SALE OF GOODS ACT

Sale of Goods Act was passed in 1930.

It 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. Contract of Sale: Sec. 4(1). - 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. A contract of sale may be absolute or conditional.

 ESSENTIALS OF CONTRACT OF SALE

It is contract i.e. all requirements of contract must be fulfilled Two parties: Contract is between buyer and seller Transfer of property : Transfer of property from seller to Buyer. The subject matter of the contract must be goods Sale should be for price It includes both sale and agreement to sell No formalities to be observed.

 Buyer - means a person who buys or agrees to buy goods. [section 2(1)]. Seller- means a person who sells or agrees to sell goods. [section 2(13)].

 Transfer of property - Property means the general property in goods, and not merely a special property. [section 2(11)] General Property means full ownership. Thus, transfer of general property is required to constitute a sale. Special property means only the possession and not the ownership. If goods are obtained by a person for hire, lease, hire purchase or pledge, it becomes special property and transfer of it is not a sale.

 POSSESSION AND PROPERTY Property and Possession are not synonymous. Transfer of possession does not mean transfer of property. e.g. - if goods are handed over to transporter or godown keeper, possession is transferred but property remains with owner. Similarly, if goods remain in possession of seller after sale transaction is over, the possession is with seller, but property is with buyer.

 Goods Sec. 2(7) 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. Actionable claims means which can be enforced by legal action or suit eg.Book Debt, Bill of exchange or promissory note.

KINDS OF GOODS : Goods form the subject-matter of a contract of sale, Goods may be classified into the following types: Existing goods: Goods which are physically in existence and which are in sellers ownership and or possession, at the time of entering the contract of sale are called existing goods. The existing goods may again be either specific or unascertained Specific goods: goods identified & agreed upon at the time of the making of the contract or sale are called specific goods(sec 2(14)), it may be noted that in actual practice the term ascertained goods is used in the same sense as specific goods

eg. Where A agrees to sell to B a particular radio bearing a distinctive number, there is a contract of sale of specific or ascertained goods Unascertained goods: the goods which are not separately identified or ascertained at the time of the making of the contract. They are indicated or defined only by description, eg. if a agrees to sell to B one bag of sugar out of the lot of one hundred bags lying in his godown, Future goods: goods to be manufactured, produced or acquired by the seller after the making of the contract of sale eg. A agrees to sell all mangos which he grows next year in his garden to B Contingent goods: goods, the acquisition of which by the seller depends upon an uncertainty of contingency eg: A agrees to sell to B a specific rare painting provide he is able to purchase it form its present owner,

An Agreement to Sell Where the transfer of property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called an Agreement to sell it is an executory contract and refers to a conditional sales. Contract of sale of goods can be made by mere offer and acceptance by the seller or the buyer, neither payment nor delivery is necessary at the time of making the contract of sale. Eg. where articles are exhibited for sale and the customer picks up item and the sales assistant packs it up, there has resulted a contract of sale of goods by the conduct of the parties

Distinction between Sale and Agreement to Sell

Sale
Sale: sale is an executed contract,

Agreement to sell
Agreement of sell is an executory contract,

Since the ownership has passed to the In case of breach , the seller can only buyer, the seller can sue the buyer for sue for damages. the price of the goods, if the latter makes a default in payment It creates a right in rem, i.e., against the whole world In case of loss of goods, the loss will fall on the buyer, even though the goods are in the possession of the seller. It is because the risk is associated with ownership It creates a right in personam, i.e., against specified person only. The loss in this case shall be borne by the seller, even though the goods are in the possession of the buyer.

Sale
In case , the buyer pays the price & the seller thereafter becomes insolvent, the buyer can claim the goods form the official receiver or assignee, as the case may be If the buyer becomes insolent without paying the price, the ownership having passed to the buyer, the seller shall have to deliver the goods to the official receiver or assignee, as the case may be , expect where he has a lien over the goods

Agreement to Sell
In this case, the buyer cannot claim the goods but only a rateable dividend for the money paid from the official receiver. Under this, the seller can refuse to deliver the goods to the official receiver or assignee, as the case may be.

Distinction between Sale and Hire Purchase

Points of Distinction Sale Hire Purchase

Transfer of property in goods

In sale, property in the goods is transferred to the buyer immediately at the time of contract.

In Hire Purchase, property in the goods passes to the hirer upon payment of the last installment

Position of buyer

The position of the buyer The position of the hirer is that of the owner of the is that of a bailee till he goods pays the last installment The buyer cannot terminate the contract & is bound to pay the price of the goods The hirer, may terminate the contract by returning the goods to its owner without paying remaining installment

Power of terminate the contract

Points of Distinction

Sale

Hire Purchase

Tax Payable

Trade tax is levied Trade tax is not at the time of the levible until it turns contract into a sale. Hire purchase agreement is bailment plus agreement to sell.

Nature of contract Contract of sale includes both sale & agreement to sell

 Price - Sec. 2(10) Price means the money or consideration for a sale of goods. Consideration is required for any contract. However, in case of contract of sale of goods, the consideration should be price i.e. money consideration.