The sales of goods act 1930

1. 2. 3. 4. Meaning of sale and goods Conditions and warranties Transfer of property Rights of an unpaid seller

 The law of sale of goods was contained in chapter VII of the Indian contract Act. 1872 Contracts for the sale of goods are subject to the general legal principles applicable to all contracts, such as offer and its acceptance or other essential elements of a contract.

Contract of sale of goods

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

Sale and 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 the goods is to be transferred are fullfilled.

Essentials of a contract of sale

1. 2. Two parties: there must be two distinct parties i.e a buyer and the seller, to effect a contract of sale and they must be competent to enter into a contract. Goods: there must be some goods the property in which is or is to be transferred from the seller to the buyer. The goods which form the subject matter of the contract of sale must be movable. Transfer of immovable property is not regulated by the sale of goods Act. Price: the consideration for the contract of sale, called price, must be money. When goods are exchanged for goods, if is not a sale but a barter. Partly in money and kind is a contract of sale. All the essential elements of a valid contract.

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Distinction between sale and an agreement to sell

In a sale the property in the goods passes from the seller to the buyer immediately so that the seller is no more the owner of the goods sold. A sale can only be in case of existing and specific goods only. In an agreement to sell the transfer of property in the goods is to take place at a future time or subject to certain conditions to be fulfilled. It is mostly in case of future and contingent goods .

 Risk of loss falls on the buyer even though they are in the possession of seller. Seller can sue for price in case of breach, possession may be with seller.

Risk of loss is with seller even though goods are in the possession of buyer. Seller can only sue for damages though goods may be in the possession of the buyer.

Conditions and warranties

A stipulation in a contract of sale with reference to goods which are the subject thereof may be a condition or a warranty ( sec 12(1). Condition: a condition is a stipulation which is essential to the main purpose of the contract. It goes to the root of the contract, its non fulfillment upsets the very basis of the contract. If there is a breach of a condition, the aggrieved party can treat the contract as repudiated. Ex: truck which is now in Bombay should proceed!

warranty
Sec 12(3) a warranty is a stipulation which is collateral to the main purpose of the contract. It is not of such vital importance as condition is. If there is a breach of a warranty, the aggrieved party can only claim damages and it has no right to treat the contract as repudiated.

 Whether a stipulation in a contract of sale is a condition or a warranty depends in each case on the construction of the contract as a whole. The court is not guided by the terminology used by the parties to the contract. A stipulation may be a condition though called a warranty in the contract. ( sec 12(4)).

Difference between condition and warranty

Condition 1. Stipulation essential to the main purpose 2. Breach of condition, contract can be repudiated 3. A breach of condition may be treated as breach of warranty. Warranty 1. Stipulation collateral to the main purpose of the contract 2. Breach of warranty the aggrieved party can claim damages only 3. A breach of warranty, cannot be treated as a breach of a condition.

When conditions to be treated as warranty

Voluntary waiver of condition: where a contract of sale is subject to any condition to be fulfilled by the seller, the buyer may (a) waive the condition or (b) elect to treat the breach of the condition as a breach of warranty. If the buyer once decides to waive the condition he cannot afterwards insists on its fulfillment.

 2. acceptance of goods by buyer: where a contract of sale is not severable and the buyer has accepted the goods or part thereof, the breach of any condition to be fulfilled by the seller can only be treated as a breach of warranty. Unless there is an agreement to the contrary.

Express and implied conditions and warranties

Implied conditions Condition as to title: (a) in the case of a sale, he has a right to sell the goods and (b) in the case of an agreement to sell he will have a right to sell the goods at the time when the property is to pass. Sale by description: where there is a contract for the sale of goods by description, there is an implied condition that the goods shall correspond, there is an implied condition that the goods shall correspond with the description.

 Condition as to quality or fitness: the condition as to quality or fitness is implied where (a) the goods sold are such as the seller deals in the ordinary course of his business (b) the buyer relies on the sellers skill or judgment as to the fitness of the goods for any particular purpose (C) the buyer expressly or impliedly makes known to the seller that he wants the goods for that particular purpose. Condition as to merchantability: where goods are bought by description from a seller who deals in goods of that description , it means goods should be such as commercially saleable under the description by which they are known in the market at their full value.

 Condition implied by custom: an implied condition as to the quality or fitness for a particular purpose may be annexed by usage of trade Sale by sample: implied condition that the bulk shall correspond with the sample in quality, that the buyer shall have a reasonable opportunity of comparing the bulk with the sample, that the goods shall be free from any defect, rendering them un-merchantable. Condition as to wholesomeness; in the case of eatables and provisions, in addition to merchantability, there is another implied condition that the goods shall by wholesome.

Implied warranties
1. Warranty of quiet possession: if the buyer is any way disturbed in the enjoyment of the goods in consequence of the sellers defective title to sell, he can claim damages from the seller. 2. Warranty of freedom from encumbrances; the goods are free from any charge or encumbrance in favor of any third party. 3. Warranty as to quality or fitness by usage of trade. 4. Warranty to disclose dangerous nature of goods

Caveat emptor
Let the buyer beware In a contract of sale of goods the seller is under no duty to reveal unflattering truths about the goods sold. Therefore when a person buys some goods, he must examine them thoroughly. If the goods turn out to be defective or do not suit his purpose or he depends upon his own skill or judgment and makes a bad selection, he cannot blame anybody excepting himself.

Exceptions
1. 2. 3. 4. 5. Fitness for buyers purpose Sale under a patent or trade name Merchantable quality Usage of trade Consent by fraud