1. Post Graduate and Research Department of Commerce
Commercial Laws
Dr. S. CHANDRASEKARAN
Assistant Professor of Commerce
PG & Research Department of
Commerce
Vivekananda College
Tiruvedakam West
Madurai
3. PERFORMANCE OF CONTRACT OF SALE
Introduction
After the formation of a valid contract of sale, the next
stage is its performance, Contract of sale imposes some duties on
the seller and the buyer, It also confers some rights to the seller
and the buyer, The seller's main duty is to deliver the goods to the
buyer, Similarly, the buyer's main duty is to accept the goods and
pay the price to the seller as per the terms of the contract The term
"performance of contract of sale" may be defined as the
performance of the respective duties of the seller and the buyer as
per the terms of the contract, The buyer and the seller are free to
provide any terms they like in their contract about the time, place,
delivery of goods, payment of the price etc., But when the parties
are silent and do not provide any terms and conditions in the
contract, then the rules contained in the Sale of Goods Act are
applicable
4. Delivery of Goods
According to Sec, 2(2), "delivery means voluntary
transfer of possession from one person to another", Delivery is a
bilateral act It requires two parties to act If transfer of
possession of goods is not voluntary i.e., possession is obtained
by theft etc., there is no delivery, The performance is mutual and
is laid down in Sec, 31 of the Act states that, "It is the duty of
the seller to deliver the goods and of the buyer to accept and pay
for them, in accordance with the terms of the contract of sale,"
The primary rule to be followed is that the payment of price and
the delivery of goods are to be concurrent. Sec, 32 lays down
that "Unless otherwise agreed, delivery of the goods and
payment of the price are concurrent conditions, that is to say, the
seller shall be ready and willing to give possession of the goods
to the buyer in exchange for the price, and the buyer shall be
ready and willing to pay the price in exchange for possession of
5. Mode of Delivery
sec. 33 states that "Delivery of goods sold may be
made by doing anything which the parties agree shall be
treated as delivery or which has the effect of putting the
goods in the possession of the buyer or of any person
authorized to hold them on his behalf. Thus, delivery
need not mean the transfer of physical possession of
goods. The essence of delivery is placing the buyer in
such a position as to enable him to exercise his rights of
ownership over the goods. Therefore, the delivery of
goods may be made in any of the following ways:
6. 1. Actual Delivery (Physical Delivery)
Where the goods are actually handed over by the seller to
the buyer or his duly authorized agent, it is called actual delivery.
2. Symbolic Delivery
Where a bulk of goods is sold, it is not possible to give actual
delivery of the goods. In such case the control over the goods is
transferred by delivery of a symbol.
3. Constructive Delivery
Sec. 36 (3) of the Act states that "Where the goods at the
time of sale are in the possession of a third person, there is no
delivery by seller to buyer unless and until such third person
acknowledges to the buyer that he holds the goods on his
behalf." Constructive delivery may be defined as the delivery
when a third person, in possession of the goods, acknowledges to
hold the goods on behalf of the buyers.
7. Rules Regarding Delivery of Goods (Sec. 33 to 39)
1. Possession of Goods (Sec. 33)
2. Delivery and Payment are concurrent Conditions(Sec. 32)
3. Demand for Delivery of Goods (Sec. 35)
4. Time of Delivery [Sec. 36(2))
5. Place of Delivery [Sec. 36(1))
6. Goods in the Possession of Third Person [Sec. 36 (3))
7. Effect of Part Delivery (Sec. 34)
8. Expenses of Delivery [Sec. 36 (5))
9. installment Delivery (Sec. 38)
10. Delivery of Wrong Quantity (Sec. 37)
(a) Short Delivery (Sec. 37 (I)
(b) Excess Delivery (Sec. 37 (2)
(c) Mixed Delivery [Sec. 37 (3)
11. Delivery to a Carrier or Wharfinger (Sec. 39)
12.Delivery at a Distant Place (Sec. 40)
8. ACCEPTANCE OF DELIVERY
1. Buyer's Right of Examining the Good (Sec. 41)
Sec. 41 (I) states that, "Where goods are delivered to the
buyer which he has not previously examined, he is not deemed to
have accepted them unless and until he has had a reasonable
opportunity of examining them for the purpose of ascertaining
whether they are in conformity with the contract."
2. When Accepted? (Sec. 42)
Sec. 42 lays down that "the buyer is deemed to have accepted
the goods:
(a) When he intimates to the seller that he has accepted them;
or (b) When he receives delivery of goods, he does any act in relation
to them which is inconsistent with the ownership of the seller;
3. Buyer not Bound to Return the Rejected Goods (Sec. 43)
Sec. 43 states that "Unless otherwise agreed, where goods are
delivered to the buyer and he refuses to accept them, having the right
to do so, he is not bound to return them to the seller, but it is
Sufficient if he intimates to the seller that he refuses to accept them."
The goods are then at the Seller's risk.
9. Buyer's Liability for neglecting or Refusing
Delivery of Goods (Sec. 44)
Sec. 44 lays down that, "When the seller is ready and
willing to deliver the goods and requests the buyer to take
delivery, and the buyer does not, within a reasonable time
after such request, take delivery of the goods, he is liable to
the seller for:
(a) any loss occasioned by his neglect or refusal to take
delivery, and
(b) a reasonable charge for the care and custody of goods".
Sec. 44 also provides that where the neglect or refusal
of the buyer to take delivery amount to a repudiation of the
contract. The seller may sue tor the price or damages.
10. RIGHTS AND DUTIES OF A BUYER
Rights of a Buyer
The following are the rights of the buyer:
1. Right to have Delivery of Goods (Sec. 32)
The buyer has the right to take delivery of the goods on payment of
price when delivery of goods and payment of price are concurrent
conditions in the contract of sale.
2. Right to Reject the Goods (Sec. 37)
The buyer is entitled to reject the goods in the following cases:
(a) Where the seller delivers lesser quantity than that contracted for;
(b) Where the seller delivers larger quantity than that contracted for;
(c) Where the seller mixes the contracted goods with goods of a
different description.
3. Right not to Accept Installments (Sec. 38)
Subject to contract, the buyer is under no obligation to accept
delivery of the goods by instalments. He can repudiate the contract
in such circumstance. [Sec. 38 (I)
11. 4. Right to Examine the Goods (Sec. 41)
The buyer is not deemed to have accepted the goods
unless and until:
(i) he has reasonable opportunity to examine the goods;
(ii) he is afforded a reasonable opportunity of
examining the goods to see whether the goods are in
conformity with the contract.
5. Right not to Return the Rejected Goods (Sec: 43)
Subject to agreement, the buyer is not liable to return the
goods rejected by him rightfully. It is sufficient if he intimates
the seller that he refused to accept the goods.
6. Right to the Notice of Insurance [Sec. 39 (3)]
It is the duty of the seller to give notice to the buyer to enable
him to insure the goods during the sea transit. If he fails to do
so, the buyer is not liable for destruction of goods in transit.
12. Right against the Seller for Breach of Contract
7. Suit the Seller for non-delivery (Sec. 57)
Sec. 57 lays down that, "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."
8. Suit for Specific Performance (Sec. 58)
The buyer may sue the seller for specific performance of
the contract of sale. If the goods are specific or ascertained, the
court may order for the specific performance of the contract.
9. Suit for Breach of Warranty (Sec. 59)
Section 59 lays down that, "Where there is a breach of
warranty, by the seller, or where the buyer elects or is compelled
to treat the breach of condition by the seller as a breach of
warranty, the buyer may:
(a) set up against the seller the breach of warranty in diminution
or extinction of the price; or
(b) sue the seller for damages for the breach of warranty."
13. 10. Repudiation of the Contract before due Date (Sec. 60)
In such a case the buyer has the right for anticipatory
breach of contract. Sec. 60 states that where the seller repudiates
the contract before the date of delivery, the buyer may either treat
the contract as subsisting and wait till the date of delivery or treat
the contract as rescinded and sue for damages for breach of
contract.
11.Suitforinterest [Sec. 61 (2) (b)]
Where there is a breach of contract on the part of the seller
and as a result the price is to be refunded to the buyer, the buyer
has a right to claim interest on the amount of price.
14. DUTIES OF THE BUYER
The buyer, in respect to the contract of sale, has to perform
the following duties:
1. Duty to Pay Price and Accept tile goods (Sec. 31)
It is the duty of the buyer to take the delivery of the goods
and pay for them in accordance with the terms of the contract.
2. Duty to Apply for delivery (Sec. 35)
The seller is not bound to deliver the goods to the buyer
until the buyer applies for delivery, in the absence of any contract
to the contrary.
3. Duty to Demand Delivery at a Reasonable Hour [Sec. 36 (4)]
As per Sec. 36 (4), "Demand or tender of delivery may be
treated as ineffectual unless made at a reasonable hour. What is a
reasonable hour is a question of fact.
15. 4. Duty to Accept Instalment Delivery and Pay for It [Sec. 38 (2)]
Where there is a contract for the-sale of goods to be delivered by
stated instalments which are to be separately paid for, it is the duty of the
buyer to accept the instalment delivery and pay for it.
5. Duty against Deterioration (Sec. 40)
Unless otherwise agreed, the buyer has to take the risk of
deterioration of the goods incidental to the course of transit.
6. Duty to Intimate the Seller when Reject the Goods (Sec. 43)
Unless otherwise agreed, it is the duty of the buyer to inform the
seller in case he refuses to accept the goods.
7. Duty to Take delivery (Sec. 44)
It is the duty of the buyer to take delivery of the goods within a
reasonable time after the tender of delivery. He becomes liable to the
seller for any loss occasioned by his neglect or refusal to take delivery.
16. 8. Duty to Pay Price (Sec. 55)
Sec. 55 (1) lays down that "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 the goods according to the terms of the contract, the seller
may sue him for the price of the goods."
9. Duty to Pay Damages for Non-acceptance (Sec. 56)
Where the buyer wrongfully neglects or refuses to accept
and pay for the goods, the seller may sue him for damages for
non-acceptance.
10. Duty to Pay Increased Tax (Sec. 64 A)
The buyer is liable to pay so much as will be equivalent
to the amount paid or payable in respect of such tax imposed or
increase of tax which may be chargeable at the time of sale, in
the absence of any contract to contrary.
17. RIGHTS AND DUTIES OF A SELLER
Rights of a Seller
The rights of seller may be discussed as under:
1. Right to Claim Compensation (Sec. 44) .
It is the right of the seller to claim compensation
for the loss occasioned by the buyer’s neglect or refusal
to take delivery and also reasonable charges for the care
and custody of the goods.
2. Right to Sue far Price [Sec. 55 (1)]
Sec. 55 (1) lays down that "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."
18. 3. Right to Sue for Price against Contract [Sec. 55 (2)]
Sec. 55 (2) lays down that, "Where under a contract of
sale the price is payable on a certain day irrespective of
delivery and the buyer wrongfully neglects or refuses to pay
such price, the seller may sue him for the price although the
property in the goods has not passed and the goods have not
been appropriated to the contract."
4. Right to Sue for Damages (sec. 56)
Sec. 56 lays down that, “Where the buyer wrongfully
neglects or refuses to accept and pay for the goods, the seller
may sue him for damages for non-acceptance.”
5. Right to Treat the Contract as Subsisting (Sec. 60)
Sec. 60 states, "Where the buyer repudiates the contract
before the date of delivery of goods, seller may either treat the
'contract as subsisting and wait till the date of delivery, or he
may treat the contract as repudiated and sue for damages for
the breach."
19. 6. Right to Interest by Way of Damages [Sec. 61 (1)]
It is the right of the seller to recover interest or special
damages in any case where by law interest or special damages
may be recoverable.
7. Rights of an Unpaid Seller
(a) Right against the goods
(b) Right against the buyer personally
20. Duties of a Seller
The duties and liabilities of the seller may be discussed as
follows:
1. Duty to Deliver the Goods (Sec. 31)
It is the duty of the seller to deliver the buyer goods in
accordance with the terms of the contract.
2. Duty to Deliver tire Goods at the Agreed Place [Sec. 36 (1)]
It is the duty of the seller to send the goods to the buyer at
the place at which they arc contracted to be delivered.
3. Duty to Supply the Goods within Specified tittle [Sec. 36 (2)]
It is the duty of the seller to send the goods to the buyer
within the fixed time or within
reasonable time when no time for sending the goods is fixed.
21. 4. Duty to Send the Goods at Reasonable Hour (Sec. 36 (4)]
Tender of delivery may be treated as ineffectual unless
made at a reasonable hour. What is reasonable hour is a question
of fact.
5. Duty to Bear the Expenses of putting the Goods in
Deliverable State [Sec. 36 (5)]
It is the liability of the seller to bear the expenses of and
incidental to putting the goods into a deliverable state.
6. Duty to make Contract with Carrier and Wharfinger [Sec.
39 (2))
It is the duty of the seller to make such contract with the
carrier or wharfinger on behalf of the buyer as may be
reasonable, having regard to the nature of the goods. If he fails
to do so he is liable to bear loss if any, incurred in course of
transit of the goods.
22. 7. Duty to Give Notice to the Buyer [Sec. 39 (3))
Subject to the agreement, it is the duty of the seller to
give notice to the buyer to get the goods insured while the goods
are sent by a route involving sea transit. If he fails to do so,
goods shall be deemed to be at seller's risk during such sea
transit.
8. Duty to Give Reasonable Opportunity to Examine the
Goods (Sec. 41)
' It is the duty of the seller to afford the buyer a reasonable
opportunity of examining the goods for the purpose of
ascertaining whether they are in conformity with the contract.
