UNIT-II- Business Law

Ques.1) Explain the term nemo dat quod non habet.

Ans.1) A seller cannot convey a better title than he himself has: The general rule relating to the
transfer of title on sale is that the seller cannot transfer to the buyer of goods a better title than
he himself has. If the title of the seller is defective the buyers title will also be subject to the
same defect. Nemo dat quod non habet no one can give that which he has not. In other words a
buyer cannot acquire a better title that the seller possesses.
Therefore a buyer cannot get good title to the goods unless he has purchased the goods from a
person who was the owner of the goods or a person who is properly authorized by the seller to
sell the goods. The title of the buyer will remain defective if the title of the seller was defective
in spite of the fact that the buyer may have purchased the goods bona fide and for value.
Following are the exceptions to the above rule. It is in these cases that the non owner can convey
a better title to the bona fide purchaser of goods for value.
1) Title by estoppel: where the true owner by his words or conduct causes the buyer to
believe that the seller was the owner of the goods or has the owners authority to sell
them and induced him to by goods in that belief, he will be stopped afterwards from
setting up sellers want of title or authority to sell.
Example: A says to B in the presence of C, the real owner of the goods that the A is the
owner of goods. C remains mum. Subsequently A sells the same goods to B. C cannot
recover the goods from B since by his conduct he has accepted that A is the owner of the
goods.
2) Sale by a mercantile agent: where goods are sold by a mercantile agent, who is in the
possession of the goods or any document of title to the goods, with the consent of the real
owner, in the ordinary course of the business, the buyer will get good title if he acts in
good faith.
Example: A entrusts his car to his agent B for sale. He instructs B not to sell the car
below a sum of Rs10000. A sells it to C for Rs8000 and absconds with the money. A
cannot recover the car from C since the sale was made by a mercantile agent who
transferred valid title to C.
3) Sale by a co-owner: a buyer who purchases goods from a co-owner will get valid title.

Example: A and B are co owners of a lantern projector with several slides. They use the
projector by turns. While the projector is with A, with the consent of B, he wrongfully
sells it away to C, a bona fide purchaser for value. C gets a good title.
4) Sale by a person in possession of goods under voidable contract: where a person who
is in the possession of the goods under a contract voidable sells such goods to another
before the contract is avoidable by the party having the option to do so and the buyer
purchases them for value, in good faith and without notice of the sellers defect of title,
he will under such conditions acquire a good title.
Example: A obtains goods from B by falsely representing that he is Xs agent. He
subsequently sells them to C, a bona fide purchaser for value. C does not get any title to
the goods since the person who self the goods to him, himself did not have any title.
5) Sale by seller in possession after sale: where a person having sold goods is in
possession of the goods or documents of title to the goods, resells the goods, the new
buyer will get a good title over the goods provided he acts in good faith, does not have
notice of the prior sale and obtains possession of goods or documents of title to the
goods.
Example: A bought motor lorry from B, a dealer in motor lorries and took its delivery.
Subsequently A let out the vehicle to B on a hire purchase agreement. B then sold it away
to C who bought it in good faith. It was held that sale to C was not valid because he took
it not from a seller in possession but a bailee of goods.
6) Sale by a buyer in possession of goods: where a person having bought or agreed to buy
goods, obtains, with consent of the seller, possession of goods or of the documents of title
of the goods, the delivery or transfer by such person or by a mercantile agent acting for
such person of the goods or documents, by way of sale, pledge or other disposition
thereof will be valid and effective if the person receiving the same acted bona fide and
without notice of the sellers lien.
7) Unpaid sellers right of re sale: A purchaser of goods of value from an unpaid seller,
who has the goods in his possession in the exercise of his right of lien or stoppage in
transit, shall get an absolute title to the goods even though re sale may not be justified
under the circumstances.

8) Sale under the provisions of other acts: other acts also contain some provisions under
which a non-owner may pass to the buyer a better title than he himself has. For example,
a) Sale by finder of lost goods under circumstances
b) Sale by pawnee or pledge under certain circumstances
c) Sale of official receiver in case of insolvency of an individual
Ques.2) Describe rules regarding delivery of goods.
Ans.2) The rules regarding delivery of goods are as follow:1. Delivery may be either actual or symbolic or constructive: delivery of goods sold may
be made by doing anything which the parties agree shall be treated as delivery or which
has the effect of putting the goods in the possession of the buyer or of any person
authorized to hold them on his behalf. Thus, the delivery of the goods may be either
actual or symbolic or constructive.
2. Delivery and payment are concurrent conditions: unless otherwise agreed, delivery of
the goods and payment of the price are concurrent conditions, that is, the seller should be
ready and willing to deliver the goods to the buyer in exchange for the price and the
buyer should be ready and willing to pay the price in exchange for possession of the
goods simultaneously, just like in a cash sale over a shop counter.
3. Effect of part delivery, when property in goods is to pass on delivery: a delivery of
part of the goods, in progress of the delivery of the whole, has the same effect, for the
purpose of passing the property in such goods, as a delivery of the whole. In other words,
when a delivery of part of the goods has been made with the intention of delivering the
rest also, the property in the whole of the goods is deemed to pass to the buyer as soon as
some portion is delivered.
4. Buyer to apply for delivery: although it is the duty of the seller to deliver the goods
according to the contract, yet he is not bound to deliver them until the buyer applies for
delivery. It is the duty of the buyer to demand delivery and if he fails to do so the buyer
cannot blame the seller for the non delivery. The parties may however agent otherwise.
5. Time of delivery: Where under the contract of sale the seller is bound to send the goods
to the buyer, but no time for sending them is fixed, the seller is bound to send them

within a reasonable time. Further, demand of delivery by the buyer or the tender of
delivery by the seller should be made at a reasonable hour.
6. Place of delivery: The place of delivery may be stated in the contract of sale, and where
it is so stated, the goods must be delivered at the named place during business hours on a
working day.
7. Delivery of goods where they are in possession of a third party: where the goods at
the time of sale is in possession of third person, there is no delivery by the seller to the
buyer unless and until such third person acknowledges to the buyer that he holds the
goods on his behalf. Such a delivery is known as constructive delivery and requires the
consent of all the three parties, the seller, the buyer and the person having the possession
of the goods. Where the seller hands over the delivery order to the buyer, there is no
delivery unless the sellers agent holding the goods ahs assented thereto.
8. Expenses of delivery: unless otherwise agreed, the expenses of incidental to putting the
goods into a deliverable state must be borne by the seller.
9. Delivery of wrong quantity or different quality: As already observed, a seller is duty
bound to deliver the goods to the buyer strictly in accordance with the terms of the
contract. A defective delivery entitles the buyer to reject the whole, accept the whole to
accept the quantity and quality he ordered and reject the rest of the goods so delivered.
10. Installment deliveries: unless otherwise agreed, the buyer of goods is not bound to
accept delivery thereof by installments. If the parties so agree then only the delivery of
the goods may be made by installments.
11. Delivery to carrier or wharfinger: where the seller is authorized or required to send the
goods to the buyer, delivery of the goods to a carrier, whether names by the buyer or not,
for the purpose of transmission to the buyer or not, for the purpose of transmission to the
buyer, or delivery of the goods to a wharfinger for safe custody is prima facie deemed to
be a delivery of the goods to the buyer.
12. Liability of buyer for neglecting or refusing to take delivery of goods: when the seller
is ready and willing to deliver the goods and requests the buyer to take delivery, and the
buyer does not within a reasonable time after such request take delivery of the goods, he
becomes liable to the seller for any loss occasioned by his neglect or refusal to take
delivery, and also for a reasonable charge for the care and custody of the goods.

Q3. Distinguish between a Sale and Agreement to sell. In a contract for the sale of goods,
state when the property in goods sold passes from the seller to the buyer.
Ans. Difference between Sale and Agreement to Sell

1. Transfer of property
Sale : The property of goods passes from the seller to the buyer immediately. So the seller is
no more owner of the goods sold.
In an Agreement to Sell : The transfer of property of the goods is to take place at a future
time or subject to certain conditions to be fulfilled.
2. Type of goods
Sale : A sale can only be in case of existing and specific goods only.
In an Agreement to Sell : An agreement to sell is mostly in case of future and contingent
goods ( associated or dependent ). Although it may refer to uncertain existing goods.
3. Risk of loss
Sale : In a sale if the goods are destroyed , the loss falls on the buyer even though the goods
are in the posssession of the seller.
In an Agreement to Sell : In an Agreement to Sell if the goods are destroyed the loss falls on
the seller even though the goods are in the posssession of the buyer.
4. Consequences of the breach
Sale : In a sale the buyer fails to pay the price of goods (or) if there is a breach of contract by
the buyer the seller can sue for the price even though the goods are still in his possession.
In an Agreement to Sell : If there is a breach of contract by the buyer the seller can only sue
for the damages and not for the price.
5. Right to re-sell
Sale : In a sale the seller cannot re-sell the goods.

In an Agreement to Sell : The buyer who takes the goods for consideration and without notice
of the prior agreement gets him a good title. The original buyer can only sue the seller for
damages.
6. General and particular property
Sale : The sale of contract plus conveyance and creates Jus in rem i.e., gives right to the
buyer to enjoy the goods as against the word and large including the seller.
In an Agreement to Sell : An agreement to sell is merely a contract pure and simple and
creates Jus in personam i.e., gives a right to the buyer against the seller to sue for the
damages.
7. Insolvency of buyer
Sale : In a sale if the buyer becomes insolvent before he pays for goods, the seller in the
absence of the lien over the goods, must return them to the official receiver or assignee. He
can only claim the reteable dividend for the price of the goods.
In an Agreement to Sell : In an Agreement to Sell , If the buyer becomes insolvent and has
not yet paid the price the seller is not bound to part with the goods until he is paid for.
8. Insolvency of the seller
Sale : In a sale the seller becomes insolvent, the buyer being the owner is entitled to recover
the goods from the official receiver of the assignee.

In an Agreement to Sell : If the buyer who has paid the price, finds that the seller has become
insolvent he can only claim a reteable dividend and not the goods because property in them
has not yet passed to him.
Passing of Property
The primary rules for ascertaining when the property in goods passes to the buyer are as follows:
1. Goods must be ascertained.-

Where there is a contract for the sale of unascertained goods, no property in the goods is
transferred to the buyer unless and until the goods are sanctioned.
2. Property passes when intended to pass.(i) Where there is a contract for the sale of specific or ascertained goods the property in them is
transferred to the buyer at such time as the parties to the contract intend it to be transferred.
(ii) For the purpose of ascertaining the intention of the parties regard shall be had to the terms of
the contract, the conduct of the parties and the circumstances of the case.
(iii) Unless a different intention appears, the rules contained in Section 20 to 24 are rules for
ascertaining the intention of the parties as to the time at which the property in the goods is to
pass to the buyer. These rules are as follows:

Specific goods in a deliverable state.-

Where there is an unconditional contract for the sale of specific goods in a deliverable state, the
property in the goods passes to the buyer when the contract is made, and it is immaterial whether
the time of payment of the price or the time of delivery of the goods, or both, is postponed
Specific goods to be put into a deliverable state
Where there is a contract for the sale of specific goods and the seller is bound to do something to
the goods for the purpose of putting them into a deliverable state, the property does not pass until
such thing is done and the buyer has notice thereof.
Specific goods in a deliverable state, when the seller has to do anything thereto in order to
ascertain price.- Where there is a contract for the sale of specific goods in a deliverable state, but
the seller is bound to weigh, measure, test or do some other act or thing with reference to the
goods for the purpose of ascertaining the price, the property does not pass until such act or thing
is done and the buyer has notice thereof.

Sale of unascertained goods and appropriation.-

(1) Where there is a contract for the sale of unascertained or future goods by description and
goods of that description and in a deliverable state are unconditionally appropriated to the
contract, either by the seller with the assent of the buyer or by the buyer with the assent of the

seller, the property in the goods thereupon passes to the buyer. Such assent may be expressed or
implied, and may be given either before or after the appropriation is made.
(2) Delivery to carrier- Where, in pursuance of the contract, the seller delivers the goods

Goods sect on approval or on sale or return- when goods are delivered to the

buyer on approval or on sale or return or other similar terms, the property therein passes to the
buyer(a) when he signifies his approval or acceptance to the seller to does not other act
adopting the transaction.
(b) if he does not signify his approval or acceptance to the seller but retains he gods
without giving notice of rejection, then, if a time has been fixed for the return of the
goods, on the expiration of such time, and, if not time has been fixed, on the expiration of a
reasonable time.

Q-4 Differentiate between condition and warranty in Sales of Goods Act. Explain all the
implied conditions in the contract of sales of goods.
Ans. Difference between condition and warranty
Difference as to value- A condition is a stipulation essential to the main purpose of the
contract. A warranty is a stipulation collateral to the main purpose of the contract.
Difference as to breach- If there is a breach of condition, the aggrieved party can repudiate
the contract of sale; in case of a breach of warranty, the aggrieved party can claim damages
only.
Difference as to treatment- A breach of condition may be treated as a breach of a warranty.
This would happen where the aggrieved party is contended with damages only. A breach of
warranty, however, cannot be treated as a breach of a condition.
Whether any express condition is made or not law presumes certain standards which are to be
ensured by the seller before selling the any product .These presumptions as to nature, quality,
and rightful ownership of the product are termed as implied conditions.

The implied conditions in sale of goods are laid down in sections 14 to 17.
1. CONDITION AS TO TITLE.
It is presumed in law that in the case of sale, the seller has the right to sell the Goods, and
in the case of an agreement to sell the, the seller will have the right to sell the goods at the
time of sale. In case a seller sells without the right to sell them, the buyer has the right to
repudiate the contract. The term right to sell infers that the seller should have a valid
title to the Goods. According to section 14 of the Act, In a contract of sale, unless the
circumstances of the contract are such as to show a different attention, there is an implied
condition on the part of the seller that-(a).in the case of a sale, the seller has the right to
sell. (b).in the case of an agreement to sell the seller will have a right to sell at the time of
sale.

In Rowland v. Divall, {1923}2K.B.500, B bought a second hand car from S a car dealer.
After few months the car was taken away by the police as it was a stolen one. The court
observed that it was a breach of condition as to title as S had no right to sell the car. It was
held that B could recover full price from S.
B buys a stolen car from S without knowing this fact .By the time B came to know about it S
had compensated the true owner and acquired a legal ownership of the car. Now B cannot
terminate the contract on the ground of breach of implied condition.
2. SALE BY DESCRIPTION.
If you contract to sell peas, you cannot oblige a party to take beans. This is the rule laid
down in section 15, where there is a contract for the sale of goods by description, there is an
implied condition that the goods shall correspond with the description. In Shepherd v. Kane
(1821)5b&Ald.240, A ship was contracted to be sold as copper fastened vessel to be taken
with all faults, without any allowance for any defects whatsoever. The ship turned to be
partially Copper fastened .The court held that that the buyer was entitled to reject the goods.

When a descriptive word or phrase is used in a contract of sale to describe the product it
creates an implied condition that the goods will correspond to the description. For example a
sale of Seedless Grapes, signifies that the fruit will have no seeds. If it turns that the fruit is
with seeds the buyer can reject the goods.

Sale of Goods by description may include the following situations,,

(1) Where the buyer has not seen the goods and relies on their description given by the seller.
In Varley v. Whipp,1900Q.B.513,W bought a reaping machine which he had never seen V
the seller described to have been new the previous year and used to cut only 50 to 60 acres
.W found the machine to be extremely old .It was held that W could return the machine as it
did not answer to the description.
(2).Where the buyer had seen the goods but relies not on what he had seen but on what was
stated to him by the seller.
InNicholson&Vennv.Smith Marriot,(1947)177 L.T.189, In an auction sale of a set of
Napkins and table clothes, these were described as dating from the seventh century; the buyer
bought the set after seeing it. Subsequently it was found that the set was not of the seventh
century but of the eighteenth century, it was held that he could reject the goods.

3. Sale by description as well as by sample.

Section 15 further provides that if the sale is by sample as well as by description then it is not
sufficient that it corresponds to the description but it should also correspond to the sample.

In Wallis v. Pratt, (1911) A.C .394, in a contract for the sale of a quantity of the sale of seed
described as common English Sainfoin, the seed supplied was of a different kind, though
the defect was not discoverable except by sowing the defect also existed in the sample. Held
the buyer was entitled to recover damages for the breach of contract.
4 . CONDITION AS TO QUALITY OR FITNESS.

Ordinarily there is no implied condition that the goods supplied by the seller should be fit for
the particular purpose of the buyer. The rule Caveat emptor applies instead It means that
while buying it is the responsibility of the buyer to ensure that the goods corresponds to the
particular purpose he want to meet. However in the following situation the responsibility of
the fitness as to Goods falls on the seller.
A the buyer make known to the seller the particular purpose for which he requires goods.,
B The buyer and seller relies on the skill and judgment of the buyer.
C The sellers business is to supply such goods whether he is the manufacturer or producer or
not.
5 CONDITION AS TO MERCHANTABILITY.
Section 16 (2)-Where goods are bought by description from a seller who deals in goods of
that description whether he is not the producer or manufacturer or not, there is an implied
condition that the goods shall be of merchantable quality
The above provision reveals that the condition of merchantability is applicable when,
a) The goods are sold by description
b) The seller deals with such goods

Thus when Mohan a blacksmith sells to Das his old car, no implied condition as to
merchantability applies.
Merchantable means that the goods must be fit for the ordinary purpose for which such goods
are used. For example, when shoes are sold, merchantability requires that the shoes have
their heals attached well enough, that they will not break of under the normal use.
In Jones v. Just, 1868LR 3 QB 197, B&Co a firm of merchants contracted to buy from S
some bales of Manila Hemp. This was to arrive from Singapore. The hemp arrived wetted
with sea water. It was so damaged that it was not possible to sell it as Manila hemp in the
market. The court held that the hemp was not of merchantable quality and it was entitled to
be rejected.
But where the buyer examines the goods and the defects are such which can be revealed by
ordinary examination, the condition of merchantability does not apply to the extent of such
defects.
Where the product has some latent defects which cannot be revealed by ordinary
examination, the condition of merchantability would apply when even if the buyer has
examined the goods.
6. CONDITION AS TO WHOLESOMENESS.
In the case of food products the condition of fitness or merchantability requires that the
goods should be wholesome, that is it should be fit for consumption. In Chapronier v.
Mason,(1905)21 TLR633, C brought a Bun from a bakers shop .The bun contained a stone
which broke of Cs teeth. The court held that the seller was liable to pay damages as he
breached the condition of wholesomeness.
In Dr.Baretto v. T.R.Price, AIR 1939 Nag 19, A bought a set of false teeth from a dentist.
The set did not fit into As mouth. Held A could reject the set as the purpose for which
anybody would buy it was implicitly known to the seller, here the dentist.

In Priest v Last (1903)2K.B.148,P asked for a hot water bottle to S ,retail chemist ,he was
supplied one which burst after few days use and injured Ps wife. The court held that S was
liable for the breach of implied condition because P had made known to the Chemist the
purpose for which he buys the goods.
7. SALE BY SAMPLE.

A contract of sale by sample is a contract for sale by sample where there is a term express or
implied in the contract, to that effect. (Section 17).In the case of contract of sale by sample,
there is an implied condition 1.That the bulk shall correspond to the sample in quality.
2. That the buyer shall have a reasonable opportunity of comparing the bulk with the sample.
3. That the goods shall be free from any defect, rendering them unmerchantable.The defect
should not however be apparent on a reasonable examination of the sample.
Q-5 Who is an unpaid seller. Describe the rights of an unpaid seller under the sales of goods
Act.
Ans 5. Unpaid Seller (Sections 45-54)
The seller of goods is deemed to be unpaid seller

When the whole of the price has not been paid or tendered; or

When a conditional payment was made by a bill of exchange or other negotiable

instrument, and the instrument has been dishonoured.

.Rights of an Unpaid Seller may be against the goods as well as for the buyer personally
Rights of an Unpaid Seller against the Goods
An unpaid seller's right against the goods are(1) A lien or right of retention
(2) The right of stoppage in transit.
(3) The right of resale.
(4) The right to withhold delivery.
(1) Lien (Sections 47-49 and 54)-An unpaid seller in possession of goods sold, may

exercise his lien on the goods, i.e., keep the goods in his possession and refuse to deliver
them to the buyer until the fulfilment or tender of the price in cases where1. the goods have been sold without stipulation as to credit; or
2. the goods have been sold on credit, but the term of credit has
expired; or
3. the buyer becomes insolvent.
.

A lien is lost
(i)

When the seller delivers the goods to a carrier or other bailee for the purpose of
transmission to the buyer, without reserving the right of disposal of the goods;

(ii)

When the buyer or his agent lawfully obtains possession of the goods;

(iii)

By waiver of his lien by the unpaid seller.

(2) Stoppage in transit (Sections 50-52)-The right of stoppage in transit is a right of stopping
the goods while they are in transit, and retaining possession until payment of the price.
The right to stop goods is available to an unpaid seller
(i) when the buyer becomes insolvent; and
(ii)

the goods are in transit.

The buyer is insolvent if he has ceased to pay his debts in the ordinary course of
business, or cannot pay his debts as they become due. It is not necessary that he has actually
been declared insolvent by the Court.
The transit comes to an end in the following cases(i)

If the buyer obtains delivery before the arrival of the goods at their
destination;

(ii) If, after the arrival of the goods at their destination, the carrier acknowledges to the
buyer that he holds the goods on his behalf, even if further destination of the goods
is indicated by the buyer.
(iii) If the carrier wrongfully refuses to deliver the goods to the buyer.
If the goods are rejected by the buyer and the carrier or other bailee holds them, the
transit will be deemed to continue even if the seller has refused to receive them back.
The right to stop in transit may be exercised by the unpaid seller either by taking actual
possession of the goods or by giving notice of the seller's claim to the carrier or other person
having control of the goods. On notice being given to the carrier he must redeliver the goods to
the seller, who must pay the expenses of the redelivery.
(3) Right of re-sale (Section 54)- The unpaid seller may re-sell-

(i) where the goods are perishable;

"
(ii) where the right is expressly reserved in the contract;
(iii) where in exercise of right of lien or stoppage in transit, the seller gives notice to the
buyer of his intention to re-sell, and the buyer, does not pay or tender the price
within a reasonable time. '
If on a re-sale, there is a deficiency between the price due and amount realised, the re-seller is
entitled to recover it from the buyer. If there is a surplus, he can keep it. He will not have these
rights if he has not given any notice and he will have to pay the buyer any profits.
(4) Rights to withhold delivery- If the property in the goods has passed, the unpaid seller
has right as described above. If, however, the property has not passed, the unpaid seller has a
right of withholding delivery.
Rights of an Unpaid Seller against the buyer personally
An unpaid seller may sue the buyer for the price of the goods in case of breach of contract
where the property in the goods has passed to the buyer or he has wrongfully refused to pay the
price according to the terms of the contract.
The seller may sue the buyer even if the property in the goods has not passed
where the price is payable on a certain day.
Under Section 56, the seller may sue the buyer for damages or breach of contract where the
buyer wrongfully neglects or refuses to accept and pay for the goods.
The unpaid seller has also a right to claim the buyer for the prices of goods.
Q-6 Write note on the following:
a)
b)
c)
d)

Warranty
Rule of Caveat Emptor
Types of Goods
Implied Warranties

Warranty
The parties are at liberty to enter into a contract with any terms they please. As a rule,
before a contract of sale is concluded, certain statements are made by the parties to each
other. The statement may amount to a stipulation, forming part of the contract. It may
also be a mere expression of opinion which is not part of the contract. If it is a statement
by the seller on the reliance of which the buyer makes the contract, it will amount to a
stipulation. If it is a mere commendation by the seller of his goods, it does not amount to
a stipulation and does not give the right of action.
The stipulation may either be a condition or a warranty. If the stipulation is collateral to
the main purpose of the contract, i.e.. is a subsidiary promise, it is a warranty. The effect
of a breach of a warranty is that the aggrieved party cannot repudiate the contract but can

only claim damages. Thus, if the seller does not fulfill a warranty. the buyer must accept
the goods and claim damages for breach of warranty.
Example: X asked a car dealer to suggest him a good car. The dealer suggested a car and
said that it can run for 20 kms per litre of petrol. But the car could run only 15 kms per
litre of petrol. In this case the statement made by the seller is a warranty. X cannot reject
the car but he can claim the damages.
Rule of Caveat Emptor
The term caveat emptor is a Latin word which means "let the buyer beware". This
principle states that it is for the buyer to satisfy himself that the goods which he is purchasing are
of the quality which he requires. If he buys goods for a particular purpose, he must satisfy
himself that they are fit for that purpose. The principle was applied in the case of Ward v. Hobbs.
(1878) 4 A.C. 13, where certain pigs were sold by auction and no warranty was given by seller in
respect of any fault or error of description. The buyer paid the price for healthy pigs. But they
were ill and all were died of typhoid fever. They also infected some of the buyer's own pigs. It
was held that there was no implied condition or warranty that the pigs were of good health. It
was the buyer's duty to satisfy himself regarding the health of the pigs.
Exceptions to the doctrine of Caveat Emptor(1) Where the seller makes a false representation and the buyer relies on it.
(2) When the seller actively conceals a defect in the goods which is not visible on a reasonable
examination of the same.
(3)

When the buyer, relying upon the skill and judgement of the seller, has expressly or
impliedly communicated to him the purpose for which the goods are required.

(4) Where goods are bought by description from a seller who deals in goods of that description.
TYPES OF GOODS
Definition:
The subject matter of a contract of a sale must be goods . According to Section 2(7) the term
goods means every kind of movable property other than actionable claims and money and
includes stock and shares , growing crops , and things attached to or forming part of the land
which are agreed to be severed before sale or under the contract of sale
Types of goods:
1. Existing goods: These are the goods which are owned or possessed by the seller at the
time of sale. Only existing goods can be the subject of a sale. The existing goods may
bea) Specific goods: Goods identified and agreed upon at the

time of making of the contract of sale of goods.

b) Ascertained goods: Goods identified subsequent to the formation of the contract of sale. The
terms ascertained and specific, are commonly used for same kind of goods.
c) Unascertained or generic goods: Goods not identified or agreed upon at the time of making of
the contract of sale. They are the goods defined for description only.
Example: A who wants to buy a television set goes to a showroom where four sets of Janta
model of Oscar television are displayed. He sees the performance of a particular set, which he
agrees to buy. The set so agreed to be bought is a specific set. If after having bought one set he
marks a particular set, the set so marked becomes ascertained. Till this all is done all sets are
unascertained.
2. Future goods: Goods to be manufactured, produced or acquired after making of the contract
are called future goods.
Example: A contract, on 1st January, to sell B 50 shares in Reliance Ltd., to be delivered and
paid for on the 1st March of the same year. At the time of making of the contract, A is not in
possession of any shares. The contract is a contract for the sale of future goods.
3. Contingent goods : Goods, the acquisition of which by the seller ,depends upon an uncertain
contingency are called contingent goods. They are also a type of future goods.
Example: A agrees to sell 100 units of an article provided the ship which is bringing them,
reaches the port safely. This is an agreement for the sale of contingent goods.

IMPLIED WARRANTIES

Warranty of quiet possession[Sec. 14(b)].

In a contract of sale, unless there is a contrary intention, there is an implied warranty that the
buyer shall have and enjoy quiet possession of the goods. If the buyer is in any way disturbed in
the enjoyment of the goods in consequence of sellers defective title to sell, he can claim
damages from the seller.

Warranty of freedom from encumbrances[Sec. 14 (c)].

The goods are not subject to any change or right in favour of a third party.

Warranty as to quality or fitness by usage of trade

[Sec. 16 (4)].
An implied warranty as to quality or fitness for a particular purpose may be annexed by the
usage of trade.

Warranty to disclose dangerous nature of goods

Where a person sell goods, knowing that the goods are inherently dangerous or they are likely
to be dangerous to the buyer and that the buyer is ignorant of the danger, he must warn the buyer
of the probable danger, otherwise he will be liable in damages.