Our today’s topic

Law of Sales of

Goods

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Discussion Topics

• Law of sales of goods• Contract of sale• Essentials of Contract of sale• The rules regarding transfer of property in

goods• Modes of delivery• Rules of delivery of goods

Law of sale of Goods

• The law as to the sale of goods was originally embodied in sections 76 to 123 of the Indian Contract Act 1872.

• It is well known that our sale of Goods Act 1930 is based upon and is largely a reproduction of the English sale of Goods Act 1893 and in principle the law of sale.

Contract Formation

• A contract for the sale of goods can be made in any manner that shows agreement between the buyer and seller.

• A contract may be made orally or in writing or through any other conduct by both parties that acknowledges the existence of a contract.

What is Contract of Sale

• A contract of sale is a legal contract an exchange of goods, services or property to be exchanged from seller to buyer for an agreed upon value in money paid or the promise to pay same. It is a specific type of legal contract.

Essentials of a valid Contract of Sale

• There must be Two parties.• Transfer of property • Goods• Price• An Agreement to Sell • Other formalities

There must be Two parties.

• There must be at least two parties, i.e. one buyer and the other seller.  A person cannot buy his own goods. 

Example:

“A” sells his computer to “B”. “A” is seller and “B” is buyer.

Transfer of property

• It is the ownership that is transferred in a Contract of sale. 

Example:

“A” sells his car to “B”. The ownership of the car is transfer from “A” to “B”.

Sale Sale Sale

Goods• The subject matter of contract of sale must be

movable goods. It can be movable property other then actionable claim and money.

• An actionable claim means a debt or a claim for money which a person may have against other.

Example:

“A” sells his car to “B” here is a contract between both the persons because car is a move able thing.

Price

• Consideration in a contract of sale has necessarily to be money.  Thus, if for instance, goods are offered as consideration for goods, it will not amount to sale, but it will be called a 'barter'. 

Similarly, in case there is no consideration, it amounts to gift and not sale.  However the consideration may be partly in money and partly in goods.

Example:

“A” sells his car to “B” it is contract of sale.

An Agreement to Sell

• Where under a construct of sale, the transfer of property in the goods is to take place at a future time or subject to some condition there after to be fulfilled the contract is called an “Agreement to Sale”

• An agreement to sell becomes a sale where no time elapses or the conditions are fulfilled subject to which the property in the goods was to be transferred.

Other formalities

• There is no specific procedure to make a contract. Apart from the above all other essentials of valid contract like capacity of parties, free consent, legality of object etc. should also be there in contract of sale

Condition

• A term or requirement stated in a contract, which must be met for the other party to have the duty to fulfill his/her obligations.

Warranty

• In business and legal transactions, a warranty is an assurance by one party to the other party that specific facts or conditions are true or will happen the other party is permitted to rely on that assurance and seek some type of remedy if it is not true or followed.

• A warranty may be express or implied depending on what you bought

The rules regarding transfer of property in goods

• Unascertained goods• Intention of parties• Goods in deliverable state

Unascertained goods

• Ascertainment is the process by which goods are identified and separated

• The property in the goods does not pass to the buyer until the goods are ascertained.

Example:

“A” agrees to sell 100 kg of rice out of rice lying in a godown. “B” becomes the owner when 100 kg rice will be separated the rest.

Intention of parties

• In contract of sale of specific or ascertained goods, the ownership transfer when parties are intend to transfer it.

• It depends on the terms of the contract.• It may transfer

At the time of contract

When the goods are delivered

When the payment is made

Goods in deliverable state

• When there is an unconditional contract for the sale of specific goods in a deliverable state the property in the goods passes to the buyer as soon as contract is made.

Delivery of goods in contract of sale

• Delivery means ‘a voluntary transfer of possession from one person to another’

Example:

“B” steals goods from “A”. There is no delivery from “A” to “B” through possession transferred.

Modes of delivery

• Actual delivery• Symbolic delivery• Constructive delivery

Rules of delivery of goods

• Duty of seller and buyer• Delivery and payment• Mode of delivery• Demand of delivery• Expenses of delivery