Assignment on

Sale and Agreement to Sale as Per Sale of Goods Acts, 1930

Assignment on
Sale and Agreement to Sale as Per Sale of Goods Acts, 1930 Course Title: Legal Environment of Business Code: BUS 361
Section-02

Submitted To Syed Rubayet Ferdous Assistant Professor Department of Business Administration East West University

Submitted By
Name Kazi Anwar Parvez Shishir Imtiaz Ahmed Nevin ID 2007-2-10-106 2007-2-10-053

Department of Business Administration East West University

Date of Submission: 20th April, 2011

20th April, 2011 Syed Rubayet Ferdous

Assistant Professor Department of Business Administration East West University 43, Mohakhali C/A, Dhaka-1212 Subject: Submission of assignment on Sale and Agreement to Sale as Per Sale of Goods Acts, 1930

Dear Sir: We are the students of BUS-361 of your section 02. You permitted us to conduct a group assignment based on Sale and Agreement to Sale as Per Sale of Goods Acts, 1930. We would like to inform you that we have incorporated our own original ideas, collected data from various law based books, internet websites, newspapers etc. & have prepared an assignment based on Sale and Agreement to Sale as Per Sale of Goods Acts, 1930.We are presenting the how the agreements made in selling goods to you for your consideration. We have tried our best to make the assignment as accurate as possible. We have given our best efforts in preparing this Assignment. We hope that you will consider it and oblige thereby.

Thanking you, On behalf of the Group . Kazi Anwar Parvez Shishir

Acknowledgement

It really was a great challenge for us to prepare the group assignment. First of all, we thank the Almighty, who has provided us the brilliant opportunity to build and complete this assignment successfully with good health & sound mind. We are grateful & thankful to our family members, our parents- without the support of whom this product could never exist. Our course instructor, Syed Rubayet Ferdous, Department of Business Administration, East West University helped us all the way through. He gave us proper guidelines & directions about this group assignment. We really want to express our gratitude to him for giving valuable advice and time, which helped immensely in preparing this assignment.

Table of Contents
Abstract Key words 1.0 Introduction vi vii

1.1 Objective of the Report 1.2 Scope and methodology 1.2.1 Primary source 1.2.2 Secondary source 1.3 Limitations 2.0 Body of the study 3.0 Conclusion 4.0 Bibliography

02 03 03

Abstract
Sale and agreement to sell is a contract where buyer and sellers come into a transaction of selling goods in a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a predetermined price. Even this contract may happened by showing only the sample of the goods. There may be a contract of sale between one part-owner and another. Goods will be the subject matter. Where the contract is for specific goods the

contract can be void if the goods without the knowledge of the buyer where the contract is for specific goods. In case of rotten, damaged, spoiled goods as no longer to answer to their description in the agreement before the risk passes to the buyer, the agreement is thereby avoided. Goods are sold in two ways; one is conditional basis and warranty basis. A breach of condition gives the aggrieved party a right to sue for damages as well as the right to repudiate the contract, but the contract cannot be repudiated in case of warranty. If everything happened in appropriate way, it is the duty of the seller to deliver the goods and of the buyer to accept and pay for them, in accordance with the terms of the contract of sale. In case, buyer wrongfully neglects or refuses to pay for the goods according to the terms of the contract, the seller may sue him for the price of the goods.

Key words
Warranty: In business and legal transactions, a warranty is an assurance by one party to the other party that certain facts or conditions are true or will happen; the other party is permitted to rely on that assurance and seek some type of remedy if it is not true or followed. Condition: a premise upon which the fulfillment of an agreement depends.

Subject matter: The topic dealt with or the subject represented in a debate, exposition, or work of art. Buyer: means a person who buys or agrees to buy goods. Seller: means a person who sells or agrees to sell goods. Goods: means every kind of movable property other than actionable claims and money; and includes stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale

Price: means the money consideration for a sale of goods.

1.0 Introduction
Sale of Goods Act is one of very old mercantile law. Sale of Goods is one of the special types of Contract. Initially, this was part of Indian Contract Act itself in chapter VII (sections 76 to 123). Later these sections in Contract Act were deleted, and separate Sale of Goods Act was passed in 1930.The Sale of Goods Act is complimentary to Contract Act. Basic provisions of Contract Act apply to contract of Sale of Goods also. Basic requirements of contract i.e. offer and acceptance, legally enforceable agreement, mutual

consent, parties competent to contract; free consent, lawful object, consideration etc. apply to contract of Sale of Goods also. A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. There may be a contract of sale between one part-owner and another. [Section 4(1)]. A contract of sale is made by an offer to buy or sell goods for a price and the acceptance of such offer. The contract may provide for the immediate delivery of the goods or immediate payment of the price or both, or for the delivery or payment by installments, or that the delivery or payment or both shall be postponed. [Section 5(1)]. Contract of sale may be made in writing or by word of mouth, or partly in writing and partly by word of mouth or may be implied from the conduct of the parties.

The main purpose of the contract of sale of goods is to retain the mutual interest of the both parties. Non-fulfilment will mean loss of foundation of contract. These are termed as conditions. Other stipulations, which are not essential, are termed as warranty. These are collateral to contract of sale of goods. Contract cannot be avoided for breach of warranty, but aggrieved party can claim damages. - - A breach of condition can be treated as breach of warranty, but vice versa is not permissible

1.1 Objective of the Study

1. To present an overview Sale and Agreement to Sale as Per Sale of Goods Acts, 1930. 2. To appraise the current practice of Sale and Agreement to Sale as Per Sale of Goods Acts, 1930 in the society and impact to the society. 3. Reasons behind choosing it.

1.2 Methodology of the Study

There may be two types of Assignment method available and they are conclusive and exploratory. Considering the subject topic I have chosen exploratory method. 1.2.1 Primary Sources We have not conducted any survey, rather we have given emphasize on secondary sources. 1.2.2 Secondary Sources In order to complete our assignment work, we depended on the secondary data more than primary data. We got the refined secondary data from the Internet by surfing huge web pages and Limited. We downloaded many WebPages, PDF files & related other things which were very much helpful for us to complete this assignment.

1.3 Limitations
(a) Time limitation is one of the problems to make this assignment. (b) Amount of data collection is not very huge because only websites are not sufficient to complete this assignment. (c) For having other courses and exams, we did not get enough time to complete this assignment. (d) Data collection process was irregular.

2.0 Body of the study

A sale is a transfer of the absolute title to property for a certain agreed price. It is contract between two parties, one of whom acquires a property in the thing sold, and the other parts with it for a valuable consideration known as price. If there is no consideration for the goods then it is not sale but a gift because sale is only for a valuable consideration. And if

there is exchange of goods for one another then it is barter and no sale. Sale takes place only when there is transfer of the title to property for a price An agreement to sell is a contract that defines a future sale, thus all conditions precedent and other terms like delivery, payment, etc, continue to be executory, that is are yet to be fully carried out. A breach of this contract could result in a court order of specific performance, or for damages caused by the loss of the opportunity to buy or sell. An agreement to sell is just that, a promise if you will that you will sell something to someone. Examples: The Section may be illustrated by the following examples: A agrees to buy a haystack from B on Bs land with liberty to come on Bs land to take it away. This is a sale and B cannot revoke the licence given to A to woo on his land. (Wood Vs Manley 1839) There was an Agreement by A to buy 20 tonnes of oil from the sellers cisterns. The seller has many cisterns, with more than 20 tonnes in them. This is merely an agreement to sale. (White Vs Wilks, 1813) There was an Agreement for sale of a quantity of nitrate of soda to arrive at a certain ship. This is an agreement to sell at a future date subject to the double condition of the arrival of the ship with the specified cargo on board. (Johnson Vs Macdonald 1842) A customer who picks up goods in a self-service shop is merely offering to buy them and the sale is not complete until they are paid for. (Pharmaceutical Society Vs Boots, 1952)

Case: Madras Vs Gannon Dunkerley and Company Limited, 1958

The Supreme Court has held that according to the law, both of England and India, in order to constitute a sale, it is necessary that there should be an agreement between the parties for the purpose of transferring title to goods, which of course presupposed capacity to contract, that it must be supported by money consideration, that as a result of transaction, the property must actually pass in the goods. Unless all these elements are present there would be no sale.

Case: M.R.Dhawan V. Madan Mohan

It was held that in sale the property in the goods in transferred from the buyer to the seller. The important points of distinction between a sale and an agreement to sell are as follows: 1. If the property in the goods passes from the seller to the buyer at the time of making of the contract, it is known as sale; but if the passing of the property in the goods is postponed until some future time or fulfillment of certain conditions, it is an agreement to sell. It means that in case of sale the buyer becomes the owner of the goods at the time of making of the contract whereas in an agreement to sell, he is to become the owner of the goods at a later time.

Case: Dwarka das Ayodhya v. Ram Ratan

It was held that on the sale of ascertained goods the property in the goods passes to the purchaser as soon as the contract of sale is made even though the delivery of the goods is postponed at his request and to suit his own convenience.

2. If after making the contract there is loss or damage to the goods, the question may arise as to which of the two parties has to bear the loss to the goods. According to the general rule contained in Section 26, the goods are at the risk of the person who is their owner at the relevant time. It means that in the case of sale, since the ownership in the goods has passed to the buyer, the loss to the goods has to be borne by the buyer. On the other hand, in the case of an agreement to sell, while the seller is still the owner of the goods, the loss has to be borne by him.

Case: Firm of Ramdyal Ram Narain V. Firm of Bhairo Bux Gouridutta

It was held that where the goods are purchased on a condition that they would be damaged and subject to inspection and approval, there is an implied warranty that they are such as fall under the denomination of undamaged goods. The goods cannot be said to be ascertained until they are inspected and approved.

3. In case of sale, i.e., where the property in the goods has passed to the buyer, if he wrongfully neglects or refuses to pay for the goods according to the terms of the contract, the seller may sue him for the price of the goods.2 In case of an agreement to sell, the seller being still the owner of the goods can dispose them of and, therefore, if the buyer wrongfully neglects or accept and pay for the goods, the seller may sue him for for non-acceptance.

Case: Gulab Rai Sagar Mal. V. Nirbal Ram Nagar Mal

A Manchester firm sent goods to India for defendant firm at Delhi, after shipment sent the drafts and shipping documents to the National bank of Delhi with directions for the

delivery to the buyer on payment of the money to the Bank, held that the property in the goods did not pass to the buyer till the money was paid to the Bank.

4. Sale is an executed contract, where there is a contract conveyance, whereas an agreement to sell is termed as contract, as it is contract pure and simple. In case of sale, seller breaks the engagement to deliver the goods or sells goods to a third party, the buyer may sue the seller not the breach of a contract but may also sue him for the conversion and detinue. The buyer has also a right in rem. In case of sale in many cases, he may follow the goods fiats hands of third parties. If there is a breach of agreement by the seller, then the buyer has only a right in personam, i.e. only a personal remedy against the seller.

The essential elements of contract for sale: Some essential elements are to be present in a contract which makes the contract of sale valid. If, the essential elements are missing, then the contract of sale will not be valid. For example, Ram agrees to sell his Car to Shyam without any consideration. This contract of sale is not valid since there is no consideration.

From the Section 4 of the Sale of Good Act, we can understand that the following essential elements must be present in the Contract of Sale. 1. Subject matter of Sale must be "goods" The subject matter of contract of sale must be movable goods. Sale and purchase of immovable property is regulated by the Transfer of Property Act. Contracts relating to services are also not treated as contract of sale. So the subject matter of contract must be goods which can be movable. 2. Consideration in Price: Consideration in a contract of sale has necessarily to be money. Thus, if for instance, goods are offered as consideration for goods, it will not amount to sale, but it will be called a 'brater'. Similarly, in case there is no consideration, it amounts to gift and not sale. However the consideration may be partly in money and partly in goods. 3. There must be two parties. There must be at least two parties, i.e. one buyer and the other seller. A person cannot buy his own goods. For example Shyam is the owner of certain goods, but he is not aware of this fact. Ram pretends to be the owner of the goods and sells them to Shyam. Since the goods already belongs to Shyam, he cannot buy his own goods, hence there is no sale and the contract is not valid. (Bell V. Lever Bros. Ltd.) There is exemption in the case of a part owner. For the purpose of sale of partnership property, partners are not regarded as separate persons. They cannot be both seller and buyer. But a partner may sell goods to the firm or buy goods from the firm. However, a part owner can sell his ownership to another part owner.

4. Formalities of the contract:

Following are essentials of contract of sale - It is contract, i.e. all requirements of contract must be fulfilled It is of goods Transfer of property is required Contract is between buyer and seller Sale should be for price A part owner can sale his part to another partowner Contract may be absolute or conditional. 5. How Contract of sale is made When an offer made to sell or buy goods with a proposed price and accept the proposal then we can say that there made a contract of sale. In such kind of contract there may be an immediate delivery of goods or immediate payment of the price or both, or for the delivery or payment by installments, or that the delivery or payment or both shall be postponed. Such kind of subject to the provisions of any law for the time being in force, there may be writing or oral contract, or can be partly written and partly oral contract, or may be implied from the conduct of the parties or can a contract can be made by both. Thus, credit sale is also a sale. - - A verbal contract or contract by conduct of parties is valid. e.g. putting goods in basket in super market or taking food in a hotel. 6. Terms of the contract: The parties may agree upon any term concerning the time, place, and mode of delivery. Term may be two types: essential (is amount to be condition) and non-essential (is amount to be warranty) The Sale of Goods Act, 1930 provides that in the absence of a contract to the contrary, certain conditions and warranties are to be implied in a contract of sale. Example: sale of car, however, not mentioned that car will run------------7. Other essential elements: Due to a valid contract parties must be competent to contract, there must be free consent, there must be consideration, the object must be lawful.

Subject matter of the contract: The subject matter of the contract must be goods. A good can be an existing good or can be a future good. May be there is a contract for the sale of goods the possession of which by the seller depends upon a possibility which may or may not occur. Where by a contract of sale the seller purports to concern a present sale of future goods, the contract operates as an agreement to sell the goods. The contract can be void if the goods without the knowledge of the buyer where the contract is for specific goods, at the time when the contract was made, rotten or become so spoiled as no longer to answer to their explanation in the contract. Where there is an agreement to sell specific goods, and consequently the goods without any fault on the part of the seller or buyer pass away or become so damaged as no longer to answer to their description in the agreement before the risk passes to the buyer, the agreement is thereby avoided. The price: For a contract price can be fixed or can be determined by the parties. If the price is not set then the sell offer a reasonable price to the buyer and seller has to pay the price. When the price of an agreement is fixed by valuation of third party then the agreement can be avoided. Where such third party is disallowed from making the valuation by the fault of the seller or buyer, the party not in fault may maintain a suit for damages against the party in fault.

Condition and warranties:

DISTINCTION BETWEEN 'CONDITION' AND 'WARRANTY' Condition Warranty

1.

A condition is a stipulation (in a 1. contract), which is essential to the main purpose of the contract.

A warranty is a stipulation, which is only collateral or subsidiary to the main purpose of the contract. A breach of warranty gives only the right to sue for damages. The contract cannot be repudiated. A breach of warranty cannot be treated as a breach of condition.

2.

A breach of condition gives the 2. aggrieved party a right to sue for damages as well as the right to repudiate the contract.

3.

A breach of condition may be treated 3. as a breach of warranty in certain circumstances.

ExA man buys a particular horse, which is warranted quiet to ride and drive. If the horse turns out to be vicious, the buyer's only remedy is to claim damages. But if instead of buying a particular horse, a man asks a dealer to supply him with a quiet horse and the horse turns out to be vicious, the stipulation is a condition and the buyer can reject the horse, or keep the horse and claim damages.

Recommendation:
The Act should more clear about barter transaction in ancient time the sale was created by gold in exchange of goods. After that the gold was the standard of sale. But if only money is the way to do sale contract then what about gold or some other things.

The contract is not give details about warranty. It should include details of both warranty and guaranty. It should include more about the Agreement to sale like what will happen if the sale cross the time limit.

3.0 Conclusion
The Sale of Goods Act 1930 is the main piece of legislation helping buyers to obtain redress when their purchases 'go wrong'. It is in the interest of anyone who sells goods or services to understand the implications of the Act for them and the responsibilities they have under it. Essentially, the Act states that what you sell must fit its description, be fit for its purpose and be of satisfactory quality. If not, you - as the supplier - are obliged to sort out the problem.It's not just a question of complying with the requirements of the Act - you can also use your compliance positively to enhance your customer relationships. This guide explains the Act and how to deal properly with complaints made under it. Remember that while the Act generally applies to protect individual consumers, it can also apply to the sale of goods between businesses. Sale of Goods Act 1930, helps us to understand the following things:

Why your claim is against the retailer, not the manufacturer When you can get your money back for a faulty product How to prove that a product was faulty when you bought it

4.0 Bibliography
1.

http://www.vakilno1.com/bareacts/saleofgoods/saleofgoods.ht m

2. 3. 4. 5. 6. 7. 8.

http://www.corecentre.co.in/Database/Docs/DocFiles/goods_a ct.pdf http://lawcommissionofindia.nic.in/1-50/Report8.pdf http://www.dateyvs.com/gener12.htm http://www.commonlii.org/in/legis/num_act/soga1930128/ http://www.knowledgebible.com/forum/showthread.php/3152The-Sale-of-Goods-Act-1930-(Act-no.-3-of-1930) http://www.advocatekhoj.com/library/bareacts/saleofgoods/ind ex.php?Title=Sale%20of%20Goods%20Act,%201930 www.dateyvs.com/gener12.htm