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SALES OF GOODSACT, 1930 AMANPREET KAUR EKTA VERMA AKHIL PANCHAL MANISH MAINI
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.
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.
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”.
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.
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.
DIFFERENCE BETWEENSale Agreement to sell Ownership passes to Ownership remains the buyer. with the seller. It is a executed It is a executory contract. contract. Risk of loss falls on the Risk of loss falls on the buyer. seller. Seller cannot resell the Seller can sell goods to third party. goods. It can be in case of It can be in case of future and existing and specific unascertained goods. goods.
Sale Agreement to sell In case of breach of a In case of breach of a contract, seller can sue for contract, seller can sue the price of the goods . only for damages not for The seller is only entitled the price. to the ratable dividend of The seller may refuse to the price due if the buyer sell the goods to the buyer becomes insolvent. w/o payments if the buyer The buyer is entitled to becomes insolvent. recover the specific Buyer can claim only property from the ratable dividend for the assignee if the seller money paid. becomes insolvent.
DISTINCTION BETWEENSale Hire-purchase agreement Property in the goods The goods passes to is transferred to the the hirer on the buyer immediately at payment of the last the time of the contract. installment. The position of the The position of the buyer is that of owner buyer is that of a bailee of the owner of the till he pays the last goods. installment.
Sale Hire purchase agreement The buyer cannot The hirer may, terminate the contract terminate the contract, and is bound to pay the by returning the goods price of the goods. to its owner without any liability to pay the remaining installment.
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.
FEATURES OF BAILMENT1. Subject is personal property2. Transfer is temporary possession3. Transfer is temporary control4. Both parties intend to return the goodsA bailment must be personal property.Real property such as land and buildings, cannot be bailed.
DISTINCTION BETWEENSale Bailment The property in goods There is only transfer is transferred from the of possession of goods seller to the buyer. from the bailor to the bailee for any of the reasons like safe custody, carriage etc. The return of goods in The bailee must return contract of sale is not goods to the bailor on possible. the accomplishment of the purpose for which bailment was made.
Sale Bailment The consideration is The consideration may the price in terms of be gratuitous or non money. gratuitous.
CONDITIONS AND WARRANTIES [SEC 12]
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
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.
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.
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.
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.
DISTINCTION BETWEENCondition Warranty It is a stipulation which It is a stipulation which is essential for the is collateral to the main main purpose of the purpose of the contract. contract. In case of breach of a In case of breach of condition, the warranty, the aggrieved aggrieved party can party can claim repudiate the contract damages only. of sale.
Condition Warranty A breach of condition The breach of may be treated as warranty cannot be breach of warranty. treated as a breach of a condition.
TYPES Express Conditions : Expressely provided in the contract Implied conditions & warranty(sec 14 to 17) : which the law implies in a contract of sale
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.
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).
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 purpose2. Sale under merchantable quality3. Sale under usage of trade4. Consent by Fraud
EXCEPTIONS Fitness for buyer‟s purpose. Sale under a patent or trade name. Merchantable quality Usage of trade Consent by fraud
RIGHTS OF UNPAID SELLER
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.
CONDITIONS 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.
CONTINUED …….. 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, orOn the expiry of the credit period, if the price remains unpaid,Then, only the seller will become an unpaid seller.
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-saleWhere the property in the goods has not passed Withholding delivery Stoppage in transit2) Right against the buyer: Suit for price Suit for damages Repudiation o contract Suit for interest
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
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
RIGHT OF RE-SALE (SEC.54) Where the goods are of perishable nature When the buyer does not pay the price