The document summarizes key aspects of The Sale of Goods Act, 1930 in India. It defines a contract of sale as an agreement where the seller transfers property in goods to the buyer for a price. A contract of sale must have two parties, goods, a price, and a transfer of ownership. The document outlines conditions and warranties, exceptions to caveat emptor, transfer of ownership including by non-owners, performance of the contract by buyers and sellers, and the rights of unpaid sellers against goods and buyers.

1. Module No. 2
The Sale of Goods Act, 1930
--------------------------------------
 INTRODUCTION
 DEFINITION OF CONTRACT OF SALE
 ESSENTIALS OF CONTRACT OF SALE,
 CONDITIONS AND WARRANTIES,
 TRANSFER OF OWNERSHIP IN GOODS INCLUDING SALE BY A
NON-OWNER AND EXCEPTIONS-
 PERFORMANCE OF CONTRACT OF SALE - UNPAID SELLER,
RIGHTS OF AN UNPAID SELLER AGAINST THE GOODS AND
AGAINST THE BUYER

2. Introduction & Definition of Contract of Sale
Introduction
The contract of the sale of goods is governed by The Sale of Goods Act, 1930. The Act
extends to the whole of India except the state of Jammu & Kashmir. Till 1930, all the
transactions related to the sale of goods was regulated by The Indian Contract Act, 1872. In
1930, Sections 76-123 were replaced by the Act of 1930.
The Act deals with the subject-matter of movable property. This Act does not deal with the
sale of immovable property.
Definition of Contract of Sale: Contract of the sale is an agreement between the buyer
and the seller intending to exchange property. Section 4(1) defines the contract of the sale as –
a contract of the sale of goods is a contract whereby the seller transfers or agrees to transfer
the property in goods to a buyer for a price

3. Essentials of Contract of Sale
1.Two parties
2. Goods
3. Price
4. Transfer of general property
5. Essential elements of a valid contract

4. Conditions and Warranties
.

5. Conditions
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.A condition is a foundation of the entire contract and an
integral part for performing the contract. (Hartly Vs. Hyman- Horse story)
Kinds of conditions
1. Expressed Condition
The dictionary meaning of the term is defined as a statement in a legal agreement that says something must be done or exist in the
contract. The conditions which are imperative to the functioning of the contract and are inserted into the contract at the will of
both the parties are said to be expressed conditions.
2. Implied Condition
There are several implied conditions which are assumed by the parties in different kinds of contracts of sale. Say for example the
assumption during sale by description or sale by sample. Implied conditions are described in Section 14 to 17 of the Sale of Goods
Act, 1930
a. Implied condition as to title
b. Implied condition as to the description
c. Implied condition as to sale by sample
d. Implied condition as to Sale by sample as well as a description

6. WARRANTY
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 contract as repudiated.
Kinds of Warranty
1. Expressed Warranty: The warranties which are generally agreed by both the parties and are
inserted in the contract, it is said to be expressed warranties.
2.Implied Warranty
Implied warranties are those warranties which the parties assumed to have been incorporated in
the contract of sale despite the fact that the parties have not specifically included them in the
contract. Subject to the contract, the following are the implied warranties in the contract of sale:
a. Warranty as to undisturbed possession
b. Warranty as to freedom from Encumbrances
c. Implied warranty to disclose Dangerous nature of the goods sold

7. BASIS FOR
COMPARISON
CONDITION WARRANTY
Meaning
It is a stipulation which forms the very basis of
the contract.
It is additional stipulation
complementary to the main purpose of
the contract.
Provision
Section 12(2) of the Sale of Goods Act, 1930
defines Condition.
Section 12(3) of the Sale of Goods
Act, 1930 defines Condition.
Purpose
Condition is basic for the formulation of the
contract.
It is a written guarantee for assuring
the party.
Result of Breach of
Contract
The whole contract may be treated as repudiated.
Only damages can be claimed in case
of a breach.
Remedies available to the
aggrieved party
Repudiation, as well as damages, can be
claimed.
Only damages can be claimed

8. DOCTRINE OF CAVEAT EMPTOR
'Caveat Emptor' is a fundamental principle of the law relating to sale of goods. It means 'Caution
Buyer', i.e., Let the buyer beware'. In other words, it is no part of the seller's duty to point out
defects of the goods he offers for sale. The buyer must examine the goods and find out their
suitability for the purpose he buys them for.
Examples: a) A person buys a readymade shirt for his son, he will not have a right to return or exchange
the same if the shirt doesn't exactly fit his son, i.e., too tight or loose.
Exceptions to the Doctrine of Caveat Emptor
1. Where the seller makes a mis -presentation and the buyer relies on that representation, the rule of
'Caveat Emptor' will not only apply
2. Where the seller actively conceals a defect in the goods, so that on a reasonable examination the
same could not be discovered, or where the seller makes a false representation amounting to fraud
3. Where the buyer makes known to the seller the purpose for which he is buying the goods, so as to
show that the buyer relies on the seller's skill or judgement and the seller happens to be a person
whose business is to sell goods of that description, then there is an implied condition that the goods
shall be reasonably fit for such purpose.

9. Exceptions to the Doctrine of Caveat Emptor: cont…
4. An implied warranty or condition as to quality or fitness for a particular purpose
may be annexed (attached) by the usage of trade Section 16(3).
5. Where the goods are sold by description and the goods supplied by the seller
do not correspond to the description, this doctrine would not apply.
6. If the goods are sold by sample and the bulk of the goods supplied do not
correspond with the sample, this doctrine would not apply
7. In a sale by sample as well as by description, if the bulk of the goods supplied
does not correspond to the sample as well as with description, this doctrine will
not apply

10. Transfer of ownership in goods including sale by a
non-owner and exceptions
There are four primary rules that govern the passing
of property:
 Specific or Ascertained Goods
 Passing of Unascertained Goods
 Goods sent on approval or “on sale or return”
 Transfer of property in case of reservation of the right to
disposal

11. SALE BY NON-OWNERS
Subject to the provisions of this Act and of any other law for the
time being in force, where goods are sold by a person who is not
the owner thereof and who does not sell them under the
authority as, with the consent of the owner, the buyer acquires
no better title to the goods than what the seller had. Thus, it can
be stated that a person who is not the owner of the goods
cannot make a third person owner of the goods. But the above
rule is subject to some exceptions where the seller may confer a
better title than what he himself possesses.

12. Exceptions:
1] Sale by a Mercantile agent
2] Sale by one of the Joint Owners (Section 28)
3] Sale by a Person in Possession of Goods under a Voidable Contract
4) Title by estoppel
5) Sale by seller in possession after sale
6) Sale by an unpaid seller:
7) Sale by a finder of goods

13. Performance of the Contract
It is defined as “the performance of the respective duties of the seller and the
buyer as per the terms of the contract.”
DELIVERY OF GOODS
Delivery means voluntary transfer of possession from oner person to
another.”
ACCEPTANCE OF DELIVERY
As per the terms of the contract, a buyer must accept the goods sent to him
by the seller.
Case Law: Charter Vs. Sulivan (1957)….(sale of car)

14. RIGHTS AND DUTIES OF A BUYER
Rights of a Buyer
1. Right to have Delivery of Goods
2. Rights to Reject the goods
3. Rights to Examine the Goods
4. Rights not to Return the Rejected goods
5. Right to the Notice of Insurance
6. Rights to sue the seller for Non-delivery
7. Right to sue for specific performance
8. Right to sue for Breach of warranty
9. Right when the seller cancels the contract before Due date
10. Right to sue for interest

15. DUTIES OF A BUYER
1. Duty to accept the goods
2. Duty to pay price
3. duty to apply for delivery
4. duty to accept delivery in instalments
5. Duty against Deterioration
6. Duty to inform when there is a rejection of goods
7. Duty to take the delivery of goods
8. Duty to pay damages for non-acceptance of goods

16. RIGHTS AND DUTIES OF A SELLER
Rights of a Seller
1. Rights to sue for price
2. Rights to claim compensation
3. Rights to sue for damages
4. Right when there is repudiation of contracts
5. Right to sue interest
6.Right of an unpaid seller

17. DUTIES OF A SELLER
1. Duty to deliver the goods
2. Duty to allow examining the goods
3. duty to deliver the goods at the agreed place
4. Duty to supply the goods in time
5. Duty to bear expenses to put goods indeliverable state
6. duty to get into a contract with the carrier
7. Duty to inform to get the goods insured

18. MEANING OF AN UNPAID SELLER
A seller who has not received the full price of goods sold is termed
as an unpaid seller. Section 45 of the Sale of Goods Act, 1930 has
defined an unpaid seller as follows: The seller of goods is deemed to
be an unpaid seller i) when the whole of the price has not been paid
or tendered; or ii) when a bill of exchange or other negotiable
instrument has been received as conditional payment and it has
been dishonored.
Examples: A sold certain goods to B for Rs. 5,000; B paid Rs. 4,500
but fails to pay the balance. A is an unpaid seller

19. The rights of an unpaid seller:
The rights of an unpaid seller can broadly be discussed under two heads:
1. The rights against the goods:
a) Where the property in goods has passed to the buyer:
i) Right of lien;
ii) Right of stoppage of goods-in-transit; and
iii) Right of resale.
b) Where the property in goods has not yet passed to the buyer, he has an
additional right of withholding delivery.
2. The tights against the buyer personally:
i) Right to file a suit fix price;
ii) Right to file a suit for damages; and
iii) Right to file a suit for interest.