Sale of Goods Act

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Training Session

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The Sale of Goods Act, 1930

 Sale of Goods Act

Preliminary

• Called The Sale of Goods Act 1930

• Dated 15.03.1930

• Extends to whole of India, except J&K

• Shall come into force on 01.07.1930

 Sale of Goods Act

Definitions

• Buyer - A person who buys or agrees to buy goods

• Delivery - Voluntary transfer of possession from one person to

another

• Deliverable state - when they are in such state that the buyer
would under the contract be bound to take delivery of them

• Document of title to goods includes a bill of lading, dock warrant,

warehouse keeper’s certificate, wharfingers’ certificate, railway
receipt, 5[multimodal transport document,] warrant or order for the
delivery of goods and any other document used in the ordinary
course of business as proof of the possession or control of goods,
or authorizing or purporting to authorize, either by endorsement or
by delivery, the possessor of the document to transfer or receive
goods thereby represented
 Sale of Goods Act

Definitions

• Fault - Wrongful act or default

• Future Goods - Goods to be manufactured or produced or acquired

by the seller after the making of the contract of sale

• Goods - every kind of moveable 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

• Insolvent - who has ceased to pay his debts in the ordinary

course of business, or cannot pay his debts as they become due,
whether he has committed an act of insolvency or not
 Sale of Goods Act

Definitions

• Mercantile agent - a Mercantile agent having in the

customary course of business as such agent authority either
to sell goods, or to consign goods for the purposes of sale,
or to buy goods, or to raise money on the security of goods

• Price - the money consideration for a sale of goods

• Property - The general property in goods, and not merely a

special property

• Quality of Goods includes their state and condition

• Seller - a person who sells or agrees to sell goods

 Sale of Goods Act

Definitions

• Specific Goods - goods identified and agreed

upon at the time a contract of sale is made

• Expressions used but not defined in this Act

and defined in the Indian Contract Act,
1872, have the meaning assigned to them in
that Act

• Un-repealed provisions of Indian Contract

1872 are applicable
 Sale of Goods Act

Contract of Sale

• Sale and Agreement to sell –

(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.

(2) A contract of sale may be absolute or conditional.

(3) 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 condition thereafter to be fulfilled, the contract is
called an agreement to sell.

(4) An agreement to, sell becomes a sale when the time elapses or the
conditions are fulfilled subject to which the property in the goods is to
be transferred.
 Sale of Goods Act

Formalities of the Contract

• Contract of sale how made –

(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 instalments, or that the delivery or
payment or both shall be postponed.

(2) Subject to the provisions of any law for the time being
in force, a 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
 Sale of Goods Act

Subject matter of the Contract

• Existing or future goods –

(1) The goods which form the subject of a contract of

sale may be either existing goods, owned or possessed by
the seller, or future goods.

(2) There may be a contract for the sale of goods the

acquisition of which by the seller depends upon a
contingency which may or may not happen.

(3) Where by a contract of sale the seller purports to

effect a present sale of future goods, the contract
operates as an agreement to sell the goods
 Sale of Goods Act

Subject matter of the Contract

• Goods perishing before making of contract – Where there

is a contract for the sale of specific goods, the
contract is void if the goods without the knowledge of
the seller have, at the time when the contract was made,
perished or become so damaged as no longer to answer to
their description in the contract

• Goods perishing before sale but after agreement to sell

- Where there is an agreement to sell specific goods,
and subsequently the goods without any fault on the part
of the seller or buyer perish 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
 Sale of Goods Act

The Price

• Ascertainment of price –

(1) The price in a contract of sale may be fixed by

the contract or may be left to be fixed in manner
thereby agreed or may be determined by the course
of dealing between the parties.

(2) Where the price is not determined in accordance

with the foregoing provisions, the buyer shall pay
the seller a reasonable price. What is a reasonable
price is a question of fact dependent on the
circumstances of each particular case
 Sale of Goods Act

The Price

• Agreement to sell at valuation –

(1) Where there is an agreement to sell goods on the terms

that the price is to be fixed by the valuation of a third
party and such third party cannot or does not make such
valuation, the agreement is thereby avoided:
Provided that, if the goods or any part thereof have been
delivered to, and appropriated by, the buyer, he shall pay a
reasonable price therefor.

(2) Where such third party is prevented 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
 Sale of Goods Act

Conditions and warranties

• Stipulations as to time - Unless a

different intention appears from the
terms of the contract, stipulations as
to time of payment arc not deemed to
be of the essence of a contract of
sale. Whether any other Stipulation as
to time is of the essence of the
contract or not depends on the terms
of the contract
 Sale of Goods Act

Conditions and warranties

• Condition and warranty –

(1) A stipulation in a contract of sale with reference to goods which are

the subject thereof may be a condition or a warranty.

(2) A condition is a stipulation essential to the main purpose of the

contract, the breach of which gives rise to a right to treat the contract
as repudiated.

(3) A warranty is a stipulation collateral to the main purpose of the

contract, the breach of which gives rise to a claim for damages but not
to a right to reject the goods and treat the contract as repudiated.

(4) Whether a stipulation in a contract of sale is a condition or a

warranty depends in each case on the construction of the contract. A
stipulation may be a condition, though called a warranty in the contract
 Sale of Goods Act

Conditions and warranties

• When condition to be treated as warranty –

(1) Where a contract of sale is subject to any condition to be fulfilled

by the seller, the buyer may waive the condition or elect to treat the
breach of the condition as a breach of warranty and not as a ground for
treating the contract as repudiated.

(2) 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 and not as a
ground for rejecting the goods and treating the contract as repudiated,
unless there is a term of the contract, express or implied, to that
effect.

(3) Nothing in this section shall affect the case of any condition or
warranty fulfilment of which is excused by law by reason of impossibility
or otherwise
 Sale of Goods Act

Implied undertaking as to title etc.

• In a contract of sale, unless the circumstances of the

contract are such as to show a different intention, there is –

(a) an implied condition on the part of the seller that, in the

case of a sale, he has a right to sell the goods and that, 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;

(b) an implied warranty that the buyer shall have and enjoy
quiet possession of the goods

(c) an implied warranty that the goods shall be free from any
charge or encumbrance in favour of any third party not declared
or known to the buyer before or at the time when the contract is
made
 Sale of Goods Act

Other provisions

• 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 with the
description; and, if the sale is by sample as well as by
description, it is not sufficient that the bulk of the
goods corresponds with the sample if the goods do not also
correspond with the description

• Implied conditions as to quality or fitness - Subject to

the provisions of this Act and of any other law for the
time being in force, there is no implied warranty or
condition as to the quality or fitness for any particular
purpose of goods supplied under a contract of sale, except
as follows:-
 Sale of Goods Act

Other provisions

(1) Where the buyer, expressly or by implication, makes known to the seller the particular
purpose for which the goods are required, so as to show that the buyer relies on the seller’s
skill or judgment, and the goods are of a description which it is in the course of the seller’s
business to supply (whether he is the manufacturer or producer or not), there is an implied
condition that the goods shall be reasonably fit for such purpose: Provided that, in the case of
a contract for the sale of a specified article under its patent or other trade name, there is no
implied condition as to its fitness for any particular purpose.

(2) Where goods are bought by description from a seller who deals in goods of that description
(whether he is the manufacturer or producer or not), there is an implied condition that the
goods shall be of merchantable quality: Provided that, if the buyer has examined the goods,
there shall be no implied condition as regards defects which such examination ought to have
revealed.

(3) An implied warranty or condition as to quality or fitness for a particular purpose may be
annexed by the usage of trade.

(4) An express warranty or condition does not negative a warranty or condition implied by this
Act unless inconsistent therewith
 Sale of Goods Act

Sale by Sample

(1) A contract of sale is a contract for sale by sample where

there is a term in the contract, express or implied, to that
effect.

(2) In the case of a contract for sale by sample there is an

implied condition—

(a) that the bulk shall correspond with the sample in quality;

(b) that the buyer shall have a reasonable opportunity of

comparing the bulk with the sample;

(c) that the goods shall be free from any defect, rendering them
un-merchantable, which would not be apparent on reasonable
examination of the sample
Sale of Goods Act