The Contract of Sale

Definition:
Section 4(1) of Sale of Goods Act defines a

contract of sale as a contract whereby a seller transfers or agrees to transfer the property in goods to the buyer for a price. Includes Sale and agreement of Sell

Essentials of a contract of Sale

Two parties- buyer Sec.2(1),seller Sec.2(13) Goods Price or Money consideration

Transfer of Property general

Essential elements of a valid contract

TYPES OF GOODS
1) EXISTING GOODS: Specific goods Ascertained goods Unascertained goods
2) FUTURE GOODS

3) CONTIGENT GOODS

Sale and agreement to selldistinction

Transfer of property Type of goods a)Existing specific, ascertained unascertained c) Future goods d) contingent goods

Risk of loss
Consequences of breach Right to re-sell

General and particular property

Insolvency of buyer Insolvency of seller

Sale and hire-purchase agreement

Ownership
Position Termination of contract Payment

 CONDITION[SEC-12(2)]-: Condition defines as a

stipulation essential to the main purpose of the contract , the breach of which gives rise to a treat the contract as repudiated
WARRANTY[SEC-12(3)]-: Warranty is defined as a

stipulation collateral to the main purpose of the contract, the breach of which gives rise to claim for but not to a right to reject the goods & treat the contract as repudiated

EXPRESS & IMPLIED CONDITIONS & WARRANTIES

EXPRESS CONDITIONS & WARRANTIES-:They are

said to the express when the terms of the contract expressly provide to them IMPLIED CONDITIONS & WARRANTIES-:They are said to be implied when the laws deems their existence in the contract even without their actually have been put in contract

IMPLIED CONDITIONS
CONDITION AS TO TITLE(S-14) ex- stolen car SALE BY DECCRIPTION (S-15) ex- 100% cotton shirt QUALITY OR FITNESS FOR BUYER PURPOSE(S-16 (1) ) CONDITION TO MERCHANTABLE QUALITY (S-16 (2) )

CONDITION AS TO WHOLESOMENESS(eatables &provisions) CONDITION IN THE CASE OF SAMPLE (S-17)

IMPLIED WARRANTIES
WARRANTY OF QUIET POSSESION [SEC-14(b)]
WARRANTY OF FREEDOM FROM ENCUMBRANCE [SEC-14(c) ] WARRANTY TO DISCLOSE DANGEROUS NATURE OF GOODS CAVEAT EMPTOR Let the buyer beware

Rights of an Unpaid Seller

Who is an unpaid seller? 1) The whole of the price has not been paid 2) A bill of exchange or other negotiable instrument has been received as a conditional payment and the condition on which it was received has not been fulfilled by reason of the dishonor of the instrument or otherwise (Sec.45(1))

Against the goods

Against the buyer personally

Rights of an unpaid seller against the goods

Right of lien [Secs46(1)(a) and 47 to 49] A lien is a right to possession of goods until payment of the price. It is available to the unpaid seller of the goods who is in possession of them.

Right of stoppage in transit [sec. 46(1) (b) and 50 to 52]

It is the right of stopping the goods in transit after the

unpaid seller has parted with the possession of the goods. It is available to the unpaid seller as1) when the buyer becomes insolvent 2) when the goods are in transit[sec.50]

How stoppage of transit is effected [sec.52]

By taking actual possession of the goods or
By giving notice of his claim to the carrier or other

bailee in whose possessions the goods are

Right of re-sale[sec.46(1) (c)] &54

1) 2)

The unpaid seller can re-sell the goodsWhere the goods of perishable nature; or Where he gives notice to the buyer of his intention to re-sell the goods & the buyer does not within a reasonable time pay the price.

Rights of an unpaid seller against the buyer personally

These rights of the seller against the buyer are

called rights in personam. The rights in personam are as follows: Suit for price(sec.55) a) where property has passed b) where property has not passed

Suit for damages for non-acceptance of goods(sec.56) Repudiation of contract before due date(sec.60) Suit for interest [sec 612(a)]

TRANSFER OF PROPERTY
Transfer of property in goods from seller to buyer is the main object of a contract of sale Property in goods means the ownership of goods Possession of goods refers to the custody or control of goods

Rules for ascertaining when the property in goods passes to the buyer

1.Specific goods (sec 20-22) - Passing of property at the time of contract 2. Unascertained goods The ownership does not get transferred unless the goods are ascertained.

3.Goods sent on approval or on sale or return (sec.24) - Signifies his approval to the seller - Does any other act adopting the transaction Eg: pledging jewellery - Does not signify his acceptance

Performance of Contract
Performance of a contract of sale means as regards the

seller, delivery of the goods to the buyer, and as regard the buyer, acceptance of the delivery of the goods and payment for them, in accordance with the terms of the contract of sale[Sec. 31] If the contract contains any special terms as to delivery and acceptance, these must be compiled with. If there are no terms in the contract to this effect , delivery of goods and payment of the price are concurrent condition, that is, both these must take place at the same time as in, for instance, a cash sale over a shop counter[Sec. 32]

Delivery of Goods
Delivery means voluntary transfer of possession of

goods from one person to another Delivery goods may be

Actual delivery Symbolic delivery Constructive delivery or delivery by attornment

Rules as to delivery of goods

1.
2. 3. 4. 5. 6. 7. 8. 9.

Mode of delivery Delivery and payment-concurrent condition Buyer to apply for delivery Place of delivery Time of delivery Goods in possession of a third party Cost of delivery Delivery of wrong quantity Instalment deliveries

Auction Sales
Auction sale is a mode of sale where different buyers

come to purchase the goods, and the goods are sold to the person who is ready to pay the highest price The auctioneer who sells the goods by auction is an agent of the seller Normally the auctioneer gives wide publicity to the auction and fixes a time and place for it

The various rules regarding auction sale are as follow:

Goods put up for sell in lots
Completion of sale Right of seller to bid Fraudulent sale Auction sale with upset or reserve price (minimum

price that is fixed by the seller) Knock out or agreement not to bid against each other. Damping illegal act dissuading the intending purchaser from bidding