The Sale of Goods Act, 1930

 the most common of all Commercial

contracts.
 Contract for sale of goods are subject to the
general principles applicable to all contracts.
 Section 76 to 123 of the Indian Contract Act,
1872 were revoked and separate act called
‘The Sale of Goods Act’ was enacted in
1930.
Section – 4: Sale and agreement to sell -
(1) 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. There may be a contract of sale between
one part-owner and another.
(2) A contract of sale may be absolute or conditional
(3) 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, but where the transfer of the property in the
goods is to take place at a future time or subject to some
condition thereafter to be fulfilled, the contract is called an
agreement to sell.
(4) 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 be transferred.
Section 5 - Contract of sale how made-
(1) A contract of sale is made by an offer to buy or sell
goods for a price and the acceptance of such offer.
The contract may provide for the immediate delivery
of the goods or immediate payment of the price or
both, or for the delivery or payment by instalments,
or that the delivery or payment or both shall be
postponed.
(2) Subject to the provisions of any law for the time
being in force, a contract of sale may be made in
writing or by word of mouth, or partly in writing and
partly by word of mouth or may be implied from the
conduct of the parties.
 Essentials of Sale of Goods
As per Section – 4
1. Two Parties (Seller & Buyer)
2. Goods (Movable goods)
3. Price (Money as consideration)
4. Transfer of General property
5. Essential elements of valid Contract.
"goods" means every kind of movable property other
than actionable claims and money; and includes stock
and shares, growing crops, grass, and things attached
to or forming part of the land which are agreed to be
severed before sale or under the contract of sale;
 Classification of Goods
1. Existing goods
A. Specific goods
B. Ascertained goods
C. Unascertained goods
2. Future goods
3. Contingent goods
Section 6 - Existing or future goods:
(1) The goods which form the subject of a contract
of sale may be either existing goods, owned or
possessed by the seller, or future goods.
(2) 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.
(3) Where by a contract of sale the seller purports
to effect a present sale of future goods, the
contract operates as an agreement to sell the
goods.
Section 9 - Ascertainment of price:
(1) The price in a contract of sale may be fixed
by the contract or may be left to be fixed in
manner thereby agreed or may be determined
by the course of dealing between the parties.
(2) Where the price is not determined in
accordance with the foregoing provisions, the
buyer shall pay the seller a reasonable price.
What is a reasonable price is a question of fact
dependent on the circumstances of each
particular case.
Section 10 - Agreement to sell at valuation:
(1) Where there is an agreement to sell goods on the
terms that the price is to be fixed by the valuation of a
third party and such third party cannot or does not
make such valuation, the agreement is thereby
avoided:
Provided that, if the goods or any part thereof
have been delivered to, and appropriated by, the
buyer, he shall pay a reasonable price therefor.
(2) Where such third party is prevented from making
the valuation by the fault of the seller or buyer, the
party not in fault may maintain a suit for damages
against the party in fault.
 Sale and Agreement to Sell
Sale Agreement to Sell
1. Property in goods passes 1. Takes place at future
from the buyer to seller time or subject to certain
immediately. conditions to be fulfilled.
2. Executory contract.
2. Executed contract. 3. Future goods ,
3. Existing or specific goods. contingent goods,
unascertained goods.
 Sale and Agreement to Sell
Sale Agreement to Sell
4. If goods are destroyed, the 4. If goods are destroyed,
loss falls on the buyer, the loss falls on the seller,
even the are in the even the are in the
possession of the seller. possession of the buyer.
5. If there is breach by the 5. If there is breach by the
buyer or the buyer fails to buyer, the seller can sue
pay the price, the seller only for the damages and
can sue for the price even not for the price even
though the goods are still though the goods are in
in his possession. possession of the buyer.
 Sale and Agreement to Sell
Sale Agreement to Sell
6. Seller can not re-sale the 6. In case of re-sale, the
goods. If he does so the buyer, who buys the
subsequent buyer does goods without notice of
not acquire title to the the prior agreement,
goods. gets good title. The
original buyer can only
7. Gives right to the buyer to sue for the damage.
enjoys the goods against 7. Gives right to the buyer
the world at large against the seller to sue
including the seller for damages.
 Sale and Agreement to Sell
Sale Agreement to Sell
8. If the buyer is insolvent: 8. If the buyer is insolvent:
before he pays for the has not yet paid the
goods, in the absence of price, the seller is not
a lien over the goods, bound to hand over the
must return them to the goods until he is paid.
Official Receiver or
Assignee. Can claim
rateable dividend for the
price.
 Sale and Agreement to Sell
Sale Agreement to Sell
9. If the seller is insolvent: 9. If the seller is insolvent:
the buyer, being the if the buyer, who has
owner, is entitled to paid the price, cn claim
recover the goods fom only rateable dividend
the Official Receiver or and not the goods
Assignee. because property has
not yet passed to him.
 Performance of Contract of Sale
Three stages in Performance of Contract of Sale by a
Seller:
1. Transfer of Property in Goods
2. Transfer of possession of the goods (i.e. Delivery)
3. Passing the Risk.
Test: 1. Risk follows ownership
2. Action against third party
3. Insolvency of the seller or buyer
4. suit for price
 Section 12 - Condition and warranty
(1) A stipulation in a contract of sale with
reference to goods which are the subject
thereof may be a condition or a warranty.
(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.
 Section 12 - Condition and warranty
(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
to a right to reject the goods and treat the
contract as repudiated.
(4) Whether a stipulation in a contract of sale is
a condition or a warranty depends in each case
on the construction of the contract. A
stipulation may be a condition, though called a
warranty in the contract.
 Condition to be treated as warranty
Voluntary waiver of condition
Sec-13(1): Where a contract of sale is subject to any
condition to be fulfilled by the seller, the buyer may
waive the condition or elect to treat the breach of the
condition as a breach of warranty and not as a
ground for treating the contract as repudiated.
Acceptance of goods by Buyer
( 3 ) Nothing in this section shall affect the case of any
condition or warranty fulfilment of which is excused
by law by reason of impossibility or otherwise.
 Implied Conditions
1. Condition as to title. S-14(a)
2. Sale by description. S-15
3. Condition as to quality or Fitness. S-16(1)
4. Condition as to Merchantability. S-16(2)
5. Condition implied by custom. S-16(3)
6. Condition as to wholesomeness.
7. Saale by Sample. S-17
 Implied Warranties
1. Warranty of quiet possession. S-14(b)
2. Warranty of freedom from encumbrance. S-
14(c)
3. Warranty as to quality & fitness. S-16(4)
4. Warranty to disclose dangerous nature od
goods.
 Caveat Emptor
“Let the buyer Beware”
Exceptions:
1. Fitness for buyers purpose
2. Sale under Patent or Tradename.
3. Merchantable Quality
4. Use of trade
5. Consent by Fraud
 Performance of Contract of Sale
Three stages in Performance of Contract of Sale by a
Seller:
1. Transfer of Property in Goods
2. Transfer of possession of the goods (i.e. Delivery)
3. Passing the Risk.
Test: 1. Risk follows ownership
2. Action against third party
3. Insolvency of the seller or buyer
4. suit for price
 Property in Goods Passes
1. Goods must be Ascertained
2. Intention of the Parties
Section 31 - Duties of seller and buyer
It is the duty of the seller to deliver the goods and of
the buyer to accept and pay for them, in accordance
with the terms of the contract of sale.
Section 32 - Payment and delivery are concurrent
conditions
Unless otherwise agreed, delivery of the goods and
payment of the price are concurrent conditions, that
is to say, the seller shall be ready and willing to give
possession of the goods to the buyer in exchange for
the price, and the buyer shall be ready and willing to
pay the price in exchange for possession of the goods.
 Delivery of Goods
Section 2(2) "delivery" means voluntary transfer of
possession from one person to another;
Section 33 – Delivery
Delivery of goods sold may be made by doing
anything which the parties agree shall be treated as
delivery or which has the effect of putting the goods
in the possession of the buyer or of any person
authorised to hold them on his behalf.
1. Actual Delivery (s- 33)
2. Symbolic Delivery
3. Constructive Delivery [s- 36(3)]
 Delivery of Goods
Section 2(2) "delivery" means voluntary transfer of
possession from one person to another;
Section 33 – Delivery
Delivery of goods sold may be made by doing
anything which the parties agree shall be treated as
delivery or which has the effect of putting the goods
in the possession of the buyer or of any person
authorised to hold them on his behalf.
1. Actual Delivery (s- 33)
2. Symbolic Delivery
3. Constructive Delivery [s- 36(3)]
 Rules as to Delivery of Goods
1. Mode of delivery (s- 33)
2. Delivery and Payment (s- 32)
3. Effect of Part Delivery (s- 34)
4. Buyer to Apply for Delivery (s- 35)
5. Place of Delivery [s- 36 (1)]
6. Time of Delivery [s- 36 (2) & (4)]
7. Goods in Possession of Third Party [s- 36 (3)]
8. Cost of delivery [s- 36 (5)]
9. Delivery of Wrong Quantity (s- 37)
 Unpaid Seller
1. Section 45 –
(1) The seller of goods is deemed to be an "unpaid
seller" within the meaning of this Act--
(a) when the whole of the price has not been paid or
tendered;
(b) when a bill of exchange or other negotiable
instrument has been received as conditional payment,
and the condition on which it was received has not
been fulfilled by reason of the dishonour of the
instrument or otherwise.
 Rights of an Unpaid Seller

Against the goods Against the Buyer

personally

Where the property Where the property

in the goods passed in the goods has not passed
S- 46 (1) S- 46 (2)

Lien Stoppage in Transit Re-Sale Withholding delivery Stoppage in Transit

S- 47 to 49 S- 50 S-54

Suit for Price Suit for Damage Repudiation of Contract Suit for Interest
S-55 S-56 S-60 S-61
Unpaid Seller Rights Against the Goods Section 46

(1) Subject to the provisions of this Act and of any law for the
time being in force, notwithstanding that the property in the
goods may have passed to the buyer, the unpaid seller of
goods, as such, has by implication of law--
(a) a lien on the goods for the price while he is in possession
of them;
(b) in case of the insolvency of the buyer a right of stopping
the goods in transit after he has parted with the possession of
them;
(c) a right of re-sale as limited by this Act.
 Unpaid Seller Rights Against the Goods
Section 46
• (2) Where the property in goods has not passed to
the buyer, the unpaid seller has, in addition
to his other remedies, a right of withholding
delivery similar to and co-extensive with his rights
of lien and stoppage in transit where the property
has passed to the buyer.