Sale of Goods Act

1. Sale of Goods Act,1930

2.  Sale of Goods Act came into force
on 1st July,1930.
 This Act came into force to
determine the Rights and liabilities
of buyer as well as seller in case of
sale of the goods.
 This act provides sale as a bargain
between the buyer and a seller.
 This act gives the right to a person
in nature of Right in Rem.

3. Essentials of Contract of Sale:
 There must be at least two parties.
 The subject matter of contract must
necessarily be goods.
 A price/Consideration can only be in terms
of money (not in kind)
 A transfer of property in goods from seller
to buyer must take place.
 Sale of goods is a contract for sale and
therefore all the Essential Elements of
Contract must be present.

4. Contract of Sale of goods:
• A contract by
which
• A seller
Transfers/Agrees
To Transfer
• Property in
goods
To Buyer
• For
Consideration
Is known as
Contract of Sale

5.  Different terms in case of Sale of
Goods Act: Section 2 of The Sale
of Goods Act,1930 defines the
terms which are frequently used in
the Act, which are as follows:
 Buyer: Buyer means a person who
buys or agrees to buy the
goods.[Sub section(1)]
 Seller: Seller means a person who
sells or agrees to sell goods.[ Sub
Section (13)]

6. Goods , Meaning And types:
Excludes:
Actionable
claims and
money.
Includes: Stock and
shares, growing
crops, grass, and
things attached to or
forming part of land
which are agreed to
be served before
contract of sale
Goods
means
every kind
of movable
properties

7. Types of Goods:
Existing goods
• Existing
goods are
those which
are in
existence at
the time of
making a
contract
• i.e. owned and
possessed by
the seller
Future Goods:
• Future goods
means those
goods which
are to be
produced or
manufactured
or acquired by
the seller after
the contract
of sale.
Specific Goods
• Specific
goods means
those goods
identified and
agreed upon
at the time of
contract of a
sale

8. Sub-types of Goods:
 Ascertained Goods: These goods
are one part of Specific goods.
Ascertained goods means those goods
which are identified in accordance with
the agreement after the contract of sale
is made.
 Unascertained Goods : These goods
are those which are always in lots and
they cannot be identified or selected
throughout the contract of sale. e.g.
Purchase of 1 kg wheat out of 100 kg
in a provision store.

9.  Contingent goods : These goods
are part of Future Goods and
whether such goods will be
available with the seller or not is
depending upon one or more future
uncertain event. E.g. A farmer is
conveying to trader that I will sell
you crops if monsoon is proper.

10. Transfer Of Property:
Transfer of Ownership
in such a way
That Buyer can enjoy
the goods
Against whole world
including seller

11. Consideration :
Fully Cash
• Allowe
d
Partly
Cash/Partly
Kind
• Allowe
d
Fully in Kind
• Not
Allowe
d

12. Ascertainment of Price:
 Price means the monetary consideration
for sale of goods.
 Price may :
o Either be fixed by the contract.
o Agreed to be fixed in manner provided
by the contract.
o Determined by the course of dealing
between the parties.

13. Contract of Sale:
Sale
Agreeme
nt to Sell
Contract
Of Sale

14. Difference between sale and
Agreement to sell:
 Sale: Where under a contract of sale
the property in goods is transferred
from seller to buyer the contract is
called sale.
 Agreement to Sell: Where under a
contract of sale the transfer of
property in the goods is to take place
at a future date or subject to some
condition thereafter to be fulfilled ,
the contract is called agreement to sell.

15. Difference between Sale and
Agreement to sell :
Sale
• Property passes to buyer with
risk.
• Executed contract
• Seller can sue for price and
buyer can sue for goods
• The loss or destruction of
goods will create liability for
buyer
• It is generally for existing
goods.
• Re-sale is possible.
Agreement to sell
• Since property is to be passed
in future the risk will not pass.
• Executory Contract
• Seller/Buyer both can claim
damages only
• The loss or destruction of
goods will create liability for
seller.
• It is generally for future goods.
• Re-sale is not possible.

16. Sale
• The property is
transferred
• Return of goods
is not possible.
• The
consideration is
the price in
terms of money.
Bailment
• Only possession
is transferred.
• Bailee must
return the goods
after fulfillment
of purpose.
• The
consideration
may be gratious
or non-gratious.

17. Sale
• Property in good
transfers
immediately
• The position of
buyer is of owner.
• Buyer does not
have the option to
return the goods
• Payment is only
towards purchase
price
Hire- Purchase
• Property in goods
passes upon
payment of last
installment
• Position of hirer is
of a bailee till he
pays last
installment
• Hirer has the
option to return
the goods
• Payment is
towards purchase
price and interest
both.

18. Rules as to delivery of goods:
 Delivery : Delivery means voluntary
transfer of possession by one person to
another.
 Delivery of goods is necessary for the
transfer of property in goods.
 Goods are said to be in a deliverable
state when they are in such a condition
where buyer , would under a contract,
be bound to take the delivery of goods.

19.  Usually a buyer is required to make the
request for delivery of goods then the seller
is bound to deliver the goods.
Modes of Delivery
Actual Delivery :
Here goods are
delivered hand to
hand
Symbolic
Delivery: Here
goods are
delivered through
keys of
warehouse or
godown or
documents
Constructive
Delivery:
Here goods are
delivered through
acknowledgement

20.  Usually place of delivery is mentioned
within the contract but if it is not
mentioned then it will be delivered at a
place where the contract was made.
 Usually time of delivery of goods is also
mentioned within the contract but if it is
not mentioned then it will be delivered at
reasonable time means Business hours.
 Usually the seller will bear the expense
of delivery of goods.
 Sometimes buyer may request for
delivery of goods in installments &
accordingly it will be given to him.

21.  Sometimes the goods are delivered
through transport company then seller’s
responsibility will come to an end as
soon as he delivers the goods to
transport company provided a notice is
given to a buyer.
 If notice is given to buyer and seller has
also delivered the goods to transport
company and afterwards if there is any
loss then buyer will bear the loss but if
no notice is given then seller will bear
the loss.

22.  If seller has delivered wrong quantity
then remedy available to buyer:
Excess
Quantity
delivered:
Accept total,
Reject total or
Reject excess
Short Quantity
Delivered:
Accept total ,
Reject total
Different
Goods
Delivered from
contract:
Accept total,
Reject total

23. Passing of Property:
 When there is an unconditional
contract for sale of specific or
ascertained goods in a deliverable
state, the property in goods passes to
the buyer when the contract is made.
 Ascertainment of goods and their
unconditional appropriation to the
contract are the two pre-conditions for
transfer of property in goods from seller
to buyer.
 Therefore in case of unascertained

24. Appropriation of goods:
 Appropriation of goods involves selection
of goods with the intention of using them in
performance of contract and with the
mutual consent of buyer as well as seller.
 The essential elements:
o The goods must confirm with the
description and quantity stated in the
contract.
o The goods must be in a deliverable state.
o The goods must be unconditionally
appropriated with the consent of buyer and
seller.
o The consent may be given either before or

25.  Sale or Return: When goods are sent
to buyer on sale or return basis then
property passes to buyer when :
o Buyer signifies his approval or
acceptance to the seller,
o When he does any other act adopting
the transaction ,
o When he does not approve the
transaction but retain the goods beyond
a reasonable time.

26. Reservation of right to
disposal:
 In certain situation the seller can reserve
the right of disposal until certain
conditions are fulfilled .
 If the seller reserves such right of
disposal with him then although the
goods are delivered to carrier or other
bailee for the purpose of transmitting the
same to the buyer , the property in
goods will not be passed to the buyer till
the condition intended by seller is
fulfilled by the buyer.

27. Passing of risk:
 The general rule is that “Unless otherwise agreed
the goods remain at seller’s risk until the property
therein is transferred to the buyer, but when the
property therein is transferred to the buyer, the
goods are at the buyer’s risk whether delivery has
been made or not.”
 Risk passes with the property. The owner of
goods must bear the loss or damage of goods but
there are two exceptions:
o The delivery has been delayed by default of either
of the party then the risk will be with the Party in
default.
o When the buyer or seller are working as the bailee

28. Rule as to Ownership:
 General rule is that a non-owner cannot
pass a better title then he has.
 That means a person who is not an owner
cannot transfer a valid ownership & if he is
selling the goods then he will not transfer a
good title but he will transfer a defective
title.
 But following are the exceptions to this
general rule:
o Goods sold by mercantile agent
o Goods sold by one of the co-owner.
o Goods sold by unpaid seller.
o Goods sold by official receiver or assignee

29. Unpaid seller:
 A seller will be treated as unpaid seller if:
o Where no payment is made to him.
o When only part payment has been made to
him.
o When cheque/Bill of exchange is given to
him but it is dishonored.
 Rights of Unpaid seller:
o Right of withholding delivery of goods
o Right of lien
o Right of stoppage in transit
o Right of Re-sale.

30.  Right Of Lien:
o Lien means keeping goods belonging to
other unless & until the dues are clear.
o Such rights can be exercised if:
In case of cash sale no cash is received
In case of credit sale credit period is over
still no payment made to him.
When buyer is declared as insolvent.
 Right to stop goods in transit :
o Such right can be exercised if
o Goods must be in transit.
o Buyer must have been declared as
insolvent.
 When right of lien is lost the right of
stoppage in transit begins.

31. Right to Re-sale:
 Such right can be exercised if:
Goods are of perishable nature.
Before re-sale of goods the seller should
give the notice to buyer.
Profit-Share
with buyer
Loss- cannot
be claimed
from buyer
If Notice
is not
given Profit-No
sharing with
buyer
Loss-Can be
claimed from
buyer
If notice
is given

32. Doctrine Of Caveat Emptor(
Principle of Let the buyer beware):
 According to such doctrine buyer should
be careful in selection of goods if later
on goods are found defective or unfit for
buyer’s purpose then he can not blame
the seller.
 Here, for the wrong selection of goods
made by buyer, he himself will be held
responsible for.
 In some exceptional circumstances for
the wrong selection made by buyer
seller will be held responsible.

33.  Following are the situations where the
buyer will not be responsible for wrong
selection rather the seller will be
responsible.:
When buyer has expressly relied upon
expertise of seller for selection of goods.
When buyer has purchased goods as
per a brand name or trade name.
When goods are not of merchantable
quality.
When buyer has purchased goods
under sample or brand name.

34. Conditions and Warranties:
 Conditions: Stipulations essential to
the main purpose of
contract.
On Breach of condition a
person suffered may cancel
contracts
 Warranties : Stipulations supportive to
the main purpose of
contract.
On breach of warranty a

35. Implied Condition:
 Condition as to title: In case of sale of
goods there is an implied condition that
seller has the ownership of goods or has
a right to sale the goods i.e. he can pass
the good title.
 Condition as to sample or
description: When the goods are sold
as per sample or description there is an
implied condition that actual goods must
co-relate with sample or description.

36.  Condition as to Quality or Fitness:
Goods must be of merchantable quality.
 Condition as to Wholesomeness: In
case of eatables there is an implied
condition that actual goods consumed
will not effect human health.

37. Implied Warranties :
 Warranty as to Quiet Possession: It is a
warranty that buyer can enjoy the goods
against whole world including seller.
 Warranty as to Quality or fitness: Goods
must be of merchantable quality.
 Warranty as to free from encumbrances:
In case of sale of goods, there is implied
warranty that goods are free from defect.
 Warranty to disclose dangerous nature
of goods : If the goods contain anything of
dangerous nature then there is an implied
warranty that such dangerous nature must
be disclosed.

38.  On happening of breach of condition a
buyer has to react within reasonable
time to claim the remedy of cancelling
the contract.
 But if a buyer is not reacting within a
reasonable time then he can only claim
the damages.

39. Auction Sale:
 In case of auction sale an auctioneer sales
goods on behalf of owner in public.
 The relationship between auctioneer and
owner will be that of Principle & Agent.
 Different goods may be put for display & for
each type of goods a separate bid will be
made.
 A bid will come to an end with the fall of
hammer.
 An owner can keep a reserve price below
which no one can bid.
 Moreover an owner can keep his own

40.  Right of seller can be by two ways :
Right against goods and Right against buyer
Right against goods can be Right of lien ,Right of
Stoppage in transit and Right to Re-sale
Right against buyer is damages for non-acceptance
, Right to sue for price.
 A person who finds the goods belonging to
another is considered as bailee of such goods
that means he has the possession on behalf of
another he has a duty to return the goods to the
true owner.

41.  Finder of goods :
 Rights of Finder:
 Keep the goods with him until the owner is found.
 Take the lawful charges incurred by him in finding
true owner.
 Right to sell the goods if owner is not ready to
give the lawful charges or if the goods are of
perishable nature if not of perishable nature then
if the cost of keeping the goods or finding of
owner increases two-third of the cost of goods.
 Duties:
 Find the true owner and hand him the goods.
 Take care of the goods till true owner is not found.

42. Thank You