1. SALES OF GOODS
ACT, 1930
PRESENTED BY
A S EduCare Institute
3 No. Airport Gate, kol-81
Mobile: 9007164873

2. TOPICS COVERED:
 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.

3. 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 contract
act,1872.

4. FORMATION
OF
CONTRACT OF SALE

5. 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”.

6. The term “Contract of sale of goods‟ is a generic term
and it includes:
a. Sale and
b. 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, 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.

7. ESSENTIALS OF A CONTRACT OF SALE
 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.

8. DIFFERENCE BETWEEN
 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 remains
with 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 and
unascertained goods.
Sale Agreement to sell

9.  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 buyer
becomes insolvent.
 The buyer is entitled to
recover the specific
property from the
assignee if the seller
becomes insolvent.
 In case of breach of a
contract, seller can sue
only for damages not for
the price.
 The seller may refuse to
sell the goods to the buyer
w/o payments if the buyer
becomes insolvent.
 Buyer can claim only
ratable dividend for the
money paid.
Sale Agreement to sell

10. DISTINCTION BETWEEN
 Property in the goods
is transferred to the
buyer immediately at
the time of the contract.
 The position of the
buyer is that of owner
of the owner of the
goods.
 The goods passes to
the hirer on the
payment of the last
installment.
 The position of the
buyer is that of a bailee
till he pays the last
installment.
Sale Hire-purchase agreement

11.  The buyer cannot
terminate the contract
and is bound to pay the
price of the goods.
 The hirer may,
terminate the contract,
by returning the goods
to its owner without any
liability to pay the
remaining installment.
Sale Hire purchase agreement

12. 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.

13. FEATURES OF BAILMENT
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 be
bailed.

14. DISTINCTION BETWEEN
 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 transfer
of possession of goods
from the bailor to the
bailee for any of the
reasons like safe
custody, carriage etc.
 The bailee must return
goods to the bailor on
the accomplishment of
the purpose for which
bailment was made.
Sale Bailment

15.  The consideration is
the price in terms of
money.
 The consideration may
be gratuitous or non
gratuitous.
Sale Bailment

16. CONDITIONS AND WARRANTIES
[SEC 12]

17. TERMS
 Representation: Statement made by the seller
before entering into a contract.
 Stipulation: If such representation forms an integral
part of the contract and other party relies upon it.
 No Representation: CAVEAT EMPTOR‟
i.e., Let the Buyer Beware – is applied

18. CONDITION AND WARRANTY
 “A stipulation in a contract of sale with reference to
goods which are subject matter there of, may be a
condition or a warranty.”
 These stipulations forms a part of the contract of
sale and breach of it provides a remedy to the
buyer against the seller.

19. 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.

20.  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 and
when 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.

21. 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.

22. DISTINCTION BETWEEN
 It is a stipulation which
is essential for the
main purpose of the
contract.
 In case of breach of a
condition, the
aggrieved party can
repudiate the contract
of sale.
 It is a stipulation which
is collateral to the main
purpose of the
contract.
 In case of breach of
warranty, the aggrieved
party can claim
damages only.
Condition Warranty

23.  A breach of condition
may be treated as
breach of warranty.
 The breach of
warranty cannot be
treated as a breach of
a condition.
Condition Warranty

24. TYPES
 Express Conditions : Expressely provided in the
contract
 Implied conditions & warranty(sec 14 to 17) : which
the law implies in a contract of sale

25. IMPLIED CONDITIONS :
 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.

26. IMPLIED WARRANTIES
 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 trade –
Sec.16(4).

27. CAVEAT EMPTOR
Let the „Buyer Beware‟
The maxim Caveat Emptor does not apply & the
contract will be subject to the implied conditions
under the following circumstances :
1. Sale under fitness for buyers purpose
2. Sale under merchantable quality
3. Sale under usage of trade
4. Consent by Fraud

28. EXCEPTIONS
 Fitness for buyer‟s purpose.
 Sale under a patent or trade name.
 Merchantable quality
 Usage of trade
 Consent by fraud

29. RIGHTS OF UNPAID SELLER

30. UNPAID SELLER (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.

31.  The term "seller" includes any person who is in the position of
a seller, as, for instance, an agent of the seller to whom the
bill of lading has been endorsed, or a consignor or agent who
has himself paid, or is directly responsible for, the price.
 The seller shall be called an unpaid seller even when only a
small portion of the price remains to be unpaid.
 It is for the non payment of the price and not for other
expenses that a seller is termed as an unpaid seller.
 Where the full price has been tendered by the buyer and the
seller refused to accept it, the seller cannot be called as
unpaid seller.
CONDITIONS

32.  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 ……..

33. 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

34. RIGHT OF LIEN (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

35. RIGHT OF STOPPAGE IN TRANSIT (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

36. RIGHT OF RE-SALE (SEC.54)
 Where the goods are of perishable nature
 When the buyer does not pay the price