Sale of Goods Act, 1930

THE SALE OF GOODS ACT, 1930
{Originally part of the Indian Contract Act,1872}
{Practical Aspects}
“Goods” under the Sale of Goods Act, 1930
Meaning :
Movable Goods
Other than actionable claims and Money
Includes-
Stock
Shares
Growing crops
Grass
Things attached to or forming part of Land that can be severed (removed)
Example: the bench that you sit on in the class room is a movable good and shall
be governed by this act however the class in which the bench is kept cannot be
moved and can not be severed and hence will not be governed by this act.
Types of Goods :
1. Existing Goods
Goods which are either owned or possessed by the seller at the time of the
contract.
• Specific goods
Goods which are identified and agreed upon at the time of the contract of sale.
• Generic or unascertained goods
Goods which are not specifically identified but are indicated by description.
Example: If a merchant agrees to supply a radio set from his stock of radio sets, it
is a contract of sale of unascertained goods because it is not known which set will
be delivered. As soon as a particular set is separated or identified for delivery and
the buyer has notice of it, the goods are ascertained and become specific goods
2. Future Goods
Future goods are goods to be manufactured or produced by the Seller after the
making of the contract of sale.
Example: A agrees to sell all the mangoes which will be produced in his garden
next season. This is an agreement for the sale of future goods.
Conditions and Warranties:
• 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 or
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 which will either be a condition or
warranty
• 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.
Conditions :
If the stipulation forms the very basis of the contract or is essential to the main
purpose of the contract, it is a condition.
If the seller fails to fulfil a condition, the buyer may
• treat the contract as repudiated
• refuse the goods
• if he has already paid for them, recover the price
• claim damages
Example: A wants to purchase a horse from B, which can run at a speed of 50 km
per hour. B shows a horse and says that this horse is well suited for you. A buys the
horse. Later on, he finds that the horse can run only at a speed of 30 km/hour. This
is the breach of condition as the requirement of the buyer is not fulfilled.
Warranties :
If the stipulation is collateral to the main purpose of the contract, i.e., is a subsidiary
promise, it is a warranty. If the seller does not fulfil a warranty, the buyer must
accept the goods (cannot repudiate the contract) and claim damages for
breach of warranty.
Example: A wants to purchase a horse from B, which is warranted to be quiet. A
buys the horse. Later on, he finds that the horse is a little vicious. This is the breach
of warranty as the stipulation made by the seller was only subsidiary.
Difference between Sale and Agreement to Sale (ATS):
Basis for comparison Sale ATS

Meaning Parties to contract agree Parties to contract agree
to exchange the goods for to exchange the goods for
a price immediately a price at a future
specified date
Type Executed Executory
Nature Absolute Conditional
Title Transferred from Seller to Title remains with the Seller
Buyer
Consequences of Responsibility of Buyer Responsibility of Seller
subsequent loss or
damage
Insolvency of Buyer Nominee/Receiver of the Nominee/Receiver of the
Buyer has to honor theBuyer can refuse to honor
obligation the obligation
Example X’ sold 10 bags of Wheat to ‘X’ agrees to sell 10 bags of
‘Y’ against payment of Rs. wheat to ‘Y’ for Rs.3,000 at
3,000.4 a future date
Difference between Sale and Hire Purchase (HP) Agreement

Basis for comparison Sale HP
Meaning Parties to contract agree Hire Purchase refers to a
to exchange the goods for form of purchase in which
a price immediately the buyer acquires the
asset by making down
payment, however, the
entire purchase price of
the asset can be paid over
the stipulated time through
periodical instalments.
Payment Lumpsum Installments
Title Transferred from Seller to Title remains with the Seller
Buyer till all the installments are
paid
Termination Buyer can not terminate Hirer can terminate the
the contract contract at any stage
Difference between Sale and Contract for Work and Materials
Basis for comparison Sale HP
Meaning Parties to contract agree Contract of Work and
to exchange the goods for Materials involves exercise
a price immediately. This isof skill and labour by one
essentially delivery of party in respect of material
goods. supplied by other party.
Goods Primary to the contract Subsidiary to the contract
Example Purchasing a shirt from aGoing to the
store tailor/boutique and asking
for the customized
clothing
Case laws:
Helby v. Mathews
B hires a piano from H on an agreement that B would pay €20 per month as the
rent. It is agreed that if B pays the rent for 36 months the piano would become his
property after the end of 36 months. It is provided that B can return the piano at
anytime and he need not pay the rent anymore. This is a higher purchase
agreement as opposed to a contract of sale.
Robinson v. Graves
G commissioned R an artist to paint a portrait for 250 guineas. G supplied the
canvas and other material. It was held that the contract was for work and
materials as opposed to the sale because the substance of the contract was the
artist’s skill.

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Sale of Goods Act, 1930

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THE SALE OF GOODS ACT, 1930

{Originally part of the Indian Contract Act,1872}

Basis for comparison Sale ATS

Difference between Sale and Hire Purchase (HP) Agreement

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