1.
ITEMS DESCRIPTION OF MODULE
Subject Name Tourism & Hospitality
Paper Name
Tourism and Hospitality Entrepreneurship and Legal
Environment
Module Title Sales of Goods Act 1932
Module Id Module No 27
Pre- Requisites Basic knowledge about Indian Contract Act
Objectives
To study the Overview to the types of Goods, and Contract of
Sales of Goods and Services
Keywords Tourism, Entrepreneurship, Business Law

2.
MODULE 1: OVERVIEW TO THE CONCEPT OF ENTREPRENEURSHIP AND
ENTREPRENEURIAL TRAITS
1. LEARNING OUTCOMES
2. INTRODUCTION
3. SALE
3.1 Essentials of Sale
4. MEANING OF GOODS AND ITS CLASSIFICATIONS
4.1 Different Kinds of Goods
4.2 Transfer of Ownership (Ownership) in the Goods
4.3 Price And Its Determination
5. SALE AND SOME ANALOGOUS CONTRACTS
5.1 Difference between Sale and the Agreement to Sell
5.2 Difference between Sale and Hire Purchase Agreement
5.3 Difference between Sale and Contract for Work and Labour
5.4 Difference between Sale and Barter Exchange
5.5 Difference between Sale and Gift
6. SALE AND ITS CONDITIONS AND WARRANTIES
6.1 Impiled Conditions and Warranties

3.
6.3 Implied Warranties
6.4 Exclusion of Implied Terms and Conditions
6.5 Penalty of the Violation of a Condition or Warranty
7. TRANSFER OF OWNERSHIPAND TITLE
7.1 Specific Goods
7.2 Goods Delivered on Approval or Return Basis
7.3 Unascertained or Future Goods
7.4 Principle of Risk Follows Ownership
8. TRANSFER OF TITLE: NEMO DAT QUOD NON HABET
8.1 Exceptions to the Rule
9. PERFORMANCE OF THE CONTRACT
9.1 Performances on Part of the Vendor
9.2 Rules Regarding Delivery
10. PERFORMANCE ON PART OF THE PURCHASER
11. RIGHTS OF UNPAID VENDOR
11.1 Lien
11.2 The Lien is Terminated
12. STOPPAGE IN TRANSIT
12.1 Transit Comes to an End When
13. RESLALE
14. SUIT FOR BREACH OF THE CONTRACT
14.1 Suits by the Vendor against the Purchaser
14.2 Suits by the Purchaser against the Vendor
15. SUMMARY

4.
1. LEARNING OUTCOMES
Present unit aims at describing Sales of Goods Act 1932, types
of goods and rights of buyer and seller. After going through
this unit you will be able to:
•Understand the basics of the contract of Sales of Goods;
•Define seller and buyer;
•Describe the rights of buyer and seller;
•Differences between Sale and other contracts similar to it;
•Conditions and Warranties in Sale contract;
•Transfer of Title in Sale contract;
•Differentiate between contract of sale and agreement to sell.

5.
2. INTRODUCTION
The Act became effective on 1st July, 1930 and named as the
Indian Sale of Goods Act,1930.Before that the legal provisions
of sale of goods were regulated by ChapterVII (sections 76 to
123) of the Indian Contract Act, 1872. Because of the
enormous changes in the trade and commerce the need was
felt to modify the law in India regarding sale and purchase of
goods .as a result a new law was enacted by substituting the
earlier sectionof 65the Contract Act 1872. The new law
omitted the word “Indian” was omitted by the Indian Sale of
Goods (Amendment) Act, 1963 (33 of 1965) and now the
enactment is named as “The Sale of Goods Act, 1930”.The Act
deals with the contract of selling and buying of goods,the
relative conditions and warranties of transfer of ownership and
rights-duties ofvendor andpurchaseretc.

6.
3. SALE
According to Section 4 (1) of the Sale of Goods Act, 1930
“A Sale of Goods is a contract whereby the vendor transfers or
agrees to transfer the ownership in goods to the purchaser for a
price”.
3.1 Essentials of Sale
The Sale of Goods must fulfill following conditions:
•Two parties, the vendor and the purchaser.
•Goods be the subject matter
•Agreement to transfer the ownership (ownership) in the
goods between vendor and the purchaser
•Such transfer of the ownership (ownership) is for the
consideration known as “ price”
All other essential provisions of the Contract Act, of the
competency of parties, lawful object of contract, etc. to
make a valid contract do apply to the sale contract in the Act.

7.
4. MEANING OF GOODS AND ITS CLASSIFICATIONS
The term GOODS includes movable ownershipof every kind
excluding actionable claims and money; but includes stock
and shares, growing crops, grass, and things attached to or
forming part of the land as agreed to be separated before sale or
under the sale .
4.1 Different Kinds of Goods
Goods can be classified in to following categories:
The classification of goods is essential to find out the time at which the
ownershipi.e. ownership in the goods passes from the vendor to the
purchaser.

8.
• goods which are existing and seller
owns or possess
Existing Goods
• goods in which manufacturing or
production or acquisition is pending
by the seller
Future Goods
• goods which are identifiable and
agreed upon
Specific Goods
• goods not identifiable and agreed
upon
Unascertained
Goods

9.
4.2 Transfer of Ownership in the Goods
According to the Sale of Goods Act the ownership means the
ownership in the goods rather than the mere possession and use.
It implies that making the purchaser as owner of the goods is
main ingredient of sale contract. The vendor can pass on the
ownership to the purchaserat the time the sale contract is made
or at some later time.Former is called a sale and latter is called
an agreement to sell.
4.3 Price and its Determination
Consideration for the sale must be price in the form of money
consideration. Such price can be determined either by the contract or in
accordance with the manner agreed between the parties. For example at
the market price or the price determined by the third party.

10.
5. SALE AND SOME ANALOGOUS CONTRACTS
Sale is a broader term and some similar elementsas
found in other contracts like Agreement to Sell, Hire
Purchase Agreement or Contract for Work and Labor
or Barter Exchange or Gifts and Bailment Pledge etc.
therefore it is necessary to mention some essential
difference between sale and above resembling
contracts.

11.
Sale Agreement to Sell
 Ownership transfers to the
purchaser from vendor at the
time of making the contract.
 Risk lie with the purchaser
and any loss to the goods to
be borne by him only.
 It’s an executed contract.
 Ownership transfers to the
purchaser from vendor at
future time or fulfilling the
condition.
 Risk remains with the vendor
only.
 Its executory contract.
5.1 Difference between Sale and the Agreement to Sell

12.
sale Hire-purchase agreement
 There is actually an
agreement for transferring the
ownership in the goods for a
price.
 Possession and ownership in
the goods, bothgoes to the
purchaser.
 After sale, purchasercannot
terminate the contract.
 It’s just a contract of hire
which may eventually ripen
into sale.
 Possession is delivered on the
condition of payment of
periodical instalments.
 The hirer has the right to
cancel the agreement before
actual sale
5.2 Difference between Sale and Hire Purchase Agreement

13.
Sale Contract For Work And
Labour
 Its only supply of goods.
 The object of the contract
is passing the ownership
 It involves rendering of
any kind of work or
service to the goods.
 There is no sale of chattel
but only rendering skill
and labour.
5.3 Difference between Sale and Contract for Work and Lab

14.
Sale Barter Exchange
 Goods sold for the
price in return.
 The consideration is
goods i.e. goods given
in exchange of goods.
5.4 Difference between Sale and Barter Exchange

15.
Sale Gift
 There is always a
consideration of price in
(terms of money) for
the passing the
ownership in the goods.
 There is gratis i.e.
without any
consideration.
5.5 Difference between Sale and Gift

16.
6. SALE AND ITS CONDITIONS AND WARRANTIES
In a sale of goods there may be various terms or requisites.
Suchrequisites may be either conditions or the warranties. Ifthe
requisites are basis of the sale or essential to the main purpose
of the contract, it’s called a condition or if they are just security
to the main purpose of the contract it’s called a warranty.
For example: A ordered a black suit on 3rd march for his
marriage and fixed it to be delivered by the registered parcel.
Here the color of the suit and date of delivery is condition
whereas the way of delivery is treated as warranty.
(Therule as to deciding the requisites as condition or warranty
depends upon each case and the construction of the contract)

17.
6.1 Implied Conditions and Warranties
As said earlier any condition can be termed
as condition or warranty as desired by the
parties. Apart from above rule The Sale of
Goods Act provides certain implied
conditions and warranties which are
obligatory in every sale unless they are
contradictory with the any
articulatedspecification agreed by the
parties.

18.
AS TO TITLE
• Seller having right to sell the
goods.
• example:A sold a stolen car to
B. here A not having title to
the goods sold.
SALE BY DESCRIPTIONS
• Goods supplied corresponds
with the description
• example: A agreed to supply
300 tins of canned fruit juices
packed with 10 cannes in
each tin.
BY SAMPLE AS WELL AS
DESCRIPTIONS
•Goods corresponds with the
sample as well as description.
•example: goods agreed to be
californian almonds packed in to
silver foil.
QUALITY OR FITNESS
• Goods arefit for the purpose
mentined by the buyer while
purchase.
• example: purchasing hessian
cloth for packing purpose.
SAMPLE SALE
•Bulk corespond with the sample in
quality; buyer having reasonable
opportunity of cpmpariing the
bulk with sampl; goods free from
any defect rendering them
unmerchantable.
6.2 Implied Conditions

19.
6.3 Implied Warranties
OF QUIET POSSESSION
• Buyer enjoying undisturbed
possession of the goods
sold.
• Goods bearing similar trade
mark not to be enjoyed
quietly by the buyer.
AGAINST ENCUMBERANCES
• Goods free from any charge
or encumberence of any
third party.
• Goods already pledged sold
to the buyer

20.
6.4 Exclusion of Implied Terms and
Conditions
In the following conditions the implied
conditions and warranties are not applied in sale
of goods.
•The rule of caveat emptor (purchaser beware)
According to this rule the purchaser himself
should be careful while purchasing the goods and
ascertain that the goods suit his purpose.
•By utterdealing with the parties
•By course of transactions and tradition of the
business.

21.
6.5 Penalty of the Violation of a Condition or Warranty
When there is a breach of condition by the vendor, thepurchaser may:
•Treat the sale as cancelled
•give up the condition
•Treat the violation of condition as a breach of warranty.
For example: A settled to supply B 1000 bags of first quality wheat at the
rate of 100 bag.A hassupplied second quality wheat at the rate of 101
bag. Itsviolation of condition and purchaser can either decline the goods or
assume the breach as break of warranty or agree tothe goods by waiving
by the condition.

22.
7. TRANSFER OF OWNERSHIPAND TITLE
The transfer of goods i.e. absolute rights in the goods are the core of the
contract. For such purpose goods are separated in to specific or
unascertained goods.
7.1 Specific Goods
In specific goods, theownership in the goods is transferred to the purchaser
at the time intended by the parties to the contract.
For example: in a sale of garments by A to B through carriage it was
decided that the ownership in the goods lies with the vendori.e.A till the
payment is made in full to the carriage.
For determining the intent of the parties the terms of the contract, conduct
of the parties and the circumstances of the case needs to be referred..

23.
The specific goods in deliverable state passes
immediately at the time of making of the
contract even though the delivery or the price is
postponed. If they are ready to be delivered then
the ownership passes on putting them in state of
delivery. Goods are in ready to be delivered state
if the purchaseris under duty to take them or
they are to be weighed, measured, test or to do
something else to ascertain the price of the
goods.
For example: Apurchases a table which is yet to
be polished by the vendor before delivery.

24.
7.2 Goods Delivered on Approval or
Return Basis
If thevendordelivers goods to the purchaser
on authorization or revisit basis the
ownership in goods does not pass to the
purchaseruntilthe purchaser
•Signifies the approval
•Adopts the transaction i.e. starts using it
•Does not take the above two steps within
reasonable time i.e. neither approved nor
gives notice of rejection

25.
7.3 Unascertained or Future Goods
The material goods in the chatteldo not get ahead
until the goods are ascertained.The ownership in
the unascertained goods sold by
explanationpasses to the purchaser by:
•Appropriation (doing of any act giving rise to a
presumption that certain goods belong to the
purchaser.i.e. earmarking or dispatching)
•Giving assent to the above appropriation
•Such assent should be unconditional

26.
7.4 Principle of Risk Follows Ownership
The principle states that the loss to be borne by the owner. If the purchaser
is owner purchaser suffer the loss or vice versa.

27.
8. TRANSFER OF TITLE: NEMO DAT QUOD NON HABET
The maxim conveys that no one can give the better label than he himself
had. It provides that vendorcannot convey the better name or designation
than that of his own. For example, thief selling the stolen goods or the
hirer is selling goods without paying the installments.

28.
8.1 Exceptions to the Rule
In the following Exceptions vendor nothaving the good designation to the goods
passes a better or good title to the purchaser
• Sale under the implied authority of owner or transfer of title by estoppel.
E.g. agent selling the goods in apparent authority
• Sale by mercantile agent.
E.g. selling car through car dealer
• Sale by one of the joint owner.
E.g. A and B isco-owner of car sold that car to C.
• Sale by person in possession under voidable contract.
E.g. Aobtained a ring from B by fraud and sold that to C before the contract is avoided
by B
• Possession of vendor and selling the goods
• Possession of purchaser and selling the goods
• Sale by an unpaid vendor
• Sale by finder of the goods.
E.g. A found a leather jacket and if could not find out the real owner can sell that to
other.
• Sale by Pawnee
E.g. A Pledged the jewelry to B and in default of payment B can sell that jewelry.
• Sale in market overt
E.g. sale in the open market by the person generally dealing in such goods

29.
9. PERFORMANCE OF THE CONTRACT
Performance here implies the responsibility of
the vendor to deliver the goods and topurchaser
to disburse the payment for them in accordance
with terms of the sale.

30.
.1 Performances on Part of the Vendor
It includes delivery of the goods as Actual, representative or
Constructive Delivery.
DELIVERY
Actual
Delivery Of
Horse,furniture
Etc.
Symbolic
Key Of The
Warehouse In
Which Goods
Are Stored Or
Railway Receipt
Of the goods etc.
Constructive
Fictious
Delivery Or
Delivery By
Attornment Or
Acknpwledgem
ent Etc.

31.
9.2 Rules Regarding Delivery
•Delivery should be according to the contract on the subject of the time, place and the
manner of the delivery.it is presumed that the payment of price and delivery are
simultaneously performed .unless otherwise agreed by the parties.
•It’s the duty of the purchaser to apply for the delivery by showing his readiness and
willingness to pay the price.
•Regarding the place of delivery it’s free for the parties to decide .as in case of C.I.F.
(cost, insurance, freight), the vendor is supposed to dispatch the goods after paying the
insurance and freight charges. In F.O.B. (free on rail) the vendor is to deliver the goods
on railway station mentioned in the contract.
•The operating costof the delivery to bear by the vendor unless otherwise agreed.
•The delivery should be made in the same quality and description as given in the contract.
•Else settled otherwise the purchaser of the goods not to accept delivery in installments
and vendor should deliver the goods in one lot only.
•When the goods are delivered at remoteplaces thesupplementary expenses to be borne by
the purchaser.

32.
10. PERFORMANCE ON PART OF THE
PURCHASER
•Purchaser duty is to acknowledge the goods and to
give the price in accordance with the contract. Before
that the purchaser is having the right to scrutinize the
goods to discover the compliance with the contract.
The purchaser is presumed to accept the goods if:
•He communicate to the vendor his acceptance
•After delivery he does not reject the goods and
retainthem.

33.
11. RIGHTS OF UNPAID VENDOR
An unpaid vendor is the person to whom the total price has not
been paid or tendered, or if the price was paid in the course of a
bill of exchange or other negotiable instruments, thesimilar has
not been honored by the bank.
The unpaid vendor can exercise following rights against the
goods:
•Lien
•Stoppage in transit
•Re-sale

34.
11.1 Lien
Lien means retaining the goods or refusing to
deliver the goods until the price in respect of
them has been paid by the purchaser. This right is
exercised in the following situations:
•Goods are being soldon cash basis.
•Goods if sold on credit and the credit period are
over.

35.
11.2 The Lien is Terminated
•By payment of the price
•By delivery to the carrier for the purpose of
communication to the purchaser and without holding
back the right of throwing away of the goods
•On purchaser obtaining the possession if the gods
•By waiverwhen vendor consent to the extended period
of credit to the purchaser or delivers a fraction of the
goods to the purchaser or his agent.
•By disposition of the goods by the purchaser in a case
when either made sub sale or transfers the title of the
goods to the transferee with the assent of the vendor

36.
12. STOPPAGE IN TRANSIT
It means repossession of the goods by the vendor after
they are dispatched to the transporter for the reason of
the communication to the purchaser. For exercise of
above right the following conditions must be fulfilled:
•Vendor should be unpaid vendor s defined
•The purchaser should bankrupti.e. a person who not
able to pay his debts in the usualway of the business.
•The goods should be in transportation. The goods are
in transportation from the minute they are delivered to
the transporter for the purpose of communication to the
purchaser.

37.
12.1Transit Comes to an End When
•The purchaser gets the delivery
•The transporter or the other bailee acknowledges
to the purchaser that he holds goods on
purchaser’s behalf.
•The transporter wrongfully declines to convey
the goods to the purchaser on afeeble notice of
stoppage in transit.

38.
13. RESLALE
The right of selling again isavailable in any of the
following circumstances:
•Where goods are of consumable nature like milk or
fruits
•Where the unpaid vendor after exercising lien and
stoppage in transit gives notice to the purchaser his
intention to re sell.
•Where it is expressly provided that the vendor has a
right of selling the goods again in case a purchaser
makes default in payment

39.
14.SUIT FOR BREACH OF THE CONTRACT
In case one of the party i.e. the vendor or the
purchasermakes commit a breach of the contract then
the vendor is having right to file a suit for the worthof
the goods and or the compensation and the purchaser is
having right to file a suit for the compensation for non-
delivery and specific performance.

40.
14.1 Suits by the Vendor against the Purchaser
•Suit for recovering the value
•Suit for claiming compensation in case
thepurchaserwrongfully neglects or refuses to admit
and disburse for the goods.

41.
14.2Suits by the Purchaser againstthe Vendor
•Suits for the compensation for the non-delivery
of the goods by the purchaser
•Purchaser can also file suit for the exact
performance of the contract if the costs are not
enoughcure and the subjectsubstance of the
contract is too unusual and e.g. the picture of a
dead painter.

42.
15. SUMMARY
The Sale of Goods Act deals with the sale of goods dealing
exclusively with movable ownership theconsequent terms
relating to the sale like stipulations regarding conditions and
warranties are given with the rules of giving the ownership of
the goods. The sale contract consists of delivery and
disbursement of price by the parties to the contract. The rights
of lien, stoppage in transportation and the consequent resale by
the vendor after the ownership in the goods passed to the
purchaser and the consequent rights of each party i.e. the
vendor and the purchaser to file a suit in case of the violation
of the contract.

43.
Exercise
1 Sale of goods deals with
•Only movable property
•Only immovable property
•Both
2 Condition is
•Stipulation essential to main purpose of the
contract
•Collateral to the main purpose of the contract
•Not important in contract of sale

44.
3 Property (ownership) in the goods means
•General property
•Specific property
•Conditional property
4 Unpaid seller is having right of
•Lien
•Stoppage in transit
•Both

45.
5 The seller can sue the buyer for the
•Price
•Non acceptance
•both

46.
Ans: 1(a), 2(a), 3(a), 4(c), 5(c)

47.
SUGGESTED READINGS:
•Contract Act Part II By R.K.Bangia
•Sale Of Goods Act 1932 By R.K.Bangia
•Elements Of Mercantile Law By N.D. Kapoor
•A Textbook Of Mercantile Law ( Commercial
Law) By P P S Gogna