SALES OF GOODS ACT – 1930
Source: www.bdlaws.gov
Commercial Law and Industrial Law BY- SEN &
MITRA
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GOODS, BUYER, AND SELLER
• The law relating to the sale of movable goods.
• Goods : Any types of movable property except (i)
actionable claims and (ii) money.
• A actionable claim means a debt or a claim for money
which a person may have against another and which he
may recover by suit.
• Buyer : A person who buys or agrees to buy goods.
• Seller : A person who sells or agrees to sell goods.
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• Movable articles like furniture, clothing etc and shares
and debentures are goods. Things attached to the
earth are not movable.
• But growing crops and grass, which can be easily
separated from the earth before dale, and fruits which
can be severed from trees are included within the
definition of movable goods.
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Classification of Goods
• Existing Goods : Existing goods are goods which are
already in existence and which are physically present
in some person’s possession and ownership.
• Future Goods : Future Goods are goods which will be
manufactured or produced or acquired by the seller
after the making of the contract of sale.
• Example : P agrees to sell to Q all the mangoes which
will be produced in his garden next year. This is an
agreement for the sale of future goods.
Continuing
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• Contingent Goods : There may be a contract for the
Sale of goods the acquisition of which by the seller
depends upon a contingency which may or may not
happen .
• In such cases the goods sold are called contingent
Goods. Contingent goods come within the class of
future goods.
• For an Example : X agrees to sell to Y a certain ring
provided he is able to purchase it from its present
owner. This is an agreement for the sale of contingent
goods.
Continuing
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Sale and agreement to sale
• Sale : A contract for the sale of goods of may be either
a sale or an agreement to sell. Where under a contract
of sale the property in the goods is transferred from
the seller to the buyer the contract is called a sale.
• The transaction is a sale even though the price is
payable at a later date or delivery is to be given in the
future, provide the ownership of the goods is
transferred from the seller to the buyer.
• Agreement to sale: When the transfer of ownership is
to take place at a future time or subject to some
condition to be fulfilled later, the contract is called an
agreement to sell.
Continuing
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• When an agreement to sell becomes a sale? An
agreement to sell becomes a sale when the prescribed
time elapses or the conditions, subject to which the
property in the goods is to be transferred are fulfilled.
• Example : P agrees to buy a quantity of soda to arrive
by a certain ship. This is an agreement to sell because
the property in the goods will pass to the buyer when
the goods come and the agreement is naturally
subject to the condition that the ship arrives in port
with the goods.
Continuing
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Differences between a sale and an
agreement to sale
• Transfer of ownership : In an agreement to sell,
the property in the goods remains with the seller
until the agreement to sell becomes a sale by the
expiry of the agreed time or the fulfillment of the
agreed conditions.
• In case of sale the property passes to the buyer
and the goods cannot be seized in execution of a
decree against the seller.
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•Transfer of risk : Where the
transaction amounts to a sale, the
goods belong to the buyer and he has
to bear the loss if the goods are
subsequently damaged or destroyed.
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•Remedial measures : In the case of a sale
, the unpaid seller has certain reliefs
available, e.g. , lien, stoppage in transit,
resale etc. In case of an agreement to sell,
the seller’s remedy for breach of contract
by the buyers is a suit for damages.
Continuing
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• Nature of contract : Sale is an executed contract
because in a sale, consideration moves simultaneous
with the promises of both parties. Also in a sale the
property of specific goods is transferred to the buyer
immediately.
• But an agreement to sell is an executory contract
because the consideration is to move at a future date .
Also the property of specific goods pass to the buyer
later.
Continuing
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ESSENTIAL ELEMENTS OF CONTRACT FOR THE SALE OF
GOODS ACT
• The essential elements of contract for the sale of
goods are enumerated below…
• Movable Goods : The sale of Goods Act deals only
with movable goods, excepting actionable claims
and money. This Act does not apply to immovable
properties.
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• Movable Goods for money : There must be a contract
for the exchange of movable goods for money.
Therefore in a sale there must be money
consideration.
• An exchange of goods for goods is not a sale. But it
has been held that if an exchange is made partly for
goods and partly for money the contract is one of sale.
• Two parties : Since a contract of sale involves a
change of ownership, it follows that the buyer and the
seller must be different persons. A sale is a bilateral
contract. A man cannot buy from or sell goods to
himself.
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• Formation of the contract of sale : A contract of sale
is made by an offer to buy or sell goods for a price and
the acceptance of such offer.
• The contact may provide for the immediate delivery of
the goods or immediate payment of the price or both
or for the delivery and payment by installment or that
the delivery of payment or both shall be postponed.
• Method of forming the contract : Subject to the
provision of any law for the time being in force a
contract of sale may be writing or by word of mouth
or may be implied from the conduct of the parties.
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• The terms of contract : The parties may agree upon
any term concerning the time, place and mode of
delivery. The terms may be of two types : essential
and non essential.
• Essential terms are called conditions and non essential
terms are called warranties. The sale of goods act
provides that in the absence of a contract to the
contrary, certain conditions and warranties are to be
implied in all contracts of sale.
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• Other essential elements : A contract for the sale of
goods must satisfy all the essential elements
necessary for the formation of a valid contract e.g.,
the parties must be competent to contract, there
must be free consent, there must be consideration,
the subject must be lawful etc.
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CONDITIONS AND WARRANTIES
• Condition : A condition is a stipulation essential to the
main purpose of contract, the breach of which gives rise
to a right to treat the contract a repudiated.
• Warranty : 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 no a right to reject the
goods and treat the contract as repudiated.
Continuing
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WHEN A CONDITION CAN BE TREATED
AS A WARRANTY
•Voluntary waiver of a condition : The
buyer may elect to treat a breach of
condition as a breach of warranty, i.e.
instead of repudiation the contract he
may accept performance and sue for
damages, if he has suffered any.
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•Compulsory waiver of a condition :
Where a contract of sale is not severable
and the buyer has accepted the goods or
a part thereof, he cannot repudiate the
contract but can only sue for damages.
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THE DOCTRINE OF CAVEAT EMPTOR.
• Caveat Emptor is a Latin expression which means, “
buyers beware”.
• The doctrine of caveat emptor means that,
ordinarily, a buyer must buy goods after satisfying
himself of their quality and fitness. If he makes a
bad choice he cannot blame the seller or recover
damages from him.
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• Exception : Subject to certain exceptions, the doctrine of
caveat emptor applies to India. The exception are as
follows……..
• Where the buyer relies upon the skill and judgment of
the seller.
• Where by custom an implied condition of fitness is
annexed to a contract of sale.
• Where there is a sale of goods by description, there is an
implied condition that the goods are fit for sale.
• Where the seller is guilty of fraud. A contract of sale of
goods must satisfy all the essential elements of a
contract and therefore if the consent of the buyer was
obtained by fraud the seller is not protected by the
doctrine of caveat emptor.
• In cases not filling under any of the four exceptions
noted above , the seller is not liable to any penalty if the
goods purchased are found to be unfit by the buyer for
the purposes he had in mind.
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•In cases not filling under any of the
four exceptions noted above , the
seller is not liable to any penalty if the
goods purchased are found to be unfit
by the buyer for the purposes he had
in mind.
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THANK YOU
FOR
ATTENDING THIS SESSION
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