Incoming and Outgoing Shipments in 1 STEP Using Odoo 17
Sale of Goods Act.pptx
1. Module III
Sale of Goods
Act, 1930
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2. A contract of sale of goods is a contract whereby the setter transfers
or agrees to transfer the property in goods to the buyer for a price
A contract of sale is regulated through the common law of contract.
Accordingly, there necessity be an offer to buy or sell goods and an acceptance of that offer, parties
necessity be competent to contract and there should be free consent.
The subject matter of such contract is goods the property in which is transferred or is to be transferred
for a money consideration described the price-paid or promised to be paid.
Essentials of Contract of Sale:
• Two parties
• Transfer of ownership/property
• Subject matter of contract is goods
• Consideration is price or money,i.e., legal tender
• All other essentials of a valid contract is present
Introduction
3. CONTRACT OF SALE HOW
MADE
a contract of sale may be made in writing or by word of
mouth, or partly in writing and partly by word of mouth or
may be implied from the conduct of the parties.
contract of sale may be made in any of the following manners:
• There may be immediate delivery of the goods;
• There may be immediate payment of the price but the delivery to be
made at some future date;
• There may be immediate delivery of goods and also immediate pay
ment of price;
• It may be agreed that the delivery or payment or both are to be mad
e in installments; or
• The delivery or payment or both may be made at some future date.
4. SALE AND AGREEMENT TO SELL
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, but where 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 whi
ch the property in the goods is to be transferred
'Risk follows ownership' is the golden rule i.e., whosoever is the owner of the goods at the time of loss,
will bear the loss.
Insolvency of the seller: If in a sale the seller becomes insolvent while the goods are still in his posses
sion, the buyer shall have a right to claim the goods from the official Receiver or Assignee because the
ownership of goods has passed to the buyer. Though, in case of an agreement to sell, the buyer canno
t claim the goods even when he has paid the price.
Insolvency of the Buyer: In case of sale, if the buyer becomes insolvent before paying the price, the o
wnership having passed to the buyer, the seller shall have to deliver the goods to the Official Assignee o
r Receiver. In case of an agreement to sell, where the seller continues to be the owner c goods, the sel
ler can refuse to deliver the goods to the Official Assignee or Receiver unless he is paid full price of the
goods.
5. Basis of difference Sale Agreement to sell
Transfer of property The property in the goods passes to the buyer
immediately.
Property in the goods passes to the buyer on future date
or on fulfilment of some condition.
Nature of contract It is an executed contract. i.e. contract for which
consideration has been paid.
It is an executory contract. i.e. contract for which
consideration is to be paid at a future date.
Remedies for breach The seller can sue the buyer for the price of the goods
because of the passing of the property therein to the
buyer.
The aggrieved party can sue for damages only and not
for the price, unless the price was payable at a stated
date.
Liability of parties A subsequent loss or destruction of the goods is the
liability of the buyer.
Such loss or destruction is the liability of the seller.
Burden of risk Risk of loss is that of buyer since risk follows ownership. Risk of loss is that of seller.
Nature of rights Creates Jus in rem Creates Jus in personam
Right of resale The seller cannot resell the goods. The seller may sell the goods since ownership is with the
seller.
6. GOODS
“Goods” means every kind of movable property other than action
able claims and money; and includes stock and shares, growing
crops, grass, and things attached to or forming part of the land,
which are agreed to be severed before sale or under the contract
of sale.
‘Actionable claims’ are claims, which can be enforced only by an action or suit. It mean
s that which a person cannot make use of, but which can be claimed by him through le
gal action.
‘Money’ means legal tender, and not the old coins which can be bough and sold as goo
ds. Foreign Currency may be bough and sold.
8. Explanation
• Existing Goods
Those goods which are owned or possessed through the seller at the time of contract of sale, The seller
is either the owner of goods, or he is in possession of goods.
• The existing goods may be
Specific goods: goods which are recognized and agreed upon through the parties at the time a contract
of sale is made.
Ascertained goods: normally used as synonym for specific goods, ascertained goods are planned to co
ntain goods which have become ascertained subsequently to the formation of the contract.
Unascertained goods: These are the goods which are not recognized and agreed upon at the time whe
n the contract is made. They are recognized only through account.
• Future Goods
Goods to be manufactured or produced or acquired through the seller after creation the contract of sale.
Therefore , future goods are goods which either are not in subsistence at the time of Contract of sale or h
ey may be in subsistence when the agreement of their sale is entered upon but have of yet been acquire
d through the seller through that time.
• Contingent Goods
The goods the acquisition of which through the seller depends upon contingency which may or may not h
appen.
9. CONDITIONS & WARRANTIES
“A condition is a stipulation essential to the main purpose of the c
ontract,”. “A warranty is a stipulation collateral to the main purpose
of the contract”
• The breach of Condition gives rise to a right to treat the contract as repudiated.
On the other hand, the breach of Warranty gives rise to a claim for damages but
not to a right to reject the goods and treat the contract as repudiated.
• Whether a stipulation in a contract of sale is a condition or a warranty depends in e
ach case on the construction of the contract. A stipulation may be a condition, thou
gh called a warranty in the contract.
10. Point of differences Condition Warranty
Meaning A condition is essential to the main purpose
of the contract.
It is only collateral to the main purpose of
the contract.
Right in case of breach The aggrieved party can repudiate the
contract or claim damages or both in the
case of breach of condition. (Right to sue +
Repudiate)
The aggrieved party can claim only damages
in case of breach of warranty. ( Right to sue)
Conversion of stipulations Abreachofconditionmaybe treated as a
breach ofwarranty.
A breach of warranty cannot be treated as a
breach of condition.
11. TYPES OF CONDITIONS AND WARRANTI
ES
Condition and warranties may either be express or implied.
Express Condition and Warranties
They are said to be express when the conditions of the contract expressly give for them.
The parties are at liberty to impose any condition or warranty through an express agreement in a contr
act of sale.
Implied Conditions
Conditions and Warranties are said to be implied when the law infers their subsistence as implicit in th
e contract even without their actually having been put in the contract. Hence, unless otherwise is agre
ed upon flanked by the parties, every contract of sale of goods shall be subject to these implied
conditions and warranties.
But the parties do have the right to exclude any of the implied conditions or warranties through specifi
cally and expressly providing otherwise.
12. Implied Conditions
condition as to title sale by sample
condition as to
quality or fitness
condition as
to wholesomeness
condition as to
description
sale by sample as
well as by
description
condition as
to merchantability
13. Condition as to title: the condition implied is that the seller has the right to sell the goods at the time w
hen the property is to pass. If the seller’s title turns out to be defective, the buyer must return the goods t
o the true owner and recover the price from the seller.
Sale by description : the goods shall correspond with the description. Whether the description was es
sential for identifying the goods where the buyer had agreed to purchase. If that is required and the goo
ds tendered do not correspond with the description, it would be breach of condition entitling the buyer to
reject the goods.
Sale by sample : In a contract of sale by sample, there is an implied condition that
(a) the bulk shall correspond with 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 un-merchantable
Sale by sample as well as by description: the bulk of the goods supplied shall correspond both with t
he sample and the description. In case the goods correspond with the sample but do not tally with descr
iption or vice versa or both, the buyer can repudiate the contract.
Condition as to quality or fitness: the condition as to the reasonable fitness of goods for a particular
purpose may be implied if the buyer had made known to the seller the purpose of his purchase and rel
ied upon the skill and judgment of the seller to select the best goods and the seller has ordinarily been d
ealing in those goods. Even this implied condition will not apply if the goods have been sold under a tra
demark or a patent name.
14. Condition as to Merchantability : Where goods are bought by description from a sel
ler who deals in goods of that description (whether he is the manufacturer or producer
or not), there is an implied condition that the goods shall be of merchantable quality.
Condition as to wholesomeness: In the case of eatables and provisions, in addition
to the implied condition as to merchantability, there is another implied condition that th
e goods shall be wholesome.
15. Implied Warranties
Warranty as to undisturbed
possession
Warranty as to non-existence
of encumbrances
Warranty as to quality or
fitness by usage of trade
Disclosure of dangerous
nature of goods
16. Warranty as to undisturbed possession: An implied warranty that the buyer s
hall have and enjoy quiet possession of the goods.
Warranty as to non-existence of encumbrances: An implied warranty that the
goods shall be free from any charge or encumbrance in favour of any third party
Warranty as to quality or fitness by usage of trade: An implied warranty as to
quality or fitness for a particular purpose may be annexed or attached by the usa
ge of trade.
Disclosure of dangerous nature of goods: Where the goods are dangerous in
nature and the buyer is ignorant of the danger, the seller must warn the buyer of
the probable danger.
17. CAVEAT EMPTOR
In case of sale of goods, the doctrine ‘Caveat Emptor’ means
‘let the buyer beware’.
• When sellers display their goods in the open market, it is for the buyers to ma
ke a proper selection or choice of the goods.
• If the goods turn out to be defective he cannot hold the seller liable. The seller
is in no way responsible for the bad selection of the buyer. The seller is not bo
und to disclose the defects in the goods which he is selling.
Following are the conditions to be satisfied:
• if the buyer had made known to the seller the purpose of his purchase, and
• the buyer relied on the seller’s skill and judgement, and
• seller’s business to supply goods of that description
18. Exceptions: The doctrine of Caveat Emptor is, however, subject to the following exce
ptions;
• Fitness as to quality or use: Where the buyer makes known to the seller the par
ticular purpose for which the goods are required
• Goods purchased under patent or brand name
• Goods sold by description, Sale by sample or Goods by sample as well as d
escription
• Goods of Merchantable Quality
• Seller actively conceals a defect or is guilty of fraud
19. Passing of Property in Goods
General Rule- Property passes from the seller to the buyer at such time wh
en the parties to the contact intends the property to pass.
The intention to transfer is determined by the terms of the contract, conduct of the party and circumstances
of the case.
Rules regarding Intention:
• In case of specific goods in deliverable state, property passes when goods are made unconditional.
• In case of specific goods where something is to be done by the seller to put them in the deliverable stat
e, property passes when that thing is done and the buyer has noticed it.
• When there is a contract of sale for unascertained goods, property does not pass till it is made ascertai
ned.
• When goods are delivered to the buyer on ‘Approval’ or ‘Sale or Return’ basis, the property passes whe
n the buyer signifies his approval or does any act adopting the transaction.
20. Transfer of Title by Non-Owner
The general rule is that only Owners can transfer a good title. “No one ca
n give what he himself doesn’t have”
Exceptions to the Rule:
• Sale by a Mercantile Agent
• Sale by one of the joint owners
• Sale by a person in possession under voidable contract
• Sale by one who has already sold the goods but continues in possession thereof
• Sale by buyer obtaining possession before the property in the goods has vested in him
21. PERFORMANCE OF THE CONTRACT
OF SALE
It is the duty of the seller to deliver the goods and the buyer’s to accept and pay
for them. Unless otherwise agreed, delivery and payment are concurrent co
nditions.
No delivery is to be given if the buyer refuses to pay and the buyer need not pay if
the seller is not willing to deliver the goods.
Delivery can be done by doing anything which the parties agree to or which has th
e effect of putting the goods in the possession of the buyer.
Therefore, Delivery of goods may be:
• Physical or Actual Delivery ( by transferring the goods)
• Symbolic Delivery (by transferring symbol)
• Constructive Delivery (only acknowledgement)
22. Rules regarding delivery
• Delivery of part of goods may amount to delivery of whole if intended.
• Unless otherwise agreed, the seller will not deliver till the buyer applies for delivery.
• Goods will be delivered at a price of sale or one agreed at the time of entering the contract of sale or
at the price of manufacture.
• When no time is specified, the seller needs to make delivery within reasonable time.
• Unless otherwise agreed, all expenses incurred in putting the goods in deliverable state is to be born
e by seller
• Buyer not bound to accept delivery in instalments, unless otherwise agreed.
• In case of examination of goods by the buyer, he will not deem to have accepted the delivery till he h
as reasonable time to examining them and ascertaining their conformity.
• Delivery by seller to the carrier for transfer to buyer or for safe keeping will be considered as delivery
, unless otherwise agreed
• When the seller is ready and willing to deliver the goods and request the buyer to take delivery, but t
he buyer doesn't within a reasonable time, the buyer is liable to the seller for any loss.
23. UNPAID SELLER
The seller who has not received whole money for the goods.
He is unpaid seller if:
• Seller has not received the full money as payment
• The negotiable instrument has been received as conditional payment and con
ditions have not been fulfilled by reason of dishonour.
Rights of an Unpaid Seller:
Rights are classified as:
• Rights against goods
• Rights against buyers personally
24. Rights
1. Rights against Goods:
i. Lien on Goods:
• The word lien means ‘to retain possession’
• the unpaid seller of goods who is in possession of them is entitled to retain possession of them until pa
yment or tender of the price in the following 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 only be exercised for non payment of price and not for any other charge against the buyer.
• It is a particular lien which means only the seller can exercise it, not his creditors.
ii. Right of stoppage in transit:
• The right is that he may resume possession of the goods out for delivery as long as they are in the cou
rse of transit, and may retain them until the buyer pays for them.
• It is a right to prevent the goods from being delivered to the buyer.
• This is a right earned only once the right of lien is lost, and the buyer is declared as insolvent.
25. • Goods are deemed to be in the course of transit from the time when they are delivere
d to a carrier or other bailee for the purpose of transmission to the buyer, until the buy
er or his agent in that behalf takes delivery of them from such carrier or other bailee.
• The unpaid seller may exercise his right of stoppage in transit either by taking actual
possession of the goods, or by giving notice of his claim to the carrier or other bailee i
n whose possession the goods are.
• the right of stoppage in transit is exercised only when the following conditions are fulfi
lled:
(a) The seller must be unpaid.
(b) He must have parted with the possession of goods.
(c) The goods are in transit.
(d) The buyer has become insolvent.
Right of re-sale:
The unpaid seller who has retained possession of goods can exercise the right to re-sell t
he goods under the following conditions:
i. Where the goods are of a perishable nature
ii. Where he gives notice to the buyer of his intention to re-sell the goods
It may also be noted that the seller can recover damages and retain the profits only when
the goods are resold after giving the notice of resale to the buyer. Thus, if the goods are r
esold by the seller without giving any notice to the buyer, the seller cannot recover the los
s suffered on resale.
26. Rights against buyer:
Rights of unpaid seller against the buyer are otherwise known as seller’s remedies for breach of contract
of sale.
• Suit for price
(a) Where under a contract of sale the property in the goods has passed to the buyer and the buyer wro
ngfully 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.
(b) Where under a contract of sale the price is payable on ascertained day irrespective of delivery and t
he buyer wrongfully neglects or refuses to pay such price, the seller may sue him for the price althou
gh the property in the goods has not passed and the goods have not been appropriated to the contra
ct.
• Suit for damages for non- acceptance
Where the buyer wrongfully neglects or refuses to accept and pay for the goods, the seller may sue him f
or damages for non-acceptance.
Where the buyer repudiates the contract before the date of delivery, the seller may treat the contract as
rescinded and sue damages for the breach.
