NATIONAL LAW INSTITUTE UNIVERSITY,

BHOPAL

PROJECT ON:
Law of contracts-2

TΟPIC:
DUTY OF SELLERS AND BUYERS UNDER SALES OF
GOODS ACT.

SUBMITTED TΟ: MS. NEHA SHARMA

SUBMITTED BY:
JEEZAN RIYAZ, 2018BALLB22
MANN SHARMA, 2018BALLB35
AJITA DASH, 2018BALLB13
SHAMBHAVI KHARE, 2018BALLB30
 CERTIFICATE

This is tο certify that the project titled “Duty Of Sellers And Buyers Under Sales Of Goods
Act.” has been prepared and submitted by Jeezan Riyaz, Ajita Dash, Shambhavi Khare and
Mann Sharma who are currently pursuing their B.A.L.L.B. (Hons.) at National Law
Institute University, Bhopal in fulfillment οf LAW OF CONTRACT-2. It is also certified
that this is their original project and this has not been submitted tο any other University.

Date:

Signature οf the Students : …………………………………….

Signature οf the Supervisor : …………………………………….

2 | Pagе
 TABLE OF CONTENTS

1. LIST OF ABBREVIATIONS..........................................................4

2. INTRODUCTION..............................................................................5

3. DUTIES OF BUYER..........................................................................6

4. DUTIES OF SELLER.........................................................................11

5. CONCLUSION....................................................................................15

6. BIBLIOGRAPHY................................................................................16

3 | Pagе
 LIST OF ABBREVIATION

1. & - And

2. AIR -All India Reporter

3. End -Edition

4. Co. -Company

5. Hon'ble -Honourable

6. Ltd -Limited

7. Ors. -Others

8. SC -Supreme Court

9. SCC - Supreme Court Cases

10. Vol -Volume

4 | Pagе
 DUTIES OF SELLER AND BUYER UNDER SALES OF GOODS ACT.

INTRODUCTION

The term “contract” is defined in Section 2(h)of the Indian Contract Act, 18721 as follo
ws: An Agreement enforced by law. Sale of goods is also an agreement enforced by la
w.

The law of sale of goods was contained in chapter VII of the Indian contract Act. 1872(
Sections 76 of 123), but was found to be inadequate to deal with new situations arising 
due to increase in mercantile transactions in the wake of rapid industrialisation. The cou
rts had to draw upon analogies from the decisions of English Courts to meet the new sit
uations. Hence the legislature intervened by passing the present Act (The Sale Of Good
s Act, 1930), incorporating therein the various provisions of English Sale Of Goods Act
, 1893.

Contracts for the sale of goods are subject to the general legal principles applicable to a
ll contracts, such as offer and its acceptance or other essential elements of a contract.

CONTRACT OF SALE OF GOODS

A contract of selling of goods is actually a contract by which the seller transfers or  agr
ees to transfer the property in commodities to customer for a cost. The phrase contract 
of sale is actually a generic phrase and includes both an agreement to sell and  sale .

Where under sale,the property in the goods is transferred from the seller to the buyer, th
e contract is called a “sale” but in which the transfer of this property within the goods i
s actually taking place at a future period or maybe subject to several circumstances ther
eafter to be satisfied. The contract is actually called agreement to sell.

An agreement to promote gets to be a sale whenever the time elapses or  the circumstan
ces, subject to that the property in the commodities would be to be transferred, are actu
ally fulfilled.

1:
Thе Indian contract Act,1872(9of 1872).

5 | Pagе
The real nature of the transaction evidenced by way of a composed understanding has t
o be ascertained through its covenants and not just from what the parties decide to call i
t.The Supreme Court in this situation reported that for considering whether a specific tra
nsaction is actually a sale or p not the Court has got to think about whether as a conseq
uence of this transaction the property within the commodities transferred to another in e
xchange for price.It is the substance of the transaction evidenced by the agreement whic
h must be looked at2. The substance of the matter must be ascertained by a consideratio
n of the whole of agreement.3

BUYER AND SELLER

According to Section 2(1) of The Sales of Goods Act, “buyer” means a person who buy
s or agrees to buy goods and Section 2(13) says “seller “means a person who sells or a
grees. to sell. In a Sale of Goods  the two parties are the buyer and seller, and each has
 his obligations and duties  to perform.

DUTIES OF BUYER

The duty of buyer is to accepting the goods as well as to pay for it. Both these duties ar
e actually to be carried out in accordance with the terms of the contract of sale.  under 
section 31 of  the Sale of goods act the term ‘in accordance with the terms of the contr
act of sale” is  intended to show that the parties are free to modify the conditions and te
rms. In absence of a contract to the contrary these duties are  conditions mentioned in t
he following section.So this may mean that the buyer and seller may  agree among  the
mselves to create certain rights and obligations.

One of the main duties of buyer among many  is to apply for delivery. The buyer has n
o cause of action against the seller if he has not applied for delivery and4 he must menti
on that cause of action in his plaint.5

2
Khеdut Sahakari Ginning & Prеssing Sociеty v. Statе of Gujarat, A.I.R 1972.S.C.1786
3 Hеlby v. Mathеws 1895 .A.c.471
4
Ramamorthy v. p. Satyanarayana AP 550
5
Sivayya v.Ranganayakulu(l935)37 Bomba.L.R

6 | Pagе
In a case where the contract provided that seller should give notice of the arrival of the 
goods (such as railway receipt), the buyer is still under an obligation to pay.

In the case Ganesh Das V Ram Nath6, it was decided  that the buyer is under a duty to 
apply for delivery even if the seller is under a duty or obligation to give notice.

The application for delivery should  be in such a manner  that the buyer must be ready 
& intending  to pay the price in exchange of goods

7
In a case, E buys goods from D, and assigns the benefit of the contract to F. Fapplies f
or delivery. E then takes a reassignment from F and Sues D on the contract without ma
king any demand for the goods. It is found that the  assignment to F was fictitious. E is
 not entitled to adopt the demand for delivery made by F. Such a demand is no demand
 for the goods.

In Section 35 of sales of goods act it is written” Apart from any express contract”, selle
r is not bound to deliver the goods to the buyer

The buyer’s duty to apply for delivery does not arise where the seller has refused to per
form his part of the contract without any justification even before the final date of deliv
ery has arrived as it would become an idle formality to apply for delivery.

Next duty of the buyer is payment in the absence of any specific agreements, the buyer 
must make payment at the time and place he receives the goods. When a sale is made o
n credit, the buyer is obliged to pay according to the specified credit terms, not when th
e goods are received. The credit period usually begins on the date of shipment. Payment
 can be made by any means agreed on between the parties-
cash or any other method generally acceptable in the commercial world. If the seller de
mands cash when the buyer offers a check, credit card, or the like, the seller must perm
it the buyer reasonable time to obtain cash.

6
Ganеsh Das v. Ram Nath 1928
7
Sivayya v. Ranganayakulu 62 AIR 1935

7 | Pagе
Buyer’s Liability for delay in taking delivery

The Buyer has got the right of Inspection under Sales of goods act, 1930 section 40 Unl
ess otherwise agreed, and also for cash on delivary  transactions, the buyer has an absol
ute right to examine the products. This right enables the buyer to confirm, prior to maki
ng payment, that the products tendered or even sent are what have been contracted for .
 In case the goods aren't what the buyer ordered, the buyer is not under a duty to pay. 
A chance for inspection is consequently an ailment precedent on the right of the seller t
o enforce transaction.unless otherwise agreed, inspection can take place in any  reasona
ble manner at any reasonable place and time Generally, what is reasonable or not  is as
certained by custom of the trade, past practices of the parties, and the likes. Expense of 
inspecting conforming foods are borne by the buyer unless otherwise agreed.

Despite examination of the goods by the buyer in consonance with the right of his, the 
buyer enjoys the right to refuse the products if a concealed, not obvious, defect is subse
quently found out.the buyer isn't under an obligation  to return rejected items, in which 
the buyer rejects items if not in consonance with the  agreement description, it's not the 
responsibility of his to post them to the seller, it's enough for him to offer a clear notice
 that they're not approved after which they're for sellers risk.

The buyer is under the obligation to admit, the buyer is able to reveal assent to the sent
 items in the following methods, each one of which comprises  as acceptance: 

1.Three is an acceptance when the buyer, after having had a reasonable opportunity to e
xamine the goods, signifies agreement to the seller that the goods are either conforming
 or are acceptable inspite  their nonconformity.

2.Acceptance is presumed when the buyer has had a reasonable opportunity to examine 
the goods and has failed to reject them within a reasonable duration of time.

3.In sales contracts, the buyer will be deemed to have accepted the goods when he perf
orms any act which is inconsistent with the seller's ownership, for e.g., use or resale of 
the goods.

Buyer’s Liability for delay in taking delivery section 44 of Sales of goods act, 

8 | Pagе
Section 44 of Sales of goods act, contemplates the case where in  the property in  good
s has been passed to the buyer and he has become the owner thereof. The mere fact that
 the seller has been given the right to recover expenses for custody and care and to reco
ver the loss shows that the buyer’s neglect doesn't entitle the seller to place an end to th
e agreement, that the property in goods has passed to the buyer and that the goods are k
ept against the will of the seller. In such a case if the buyer fails to take delivery within
 a reasonable duration of time, he is liable to the seller for any damage caused by his d
efault and also for a reasonable charge for the care and custody of the goods.

DUTIES OF SELLER

The major obligation of the seller within a sales contract is to tender conforming goods 
to the buyer. Tender of delivery requires that the seller have and hold conforming goods
 at the disposal of the buyer and give the buyer any such notification  notification whic
h is reasonably necessary to enable the buyer to take the delivery. Conforming goods ar
e  those goods that conform identically  to the description of the goods in the contract.

Tender must occur in a reasonable manner and also at a reasonable hour. Unless if the 
parties have agreed otherwise, the goods must be tendered for delivery at some reasona
ble time and  must be kept available for a reasonable duration of time to enable the buy
er to take possession of it. All goods called for by a contract must be tendered in a sing
le delivery unless the parties  have agreed otherwise, or the circumstances are such that 
either parties can rightfully request for delivery in lots.

Delivery

It is the obligation of the seller to deliver the goods and  also of the buyer to accept an
d pay for it, in accordance with the terms and conditions of the contract of sale.

Unless  agreed, delivery of goods and payment of the price are conditions concurrent to
 each other, in other words, the seller shall be ready and intending to give possession of
 the goods to the buyer in exchange of the price, and the buyer shall be ready and inten
ding to pay the  price in exchange of possession of the goods.

Risk of deterioration in the goods

9 | Pagе
When the seller assents or agrees to deliver the goods at his own risk at a location other
 than that where they are when sold, the buyer shall, nevertheless, unless otherwise agre
ed, take any risk of deterioration in the  quality of goods, necessarily incident in the co
urse of transit.

Damages for non-delivery

Where the seller of goods wrongfully, neglects or refuses to deliver the goods to the bu
yer, the buyer can sue the seller for damages for non-delivery.

Specific Performance

Under specific circumstances when any suit for a breach of contract to deliver specific 
or ascertained goods, the Court may  depending if it thinks fit, the application of the pla
intiff, by its decree may order that the contract shall be performed specifically. The pow
er of the court to direct specific performance in such cases is to be used in accordance t
o rules contained in the Specific Relief Act regarding specific performance of contracts.

Place of Delivery

The UCC provides for the place of delivery pursuant to the contract when the contract 
does not Of course, the parties may agree on a particular destination, or their contract's 
terms or the  circumstances may indicate the place.

Noncarrier Cases

If the contract doesn’t designate a  place of delivery for the goods, and the buyer is exp
ected to pick them up, the place of delivery is assumed to be the seller's place of busine
ss or, if the seller has no such place, the residence of the seller will be considered, if th
e contract involves the sale of identified goods, and the parties are aware  when they en
ter into the contract that these goods are located somewhere other than of the seller's pl
ace of business, then that  location of the goods is the place for their delivery.

Carrier Cases

It is the duty of the seller to do whatever is necessary to assure the carrier’s responsibili
ty for the safe delivery of the goods to the buyer so that in the event of damage or loss,

10 | Pagе
 the buyer shall  have his indemnity against the carrier8

In various instances, attendant circumstances or delivery conditions in the contract make
 it apparent that the parties intend that the  carrier be used to move  goods. There are t
wo ways in which a seller can complete performance of the obligation to deliver the go
ods in carrier cases — through a destination contract and through a shipment contract

Shipment Contracts: Unless agreed otherwise, the seller must do the following:

● place  the goods in the hands of the carrier.

● Make a contract for there transportation which is reasonable according to the nat
ure of the goods and also their value.

● Obtain and swiftly deliver or tender to the buyer any document which is necessa
ry to enable the buyer to obtain possession of  goods from the carrier.

● Promptly and swiftly inform the buyer that the  shipment has been made.

If the seller fails to notify or inform the the buyer that shipment has been made or  if h
e fails to make  proper contract for transportation, and a material loss or damage of the 
goods or a significant  time delay results, the buyer may reject the shipment of goods. 
Of course, the parties may agree that a lesser amount of loss or any delay will be consi
dered a ground for rejection.

Destination Contracts: under a destination contract, the seller of goods agrees to see th
at  the conforming goods will be duly tendered to the buyer of goods at a particular loc
ation or destination. The goods must be tendered at a reasonable time and held at the bu
yer’s disposal for a reasonable duration of time. The seller must also give the buyer app
ropriate notice of the same. In addition to it , the seller must provide the buyer of goods
 with any documents of title which is necessary to enable the buyer to obtain delivery fr
om the carrier(s). Sellers most often do this by tendering the documents through the me
ans of ordinary banking channels.

8
Clarkе v. Hutchis (1811)14 еast

11 | Pagе
The Perfect Tender Rule

The seller has a duty to ship or tender conforming goods, and this entitles the buyer to 
accept and pay for the goods in accordance with the terms and conditions of the contrac
t. Under  common law, the seller was under a duty  to deliver the goods in conformity 
with the terms of the contract in every minute detail. This was termed as the the perfect
 tender rule. The UCC preserves the perfect tender rule by saying that when the  goods 
or tender of delivery fail in any manner to conform to the  contract, the buyer has the ri
ght to accept the shipment , reject the entire shipment, or accept  a part of it  and reject
 a part of it..

Exceptions to the Perfect Tender Rule

due to thw  the rigidity of the perfect tender rule, various  exceptions to the rule have b
een made. They are: (1) Agreement of the concerned  parties; (2)Substitution of Carrier
s; (3) Right to cure; (4)Destruction of Identified Goods. (5) Commercial Impracticability
; (6) Installment contracts;

Section 45 lays down that a seller is unpaid :

(1) When the whole price has not been  tendered or paid.

(2) When any negotiable instrument or a bill of exchange has been received as provi
sional  or conditional payment and the condition in which it was received has no
t been satisfied by reason of the dishonor of the instrument or otherwise.

The seller remains to be  an unpaid seller as long as any portion of the price, however s
mall in amount, remains unpaid. Where the whole price has been tendered, and the selle
r has refused to accept such tender, seller then in that case ceases to be an unpaid seller
. In such a scenario  the seller loses all his right against the goods.

If there is a period of credit in that case  the seller is not unpaid until the price becomes
 due. Against if there is a condition attached to payment  then it has be fulfilled.

The right of the unpiad seller can be  exercised by an agent of the seller to whom the b
ill of leading has been endorsed, or a consignor or an agent who has himself paid, or is 

12 | Pagе
directly  accountable for such  price.

Rights of an unpaid seller

. If seller is not  been paid he has some right under this act .The sale of Goods Act has 
explicitly and clearly  provided two kinds of right to an unpaid seller of goods, :

(1)  Against the goods
(a) When property in the goods has passed
(i) Right of lien
(ii) Right of stoppage of goods in transit
(iii) Right of re-sale

(b) When property in the goods has not passed

(i) Right of withholding delivery.

(2) Against the buyer personally
(i) Right to use for price
(ii) Right to sue for damages
(iii) Right to sue for interest

Among these  the Right of lien  is the most important .

Right of lien

The lien of an unpaid seller is a right to retain possession of the goods  till the time ten
der or payment of the price is recieved. A person cannot on his own goods M. On the b
asis of this principle, when the statute gives a right of lien to the seller, it assumes that 
the property in  goods has been passed to the buyer9.it  then depends on actual possessi
on and not on title, and then it is not affected by his having separated with a document 
capable of transferring the title. He may have given a bill of lading which passes the le

9
Nippon Yusеn Kaisha v. Ramjiban (1938) A.P.C.(155).

13 | Pagе
gal property in the goods, or he may have given an order of delivery, Which though it 
doesn’t pass the legal title or property in the goods, entitles the person receiving it to ta
ke  possession of the goods and take a title in that way, but what so ever he has done i
n that respect doesn’t deprive him of his right of lien till the time  he keeps possession 
of the goods as a vendor.10

Under sub-sec(2), an unpaid seller can enforce his right of lien even if his character of an
unpaid vendor has ceased and thereby has become the bailee of the buyer. Accordingly, it
has been held that giving a delivery order by a seller of goods to a buyer doesn’t per se give
the buyer such a possession of goods so as to deprive the seller’s lien for the price. But the
seller’s lien can be defeated if at all the conditions of the case are such so as to stop him
from denying that payment had been received for goods to which the delivery order is
related to.

10
Impеrial Bank v. London and St. Kathеrinе Docks Co.(1877)5 Ch. Div.195.200.

14 | Pagе
 CONCLUSION

It is the duty of the seller of goods to deliver the goods and that of the buyer to accept and
duly pay for them, in consonance with the terms and conditions of the contract of sale.

A contract of sale of goods is a contract in which the seller transfers or agrees to transfer
the property in goods to the buyer of goods for a particular or specific price. For a contract
of sale to be created , an offer to sell or buy goods must be there. Provision relating to
payment of price and delivery of goods must also be there.

For better and swift functioning of the contract of sales. The sales of goods act has laid
down certain duties to seller and buyer, which they shall abide during payment and also
during delivery of goods or price.

The obligations of the seller and buyer were discussed in the research, of those as mentioned
earlier in the research work is. The seller’s main duty is to deliver the goods while the buyer
is to accept the goods. Other various obligations under provisions of Sales of goods act,
1930, were discussed throughout the research work.

A contract of sale of goods is a contract in which the seller transfers or agrees to transfer
the property in goods to buyer for a specific price. The term “ contract of sale” is a generic
term and includes both a sale and an agreement to sell.

Where under a contract of sale, the property in the goods is transferred from the seller to the
buyer, the contract is called a “sale” but where the transfer of the property in the goods is to
take place at a future time or subject to some conditions thereafter to be fulfilled. The
contract is called “agreement to sell.

An agreement to sell becomes a sale when the time elapses or the conditions, subject to
 which the property in die goods is to be transferred, are fulfilled.

The true nature of a transaction evidenced by a written agreement has to be ascertained 
from its covenants and not merely from what the parties choose to call it.

If both the seller and buyer agrees to abide by their duties only then a contract is compl
ete by the sales of goods Act, 1930.

15 | Pagе
 BIBLIOGRAPHY

STATUTES

1. The Sale Of Goods Act, 1930

2. H.S. Pathak, Mulla Sales of Goods Act And Indian Partnership Act, 9th edition, 2009
3. Avatar Singh, Law of Sales Of Goods

LIST OF CASES

1. Khedut Sahakari Ginning & Pressing Society vs. State of Gujarat, A.I.R 1972.S.C. 1786.
2. Helby vs. Mathews 1895 . A.C.471
3. Sivayya vs .Ranganayaknluai A.I.R 1935 P.C.67.
4. Ramamorthy vs. p. Satyanarayana A. I.R 1935 P.C.67
5. Ganesh Das vs. Ram Nath (1928)A. Lah.20(27)
6. Sivayya vs. Ranganayakulu A.I.R.1935 P.C.67,58 Mad.670.1541.C. 1097
7. Nippon Yusen Kaisha vs. Ramjiban (1938) A.P.C.(155).
8. Imperial Bank vs. London and St. Katherine Docks Co.(1877)5 Ch. Div.195.200.
9. Clarke vs. Hutchis (1811)9 Cal.473.
10. Isherwood vs. Whitmore (1874) L.R.9 C.P.208
11. Greaves vs. ashlin (1813)3 Camp. 426
12. Randall vs. Newson (1872) 2Q.B.D.102

WEBSITES

• http://en.wikipedia.org/wiki/Sale_of_Goods_Act_1979

• http://220.227.161.86/168131930ofsga.pdf

• papers. ssrn.com/sol3/papers ,cfm?abstract_id= 1447877

• http://www.publishyourarticles.org/eng/articles/duties-of-seller-of-goods.htm

• http://www.ricardobarrazacom/Duties%20of%20Seller's%20Agent,%20Buyer's%2
0 Agent,%20and%20Transaction%20Broker.htm

16 | Pagе
DUTIES OF SELLER AND BUYER UNDER THE SALES OF GOODS ACT

● http://www.heinonline.org/HOL/Page?handle=hein.beal/lutitmtsgw0001&id=l&co
lle ction=beal

● http://www.wipo.com

● http://www.manupatra.com

● http://westlawindia.com

DICTIONARY AND LEXICONS

(3) Aiyar Ramanatha P, The Law Lexicon, 2nd Edition, Reprint 2006, Wadhwaa
Nagpur.

(4) Garner Bryan A. Black’s law Dictionary, 6th Edition, 1990, West.

(5) Kirkpatrick Betty, The Concise Oxford Thesaurus, A Dictionary of Synonyms,

2004.

(6) The New International Webster Comprehensive Dictionary, 2004.

17 | Pagе