ALIGARH MUSLIM UNIVERSITY

PROJECT ON TOPIC

DEFINATION AND CONCEPT OF SALE

SUBMITTED TO :- Azmat Ali

SUBMITTED BY:- Ilma Sabeel

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Introduction

The contract of the sale of goods is governed by The Sale of Goods Act, 1930. The Act

extends to the whole of India except the state of Jammu & Kashmir. Till 1930, all the

transactions related to the sale of goods was regulated by The Indian Contract Act, 1872. In

1930, Sections 76-123 were replaced by the Act of 1930. A contract for the sale of goods has

certain unusual features such as transfer of ownership of the goods, delivery of goods, rights

and duties of the buyer and seller, remedies for breach of contract, conditions and

warranties implied under a contract for the sale of goods, etc. These subjected to the

provisions of the Sale of Goods Act, 1930.

The Act deals with the subject-matter of movable property. This Act does not deal with the

sale of immovable property. The transaction relating to immovable properties, e.g., the sale,

lease, gifts, etc., are governed by a separate Act known as the Transfer of Property Act,

1882.

The Indian Act is based mainly on the (English) Sale of Goods Act,1893. In England, some

vital changes were made in the Sale of Goods Act regarding implied conditions and

warranties through supply of Goods (Implied terms) Act,1973 and Unfair Contract Act ,1977

and the reframing of Sale of Goods Act in 1979, to cope the changed conditions of trade

and business. It has been noted below that there is need for similar Amendments in India,

But the Indian enactments continues to remain unamended.

What is Contract of Sale: meaning and concept

exchange property. Section 4(1) defines the contract of the sale as a contract of the sale

of goods is a contract whereby the seller transfers or agrees to transfer the property in

goods to a buyer for a price .

The essentials to constitute a contract of the sale are as follows:

Two parties :

There must be two distinct parties i.e. a buyer and a seller, to effect a contract of the sale

ns a

states that a person who sells or agrees to sell goods.

Case law

Andhra Sugar Ltd. Vs State of A.P.

It has been held by the Supreme Court of India that in case of sale under the compulsion of a statute

, the consent is not deemed to be caused by the coercion ,undue influence ,fraud, misrepresentation

and mistake. In that case , if any canegrower offered to sell his sugarcane to a factory in certain zone

, the factory was bound to accept the order under the Andhra Pradesh Sugar( Regulation of Supply

and Purchase)Act, 1961.It was held that in such a case even though there was the legal

compulsionfor the factory to make the agreement,the validity of the agreement was not affected on

ground of absence of free consent, such as an agreement being a contract of sale within in the

meaning of the Section 4 of the Sale of Goods Act, the state could validly impose purchase tax on

the purchase of sugarcane.

Section 2(7) defines goods as:

Goods means every kind of movable property other than actionable claims and money; and

includes stock and share , 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.

There must be some goods, the property which is or is to be transferred from the seller to

the buyer. The subject-matter as to the goods under the Contract of Sale must be movable

property. This Act does not concern the immovable property as its subject-matter.

Case law

Association power co. Ltd. Vs Ram Taran Roy

In this case the Calcutta High court held that the electric energy included in the term

. The High court disagree with Pollock and Mulla, who considered the inclusion of

the term electrical energyin the term of Goods as doubtful.

Price

According to Section 2(10) , Price means the money the consideration for the sale of

goods.
The most important essential for the enforceability of the Contract of Sale of goods is the

price. The price can be termed equivalent to the consideration. In the absence of such price

or consideration, the transfer cannot be termed as a sale. The transfer by way of the sale

must be in exchange for a price. The payment of the price can be made in two modes:

Paid fully in cash; or

Paid partly and,

rest promised to be paid partly in future.

The price can be determined through an instrument of agreement between the parties

before the conveyance (transfer) of the property.

Transfer of Property (ownership) in the Goods :

In every contract of sale there is to be transfer of property in the goods from the seller to

the buyer . According to the Sale of Goods Act, property means

Transfer of general property

There are two types of property on the basis of its nature, i.e., general property and special

property. The subject-matter of the contract of Sale of Goods deals with the special

property. For the enforceability of such a contract, there must be a transfer of special

property from the seller to the buyer. For e.g., if A owns certain goods he has general

property in the goods. If he pledges them with B, B has a special property in the goods.

Essential elements of a valid contract

An offer,

An acceptance,

An intention to create a legal relationship, and

A consideration

Formalities of the contract of sale of goods

Except where specifically mentioned by the law, there is no prescribed form required to

draft a contract of the sale of goods. The agreement between the parties, i.e., the buyer and

the seller may be implied or may be expressed acknowledged by the conduct of the parties.

Section 5 of the Sale of Goods Act, 1930 describes as to how the contract of the sale of

goods can be framed. Therefore, the contract of the sale of goods can be made-

By an offer from the buyer to buy and seller to sell goods for a fixed consideration

mentioned in the agreement. Such an offer of buying or selling must have an acceptance of

the opposite party. The delivery of the goods can be executed in the following manner:

Immediate delivery of the goods; or

Immediate payment of the price or both; or

by delivery or payment in instalments; or

the delivery or payment or both to be postponed.

2. Subject to the provisions of any law for the time being in force, a contract of the 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 by the conduct of the parties.

There may be an immediate delivery of the goods; or

There may be an immediate payment of a price, but it may be agreed that the

delivery is to be made at some future date; or

There may be an immediate delivery of the goods and an immediate payment of the

price; or

It may be agreed that the delivery or the payment or both are to be made in

instalments; or

It may be agreed that the delivery or the payment or both are to be made at some

future date.

Important clauses in a contract of sale of goods

There are some important clauses that are pre-requisite conditions to constitute an

agreement for the contract of the sale of goods. These are as follows:

Title of documents

Title to a document differentiates it from the other documents. It makes it more specific as

to what and which subject-matter it deals with. It gives an identity to a document. Title the

document belongs to and who owns it or has the right to take control over it.

Name the parties to the contract

addresses of the parties must be mentioned therein to have the accountability and

made and entered into (date) between (name of the seller) located at (address of the seller)

and (name of the buyer) located at (address of the buyer).

Include the recitals

ntering into the contract.

Recitals act as elementary statements for the effective enforceability of the written agreement or

deed. They customarily appear at the beginning, and acts similar to the preamble, i.e., setting out

the aims and objectives. They

conditions and compliances to be fulfilled for the enforceability of the contract.

Describe the goods

The Sale of Goods Act,1930 only deals with the movable property. The goods must be described

clearly and definite. It must be defined as in quality and quantity both. Goods are defined under the

Section 2(7) of the said Act. Thus, to call an element to be goods, it must have the following

essentials:

Essentials

It must be a movable property;

it includes stock, shares, growing crops, grass, things attached to or forming part of the land;
Such a good must be agreed to be severed before the sale or under the contract of sale;It does not

include actionable claims and money.

State the time of delivery

There must be certain specific attributes as to the time and date of the delivery of the goods in the

contract of the sale of goods. Such a clause in the contract must be provided with a deadline as to

change in the delivery date or change of address.

For example, Seller shall deliver the goods to the buyer by (date) at location (address of delivery).

Buyer shall have the right to change the delivery date by providing written notice within 10 days in

advance.

Insert Warranties and Conditions

Section 12 of The Sale of Goods Act,1930 defines condition and warranty. A stipulation in a contract

of the sale with reference to goods may be a condition or a warranty. A condition is an arrangement

which is essential to achieve the main purpose of the contract. The breach of a condition must give

the right to abandon the contract which results in claiming the damages.

Contrarily, a warranty is an arrangement which is corroborative to the main purpose of the contract.

The breach of such a warranty must give rise to a claim for damages but such warranty can not take

away the right from the parties to reject and deny the acceptance of the goods. Warranties and

Conditions can either be expressed or implied.

The obligations of the buyer must be specified in the contract of the sale of goods as to the

payment, mode of payment, and provisions as to when goods are received. The provisions as to the

mode of payment can be:

The buyer can pay in instalments.

The buyer can pay half upon receipt and the rest within 30 days of receiving the goods.

Sometimes disputes may arise related to the receiving of the goods. The contract of the sale

Include Boilerplate Provisions

The provisions or the clauses customarily added at the end of a contract are known as boilerplates.

They are also known as miscellaneous provisions. These provisions play a vital role because they

affect the legal rights under the contract as well as all other clauses. These boilerplate provisions

include:

Rules on how the agreement will be interpreted,

Law governing the subject-matter of the contract,

The consequences of the invalid provisions in the contract,

Whether third parties are deemed to be third party beneficiaries of the agreement,

It includes notice provisions, merger provisions, severability clause, waiver provision,

and so on.

Add an arbitration clause

Arbitration is outside court dispute resolving resolution. In the case of differences in opinion

or disputes, one must have an arbitration clause inacted to its contract of sale of goods as a

solution to resolve the future contingencies. Arbitration is cheaper and requires less red-

settled by binding arbitration in the state of (name of state) or another location agreeable
to both parties. An Arbitration award may be confirmed in a court of competent

Finalizing of the agreement

Finalization of the agreement results in the enforceability of the clauses of the agreement.

Once an agreement is final, it becomes a contract. It binds the buyer and seller. An

agreement is finalized when signed by the parties to the contract. An agreement is finalized

by signing the authorized signatures of both the parties. For this purpose, an agreement

must have lines on either side of the last page of the document for the official and dated

signature of the parties.

The agreement of the sale of goods must undergo certain stages and procedure to become

a valid contract. Before entering into the contract or finalizing the contract, the parties must

check the credibility of the document and finalize it then. There is no strict format as to the

drafting of the contract of sale, it can be moulded as per the needs and requirements of the

parties.But there are certain clauses mentioned in this article which lays down paramount

structure for the important clauses of the contract of sale of goods.

There is no legal framework as to the contents of a contract of sale of goods but the

mentioning of certain clauses makes the contract stronger.