Sales of Goods Act, 1930
Sales of Goods Act, 1930
Sales of Goods Act, 1930
A condition can be termed as one of the crucial term in agreement of sale which is mention
by the buyer to the seller which can be implied or expressed. The buyer can cancel the
proposal in case of non- compliance with the condition mentioned by the seller. Condition
may be expressed or implied. If there is a breach of condition, then there is a right to
aggrieved party to treat the contract as repudiated. In case if the buyer had paid, then he is
also having the right to recover the price and can also claim the damages for breach.
For ex. If the buyer expressly mentions that good should be delivered before stipulated date,
then that date will be taken as condition as buyer expressly mentioned it at the time of
contract.
For example, Sohan wants to purchase a horse from Ravi, which can run at a speed of 50 km
per hour. Ravi shows a horse and says that this horse is well suited for you. Sohan 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. The conditions can be
further classified as follows.
Kinds of conditions
Expressed Condition
The dictionary meaning of the term is defined as a statement in a legal
agreement that says something must be done or exist in the contract. The
conditions which are imperative to the functioning of the contract and are
inserted into the contract at the will of both the parties are said to be
expressed conditions.
Implied Condition
There are several implied conditions which are assumed by the parties in
different kinds of contracts of sale. Say for example the assumption during
sale by description or sale by sample. Implied conditions are described
in Section 14 to 17 of the Sale of Goods Act, 1930. Unless otherwise agreed,
these implied conditions are assumed by the parties as if it is incorporated in
the contract itself. Let’s study these conditions briefly:
In Rowland v. Divall (1923), the party bought a second-hand motor car from
the former and paid for the same. After six months, he was deprived of it as
the seller had no title to sell the car. It was held that the aggrieved party is
entitled to recover the money.
1. That the actual products would correspond with the sample with
respect to the quality, size, colour etc.
2. That the buyer gets a reasonable opportunity to compare the goods
with the sample.
3. Further, the goods are free from any defect rendering them
unmerchantable.
For example, A company sold certain shoes made of a special kind of sole by
sample sale for the French Army. Later when the bulk was delivered it was
found that they were not made from the same sole. The buyer was entitled
to the refund of the price and damages.
Warranty
Warranty is the additional stipulation and a written guarantee that is
collateral to the main purpose of the contract. The effect of a breach of a
warranty is that the aggrieved party cannot repudiate the whole contract
however, can claim for the damages. Unlike in the case of breach of
condition, in the breach of warranty, the buyer cannot treat the goods as
repudiated.
Kinds of Warranty
Expressed Warranty
The warranties which are generally agreed by both the parties and are
inserted in the contract, it is said to be expressed warranties.
Implied Warranty
Implied warranties are those warranties which the parties assumed to have
been incorporated in the contract of sale despite the fact that the parties
have not specifically included them in the contract. Subject to the contract,
the following are the implied warranties in the contract of sale:
For eg: ‘X’ purchased a second-hand bike from ‘Y’. Unknown to the fact that
the bike was a stolen one, he used the bike. Later, he was compelled to
return the same. X is entitled to sue Y for the breach of warranty.
For eg: A purchases a horse from B if the horse is violent and then It is the
duty of the seller to inform A about the probable danger. While riding the
horse, A was inflicted with serious injuries. A is entitled to claim damages
from B.
Result of Breach of The whole contract may be Only damages can be claimed in
Contract treated as repudiated. case of a breach.
Remedies available
Repudiation, as well as
to the aggrieved Only damages can be claimed.
damages, can be claimed.
party
Transfer of Property
Types of Goods under the Act
Existing Goods
As per Section 6 of the Sale of Goods Act, 1930, those goods which are
present (in existence) at the time of formation of a contract are known as
existing goods. The existing goods can be further classified as:
Specific Goods
As per Section 2(14) of the Sale of Goods Act, 1930, specific goods are those
goods which are specifically identified and ascertained by the buyer which he
intends to buy at the time when the contract of sale is formulated.
For example, Deepak wants to sell his old guitar. He put an advertisement in
the local newspaper with its picture, make and other details. Rahul agrees to
buy the guitar and thereby formed a contract with Deepak. The guitar is a
‘Specific Good’ in this case.
Ascertained Good
Ascertained goods are not defined under the Sale of Goods Act, 1930 and
many jurists have considered specific Goods and ascertained Goods as alike.
However, ascertained goods can be called those goods which are specifically
selected from a large set of goods.
Unascertained Good
Unascertained goods are those goods which are not specifically identified by
the buyer at the time when the contract for sale is formulated.
For example, Deepak from his 300 oranges wants to sell 100 oranges;
however he doesn’t specify which oranges he wants to sell. This is called a
sale of unascertained goods.
Future Goods
As per Section 2(6) of the Sale of Goods Act, 1930, future goods have been
characterised as those goods which at the time of formation of the contract
will either be “manufactured, produced or acquired by the buyer”. There will
not be an actual sale in the sale of future goods, it will always be an
“agreement to sell”.
For example, Deepak has an orange grove with oranges in it. He agrees to
sell 500 oranges to a buyer once the oranges are ready for market. This is a
sale which will happen in the future. However, the goods have already been
identified along with the agreement to sell. Such goods are known as future
goods.
Contingent Goods
Contingent goods are a subtype of future goods. In contingent goods, the
sale happens in the future. The sale will always come with some contingency
clause in it. For example, if Deepak sells his oranges from his orange grove
when the trees are yet to produce oranges, then the oranges are contingent
good. This sale of contingent goods will be dependent on a condition that the
trees will produce oranges, which may or may not happen.
Where there is an existence of a contract for the sale of specific goods, the
property concerned in the transaction will only be passed to the buyer, if the
seller performs the necessary acts and omissions in order to put the goods in
a deliverable state. Also, it is mandatory for the seller to notify the buyer
regarding the alterations.
In order to summarize the example, the goods will only be transferred to “A”
if the manager has installed the operating system making the smart TV ready
for its use.
Where there is a contract for the sale of specific goods in a deliverable state,
the seller is undoubtedly bound to weigh, measure, test or do the necessary
demonstration or anything which is required in reference with the sale of
those particular goods. He’ll be doing this to ascertain the appropriate value
of the goods. The property in the goods will not pass until such
demonstration or particulars are done and the buyer has acknowledged it
thereof.
(a) The goods therein will only pass to the buyer if the buyer either portrays
his consent or acknowledges to the seller or does any act by which the
transaction would be adopted.
(b) The goods therein will only pass to the buyer if the buyer doesn’t express
his consent or acknowledgement to the seller that he intends to reject the
goods, however, holds the goods without giving a notice to the buyer then on
the expiration of time frame for the return of the goods or if time hasn’t been
fixed, then on the completion of a reasonable time, the property will be
passed to the buyer.
Example: “A” the seller of a precious necklace gives it to “B” the buyer on
“Sale or return” basis. B after observing the necklace finds it very beautiful
and put forth his consent on buying the necklace. In this case, the goods will
be transferred to the buyer. However, if the buyer doesn’t wish to give the
acknowledgement for the product then the goods shall be duly returned back
to B.
Who is a seller
The definition of the seller is given in Section 2(13) of the Sale of Goods Act,
1930. The seller can be defined as a person who agrees to sell goods.
Duties of seller
He should make an arrangement for the transfer of property to the
buyer.
He should check whether the goods are delivered properly or not.
He should give a proper title to the goods which he has to pass to
the buyer.
He should deliver the goods according to the terms of the
agreement.
He should ensure that the goods supplied should be agreed to the
implied condition and warranties.
He should keep the goods in a deliverable state and deliver the
goods when the buyer asks for it.
He should deliver the goods within a specific time fixed in the
contract.
He should bear all the expenses for which the good should be
delivered.
He should deliver the goods as said by the buyer in the contract in
an agreed quantity.
To deliver the goods in instalments only when the buyer wants.
He should make arrangements for the goods while they are in the
custody of the carrier.
Who is a buyer?
The definition of the buyer is given in Section 2(1) of the Sale of Goods Act,
1930. The buyer can be defined as a person who buys goods from the seller.
Delivery
Section 33 of the Sale of Goods Act, 1930 defines delivery as a voluntary
transfer of possession from one person to another. It is also the process of
transporting goods from a source location to a predefined destination. Cargo
(physical goods) are primarily delivered via roads and railroads on land,
shipping lanes on the sea and airline networks in the air.
Where the seller, after having sold the goods, agrees to hold them
as bailee for the buyer
Where the buyer, who is already in possession of the goods as bailee
of the seller, holds them as his own, after the sale, and
Where a third party, for example, a carrier/transporter, who holds
the goods, as bailee for the seller, agrees and acknowledges holding
them for the buyer.
If the quantity of goods is less as per the contract then the buyer
can reject the goods.
If the quantity of goods is more than that of contract than the buyer
can keep the number of goods as per the contract and reject the
rest or he may also reject the total.
If the goods ordered are mixed with the goods of different
descriptions( i.e. goods with a different title or different quality), the
buyer may reject the goods or accept the goods.
If there is no contract for the instalment delivery, the seller cannot
force the buyer to accept the instalment delivery.
The buyer has the right to check and examine the goods.
If the buyer once accepted the goods then he cannot reject the
goods.
If the buyer refuses to take the delivery then he would be
responsible for it.
According to Section 36(3) of the Sale of Goods Act 1930, if at the time of
delivery the goods are in possession of a third party then there will be no
delivery unless and until the third party tells the buyer that the goods are
being held on his behalf. This section would not create any impact on the
transfer of title of the goods.