The sale of goods act

This act came into force in 1930. It applies only to the movables other than actionable claims and money. This act is only applicable the things called goods. Sale of immovable property is governed by the Transfer of property act.

Goods: Goods form the subject matter of contract of sale. It includes:

Every kind of movable property other than actionable claims.

Money, stock, shares, growing crops.

Classification of goods

Existing goods

Specific goods

Ascertained

Unascertained

future goods Contingent goods

Effects of destruction of subject matter

Goods perishing before making of the contract : It is void provided it is for specific goods, goods must have perished before the contract is made, the seller should not be aware of the destruction. Goods perishing before sale but after the agreement : The contract becomes void if the goods are indivisible and its valid if the goods are divisible and only a part is destroyed. The goods should be specific.

Essentials of contract of sale

Two parties Goods Transfer of property Price Contract

Sale & agreement to sell

Nature Transfer of property Risk of loss Performance(Absolute and conditional) Right of resale Insolvency of buyer Insolvency of seller Consequences of breach

Sale & hire-purchase

Mode of contract Transfer of ownership Position of the buyer Right to resell Act governing Risk in case of insolvency of purchaser

Document to title

It is a document of title to goods is a proof of the ownership of the goods. It authorizes the holder to receive goods mentioned therein or to further transfer such right to another person by proper endorsement or delivery. The following documents are the document of titles:

Bill of lading: Issued by ship owner Dock warrant ; Issued by dock owner Warehouse keepers certificate Railway receipt : Issued by railways Delivery order : Issued by the owner of goods

Conditions & warranties

At the time of sale the seller usually makes certain representations in order to induce the buyer for purchasing goods.

The representations which are of primary importance for the contract are known as conditions and the statements which are of collateral importance to the contract are known as warranties.

Comparison

Purpose Importance Right to aggrieved party in case of breach Treatment of breach

When a condition is treated as warranty

Voluntary waiver of condition Acceptance of goods by buyer By impossiblity

Remedies for breach of condition

repudiation claim damages and treat it as breach of warranty

No remedy is available when it is treated as breach of warranty

Consequences of breach of warranty

Claim damages but no rejection No repudiation

No remedy is available when it is treated impossible by law

Express & implied conditions & warranties

Express conditions & warranties are those which are entered in clear words in the contract. They are said to be implied when the law presumes their existence in the contract automatically though they have not been put into words.

Implied conditions:

Condition as to title

Condition as to description

Condition as to Sample

Condition as to sample & description

Condition as to fitness or quality

Implied conditionscontd

Condition as to merchantability

Condition as to wholesomeness

Implied Warranties:

Warranty as to quiet possession

Warranty of freedom from encumbrance

Warranty to disclose dangerous nature of goods

Doctrine of caveat emptor

Caveat emptor means let the buyer beware. It is not sellers duty to give the buyer, an article suitable for the particular purpose unless such purpose is made known to the seller. According to this doctrine it is the buyers duty to examine and be careful while purchasing that the goods are useful for his purpose and buy them only after being completely satisfied.

Exceptions to caveat emptor

Fitness for buyers purpose

Sale under a patent or trade name

Merchantable quality

Custom or usage of trade

Consent by fraud

Sale by sample

Misrepresentation

Transfer of property

It means the transfer of ownership of goods. The main purpose of contract of sale is to transfer of ownership from the seller to the buyer. A person may be the owner of goods but may not be in possession of the goods and similarly he may be in possession of goods but may not be the owner.

Importance of Transfer

Risk follows ownership

Action against third parties

Suit for price

Insolvency

Time of passing property

Specific or ascertained goods

When goods are in deliverable state(immediately when the contract is made)When the goods are to be made deliverable(when they become deliverable and buyer is aware)Case: Rugg Vs.Minnet(oil casks)When goods are to be measured(when they are measured): Case:Zagury vs.Furnell(goat skin)

B. Unascertained goods

It is an agreement to sell until the goods are ascertained and identified.

Case: Rhode Vs. Thwaites(Sugar sacks)

Passing of risk

As per the general rule the risk and the ownership go together.

Exceptions:

Agreement Delay due to fault of the either party Trade custom

Transfer of title by non-owners

As per the general rule nemo dat quod non habet. This means no one can transfer a better title than he himself has.

Exceptions:

Sale by mercantile agent

Title by estoppel(OConnor vs.Clark-wagon)

Sale by joint owner

Sale under voidable contract

Sale by seller in possession, after sale

Resale by unpaid seller

Sale by market overt

Sale by finder of lost goods

Performance of contract of sale

Delivery of goods:

Delivery means voluntary transfer of goods or transfer of possession from one person to another. If the transfer is not voluntary then there is no delivery.

Mode of delivery

Actual Delivery Symbolic delivery(railway receipt) Constructive delivery(third party acknowledgement)

Rules regarding delivery

Possession of goods Delivery & payment are concurrent conditions Demand for delivery of goods Time of deliveryPlace of delivery Goods in possession of third Party Effect of part delivery Expenses of delivery borne by seller Delivery of wrong quality-short, excess or mixed

Rules regarding deliverycontd

Delivery to a carrier or wharfinger Delivery at a distant Place

Acceptance of delivery

Buyers right of examining the goods When acceptedBuyer not bound to return the rejected goods

Rights and duties of a buyer

Rights

Right to have delivery of goodsRight to reject the goodsRight not to accept the goodsRight to examine the goodsRight not to return the rejected goodsRight to the notice of insurance Suit against the seller for non-delivery Suit for specific performance Suit for breach of warrantyRepudiation of the contract before due dateSuit for interest

Duties

Duty to pay price and accept the goods Duty to apply for delivery Duty demand delivery at a reasonable hourDuty to accept installment delivery and pay for Duty against deteriorationDuty to intimate the seller when reject the goodsDuty to take deliveryDuty to pay priceDuty to pay damages for non-acceptanceDuty to pay increased tax

Rights and duties of a seller

Rights

Right to claim compensationRight to sue for priceRight to sue for price against contractRight to sue for damagesRight to treat the contract as subsistingRight to interest by way of damagesRights of unpaid seller

Duties

Duty to deliver the goodsDuty to deliver the goods at the agreed placeDuty to supply the goods within specified time Duty to sent the goods at reasonable hourDuty to beat the expenses of putting the goods in deliverable stateDuty to make the contract with the carrier or wharfinger]Duty to give notice to the buyer Duty to give reasonable opportunity to examine the goods

Rmedial measures

In a contract of sale, if seller is under an obligation to deliver goods, buyer has to pay for it. In case buyer fails or refuses to pay, the seller is an unpaid seller.

Unpaid seller

Unpaid seller the person to whom whole of the price has not been paid, or a bill of exchange is dishounoured.

Rights of an unpaid seller

(A)Rights against goods

Where the ownership of goods is transferred to the buyer

Right of lien

It is an unpaid sellers right against the goods, the property of which is transferred to the buyer.

Rules:

He should be in possessiion of goods

Lien should be for price & no other expense

Part of goods can also be retained

Lien is not lost if decree is recieved

Loss of Lien

In the following circumstances the seller loses lien:

Goods delivered to the carrier

When agent or buyer lawfully obtains possession

By waiver thereof, express or implied

Where seller assents to sub-sale by buyer

Right of stoppage in transit

It means the right of stoping future transit of the goods while they are in transit. The following conditions must be satisfied for exercising the right to stoppage in transit:

The seller must be unpaid

Buyer must be insolvent

Property in goods must have passed

Seller must have parted with the possession of goods

Buyer must not have got the possession

Duration of transit

Goods are deemed to be in transit from the time they are delivered to a carrier for the purpose transmission to the buyer, until the buyer or his agent in that behalf takes delivery of them from such carrier.

Right of transit in case of different parties:

Sellers agent: Right can be exercised

Buyers agent: Right cannot be exercised

Independent contractor: Right can be exercised

When transit comes to an end

Buyer or his agent obtain delivery

Goods arrive their destination and carrier acknowledges their delivery

Refusal by carrier to deliver the goods to buyer

Part of goods is delivered(even if remaining goods are in transit)

How stoppage in transit is effected

The right of stoppage in transit can be exercised in the following ways

BY taking actual possession

By giving notice to carrier or bailee

Comparison of lien and stoppage in transit

Circumstances of such right Existence and continuation of right Time when right comes to an endPurpose of right Duration of exercising the right Where the property in goods has not passed to the buyer

Where the property has not passed , the unpaid seller has a right to withhold the delivery and also enjoys other remedies similar to the remedies in right to lien and stoppage in transit.

(B)Rights against the buyer personally

Suit for price Suit for damages for non- acceptanceSuit for repudiation of contract before due dateSuit for interest

(C)Right of resale

When the goods are perishable Where unpaid seller gives notice of his intention Where the seller expressly reserves his rights of resale.