Your SlideShare is downloading. ×
Sale of goods notes...
Upcoming SlideShare
Loading in...5

Thanks for flagging this SlideShare!

Oops! An error has occurred.

Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Sale of goods notes...


Published on

1 Comment
No Downloads
Total Views
On Slideshare
From Embeds
Number of Embeds
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

No notes for slide


  • 1. Sale of Goods Act 19301. Contract of Sale  Sale and agreement to sell.  Essentials of Contract of sale.2. Conditions and Warranties  Distinctions between conditions and warranties.  Express and implied conditions and warranties.3. Doctrine of Caveat Emptor: “ Buyer Beware”4. Transfer of Property  Rules of ascertaining when the property in goods passes to the buyer.  Passing of Property5. Sale by Non-Owners.6. Performance of Contract  Types of Delivery of Goods.  Rules as to delivery of Goods.7. Rights of an unpaid seller
  • 2. The Sale of Goods Act, 1930:Definitions of some terms used in the Sale of Goods act:  Buyer: Means a person who buys or agrees to buy goods  Delivery: Means voluntary transfer from one person to another.  Goods: Goods are said to be in deliverable state, when they are in such state, the buyer would under the contract be bound to take delivery of them.  “Document of Title Goods”: A document of title to goods may be described as any document used as proof of the possession or control of goods. The following are recognized as documents of title to goods: • Bill of Loading • Railway Receipt • Warehouse keepers certificate • War finger’s certificate. • Dock warrant.  Insolvent Person: A person is said to be insolvent who cannot pay his debts as they become due.  Price: Means the consideration for a sale of goods.  Property: Means the general property in goods and not merely a special property. SALE OF GOODS ACT 1930: “An act to define and amend the law relating to the sale of goods”The sale of goods act, 1930 governs the contracts relating to sale of goods. It applies to the wholeof India except the State of Jammu & Kashmir. The act first came into force on the 1 st of July 1930.The act contains Sixty-Six sections. A few amendments in the act were made by Sale of Goods(Amendment) act 1963.It is the most common of all commercial contracts and its knowledge of its main principals isessential for all classes of the community.A contract of sale of goods results, like any other contract, by an offer by one party & itsacceptance by the other. Thus it is a consensual transaction. The parties to the contract enjoyunfettered discretion to agree to any terms like relating to delivery and payment of price, etc. Thesale of goods act does not seek to fetter this discretion. It simply lays down certain positive rulesof general application for those cases where the parties have failed to contemplate expressly forcontingencies which may interrupt the smooth performance of a contract of sale, such as thedestruction of a thing sold, before its delivered or the insolvency of the buyer, etc. The act leavesthe parties free to modify the provisions of the law by express stipulations.1. CONTRACT OF SALE:A contract of Sale of goods is a contract whereby the seller transfers or agrees to transfer theproperty in the goods to the buyer for a price. The term contract of sale is a generic term andincludes both a sale & an agreement to sell.
  • 3. Sale and Agreement to sell:Where under a contract of sale, the property in the goods is transferred from the seller to thebuyer (i.e. at once) the contract is called “a sale” but where the transfer of the property in thegoods is to take place at a future time or subject to some condition thereafter to be fulfilled, thecontract is called as “an agreement to sell”. An agreement to sell becomes a sale when the timeelapses or the condition, subject to which the property in the goods is to be transferred, is fulfilled.In a contract of sale: • There must be an offer to sell the goods at a price and subject, sometimes, to certain terms and conditions. This is usually a quotation. • There must be an acceptance to buy (usually a purchase order)But. If a supplier sends a quotation and the Purchase order stipulates conditions at variance withthe term in the quotation, it is a counter offer and the supplier must accept the revised terms togive them the legal status of the contract.The contract may provide for: • Immediate delivery of the goods or • Immediate payment • Or Both. • Delivery or payment by installments. • Delivery or payment or both at a future date.Essentials of a contract of sale:1.)Two Parties: There must be two distinct parties i.e. a buyer & a seller, as a person cannot buy his own goods to affect a sale and they must be competent to contract.2.)Goods: Goods means every kind of movable property other than actionable claims and money and includes stock & shares, growing crops, grass, and things attached to or forming a part of the land which are agreed to be severed before sale or under the contract of sale. Goodwill, trademarks, copy-rights, patents rights, water, gas, electricity, decree of a court of law are all regarded as goods. Goods are classified into 3 types: • Existing goods Goods which are physically in existence and which are in seller’s ownership and/or possession at the time of entering the contract of sale are called existing goods. Where seller is the owner & has a general property in them and if he is an agent, he has the right to sell them. Existing goods are further classified into 2 types: a) Specific goods: Goods identified and agreed upon at the time of the making of the contract of sale are called Specific Goods. e.g Where A agrees to sell B a particular radio bearing a distinctive number there is a contract of sale of specific or ascertained goods. b) Unascertained goods: Goods that are not separately identified or ascertained at the time of making of the contract are known as unascertained goods. e.g. If A agrees to sell to B one bag of sugar out of the lot of one hundred bags lying in his go down, it is a sale of unascertained goods because it is not known which bag is to be delivered..
  • 4. • Future goods Goods that are to be manufactured, produced or acquired by the seller after the making of the contract of sale are called future goods. e.g. If A Agrees to sell B all the milk that his cow may yield during the coming year, this is a contract for the sale of future goods. • Contingent goods Goods, the acquisition of which by the seller depends upon an uncertain contingency are called contingency goods. e.g. If A agrees to sell to B a specific rare painting provided he is able to purchase it from its present owner this is a contract of sale of CONTINGENT GOODS.3.)Price: The consideration for contract of sale must be money consideration called the “Price”. If goods are sold or exchanged for other goods, the transaction is barter, governed by the transfer of property act. But if goods are sold partly for goods and partly for money, the contract is one of sale. • The price may be fixed, or • The price may be left to be fixed in a manner agreed upon, or • The price may be determined in the course of dealing between the two parties or • May be fixed as per the valuation of a third party.If the price is not fixed as per these provisions, the buyer “ shall pay the seller a reasonable price”.e.g A agrees to exchange with B 100 kegs of barley at Rs 60/kg for 52 bullocks valued at Rs 300per bullock & pay the difference in cash. Held the contract was a contract of sale.4.)Transfer of General Property: There must be a transfer of general property as distinguished from special property in goods from the seller to the buyer. If A owns certain goods, he has general property in the goods. If he pledges them with B, B has special property in the goods. e.g if A owns certain goods , B has general property in the goods. If he pledges them with B,B has special property in the goods.5.)Essential Elements of a Valid Contract: All essential elements of a valid contract must be present in the contract of sale.2. CONDITIONS & WARRANTIES:Before a contract of sale is entered into, a seller frequently makes representations or statements,which influence the buyer to clinch the bargain. Such representations or statements differ incharacter and importance. Whether any statement or representation made by the seller withreference to the goods is a stipulation forming part of the contract or is a mere representationforming no part of the contract, depends on the construction of the contract. If there are no suchrepresentations then the concept of “ buyer beware” applies. This means the buyer gets the goodsas they come and it is no part of the seller’s duty to point out the defects in the goods to thebuyer.A stipulation in a contract of sale with reference to goods may be a condition or a warranty.Condition: A condition is a stipulation, which is essential to the main purpose of the contract. Itgoes to the root of the contract. Its non fulfillment upsets the very basis of the contract, it isdefined as “an obligation which goes so directly to the substance of the contract, or in other wordsso essential to its very nature, that its non-performance may fairly be considered by the otherparty as a substantial failure to perform the contract at all.Warranty: A warranty is a stipulation, which is collateral to the main purpose of the contract. It isnot of such vital importance as a condition. It is defined as “ an obligation, which, though it mustbe performed, is not so vital that a failure to perform it goes to the substance of the contract”. If
  • 5. there is a breach of a warranty, the aggrieved party can only claim the damages, as it has no rightto treat the contract as repudiated.Whether a stipulation is a contract of sale is a condition or a warranty depends on each case on theconstruction of the contract as a whole.Distinctions between a condition & a warranty:1.)Difference as to Value:A condition is a stipulation, which is essential to the main purpose of the contract. A warranty is astipulation, which is collateral to the main purpose of the contract.2.)Difference as to Breach: If there is a breach of a condition the aggrieved party can repudiate the contract of sale, but in case of a breach of a warranty, the aggrieved party can claim damages only.3.)Difference as to Treatment: A breach of a condition may be treated as a breach of a warranty. This would happen where the agreed party is contended with damages only. A breach of a warranty however, cannot be treated as a breach of a condition.The distinction between the two i.e. Condition & warranty can be explained as follows:A Man buys a particular Horse, which is warranted quiet to ride & drive. If the horse turns out to bevicious the buyer’s only remedy is to claim damages. But if instead of buying a particular horse, aman asks a dealer to supply him with a quiet horse & the horse turns out to be vicious, thestipulation is a condition, & the buyer can reject the horse, or keep the horse & claim the damages.Express and Implied Conditions & Warranties: Conditions & Warranties may be either express or implied. They are said to be expresswhen at the will of the parties they are inserted in the contract and they are said to be impliedwhen the law presumes their existence in the contract automatically though they have not beedout into it in express words. Implied Conditions & Warranties may however be negative or variedby express agreement, or by course of dealing between the parties or by usage of trade.Implied Conditions:Unless otherwise agreed the law incorporates the following implied conditions:1.) Condition as to Title: The first implied condition on part of the seller is that, in the case of a sale, he has the right to sell the goods at the time when the property is to pass. As a result of this condition if the sellers title turns out to be defective the buyer is entitled to reject the goods and the recover the price.e.g. A purchased a car from B who had no Title to it. A used the car for several months. After that,the two owners spotted the car & demanded it from A. Held, that A was bound to hand over thatcar to its true owner & that A could successfully sue B the seller without Title, for the recovery ofthe purchase price even though several months had passed.2.) Condition in a sale by description: “ Where there is a contract of sale of goods by description, there is an mplied condition where the goods shall correspond to the with the description. If the article tendered is different in any respect, it is not the article bargained for, the other party is not bound to take it”. Further the fact that the buyer has examined the goods, will not affect his rights to reject the goods, if the deviation of the goods from the description is such which could not have been discovered by casual examination i.e. if the goods show any latent defects.e.g. a ship was sold by description viz , “copper fastened vessel” but actually it was partly copperfastened. Held, that the goods did not correspond to description & hence could be returned or else
  • 6. if the buyer took the goods, he could claim damages for breach. This was even though the shipwas sold subject to all faults & defects3.) Condition in a sale by sample: When under a contract of sale, foods are supplied according the a sample agreed upon, the implied conditions are: a. The bulk sample shall correspond to the sample in quality b. The buyer shall have a reasonable opportunity of comparing the bulk with the sample. c. The goods shall be free from any defect, rendering them Unmerchantable, which would not be apparent on reasonable examination of the sample.e.g. A certain shoes were sold by sample by the French Army. The Shoes were found to containpaper not discoverable by ordinary inspection. Held, the buyer was entitled to the refund of priceplus damages.4.) Condition in a sale by sample as well as by description: There is an implied condition that the bulk of the goods shall correspond both with the sample and with the description. If the goods supplied correspond only with the sample and not with the description Or vice- versa, the buyer is entitled to reject the goods. The bulk of the goods must correspond with both.e.g A agreed to sell to B some oil describes as “Foreign refined rape oil warranted only equal tosample”. the goods tendered were equal to sample but contained an admixture of Hemp oil. Held,Bcould reject the goods.5.) Condition as to fitness or quality: Normally there is no implied condition or warranty as to quality or fitness for any particular purpose of goods supplied, the rule of law being let the “buyer beware”. But an implied condition is deemed to exist, if the following conditions are satisfied: a. The buyer, expressly or impliedly, should make known to the seller the particular purpose for which the goods are required. b. The buyer should rely on the seller’s skill or judgment. And c. Goods sold must be of a description which the seller deals in the ordinary course of his business, be it a manufacturer or not.e.g A approached B, a motor car dealer & asked for a comfortable car for touring purposerecommended his Bugatti car, a Trade name & also showed a specimen of the same. A there uponordered for a bugatti car, which was supplied. The car proved to be unsuitable for touringpurposes. A claimed to reject the car & recover back the purchase money paid by him. It was heldthat he was entitled to do so because, while ordering that car by its trade name he was still relyingon the sellers skill & judgment as regards the suitability of the car for the specific purpose.6.) Condition as to merchantability: This condition is implied only when the sale is by description; the following conditions are to be met: a. The seller should be a dealer in the goods of that description, whether he is the manufacturer or not. b. The buyer must not have any opportunity of examining the goods, or there must be some latent defect in the goods, which would not be apparent on reasonable examination of the same.e.g. Where A purchases a certain quantity of black yarn from B, a dealer in yarn, and finds ifdamaged by white ants, the condition as to merchantability has been broken and A is entitled toreject as unmerchantable.7.) Condition as to Wholesomeness: This condition is implied only in a contract of sale of eatables and provisions. In such cases the goods supplied must not only answer to description and be merchantable but must also be wholesome i.e. free from any defect, which render them, unfit for human consumption.
  • 7. e.g. A bought milk from B a dairy owner. The milk was contaminated with germs of typhoid fever,A’s wife on taking the milk became infected and died of it. B was held liable in damages.Implied Warranties:Unless otherwise agreed the law also incorporates into a contract of sale of goods the followingimplied warranties:1.) Warranty of Quiet Possession: In every contract of sale, the first implied warranty on the part of the seller is that “the buyer shall have & enjoy quiet possession of the goods.” If the quiet possession of the buyer is in anyway disturbed by a person having superior right than that of the seller, the buyer can claim damages from the seller.e.g. The plaintiff a lady purchased a second hand typewriter from the defendant. She thereafter spent some money on its repairs and used it for some months. Unknown to the parties, the typewriters was a stolen one and the plaintiff was compelled to return the same to its true owner. She was held entitled to recover from the seller’s for the breach of the warranty, damages reflecting not merely the price paid, but also the cost of repair.2.) Warranty of freedom from encumbrances: Where the goods shall be free from any charge or encumbrance in favour of any third party not declared or known to the buyer before or at the time when the contract is made” If the goods are afterwards found to be subject to a charge and the buyer has to discharge the same, then there is a breach of warranty & buyer is entitled to damages.e.g. A, the owner of the watch, pledges it with B. After a week obtains possession of the watchfrom B for some limited purpose and sells it to C. B approaches C and tells him about the pledgeaffair. C has to make payment of the pledge amount to B. There is breach of this warranty and C isentitled to claim compensation from A.3.) Warranty of disclosing the dangerous nature of goods to the ignorant buyer: The third implied warranty on the part of the seller is that, if the goods sold are of dangerous nature, he will warn the buyer of the probable danger. If there is a breach of warranty the buyer is entitield to claim compensation for the injury caused to him.e.g. A purchases a Tin of disinfectant powder from B. B knows that the lid of the tin is defectiveand if it is opended without special care it may be dangerous, but tells nothing to A. A opens thetin in the normal way, whereupon the disinfectant power flies into her eyes and causes injury. B isliable in damages to A as he should have warned A of the probably danger.3. BUYER BEWARE: DOCTRINE OF CAVEAT EMPTOR.The maxim of caveat emptor means, “let the buyer beware”. According to the doctrine of caveatemptor it is the duty of the buyer to be careful while purchasing goods of his requirement and, inthe absence of any enquiry from the buyer, the seller is not bound to disclose every defect in thegoods of which he may be cognizant.The buyer must examine the goods thoroughly and must see that the goods that he buys must besuitable for the purpose of which he wants them.If the goods turn out to be defective or do not serve his purpose, the buyer cannot hold the sellerliable for the same, as there is no implied undertaking by the seller that he shall supply the goods,which suits the buyers purpose. If, therefore, while making purchases of the goods the buyerdepends upon his own skills and makes a bad choice, he must curse himself for his own mistake, inthe absence of any misrepresentation or guarantee by the seller. This doctrine too has certainexceptions.e.g. A, a farmer, bought from B, a butcher, the carcass of a dead pig for consumption and left ithanging up, intending to return after completing other business and take it away. In his absence C,a farmer, on seeing and wishing to buy it, was referred to A and bought it of A. It turned out
  • 8. unsound and unfit for human consumption. It was held that no warranty of soundness was impliedby law between farmers A and C.4. TRANSFER OF PROPERTY:There are primarily 3 stages in the performance of a contract of sale of goods by a seller, viz:1.)The transfer of property in the goods.2.)The transfer of possession in the goods.3.)The passing of the risk.Transfer of property in the goods from the seller to the buyer is the main object of a contract ofsale. Property in Goods means the ownership of goods, whereas “possession of goods” refers tothe custody or control of goods.Hence it is important to know the precise moment of time at which the property in the goodspasses from the seller to the buyer for the following reasons:1.) Risk follows ownership: Unless otherwise agreed, risk follows ownership, whether delivery has been made or not and whether the price has been paid or not. Hence the risk of loss lies with the owner. When the property of the goods gets transferred to the buyer, the goods are at the buyers risk, whether the delivery has been made or not. But if the delivery has been delayed by fault of either the buyer or seller, the goods are at the risk of the party at fault. Thus risk and Property go together. e.g. B contracts to purchase 30 Tons of apple juice from S. S crushes the apples, puts juice in casts and keeps it ready for delivery. B, however, delay to take the delivery and the juice goes putrid and has to be thrown away. B is liable to pay the price.2.) Action against Third Parties: When the goods are in anyways damaged or destroyed by the action of third parties, it is only the owner of the goods who can take action at that time.4.)Insolvency of the Seller or the Buyer: In the event of insolvency of the seller of the buyer, whether the official receiver or Assignee can take over the goods or not depends on whether the property in the goods has passed from the seller to the buyer.5.)Suit for Price: The seller can sue for the price, unless otherwise agreed, only if the goods have become the property of the buyer.PASSING OF PROPERTY:What does “Property in Goods” mean?Ans: It means ownership of the goods.But it should be understood that “Property in Goods” is not the same as “Possession of Goods”.Possession of goods refers to the custody of goods.The rules regarding the passing or property in goods are contained in Section 18-25 of the act.Primary Rules of ascertaining the when the property of the rights gets transferred to the buyer asfollows:1.) Goods must be ascertained: Where there is a contract for the sale of unascertained goods, no property in the goods is transferred to the buyer unless and until the goods are ascertained.Ex: Under a contract of sale, B was entitled to cut teak tree’s of more that 12 in Girth. The stumpsof the tree’s after cutting had to be 3 inches high. Held in these circumstances the property in the
  • 9. timber that was cut would pass to B when the trees are cut. Till the trees were felled, they werenot ascertained.2.) Intention of the parties: Where there is a contract for the sale for specific or ascertained goods, property in them passes to the buyer at the time when the parties intend to pass. For purpose of ascertaining the intention of the parties, regard shall be had to the terms of the contract, conduct of the parties & the circumstances of the case.E.g.: S offers to sell B a certain machine for Rs. 5000/-. B refuses to buy it unless certain work wasdone on it to put it under proper running conditions. S replied that B could get it done himself andwhen the cost of repairs was known B might pay S Rs 5000 less the cost of repairs. To this Bagreed and took the machine to his repair shop. While being repaired the machine was destroyedwithout any fault of the repairman. The property in the machine did not pass from S to B.But where the intention of the parties as to the time when the property in the goods is to pass tothe buyer cannot be ascertained from the contract, the rules contained in Sec 20 to 24 apply.These rules are as follows:1.)Specific Goods: The rules relating to the transfer of property of specific goods are as follows: a. Passing of property at the time of contract: When there is an unconditional contract for sale of specific goods in a deliverable state, the property in the goods passes to the buyer when the contract is made. Deliverable state means such a state that the buyer under the contract be bound to take delivery of them. The fact that the time of payment of the price or the time of delivery of the goods, or both, is postponed does not prevent the property in the goods, passing at once. Ex: X sells to B a horse, which is to be delivered to B the next week. B is to pay the price on delivery, B asks his servant to keep the horse separate from the other horses. The horse dies before it is delivered and paid for. The property of the goods has passed to B and he has to bear the loss. b. Passing of property delayed beyond the date of the contract: i. Goods not in a deliverable state: Where there is a contract for the sale of specific goods not in a deliverable state, i.e.; the seller has to do something to the goods to put them into a deliverable state, the property does not pass until such a thing is done and buyer has notice of it. Ex: There is a contract of sale for a machine weighing 30 Tons and embedded into the concrete floor. A part of the machine was destroyed while being removed. Held, the buyer was entitled to refuse to take the machine, as it was not in a deliverable state. ii. When the price of goods is to be ascertained by weighing: Where there is a contract for the sale of specific goods in deliverable state, but the seller is bound to weigh, test, measure or do some other act or thing with reference to the goods for the purpose of ascertaining the price, the property does not pass until such act or thing is done, and buyer has notice thereof.2.)Unascertained Goods: Where there is a contract for the sale of unascertained goods, the property is the goods do not pass to the buyer until the goods are ascertained. Until goods are ascertained there is merely an agreement to sell.
  • 10. Further under section 23 states that where there is a contract for sale of unascertained or future goods by description & goods that description and in a deliverable state are unconditionally appropriated in the contract, the property of the goods thereupon passes to the buyer. The “ascertainment of the goods” and their unconditional “appropriation to the contract” are two pre-conditions for the transfer of property from the seller to the buyer in case of unascertained goods. Ascertainment is a process by which the goods answering the description are identified and set apart. Ex: in a sale of 20 hog-heads of sugar out of a large quantity, 4 were filled and taken away by the buyer. The remaining 16 were subsequently filled and the buyer was informed of the same. The buyer promised to take them away, but before he could do so the goods were lost. Held the property had passed to the buyer at the time of the loss.3.)Goods sent on approval or “ on sale or return”: under sec 24, Where goods are delivered to thebuyer on approval or “on sale” or “on return” or other similar terms, the property there in passesto the buyer: a. When he signifies his approval or acceptance to the seller. b. When he does some act adopting the transaction.Ex: Goods are delivered by A to B on “sale or return”. They are further delivered by B to C andthen by C to D on similar terms. The goods are stolen while in custody of D. As between A and Band B and C, has not passed to D. As such, C cannot recover the loss from D, but is bound to paythe price to B and B is bound to pay the price to A.Reservation of rights of disposal: The property in goods, whether specific or unascertained, does not pass to the buyer if theseller reserves the right of disposal of goods.If for Ex: it is the term of the contract that the buyer is to pay for the goods before delivery, theseller reserves the right for disposal. In such a case the property of the goods does not pass to thebuyer until the conditions imposed by the seller is fulfilled.5. SALE BY NON-OWNERS: Sections 27 – 30.The general rule of law is that “no one can give that which he has not got”. Only an owner of thegoods can transfer a good title. This rule is expressed by the Latin maxim“ Nemo dat quod non habet”.Examples: 1.) A, the hirer of goods under a hire purchase agreement sells them to B, B, through a bonafide purchaser, does not acquire the property in the goods. At the most he acquires such an interest as the hirer had. 2.) A finds a ring of B and sells it to a third person who purchases it for a value & in good faith. The true owner i.e. B can recover from that person, for A having no title could pass none the better.The above rules, there are certain exceptions:1.)Sale by a person not the owner or title by estoppels: Where the true owner by his conduct or by an act of omission, leads the buyer to believe that the seller has the authority to sell and induces the buyer to buy the goods, he shall be estopped from denying the fact of want of authority of the seller. The buyer in such a case gets a better title than that of the seller. Ex: A tells B within the hearing of C that he is the owner of certain goods which infact belong to C. After sometime B buys those goods from A. The title of B will be better than that of A and C will be precluded from disputing B title to the goods.2.)Sale by a mercantile agent:
  • 11. A mercantile agent is the one who in the customary course of his business, has, as such agent authority either to sell goods or to consign goods for the purpose of sale or to buy goods, or to raise money on the security of the goods. The buyer of the goods from a mercantile agent, who has no authority from the principal to sell, gets a good title to the goods if the following conditions are satisfied: a. The agent should be in possession of the goods or documents of the title to the goods with the consent of the owner. b. The agent should sell the goods while acting in the ordinary course of business of a mercantile agent. c. The buyer should act in good faith d. The buyer should not have at the time of the contract of sale notice that the agent has no authority to sell.Ex: F, the owner of a car delivered it to H a mercantile agent for sale at not less that Rs 575. Hsold the car for Rs 145 to K who bought it in good faith and without notice of any fraud. Hmisappropriated the money. F sued to recover the car from K. Held, as H was in possession of thecar with F’s consent for the purpose of sale, K obtained a good title to the car.3.)Sale by one of several joint owners: If one of the several joint owners, who is in sole possession of the goods by permission of the other co-owners, sells the goods, a buyer in good faith of those goods gets a good title to the goods.4.)Sale by a person in possession under a void able contract: When the seller of goods has obtained their possession under a voidable contract, but the contract has not be rescinded at the time of the sale, the buyer acquired a good titile to the goods, provided he buys them in good faith and without notice of the seller defect of title.Ex: A purchases a piano from B by fraud. A has a voidable title to the goods. Before B reincidesthe contract, A sells the piano to C, who buys in good faithand in ignorance of the fraud. C gets agood title.5.)Sale by seller in possession after sale.: Where the seller having sold goods, continues to be in possession of the goods or documents of the title to the goods and sells them either himself or through a merchantile agent to a person who buys in good faith and without notice of previous sale, the buyer gets a good title.Ex: A sells certain goods to B and promises to deliver the goods the next day. Before delivery Asells & delivers the goods to C who buys the goods in good faith and without prior knowledge ofsale to B. C gets a good title to the goods not withstanding that the property had, before hepurchased, passed to B. B’s only remedy in this case is against A.6.)Sale by a buyer in possession after a sale: Where a person having bought or agreed to buy goods obtains, with the concent of the seller , possession of the goods or documents of the titile to the goods and sells them either himself or through an agent, the buyer who acts in good faith and without notice of any lien or other right of the original seller in respect of the goods gets a good titleEx: A bought some furniture on hire – purchase, the ownership to pass to him on the payment ofthe last installment. A sold the furniture to B before paying the last instalment. A sold the furnitureto B before paying the last instalment. B purchased the furniture bona-fide. Held, B having boughtin good faith, had obtained a good title to the furniture.7.)Sale by an unpaid seller: Where an unpaid seller who has exercised his right of lien or stoppage in transit re-sells the goods, the buyer acquires a good title to the goods as against the original buyer.8.)Exceptions in other acts like Indian Contract Act 1872, under a sale by finder of lost goods.m Asale by a pawnee or pledgee or sale by sale by official receiver or official assignee.
  • 12. 6. PERFORMANCE OF THE CONTRACT OF SALE:Duties of the seller and the buyer:It is the duty of the seller to deliver the goods & of the buyer to accept and pay for them, inaccordance with the terms of the contract of sale.Unless otherwise agreed, delivery & payment of price are concurrent conditions. In other words, nodelivery need be given, if the buyer is not willing to pay the price, nor need the buyer pay theprice, unless the seller us ready and willing to give the delivery.Delivery:It is defined in the act as “a voluntary transfer of a possession from one person to another.”Delivery of goods may, therefore be; 1.) Physical or actual delivery: The physical possession of the goods is handed over by the seller to the buyer. 2.) Symbolic Delivery: The deliver is made by delivering some symbol. Ex: Delivery of a railway receipt properly endorsed. 3.) Constructive Delivery: There is only an acknowledgement by the person in possession of goods that he holds them on behalf of another.Rules Regarding Delivery: 1.) Delivery of Part of Goods: Part of goods sold may amount to delivery of the whole if it is so intended and agreed. But, however, where the part is intended to be severed from the whole, part delivery does not amount to delivery of the whole. 2.) Unless agreed otherwise, the seller is not bound to deliver the goods, the buyer applies for delivery. 3.) Place of Delivery: Where at the place at which delivery of the goods is to take place is specified in the contract, the goods must be delivered at that place during business hours on a working day. Where there is no specific agreement as to place, the goods sold are to be delivered at the place at which they are at the time of sale. 4.) Time of Delivery: When under the contract of sale, the seller is bound to sell the goods to the buyer, but no time for sending them is fixed, the seller is bound to send them within a reasonable time. What is a reasonable time is a question of fact. 5.) Cost of Delivery: Unless otherwise agreed, all expenses of and incidental to the making of delivery are borne by the seller, but all expenses of and incidental to obtaining of delivery are borne by the buyer. 6.) Delivery of Wrong Quantity: Where the seller delivers to the buyer a quantity of goods, less that he contracted to sell, the buyer may reject them. But, if the buyer accepts the goods delivered he should be required to pay for them at the contracted rate. Where a larger quantity is delivered, the buyer may accept the goods included in the contract and reject the rest or he may reject the whole. If the buyer accepts the whole of the goods so delivered, he shall pay for them at the contract rate. 7.) Installment Deliveries: The buyer is not bound to accept delivery by installment, unless otherwise agreed. 8.) Delivery to the carrier or wharfinger: Delivery of the goods by the seller to a carrier for transmission to buyer or to wharfinger for safe custody is prima facie deemed to be a delivery of the goods to the buyer, unless the right of disposal has been recovered by the seller. The seller is bound to make with the carrier such a contract of carriage as properly protects the interest of the buyer. If he fails to do so, he is liable in damages to the buyer. 9.) Liability of the buyer: When the seller is ready and willing to deliver the goods and requests the buyer to take delivery and buyer does not within a reasonable time after such request take delivery of the goods, he is liable to the seller for any loss occasioned by his neglect or refusal to take delivery. 10.)Where goods are delivered to a buyer, which he has not previously examined, he is not deemed to have accepted them, unless he has reasonable opportunity of examining them and ascertaining whether they conform to the contract.
  • 13. 7. UNPAID SELLER AND HIS RIGHTS:Who is an unpaid seller?A seller is deemed to be an unpaid seller when –1.) The whole of the price has not been paid or tendered;2.) A bill of exchange or other negotiable instrument has been received as a conditional payment &the condition on which it was received has not been fulfilled by reason of dishonor of theinstrument.The following conditions must be fulfilled before a seller can be deemed to be an unpaid seller: 1.) He must be unpaid and the price must be due. 2.) He must have an immediate right of action for the price. 3.) A bill of exchange or other negotiable instruments was received but the same has been dishonored. When payment is made by a negotiable instrument it is usually a conditional payment, the condition being that the instrument shall be duly honored. If the instrument is not honored the seller is deemed to be an unpaid seller.Rights of an unpaid seller:These may be broadly classified under 2 heads 1.) Rights against goods 2.) Rights against the buyer personally. 1.) Rights against goods: An unpaid seller has the following rights against the goods a. Right of Lien b. Right of Stoppage in transit. c. Right of Resale.Lien of Goods: The word “lien” means to retain possession of. An unpaid seller who is in possessionof goods, is entitled to retain them in his possession until payment or tender of the price in thefollowing cases, namely: a.) Where the goods have been sold, without any stipulation as to credit. b.) Where the goods have been sold on credit, but the term of credit has expired. c.) Where the buyer becomes insolvent.Lien can be exercised only for the non-payment of the price, and not for any other charges dueagainst the buyer.Ex: The seller cannot claim lien for go down charges for storing the goods in exercise for his lien ofthe rights.Termination of Lien: An unpaid seller, looses his lien in the following cases: 1.) When the seller delivers the goods to a carrier for the purpose of transmission to the buyer, without reserving a right of disposal of the goods to himself Ex: Seller take Railway Receipt in the name of the buyer or his carrier. 2.) Where a buyer or his agent lawfully obtains the possession of the goods 3.) By waving the right of lien. 4.) Where he ascends to a sub sale by the buyer. 5.) Where he takes a security from the buyer for the payment of the price, in place of his lien 2.) Rights of stoppage in transitThe right of stoppage in transit is a right of stopping the goods while they are in transit, resumingpossession of the goods as long as they are in the course of transit, & retaining possession untilpayment or tender of the price. 3.) Right of Re-sale:The unpaid seller can re-sell the goods :
  • 14. 1) Where the goods are of perishable nature. 2) Where the seller expressly reserves theright of resale in case the buyer shoul make default. 3) Where he gives notice to buyer of his intention to resale the goods & the buyer does not within a reasonable time pay or tender the price.Rights of an unpaid seller against the buyer personally:These are the rights, which an unpaid seller may enforce against the buyer personally. These rightsof the seller against the buyer personally are called Rights in personam as against the rights inrem( i.e rights against the goods & are in addition ti his rights against the goods. The rights inpersonam are explained as follows:1) Suit for Price2) Suit for damages for non-acceptance.3) Repudiation of contract before due date.4) Suit for interest.