BBA 201 BL 6/18/2018 1
Introduction of Sale of goods Act, 1930
Scope of the Act
Sale Vs. Agreement to Sell
Essentials of a Contract of Sale
Classification of Goods
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INTRODUCTION
•The law relating to sale and purchase of goods, prior
to 1930 were dealt by the Indian Contract Act, 1872.
•In 1930, Sections 76 to 123 of the Contract Act was
repealed and a separate Act known as the Sale of
Goods Act, 1930 was passed.
• The Act came into force on 1 July, 1930
• Itextends to the whole of India, except Jammu &
Kashmir
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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.
The term „Contract of sale‟ is a generic term
and include both a sale and agreement to
sell.
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Sale – The property (ownership) of the goods
is transferred from the seller to the buyer; it
is called a sale [Sec 4 (3)].
Sales takes place when there is a transfer of
ownership in goods from the seller to the
buyer. A sale is an executed contract.
e.g. – X sells his car to Y for Rs. 10 lakh. If all
the essential elements of valid contract are
present.
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Contract of sale under which the transfer of
property in goods is to take place at a future date
or subject to some conditions thereafter to be
fulfilled.
e.g.-
A agree to sell certain goods to B. The goods are
on their way from London to Goa in a ship. The
ownership in the goods will pass to the buyer when
the goods come and the agreement is subject to
the condition that the ship arrives at port with the
goods.
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It deals with the „Sale‟ but not with „mortgage‟
(Which is dealt with under the Transfer of Property
Act, 1882) or „pledge‟ (Which is dealt with under
the ICA,1872).
The Act deals with „goods‟ but not with other
movable property e.g. Actionable claim and money.
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“Goods means every kind of movable property
other then actionable claims and money and
includes stock and shares, growing crops, grass
and things attached to forming part of land which
are agreed to be served before sale or under the
contract of sale.”
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The actionable claims are things which a person
cannot make use of, but which can be claimed by
him by means of a legal action.
A borrows Rs. 5000/- from B at 12% per annum
interest on 1st April, 2006 and promises to pay
back the amount with interest on 1st July,
2006. Till 1st July, 2006, the debt is an accruing
debt and is an actionable claim.
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Basis Sale Agreement to Sell
Contract A sale is an executed contract It is an executory contract
Transfer of The property in goods passes to There is no transfer of property
Property the buyer immediately at the to the buyer at the time of
time of making contract. contract.
Transfer of The property in the goods passes Since property does not pass to
Risk to the buyer and the risk also the buyer, the risk also doesn’t
pass to the buyer.
passes to the buyer.
Liability A loss or destruction of a goods The liability remains with the
is the liability of the buyer. seller where the transaction
only amounts to an agreement
to sell.
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From the definition, the following essentials of the
contract emerge:
1) There must be at least two parties: a sale has to
be bilateral because the property in goods has to
pass from one person to another. The seller and
the buyer must be different persons
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2) Transfer or agreement to transfer the ownership
of goods: In a contract of sale, it is the ownership
that is transferred (in the case of sale), or agreed to
be transferred (in the case of agreement to sell)
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• 3) The subject matter of the contract must
necessarily be goods: the sale of immovable
property is not covered under Sale of Goods Act.
• 4) Price is the consideration of the contract of sale:
the consideration in a contract of sale has
necessarily to be „money‟
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If goods are offered as the consideration for goods, it
will not amount to sale. It will be called a barter.
Where goods are sold for a definite sum and the price is
paid in terms of valued up of goods, that is sale.
To sum-up:
the Act applies only when the buyer pays by cash (or by
cheque, credit card, etc)
Payment by installments: in the case of sale of goods,
the parties may agree that the price will be payable by
installments
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• 5) All other essentials of a valid contract as per the
Indian Contract Act, 1872 must be present: the
parties to the contract must be competent to
contract, the consent of the parties must be free,
the object of the contract must be lawful and so
on.
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Goods
Existing Future Contingent
Goods Goods Goods
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a) Existing goods - Goods which are physically in
existence . Which are in seller‟s ownership or
possession, at the time of entering the contract of
sale are called „existing goods‟.
It can be a 3 types :
i)Specific goods - Goods identified and agreed
upon at the time of making a contract of sale are
specific goods.
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ii) Unascertained goods- The goods which are not
separately identified or ascertained at the time of
making contract are k/n as unascertained goods.
For example – 1. A agrees to sell to B one bag of
sugar out of the lot of one hundered bags lying in
his godown; it is sale of unascertained goods b/c it
is not known which bag is to be delivered.
2. Anthony, who owns a TV showroom, has 20 TV
sets and agrees to sell any one of them to Bharti.
The contract is for unascertained goods, since which
particular TV set shall become the subject matter of
sale is not individualized at the time of the contract
of sale.
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iii)Ascertained goods - When, out of a mass
or a lot of unascertained goods, the quantity
extracted for is identified and set aside for a
given contract. When a parts of the goods
lying in bulk are identified and earmarked for
sale such goods are termed as ascertained
goods.
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b) Future goods - Means goods to be manufactured
or produced or acquired by the seller after making of
the contract of sale. There can be an agreement to sell
only.
e.g. – X agrees to sell to Y all the crops to be grown at
his farm in Haryana during the year 2016 season for a
sum of Rs. 1 Lakh. This is an agreement to sell future
goods and not a sale.
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c) Contingent goods - The goods the acquisition
of which by the seller depends upon a contingent
event which may or may no happen.
For example- 1. X agrees to sell to Y all crops to be
grown at Z‟s farm in Haryana during the year 2016
season for sum of Rs. 1Lakh, if Z sells the same to
X. This is an agreement to sell contingent goods
b/c the availability of crops depends on its sale by
Z.
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Contract of sale is a contract where the seller transfers
or agree to transfer the property in goods to the buyer
for price.
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