The document summarizes key concepts from the Indian Sale of Goods Act, 1930 including: 1) It distinguishes between a sale (where ownership passes to the buyer) and an agreement to sell (where ownership remains with the seller). 2) It describes different types of goods like existing, future and contingent goods. 3) It explains important concepts like conditions, warranties, passing of property, and the doctrine of caveat emptor which places the burden on buyers to examine goods before purchase.

1. Module III
Indian Sale of Goods Act, 1930.
PRACHILEKHA SAHOO

2. Sale
•Ownership passes to the buyer.
•It is a executed contract.
•Risk of loss falls on the buyer.
•Seller cannot resell the goods.
•It can be in case of existing and
specific goods.
•In case of breach of a contract, seller can sue
for the price of the goods.
•The seller is only entitled to the ratable
dividend of the price due if the buyer becomes
insolvent.
Agreement to Sell
•Ownership remains with the
seller.
•It is a executory contract.
•Risk of loss falls on the seller.
•Seller can sell goods to third
party.
•It can be in case of future and
unascertained goods.
•In case of breach of a contract, seller can
sue only for damages not for the price.
•The seller may refuse to sell the goods to
the buyer w/o payments if the buyer
becomes insolvent.

3. Hire Purchase
• Hire purchase is an arrangement for buying expensive consumer goods,
where the buyer makes an initial down payment and pays the balance plus
interest in installments. The term hire purchase is commonly used in the
United Kingdom and it's more commonly known as an installment plan in
the United States. However, there can be a difference between the two: With
some installment plans, the buyer gets the ownership rights as soon as the
contract is signed with the seller. With hire purchase agreements, the
ownership of the merchandise is not officially transferred to the buyer until
all the payments have been made.

4. Pledge
• Pledge is defined in Section 172 of the Indian Contract Act,1872 as “The
bailment of goods as security for payment of a debt or performance of a
promise is called 'pledge'.

5. Mortgage
• It is defined under Section 58 of Transfer of Property Act.
• A mortgage is a transfer of an interest in immovable property and it is given
as a security for a loan. The ownership of an immovable property remains
with the mortgagor itself but some interest in the property is transferred to
the mortgagee who has given a loan.

6. Hypothecation
• Hypothecation is defined under Section 2(n) of The Securitisation and
Reconstruction of Financial Assets and Enforcement of Securities Interest
Act, 2002
• Hypothecation is the process of agreeing to use an asset as collateral in
exchange for a loan. With a car loan, for example, you agree that your car is
used as collateral to secure your loan; if you can't repay the loan, your lender
can repossess the car.

7. Lease
• Lease has been defined under Section 105 of Transfer of Property Act.
• Lease is a transfer of an interest in the property for a stipulated period of
time without transferring the ownership of that property. In a lease, right of
possession is transferred instead of the right of ownership. Transferor here
is called the lessor and the transferee i.e. the one enjoying the property for a
period is called lessee.

8. Goods
According to Section 2(7) of the Sale of Goods Act, “goods” include-
Any movable property except
• actionable claims and money;
• Stock and shares;
• The growing crops, standing timber, grass;
• The things that are attached or forming part of the land which is agreed to
be severed from the land before the sale.

9. Types of Goods
• Section 6 of the act explains in detail all types of goods in the Sale of Goods Act. There are mainly
three categories of goods:
• Existing Goods – If the goods exist physically at the time of contract and the seller is in legal
possession of the goods, then it is termed as existing goods. They are further divided into three types:
1. Specific Goods – They are defined under section 2(14) and refer to goods that are identified and
agreed to be transferred, at the time of making the contract. For example, A wants to sell a Bike of a
certain model and year of manufacture, and B agrees to buy the bike. Here the bike is a specific
good.
2. Ascertained Goods – These types of goods are identified by judicial interpretation and not by law.
Any good where the whole or part of the good is identified and marked for sale at the time of the
contract comes under ascertained goods. These goods are earmarked for sale.
3. Unsanctioned or Unascertained Goods – Those goods that are not specifically identified for sale, at
the time of the contract, fall under the category of unsanctioned goods. For example, there is a bulk
of 1000 quinols of wheat out of which 500 quinols are agreed to be sold. Here the seller can choose
the goods from the bulk and is not specified.

10. • Future Goods – The definition of future goods appears in section 2(6). The goods which do not
exist at the time of contract but are supposed to be produced, acquired, or manufactured by the
seller are called future goods. For example, A sells chairs and B wants 300 chairs of a specific
design which A agrees to manufacture at a future date. Here chairs are future goods.
• Contingent Goods – You can find the answer to what is contingent goods in section 6(2) of the
Sale of Goods Act. A contingent good is a kind of future good, but it is dependent on the
happening (or the absence of) certain conditions. As an example, X has agreed to sell 100 mangoes
from his farm to Y at a future date. But this sale depends on the fact whether the trees in X’s farm
give a yield of 100 mangoes by the date of the contract.

11. Passing of Property in Goods
• The literal meaning of the passing of property is the transfer of
ownership at an agreed price. The passing of property is an important aspect
to help determine the liabilities and rights of both the buyer and the seller.
Once a property is passed to the buyer, then the risk in the goods sold is that
of the buyer and not the seller. This is true even if the goods are in the
possession of the seller. Ownership is transferred only when the ownership
of property rights is transferred from the seller to the buyer.

12. Conditions
• A condition is a foundation of the entire contract and integral part for performing
the contract. If the seller fails to fulfil a condition, the buyer has the option to
repudiate the contract or refuse to accept the goods. If the buyer has already paid,
he can recover the prices and also claim the damages for the breach of the contract.
• For example, Sohan wants to purchase a horse from Ravi, which can run at a speed
of 50 km per hour. Ravi shows a horse and says that this horse is well suited for
you. Sohan buys the horse. Later on, he finds that the horse can run only at a speed
of 30 km/hour. This is the breach of condition as the requirement of the buyer is
not fulfilled. The conditions can be further classified as follows.

13. Warranty
• Warranty is the additional stipulation and a written guarantee that is collateral
to the main purpose of the contract. The effect of a breach of a warranty is
that the aggrieved party cannot repudiate the whole contract however, can
claim for the damages. Unlike in the case of breach of condition, in the
breach of warranty, the buyer cannot treat the goods as repudiated.

14. 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.

15. Doctrine of Caveat Emptor
• “Caveat Emptor” is a Latin phrase that translates to “let the buyer beware”.
• Caveat emptor is a common law doctrine that places the burden on buyers to
reasonably examine property before making a purchase. A buyer who fails to
meet this burden is unable to recover for defects in the product that would
have been discovered had this burden been met.