1. ESSENTIALS OF A VALID SALES CONTRACT Two parties:There must be two distinct parties i.e. a buyer and a seller. Goods:Goods which form the subject matter of the contract ofsale must be movable. Price:The consideration of the contract of sale, called price, mustbe money.Hence in nutshell a contract is made by an offer to buy orsell goods for a price and the acceptance of such offer.
2. basis sale Agreement tosell1. payment Immediatepayment is notnecessary and canbe done at afuture date.Ownership is tobe given at afuture date.2 contract Its an executedcontractIts an executorycontract3.Right on goods Jus-in-rem Jus-in-personam4.risk There is a riskbecause the goodspasses to thebuyer withoutpaymentThere is no risk.
3. CONDITION It is a stipulation essential to the main purpose ofthe contract, the breach of which gives theaggrieved party a right to repudiate the contractitself. In addition, he may maintain an action fordamages for loss suffered, if any, on the footingthat the whole contract is broken and the seller isguilty of non-delivery. EXAMPLE-P , goes to R , a horse dealer, and says, Iwant a horse which can run at a speed of30km.perhour . The horse dealer points out aparticular horse and says , this will suit you. Pbuys the horse . Later on P finds that the horsecan run only at a speed of 20km./hr . There is abreach of condition,P can repudiate the contract ,return the horse to R and get back the price.
4. WARRANTY A warranty is a stipulation collateral to the purpose ofthe contract, the breach of which gives the aggrievedparty a right to sue for damages only ,and not to avoidthe contract EXAMPLE- Assume that a farmer ,intending to plant no-tillsoybeans ,approaches a seller to buy her biocide .Assume further that the buyer requests a particularherbicide mix but the seller suggests a less expensivemix . If the chemicals fail to kill crabgrass and thefarmer has a low yield of soybeans , the farmer couldsue the seller for breach of the warranty of fitness for aparticular purpose because the seller knew what thefarmer required
5. The rights andduties of Buyerand Seller
6. Rights and duties of seller
7. Unpaid SellerUnpaid SellerSeller to whom the full price of the goodssold has not been paid.As per section 45 of Sale of Goods Act(1) When the whole of the price has not been paid(2) When a bill of exchange or other negotiableinstrument has been received as conditional paymentand the condition on which it was received has notbeen fulfilled by reason of dishonour of theinstruments or otherwise
8. Rights of Unpaid Seller(1) Rights Against Goods Where the ownership of goods is transferred to buyer(2) Rights Against Buyer Where the ownership of goods is not transferred tobuyer.
9. Rights Against Goods1. Right of Lien Right to retain possession of goods until payment ofprice It can be exercised when Goods have been sold without anystipulation as to credit Goods sold on credit but the term ofcredit has expired Buyer becomes insolvent
10. Continued2. Right of stoppage in transitRight of stopping the goods in transit after the unpaid sellerhas parted with the goods.Exercised when: when buyer becomes insolvent Goods are in transitOnly for the payment of price of the goods
11. Continued3.Right of Re-saleThe unpaid seller can re-sale the goods when The goods are of perishable nature Seller gives notice to the buyer ofhis intention to re-sale the goods Seller has reserved his rights ofresale
12. Rights Against Buyer1. Suit for price The buyer fails to pay the price of goods The seller can file a suit against the buyer for recoveryof the price.2.Suit for Damages for Non-Acceptance The seller is ready to deliver the goods to the buyer But the buyer wrongfully neglects or refuses to acceptthe goods and pay for them.
13. Continued3. Repudiation of contract before due date When the buyer puts an end to the contract before duedate of delivery of goods, the seller may either Treat the contract as subsisting and waittill the date of delivery of goods Treat the contract as repudiated andbring the legal action against the buyer forthe recovery of the damages.
14. Continued4. Suit for Interest Specific agreement between buyer and seller Regarding interest on the price of goods from the date onwhich payment becomes due The seller can recover interest from the buyer
15. Caveat emptor means ‘LET THE BUYER BEWARE’EXCEPTIONS TO THE DOCTRINE OF CAVEATEMPTOR In case of misrepresentation by seller. In case of concealment of latent defect. In case of sale by description. In case of sale by sample. In case of sale by descriptionand sample. Fitness for a particular purpose
16. EXAMPLES Ex. Pigs were sold subject to all faults and these pigsbeing infected caused typhoid to other healthy pigs ofthe buyer, it was held that the seller was not bound todisclose that the pigs were unhealthy. The rule of thelaw being caveat emptor.