2. Prepared By
Manu Melwin Joy
Assistant Professor
Ilahia School of Management Studies
Kerala, India.
Phone – 9744551114
Mail – manu_melwinjoy@yahoo.com
Kindly restrict the use of slides for personal purpose.
Please seek permission to reproduce the same in public forms and presentations.
3. 1. Sales and types of sales.
2. Types of sales.
3. Contract of sales.
4. Agreement of sales.
5. Essential elements of a contract of sale.
4. 1. Good – Definition.
2. Types of goods.
3. Perishing of goods.
4. Price and fixation of price.
5. • Definition of condition.
• Essential features of condition.
• Implied conditions.
• Caveat Emptor.
6. • Definition of Warranty.
• Essential features of Warranty.
• Implied Warranty.
• Difference between condition and warranty.
7. Sales
• Where the right of
ownership in the goods
is transferred from the
seller to the buyer, the
contract is called a sale.
9. Contract of sale
• A contract of sale of
goods is a contract
whereby the seller
transfers or agrees to
transfer the property of
goods to the buyer for a
price. Property means
the right of ownership.
10. Agreement to sale
• Where the transfer of
ownership in the goods
is to take place at a
future time or subject to
some conditions
thereafter to be fulfilled,
the contract is called
agreement to sell.
11. Essential elements of a contract of
sale
1. Contract.
2. Existence of two parties namely buyer and
seller.
3. Transfer of ownership.
4. Subject matter of sale of goods.
5. Price.
12. Goods
• The goods include every
kind of movable
property other than
actionable claim or
money.
14. Perishing of goods
• Perishing of specific
goods before making of
the contract – Where
there is a contract for the
sale of specific goods and
if they perish without the
knowledge of the seller,
even before the contract
is made, the contract
becomes void.
15. Perishing of goods
• Goods perishing before
sales but after agreement
to sell – Where contract is
only an agreement to sell
and goods without any
fault of either the seller or
the buyer perish
subsequent to the
contract, then also the
agreement becomes void.
16. Perishing of goods
• Perishing of
unascertained goods:
Where the contract is for
unascertained goods, the
perishing of the good will
not avoids the contract
and the seller will be
liable for damages for the
breach of contract.
17. Fixation of price
The price must be fixed by
both parties at the time of
contract itself.
Both the parties may enter
into an agreement
regarding the manner in
which the price may be
fixed.
18. Mode of payment
In the absence of agreement
to the contrary, the seller is
not bound to accept any kind
of payment other than the
currency of the country. By
common consent, the seller
may accept payment by a
cheque or a draft, bank
guarantee, a letter of credit
or by any other mode.
19. Mode of payment
In the absence of agreement
to the contrary, the seller is
not bound to accept any kind
of payment other than the
currency of the country. By
common consent, the seller
may accept payment by a
cheque or a draft, bank
guarantee, a letter of credit
or by any other mode.
20. Definition
• 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.
21. Essential features of a condition
• It is essential to the main
purpose of the contract.
• The non fulfillment of
condition causes irreparable
damage to the aggrieved party
which would defeat the very
purpose for which the contract
is made.
• The breach of contract gives a
right to the aggrieved party to
rescind the contract and
recover the damages for
breach of condition.
22. Implied conditions
• Conditions as to title of
goods sold – In every
contract of sale, there is
an implied condition that
the seller has got a right
to sell the goods.
23. Implied conditions
• Goods sold should
correspond to description
– Where there is a
contract of sale of goods
by description, there is an
implied condition that the
goods shall correspond
with that description.
24. Implied conditions
• Condition as to quality or
fitness – This is applicable if
– The goods are needed for a
particular purpose which the
buyer brings to the
knowledge of the seller,
either expressly or impliedly.
– The buyer relies on the
seller’s skills and judgment.
– It is seller’s duty to supply by
description.
25. Implied conditions
• Conditions as to
merchantability – Goods
are of mercantile quality if
– They are reasonable by the
description by which they
are known in the market.
– They are purchased for
personal use, they must be
reasonably fit for the
purpose for which they are
generally uses.
26. Implied conditions
• Condition as to
wholesomeness -
Wholesomeness means
physical health. The
provisions supplied must
not only correspond to
description and
merchantable but also
should promote physical
health.
27. Implied conditions
• Condition as to sample –
Whenever we want to
purchase goods, generally
we see some sample of
those goods which we want
to purchase. After seeing
the sample and satisfying
ourselves with the sample,
we will place order asking
the dealers to supply goods
which would correspond to
the sample.
28. Definition
• “Caveat Emptor” is a Latin
expression which means
“Let the buyer beware”.
The doctrine of caveat
emptor means that in a
sale of goods, the seller is
under not duty to reveal
unflattering truths about
the goods. A buyer must
buy goods after satisfying
himself of their quality and
fitness.
29. Definition
• 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
contact as repudiated.
30. Essentials of a warranty
• It is collateral to the main
purpose of the contract.
• The breach of warranty
causes damage to the
aggrieved party and does
not defeat the main
purpose of the contract.
• The aggrieved party can
only claim the damages for
the breach of warranty but
cannot repudiate the
contract.
31. Distinction between a condition and warranty
No Difference Condition Warranty
1 Nature It is fundamental in nature
and essential for main
purpose of contract.
It is supportive and
collateral for the contract.
2 Breach Due to breach of condition,
the contract may be
avoided.
It’s breach may give rise to a
right to claim for
compensation.
3 Treatment Breach of condition can be
treated as a breach of
warranty.
Breach of warranty cannot
be considered as a breach
of condition
32. Implied warranty
• Warranty for quiet
possession – The buyer has
obtained the possession of
goods and if the buyer is in
any way disturbed in the
enjoyment of goods, the
buyer has a right to sue the
seller for damages caused.
33. Implied warranty
• Implied warranty against
encumbrance – The goods are
not subject to any charge or
encumbrance in favor of third
parties which is not disclosed
or known the buyer before or
at any time when the contract
is made.
34. Implied warranty
• Implied warranty as to
usage of trade – An
implied warranty as to
quality or fitness for a
particular purpose may be
fixed by the usage of
trade.
