sales of goods act by darpan gadher

1. Sales of goods act
Darpan Gadher
Shanti business school

2. The sales of goods act 1930
1. Meaning of sale and goods
2. Conditions and warranties
3. Transfer of property
4. Rights of an unpaid seller

3. • The law of sale of goods was contained in
chapter VII of the Indian contract Act.
1872
• Contracts for the sale of goods are subject
to the general legal principles applicable to
all contracts, such as offer and its
acceptance or other essential elements of
a contract.

4. Contract of sale of goods
• A contract of sale of goods is a contract
whereby the seller transfers or agrees to
transfer the property in goods to buyer for
a price.
• The term “ contract of sale” is a generic
term and includes both a sale and an
agreement to sell.

5. Sale and 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” but where
the transfer of the property in the goods is to
take place at a future time or subject to some
conditions thereafter to be fulfilled. The contract
is called “agreement to sell “.
An agreement to sell becomes a sale when the
time elapses or the conditions, subject to which
the property in the goods is to be transferred are
fullfilled.

6. Essentials of a contract of sale
1. Two parties: there must be two distinct parties i.e a
buyer and the seller, to effect a contract of sale and
they must be competent to enter into a contract.
2. Goods: there must be some goods the property in
which is or is to be transferred from the seller to the
buyer. The goods which form the subject matter of the
contract of sale must be movable. Transfer of
immovable property is not regulated by the sale of
goods Act.
3. Price: the consideration for the contract of sale, called
price, must be money. When goods are exchanged for
goods, if is not a sale but a barter. Partly in money and
kind is a contract of sale.
4. All the essential elements of a valid contract.

7. Distinction between sale and an
agreement to sell
• In a sale the property
in the goods passes
from the seller to the
buyer immediately so
that the seller is no
more the owner of the
goods sold.
• A sale can only be in
case of existing and
specific goods only.
• In an agreement to
sell the transfer of
property in the goods
is to take place at a
future time or subject
to certain conditions
to be fulfilled.
• It is mostly in case of
future and contingent
goods .

8. • Risk of loss falls on
the buyer even
though they are in the
possession of seller.
• Seller can sue for
price in case of
breach, possession
may be with seller.
• Risk of loss is with
seller even though
goods are in the
possession of buyer.
• Seller can only sue
for damages though
goods may be in the
possession of the
buyer.

9. Conditions and warranties
• A stipulation in a contract of sale with reference
to goods which are the subject thereof may be a
condition or a warranty ( sec 12(1).
• Condition: a condition is a stipulation which is
essential to the main purpose of the contract. It
goes to the root of the contract, its non fulfillment
upsets the very basis of the contract.
• If there is a breach of a condition, the aggrieved
party can treat the contract as repudiated.
• Ex: truck which is now in Bombay should
proceed!

10. warranty
• Sec 12(3) a warranty is a stipulation which
is collateral to the main purpose of the
contract. It is not of such vital importance
as condition is. If there is a breach of a
warranty, the aggrieved party can only
claim damages and it has no right to treat
the contract as repudiated.

11. • Whether a stipulation in a contract of sale
is a condition or a warranty depends in
each case on the construction of the
contract as a whole. The court is not
guided by the terminology used by the
parties to the contract. A stipulation may
be a condition though called a warranty in
the contract. ( sec 12(4)).

12. Difference between condition and
warranty
• Condition
1. Stipulation essential to
the main purpose
2. Breach of condition,
contract can be
repudiated
3. A breach of condition
may be treated as
breach of warranty.
• Warranty
1. Stipulation collateral to
the main purpose of the
contract
2. Breach of warranty the
aggrieved party can
claim damages only
3. A breach of warranty,
cannot be treated as a
breach of a condition.

13. When conditions to be treated as
warranty
Voluntary waiver of condition: where a
contract of sale is subject to any
condition to be fulfilled by the seller, the
buyer may (a) waive the condition or (b)
elect to treat the breach of the condition
as a breach of warranty. If the buyer
once decides to waive the condition he
cannot afterwards insists on its
fulfillment.

14. • 2. acceptance of goods by buyer: where a
contract of sale is not severable and the
buyer has accepted the goods or part
thereof, the breach of any condition to be
fulfilled by the seller can only be treated as
a breach of warranty. Unless there is an
agreement to the contrary.

15. Express and implied conditions and
warranties
• Implied conditions
Condition as to title: (a) in the case of a sale, he
has a right to sell the goods and (b) in the case
of an agreement to sell he will have a right to
sell the goods at the time when the property is
to pass.
Sale by description: where there is a contract for
the sale of goods by description, there is an
implied condition that the goods shall
correspond, there is an implied condition that
the goods shall correspond with the
description.

16. • Condition as to quality or fitness:
the condition as to quality or fitness is implied
where (a) the goods sold are such as the seller
deals in the ordinary course of his business (b)
the buyer relies on the seller’s skill or judgment
as to the fitness of the goods for any particular
purpose (C) the buyer expressly or impliedly
makes known to the seller that he wants the
goods for that particular purpose.
• Condition as to merchantability: where goods
are bought by description from a seller who
deals in goods of that description , it means
goods should be such as commercially saleable
under the description by which they are known in
the market at their full value.

17. • Condition implied by custom: an implied
condition as to the quality or fitness for a
particular purpose may be annexed by usage of
trade
• Sale by sample: implied condition that the bulk
shall correspond with the sample in quality, that
the buyer shall have a reasonable opportunity of
comparing the bulk with the sample, that the
goods shall be free from any defect, rendering
them un-merchantable.
• Condition as to wholesomeness; in the case of
eatables and provisions, in addition to
merchantability, there is another implied
condition that the goods shall by wholesome.

18. Implied warranties
1. Warranty of quiet possession: if the buyer is
any way disturbed in the enjoyment of the
goods in consequence of the seller’s defective
title to sell, he can claim damages from the
seller.
2. Warranty of freedom from encumbrances; the
goods are free from any charge or
encumbrance in favor of any third party.
3. Warranty as to quality or fitness by usage of
trade.
4. Warranty to disclose dangerous nature of
goods

19. Caveat emptor
• “Let the buyer beware”
• In a contract of sale of goods the seller is under
no duty to reveal unflattering truths about the
goods sold. Therefore when a person buys
some goods, he must examine them thoroughly.
If the goods turn out to be defective or do not
suit his purpose or he depends upon his own
skill or judgment and makes a bad selection, he
cannot blame anybody excepting himself.

20. Exceptions
1. Fitness for buyer’s purpose
2. Sale under a patent or trade name
3. Merchantable quality
4. Usage of trade
5. Consent by fraud