Law Relating to Sale of Goods

Law relating to Sale of GoodsThe law relating to sale of goods is governed by Sale of Goods Act, 1930.Scope of Sale of Goods Act: This Act is applicable only to movable property.

Law relating to Sale of GoodsContract of Sale as defined in sec 4 (1) of the Act: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. There may be a contract of sale between one part-owner and another.

Law relating to Sale of GoodsEssentials:An agreement Parties ( there must be two parties)Transfer of property ( that is transfer of ownership)Sale of goods (movable property)The consideration being the price Sale

Law relating to Sale of GoodsGoods as defined in section 2 (7):-- "goods" means every kind of movable property other than actionable claims and money; and includes electricity, water, gas, 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;

Law relating to Sale of GoodsClassification of Goods:

Existing GoodsFuture GoodsContingent Goods.

Law relating to Sale of GoodsClassification of Goods: Existing goodssec 6 (1):The goods which form the subject of a contract of sale may be either existing goods, owned or possessed by the seller, or future goods.Future goodssec 2 (6)"future goods" means goods to be manufactured or produced or acquired by the seller after the making of the contract of sale;

Law relating to Sale of GoodsGoods as contained in various provisions of the Act:Contingent goodssec 6 (2):There may be a contract for the sale of goods the acquisition of which by the seller depends upon a contingency which may or may not happen.

Law relating to Sale of GoodsSale as defined in sec 4 (3) of the Act:--Where under a contract of sale the property in the goods is transferred from the seller to the buyer, the contract is called a sale, but where the transfer of the property in the goods is to takeplace at a future time or subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell.

Law relating to Sale of GoodsAgreement to sell:Contract of sale is comprised of sale as well as agreement to sell. When transfer of ownership in the goods is to be transferred from seller to buyer at some future date, it shall be called as agreement to sell.Agreement to sell is not sale of goods.

Law relating to Sale of GoodsDistinguishing features between Sale and Agreement to sell:SaleAgreement to Sell1. Nature of Contract1. Nature of Contract--Executed contract--Executory contract2. Transfer of Property2. Transfer of Property--ownership is transferred to -- the ownership is buyer immediately transferred to buyer at some future date/ time.

Law relating to Sale of GoodsDistinguishing features between Sale and Agreement to sell:SaleAgreement to Sell3. Risk of Loss3. Risk of Loss--loss shall be suffered by --loss shall be suffered by the buyer the seller

Law relating to Sale of GoodsDistinguishing features between Sale and Agreement to sell:SaleAgreement to Sell4. Right of Re-sale4. Right of Re-sale--this right vests in buyer, --since possession of the seller cannot resell the goods is with the seller goods he can sell the goods but this act would lead to the breach of contract

Law relating to Sale of GoodsDistinguishing features between Sale and Agreement to sell:SaleAgreement to Sell5. Insolvency of seller5. Insolvency of seller-- the buyer has the right -- the buyer cannot to recover the goods recover the goods from from the official receiver official receiver.

Law relating to Sale of GoodsDistinguishing features between Sale and Mortgage:Sale Mortgage1. the buyer becomes 1. Ownership of the absolute owner of the goods remain vested goods sold. in the mortgagor.2. ownership of the goods 2. Only the interest is as a whole is transferred transferred and from the seller to the ownership transfer is buyer. Subject to certain conditons.

Law relating to Sale of GoodsDistinguishing features between Sale and Mortgage:Sale Mortgage3. Consideration is the 3. Consideration is the price. advance of the loan and the securing of the debt.

Law relating to Sale of GoodsConcept of Price:Price has been defined in section 2 (10) of the Act:-- Price means the money consideration for a sale of goods.

Law relating to Sale of GoodsConditions and Warrantees A contract of sale of goods contains some stipulations/ conditions regarding the various aspects such as price, mode of payment, time of payment, place of delivery of goods and so on. But these conditions and warrantees have special meanings and have been exclusively been defined in the Act.

Law relating to Sale of GoodsConditions and Warrantees Condition as defined in Section 12 (2) of the Act --A condition is a stipulation essential to the main purpose of the contract, the breach of which gives rise to a right to treat the contact as repudiated. Warrantee as defined in Section 12(3) of the Act--A warranty is a stipulation collateral to the main purpose of the contract, the breach of which gives rise to claim for damages but not to a right to reject the goods and treat the contract as repudiated.

Law relating to Sale of GoodsDistinguishing features between Condition and Warrantee ConditionWarrantee1. the stipulation in case of 1. it is such a stipulation condition is essential to which is secondary or the main purpose of the subsidiary to the main contract. main purpose of the contract

Law relating to Sale of GoodsDistinguishing features between Condition and Warrantee ConditionWarrantee2. fulfillment of a condition 2. in the case of warrantee is essential for the contract can be fulfillment of a contract fulfilled without of sale. fulfillment of warrantee

Law relating to Sale of GoodsDistinguishing features between Condition and Warrantee ConditionWarrantee3. In case of breach of 3. In case of breach, condition, aggrieved aggrieved party has party has a right to the right of claiming repudiate the contract as damages. well as to claim damages

Law relating to Sale of GoodsDistinguishing features between Condition and Warrantee ConditionWarrantee

4. A breach of condition4. A breech of warrantee may be treated as a cannot be treated as a breach of warrantee breach of condition.

TRANSFER OF PROPERTYUnascertained Goods:Goods have to be identified (ascertained). For future goods property in the goods does not pass to the buyer until the goods are ascertained.Goods in Deliverable State:Under unconditional contract for the sale of specific goods in a deliverable state, the property passes to the buyer as soon as contract is made.

TRANSGER OF PROPERTYWhen in non deliverable state, and contract requires to be delivered in deliverable state, property passes when put to deliverable state and seller informed.Sale by non-owner:Generally, only the owner can sell the goods.Person Not the owner:Person showing authority to sell and is the owner cannot deny right to sell subsequently.Sale by mercantile agent can sell if holds the goods or documents with the consent of the owner.

TRANSGER OF PROPERTYJoint Owner:Joint owner can sell his part (in good faith)Seller in Possession after Sale:Seller in possession after sale-second buyer has legal title if possession is passed to him

TRANSFER OF PROPERTYBuyer in Possession before Sale:Buyer possessing goods before property is passed to him, with the consent of the seller, may sell it subsequently. The second buyer if obtains the delivery will be entitled to the title of the goods.

UNPAID SELLER

Seller is any person who is a seller himself or his agent.A seller is deemed to be an unpaid seller if:i.whole of the price has not been paidor/andii.A negotiable instrument has been received and it is dishonoured.

FEATURES OF UNPAID SELLERIf sells on cash, and he is not paidIf sells on credit, the credit term has expired and he is not yet paidHe is unpaid wholly or partiallyPrice paid wholly or partially in form of negotiable instrument which is dishonored

Seller is not Unpaid seller if

If he sells on credit and the credit period has not expiredFull price is offered by the buyer and the seller has refused to accept it.