sales of goods act-1930
TRANSCRIPT
SALES OF GOODS ACT 1930
CONTRACT OF SALE –DEFINED
(SECTION-4)
A contract of sale of goods is a contract whereby the seller
transfers or agrees to transfer the property in
goods for a price
Essentials of contract of sale
A valid contract
Two parties
Transfer the property
Goods
Price
Important distinctions
Sale and agreement to sell
Sale and bailment
Sale and Hire-purchase
Sale and mortgage
Elements of a sale of goods contract
A contract involving
transfer of ownership
in goods
for a money consideration called the price
Not
hire purchase
barter
Leasing
Hire purchase is for a specific item for a specific time, lease purchase is when you lease something with the option to buy it
DEFINITION OF GOODS
SECTION –6 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
Goods Chattels(moveable possession) personal but
not choses in action not growing crops but harvested crops are future goods = to be manufactured specific goods = identified and agreed upon at
time of sale existing goods = in existence but not yet seller's
property unascertained goods = goods not yet
appropriated (devote to special purpose) to this contract
ascertained goods = identified and appropriated
DEFINITION OF PRICE
Price in a contract of sale means the money consideration for sale of goods [Sec.2 (10)]. It must be expressed in money.
MODES OF FIXING PRICE SECTION-9
As expressly stated in the contract I.e by agreement
By the course of dealing between the parties
If nothing is there then reasonable price
Through valuation By the third party
Passing of property and risk
General rule is that risk passes with property unless otherwise agreed
Property passes when goods are ascertained contract is made for sale of specific goods in a deliverable
state when whatever needs to be done to put specific goods in a
deliverable state is done when something that needs to be done to determine price of
specific goods is done and buyer has notice when goods are delivered on approval or sale or return basis
when buyer expressly or impliedly accepts goods
Where non-owner can validly pass title to goods
Nemo dat quod non habet rule – cannot give better title than you have Exceptions to nemo dat
sells with authority of true owner
disposal by mercantile agent
under court order
sale under common law or statutory power
sale under voidable title
sale by seller in possession
sale in market overt
CONDITIONS AND WARRANTIES
SEC-12(1) A stipulation(demand/specify as a part of bargain) in a contract of sale with reference to goods which are subject matter there of , may be a condition or a warranty
The stipulation which are essential for the main purpose of the contract and the breach of which gives rise to right to treat the contract as repudiated is called Condition. Section –12(2)
The stipulation which is collateral(additional but subordinate) to the main purpose of the contract and the breach of which gives rise to claim for damages but not a right to reject the goods and treat it as repudiated is called Warranty Section –12(3)
IMPLIED CONDITIONSCondition as to title:- (sec-14) subject to a contrary intention,there is an implied condition on the part of the seller that in the case of sale, he has a right to sell goods and that in case of the agreement to sell, he will have a right to sell the goods at the time when property is to pass.
Sale by description :- (sec-15) where goods are sold by description, there is an implied condition that the goods shall correspond with the description. This rule is based on the maxim,”if you contract to sell peas,you cannot oblige a party to take beans.Sale by sample as well as description;-(sec-15) if the sale is by sample as well as description, it is not sufficient that the bulk of the goods shall correspond with the sample,if the goods do not also correspond with the description.thus should correspond with both sample as well description.
Condition as to quality or fitness ;- su
bject to the provisions of this act, and of any other law for a time being in force,there is no implied condition as to quality or fitness for any particular purpose of goods supplied. But where the buyer expressly or by implication makes known to the seller the particular purpose for which the goods are required.
Condition as to merchantability ;- there is always an implied condition in a contract of sale that the goods purchased should be of merchantable quality.thus where goods are brought by description from a seller,who deals in such goods,there is an implied condition as to merchantability
Merchantability means;- that the article sold must be of such quality and in such condition that reasonable man would accept the article as performance of a promise
SALE BY SAMPLE ;- In the contract of sale by sample, there is an implied condition-
(i) That the bulk shall correspond with the sample in quality(ii) That the buyer should have reasonable opportunity of
comparing the bulk with the sample(iii) That the goods shall be free from any defect rendering them
unmerchantable, which would not apparent on reasonable examination
CONDITION AS TO CUSTOM OR USAGE;- An implied condition as to quality or fitness for a particular purpose may be annexed by custom or usage of trade (sec-16(3))
IMPLIED WARRANTIES
Implied warranty of quiet possession – Buyer will shall enjoy quiet possession of goods. Buyer shall have the possession and enjoyment of goods.
Implied warranty of freedom from encumbrances
Implied warranty annexed by usage of trade.
CAVEAT EMPTOR
Let the buyer beware
Exceptions;-
where the buyer relies on the skill and judgment of the skill
Merchantability quality of goods – where the goods are bought by description.
Consent by fraud – false representation.
Usage of trade
Difference between Transfer of Property and Possession,
Transfer of property means transfer of ownershipRisk of loss also passes with ownership to buyerWhen the goods are destroyed or damaged ,only the owner can sueThe seller can sue for price only if the ownership of goods has been transferred to the buyer
Transfer of possession means property just passes
Risk of loss remains with the seller
Possessor does not have the right to sue
This is not in case of transfer of possession
Express and implied terms in a sale of goods contract (conclusion)
Express terms are those expressly agreed upon and included in the agreement
Terms implied by custom, usage or statute
Terms are either conditions – essential – or warranties – subsidiary – less important
Remedies depend on significance of breached term condition treat contract as terminated and sue for
damages or affirm
warranty sue for damages only
Implied conditions under Sale of Goods Act
that seller has the right to sell the goods
that unascertained goods when delivered will correspond with description or sample
where buyer relies on seller, that the goods are fit for purpose
where the goods are bought by description from a dealer that they are of merchantable quality
Implied warranties under Sale of Goods Act
that buyer shall have and enjoy quiet possession of goods
the goods shall be free of any charge or encumbrance
Terms implied under sale of Goods Act can be excluded
Similar terms implied under Trade Practices Act – non-excludable
Remedies for breach of a sale of goods contract
Failure to deliver goods or to pay for them will amount to breach of the sales contractRemedies of unpaid seller lien against goods (sec-47-49) right of stoppage in transit right of retention of goods right of resale (sec-54) sue for price if it is due and payable sue for damages for non-acceptance
Rights of buyer reject the goods recover the price sue for damages for breach of warranty sue for damages for non-delivery sue for specific performance sue in detinue or conversion
Auction salesLegislative provisions changeable by agreement between partiesAuction sale is a contractEach lot is subject of a separate contractBidder makes offer, acceptance is at fall of hammer. Auctioneer can refuse to accept bidNormally sellers cannot bid for own goods but can reserve the right to bidAuction may be subject to reserve priceWhere no reserve auctioneer may refuse to accept bid – can specify this right in sale conditions.