sales of goods act, 1930 business law

8/13/2019 Sales of Goods Act, 1930 Business Law

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SALES OF GOODSACT, 1930

AMANPREET KAUR

EKTA VERMA

AKHIL PANCHAL

MANISH MAINI


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TOPICSCOVERED:

Formation of contract of sales

Difference between sale and Agreement to sell,

Difference between sale and hire purchase,

Difference between sale and bailment Bail agreement

Conditions and warranties

Rule of Caveat Emptor

Rights of unpaid seller.


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HISTORY

Sale of goods act was enacted in 1930.

Borrowed from the English act.

Came into force in July, 1930.

Prior to the act, the law of sale of goods was

contained in chapter VII of the Indian contractact,1872.


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FORMATION

OF

CONTRACTOFSALE


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DEFINITION

Sec 4(1) of the Indian Sale of Goods Act, 1930

defines the contract of he sale of goods in the

following manner:

A contract of sale of goods is a contract whereby

the seller transfers or agrees to transfer the

property in goods to the buyer for a price.


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The term Contract of sale of goods is a generic term

and it includes:

a. Sale andb. An agreement to sell

where the seller transfers the ownership

rights to the buyer immediately on making

the contract, it is the contract of sale, butwhere the ownership rights are to pass on

some future date upon the fulfillment of

certain conditions then it is called an

agreement to sell.


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ESSENTIALSOFACONTRACTOFSALE

Two parties- buyer and seller

Goods

Price

Transfer of general property

Essential elements of a valid contract

A contract of sale may be absolute or conditional.


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DIFFERENCEBETWEEN

Ownership passes to

the buyer.

It is a executed

contract. Risk of loss falls on the

buyer.

Seller cannot resell the

goods.

It can be in case of

existing and specific

goods.

Ownership remainswith the seller.

It is a executory

contract. Risk of loss falls on the

seller.

Seller can sell goods to

third party. It can be in case of

future andunascertained goods.

Sale Agreement to sell


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In case of breach of a

contract, seller can sue for

the price of the goods .

The seller is only entitled

to the ratable dividend of

the price due if the buyerbecomes insolvent.

The buyer is entitled to

recover the specific

property from theassignee if the seller

becomes insolvent.


contract, seller can sue

only for damages not for

the price.

The seller may refuse to

sell the goods to the buyerw/o payments if the buyer

becomes insolvent.

Buyer can claim only

ratable dividend for themoney paid.

Sale Agreement to sell


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DISTINCTIONBETWEEN

Property in the goods

is transferred to the

buyer immediately atthe time of the contract.

The position of the

buyer is that of owner

of the owner of thegoods.

The goods passes to

the hirer on the

payment of the lastinstallment.

The position of the

buyer is that of a bailee

till he pays the lastinstallment.

Sale Hire-purchase agreement


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The buyer cannot

terminate the contract

and is bound to pay theprice of the goods.

The hirer may,

terminate the contract,

by returning the goodsto its owner without any

liability to pay the

remaining installment.

Sale Hire purchase agreement


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BAILMENT

Bailment is the delivery of the goods for some

specific purpose under a contract on the condition

that the same goods are to be returned to the bailor

or are to be disposed of according to the directions

of the bailor.

For example:-

A guard hired to protect the paintings at a museum.


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FEATURESOFBAILMENT

1. Subject is personal property

2. Transfer is temporary possession

3. Transfer is temporary control

4. Both parties intend to return the goods

A bailment must be personal property.

Real property such as land and buildings, cannot bebailed.


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DISTINCTIONBETWEEN

The property in goods

is transferred from the

seller to the buyer.

The return of goods in

contract of sale is not

possible.

There is only transferof possession of goods

from the bailor to thebailee for any of thereasons like safecustody, carriage etc.

The bailee must returngoods to the bailor onthe accomplishment ofthe purpose for whichbailment was made.

Sale Bailment


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The consideration is

the price in terms of

money.

The consideration may

be gratuitous or non

gratuitous.

Sale Bailment


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CONDITIONSANDWARRANTIES

[SEC12]


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TERMS

Representation: Statement made by the seller

before entering into a contract.

Stipulation: If such representation forms an integralpart of the contract and other party relies upon it.

No Representation: CAVEAT EMPTOR

i.e., Let the Buyer Bewareis applied


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CONDITION[SEC12(2)]

A 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.

It goes to the root of the contract.

Its non fulfillment upsets the very basis of the

contract.


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Example :- [Behn v. Burness,1863]

By charter party( a contract by which a ship is hired for

the carriage of goods), it was agreed that ship m of 420

tons now in port of Amsterdam should proceed direct

to new port to load a cargo. In fact at the time of the

contract the ship was not in the port of Amsterdam andwhen the ship reached Newport, the charterer refused

to load. Held, the words now in the port of Amsterdam

amounted to a condition, the breach of which entitled

the charterer to repudiate the contract.


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WARRANTY: SEC.12(3)

A warranty is a stipulation collateral to the main

purpose of the contract the breach of which gives

rise to a claim for damages but not right to reject

the goods and treat the contract as repudiated.


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DISTINCTIONBETWEEN

It is a stipulation which

is essential for the

main purpose of thecontract.


condition, the

aggrieved party canrepudiate the contract

of sale.

It is a stipulation which

is collateral to the main

purpose of thecontract.

In case of breach of

warranty, the aggrieved

party can claimdamages only.

Condition Warranty


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A breach of condition

may be treated as

breach of warranty.

The breach of

warranty cannot be

treated as a breach ofa condition.

Condition Warranty


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TYPES

Express Conditions : Expressely provided in the

contract

Implied conditions & warranty(sec 14 to 17) : which

the law implies in a contract of sale


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IMPLIEDCONDITIONS:

Conditions as to title [Sec.14(a)]

[Rowland v. Divall,(1923)]

Sale by description [Sec.15]

[Bowes v.shand,(1877)] Condition as to quality or fitness.[Sec.16(1)]

Conditions as to Merchantability [Sec.16(2)]

[R.S.Thakur v. H.G.E. corp., A.I.R.(1971)]

Conditions implied by custom[Sec.16(3)].

Sale by Sample (Sec.17)

Condition as to wholesomeness.


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IMPLIEDWARRANTIES

Warranty of Quiet possession-Sec.14(6)

Warranty against encumbrances-Sec.14(c)

Warranty to disclose dangerous natures of goods.

Warranty as to quality or fitness by usage of tradeSec.16(4).


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CAVEAT EMPTOR

Let the Buyer Beware

The maxim Caveat Emptor does not apply & thecontract will be subject to the implied conditionsunder the following circumstances :

1. Sale under fitness for buyers purpose2. Sale under merchantable quality

3. Sale under usage of trade

4. Consent by Fraud


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EXCEPTIONS

Fitness for buyers purpose.

Sale under a patent or trade name.

Merchantable quality

Usage of trade

Consent by fraud


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RIGHTSOFUNPAIDSELLER


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UNPAIDSELLER(SEC.45)

A seller of goods is deemed to be an unpaid seller when:-

The whole of the price has not been paid or tendered;

A bill of exchange or other negotiable instrument has been

received as a conditional payment, and the condition on which

it was received has not been fulfilled by reason of the dishonour

of the instrument or otherwise.


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The term "seller" includes any person who is in the position ofa seller, as, for instance, an agent of the seller to whom thebill of lading has been endorsed, or a consignor or agent whohas himself paid, or is directly responsible for, the price.

The seller shall be called an unpaid seller even when only asmall portion of the price remains to be unpaid.

It is for the non payment of the price and not for otherexpenses that a seller is termed as an unpaid seller.

Where the full price has been tendered by the buyer and theseller refused to accept it, the seller cannot be called asunpaid seller.

CONDITIONS


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Where the goods have been sold on credit, the seller

cannot be called as an unpaid seller. Unless :

If during the credit period seller becomes insolvent, or

On the expiry of the credit period, if the price remains

unpaid,

Then, only the seller will become an unpaid seller.

CONTINUED..


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1) Right against goods:

Where the property in the goods has passed

Lien on goods

A right of stoppage-in-transit

A right of Re-sale

Where the property in the goods has not passed Withholding delivery

Stoppage in transit

2) Right against the buyer:

Suit for price Suit for damages

Repudiation o contract

Suit for interest


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RIGHTOFLIEN (SEC.47-49) :

the goods are not sold on credit

the goods have been sold on credit, but the period

of credit has expired

the buyer becomes insolvent


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RIGHTOFSTOPPAGEINTRANSIT(SEC.50-52)

The transit is end in following cases:

If the buyer obtains the possession of the goods

before its arrival at the destination

If, after the arrival at their destination, the carrier

acknowledges to the buyer that he holds on his

behalf

If the carrier wrongfully refuses to deliver the goods

to the buyer


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RIGHTOFRE-SALE(SEC.54)

Where the goods are of perishable nature

When the buyer does not pay the price


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sales of goods act, 1930 business law

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