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The Sale of Goods Act 1930 -

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The concept of this presentation deeply summarized 66 sections of The Sale of Goods Act 1930 including contract of sale, agreement to sale, difference between sale and agreement to sell, essentials of contract of sale, goods, classification of goods, existing goods, specific goods, ascertained goods, unascertained goods, future goods, contingent goods, transfer of ownership, price, acceptance, stipulation, condition and warranty, difference between condition & warranty, express and implied conditions, express and implied warranties, breach of condition, breach of warranty, Doctrine of Caveat Emptor, Exceptions to Doctrine of Caveat Emptor, Doctrine of Caveat Venditor, transfer of property, delivery of goods, rights of unpaid seller, rights against goods, rights against buyer, rights against seller, auction sale, Baldry vs. Marshall Case Analysis and Grant vs. Australian Knitting Mills Ltd Case.

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The Sale of Goods Act 1930 -

  1. 1. Sale of Goods Act 1930
  2. 2. Introduction  Act is known as Sale of Goods Act, 1930 [Section 1(1)]  Whole of India except Jammu & Kashmir [Section 1(2)]  Came into force on July 01, 1930 [Section 1(3)]  66 Sections
  3. 3. Contract of Sale [Section 4] Sale of Goods Act defines a contract as, “A contract, whereby, the seller transfers or agrees to transfer the property in goods to buyer for a price. There can be contract of sale between one part owner and another. [Section 4(1)] A contract of sale may be absolute or conditional. [Section 4(2)] Sale of Goods Act defines a contract as, “A contract, whereby, the seller transfers or agrees to transfer the property in goods to buyer for a price. There can be contract of sale between one part owner and another. [Section 4(1)] A contract of sale may be absolute or conditional. [Section 4(2)]
  4. 4. Contract of Sale [Section 4(3)] Contract of Sale Sale Agreement to Sell
  5. 5. Sale [Section 4(3)] Sale of Goods Act defines sale as, “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.” Sale of Goods Act defines sale as, “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.”
  6. 6. Agreement to Sell [Section 4(3)] Sale of Goods Act defines agreement to sell as, “Where under a contract of sale the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell.” An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred. [Section 4(4)] Sale of Goods Act defines agreement to sell as, “Where under a contract of sale the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell.” An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred. [Section 4(4)]
  7. 7. Sale & Agreement to Sell Basis of Difference Sale Agreement to Sell Transfer of ownership Immediate At Future Time Nature of Contract Executed Executory Nature of rights of Buyers Just –in-rem Just-in-personam Consequence of breach by Buyer Seller may sue Buyer for price of Goods. Seller can sue only for damages. Risk of Loss Falls on Buyer Falls on Seller
  8. 8. Essentials of Contract of Sale [Section 4 and 5]  Two Parties  Goods  Transfer of Ownership  Price  Essentials of a valid contract  Contract to include both a ‘sale’ and ‘an agreement to sell’  Two Parties  Goods  Transfer of Ownership  Price  Essentials of a valid contract  Contract to include both a ‘sale’ and ‘an agreement to sell’
  9. 9. Two Parties  Bilateral in Nature  One cannot buy one’s own goods  Part-owner of goods
  10. 10. Goods [Section 2(7)] Sale of Goods Act defines Goods as, “Goods means every kind of movable property other than actionable claims and money and includes stock and shares, growing crops, grass, and things attached to or forming part of land which are agreed to be severed before sale or under the contract of sale.” [Section 2(7)] Sale of Goods Act defines Goods as, “Goods means every kind of movable property other than actionable claims and money and includes stock and shares, growing crops, grass, and things attached to or forming part of land which are agreed to be severed before sale or under the contract of sale.” [Section 2(7)]
  11. 11. Goods - Extension[Section 2(7)] Sale & Purchase of Immovable PropertySale & Purchase of Immovable Property Contract of ServiceContract of Service ElectricityElectricity
  12. 12. Classification of Goods [Section 6] Classification of Goods Existing Goods Goods that are in physically in existence at the time of entering of contract of sale. Future Goods Goods that are to be manufactured, produced or acquired by the seller after making contract of sale. For Eg: A order B to manufacture 50 chairs. Contingent Goods Goods whose acquisition by seller depend upon happening or non- happeing of an event. For Eg: A agrees to sell car to B, provided C who is present owner sell it to A. Specific Goods Goods identified and agreed upon at time of making contract of sale. For Eg, A agrees to sell his Rolex watch as pointed or specified to B. Ascertained Goods Goods identified subsequent to contract of sale. For Eg, A agree to sell 40 sack of rice to B out of 100 sacks,
  13. 13. Existing Goods [Section 6] Sale of Goods Act defines Existing Goods as, “Existing Goods are those goods, that are owned and/or possessed by the seller at the time of contract of sale. [Section 6] Existing goods can be further sub-divided as, 1. Specific Goods 2. Ascertained Goods 3. Unascertained Goods
  14. 14. Existing Goods > Specific Goods [Section 2(14)] Sale of Goods Act defines Specific Goods as, “Goods identified and agreed upon at the time of making the contract of sale are specific goods. [Section 2(14)]
  15. 15. Existing Goods > Ascertained Goods [Section 2(14)] Goods that have been identified subsequent to formation of contract of sale. These are more or less specific goods.
  16. 16. Existing Goods > Unascertained Goods [Section 2(14)] Goods that are not specifically identified or ascertained at the time of entering the contract of sale. They are identified only by Description.
  17. 17. Future Goods [Section 2(6)] Sale of Goods Act defines Future Goods as, “Goods to be manufactured or produced or acquired by the seller after making the contract of sale. [Section 2(6)]
  18. 18. Contingent Goods Sale of Goods Act defines Contingent Goods as, “Goods, the acquisition of which by seller depends upon a contingency which may or may not happen.
  19. 19. Transfer of Ownership [Section 2(11)] Sale of Goods Act defines Property as, “Property means general property in goods and not merely a special property.” [Section 2(11)] Sale of Goods Act defines Property as, “Property means general property in goods and not merely a special property.” [Section 2(11)]
  20. 20. Price [Section 2(10)] Sale of Goods Act defines Price as, “the money consideration for sale of goods.” [Section 2(10)]
  21. 21. How Contract of Sale is Made? [Section 5(1)] Offer + Acceptance to offer for consideration = Contract Contract of Sale Immediate delivery of Goods or; Immediate payment of price or; Both Delivery of Goods or; Payment of Price or; Both in Installment Delivery of Goods or; Payment of Price or; Both in Future subject to some conditions fulfilled
  22. 22. How Contract of Sale is Made? [Section 5(2)] Contract of Sale* Orally In Written Partly orally and partly in writing Implied from the conduct of the parties *Subject to the provision of law for time being in force
  23. 23. Acceptance [Section 42] Sale of Goods Act defines Acceptance as,  “The buyer is deemed to have accepted the goods when he intimates to the seller that he has accepted them, or  When the goods have been delivered to him and he does any act in relation to them which is inconsistent with the ownership of the seller, or  When after the lapse of a reasonable time, he retains the goods without intimating to the seller that he has rejected them. [Section 42]
  24. 24. Stipulation [Section 12(1)] Sale of Goods Act defines Stipulation as, “A stipulation in a contract of sale with reference to goods which are the subject thereof may be a condition or a warranty..” [Section 12(1)]
  25. 25. Condition [Section 12(2)] Sale of Goods Act defines Condition as, “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..” [Section 12(2)]
  26. 26. Warranty [Section 12(3)] Sale of Goods Act defines Warranty as, “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 to a right to reject the goods and treat the contract as repudiated.” [Section 12(3)]
  27. 27. Stipulation – Condition or Warranty [Section 12(4)] ”Whether a stipulation in a contract of sale is a condition or a warranty depends in each case on the construction of the contract. A stipulation may be a condition, though called a warranty in the contract.” [Section 12(4)]
  28. 28. Condition & Warranty Point of Difference Condition Warranty Nature It is a stipulation essential to the main purpose of the contract. It is a stipulation which is collateral to the main purpose of the contract. Breach of Contract Aggrieved party can repudiate the contract and sue seller for damages. Aggrieved party can only claim damages. Importance Vital importance for completion of contract Not vital importance, the main contract can be completed even if warranty is not fulfilled. Treatment A breach of condition may be treated as breach of warranties if the aggrieved party chooses to be satisfied only with claiming damages or when the contract is not divisible and the buyer has accepted the goods or part thereof. A breach of warranty under no circumstances can be treated as breach of condition.
  29. 29. Types of Condition  Express Conditions  Implied Conditions • Condition as to Title • Condition as to Description • Condition as to Sample • Condition as to Sample as well as Description • Condition as to Quality or Fitness • Condition as to Merchantability • Condition as to Wholesomeness
  30. 30. Types of Warranties  Express Warranties  Implied Warranties • Warranty as to quiet possession • Warranty against encumbrances • Warranty to disclose dangerous nature of goods
  31. 31. Breach of Condition as Breach of Warranty [Section13(2)]  “Where a contract of sale is not divisible and the buyer has accepted the goods or part thereof, the breach of condition can only be treated as a breach of warranty.”  The buyer is such case cannot reject the goods and treat the contract as repudiated on the ground that certain condition was not fulfilled.
  32. 32. Doctrine of Caveat Emptor  Caveat Emptor, Latin expression means caution buyer i.e. ‘let the buyer beware’  Section 16, “Subjects to provisions of this Act and of any other law for the time being in force, there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale”
  33. 33. Exceptions to Doctrine of Caveat Emptor  Misrepresentation by seller  Seller actively conceals a defect in the goods  Goods sold by sample  Sale by description and sample
  34. 34. Doctrine of Caveat Venditor  Caveat Venditor, Latin expression means caution buyer i.e. ‘let the seller beware’
  35. 35. Performance of Contract of Sale  It is duty of seller to deliver the goods and it the buyer to accept and pay for them, in accordance with the terms of the contract of sale.  Apart from the transfer of property in goods from the seller to buyer, delivery of goods to buyer and payment of price to the seller by buyer are two important events.
  36. 36. Significance of Transfer of Ownership  Risk ‘Prima facie’ passes with property  Action against third party  Suit for price  Insolvency of buyer or seller
  37. 37. Rules regarding Transfer of Property [Section(18-24)]  Transfer of property in specific or ascertained goods  Transfer of property in generic or unascertained goods  Transfer of property in goods sent ‘on approval’ or ‘sale or return’ basis.
  38. 38. Delivery [Section 2(2)]  ”Voluntary transfer of possession from one person to another.” [Section 2(2)]  Any forced transfer of possession will not amount to delivery of goods.  Modes of Delivery • Actual • Symbolic • Constructive  Part Delivery  Buyer should apply for delivery  Place & Time of Delivery [Section 36(1 and 2)]  Delivery by attornment [Section 36(3)]  Expenses of Delivery [Section 36(2)]
  39. 39. Delivery [Section 2(2)]  Delivery of wrong Quantity • Excess Delivery • Short Delivery • Mixed Goods  Installment Deliveries [Section38(1)]  Delivery to carrier or wharfinger [Section 39] • Assumed Delivery to Buyer • Seller’s Duty • Sea Transit • Forms of Contract involving sea transit • CIF Contract & FOB Contract • Ex-ship Contract
  40. 40. Unpaid Seller Sale of Goods Act defines unpaid seller as, “The seller of goods is deemed to be an unpaid seller, 1. When whole of the price has not been paid or tendered, or 2. When a Bill of exchange or other negotiable instrument has been received as conditional payment and the condition on which it has been received has been fulfilled by reason of dishonor of the instrument or otherwise.”
  41. 41. Rights of an Unpaid Seller The rights of an unpaid seller can be classified under two heads,  Rights against Goods  Rights against Buyer
  42. 42. Rights against Goods The seller has following rights to an unpaid seller against goods,  Rights of lien or retention  Rights of stoppage of goods in transit  Rights of resale  Right to withhold delivery
  43. 43. Rights against Buyer The seller has following rights to an unpaid seller against buyer,  Suit for Price  Suit for Damages for non-acceptance  Suit for Damaging for repudiating contract before due date  Suit for interest and special damages.
  44. 44. Rights against Seller The buyer has following rights against defaulter seller,  Suit for damages for non-delivery  Suit for specific performance  Suit for damages of breach of warranty  Suit for damages for rescission of contract before due date  Suit for recovery of price along with interest
  45. 45. Auction Sale The term auction refers to a public event at which things are sold to the person who offers the highest price for them. In Auction sale, untended buyers called bidders, assemble at one place and offer the price (known as Bid) at which they are ready to buy the goods . The goods are ultimately sold to higher bidder. => Rules regarding sale by auction
  46. 46. Case Analysis
  47. 47. Baldry v Marshall Case Baldry Client Marshall Car Dealer  B consulted M, a car dealer, for a car which is suitable for touring purpose.  M suggested “Bugatti” car and B accordingly purchased it.  The car turns out to be unfit for touring purpose  It was held that suitability of car for touring purpose is a condition  It was so vital that, if it is not fulfilled, it would defeat the very purpose of contract for which B bought the car.  He was therefore entitled to reject the car and get his money back from the dealer.
  48. 48. Grant v Australian Knitting Mills Ltd Case
  49. 49. THANK YOU HARSH BOHRA Sale of Goods Act 1930

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