Indian Sale Of Goods Act, 1930: Definition of Contract, Essentials of contract of Sale, Condition & Warranties, Right & Duties of a Buyer, Rights of Unpaid Seller

1. THE SALE OF GOODS
ACT, 1930
Definition of Contract
Essentials of contract of
Sale
Condition & Warrantees
Right & Duties of a Buyer
Rights of Unpaid Seller

2. INTRODUCTION
The Act came into force on 1 July, 1930
It extends to the whole of India,
except Jammu & Kashmir

3. DEFINITION OF A CONTRACT OF
SALE
Section 4
A contract whereby a seller transfers
or agrees to transfer the property in
goods to the buyer for a price”

4. ESSENTIALS OF A CONTRACT OF
SALE
1) There must be at least two parties
Seller
Buyer
2) Transfer or agreement to
transfer the ownership of goods

5. ESSENTIALS OF A CONTRACT
OF SALE
3) The subject matter of the contract
must necessarily be goods: the sale of
immovable property is not covered
under Sale of Goods Act.
4) Price is the consideration of the
contract of sale:

6. ESSENTIALS OF A CONTRACT
OF SALE
5) All other essentials of a valid contract as
per the Indian Contract Act, 1872 must be
present:
1. The parties must be competent
2. Free consent
3. Contract must be lawful

7. SALE AND AGREEMENT TO SELL
Sale
The property (ownership) in the
goods is transferred from the seller
to the buyer, it is called a sale.
A sale is an executed contract

8. SALE AND AGREEMENT TO SELL
Agreement to sell
Agreement to sell means a contract of
sale under which the transfer of
property in goods is to take place at a
future date or subject to some
conditions thereafter to be fulfilled.
Order for
Jewellery
Eg.

9. DIFFERENCE BETWEEN
Sale
Executed contract
The seller can sue the buyer for
the price of the goods, if the
latter makes a default in payment
In case of loss of goods, the loss
will fall on the buyer, even though
the goods are in the possession
of the seller.
In case the buyer pays the price
and the seller thereafter becomes
insolvent, the buyer can claim the
goods from the official receiver or
assignee as the case may be
Agreement to Sell
Executory contract
In case of breach, the seller can
only sue for damages.
The loss in this case shall be
borne by the seller, even though
the goods are in the possession
of the buyer
In this case, the buyer cannot
claim the goods, but only a
dividend for the money paid

10. GOODS & THEIR CLASSIFICATION
 ‘Goods’ means every kind of movable
property, other than actionable claims and
money;
Eg. stocks and shares, growing crops, grass
 Trademarks, patents, copyright, goodwill,
water, gas, electricity are all goods

11. CLASSIFICATION OF GOODS
Goods may be classified as:
1.Existing
2.Future
3.Contingent

12. CLASSIFICATION OF GOODS
#1. Existing goods are those which are owned or possessed by
the seller at the time of the contract.
Ascertained goods:
From mass of product,
separating few
goods and marked
the ownership after
contract made.
Eg: A wants to buy 7no.
Shoes 100 pieces
from B’s Factory of
Shoes.
B will make a lot of
same and keep
aside.
a) Specific b) Unascertained
Specific goods:
Goods with fix
details: Xiomi
412 Model
Mobile
b) Ascertained
Types Of Existing Goods
Unascertained
goods:
Goods which are
not Separately
identified from
mass.
A wants to buy
100 kg of
Sugar from B’s
Sugar Factory.
B will pack and
give randomly.

13. CLASSIFICATION OF GOODS
#2 Future goods means goods to
be manufactured or produced or
acquired by the seller after making
the contract of sale.
Order for
Jewellery
Order for
Wedding
Dress

14. CLASSIFICATION OF GOODS
#3 Contingent goods are the goods the
acquisition of which by the seller depends
upon a contingency which may or may not
happen. Contingent goods is a part of future
goods
A wants to vist Statue of Unity,
He approaches to B for Ticket. B travel Agent
B depend upon government site to allocate ticket.
If Government not issuing ticket, then A contingency depend upon B, and B
contingency depend upon Govt.

15. EFFECT OF PERISHING OF GOODS
Section 7 and 8 deal with the effect of perishing of
goods on the rights and obligations of the parties to
a contract of sale.
 Damage to goods so that the goods have ceased to exist in the
commercial sense, ie, their merchantable character as such has
been lost, eg, where cement is spoiled by water and becomes
almost stone or where sugar becomes sharbat and thus are
unsaleable as cement or sugar
 Loss of goods by theft
 Where the goods have been lawfully requisitioned by the
government

16. EFFECT OF PERISHING OF GOODS
It may also be mentioned that it is only the perishing
of specific and ascertained goods that affects a
contract of sale
Where unascertained goods form the subject matter
of a contract of sale, their perishing does not affect
the contract and the seller is bound to supply the
goods from wherever he likes, otherwise be liable for
breach of contract
Example:
Where A agrees to sell to B 10 Container of Crude Oil out of
100 container lying in his godown.
and the container in the godown are completely destroyed by
fire, the contract does not become void. A must supply 10
Container of Crude Oil after purchasing them from the market
or pay damages for the breach.

17. CONDITIONS & WARRANTIES
Certain claims regarding Quality by
seller is called ‘warranties’.12[3]
Fundamental nature, eg. Quality of the
goods called ‘conditions’. 12 [2]
BREACH= Sue for Damage & Repudiation of
Contract
BREACH= Sue for Damage & NO Repudiation of
Contract
Eg: Amit wants a Car for TRAVELLING Purpose only.
Shyam Sold him a car.
After a month
Car is not serving travelling Purpose.
A will Sue for damages & Reject he contract with Shyam.
A purchased washing machine,
which stopped working under
Manufacturing warranty period. He
will get repaired or replaced. But
can’t break the contract.

18. CONDITIONS & WARRANTIES (SEC. 11-17)
 Sec. 12(2) defines a ‘condition’ as, ‘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’ (denied),
 Sec 12(3) defines a ‘warranty’ as, ‘stipulation collateral to the
main purpose of the contract, the breach of which gives rise
to claim for damages but not to a right to reject the goods
and treat the contract as repudiated’ .

19. IMPLIED CONDITIONS
i.Condition as to title (sec. 14)
ii.Sale by description (sec. 15)
iii.Condition as to quality or fitness for buyer’s
purpose [sec. 16(1)]
iv.Condition as to merchantable quality [sec.
16(2)]
v.Condition as to wholesomeness
vi.Implied condition in the case of sale by
sample (sec. 17)
vii.Implied condition in the case of sale by
sample as well as description (sec. 15)

20. Rights of unpaid seller against the goods
"Unpaid seller" defined
(a) When the whole of the price has not been paid or
tendered.
(b) When a bill of exchange or other negotiable instrument
has been received as conditional payment, and the conditions
on which it was received has not been fulfilled by reason of
the dishonour of the instrument or otherwise

21. Unpaid seller’s rights
(a) a lien on the goods for the period while he is
in possession of them.
(b) in case of the insolvency of the buyer a right
of stopping the goods in transit after he has
parted with the possession of them.
(c) a right of re-sale as limited by this Act.
(d) Where the property in goods has not passed
to the buyer, the unpaid seller has, in
addition to his other remedies, a right of
withholding delivery

22. The unpaid seller of goods losses his lien thereon –
(a) when he delivers the goods to a carrier or other bailee
for the purpose of transmission to the buyer without
reserving the right of disposal of the goods.
(b) when the buyer or his agent lawfully obtains possession
of the goods,
(c) by waiver thereof.
(1) The unpaid seller may exercise his right to stoppage in
transit either by taking actual possession of the goods,
or by giving notice of his claim to the carrier or other
bailee in whose possession the goods are. 2) Whether
notice of stoppage in transit is given by the seller to the
carrier or other bailee in possession of the goods, he
shall re-deliver the goods to, or according to the
directions of, the seller. The expenses of such re-
delivery shall be borne by the seller.

23. Suits for Breach of the Contract
Sue for Price : Where under a contract of sale the property in the goods
has passed to the buyer and the buyer wrongfully neglects or refuses to
pay for the goods according to the terms of the contract, the seller may
sue him for the price of the goods.
Damages for non-acceptance.- Where the buyer wrongfully neglects or
refuses to accept and pay for the goods, the seller may sue him for
damages for non-acceptance.
Damages for non-delivery.- Where the seller wrongfully neglects or
refuses to deliver the goods to the buyer, the buyer may sue the seller
for damages for non-delivery

24. The Doctrine of Caveat Emptor. The doctrine of Caveat Emptor is an integral part
of the Sale of Goods Act. It translates to “let the buyer beware”. It means a buyer,
need to be attentive while buying any goods.
CAVEAT EMPTOR VS CAVEAT
VENDITOR
Caveat venditor is a Latin term meaning “let the seller beware,” in contrast to
the more widely known saying caveat emptor (let the buyer beware). The
principle of caveat venditor cautions that the seller is responsible for any
problem that the buyer might encounter with a service or product.