property other than actionable claims
and money.
Price – The money consideration for a sale of goods.
Example:
If A agrees to sell a car to B for ₹5,00,000, it is a contract of sale.
3. Essentials of a Valid Contract of Sale
1.Two Parties:
There must be a seller and a buyer (cannot be the same person).

2. 2.Transfer of Property:
Ownership of goods must pass or be agreed to pass from seller to
buyer.
3.Goods:
The subject matter must be movable goods.
4.Price:
Consideration must be in money (not barter).
5.Legal Formalities:
Contract may be oral, written, or implied by conduct.
4. Sale vs Agreement to Sell
Basis Sale Agreement to Sell
Meaning
Ownership is transferred
immediately.
Ownership is to be transferred
at a future date.
Nature Executed contract. Executory contract.
Risk Risk passes to buyer. Risk remains with seller.
Remedy for
Breach
Seller can sue for price.Seller can sue for damages only.
Example
A sells his car to B for ₹5
lakh today.
A agrees to sell his car to B
after 10 days.
5. Types of Goods (Section 6)
1.Existing Goods:
Goods that exist at the time of contract.
oSpecific Goods: Identified and agreed upon (e.g., a particular
car).

3. oAscertained Goods: Identified after contract formation.
oUnascertained Goods: Not specifically identified.
2.Future Goods:
Goods to be manufactured or acquired after the contract (e.g., future
crops).
3.Contingent Goods:
Goods the acquisition of which depends on a contingency (e.g., goods
to arrive by ship).
6. Conditions and Warranties
Section 12(2): Condition – A stipulation essential to the main purpose of
the contract.
Section 12(3): Warranty – A stipulation collateral to the main purpose of
the contract.
Basis Condition Warranty
ImportanceEssential term. Secondary term.
Breach
Effect
Buyer can repudiate the
contract.
Buyer can claim damages only.
Conversion
Condition may be treated as a
warranty.
Warranty cannot be treated as
a condition.
Examples:
Condition: Fitness of car engine.
Warranty: Free service for 6 months.
7. Doctrine of Caveat Emptor

4. Meaning:
“Let the buyer beware.” The buyer must examine the goods before purchase;
the seller is not liable for defects that are apparent.
Exceptions to Caveat Emptor:
1.Fitness for Purpose: Buyer informs seller of purpose and relies on
seller’s skill.
2.Merchantable Quality: Goods must be of saleable quality.
3.Sale under Brand or Description: Must correspond to the
description.
4.Usage of Trade: Custom of trade may impose duty on seller.
5.Fraud or Misrepresentation: Seller conceals or misrepresents
quality.
6.Sample Sale: Bulk must correspond with sample.
8. Transfer of Property and Title
Transfer of Property means passing of ownership from seller to buyer.
Rules for Transfer of Property
1.Specific Goods in a Deliverable State: Property passes when
contract is made.
2.Specific Goods to be put in a Deliverable State: Property passes
when put in that state.
3.Unascertained Goods: Property passes when goods are ascertained
and appropriated to contract.
Transfer of Title (Nemo dat quod non habet):
“No one can give what he doesn’t have.”
A buyer acquires no better title than the seller had.

5. Exceptions:
1.Sale by Mercantile Agent in ordinary course.
2.Sale by One of Joint Owners.
3.Sale under Voidable Contract.
4.Sale by Seller in Possession after Sale.
5.Sale by Buyer in Possession after Agreement to Buy.
9. Rights of Unpaid Seller (Sections 45–54)
Unpaid Seller: Seller who has not received full payment or conditional
payment dishonored.
Rights Against Goods
1.Right of Lien: Retain goods until payment is made.
2.Right of Stoppage in Transit: Stop goods while in transit if buyer
becomes insolvent.
3.Right of Resale: Resell goods after notice to buyer.
Rights Against Buyer Personally
1.Suit for Price.
2.Suit for Damages.
3.Suit for Interest.
10. Summary Chart
Topic Key Points
Definition Transfer of ownership in goods for a price.
Main Elements Buyer, seller, goods, price, transfer of ownership.

6. Topic Key Points
Difference
Sale = transfer now; Agreement to sell = transfer
later.
Goods Existing, Future, Contingent.
Conditions/WarrantiesEssential vs. collateral stipulations.
Doctrine
Caveat Emptor – Buyer should beware, with
exceptions.
Transfer of Property Ownership transfer rules based on goods’ state.
Unpaid Seller Rights Lien, stoppage in transit, resale, legal action.