Formalities of Contract

8/6/2019 Formalities of Contract

http://slidepdf.com/reader/full/formalities-of-contract 1/16

Section 5



` Contract of sale may be made in writing or by word of

mouth or partly in writing & partly by word of mouth or

may be implied from conduct of parties or from course

of dealings between the parties. Contract made in any

of following ways:

1. offer& acceptance is necessary

2. immediate delivery or in installments

3. immediate payment or in installments

4. goods may be existing or future goods

5. must have all essentials of ordinary contract



` The possession of goods passes to buyer whopromises to pay price of goods in certain installments .Unless full price is paid the ownership of goods remainwith the seller. Hirer becomes the possessor of goodsimmediately & he has an option to return the goods.

` If there is no such option existing, the agreementwould be an agreement to sell not hire ±purchaseagreement even though payment are made byinstallments. Mere payment in installments not make ithire purchase one.

` Hire purchase agreement is regulated by HirePurchase Act, 1972.



1. Goods perishing before making of a contract,

contract is void if without knowledge of seller goods

perished, goods must be specified goods & goods

become so damaged as no longer to answer their

description in contract.{sec 7}

2. Goods perishing before sale but after agreement to

sell, such an agreement is avoided. But goods must

be specified , goods become so damaged as no

longer to answer their description in contract, withoutany fault on part of seller or buyer.{sec 8}



` Price, means money consideration for sale of

goods. Price is integral part of contract of sale. If it

is not fixed or not capable of fixed , the whole

contract is void ab-initio. Acc. To section 9 pricemay be: 1) fixed by contract 2)may be agreed to

be fixed in the manner provided by contract {by

valuer} . 3) determined by course of dealings

between the parties 4) if price is not to be fixed byabove ways buyer is bound to pay reasonable

price.



` Section 12(2) defines condition as a stipulation

essential to main purpose tom contract, the

breach of which give rise to treat contract as

repudiated.(quality of goods)` Section 12(3) warranty is stipulation subsidary to

main purpose of contract breach of which give rise

to claim of damages but not to reject the

contract(time of payment)` Whether stipulation in a contract is condition or

warranty depends in each case on construction of

contract.



Condition Warranty

` Essential to main

purpose of contract

` Right to sue for damages

and repudiate the

contract

` Breach of condition may

be treated as breach of

warranty in certain

circumstances( waiver of condition)

` Subsidiary to main

purpose of contract

` Right to sue only for

damages

` Breach of warrantycannot be treated as

breach of condition



` These may be of kind that party choose to agree

upon e.g, buyer cannot sell the goods below

stipulated price, delivery shall be made on or

before certain date.



` Implied conditions and warranty are deemed to be

incorporated every contract of sale of good unless

terms of contract shows the contrary intention.

The following are implied conditions:

1. Condition as to title(sec 14)

A, purchased a care from B who had no title to it. A

used the car for several months. After that true

owner spotted the car and demanded it from A.



2. Sale by description(sec 15): where there is

contract for sale of goods by description there is

an implied condition that goods shall corresponds

with the description. If that sale is by sample aswell as description goods must corresponds to

both.

Car is sold as new car buy buyer finds it used one.

Buyer may reject the car or retain the car but claimfor damages.



3. Conditions as to quality or fitness: as a general

rule the buyer is supposed to satisfy himself about

quality of goods he purchases & he is also

charged with himself the responsibility of seeingfor himself the goods suits the purpose for which

he buys them. Later on if goods do not suit the

purpose the seller cannot be asked to

compensate.Exceptions:

# buyer disclose the purpose

#buyer must have relied on seller¶s skill or judgment

# sellers business must be to sell such goods



` In food articles there is an implied condition that

articles are fit for human consumption.

4. Merchantable quality: It means ³it must be

saleable in market under denominationmentioned´ the quality should be such that

reasonable men would accept the article as

performance of promise.

Seller would not be held liable if certain facts areconcealed from him & unsuitability arises because

of those facts



5. Sale by sample: a contract of sale is contract of

sale by sample where there is term in contract

express or implied to that effect. Thus it cannot be

assumed that in all cases where sample is shownsale is by sample.

In case of sale by sample:

# bulk to correspond with sample

#buyer have reasonable opportunity to compare thebulk with sample

#goods to be of merchantable quality



1. Warranty of quiet possession

2. Warranty of freedom from encumbrances.



` Caveat Emptor is fundamental principle of sale of

goods. It means ³caution buyer´ i.e. let the buyer

beware.

` It is no part of seller duty to point out defect in hisown goods.

` The buyer must inspect the goods to find out if

they suit his purpose.



` Exceptions of caveat emptor:

` 1. seller makes false representation

` 2. seller actively conceals defects in the goods so

that it could not be discovered on examination` 3. buyer makes known to seller his purpose of

buying goods

Formalities of Contract

Documents

Transcript of Formalities of Contract