law relating to sale of goods

8/3/2019 Law Relating to Sale of Goods

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LAW RELATING TO SALE OF G

SALE OF GOODS ACT, 1930


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OVERVIEW

The Sale of Goods Act, 1930 governs the co

relating to sale of goods or movables.

Initially sale of goods was a part of the Cont

1872.

Contracts for sale of goods i.e., movable pro

are now covered by the provisions of the Sa

Goods Act.


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PURPOSE contract sale of goods is the m

common of all business contra

A basic knowledge of the law

governing these contracts is es

for all persons engaged, directlindirectly, in any business activ

be aware of rights


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CONTRACT OF SALE :A contractof sale ofgoods is contract whereby the seller

transfers oragrees to transfer

property in goods to a buyerfoprice.


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Essential elements of a sale :

1. There must be at least two parties(seller & buyer)2. All essentials of a valid contract must be present

1. Transfer orAgreementto transfer the ownersh

1. The subject matter of the contract must necessarily b

2. There must be Money consideration known as th

3. A Contract of sale may be absolute or conditional


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1. A Valid Contract :

A contract of sale is just like any other contract made

Contract Act, 1872. Therefore to constitute a valid contra

it should satisfy all the essentials of a valid contract name

valid offer & acceptance, free consent of the parties, a va

lawful consideration, parties must be competent etc.

2. Two parties :

To constitute a contract of sale , there must be a transf

agreement to transfer the property in goods by the sellerbuyer. It means that there must be two persons,

"buyer: means a person who buys or agrees to buy goods;

"Seller" : means a person who sells or agrees to sell goods

"unpaid seller : means a seller to whom the whole of the p

not been paid or tendered;


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3. Transfer of ownership :

To constitute a valid contract of sale, there sho

immediate transfer or an agreement to transfer the full ownersh

goods sold or agreed to be sold.

4 PRICE :

To constitute a valid contract of sale , conside

transfer must be money. Where there is no money consideratio

transaction is not a contract of sale, as for instance goods givenexchange for goods or as remuneration for work or labour.


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Formalities in a Contract of Sale

No special formalities are required to form a contract of sale; it m

like any other contract.

No particular form is required to form a contract of sale. It maybe

oral or partly in writing and partly by word of mouth. A contract of s

be implied from the conduct of the parties.

Therefore, if a written offer to sell goods is accepted verbally on the

will be a valid contract of sale.

So also where goods are also ordered by a letter and the same

without any communication, the contract of sale is implied by the c

parties.


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SaleA contract where, the

property in the goods is

transferred immediatelyfrom the seller to the buyer,

the contract is called a sale.

Example :

Mr. A sells to Mr. B 100wheat bags weighing 10tonnes, lying at hisgodown. This is animmediate sale, the buyerMr. B, is free to take up

the delivery as and when

Agreement to SellBut where the tr

property in the goods i

place at a future time, or

some conditions, to be ful

called an agreement to sel

Example :

A agrees to

of wheat todate. This agreement t


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What are Goods [Sec 2(7)]

Goods means every kind

of movable propertyother than actionable

claims and money

Growing crops, grass, standithings attached to or formingalso fall in the meaning of g

Things like goodwill, ptrademark, water, gas, elecshares etc are all regarded abe bought and sold as such.

An actionable claim means a claim to any

beneficial interest in movable propepossession, which can be recovered by meor a action.

Stocks and shares, which too are actiohave been specifically included in the

goods.


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Classification of Goods

1. Existing goods2. Specific goods/ Ascertained goods

3. Unascertained or Generic Goods

4. Future goods

5. Contingent goods


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3. Unascertained or Generic Goods Go

which are not specifically identified at time of the contract and are defined only

description are called unascertained goods

2. Specific/Ascertained Goods Spec

goods means goods identified and agr

upon at the time of a contract of sale.

Example e.g. a specified shirt, watch, etc.


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Example:

P agrees to sell to Q all the manwhich will be produced in his ganext year. This is an agreement fo

sale of future goods

4. Future Goods means goods to be

manufactured or produced or

acquiredby the sellerafter making contract of sale.


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Example

if A agrees

B certain gwhich shall

on a ship, i

a case of co

goods.

5. Contingent Goodsare the

goods the acquisition of which

by the seller depends upon a

contingency which mayor maynot happen. Contingent goods

are a part of future goods. i.e,

goods which might be expected

to come into existence,as (i) goods to arrive (ii) future

crops (iii) eggs.


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Perishing of goods' includes not only complete destructiogoods when the seller has been forever deprived of the go

when the goods have been stolen or have in some other w

lost and are untraceable, but also when the goods become

merchantable i.e. when the goods has lost their commerci

What shall be the fate of a contract if theare perished or destroyed?

Destruction before making of contract

Destruction After the Agreement to Sell but

Sale


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Destructtion before making of contract

Where in a contract for sale of specificgoods, at the time of making the

contract, the goods, without knowledge

of the seller, have perished or become

so damaged as no longer to answer to

their description in the contract or haveceased to exist the contract shall

become null and void.

Exampleto sell B, cargo supbe on its

Dubai to It turns tthe day ofbargain tcarrying & the goolost. Neitwas awar

facts. ThagreemenWhich rule?


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Goods perishing before sale butafter agreement to sell

Where the goods are inexistence at the time of

making the contract but

perish without the fault of

either party before

ownership or risk has passed

to the buyer.

Example:

A agrees to buy a hors

upon a condition that

would be taken away b

tried by him for 8 days

returned at the end of

if A did not think it is

his purposes. The horplaced in As stable, d

4th day , without fault

party. B cannot maint

action for price.


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DOCUMENTS OF TITLE TO GOODS

Proof of the ownership, possession or control of goods

It authorises the possessor to receive the goods,claim f

resale of goods etc.

Cash memo, bill of lading, dock warrant, warehouse k

wharfinger's certificate, lorry receipt (L/R), railway recand delivery order are some of the instances of docum

to goods.

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