The Sale of Goods Is The Most Common of All Commercial Contracts

The sale of goods is the most common
of all commercial contracts.

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. The term contract of
sale includes both a sale
and an agreement to sell.
 SALE: 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.
 AGREEMENT TO SELL: 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.
Essentials of a Contract of sale:
1. It is a contract.
2. Between two parties.
3. To transfer or agree to
transfer.
4. The property in goods.
5. For a price, that is, money
consideration.
Transfer
of property
means transfer of
ownership of the goods to
the buyer.
Propertymeans the
general property & not
merely a specific property.
GOODS form the subject of a contract of
sale. They mean every kind of movable
property other than actionable claims &
money, and include 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.
 Actionable claims can only be claimed or
enforced by action & not by taking physical
possession.
 Money is legal tender.
 The contract of sale of things forming part
of the land like a coal mine, or a building

stone quarry is not a contract of sale.
 Goods may be:
 Existing: owned & possessed by the
seller at the time of sale. They may be

classified as specific or ascertained &
unascertained.
 Future: which the seller does not
possess at the time of the contract and

which will be acquired, manufactured or
produced by him at some future date….
 Contingent: the acquisition of which by
the seller depends upon a contingency
which may or may not
happen.
 The price is the linchpin of the
definition of contract of sale. It must be
expressed in money. It may be:
1. Mentioned by the contract itself or
2. The manner of fixing the price is
mentioned in the contract
3. May be determined from the course of
dealing between the parties…..
 When price is not fixed by
any of the above modes, a
reasonable price is
considered as the price of the
contract.
 What is reasonable will
depend upon the facts and
circumstances of each case.
 (Specific) Goods perishing before making
the contract: The contract is void. Of
course! the seller should not have any
knowledge of destruction.
 (Specific) Goods perishing after the
agreement to sell but before the sale is
effected: The contract is void. Of course!
the seller should not have any knowledge of
destruction.
 NOTE: The above does not apply to
unascertained goods.
 SALE.  HIRE PURCHASE
1. Ownership is AGREEMENT.
transferred as 1. Ownership is not
soon as contract transferred
is entered into. immediately.
2. Buyer cannot 2. Hire Purchaser has
terminate the an option to
contract. terminate the
3. Seller cannot take contract.
possession if 3. Hire Seller can do
buyer cannot pay so.
the price. He can
only sue for price.
A seller of the goods is deemed to be
an unpaid seller when:
 Thewhole of the price has not been

paid or tendered.
A bill of exchange or other negotiable

instrument has been received as
conditional payment.
Rights of unpaid seller
Against the buyer

Against the goods
personally
Where the property Where the property

In the goods has In the goods has not
passed passed
Stoppage Withholding Stoppage in

Lien Re-Sale delivery transit
In transit
Suit for Repudiation of Suit for

damages contract interest
It 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 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 right
to reject goods and treat
the contract as
repudiated.
Condition as to title
Condition in a sale by
description…..
Condition in a sale by
sample…
 Conditions as to fitness &
quality (in the following cases only)….
 Buyer makes known to the seller
the particular purpose for which
he requires the goods.
 Buyer relies on the skill &
judgment of the seller
(The seller’s business is to supply
such goods whether he is the
manufacturer or producer or not)
 Condition as to merchantability….
◦ Where goods are bought by
description from a seller who deals in
goods of that description (whether he
is manufacturer or producer or not),
there is an implied condition that the
goods shall be of merchantable
quality.
 Merchantability means essentially that the
goods must be fit for the ordinary purpose for
which such goods are used.
 Condition
as to
merchantability
 When applied to food products, the
condition of fitness of
merchantability requires that the
goods should be wholesome, I.e. fit
for the purpose of consumption.
 Warranty as to quiet
possession.
 Warranty as to non-existence
of encumbrances.
 Warranty as to disclosure of
dangerous nature of the
goods to the innocent buyer.
Option of the buyer…..
 The toaster case…
 Circumstances
are such that
goods cannot be returned ….
 When the buyer has accepted the
goods & intimates to the seller.
 When goods have been delivered
to the buyer & he does any act in
relation to them which is
inconsistent with the ownership
of the seller.
 When,after the lapse of
reasonable time, the buyer
retains them for
unreasonably long time
without intimating, the seller
that he has rejected them….
By express agreement.
By course of dealings.
By customs & trade
usage.
LET THE BUYER
BEWARE
 When the seller makes a
representation of fact, whether
innocent or fraudulent, regarding
the product….
 When the seller actively conceals
a defect in the goods which could

not be revealed by ordinary
examination……
 Where goods are supplied by
description and they do not
correspond with the
description….
 Where goods are supplied by
description and they are not
of merchantable quality….
 When goods are sold by
sample & the goods do not
correspond with the sample.
 When the buyer relies on the
skill & judgment of the seller
& makes his purpose of
buying the product known to
him.

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The sale of goods is the most common

of all commercial contracts.

 AGREEMENT TO SELL: Where the

of the land like a coal mine, or a building

seller at the time of sale. They may be

possess at the time of the contract and

 Thewhole of the price has not been

A bill of exchange or other negotiable

Against the buyer

Where the property Where the property

Stoppage Withholding Stoppage in

Suit for Repudiation of Suit for

a defect in the goods which could

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