The Sale of Goods Act, 1930

The Sale of Goods Act shall apply to

• A Contract only if the ownership of goods is transferred from one person to another immediately at the time of formation of contract or subsequent to formation of contract;

Sale of Goods Act shall not apply to

• Bailment of goods;

• Pledge of goods ;

• Any contract relating to immovable property ;

• Contract of work and skill

Sale and agreement to sell

• The property in the goods is transferred from seller to the buyer, the contract is called sale;

• The transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell;

Essentials of a contract of Sale

• Two distinct parties ;• Movable goods ;• Consideration should be a price and that too

in money terms;• There must be a transfer of general property

as distinguished from special property in goods, from seller to the buyer;

• All essential elements of a valid contract;

Sale & Hire Purchase Agreement

• Transfer of ownership ;

• The position of buyer is that of the owner but the hire purchaser act as a bailee;

• Termination of Contract ;

Goods

• Goods form the subject matter of a contract of sale ;

• Existing goods;

• Specific goods ;

• Ascertained Goods ;

• Unascertained goods ;

• Future Goods ;

Destruction of Goods

• Goods perishing before making of contract of sale ;

• Goods perishing before sale but after agreement to sell ;

• Specific goods ;

• Ascertained Goods ;

• Unascertained goods ;

• Future Goods ;

Document of title to goods

• Document of title to goods is one which enables its possessor to deal with the goods described in it as if he was the owner;

– Condition to be fulfilled• It must be in the ordinary course of business;

• The undertaking to deliver the goods to the possessor of the document must be unconditional;

• The possessor of the document by virtue of holding such document, must be entitled to receive the goods unconditionally.

Condition & Warranty

Condition is a stipulation essential to the main purpose of the contract, the breach of which gives rise to a right to treat the contract as repudiated.

Warranty is a stipulation collateral to the main purpose of the contract, the breach of which does not entitle the buyer to treat the contract as repudiated and give rise to a claim for damages.

Breach of condition may be treated as a breach of warranty

Breach of warranty cannot be treated as a breach of condition

Implied conditions

• Condition as to title ;

• Sale by description ;

• Condition as to quality or fitness / Doctrine of Caveat Emptor

• Condition as to merchantability ;

• Condition implied by custom ;

• Sale by Sample

Implied Warranties

• Warranty of quiet possession ;

• Warranty of freedom from encumbrance ;

• Warranty to disclose the dangerous nature of the goods

Transfer of Property

• Goods must be ascertained• Specific goods in a deliverable state• Specific goods to be put in a deliverable state• Specific goods in a deliverable state when the

seller has to do anything thereto in order to ascertain price

• Sale of unascertained goods and appropriation• Goods sent on approval or “ on sale or return “• Reservation of right of disposal • Risk prima facie passes with the property

Transfer of Title

• The general rule “ no one can give that which one has not got ’

• Sale by person not the owner – “effect of estoppel’

• Sale by mercantile agent• Sale by one of joint owners• Sale by person in possession under voidable

contract• Seller in possession after sale• Buyer in possession after sale• Sale by an unpaid seller

Rules as to delivery of goods

• Place of delivery• Time of delivery• Goods in the possession of a third person• Expenses of delivery• Delivery of wrong quantity• Instalment deliveries• Delivery to carrier or wharfinger• Risk where goods are delivered at a distant place• Buyer’s right of examining the goods• Acceptance• Buyer not bound to return rejected goods• Liability of buyer for neglecting or refusing delivery of

goods

Rights of an unpaid Seller

• Against the Goods– When the property in the goods has passed

• Right to lien• Right to stop in transit• Right to re-sell

– When the property in the goods has not passed• Right to withhold delivery• Right to stop in transit

• Against the buyer personally– Right to sue for price – Right to sue for damages– Right to repudiate the contract– Right to sue for interest

Auction Sale

• Buyers assemble and make offers on the spot. Person offering to pay highest price gets the goods.

• Implied warranties undertaken by an auctioneer– He has the authority to sell– He does not know of any defect in the title of his

principal– He undertakes to give possession of the goods

against the price paid to him– He guarantees the quiet possession of the goods by

the purchaser.