Sale of Goods Act (1)

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THE

SALE OF

GOODS ACT,

1930

For CS FOUNDATION

BY

(CS) VINIT SIKKA

CONTACT NO: 09871664440, 09136614465

SALE OF GOODS ACT

1.

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Section 4(1) of the Indian Sale

Section 4(1) of the Indian Sale of Goods Act, 1930 defines the of Goods Act, 1930 defines the contract of sale of `goods as following:contract of sale of `goods as following:

“A contract of sale of goods is a contract where by the seller transfers or agrees to transfer the property in “A contract of sale of goods is a contract where by the seller transfers or agrees to transfer the property in goods to the buyer for a price.”

goods to the buyer for a price.”

From this definition it is clear that a contract of sale may be absolute or conditional. In an absolute sale, the From this definition it is clear that a contract of sale may be absolute or conditional. In an absolute sale, the property

property in in the the goods goods passes passes immediately to immediately to the the buyer buyer and and nothing nothing more more remains remains to to be be done done by by the the seller.seller. Goods sold on the counter of a shop is an example of absolute sale. On the other hand, in a conditional Goods sold on the counter of a shop is an example of absolute sale. On the other hand, in a conditional contract of sale, the property in the goods does not pass to the buyer immediately but it will pass on the contract of sale, the property in the goods does not pass to the buyer immediately but it will pass on the fulfillment of certain conditions.

fulfillment of certain conditions.

The term ‘Contract of sale of goods’ is a generic term and it includes (a) sale and (b) an agreement to sell. The term ‘Contract of sale of goods’ is a generic term and it includes (a) sale and (b) an agreement to sell. When the seller transfers the ownership rights to the buyer immediately on making the contract, it is a When the seller transfers the ownership rights to the buyer immediately on making the contract, it is a ‘contract of sale’. But where the ownership rights are to pass on some future date upon the fulfillment of ‘contract of sale’. But where the ownership rights are to pass on some future date upon the fulfillment of certain conditions, then it is called ‘an agreement to sell’.

certain conditions, then it is called ‘an agreement to sell’.

An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to

the property in the goods is to be transferred.be transferred. Example:

Example: A A agrees to agrees to sell his sell his book book to to B, B, B agB agrees to rees to purchase it, purchase it, it it is sale. is sale. Suppose Suppose B B agrees to agrees to purchasepurchase the book after two months, it is an

the book after two months, it is an agreement to sell.agreement to sell.

A contract of sale may be made in writing or by words of mouth, or partly in writing and partly by words of A contract of sale may be made in writing or by words of mouth, or partly in writing and partly by words of mouth or may be implied from the conduct of the parties.

mouth or may be implied from the conduct of the parties.

Essential Essential

Features:-On analysis the definition of a contract of

On analysis the definition of a contract of sale of goods, the following essential features emerge:sale of goods, the following essential features emerge:

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1.. A cA coonnttrraacctt.. A contract of sale is a special type of contract. Therefore, all the essential elements of aA contract of sale is a special type of contract. Therefore, all the essential elements of a valid contract must be present in a contract of sale. There must be free consent, there must be some valid contract must be present in a contract of sale. There must be free consent, there must be some consideration and the object must be lawful. Thus, where ownership rights are given to another person consideration and the object must be lawful. Thus, where ownership rights are given to another person without any consideration, then it is not a contract of sale but a transaction of gift.

without any consideration, then it is not a contract of sale but a transaction of gift.

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2.. TTwwo po paarrttieiess.. To constitute a contract of sale, there must be two parties- seller and buyer. The seller andTo constitute a contract of sale, there must be two parties- seller and buyer. The seller and buyer must be two different persons, because a

buyer must be two different persons, because a person cannot buy his own person cannot buy his own goods. In state of Gujarat Vs.goods. In state of Gujarat Vs. Ramanlal S. & Co. when on dissolution of a partnership, the assets of the firm were divided among the Ramanlal S. & Co. when on dissolution of a partnership, the assets of the firm were divided among the partners,

partners, the the sales-tax sales-tax officer officer wanted wanted to to tax tax this this transaction. transaction. It It was was held held that that it it was was not not a a sale. sale. TheThe partners

partners being being the the joint joint owner owner of of those those assets caassets cannot nnot be be both both seller seller and and buyer. buyer. However, However, a a part-owner part-owner can sell his share to another part-owner.

can sell his share to another part-owner.

3.

3. TrTranansfsfer er of Prof Propoperertyty.. Transfer of property means transfer of ownership rights. The object of theTransfer of property means transfer of ownership rights. The object of the contract of sale is to transfer the ownership of goods from seller to buyer. A mere transfer of possession contract of sale is to transfer the ownership of goods from seller to buyer. A mere transfer of possession of the goods cannot be termed as sale. Though transfer of property is an essential feature of a sale, but it of the goods cannot be termed as sale. Though transfer of property is an essential feature of a sale, but it does not mean that there should be physical delivery of goods.

does not mean that there should be physical delivery of goods.

The term property as is used here means the transfer of ‘general property’ in goods as distinguished The term property as is used here means the transfer of ‘general property’ in goods as distinguished from ‘special property’.

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4.. GGooooddss:: The subject matter of the contract of sThe subject matter of the contract of sale is goods. ale is goods. Goods mean all types of moveable propertyGoods mean all types of moveable property other than actionable claim

other than actionable claims and money. s and money. Things like goodwillThings like goodwill, trade mark, patents, wat, trade mark, patents, water electricity areer electricity are all goods.

all goods. Things attached to or forming part Things attached to or forming part of land may be sold as goods provided they can be sof land may be sold as goods provided they can be severedevered or separated from the land.

or separated from the land.

It should be noted that sale and purchase of immovable property is governed by the Transfer of Property It should be noted that sale and purchase of immovable property is governed by the Transfer of Property Act.

Act.

5.

5. Price:Price: The properThe property in goods is to be ty in goods is to be transtransferreferred for a d for a consiconsideratderation, called pricion, called price. e. If the propertIf the property iny in goods is transferred for any consideration other than money, then it is not a sale but may be a barter or goods is transferred for any consideration other than money, then it is not a sale but may be a barter or exchange.

exchange. But if the price is paid partly in cash and partly in the form of goods, then it is a salBut if the price is paid partly in cash and partly in the form of goods, then it is a sale.e.

It should, however, be remembered that payment of price is not a pre-requisite for transferring the It should, however, be remembered that payment of price is not a pre-requisite for transferring the ownership of goods.

ownership of goods. The property in goods may The property in goods may pass immediately, though pripass immediately, though price is to be paid ce is to be paid in futurein future or in installments.

or in installments.

2.

2. DistinguiDistinguish betsh between ween a contra contract of act of sale ansale and an d an agreemeagreement to nt to sell.sell.

According to Section 4 (3) of the Sale of Goods Act, when the property in the goods is transferred to the According to Section 4 (3) of the Sale of Goods Act, when the property in the goods is transferred to the buyer

buyer immediately immediately on on the the making making of of the the contract, contract, then then it it is is called called a a ‘sale’. ‘sale’. On On the the other other hand, hand, when when thethe property in the goods is

property in the goods is to be transferred on some future to be transferred on some future date or on the fulfillment of certain date or on the fulfillment of certain conditions thenconditions then it is called an ‘agreement to sell.’

it is called an ‘agreement to sell.’ SectiSection 4(4) further provion 4(4) further provides that an agreement to sell becomes a saledes that an agreement to sell becomes a sale when the time elapses or the conditions are fulfillment subject to which the property in the goods is to be when the time elapses or the conditions are fulfillment subject to which the property in the goods is to be transferred.

transferred. Examples: Examples:

(i) A sells all the wheat lyi

(i) A sells all the wheat lying in his godown to B. ng in his godown to B. It is a contract of sale, thouIt is a contract of sale, though goods have not yet beengh goods have not yet been delivered.

delivered.

(ii) A sells a television set to V on hire-purchase basis on the condition that the property in goods shall pass (ii) A sells a television set to V on hire-purchase basis on the condition that the property in goods shall pass on the payment of last instal

on the payment of last installmentlment. . Here, thougHere, though the goods have been h the goods have been delidelivered, yet it is not a vered, yet it is not a contracontract of ct of sale but is only an agreement to sell.

sale but is only an agreement to sell.

Following are the main points of distinction: Following are the main points of distinction: 1.

1. Nature of Contract:Nature of Contract: A sale is an executed contract, meaning thereby that all the formalities haveA sale is an executed contract, meaning thereby that all the formalities have been

been complied with complied with and and so the so the property in property in goods pgoods passes to asses to the buythe buyer. er. While an While an agreement to agreement to sell issell is an

an executoryexecutory contract, i.e. something remains to be done and the property in goods has not yet passedcontract, i.e. something remains to be done and the property in goods has not yet passed to the buyer.

to the buyer. 2.

2. TranTransfer sfer of of proppropertyerty:: In In a a sasalele, , ththe e prpropopererty ty in in ththe e gogoodods s papasssses es frfrom om sesellller er to to ththe e bubuyeyer r immediately when the contract is

immediately when the contract is made. made. In other words, the In other words, the moment the contract of sale imoment the contract of sale is made, thes made, the seller ceases to be t

seller ceases to be the owner of goods. he owner of goods. Payment of price and delivery of Payment of price and delivery of goods are no conditions for goods are no conditions for trans

transferrferring the ing the properproperty in ty in the goods.the goods. For For example example A A buys buys a a wrist wrist watch watch from from B B on on 55thth _December_December

and the price is to be paid aft

and the price is to be paid after a week. er a week. It is a contracIt is a contract of sale, A becomes the ownet of sale, A becomes the owner of the watchr of the watch though the price is yet to be paid.

though the price is yet to be paid.

In an agreement to sell, the property in the goods does not pass immediately but it is to pass on some In an agreement to sell, the property in the goods does not pass immediately but it is to pass on some futur

future date or on the fulfille date or on the fulfillment of some condiment of some condition. tion. Thus the sellThus the seller continuer continues to be the owner of es to be the owner of goods until hat date or till t

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buy

buy the the wrist wrist watch watch from from B B on on the the condition condition that that if if it it is is approved approved by by A’s A’s father, father, then then it it is is anan agreem

agreement to sell. ent to sell. The properThe property in goods well pass from B to A ty in goods well pass from B to A only when A’s fathonly when A’s father approves theer approves the watch.

watch.

In fact, this is the basic point of dist

In fact, this is the basic point of distinction between a sale and an agreement to sell. inction between a sale and an agreement to sell. All other pointsAll other points of distinction gives below follow from this basic difference.

of distinction gives below follow from this basic difference. 3.

3. Nature of rights:Nature of rights: In a contract of sale, the buyer becomes the owner of goods and he acquired theIn a contract of sale, the buyer becomes the owner of goods and he acquired the proprietory rights in respect

proprietory rights in respect of them. of them. He acquires aHe acquires a Jus in rem Jus in rem, i.e. a right to enjoy the goods against, i.e. a right to enjoy the goods against the whole world.

the whole world. On the other hand in an agreement to sell On the other hand in an agreement to sell the buyer gets a right as against the buyer gets a right as against the seller the seller only such rights are

only such rights are jus jus in in personampersonam. . In case the seIn case the seller refller refuses to seluses to sell goods to the buyel goods to the buyer, then ther, then the buyer’s only remedy is to file a suit for damages, he can not recover the goods.

buyer’s only remedy is to file a suit for damages, he can not recover the goods. 4.

4. Risk of loss:Risk of loss: In a sale, the risk of loss is that of the buyerIn a sale, the risk of loss is that of the buyer. . In a contract of sale becaIn a contract of sale because ownersuse ownershiphip passes

passes immediately immediately to to the the buyer, buyer, the the risk risk also also passes. passes. The The rule rule is is risk risk follows follows ownership. ownership. SoSo whosoever is the owner of the goods shal

whosoever is the owner of the goods shall bear the risk. l bear the risk. Thus, in a contract of sale, iThus, in a contract of sale, if the goods aref the goods are destr

destroyed the loss falls on oyed the loss falls on the buyer, even though the goods the buyer, even though the goods are in the are in the posspossessioession of n of the seller.the seller. For For example, A buys a radio set

example, A buys a radio set from B and agrees tfrom B and agrees to take the delivery on the fo take the delivery on the following day. ollowing day. As a result As a result of fire in the shop that radio set is

of fire in the shop that radio set is also destroyed. also destroyed. Here A shall be liable to pay the price because heHere A shall be liable to pay the price because he will have to bear this loss since the owne

will have to bear this loss since the ownership had already passed on to him.rship had already passed on to him.

In an agreement to sell, on the other hand, where the ownership in goods has not yet passed but is yet In an agreement to sell, on the other hand, where the ownership in goods has not yet passed but is yet to pass from seller to the buyer, if the goods are destroyed such loss will have to be borne by the to pass from seller to the buyer, if the goods are destroyed such loss will have to be borne by the seller, even though the goods may be in the possession of the buyer.

seller, even though the goods may be in the possession of the buyer. Thus, if in the above example,Thus, if in the above example, the radio set is given by B

the radio set is given by B to A on trial for a week to A on trial for a week and if the set is destroyed on and if the set is destroyed on the third day, this lossthe third day, this loss will have to be borne

will have to be borne by B because the by B because the ownership has not yet passed from seller to the buyer.ownership has not yet passed from seller to the buyer. 5.

5. Consequences of the breach:Consequences of the breach: Breach by the Breach by the buyer buyer – In case of sale if the buyer refuses to accept the– In case of sale if the buyer refuses to accept the goods or to pay for them, the seller can sue for the price, even though the goods are still in his goods or to pay for them, the seller can sue for the price, even though the goods are still in his possession.

possession. But in an But in an agreement to agreement to sell, if there is sell, if there is a breach a breach by the buyer, by the buyer, then the seller then the seller can only suecan only sue for damages and not for the price, even though the goods are in possession of the buyer.

for damages and not for the price, even though the goods are in possession of the buyer. Breach by

Breach by the seller the seller – in a contract of sale if the seller refuses to deliver the goods, the buyer can sue– in a contract of sale if the seller refuses to deliver the goods, the buyer can sue for the recovery of the goods as well as for damages, But in an agreement to sell, if the seller refuses for the recovery of the goods as well as for damages, But in an agreement to sell, if the seller refuses to sell the goods, the buyer’s only remedy is to claim damages, he can not ask for the delivery of to sell the goods, the buyer’s only remedy is to claim damages, he can not ask for the delivery of goods.

goods. 6.

6. Right to re-sell:Right to re-sell: In a contract of sale because the property in goods is with the buyer, a seller who isIn a contract of sale because the property in goods is with the buyer, a seller who is in possession if goods, can not resell s

in possession if goods, can not resell such goods. uch goods. IF the seller re-sellsIF the seller re-sells, then the original buyer has not, then the original buyer has not only a personal remedy against the seller for damages but he can also recovery the goods from the only a personal remedy against the seller for damages but he can also recovery the goods from the third person.

third person.

The right to recover the goods from the third person is lost if the subsequent buyer had bought the The right to recover the goods from the third person is lost if the subsequent buyer had bought the goods in good faith without notice

goods in good faith without notice of the previous sale.of the previous sale.

In an agreement to sell, the property in the goods remains with the seller, therefore, he can dispose In an agreement to sell, the property in the goods remains with the seller, therefore, he can dispose the

them off in m off in any mannany manner he er he liklikes. es. The buyeThe buyer’r’s only remeds only remedy againsy against the sellet the seller is r is to sue him for to sue him for damages, he can not recover the goods from the subsequent buyer.

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7.

7. Insolvency of buyer:Insolvency of buyer: In a sale, if the buyer is adjudged insolvent, before he pays for the goods in theIn a sale, if the buyer is adjudged insolvent, before he pays for the goods in the absence of any lien on the goods, the seller must deliver the goods to the Official Receiver or the absence of any lien on the goods, the seller must deliver the goods to the Official Receiver or the Official Ass

Official Assignee. ignee. This is This is because in sale because in sale the ownership has the ownership has passed to passed to the buyer. the buyer. However, the selHowever, the seller ler will be entitled to a rateable dividend

will be entitled to a rateable dividend for the price of the goods.for the price of the goods.

In an agreement to sell, when the buyer becomes insolvent before he pays for the goods, the seller In an agreement to sell, when the buyer becomes insolvent before he pays for the goods, the seller may refuse to deliver the goods until he is paid for because the property in goods has not yet passed may refuse to deliver the goods until he is paid for because the property in goods has not yet passed to the buyer.

to the buyer. 8.

8. Insolvency of seller:Insolvency of seller: In a sale, if the seller becomes insolvent, the buyer is entitled to recover theIn a sale, if the seller becomes insolvent, the buyer is entitled to recover the goods from official receiver or Assignee, because the property in goods rests with the buyer.

goods from official receiver or Assignee, because the property in goods rests with the buyer.

In an agreement to sell, on the other hand, if the buyer has already paid the price and the seller In an agreement to sell, on the other hand, if the buyer has already paid the price and the seller becomes insolvent, the b

becomes insolvent, the buyer can claim uyer can claim only a rateable donly a rateable dividend and not ividend and not the goods. Even the goods. Even if the goodsif the goods are in the

are in the possepossessiossion of n of the buyer, he cannot retain them, but the buyer, he cannot retain them, but he will have to he will have to returreturn the n the goods to thegoods to the official receiver or Assignee.

official receiver or Assignee.

3.

3. DistDistinguinguish betish betweeween a sale and a hin a sale and a hire purre purchaschase agree agreemeement.nt.

A hire-purchase agreement is not a contract of sale. In a hire-purchase agreement the owner of the goods A hire-purchase agreement is not a contract of sale. In a hire-purchase agreement the owner of the goods lets them out on hire for a periodic rent on the terms that the hirer has the option to buy the goods after lets them out on hire for a periodic rent on the terms that the hirer has the option to buy the goods after the payment of agreed number of installments or to return them and the seller can recover the goods the payment of agreed number of installments or to return them and the seller can recover the goods from the possession of the hirer in case he makes a default in paying the hire charges. In a hire purchase from the possession of the hirer in case he makes a default in paying the hire charges. In a hire purchase agreement the buyer is not compelled to buy the goods. In a hire purchase agreement, therefore, till the agreement the buyer is not compelled to buy the goods. In a hire purchase agreement, therefore, till the hirer decides to buy, the property in goods remains with the seller, the hire-purchaser is entitled to use hirer decides to buy, the property in goods remains with the seller, the hire-purchaser is entitled to use the goods on payment of hire charges.

the goods on payment of hire charges.

Example: A hires a sewing machine agreeing to pay Rs. 15 per month with the stipulation that if he pays Example: A hires a sewing machine agreeing to pay Rs. 15 per month with the stipulation that if he pays regularly the monthly installments for thirty months, the machine shall become his property at the end regularly the monthly installments for thirty months, the machine shall become his property at the end of the said period of thirty months. This is only a hire-purchase agreement and A will not become the of the said period of thirty months. This is only a hire-purchase agreement and A will not become the owner till all the installments are paid.

owner till all the installments are paid. A

A hire-hire-purchapurchase agreement should be se agreement should be distdistinguiinguished from a shed from a contrcontract of act of sale by sale by instainstallmenllment. In t. In a a sale bysale by installment, there is a contract of sale and the buyer becomes the owner of the goods, the only thing is installment, there is a contract of sale and the buyer becomes the owner of the goods, the only thing is that the price is to be paid in installments. In a sale by installment, the buyer has no option to return the that the price is to be paid in installments. In a sale by installment, the buyer has no option to return the goods simil

goods similarly if the arly if the buyer fails to pay buyer fails to pay the instalthe installment money, the seller cannot recover the lment money, the seller cannot recover the goods butgoods but he can file a suit for the

he can file a suit for the recovery of the price.recovery of the price.

Following are the important points of distinction between a

Following are the important points of distinction between a contract of sale and a hcontract of sale and a hire purchase agreement:ire purchase agreement: 1)

1) In a In a cocontntraract of ct of sasale the le the prpropopererty in ty in ththe e googoods passds passes to es to ththe e bubuyer immyer immediediatatelely y on makion making ng ththee contract and the buyer can deal with the goods as he likes. But in hire-purchase agreement the contract and the buyer can deal with the goods as he likes. But in hire-purchase agreement the ownership does not passes immediately but it passes only when a certain number of stipulated ownership does not passes immediately but it passes only when a certain number of stipulated installments are paid by he hire-purchaser.

installments are paid by he hire-purchaser. 2)

2) In a sale, the buIn a sale, the buyer becomyer becomes the owner oes the owner of the goodsf the goods, where as in a hir, where as in a hire-pure-purchase agrchase agreement he hieement he hirer rer is not the owner but only a bailee of goods.

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3)

3) In a sale, the buyeIn a sale, the buyer has no option tr has no option to termino terminate the contrate the contract and as such he is bounact and as such he is bound to pay the price of d to pay the price of the goods. But in a hire-purchase, the hirer has the option to buy or reject the goods, therefore, he the goods. But in a hire-purchase, the hirer has the option to buy or reject the goods, therefore, he can terminate the contract at any

can terminate the contract at any time and he is not bountime and he is not bound to pay any further installments.d to pay any further installments. 4)

4) In a sale, if tIn a sale, if the price is aghe price is agreed to be paireed to be paid in instald in installmentlments and the buyer mas and the buyer makes a defaulkes a default in making tht in making thee payment, the

payment, the seller can seller can recover the recover the amount from amount from the buyer the buyer but he but he cannot cannot claim back claim back the goods. the goods. ButBut in hire-purchase, if a default is made by the hirer in paying any installment, the seller has a right to in hire-purchase, if a default is made by the hirer in paying any installment, the seller has a right to recover his goods from the hirer.

recover his goods from the hirer. 5)

5) In a sale, beIn a sale, because the bucause the buyer has becyer has become the owneome the owner of the goodr of the goods, he gets a rs, he gets a right to seight to sell themll them. But in. But in hire-purchase, because the hire-vendor is still the owner of the goods, the hire purchaser has no right hire-purchase, because the hire-vendor is still the owner of the goods, the hire purchaser has no right to sell them.

to sell them.

4.

4. How a contract of sale is How a contract of sale is different from a contract for work and different from a contract for work and labour?labour?

A contract of sale has to be distinguished from a contract involving the exercise of skill or labour on A contract of sale has to be distinguished from a contract involving the exercise of skill or labour on some material. The distinction is important not only from the point of view of sales-tax but is also some material. The distinction is important not only from the point of view of sales-tax but is also important because in sale certain implied conditions and warranties are applicable. The distinction, important because in sale certain implied conditions and warranties are applicable. The distinction, however, is very minute. In a contract for work and labour, a party exercises some labour or skill on the however, is very minute. In a contract for work and labour, a party exercises some labour or skill on the material which is supplied by the other party.

material which is supplied by the other party.

In Robinson Vs. Graves, the court laid down the guidelines, it said that the proper test is to see whether In Robinson Vs. Graves, the court laid down the guidelines, it said that the proper test is to see whether work is of the essence of the contract. In a case of work of art, where the application of skill and labour work is of the essence of the contract. In a case of work of art, where the application of skill and labour is of the highest order, the material is of no importance as compared to labour, the price may be is of the highest order, the material is of no importance as compared to labour, the price may be recovered for work and labour.

recovered for work and labour.

In Lee Vs. Griffin, a lady asked a dentist to make two sets of false teeth to be fitted in her mouth. Before In Lee Vs. Griffin, a lady asked a dentist to make two sets of false teeth to be fitted in her mouth. Before the work could be completed the lady died. It was held to be a contract of sale.

the work could be completed the lady died. It was held to be a contract of sale.

If a hotel company which provides residence and food to its customers and charges a consolidated If a hotel company which provides residence and food to its customers and charges a consolidated amount for both the services, and it gives no rebate if a customer does not take his food at the hotel, it is amount for both the services, and it gives no rebate if a customer does not take his food at the hotel, it is a contract for work and labour and not a sale.

a contract for work and labour and not a sale.

But a contract to take and supply photographs, to build ships as per specifications, to construct bus But a contract to take and supply photographs, to build ships as per specifications, to construct bus bodies on chassis supplied by government have been held to be contracts of sale of goods.

bodies on chassis supplied by government have been held to be contracts of sale of goods.

In conclusion, we can say that we must see the particular contract and find out whether the essence of In conclusion, we can say that we must see the particular contract and find out whether the essence of the contract is the rendering of service and exercise of skill, then it is a contract for work and labour and the contract is the rendering of service and exercise of skill, then it is a contract for work and labour and not a sale.

not a sale.

5.

5. Define tDefine the he term term ‘goods’.‘goods’.

The subject-matter of the contract of sale must be goods. The term ‘goods’ is defined by section 2(7) of The subject-matter of the contract of sale must be goods. The term ‘goods’ is defined by section 2(7) of the Sales of Goods Act as following:

the Sales of Goods Act as following:

“Goods mean every kind of movable property other than actionable claims and money; and include “Goods mean every kind of movable property other than actionable claims and money; and include stock and shares, growing crops, grass, and things attached to or forming part of the land which are stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be served before

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The above definition is quite exhaustive. Things attached to or forming part of land may be sold as The above definition is quite exhaustive. Things attached to or forming part of land may be sold as goods provided they can be severed from the land. Thus standing crop, trees, fruits on the trees are goods provided they can be severed from the land. Thus standing crop, trees, fruits on the trees are goods. But contracts for the sale of things forming part of the land itself are not contracts for sale of goods. But contracts for the sale of things forming part of the land itself are not contracts for sale of goods. For example, a contract for the sale of coal mine or building-stone quarry is not a contract of sale goods. For example, a contract for the sale of coal mine or building-stone quarry is not a contract of sale of goods.

of goods. Money and

Money and actioactionable claims have nable claims have been expresslbeen expressly y excludexcluded ed from the definitiofrom the definition n of goods. Money of goods. Money herehere means current money or the money in circulation, thus old and rare coins can be bought and sold. An means current money or the money in circulation, thus old and rare coins can be bought and sold. An actionable claim means a claim or sight which can he enforced by filing a suit in a court of law. For actionable claim means a claim or sight which can he enforced by filing a suit in a court of law. For example, a debt due from one person to another is an actionable claim and cannot be bought and sold as example, a debt due from one person to another is an actionable claim and cannot be bought and sold as goods, however, it can be assigned.

goods, however, it can be assigned. Goods may be divided into

Goods may be divided into the following types:the following types: 1.

1. Existing goods:Existing goods: The goods which physically exist and which are owned and / or possessed by theThe goods which physically exist and which are owned and / or possessed by the seller at the time of making the contract of sale are known as existing goods. Sometimes the seller seller at the time of making the contract of sale are known as existing goods. Sometimes the seller may be in possession of the goods but may not be the owner, as it happens when goods are sold by may be in possession of the goods but may not be the owner, as it happens when goods are sold by mercantile agent. It is only the existing goods which are the subject matter of the sale. In case of mercantile agent. It is only the existing goods which are the subject matter of the sale. In case of goods which are not in existence there cannot be a contract for sale.

goods which are not in existence there cannot be a contract for sale. Existing goods may again be

Existing goods may again be either specific or ascertained or unascertained.either specific or ascertained or unascertained. a)

a) SpecifSpecific Goods – Specic Goods – Specific Gooific Goods means gods means goods ascerods ascertainetained and identid and identified and agrfied and agreed upon ateed upon at the time of contract of sale is made. To be specific goods must be ascertained and identified. the time of contract of sale is made. To be specific goods must be ascertained and identified. For example if A owns a number of horses, promises to sell one of them, here the goods are not For example if A owns a number of horses, promises to sell one of them, here the goods are not specific/

specific/ But if the particular house to be sold is identifBut if the particular house to be sold is identified and separated from the rest, then theied and separated from the rest, then the goods become specific.

goods become specific. b)

b) Ascertained goods – The term ‘ascertained goods’ has not been Ascertained goods – The term ‘ascertained goods’ has not been defined in the Act. defined in the Act. Quite oftenQuite often the term ‘ascertained goods’ is used in the same sense as ‘specific goods’, but there is minute the term ‘ascertained goods’ is used in the same sense as ‘specific goods’, but there is minute dif

differference betweence between the en the twotwo. . AscAscertertainained ed goodgoods s meamean n sucsuch h googoods which are ds which are ideidentintifiefied d inin accordance with the agreement subsequently to t

accordance with the agreement subsequently to the formation of contract he formation of contract of sale. of sale. In the aboveIn the above example, when the house to be sold is identified, it becomes ascertained goods.

example, when the house to be sold is identified, it becomes ascertained goods. c)

c) UnascerUnascertainetained Goods: The goods wd Goods: The goods which are not idehich are not identifntified or ascertied or ascertained at the tiained at the time of makingme of making the cont

the contracract are t are knoknown as wn as unaunascescertartaineined d or generor generic goodsic goods. . SucSuch h googoods are definds are defined byed by description or by sample.

description or by sample. In the above example where A agrees In the above example where A agrees to sell one of tto sell one of the horses to B,he horses to B, the goods are unascertained.

the goods are unascertained. As soon as the house As soon as the house to be sold is identto be sold is identified it becomes specificified it becomes specific goods.

goods. 2.

2. Future goods:Future goods: Section 2(6) defines future goods as “goods to be manufactured or produced or Section 2(6) defines future goods as “goods to be manufactured or produced or acquired by the seller aft

acquired by the seller after the making of the contract er the making of the contract of sale.” of sale.” Unlike existing goods, future Unlike existing goods, future goodsgoods are not in existence at the time of contract of sale.

are not in existence at the time of contract of sale. A person may agree to sell goods in anticipationA person may agree to sell goods in anticipation of their produc

of their production or acquisition or acquisition. tion. But when a person purportBut when a person purports to make a s to make a presenpresent sale of futuret sale of future goods, the contr

goods, the contract is not a act is not a sale but is an agreemensale but is an agreement to sell. t to sell. This is so because the ownerThis is so because the ownership of ship of goods can not pass to buyer if the goods do not exist.

goods can not pass to buyer if the goods do not exist. Example: A agrees to seek

Example: A agrees to seek B all the wheat which B all the wheat which will be grown in his field in will be grown in his field in the current ‘season’.the current ‘season’. It is a sale of future goods, amounting to an agreement to sell.

It is a sale of future goods, amounting to an agreement to sell. 3.

3. Contingent goodsContingent goods: This is a type of future goods, acquisition of which by the seller depends upon: This is a type of future goods, acquisition of which by the seller depends upon uncertain contingencies.

(8)

sale of contingent goods, the contract can be enforced only when the event on the happening of sale of contingent goods, the contract can be enforced only when the event on the happening of which the performance depends, happens, otherwise the contract becomes void.

which the performance depends, happens, otherwise the contract becomes void. Example: A ag

Example: A agrees to sell rees to sell to B to B certain goods which certain goods which are on are on their way from their way from England to England to India on India on thethe condition that if the ship

condition that if the ship carrying the goods arrive safely. carrying the goods arrive safely. If the ship is sIf the ship is sunk, the contract becomesunk, the contract becomes void and the seller is not liable.

void and the seller is not liable.

6.

6. What iWhat is the efs the effecfect of perit of perishinshing of goog of goods on a cods on a contrantract of sact of sale?le?

The effect of perishing of goods on a contract of sale may be studied under the two heads: The effect of perishing of goods on a contract of sale may be studied under the two heads:

a)

a) GooGoods perds perishishing being beforfore makie making of contng of contracract, andt, and b)

b) Goods perishing before sale but after agreement to sell.Goods perishing before sale but after agreement to sell.

1.

1. Goods pGoods perishing erishing before mbefore making aking of controf contract:act: Where there is a contract for the sale of specificWhere there is a contract for the sale of specific goods, the contract is void, if the goods, without the knowledge of the seller have, at the time when the goods, the contract is void, if the goods, without the knowledge of the seller have, at the time when the contract was made, perished or become so damaged as no longer to answer to their description in the contract was made, perished or become so damaged as no longer to answer to their description in the contract (Section 7).

contract (Section 7). This rule is applicablThis rule is applicable only in case of specific goods e only in case of specific goods and that the goods must haveand that the goods must have perished before the contract is made and without the knowledge of the seller.

perished before the contract is made and without the knowledge of the seller. Example: A agrees to sell a horse to

Example: A agrees to sell a horse to B. B. It was discovered that the horse was dead It was discovered that the horse was dead at the time of making at the time of making of contract.

of contract. Here the agreement iHere the agreement is void. s void. This rule iThis rule is based on ts based on the ground of mutual he ground of mutual mistake.mistake.

In case the contract is for the supply of specific goods, and only part of the goods are lost or destroyed, In case the contract is for the supply of specific goods, and only part of the goods are lost or destroyed, then we have to see whether the contract is

then we have to see whether the contract is divisible or indivisibldivisible or indivisible. e. If the contract is indiviIf the contract is indivisible, then onsible, then on the destruction of part of goods, the buyer can not be compelled to accept the remaining the goods.

the destruction of part of goods, the buyer can not be compelled to accept the remaining the goods. In

In Barrow Barrow Lane Lane & & Ballard Ballard Vs. Vs. PhillipsPhillips, a contract for the sale of 700 bags of groundnuts was made., a contract for the sale of 700 bags of groundnuts was made. Unknown to the seller 109 the remaini

Unknown to the seller 109 the remaining 591 bags but the buyer refused to accept them. ng 591 bags but the buyer refused to accept them. It was held thatIt was held that the contract, being indivisible, had become void by reason of the loss of the goods and the buyer can not the contract, being indivisible, had become void by reason of the loss of the goods and the buyer can not be compelled to accept 591 bags or pay for the goods.

be compelled to accept 591 bags or pay for the goods.

“Perishing of goods” does not only mean physical destruction but it also includes loss by theft and “Perishing of goods” does not only mean physical destruction but it also includes loss by theft and comme

commercial destrcial destructiruction. on. If the goods are so damaged that they becoIf the goods are so damaged that they become completme completely useless for thely useless for thee purpose

purpose for for which which they they are are generally generally used used or or if if the the goods goods cease cease to to exist exist in in the the commercial commercial sense, sense, thenthen also the contract becomes void.

also the contract becomes void. In

In Asfar & Asfar & Co. Ltd.Co. Ltd. Vs.Vs. Blundell Blundell , a cargo of dates , a cargo of dates was sold. was sold. The dates were contamiThe dates were contaminated with sewagenated with sewage so as to be unsaleable as dates,

so as to be unsaleable as dates, though they could be used for making spiritthough they could be used for making spirits. s. The contract was declaredThe contract was declared as void because the go

as void because the goods do not answer to the dods do not answer to the description in the contract.escription in the contract. 2

2. . Goods peGoods perishing berishing before salfore sale but after ae but after agreemegreement to sell:nt to sell: Where there is an agreement to sellWhere there is an agreement to sell specific goods, and subsequently the goods without any fault on the part of the seller or buyer perish or specific goods, and subsequently the goods without any fault on the part of the seller or buyer perish or become

become so damaged so damaged as no as no longer longer to answer to answer their description their description in in the agreement the agreement before the before the risk passes risk passes toto the buyer, the agreement ther

the buyer, the agreement thereby becomes void (Sec. 8). eby becomes void (Sec. 8). Where the goods are Where the goods are in existence at the tin existence at the time of ime of making the contract but perish without the fault of either party before the risk passes to the buyer, the making the contract but perish without the fault of either party before the risk passes to the buyer, the contract becomes void and the parties are excused fr

contract becomes void and the parties are excused from performance of contract. om performance of contract. This rule is based onThis rule is based on the principle of supervening impossibility of performance.

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If, however, fault of other party causes the destruction of the goods, then the party in default is liable for If, however, fault of other party causes the destruction of the goods, then the party in default is liable for non-delivery or to pay for the goods, as the case may be.

non-delivery or to pay for the goods, as the case may be.

It should be noted that the rules laid down in Sections 7 and 8 are applicable only in case of specific It should be noted that the rules laid down in Sections 7 and 8 are applicable only in case of specific goo

goods. ds. TheTherefreforeore, , if the if the subsubjecject t matmatter of ter of a a concontratract of ct of salsale e i.ei.e. . goodgoods s are unascare unascertertainained, then theed, then the destr

destruction of goods does not affuction of goods does not affect the contracect the contract and the seller is bound to fulft and the seller is bound to fulfill his promill his promise. ise. For For exampl

example A agrees to sell B 10 bags of sugae A agrees to sell B 10 bags of sugar out of his tock of 100 bags lr out of his tock of 100 bags lying in his godoying in his godown. wn. If as aIf as a result of fire the entire st

result of fire the entire stock of sugar is lost, the contract will not become void. ock of sugar is lost, the contract will not become void. A must supply 10 bagsA must supply 10 bags of sugar to B from wherever he

of sugar to B from wherever he likes.likes. 7.

7. Distinguish between a ‘condition’ and a ‘warranty’ in a contract of sale.Distinguish between a ‘condition’ and a ‘warranty’ in a contract of sale.

Or Or

Distingui

Distinguish between a ‘conditish between a ‘condition’ and a ‘warranty’. on’ and a ‘warranty’. When does a condition descWhen does a condition descend to the level of aend to the level of a warranty?

warranty?

When a seller is selling his goods, he may make a statement or representation with view to inducing the When a seller is selling his goods, he may make a statement or representation with view to inducing the other party to buy the goods.

other party to buy the goods. Such a representation may be a merSuch a representation may be a mere expression of an opinion and me expression of an opinion and may not beay not be a part of a contract.

a part of a contract. If it is If it is not a part of the contractnot a part of the contract, no legal consequences follow. , no legal consequences follow. But if the representatBut if the representationion forms par

forms part of the contract and the othet of the contract and the other party relir party relies on it, then it becomes a stipules on it, then it becomes a stipulation. ation. In case no suchIn case no such representations or stipulations are made then the general principle of Caveat Emptor, i.e. let the buyer representations or stipulations are made then the general principle of Caveat Emptor, i.e. let the buyer beware, applies.

beware, applies.

A stipulation in the contract of sale may

A stipulation in the contract of sale may be either a condition or a be either a condition or a warranty.warranty.

Condition

Condition: A condition is a stipulati: A condition is a stipulation essential to the main purpose of the contract. on essential to the main purpose of the contract. If there is a breach of If there is a breach of any condition the aggrieved party has a right t

any condition the aggrieved party has a right to terminate the contract. o terminate the contract. Thus conditions are such, which goThus conditions are such, which go directly to the root of the contract.

directly to the root of the contract.

Warranty

Warranty: A warranty is stipulation collateral to the main purpose of the contract, the breach of which: A warranty is stipulation collateral to the main purpose of the contract, the breach of which gives the aggri

gives the aggrieved party a right to claim for damages. eved party a right to claim for damages. In case of breach of warranty the aggrieIn case of breach of warranty the aggrieved partyved party can not refuse to accept the goods, i.e. he can not repudiate the contract.

can not refuse to accept the goods, i.e. he can not repudiate the contract.

From this it becomes clear that conditions form the basis of the contract and they are of primary importance. From this it becomes clear that conditions form the basis of the contract and they are of primary importance. On the other hand warranty

On the other hand warranty is only of secondary importance.is only of secondary importance. There is no hard and fast rule as to which sti

There is no hard and fast rule as to which stipulation is a condition and which one is a warranty. pulation is a condition and which one is a warranty. Whether aWhether a stipulation in a contract of sale is a condition or warranty depends in each case of a construction of the stipulation in a contract of sale is a condition or warranty depends in each case of a construction of the contr

contract. act. A stipA stipulatiulation may be a condon may be a conditioition though caln though called a warled a warranty iranty in a contran a contract. ct. Thus the cThus the court iourt is nots not bound by the terminology employed by the parties, but it must see the real intention of the parties.

bound by the terminology employed by the parties, but it must see the real intention of the parties. In Baldry Vs. Marshall

In Baldry Vs. Marshall, A consulted a car dealer for the purchase of , A consulted a car dealer for the purchase of a car suitable for touria car suitable for touring purposes. ng purposes. TheThe dealer sold a particular car saving that it wi

dealer sold a particular car saving that it will serve the purpose. ll serve the purpose. The case turned out to be unfit for touriThe case turned out to be unfit for touringng purposes.

purposes. It was hIt was held that the eld that the buyer can buyer can return the care return the care and get and get back the back the price as price as well as dwell as damages, becauseamages, because there was a breach of condition.

there was a breach of condition. If in this case had tIf in this case had the buyer asked for a good car, then he could not avoidhe buyer asked for a good car, then he could not avoid the contract.

(10)

Example:

Example: A A asks asks B, B, a a scooter scooter dealer dealer to to supply supply him him a a scooter scooter which which can can cover cover 40 40 Kms Kms per per litre litre of of petrol.petrol. Later

Later on on it it is is found found that that the the scooter scooter can can cover cover only only 30 30 Kms Kms per per litre litre of of petrol. petrol. Here Here there there is is a a breach breach of of condit

condition, so A can return the scooteion, so A can return the scooter and can claim damages. r and can claim damages. But if in this examplBut if in this example A, asks for a good e A, asks for a good scooter

scooter or or B B tells tells A A that that it it can can cover cover 40 40 Kms Kms per per litre litre and and its its only only 30 30 Kms, Kms, then then the the buyer buyer A A can can not not repudiate the contract because it was not a breach of any condition but only a breach of warranty.

repudiate the contract because it was not a breach of any condition but only a breach of warranty. Thus, if a stipulation is the basis of the contract then it is a condition, otherwise it is a warranty. Thus, if a stipulation is the basis of the contract then it is a condition, otherwise it is a warranty.

Distinction between condition and warranty Distinction between condition and warranty

1.

1. A conditA condition is a stipuion is a stipulatiolation in a contract of saln in a contract of sale which is esse which is essentiaential to the main purpol to the main purpose of the contrse of the contract.act. The performance of the contract depends on the fulfill

The performance of the contract depends on the fulfillment of condition. ment of condition. On the other hand, a warrantyOn the other hand, a warranty is a stipulati

is a stipulation which is collateral to ton which is collateral to the main purpose of the contracthe main purpose of the contract. . The performance does not dependThe performance does not depend on the fulfillment of warranty.

on the fulfillment of warranty. 2.

2. In case of breaIn case of breach of a ch of a conconditditionion, the aggrie, the aggrieved partved party gets the righy gets the right to t to terterminminate the contate the contracract and alsot and also claim damages but in case of breach of warranty, the aggrieved party can not avoid the contract but can claim damages but in case of breach of warranty, the aggrieved party can not avoid the contract but can claim damages only.

claim damages only. 3.

3. In certIn certain caseain cases, a breas, a breach of condich of condition may be tion may be treattreated as a breaced as a breach of warrh of warranty. anty. But a breBut a breach of warach of warrantyranty can not be treated as breach of condition.

can not be treated as breach of condition. When condition to be treated

When condition to be treated as warrantyas warranty In some case

In some cases a s a conconditdition may becomion may become e a warraa warrantynty. . The effeThe effect is that the buyer can not repudict is that the buyer can not repudiate theate the contract but has to be

contract but has to be satisfied with damages only.satisfied with damages only.

Section 13 of the Sale of Goods Act lays down the following two conditions when a condition becomes a Section 13 of the Sale of Goods Act lays down the following two conditions when a condition becomes a warranty:

warranty: 1.

1. Waiver of buyerWaiver of buyer: Where a contract of sale is subject to any condition to be fulfilled by the seller, then: Where a contract of sale is subject to any condition to be fulfilled by the seller, then buyer

buyer may may (a) (a) waive waive the the condition, condition, or or (b) (b) elect elect to to treat treat the the breach breach of of the the condition condition as as a a breach breach of of warranty.

warranty. The buyer has The buyer has the option tthe option to accept the o accept the goods and claim goods and claim damages from damages from the seller. the seller. If he If he onceonce decides to waive the condition, be can not afterwards insist on its fulfillment.

decides to waive the condition, be can not afterwards insist on its fulfillment. Example: A agrees to buy from B, ten bags

Example: A agrees to buy from B, ten bags of wheat as per sample. of wheat as per sample. B Delivers the wheat, but it was not B Delivers the wheat, but it was not accord

according to the sampleing to the sample. . A has a right to reject thA has a right to reject the goods, but he may decide to accepe goods, but he may decide to accept the goods and t the goods and treat this breach of condition as a breach

treat this breach of condition as a breach of warranty.of warranty. 2.

2. Acceptance of goods by buyerAcceptance of goods by buyer: Where a contract of sale is not severable, i.e. it is indivisible and the: Where a contract of sale is not severable, i.e. it is indivisible and the buyer has

buyer has accepted accepted the goods the goods or part or part thereof, the thereof, the breach of breach of any condition any condition is to is to be treated be treated as a as a breach of breach of warranty.

warranty. In such a case it is not left at In such a case it is not left at the option of the buyer. But if the contract is divisithe option of the buyer. But if the contract is divisible then evenble then even though the buyer has accepted a part of the goods, he can still reject the remaining goods.

though the buyer has accepted a part of the goods, he can still reject the remaining goods. Now the question

Now the question arises as to when arises as to when the buyer can the buyer can be said to be said to have accepted have accepted the goods. In the goods. In this connectionthis connection Section 42 provides that the buyer is deemed to have accepted the goods:

Section 42 provides that the buyer is deemed to have accepted the goods: (a)

(a) whewhen he in he intintimatmates tes to the so the selleller ther that he hat he has acas accepcepted tted them ohem of ;f ; (b)

(11)

(c)

(c) When, afWhen, after the lter the lapse of apse of a reasona reasonable tiable time, he retme, he retains tains the goods wihe goods without ithout intimantimating to tting to the sellhe seller thater that he has rejected them.

he has rejected them.

Thus, where buyer after receiving the goods, resells them or pledges them, it will be regarded that the Thus, where buyer after receiving the goods, resells them or pledges them, it will be regarded that the buy

buyer has accepter has accepted the ed the googoods. ds. For examFor example A ple A purpurchachased 10 bags of sed 10 bags of ricrice e frofrom B m B accaccordording to theing to the sample.

sample. When the goods were delivered, A resold the rice to P. When the goods were delivered, A resold the rice to P. P rejected the goods on the ground that P rejected the goods on the ground that is not

is not according to according to sample. sample. Now A alsNow A also wants o wants to avoid the to avoid the contract. contract. Here A Here A will not will not succeed becausesucceed because by reselling t

by reselling the goods to P. he goods to P. A has accepted the A has accepted the goods. goods. Now, he is Now, he is not treat thinot treat this breach of condits breach of condition as aion as a breach of warranty and be content with damages only.

breach of warranty and be content with damages only. 8.

8. What are the implied conditions in a contract of sale?What are the implied conditions in a contract of sale?

Or Or

Explain and illustrate the implied conditions in contract of sale of goods. Explain and illustrate the implied conditions in contract of sale of goods.

In a

In a concontratract of ct of salsale e condconditiitions and ons and warwarranrantieties s may be may be exprexpress or ess or impimplielied. d. ExpExpresress s condcondititionions s andand warranties are those which are agreed upon between the parties at the time of the contract and are expressly warranties are those which are agreed upon between the parties at the time of the contract and are expressly provided in the contract.

provided in the contract. The implied conditions on the The implied conditions on the other hand, are those whother hand, are those which are presumed by ich are presumed by law tolaw to be

be present present in in the the contract. contract. It It should should be be noted noted that that an an implied implied condition condition or or warranty warranty may may be be negative negative or or varied by an express agreement or by usage of trade.

varied by an express agreement or by usage of trade.

IMPLIED CONDITIONS IMPLIED CONDITIONS

1.

1. ConditiCondition as on as to titleto title [Sec. 14(a)] In every contract of sale, unless there is an agreement to the contrary,[Sec. 14(a)] In every contract of sale, unless there is an agreement to the contrary, the first implied condition the part of the seller is that (a) in case of a sale, he has a right to sell the the first implied condition the part of the seller is that (a) in case of a sale, he has a right to sell the goods, and (b) in the case of an agreement to sell, he will have a right to sell the goods at the time when goods, and (b) in the case of an agreement to sell, he will have a right to sell the goods at the time when the property is to pass.

the property is to pass. In simple words, the conditIn simple words, the condition implied is that the sion implied is that the seller has the right to seleller has the right to sell thel the goods.

goods. If the sellerIf the seller’s title turn’s title turns out to s out to be defectibe defective, the buyer must returve, the buyer must return the n the goods to the true owner goods to the true owner and recover the price from the seller.

and recover the price from the seller. In

In Rowland Rowland Vs. Vs. Divall Divall , , R R boboughught t a a cacar r frfrom D om D anand d usused it ed it fofor sever severaral l momontnthshs. . It wasIt was, , lalateter r onon,, discovered that D had no title to the car as it was a stolen one and R had to return the car to the true discovered that D had no title to the car as it was a stolen one and R had to return the car to the true owner.

owner. It was held that the buyer R can recover the full prIt was held that the buyer R can recover the full price from the sellice from the seller even though he has useder even though he has used the car for several months.

the car for several months. The term “

The term “right to sell right to sell ” is of wider implica” is of wider implication. tion. Thus, if a person sellThus, if a person sells goods by infringis goods by infringing the tradeng the trade mark, patent or copyright, the buyer is entitled to terminate the contract on the ground that though seller mark, patent or copyright, the buyer is entitled to terminate the contract on the ground that though seller is the owner of the goods b

is the owner of the goods but he has no right to ut he has no right to sell them as they are.sell them as they are. In

In Niblett Vs. confectioner’s Materials Co Niblett Vs. confectioner’s Materials Co., 3000 tins of condensed milk were sold to a buyer in London.., 3000 tins of condensed milk were sold to a buyer in London. 1000 tins were labeled ‘Nissly brand’, proved that t

1000 tins were labeled ‘Nissly brand’, proved that this was an infringement of its this was an infringement of its trade mark. rade mark. The buyer The buyer had to remove all the labels and sold them at a r

had to remove all the labels and sold them at a reduced value. educed value. It was held that the selIt was held that the seller had no right toler had no right to sell the goods and they were liable to pay damages to the buyer.

sell the goods and they were liable to pay damages to the buyer. 2.

2. Sale by DescriptionSale by Description [Sec. 15] Where there is a contract of sale of goods by description, there is an[Sec. 15] Where there is a contract of sale of goods by description, there is an imp

implielied d condconditiition on thathat t the goodthe goods s shashall correll correspospond nd witwith h the descthe descripriptiotion. n. ThiThis s rulrule e is based on is based on thethe principle that “if you

principle that “if you contract to sell peas, contract to sell peas, you can not you can not compel the buyer compel the buyer to take beans” to take beans” The buyer is notThe buyer is not bound to accept and pay for the goods which are not in accordance with the description of goods.

bound to accept and pay for the goods which are not in accordance with the description of goods. In

In Shephead Vs. KainShephead Vs. Kain, a ship was advertised for sale as copper fastened without allowance for any, a ship was advertised for sale as copper fastened without allowance for any defect

defects whatsoes whatsoever. ver. The ship was noThe ship was not fullt fully copper fasty copper fastened as is undeened as is understoorstood in the tradd in the trade. e. It was helIt was heldd that it was a sale by description and

(12)

The term ‘sa

The term ‘sale by descriptle by description’ has nowherion’ has nowhere been defined in the Act. e been defined in the Act. It may incluIt may include the followide the followingng situations:

situations: (a)

(a) Where the buyer had never seen the goods and Where the buyer had never seen the goods and buys them on the basis of buys them on the basis of the description given by thethe description given by the selle

seller. r. For exampFor example the sellle the seller says ther says that the machiat the machine he is sellne he is selling is braing is brand new. nd new. On deliOn delivery it wasvery it was found to be a

found to be a used one. used one. The buyer can reject The buyer can reject the goods.the goods. (b)

(b) Where the buyer has seen the goods Where the buyer has seen the goods but he relies not on what but he relies not on what he has seen but what was he has seen but what was stated to himstated to him and the deviation of the goods from the description is not apparent.

and the deviation of the goods from the description is not apparent. (c)

(c) Packing of gooPacking of goods may someds may sometimes be a part of dtimes be a part of descriescriptionption..

It should, however, be noted that where the goods supplied do not correspond with the description, the It should, however, be noted that where the goods supplied do not correspond with the description, the buyer has

buyer has a right a right to reject to reject the goods the goods were though were though the goods the goods may serve may serve the purpose the purpose for which for which they werethey were bought.

bought. 3.

3. Sale by SampleSale by Sample [Sec. 17] A contract of sale is a contract for sale by sample where there is a term in a[Sec. 17] A contract of sale is a contract for sale by sample where there is a term in a contr

contract express or implact express or implied, to that effectied, to that effect. . Thus where a seller showThus where a seller shows that sample to the buyer, it doess that sample to the buyer, it does not am

not amounount to a sale by samt to a sale by sampleple. . It wiIt will be a sale by sall be a sale by samplmple only whee only when the seln the seller haler has agres agreed or ed or guaranteed to supply the goods according to the sample.

guaranteed to supply the goods according to the sample. In a contract of sale by sample,

In a contract of sale by sample, there is an implied condition – there is an implied condition –

(a)

(a) that the bulk shall correspond with the that the bulk shall correspond with the sample in quality,sample in quality,

(b)

(b) that the buyer shall have a reasonable opportunity of comparing the bulk with the sample, andthat the buyer shall have a reasonable opportunity of comparing the bulk with the sample, and

(c)

(c) that the goods shall be free from any defect, rendering them unmerchantable, which would not bethat the goods shall be free from any defect, rendering them unmerchantable, which would not be apparent on reasonable examination of the sampl

apparent on reasonable examination of the sample. e. This condition is appliThis condition is applicable only with regard tocable only with regard to defect

defects which could not be discoveres which could not be discovered by d by an ordinaran ordinary examinatiy examination of the on of the goods. goods. TherefTherefore, if theore, if the defects are such which could be discovered by an ordinary inspection and the buyer accepts the defects are such which could be discovered by an ordinary inspection and the buyer accepts the goods after inspecting them, later on he can not

goods after inspecting them, later on he can not avoid the contract. avoid the contract. But if the defects are But if the defects are latent, thenlatent, then the buyer can avoid the contract.

the buyer can avoid the contract. In

In Drummond & Sons Drummond & Sons Vs Van IngenVs Van Ingen, there was a , there was a sale by sample of sale by sample of worsted coating. worsted coating. The cloth that wasThe cloth that was suppl

supplied was accordiied was according to the ng to the samplsample but because of some latent defect it was unme but because of some latent defect it was unmerchanterchantable. able. TheThe same defect was in the sam

same defect was in the sample, but it could not be discovered on a rple, but it could not be discovered on a reasonable examination. easonable examination. It was heldIt was held that the buyer can avoid the contract.

that the buyer can avoid the contract. 4.

4. Sale by sample as well as by descriptionSale by sample as well as by description [Sec 15] where the goods are sold by sample as well as by[Sec 15] where the goods are sold by sample as well as by description, the implied condition is that the bulk of the goods supplied must correspond both will the description, the implied condition is that the bulk of the goods supplied must correspond both will the sam

sample and the ple and the desdescricriptiption. on. In case the goods corrIn case the goods correspespond with the sampond with the sample but do le but do not talnot tally withly with description or vice versa, the buyer can

description or vice versa, the buyer can repudiate the contract.repudiate the contract.

It is not sufficient that the bulk of the goods correspond with the sample if the goods do not also It is not sufficient that the bulk of the goods correspond with the sample if the goods do not also correspond

correspond with with description. description. InIn Nichol Vs. Nichol Vs. GodtsGodts, foreign refined rape oil was sold warranted equal to, foreign refined rape oil was sold warranted equal to sample.

sample. The bulk corresponded with the sample but it was not The bulk corresponded with the sample but it was not rape oil but a mixture of rape and hemprape oil but a mixture of rape and hemp oil.

oil. It was It was held that the held that the buyer could repudiate tbuyer could repudiate the contract.he contract. 5.

5. Condition as a quality or fitness [Sec 16(1)]Condition as a quality or fitness [Sec 16(1)] ordinarily, in a contract of sale there is no impliedordinarily, in a contract of sale there is no implied warra

warranty or conditinty or condition as to on as to the qualitthe quality or fitness for any particy or fitness for any particular purposular purpose of goods suppliede of goods supplied. . TheThe general principle is Caveat Emptor, i.e. let the buyer beware, the buyer should buy the goods after general principle is Caveat Emptor, i.e. let the buyer beware, the buyer should buy the goods after satisfying himself that they will serve his purpose.