ESSENTIALS OF A VALID SALES CONTRACT
There must be two distinct parties i.e. a buyer and a
Goods which form the subject matter of the contract of
sale must be movable.
The consideration of the contract of sale, called price,
must be money.
Hence in nutshell a contract is made by an offer to buy or
sell goods for a price and the acceptance of such offer.
basis sale Agreement to
1. payment Immediate
payment is not
necessary and can
be done at a
Ownership is to
be given at a
2 contract Its an executed
Its an executory
3.Right on goods Jus-in-rem Jus-in-personam
4.risk There is a risk
because the goods
passes to the
There is no risk.
It is a stipulation essential to the main purpose of the
contract, the breach of which gives the aggrieved party a
right to repudiate the contract itself. In addition, he may
maintain an action for damages for loss suffered, if any,
on the footing that the whole contract is broken and the
seller is guilty of non-delivery.
EXAMPLE-P , goes to R , a horse dealer, and says, I want
a horse which can run at a speed of 30km.perhour . The
horse dealer points out a particular horse and says , this
will suit you. P buys the horse . Later on P finds that the
horse can run only at a speed of 20km./hr . There is a
breach of condition,P can repudiate the contract , return
the horse to R and get back the price.
A warranty is a stipulation collateral to the purpose of the
contract, the breach of which gives the aggrieved party a right
to sue for damages only ,and not to avoid the contract
Assume that a farmer ,intending to plant no-till soybeans
,approaches a seller to buy her biocide . Assume further that
the buyer requests a particular herbicide mix but the seller
suggests a less expensive mix . If the chemicals fail to kill
crabgrass and the farmer has a low yield of soybeans , the
farmer could sue the seller for breach of the warranty of
fitness for a particular purpose because the seller knew what
the farmer required
Seller to whom the full price of the goods
sold has not been paid.
As per section 45 of Sale of Goods Act
When the whole of the price has not been paid
When a bill of exchange or other negotiable
instrument has been received as conditional
payment and the condition on which it was received
has not been fulfilled by reason of dishonour of the
instruments or otherwise
Rights of Unpaid Seller
Rights Against Goods
Where the ownership of goods is transferred to
(2) Rights Against Buyer
Where the ownership of goods is not transferred to
Rights Against Goods
Right of Lien
Right to retain possession of goods until payment of
It can be exercised when
Goods have been sold without any stipulation as to credit
Goods sold on credit but the term of credit has expired
Buyer becomes insolvent
2. Right of stoppage in transit
Right of stopping the goods in transit after the unpaid seller
has parted with the goods.
when buyer becomes insolvent
Goods are in transit
Only for the payment of price of the goods
3.Right of Re-sale
The unpaid seller can re-sale the goods when
The goods are of perishable nature
Seller gives notice to the buyer of
his intention to re-sale the goods
Seller has reserved his rights of
Rights Against Buyer
1. Suit for price
The buyer fails to pay the price of goods
The seller can file a suit against the buyer for recovery
of the price.
2.Suit for Damages for Non-Acceptance
The seller is ready to deliver the goods to the buyer
But the buyer wrongfully neglects or refuses to accept
the goods and pay for them.
3. Repudiation of contract before due date
When the buyer puts an end to the contract before due
date of delivery of goods, the seller may either
Treat the contract as subsisting and wait
till the date of delivery of goods
Treat the contract as repudiated and
bring the legal action against the buyer for
the recovery of the damages.
4. Suit for Interest
Specific agreement between buyer and seller
Regarding interest on the price of goods from the date on
which payment becomes due
The seller can recover interest from the buyer
Caveat emptor means ‘LET THE BUYER BEWARE’
EXCEPTIONS TO THE DOCTRINE OF CAVEAT EMPTOR
In case of misrepresentation by seller.
In case of concealment of latent defect.
In case of sale by description.
In case of sale by sample.
In case of sale by description
Fitness for a particular purpose
Ex. Pigs were sold subject to all faults and these pigs
being infected caused typhoid to other healthy pigs of
the buyer, it was held that the seller was not bound to
disclose that the pigs were unhealthy. The rule of the
law being caveat emptor.
10th Floor, Plot G1,
Block EP & GP,
Sector V, Salt-Lake,
Kolkata – 700091.
Goldline Business Centre
Next to Chincholi Fire
Brigade, Malad (West),
Mumbai – 400 064.