11

Sale of Goods Act, 1930Sale of Goods Act, 1930

22

IntroductionIntroductionThe law relating to sale and purchase of goods, The law relating to sale and purchase of goods,

prior to 1930 were dealt by the Indian Contract Act, prior to 1930 were dealt by the Indian Contract Act,

1872. 1872.

In 1930, Sections 76 to 123 of the Contract Act In 1930, Sections 76 to 123 of the Contract Act

was repealed and a separate Act known as the was repealed and a separate Act known as the

Sale of Goods Act, 1930 was passed.Sale of Goods Act, 1930 was passed.

The provisions of the Contract Act still apply to The provisions of the Contract Act still apply to

contracts of sale of goods except where the Sale of contracts of sale of goods except where the Sale of

Goods Act, 1930 specifically provides for the Goods Act, 1930 specifically provides for the

contrary.contrary.

33

Definition Definition

A contract of sale of goods is a contract A contract of sale of goods is a contract

whereby whereby

the seller transfers or agrees to transfer the seller transfers or agrees to transfer

the property in goods to the buyer for a price. the property in goods to the buyer for a price.

(Sec. 4)(Sec. 4)

The term contract of sale is a generic term, The term contract of sale is a generic term,

which includes sale and agreement to sale which includes sale and agreement to sale

both. both.

44

Essential Features of SaleEssential Features of Sale

Bilateral ContractBilateral Contract

Money ConsiderationMoney Consideration

GoodsGoods

Transfer of PropertyTransfer of Property

Essential Elements of a ContractEssential Elements of a Contract

55

GoodsGoods

Goods means every kind of movable Goods means every kind of movable

property other than property other than

actionable claims and money and actionable claims and money and

includes stocks and shares, growing crops, includes stocks and shares, growing crops,

grass and grass and

things attached to or forming part of the land things attached to or forming part of the land

which are agreed to be severed before sale which are agreed to be severed before sale

or under the contract of sale. [Sec 2(7)] or under the contract of sale. [Sec 2(7)]

66

Classification of GoodsClassification of Goods

a) Existing goodsa) Existing goods - Goods which either owned or - Goods which either owned or

possessed by the seller at the time of contract of possessed by the seller at the time of contract of

sale.sale.

i)i) Specific goodsSpecific goods - Means goods identified and - Means goods identified and

agreed upon at the time a contract of sale is made.agreed upon at the time a contract of sale is made.

ii)ii) Ascertained goods Ascertained goods - When, out of a mass or - When, out of a mass or

a lot of unascertained goods, the quantity extracted a lot of unascertained goods, the quantity extracted

is identified and earmarked for a given contract. is identified and earmarked for a given contract.

iii)iii) Unascertained goods Unascertained goods

77

b)b) Future goodsFuture goods - Means goods to be - Means goods to be

manufactured or produced or acquired by the manufactured or produced or acquired by the

seller after making of the contract of sale.seller after making of the contract of sale.

c)c) Contingent goodsContingent goods - The goods the - The goods the

acquisition of which by the seller depends upon acquisition of which by the seller depends upon

a contingent event which may or may no a contingent event which may or may no

happen. happen.

88

Effect of Perishing of Goods [Sec Effect of Perishing of Goods [Sec 7] 7]

A contract for the sale of specific goods is void if A contract for the sale of specific goods is void if

the goods have perished at the time of contract.the goods have perished at the time of contract.

Contract is void ab initio if the goods perished Contract is void ab initio if the goods perished

before the formation of contract.before the formation of contract.

In agreement to sell it becomes void if In agreement to sell it becomes void if

subsequently the goods have perished before the subsequently the goods have perished before the

risk passes to the buyer.risk passes to the buyer.

99

The PriceThe PricePrice means the money consideration for a sale of Price means the money consideration for a sale of goods. [Sec 2(10)] goods. [Sec 2(10)]

Price can be fixed in the following ways :Price can be fixed in the following ways :

by the contract or terms of agreement, or by the contract or terms of agreement, or

may be determined by course of dealing between may be determined by course of dealing between the parties. the parties.

It may be the price prevailing on a particular day, or It may be the price prevailing on a particular day, or

price to be fixed by a third party. price to be fixed by a third party.

When price is not capable of being fixed by any of When price is not capable of being fixed by any of the above modes, the above modes,

the buyer shall pay the seller a reasonable price. the buyer shall pay the seller a reasonable price.

1010

Conditions and WarrantiesConditions and WarrantiesAs a general rule, a person buying something, is As a general rule, a person buying something, is duty bound to see whether that thing suits his duty bound to see whether that thing suits his propose.propose.

This is called the doctrine of This is called the doctrine of caveat emptor. caveat emptor.

When a seller gives an express assurance When a seller gives an express assurance regarding the product, he is bound to honour that.regarding the product, he is bound to honour that.

Law presumes that product should meet certain Law presumes that product should meet certain minimum standards, minimum standards,

breach of which has the same effect as the breach breach of which has the same effect as the breach of express assurances or stipulations. of express assurances or stipulations.

Such legal presumptions are called implied Such legal presumptions are called implied conditions conditions and and warrantieswarranties. .

1111

Implied ConditionsImplied ConditionsA condition is a stipulation essential to the A condition is a stipulation essential to the main purpose of the contract, the breach of main purpose of the contract, the breach of which gives rise to a right to treat the which gives rise to a right to treat the contract as repudiated. [Sec 12(12)] contract as repudiated. [Sec 12(12)] Implied WarrantiesImplied WarrantiesA warranty is a stipulation collateral to the A warranty is a stipulation collateral to the main purpose of the contract, breach of main purpose of the contract, breach of which gives rise to a claim for damages, but which gives rise to a claim for damages, but not a right to reject the goods and treat the not a right to reject the goods and treat the contract as repudiated. [Sec 12(3)] contract as repudiated. [Sec 12(3)]

1212

Types of Implied Conditions Types of Implied Conditions

a)a) Condition as to titleCondition as to title

b)b) Sale by descriptionSale by description

c)c) Sale by SampleSale by Sample

d)d) Sale by description as well as sampleSale by description as well as sample

e)e) Condition as to fitness or qualityCondition as to fitness or quality

f)f) Condition as to Merchantability Condition as to Merchantability

g)g) Conditions implied by trade usage Conditions implied by trade usage

h)h) Condition as to wholesomeness Condition as to wholesomeness

i)i) MarketabilityMarketability

1313

Caveat Emptor & Exceptions Caveat Emptor & Exceptions [Sec16][Sec16]

Where the seller makes a misrepresentation of Where the seller makes a misrepresentation of fact;fact;

where the seller actively conceals a defect in the where the seller actively conceals a defect in the goods;goods;

where goods are supplied by description and they where goods are supplied by description and they do not corresponds with the description;do not corresponds with the description;

where the goods are supplied by description and where the goods are supplied by description and they are not of merchantability quality;they are not of merchantability quality;

when goods are sold by sample, and the goods when goods are sold by sample, and the goods do not correspond with the sample;do not correspond with the sample;

1414

when the goods are sold by sample as well as when the goods are sold by sample as well as

description, and the bulk of the goods do not description, and the bulk of the goods do not

match either the sample or description, or both;match either the sample or description, or both;

where the buyer relies upon the skill and where the buyer relies upon the skill and

judgement of the seller;judgement of the seller;

where trade usages or customs implies some where trade usages or customs implies some

condition or warranty and the seller deviates condition or warranty and the seller deviates

from that.from that.

1515

Implied WarrantiesImplied Warranties

Warranties as to Quite Possession. Warranties as to Quite Possession.

Warranties as to free from encumbrance.Warranties as to free from encumbrance.

Warranty as to disclosure of dangerous nature of Warranty as to disclosure of dangerous nature of

the goods.the goods.

Warranty implied by customs. Warranty implied by customs.

Conditions reduced to Warranty.Conditions reduced to Warranty.

Waiver by Buyer.Waiver by Buyer.

Acceptance of the goods by the buyer.Acceptance of the goods by the buyer.

1616

Passing of PropertyPassing of Property

Transfer of property in the goods to the buyer is Transfer of property in the goods to the buyer is

the main object .the main object .

The significance of transfer of property is that The significance of transfer of property is that

risk travels with property. risk travels with property.

After the formation of the contract but before the After the formation of the contract but before the

delivery of goods the questions regarding the delivery of goods the questions regarding the

rights and obligation are very crucial in the wake rights and obligation are very crucial in the wake

of risk of loss being associated with property.of risk of loss being associated with property.

1717

Effect of Passing of PropertyEffect of Passing of Property

1.1. Risk Travels with PropertyRisk Travels with Property

2.2. Action against third partiesAction against third parties

3.3. Insolvency of seller or buyerInsolvency of seller or buyer

4.4. Seller's right for priceSeller's right for price

1818

Rules regarding Passing of Rules regarding Passing of propertyproperty

Goods must be specific or ascertained.Goods must be specific or ascertained.

Property passes when intended to pass. Property passes when intended to pass.

Sale of Specific GoodsSale of Specific Goods

a)a) Passing of property at the time of Passing of property at the time of contract.contract.

b)b) Goods to be put in deliverable state.Goods to be put in deliverable state.

c)c) Goods to be weighed or measured for Goods to be weighed or measured for ascertaining their price.ascertaining their price.

d)d) Sale on approval.Sale on approval.

1919

Delivery to carrierDelivery to carrier

Where the goods are delivered to the buyer Where the goods are delivered to the buyer

or to a carrier or other bailee for the or to a carrier or other bailee for the

purpose of transmission to the buyer,purpose of transmission to the buyer,

the seller is deemed to have appropriated the seller is deemed to have appropriated

the goods to the contract. the goods to the contract.

Provided without reserving the right of Provided without reserving the right of

disposal.disposal.

2020

Reservation of right of Reservation of right of disposaldisposal

The seller may reserve the right of disposal until The seller may reserve the right of disposal until certain conditions are fulfilled. For example – certain conditions are fulfilled. For example –

Where buyer is to pay for the goods before Where buyer is to pay for the goods before delivery,delivery,

Where by the BoL or R/R, the goods are Where by the BoL or R/R, the goods are deliverable to the order of the seller or his agent, deliverable to the order of the seller or his agent,

Where the seller draws a BoE and send the Where the seller draws a BoE and send the same along with the BoL or R/R to secure same along with the BoL or R/R to secure buyer's acceptance or payment.buyer's acceptance or payment.

The property in the goods does not pass to the The property in the goods does not pass to the buyer until the conditions are fulfilled.buyer until the conditions are fulfilled.

2121

Transfer of TitleTransfer of TitleThe principle of The principle of Nemo dat quod non habetNemo dat quod non habetExceptions -Exceptions - Transfer of title by Estoppel. Transfer of title by Estoppel. Sale by Mercantile Agent.Sale by Mercantile Agent.Sale by joint owner.Sale by joint owner.Sale by person in possession under voidable Sale by person in possession under voidable contract.contract.Seller in possession after sale.Seller in possession after sale.Buyer in possession before sale.Buyer in possession before sale.Resale by an Unpaid Seller.Resale by an Unpaid Seller.

2222

Other ExceptionsOther Exceptions

Finder of lost goods can convey a better title Finder of lost goods can convey a better title

under certain circumstances. under certain circumstances.

Pawnee or pledgee of goods can transfer a Pawnee or pledgee of goods can transfer a

better title under certain circumstances. better title under certain circumstances.

Sale by Official Receiver or Assignee in case Sale by Official Receiver or Assignee in case

of insolvency can transfer a better title in spite of insolvency can transfer a better title in spite

of not being owner of the goods. of not being owner of the goods.

A holder in due course gets better title of a A holder in due course gets better title of a

negotiable instrument than the transferor. negotiable instrument than the transferor.

2323

Performance of ContractPerformance of Contract

It is the duty of the seller to deliver the goods and It is the duty of the seller to deliver the goods and of the buyer to accept and pay for them. [Sec 31] of the buyer to accept and pay for them. [Sec 31]

Unless otherwise agreed, delivery of the goods Unless otherwise agreed, delivery of the goods and payment of the price are concurrent and payment of the price are concurrent conditions. [Sec 32] conditions. [Sec 32]

Delivery may be made by doing anything that Delivery may be made by doing anything that shall be treated as delivery, or shall be treated as delivery, or

which has the effect of putting the goods in the which has the effect of putting the goods in the possession of the buyer, or possession of the buyer, or

of any person authorised to hold them on his of any person authorised to hold them on his behalf. [Sec 33]behalf. [Sec 33]

2424

Modes of DeliveryModes of Deliverya)a) Actual DeliveryActual Delivery

b)b) Constructive DeliveryConstructive Delivery

Constructive delivery may take place in either of the Constructive delivery may take place in either of the three ways - three ways -

i)i) seller in possession of goods after sale agrees seller in possession of goods after sale agrees to hold them on behalf of the buyer; orto hold them on behalf of the buyer; or

ii)ii) buyer is in possession of the goods and the buyer is in possession of the goods and the seller agrees to his holding the goods as owner; or seller agrees to his holding the goods as owner; or

iii)iii) a third person in possession of goods a third person in possession of goods acknowledges to the buyer that he is holding them on acknowledges to the buyer that he is holding them on his behalf.his behalf.

c)c) Symbolic DeliverySymbolic Delivery

2525

Part DeliveryPart Delivery

A delivery of part of goods, in progress of the A delivery of part of goods, in progress of the

delivery of the whole, has the same effect, as a delivery of the whole, has the same effect, as a

delivery of the whole; delivery of the whole;

but a delivery of part of the goods, with an but a delivery of part of the goods, with an

intention of severing it from the whole does not intention of severing it from the whole does not

operate as a delivery of the remainder. [Sec 34]operate as a delivery of the remainder. [Sec 34]

2626

Duty of buyer to apply for deliveryDuty of buyer to apply for delivery

In the absence of any express contract, the seller In the absence of any express contract, the seller of goods is not bound to deliver them unless the of goods is not bound to deliver them unless the buyer applies for delivery. [Section 35] buyer applies for delivery. [Section 35]

Even when the goods are to be acquired by the Even when the goods are to be acquired by the seller, and when they are acquired, and the seller, and when they are acquired, and the seller notifies the buyer that the goods are in his seller notifies the buyer that the goods are in his possession, the buyer must apply for the possession, the buyer must apply for the delivery. delivery.

The buyer has no cause of action against the The buyer has no cause of action against the seller if he does not apply for delivery, unless seller if he does not apply for delivery, unless otherwise agreed.otherwise agreed.

2727

Place of Delivery Place of Delivery The place of delivery of goods may be specified in The place of delivery of goods may be specified in the contract itself. the contract itself. Where no place is specified in the contract, the Where no place is specified in the contract, the foll. shall apply –foll. shall apply –a)a) in case of sale, goods sold are to be in case of sale, goods sold are to be delivered at the place at which they are at the time delivered at the place at which they are at the time of sale,of sale,b)b) in case of an agreement to sale, goods are in case of an agreement to sale, goods are to be delivered at the place at which they are at to be delivered at the place at which they are at the time of the agreement to sell, the time of the agreement to sell, c)c) if at the time of agreement to sell the goods if at the time of agreement to sell the goods are not in existence, they are to be delivered at the are not in existence, they are to be delivered at the place where they are manufactured or produced. place where they are manufactured or produced.

2828

Where the goods are in the possession of a Where the goods are in the possession of a

third person, there is no delivery by seller to third person, there is no delivery by seller to

buyer until such person acknowledges to the buyer until such person acknowledges to the

buyer that he holds the goods on his behalf.buyer that he holds the goods on his behalf.

Unless otherwise agreed, the expenses of and Unless otherwise agreed, the expenses of and

incidental to putting the goods into a deliverable incidental to putting the goods into a deliverable

state shall be borne by the seller. state shall be borne by the seller.

2929

Delivery in wrong quantity [Sec Delivery in wrong quantity [Sec 37]37]

Short delivery Short delivery

Excess delivery Excess delivery

Delivery of mixed goods Delivery of mixed goods

Installment deliveries Installment deliveries

3030

Delivery to Carrier/WharfingerDelivery to Carrier/WharfingerDelivery of the goods to a carrier or to a wharfinger is Delivery of the goods to a carrier or to a wharfinger is deemed to be a delivery to buyer. deemed to be a delivery to buyer.

The seller shall make such contract with the carrier or The seller shall make such contract with the carrier or wharfinger on buyer's behalf as may be reasonable wharfinger on buyer's behalf as may be reasonable having regard to the nature of goods and other having regard to the nature of goods and other circumstances. circumstances.

If the seller omit to do so, and the goods are lost or If the seller omit to do so, and the goods are lost or damaged, the buyer may decline the delivery to himself. damaged, the buyer may decline the delivery to himself.

Where goods are sent by sea, the seller shall give Where goods are sent by sea, the seller shall give notice to the buyer to enable him to insure them, if he notice to the buyer to enable him to insure them, if he fails to do so, the goods shall be deemed to be at his fails to do so, the goods shall be deemed to be at his risk. risk.

3131

Duties of the buyerDuties of the buyerDuty to accept the goods and pay for them in Duty to accept the goods and pay for them in exchange of possession. exchange of possession.

Duty to apply for delivery of goods. Duty to apply for delivery of goods.

Duty to demand delivery at a reasonable hour. Duty to demand delivery at a reasonable hour.

Duty to accept installment delivery and pay for it. Duty to accept installment delivery and pay for it.

Duty to take risk of deterioration in the course of Duty to take risk of deterioration in the course of transit.transit.

Duty to intimate the seller where he rejects the goods. Duty to intimate the seller where he rejects the goods.

Duty to take delivery. Duty to take delivery.

Duty to pay the price. Duty to pay the price.

Duty to pay damages for non-acceptance. Duty to pay damages for non-acceptance.

3232

Unpaid Seller Unpaid Seller

The seller of goods is deemed to be an The seller of goods is deemed to be an "unpaid" seller –"unpaid" seller –

when the whole of the price has not been paid when the whole of the price has not been paid or tendered; oror tendered; or

when a bill of exchange or other negotiable when a bill of exchange or other negotiable instruments has been received as conditional instruments has been received as conditional payment, payment,

the conditions has not been fulfilled by reason the conditions has not been fulfilled by reason of the dishonour of the instrument or otherwise. of the dishonour of the instrument or otherwise. [Sec 45(1)][Sec 45(1)]

3333

Rights of Unpaid SellerRights of Unpaid Seller

Notwithstanding that the property in the goods Notwithstanding that the property in the goods

may have passed to the buyer, the unpaid may have passed to the buyer, the unpaid

seller, has, by implication of law- seller, has, by implication of law-

a)a) a lien on the goods for price while he is in a lien on the goods for price while he is in

possession of them;possession of them;

b)b) in case of insolvency of the buyer a right in case of insolvency of the buyer a right

of stopping the goods in transit; andof stopping the goods in transit; and

c)c) a right of resale. [Sec 45(1)]a right of resale. [Sec 45(1)]

3434

Rights against goodsRights against goods

1.1. Unpaid Seller's Lien [Sec 47]Unpaid Seller's Lien [Sec 47]

a) a) where the goods have been sold without where the goods have been sold without stipulation as to credit; orstipulation as to credit; or

b) b) where the goods have been sold on credit, where the goods have been sold on credit, but terms of credit has expired; orbut terms of credit has expired; or

c) c) where the buyer becomes insolvent.where the buyer becomes insolvent.

The right of lien exists only for the price of the The right of lien exists only for the price of the goods. goods.

Where part delivery of the goods has been Where part delivery of the goods has been made, he may exercise his right of lien on the made, he may exercise his right of lien on the remainder. remainder.

3535

Termination of lien [Section Termination of lien [Section 49]49]

When he delivers the goods to a carrier or When he delivers the goods to a carrier or

other bailee for transmission to the buyer other bailee for transmission to the buyer

without reserving the right of disposal;without reserving the right of disposal;

when the buyer or his agent lawfully obtain when the buyer or his agent lawfully obtain

possession of the goods; and possession of the goods; and

by waiver thereof.by waiver thereof.

3636

Right of Stoppage in TransitRight of Stoppage in TransitDelivery to buyer Delivery to buyer

Goods are deemed to be in course of transit from Goods are deemed to be in course of transit from the time when they are delivered to a carrier or a the time when they are delivered to a carrier or a bailee, until the buyer or his agent takes delivery.bailee, until the buyer or his agent takes delivery.The transit ends when the buyer or his agent The transit ends when the buyer or his agent takes delivery of the goods from the carrier before takes delivery of the goods from the carrier before their arrival at the appointed destination.their arrival at the appointed destination.

Acknowledgement to buyerAcknowledgement to buyer When the goods have arrived at their destination When the goods have arrived at their destination and the carrier acknowledges to the buyer or his and the carrier acknowledges to the buyer or his agent that he is now holding the goods on his agent that he is now holding the goods on his behalf, the transit is at the end.behalf, the transit is at the end.

3737

Rejection by buyerRejection by buyer If the goods are rejected by the buyer, and the If the goods are rejected by the buyer, and the carrier or other bailee continues in possession of carrier or other bailee continues in possession of them, the transit is not at an end. them, the transit is not at an end.

Wrongful refusal to deliver Wrongful refusal to deliver Where the carrier wrongfully refuses to deliver the Where the carrier wrongfully refuses to deliver the goods to the buyer or his agent, the transit is at an goods to the buyer or his agent, the transit is at an end.end.

Part delivery Part delivery Where the goods have been delivered in part, the Where the goods have been delivered in part, the seller may stop the remainder of the goods, unless seller may stop the remainder of the goods, unless the part delivery shows an agreement to give up the part delivery shows an agreement to give up the possession of the whole.the possession of the whole.

3838

When transit comes to an endWhen transit comes to an end

When the buyer or his agent takes delivery of the When the buyer or his agent takes delivery of the

goods from the carrier before their arrival at the goods from the carrier before their arrival at the

destination.destination.

When the goods have arrived at their destination When the goods have arrived at their destination

and the carrier acknowledges to buyer or his agent.and the carrier acknowledges to buyer or his agent.

Where the goods are delivered to a ship chartered Where the goods are delivered to a ship chartered

by the buyer, the carrier is the agent of the buyer. by the buyer, the carrier is the agent of the buyer.

Where the carrier wrongfully refuses to deliver the Where the carrier wrongfully refuses to deliver the

goods to the buyer or his agent.goods to the buyer or his agent.

3939

Right of resale [Sec 54]Right of resale [Sec 54]

A contract of sale is not rescinded by mere exercise A contract of sale is not rescinded by mere exercise of right of lien or stoppage in transit.of right of lien or stoppage in transit.

Where the unpaid seller gives notice to the buyer of Where the unpaid seller gives notice to the buyer of his intention to resell, he may resell the goods and his intention to resell, he may resell the goods and recovers from the buyer damages for any loss. recovers from the buyer damages for any loss.

If no notice is given, the unpaid seller is not entitled If no notice is given, the unpaid seller is not entitled to recover damages and the buyer shall be entitled to recover damages and the buyer shall be entitled to the profit.to the profit.

Where the seller reserves a right of resale and sells Where the seller reserves a right of resale and sells the goods, the original contract is thereby rescinded, the goods, the original contract is thereby rescinded, but without prejudice to any claim by the seller.but without prejudice to any claim by the seller.

4040

Seller's remedies against Seller's remedies against BuyerBuyer

Suit for price.Suit for price.

Damages for non-acceptance.Damages for non-acceptance.

Damages are assessed as follows: Damages are assessed as follows:

Where the goods have a ready market, the buyer Where the goods have a ready market, the buyer has to pay the loss that the seller has sustained on has to pay the loss that the seller has sustained on reselling the goods.reselling the goods.

If the seller does not resell the goods, the difference If the seller does not resell the goods, the difference between the contract and market price on the day of between the contract and market price on the day of breach is the measure of damages.breach is the measure of damages.

Where the goods are deliverable by installments, Where the goods are deliverable by installments, the difference in prices is to be reckoned on the day the difference in prices is to be reckoned on the day that a particular installment was to be delivered.that a particular installment was to be delivered.

4141

Buyer's Remedies against Buyer's Remedies against SellerSeller

1. 1. Damages for non-delivery.Damages for non-delivery.

2.2. Remedy for breach of warranty.Remedy for breach of warranty.

3. 3. Specific Performance.Specific Performance.

4.4. Anticipatory breach.Anticipatory breach.

5.5. Recovery of interest.Recovery of interest.

4242

Auction Sales [Sec 64]Auction Sales [Sec 64]

An auction sale is complete when the auctioneer An auction sale is complete when the auctioneer announces its completion by the fall of the hammer. announces its completion by the fall of the hammer.

The bidder can withdraw before the acceptance of The bidder can withdraw before the acceptance of his bid and his security amount cannot be forfeited.his bid and his security amount cannot be forfeited.

The law does not prevent the seller from bidding The law does not prevent the seller from bidding provided he expressly reserve the right to bid. provided he expressly reserve the right to bid.

If the seller appoint a puffers (persons who make If the seller appoint a puffers (persons who make bids in order to prompt bidding at higher prices), bids in order to prompt bidding at higher prices), the sale is voidable at the option of the buyer.the sale is voidable at the option of the buyer.

Auction subject to a Auction subject to a reservereserve or or upset price upset price means means a price below which the auctioneer will not sell. a price below which the auctioneer will not sell.

4343

Knock out AgreementKnock out Agreement

An agreement among bidders not to bid against An agreement among bidders not to bid against

each other. each other.

It is a combination to prevent competition It is a combination to prevent competition inter se. inter se.

An arrangement that only one of them will bid and An arrangement that only one of them will bid and

dispose of anything so obtained privately among dispose of anything so obtained privately among

themselves. themselves.

Not illegal per se but if the intention is to defraud Not illegal per se but if the intention is to defraud

a third party then knock out is illegal.a third party then knock out is illegal.

4444

DampingDamping

An unlawful act discouraging the intending An unlawful act discouraging the intending

purchaser from bidding –purchaser from bidding –

by pointing out defects in the goods in the by pointing out defects in the goods in the

auction sale; orauction sale; or

by taking away the intending purchaser from by taking away the intending purchaser from

the place of auction by some other method.the place of auction by some other method.

Damping is illegal and the auctioneer is entitled Damping is illegal and the auctioneer is entitled

to withdraw the goods from the auction.to withdraw the goods from the auction.