one of the important act for understanding legal aspects of business in India.An MBA Student in India must go through.

1. Dr. B K SinhaDr. B K Sinha
Professor MarketingProfessor Marketing
BIMM,PUNEBIMM,PUNE
The Sale of Goods Act,The Sale of Goods Act,
19301930

2. Scope of the ActScope of the Act
 This Act deals with sale but not mortgageThis Act deals with sale but not mortgage
 This Act deals with salable goods only butThis Act deals with salable goods only but
not with any other thingsnot with any other things
 This Act does not deals with theThis Act does not deals with the
immovable propertyimmovable property
 It does not deal with actionable claims andIt does not deal with actionable claims and
money.money.

3. Contract of SaleContract of Sale
 A contract of sale of goods is a contract wherebyA contract of sale of goods is a contract whereby
the seller transfers or agrees to transfer thethe seller transfers or agrees to transfer the
property in goods to the buyer for aproperty in goods to the buyer for a priceprice..
 Essential Elements of a Contract of Sale:Essential Elements of a Contract of Sale:
1.1. There must be at least two parties – buyer & sellerThere must be at least two parties – buyer & seller
2.2. Transfer or Agreement to transfer the ownership ofTransfer or Agreement to transfer the ownership of
goods.goods.
3.3. The subject matter of the contract must necessarily beThe subject matter of the contract must necessarily be
'goods'.'goods'.
4.4. The consideration is Price.The consideration is Price.
5.5. A Contract of sale may be absolute or conditionalA Contract of sale may be absolute or conditional
6.6. All other essentials of a valid contract must be presentAll other essentials of a valid contract must be present
in a contract of sale.in a contract of sale.

4. Formalities of a contract of saleFormalities of a contract of sale
 Offer & AcceptanceOffer & Acceptance:: A contract of sale is made by anA contract of sale is made by an
offer to buy or sell goods for a price and the acceptanceoffer to buy or sell goods for a price and the acceptance
of such price.of such price.
 Delivery & PaymentDelivery & Payment: A contract may provide for the: A contract may provide for the
immediate delivery of goods or immediate payment ofimmediate delivery of goods or immediate payment of
the price or both, or for the delivery or payment bythe price or both, or for the delivery or payment by
instalments. Or that the delivery of payments or bothinstalments. Or that the delivery of payments or both
shall be postponed.shall be postponed.
 Express or ImpliedExpress or Implied: Subject to the provisions of any law: Subject to the provisions of any law
for the time being enforced, a contract of sale may be infor the time being enforced, a contract of sale may be in
writing or by the word of mouth or may be impliedly orwriting or by the word of mouth or may be impliedly or
may be implied from the conduct of the parties.may be implied from the conduct of the parties.

5. Sale and agreement to saleSale and agreement to sale
 When property is transferred from seller to buyerWhen property is transferred from seller to buyer
at the time of formation of contract, an absoluteat the time of formation of contract, an absolute
sale occurs.sale occurs.
 When property in the goods is to be transferredWhen property in the goods is to be transferred
at some future date and not at the time ofat some future date and not at the time of
contract, the contract of sale is termed as ancontract, the contract of sale is termed as an
agreement to sell.agreement to sell.
 An agreement to sell becomes a sale when theAn agreement to sell becomes a sale when the
time elapses; all the conditions are fulfilledtime elapses; all the conditions are fulfilled
subject to which the property in the goods is tosubject to which the property in the goods is to
be transferred.be transferred.


6. Transfer of propertyTransfer of property
 Transfer of property means transfer ofTransfer of property means transfer of
ownership. Mere transfer of possessionownership. Mere transfer of possession
can not be termed as a sale.can not be termed as a sale.
 ‘‘Property means general property inProperty means general property in
goods and not merely a special property.’goods and not merely a special property.’
 General property means all ownershipGeneral property means all ownership
rights and special property means limitedrights and special property means limited
rights.rights.

7. Sale and agreement to saleSale and agreement to sale
 Sale:Sale: where the ownership in the goods is transferred by seller towhere the ownership in the goods is transferred by seller to
the buyer immediately at the conclusion contract. Thus, strictlythe buyer immediately at the conclusion contract. Thus, strictly
speaking, sale takes place when there is a transfer of property inspeaking, sale takes place when there is a transfer of property in
goods from the seller to the buyer. It must be noted here that thegoods from the seller to the buyer. It must be noted here that the
payment of price is immaterial to the transfer of property in goods topayment of price is immaterial to the transfer of property in goods to
the buyer. A sale is an executed contract.the buyer. A sale is an executed contract.
 Ex - A sells his Yamaha Motor Bicycle to B for Rs. 10,000. It is aEx - A sells his Yamaha Motor Bicycle to B for Rs. 10,000. It is a
sale since the ownership of the motorcycle has been transferredsale since the ownership of the motorcycle has been transferred
from A to B.from A to B.
 Agreement to sellAgreement to sell: It is a contract of sale where the transfer of: It is a contract of sale where the transfer of
property in goods is to take place at a future date or subject to someproperty in goods is to take place at a future date or subject to some
condition thereafter to be fulfilled.condition thereafter to be fulfilled.
 Ex- (i) A agreed to buy from B a certain quantity of nitrate of soda.Ex- (i) A agreed to buy from B a certain quantity of nitrate of soda.
The ship carrying the nitrate of soda was yet to arrive. This is `anThe ship carrying the nitrate of soda was yet to arrive. This is `an
agreement to sale`. In this case, the ownership of nitrate of soda isagreement to sale`. In this case, the ownership of nitrate of soda is
to be to transferred to A on the arrival of the ship containing theto be to transferred to A on the arrival of the ship containing the
specified goods (i.e. nitrate of soda)specified goods (i.e. nitrate of soda)
 (ii) On 1st March 1998, A agreed to sell his car to B for Rs. 80,000.(ii) On 1st March 1998, A agreed to sell his car to B for Rs. 80,000.
It was agreed between themselves that the ownership of the car willIt was agreed between themselves that the ownership of the car will
transfer to B on 31st March 1998 when the car is got registered intransfer to B on 31st March 1998 when the car is got registered in
B`s name. It is an agreement to sell and it will become sale on 31stB`s name. It is an agreement to sell and it will become sale on 31st
March when the car is registered in the name of B.March when the car is registered in the name of B.

8. Points of distinction- sale andPoints of distinction- sale and
agreement to sell.agreement to sell.
 Nature of contract-executed /Nature of contract-executed /
executory.executory.
 Transfer of property-Transfer of property-
immediate / future date.immediate / future date.
 Nature of rights of buyer-Nature of rights of buyer- jusjus
in rem / jus in personemin rem / jus in personem
 Rights of buyer in case ofRights of buyer in case of
breach-recovery of goods,breach-recovery of goods,
specific performance /specific performance /
Damages.Damages.
 Risk of loss- buyer’s / seller’sRisk of loss- buyer’s / seller’s
 Rights of seller in case ofRights of seller in case of
breach-suit for the price ofbreach-suit for the price of
goods / Damages.goods / Damages.
 Right to resell- notRight to resell- not
available. / may resale butavailable. / may resale but
liable for damages.liable for damages.
 Insolvency of seller- buyerInsolvency of seller- buyer
can recover goods / if pricecan recover goods / if price
already paid proportionatealready paid proportionate
amount can be recovered.amount can be recovered.
 Insolvency of buyer- if priceInsolvency of buyer- if price
is not paid proportionateis not paid proportionate
amount can be recovered.amount can be recovered.
delivery of goods can bedelivery of goods can be
demanded./ seller candemanded./ seller can
refuse delivery unless fullrefuse delivery unless full
price is paid.price is paid.

9. GoodsGoods
 ‘‘Goods means every kind ofGoods means every kind of movablemovable
property other than actionable claims andproperty other than actionable claims and
money, and includes stock and shares,money, and includes stock and shares,
growing crops, grass, and things attachedgrowing crops, grass, and things attached
to or forming part of the land which areto or forming part of the land which are
agreed to be severed before sale or underagreed to be severed before sale or under
contract of sale.’contract of sale.’

10. Types of Goods.Types of Goods.
 Goods may be classified as :-Goods may be classified as :-
1.1. Existing Goods- a) specific goods, b)Existing Goods- a) specific goods, b)
ascertained goods, c) unascertained goods.ascertained goods, c) unascertained goods.
2.2. Future goods- which do not exist with the sellerFuture goods- which do not exist with the seller
at the time of sale. the contract thus is anat the time of sale. the contract thus is an
agreement to sell.agreement to sell.
3.3. Contingent goods – a type of future goods, theContingent goods – a type of future goods, the
acquisition of which depends upon aacquisition of which depends upon a
contingency which may or may not happen.contingency which may or may not happen.

11. Kind of goodsKind of goods
 Existing goods- these are the goods which areExisting goods- these are the goods which are
in existence and are physically present in thein existence and are physically present in the
sellers possession. They are further classified assellers possession. They are further classified as
 Specific goods- – these are the goods identifiedSpecific goods- – these are the goods identified
and agreed uponand agreed upon at the timeat the time the contract isthe contract is
made.made.
 Ascertained goods- these are identifiedAscertained goods- these are identified afterafter thethe
formation of the contract.formation of the contract.
 Unascertained goods- these are the goods whichUnascertained goods- these are the goods which
areare not specifically identifiednot specifically identified or agreed upon ator agreed upon at
the time of the contract of sale.the time of the contract of sale.

12. PricePrice
 Sec.2(10) defines the price as ‘the moneySec.2(10) defines the price as ‘the money
consideration for the sale of goods.’consideration for the sale of goods.’
 Price has to be in terms of money.Price has to be in terms of money.
 All monetary payments do not amount toAll monetary payments do not amount to
price.price.

13. Fixing the priceFixing the price
 Price is mentioned in the contract.Price is mentioned in the contract.
 The manner of fixing the price isThe manner of fixing the price is
mentioned in the contract.mentioned in the contract.
 It is determined by the course of dealingsIt is determined by the course of dealings
of the parties. when price is not fixed byof the parties. when price is not fixed by
any of the above modes a ‘reasonableany of the above modes a ‘reasonable
price’ is considered as the price of theprice’ is considered as the price of the
contract.contract.

14. Price considerationPrice consideration
 The consideration for the contract of saleThe consideration for the contract of sale
must be money. If goods are exchangedmust be money. If goods are exchanged
against goods the transaction is barter andagainst goods the transaction is barter and
not covered by the act. Howevernot covered by the act. However
consideration may be partly in money andconsideration may be partly in money and
partly in goods.partly in goods.
NO SPECIAL FORMALITIES ARE REQUIREDNO SPECIAL FORMALITIES ARE REQUIRED
FOR CONTRACT OF SALE. IT MAY BE INFOR CONTRACT OF SALE. IT MAY BE IN
WRITING OR ORAL OR IMPLIED.WRITING OR ORAL OR IMPLIED.

15. TimeTime
 When time is stipulated regarding the payment ofWhen time is stipulated regarding the payment of
price :- Time of payment is not considered theprice :- Time of payment is not considered the
essence of the contractessence of the contract unless a different intentionunless a different intention
appearsappears from the terms of the contract. Thus iffrom the terms of the contract. Thus if
payment is not made in time the seller can not avoidpayment is not made in time the seller can not avoid
the contract but can claim damages.the contract but can claim damages.
 When time is stipulated regarding delivery of goods:-When time is stipulated regarding delivery of goods:-
time of delivery of goods is normally consideredtime of delivery of goods is normally considered
essence of the contract. Thus non performance atessence of the contract. Thus non performance at
stipulated time will render the contract voidable atstipulated time will render the contract voidable at
the option of the buyer.the option of the buyer.

16. Thank YouThank You