J K SHAH CLASSES C.A.

FOUNDATION - LAW
kg on 10.11. 2006 rose to ` 50 per kg as on 4.12.2006 and finally to ` 53 per
kg, on 09.12.2006. The answer to the problem is that
1. Mr. Ramaswamy can repudiate the contract on 04.12.2006 and can
claim damages of ` 10 per kg viz. ` 1, 00,000.
2. He could wait till 09.12.2006 and claim ` 130,000 i.e. ` 13 per kg.
3. If the Government, in the interim period i.e. between 04.12.2006 and
09.12. 2006 imposes a ban on the movement of the commodity to
arrest rise of prices, the contract becomes void and Mr. Ramaswamy
will not be able to recover any damages whatsoever.

UNIT 6: CONTINGENT & QUASI CONTRACTS

Ans.1. Section 69 of the Indian Contract Act, 1872, provides that "A person who is
interested in the payment of money which another is bound by law to pay,
and who therefore pays it, is entitled to be reimbursed by the other. In the
given case Y, in order to prevent the sale and the consequent termination of
his own lease, pays the Government, the sum due from X. That means Y
has made the payment of lawful dues of X in which Y had an interest.
Therefore, Y is entitled to get the reimbursement from X. Hence, X is bound
to make good to Y the amount so paid.

Ans.2. As per Section 72 of Indian Contract Act, 1872, a certain amount of money is
paid or something is delivered to a person by mistake or under coercion. In
such cases, the person receiving the money or goods must repay or return
the same to the person who has paid or delivered by a mistake or under
coercion.
In the given question, A under a mistaken impression gives some money into
B's hand believing him to 'C. He can obtain the return of money

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CHAPTER 2 - THE SALE OF GOODS ACT, 1930

UNIT 1: FORMATION OF CONTRACTOF SALE

• INTRODUCTION :

It came into force on the 1st of July, 1930.

It is applicable to whole of India except Jammu & Kashmir.

The Law relating to this statute was contained in the Chapter VII of the
Indian Contract Act, 1872.

Where the Sale of Goods Act is silent on any point, the general principles of
the law of contract apply.

• CONTRACT OF SALE

Sale Agreement to sell

(Executed) (Executory)
The term ‘contract of sale’ is defined in Section 4 (1) of the Sale of Goods Act, as under :
“A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer
the property in the goods to the buyer for a price. “

• DEFINITIONS
1. Buyer :
“Buyer means a person who buys or agrees to buy goods.” [Sec. 2(1)]
2. Seller :
“Seller means person who sells or agrees to sell goods.” [Sec. 2(13)]
3. Goods :
“Goods” means every kind of movable property
other than actionable claims and money; and
includes stocks and shares,
growing crops, grass and things attached to or forming part of the land
which are agreed to the severed before sale or under the contract of sale.
[Sec. 2 (7)].

An actionable claim is a claim to any debt. For example: a money
debt, book debts, etc.

Money here means legal tender of money, i.e. the
recognised circulation in the country; but not old rare coins.

Things attached to the earth are not movables, but trees,
growing crops which can be easily severed from the earth
before sale. Fruits, vegetablesand flowers which can be
separated from the trees, are included in ‘goods’.

Livestock i.e. cows, buffaloes, cats etc are ‘goods’.

Patents, copyrights, goodwill, trade-marks, are all
considered goods which can be the subject matter of a
contract.

A ship has also been considered to come within the
definition of the word “goods”. Similarly water, gas and
electricity are included in the definition, though some writers
doubt if they can be classed among “goods”.

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As per English law, “shares and stock” are not treated as

“goods”.

To conclude, everything movable is goods, except the
following:-
1. Money
2. Actionable Claims
3. Immovable assets
4. Services

Classification of Goods:

Existing Goods Future Goods Contingent Goods

Goods which are Goods which are yet Acquisition of such

already in existence to be manufactured goods depends upon a
at the time of in future. contingency which may
contract of sale or may not happen.
Example:A contracts
to sell to B all the Example:A agrees to sell
apples which will be to B a certain car
produced in his garden provided he is able to
next year
purchase it from its
present owner.

Specific/Ascertained General /Unascertained

Goods Goods

Goods which are Goods which are not

identified and agreed specifically identified but
upon at the time of a indicated by description at
contract the time of the Contract

Example:A particular Example: Any 1 pen out of

painting 50 pens

4. Price
 “Price’ means the money consideration for a sale of goods.” [Sec. 2 (10)].
 No sale can take place without a price.
 Therefore,
a. Exchange of goods for goods will not be considered as sale
b. Gift of goods will not be considered as sale
c. Exchange of goods for goods along with price will be considered as
sale
5. Property:

General property Special property

(ownership) (interest)

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But in Sale Of Goods Act, ‘property’ means the general property in goods and not merely
a special property
Example: A who owns the goods pledges them to B, then A has the general property in
the goods, while B has a special property or interest in them.

6. Documents showing Title to Goods/ Documents of Title to Goods

It is a document which It is a document which is used as

shows the ownership of proof of the possession or control of
goods. goods.

It includes share It includes a Bill of lading, Dock-

certificate, RC book of warrant, Warehouse keeper’s
car, etc Certificate, Wharfinger Certificate,
Railway Receipt

7. Mercantile Agent:
“Mercantile Agent’ means an agent having in the customary course of business as
such agent, authority either to sell goods, or to consign goods for the purpose of
sale, or, to buy goods, or to raise money on the security of goods.” [Section 2(9)].
If a person is not carrying on business as such agent, he would not fall under this
definition. Thus, a contractor, a warehouseman, a carrier or a servant and a friend
would be excluded.

8. Delivery:
“Delivery’ means voluntary transfer of possession from one person to another”
[Sec. 2 (2)].Therefore, in case of theft, there is no delivery, though there is a
transfer of possession.

Actual delivery Symbolic delivery Constructive delivery:

When the goods are When there is a When it is affected

actually physically delivery of a thing in without any change in
delivered to the token of a transfer of the custody or actual
buyer. something else possession.

Example: Handing Example: Where a

over car keys, handing warehouseman holding
over documents of title the goods of A agrees
to goods to hold them on behalf
of B, at A’s request.

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• ESSENTIAL ELEMENTS OF A VALID CONTRACT OF SALE

Following are the essential elements of a valid contract of sale:
1. All the requirements of a valid contract must be fulfilled:
A contract of sale must fulfil all the requirements of a valid contract, e.g.,
free consent, consideration, competency of the parties, lawful object and
consideration. If any of the essential elements of a valid contract is missing
then the contract of sale will not be valid.
2. There must be two parties to the contract of sale:
There must be two parties, one seller and the other buyer. The reason for
the same is that in a contract of sale, the ownership of the goods has to
pass from one person to another.
3. There must be some goods as a subject-matter:
The ‘goods’ as defined in Section 2 (7) of the Sale of Goods Act.
4. The property in the goods must be transferred to the buyer:
The term ‘property’ in the goods means the ownership of the goods. In
every contract of sale, the ownership of the goods must be transferred by
the seller to the buyer, or there should be an agreement by the seller to
transfer the ownership to the buyer. The term ‘property’ here means the
general property, i.e., all ownership rights of the goods, and not merely a
special property, i.e., limited rights such as right of a Pawnee.
5. There must be some price for the goods:
The goods must be sold for some price. The term ‘price’ is defined in
Section 2 (10)
6. A contract of sale can be absolute or conditional [Section 4(2)].

• DISTINGUISH BETWEEN
1. SALE AND AGREEMENT TO SELL

SALE AGREEMENT TO SELL

1.Transfer of property: the 1.Transfer of property: In
property in goods passes from agreement to sell, the ownership of
the seller to the buyer the property will pass from the seller
immediately to the buyer at some future time or
on fulfilment of some conditions.
2.Nature of contract: A sale is 2.Nature of contract: An agreement
an executed contract to sell is an executory contract

3. Consequences of Breach by 3. Consequences of Breach by buyer :

buyer : In a sale, if the buyer fails to In an agreement to sell, the seller can
pay for the goods, the seller can: only sue for damages for breach of
i. Sue him for recovery of price contract
ii. Claim damages

4. Consequences of Breach by 4. Consequences of Breach by

seller :In a sale, if the seller defaults, seller:In the case of an agreement to sell,
i.e. commits a breach, the buyer can: if the seller commits a breach, the buyer
1. Claim delivery of the goods from can only claim damages.
third party
2. Sue for damages

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5. Transfer of risk:In a sale, if the 5. Transfer of risk: In an agreement to

goods are destroyed, the loss falls on sell, if the goods are destroyed, the loss
the buyer even though they are in the falls on the seller, even though they are in
possession of the seller. the possession of the buyer.

6. Subsequent destruction: A 6. Subsequent destruction: Such loss

subsequent loss or destruction of the or destruction is the liability of the seller.
goods is the liability of the buyer.

2. SALE AND HIRE- PURCHASE

SALE HIRE-PURCHASE
1. Property in the goods is 1. The property in goods passes to the
transferred tothe buyer immediately hirerupon payment of the last instalment.
at the time ofContract.
2. The position of the buyer is that of 2. The position of the hirer is that of a
anOwner of the goods. baileetill he pays the last instalment.
3. The buyer cannot terminate the 3. The hirer may, if he so likes, terminate
contractand is bound to pay the price the contract by returning the goods to its
of thegoods. owner without any liability to pay the
remaining instalments.
4. The seller takes the risk of any 4. The owner takes no such risk, for if the
lossresulting from the insolvency of hirer fails to pay an instalment the
the buyer. ownerhas right to take back the goods.
5. The buyer can resell the goods. 5. The hirer cannot resell the goodstill the
last instalment.
6. Tax is levied at the time of the 6. Tax is not leviable until it eventually
contract. ripens into a sale.

3. SALE AND BAILMENT

SALE BAILMENT
1. The property in goods is 1. There is only transfer of possession of
transferred fromthe seller to the goods from the bailor to the bailee for
buyer. anyof the reasons like safe custody,
carriage,etc.
2. The return of goods in contract of 2. The bailee must return the goods to
sale isnot possible. thebailor on the accomplishment of
thepurpose for which the bailment
wasmade.
3. The consideration is the price in 3. The consideration may be gratuitous
terms ofmoney. ornon-gratuitous.

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• BARTER AND EXCHANGE

Barter:
Where goods are transferred for goods, the transaction is one of a ‘barter’ and not
sale, i.e. wheat is given in exchange of rice.
Exchange :
Where money is exchanged for money, the transaction is one of ‘exchange’ and
not sale, i.e. 100 rupee note is exchanged for 2 notes of Rs. 50.

• SALE AND CONTRACT FOR WORK AND LABOUR

A contract of sale has to be distinguished from a contract for work and labour. The
contract of sale contemplates the delivery of goods, whereas in contract for work
and labour or materials, the contract is for the exercise of the skill and labour, and
delivery of goods is only subsidiary.
Example:G commissioned R, an artist to paint a portrait and supplied the canvas
and the paint. Held, it is a contract for work and labour and not one for the sale of
goods.

• FORMATION AND MODES OF A CONTRACT OF SALE

A contract of sale is made by an offer to buy or sell by one person, and the
acceptance of such offer by another person. And it may be made in anyone of the
following modes [Section 5 (1)]:
1. There may be immediate delivery of goods, but the price to be paid at some
future date.
2. There may be immediate payment of price, but the delivery to be made at
some future date.
3. There may be immediate payment of price and the immediate delivery of
goods.
4. The price and delivery of the goods may be postponed.
5. The price and delivery of the goods may be agreed to be made in
instalments.

 It may be noted that no particular form is necessary for the making of

a contract of sale.
 It may be in any form, e.g., a contract of sale may be made
(a) In writing, or
(b) By words of mouth, or
(c) Partly in writing and partly by words of mouth, or
(d) May be implied from the conduct of the parties.
However, if any particular mode is prescribed by any law, then the contract
of sale must be made in that particular mode [Section 5 (2)].

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• EFFECT OF DESTRUCTION OF GOODS

Goods are destroyed Goods are destroyed Goods are destroyed

before the contract of after agreement to after the contract of sale
sale sell but before sale
Contract is already
Agreement is void Contract becomes executed
(Risk of goods is with void (Risk if goods is with the
the seller) (Risk if goods is with buyer)
the seller)
*Aggrieved party can
claim damages

• PRICE AND MODES OF FIXING THE PRICE

The price means the money consideration for the sale of goods [Section 2 (10)].
Price may be fixed in any of the following modes provided in Section 9:
1. The fixation of price by the contract of sale [Section 9 (1)]:
The price may be expressly fixed the contract of sale. The parties may fix
any price they like.
2. The fixation of price in a manner provided in the contract of sale
[Section 9 (1)]:
The contract of sale may provide for some manner in which ‘price is to, be
fixed. In such cases, the price may be fixed in a manner provided in the
contract.
3. The fixation of price by course of dealings [Section 9 (1)]:
Sometimes, the customs or usage of trade provides certain principles for the
determination of the price. In such cases, the price may be determined from
the course of dealings between the parties.
4. The fixation of a reasonable price [Section 9 (2)]:
Sometimes, none of the above principles is applicable. In such cases, the
buyer shall pay to the seller a reasonable price. The term ‘reasonable’ price
is a question of fact which depends on the circumstances of each particular
case.

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5. The fixation of price by third party [Section 10]:

 The parties may agree to sell and buy goods on the terms that the
price shall be fixed by the valuation of a third party.
 However, if such third party fails to make the valuation, the contract
becomes void. But if the buyer has received the goods and has
appropriated them, he becomes bound to pay reasonable price to the
seller.
 Sometime, the third party is influenced or prevented by the buyer or
the seller from fixing the price. In such cases, the innocent party may
recover damages from the defaulting party.
Example:
A agreed to sell his 100 bags of rice to B at a price to be fixed by C. But C
failed to fix the price. In this case, the agreement becomes void on C’s
failure to fix the price.
Example:
A agreed to sell his 100 quintals of wheat to B at a price to be fixed by C. C
is willing to value wheat and fix the price. But, A by his wrongful acts,
prevents C from making the valuation of the goods. In this case, B can claim
damages from A.

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UNIT 2: CONDITIONS AND WARRANTIES

• INTRODUCTION :
In every contract of sale of goods there are certain stipulations made with
reference to goods which are the subject-matter thereof. Such stipulations differ in
character and importance. The clause divides stipulations into conditions and
warranties.
Condition:
“A condition is a stipulation essential to the main purpose of the contract, that
breach of which gives a right to treat the contract as repudiated.”
Warranty:
“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 a right to reject the
goods and treat the contract as repudiated”.

CONDITION WARRANTY

1.A condition is essential to the 1. It is only collateral to the main

mainpurpose of the contract. purposeof the contract.
2. In case of breach of condition, 2. In case of breach of warranty,
aggrieved party can: aggrieved party can only claim
i. Rescind the contract, return the damages.
goods and claim refund.
ii. Claim damages
3. A breach of condition may be 3. A breach of warranty cannot be
treated asa breach of warranty treated as a breach of condition.

4. Example: 4. Example:

• WHEN A CONDITION CAN BE TREATED AS A WARRANTY :

1. Voluntary waiver of condition:

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 the buyer elects to treat the breach of the conditions, as one of
a warranty. That is tosay, he may claim only damages instead of
repudiating the contract

3. Compulsory waiver of a condition:

Where a contract of a 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
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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
terms of the contract, express or implied, to that effect
Example:
B agrees to buy from A 20 bales of cotton by sample. The cotton is
delivered to B who makes payment of its price. B upon examination of
cotton finds them not equal to sample but uses 2 bales and sells 3. At this
point he cannot rescind the contract and recover the price. But A is bound to
compensate for the loss caused to B by breach of warranty.

4. Impossibility:
Nothing in this section shall affect the case of any condition or warranty,
fulfilment of which is excused by reason of impossibility or otherwise.

• CONDITIONS :

EXPRESS CONDITIONS IMPLIED CONDITIONS

Express conditions: Express conditions are those, which are agreed upon
between the parties at the time of contract and are expressly provided in the
contract.

Implied Conditions:
 It is a condition, which the law implies into the contract of sale. The law
presumes that the parties have incorporated it into their contract.
 The implied conditions are read into every contract of sale unless they are
expressly excluded by the parties.
 In case of conflict between the express and implied conditions, the express
term shall prevail and the implied terms shall not be considered.
 Following are the implied conditions which are contained in the Sale of
Goods Act :
1. Conditions as to title:

According to this condition, it is presumed that the seller has a
valid title to the goods, i.e., he has the right to sell the goods. If
later on, the buyer comes to know that the seller had no valid
right to sell the goods, then he may reject the goods and claim
the refund of the price, if already paid.

This implied condition may be analysed as under:
(i) In case of sale, the implied condition is that the seller
has the right to sell the goods, and
(ii) In case of an agreement to sell, the implied condition is
that the seller will have the right to sell the goods at the
time when the ownership is to pass from the seller to
the buyer.

Example:

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2. Condition as to description:

Sometimes, the goods are sold by description. In such cases,
the implied condition is that the goods shall correspond with
the description.

The term ‘correspondence with description’ means that the
goods purchased by the buyer must be the same which were
described by the seller.

If subsequently, it is discovered that the goods do not
correspond with the description, the buyer may reject the
goods and claim the refund of the price, if already paid.

Example:

3. Condition as to sample:

In case of sale of goods by showing the sample to the buyer,
there are following three implied conditions,
(i) That the goods delivered shall correspond with the
quality of the sample
(ii) That the buyer shall have a reasonable opportunity of
comparing the bulk with the sample.
(iii) That the goods shall be free from latent defects (i.e.,
the defects which are not discoverable on reasonable
examination of sample)

4. Condition as to sample as well as description:

Sometimes, the seller shows sample of the goods to the buyer
and also gives him their description. In such cases, the implied
condition is that the goods shall correspond with both, the
sample as well as description.

5. Condition as to quality or fitness for buyer’s purpose:

Ordinarily, there is no implied condition that the goods shall be
fit for the particular purpose of the buyer.

Seller is not responsible:
(i) To know the particular purpose of buyer.
(ii) If buyer chooses the goods negligently.

However in following exceptions, there is an implied condition
that the goods shall be fit for the buyer’s specific purpose.
In following cases seller is responsible to the buyer:
(i) If the buyer makes his purpose clear to the seller.
(ii) If the buyer buys the goods ‘relying upon his skill and
judgment’.

Example:

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6. Condition as to merchantability:
The term ‘merchantability’ has not been defined in the Sale of Goods
Act. However, it has been interpreted by the courts, and basically it
means the two things, namely:If goods are purchased for

Self use Resale

Then they should be reasonably Then they should be immediately re-

fit for the purpose for which they saleable in the market under their
are generally used. description.

Example: Example:

7. Condition as to wholesomeness:
This condition is a part of the condition as to merchantability. It is
applicable in cases of eatables, i.e., foodstuffs and other goods which
are used for human consumption. As per this condition, goods sold
must be fit for human consumption.
Example:

• WARRANTIES :

EXPRESS WARRANTIES IMPLIED WARRANTIES

Implied Warranties:
 It is a warranty, which the law implies into the contract of sale. The law
presumes that the parties have incorporated it into their contract.
 The implied warranties are read into every contract of sale unless they are
expressly excluded by the parties.
 In case of conflict between the express and implied warranties, the express term
shall prevail and the implied terms shall not be considered.
 Following are the implied warranties which are contained in the Sale of Goods Act :
1. Warranty as to quiet possession:

Where the buyer has obtained the possession of the goods, he has a
right to enjoy them in a way he likes, i.e., no one should interfere with
the quiet enjoyment of the buyer.

If buyer’s right of possession and enjoyment is disturbed by anyone,
then the buyer can recover damages from the seller.

Example:

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2. Warranty as to free from encumbrance:

In every contract of sale there is an implied warranty that the goods
sold shall be free from any charge.

If the possession of the buyer is disturbed due to such charge in
favour of third party, he can claim damages from the seller.

Example:

3. Disclosure of dangerous nature of goods:

There is another implied warranty on the part of the seller that in case
the goods are inherently dangerous or they are likely to be
dangerous to the buyer and the buyer is ignorant of the danger, the
seller must warn the buyer of the probable danger.

If there is breach of this warranty, the seller will be liable in damages.

4. Warranties implied by customs:

Like implied conditions, implied warranties are also attached by
custom or usage of trade. This is so because the parties enter into an
agreement subject to the known customs or usages of trade.

• THE DOCTRINE OF CAVEAT EMPTOR

(BUYER BEWARE) :

‘Caveat Emptor’ is a Latin expression which means “let the buyer beware”.

The Doctrine states generally seller is not responsible for bad goods.

This Doctrine takes the side of the seller.

As per the ruler, seller is not responsible in following cases:-
(i) To know the particular purpose of buyer.
(ii) If buyer chooses the goods negligently
(iii) If the goods are defective and the defect is patent (i.e. defect which can be
discovered by mere inspection)

Exceptions : The exceptions to the doctrine of Caveat Emptor; which are

mentioned below (i.e in the following seller is responsible) :
1. Where the buyer specifies the particular purpose for which the goods are
required to the seller.
2. Where buyer relies on the seller’s skill or judgment.
3. Where there is contract of sale by sample, the rule of caveat emptor will not
apply if the goods do not correspond with sample
4. Where goods are bought by description, the goods shall correspond with the
description.
5. If the goods are bought both by sample as well as by description this rule
will not apply if goods do not correspond with both sample and description.
6. There is an implied condition that the goods shall be of merchantable quality
7. When the seller actively conceals some defect in the goods so that the
same could not be discovered by the buyer on a reasonable examination,
then the rule of Caveat Emptor will not apply.
8. When the goods are purchased under some brand name.

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UNIT 3: TRANSFER OF OWNERSHIP AND DELIVERY OF GOODS

Transfer of property: Delivery of Goods: Acceptance

of Goods
1. Meaning 1. Meaning
2. Rules 2. Rules

• TRANSFER OF PROPERTY (OWNERSHIP) :

A. Meaning:

The term ‘property in the goods’ may be defined as the legal
ownership of the goods.

Transfer of Ownership means transfer of Risk, Rights and Returns
pertaining to the goods.

The term ‘property in the goods’ must be distinguished from the term
‘possession of the goods’. The term ‘property in the goods’ means
the ownership’ of the goods, whereas the term ‘possession of goods’
simply means the custody or physical control over the goods.

B. Rules:
1. The ownership is transferred at the time of making the contract
if the following conditions’ are fulfilled:
(a) The sale must be of specific goods:
These are the goods which are identified and agreed upon at
the time of contract.
(b) The goods must be in a deliverable state:
The goods are said to be in a deliverable state when they are
in such a state that the buyer would, under the contract, be
bound to take delivery of them.
(c) The contract of sale must be unconditional:
A contract is unconditional in which no condition is imposed
regarding the transfer of ownership of the goods.
2. Transfer of ownership in case of sale of unascertained goods.
The unascertained goods are the goods which are not specifically
identified at the time of making the contract of sale.
In case of sale of unascertained goods, the ownership is transferred
to the buyer on the fulfilment of both the following conditions:
(i) Ascertainment of goods:
It is the process by which the goods to be delivered under the
contract are identified and set apart. It is a unilateral act of the
seller alone to identify and set apart the goods.
(ii) Appropriation of goods:
It is the process by which the goods to be delivered under the
contract are identified and set apart with the mutual consent of
the seller as well as buyer. It is a bilateral act of the seller and
the buyer to identify and set apart the goods.

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Example:

3. Where the specific goods are to be put in a deliverable state by

the seller: The ownership is transferred as soon as the seller has put
the goods in a deliverable state and the buyer comes to know about
the act of the seller.

4. Where the specific goods in a deliverable state are to be

weighed or measured by the seller to ascertain the price, the
ownership is transferred to the buyer as soon as the seller has done
the act of ascertaining the price and the buyer comes to know about
this act of the seller.
Example:

5. However, parties may decide to pass the ownership as per the

contract.

6. Transfer of ownership in case of sale on approval

The ownership of goods is with seller and the possession of
goods is with buyer

The buyer has an option to return the goods.

The ownership is transferred to the buyer in any of the
following three ways:
(i) When the buyer accepts the goods:
The acceptance by the buyer may be express or
implied.
(ii) When the buyer adopts the transaction:
The buyer may adopt the goods by doing some act
which shows that he has accepted the goods e.g.,
where he further sells or pledges the goods.
(iii) Where the buyer fails to return the goods within
fixed or reasonable time

7. Reservation of right of disposal

The seller may like to retain the ownership of the goods until
some later date, e.g., until the price is paid or some conditions
are fulfilled. The seller may do so by reserving his right of
disposal.

Where the seller has reserved his right of disposal, the
ownership of the goods is not transferred to the buyer even if
the goods are delivered to the buyer or some carrier for the
purpose of transmission to the buyer. The ownership is

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transferred to the buyer only when the conditions imposed by

the seller are fulfilled

In the following two circumstances the seller is presumed to
have reserved the right of disposal :
1. By taking the documents showing title in his own name
or his agent’s name
2. By sending the bill of exchange for the price, to the
buyer, along with the documents of title

Example:

8. Transfer of risk

The risk and the ownership of the goods go together.

In other words, the goods are at the risk of the party who has
the ownership of the goods. This means that in case of loss of
the goods, the loss shall be borne by the party who has the
ownership of the goods at the time of loss.

Exceptions:
In these exceptional circumstances, the goods may be at the
risk of one party and their ownership may be with the other:
1. Agreement between the parties:
The terms of agreement between the parties may
provide as to when the ownership shall be transferred
and who shall suffer the loss.
2. Goods are at the risk of the party in default:
Sometimes, the delivery of the goods is delayed due to
the fault of either seller or buyer. In such cases, the
goods shall be at the risk of the party in default though
their ownership is with the other party.
3. Trade customs :
The risk and the ownership may also be separated by
the trade customs e.g., the trade custom may provide
that the goods shall be at the risk of the buyer whether
or not the ownership has been transferred to him.

9. Transfer of title by non-owners

“Nemodat quod non-habet”: This means that ‘no one can
transfer a better title than he himself has’. Thus, the buyer
cannot get a better title than that of the seller. If the seller’s
own title is defective, the buyer’s title will also be defective.

Example:

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Exceptions:
In the following exceptional circumstances a non-owner can
transfer a valid title to a bonafide buyer:
1) Sale by a mercantile agent
A ‘mercantile agent’ is an agent who deals in the buying
and selling of the goods on behalf of his principal, e.g.,
an auctioneer. Where a mercantile agent sells goods in
the ordinary course of his business, the buyer who buys
in good faith, gets a valid title to the goods even if he
(the mercantile agent) is not the owner of the goods.
2) Sale by a joint owner: When the joint owner is in the
sole possession of the goods, and he sells them to a
person who buys in a good faith, the buyer gets a valid
title to the goods.
Example:

3) Sale by estoppel: When the owner of goods, by his

conduct or by statement, wilfully leads the buyer to
believe that the seller has the authority to sell, then he
is estopped (i.e., prevented) from denying the seller’s
authority to sell
Example:

4) Sale by unpaid seller: To be done in Unit 4

5) Sale by a seller in possession of goods after their
sale: If the seller continues to have the possession of
the goods even after their sale and if he resells the
same goods to a new buyer then in such cases, the
second buyer gets a valid title to the goods if he buys
them in a good faith.
Example:

6) Sale by a buyer in possession of goods after their

sale: If the buyer obtains the possession of the goods
which he has bought or agreed to buy from the seller
and the seller still has some lien or other rights over the
goods. If the buyer resells the same goods to a new
person. In such cases, the second buyer gets a valid
title free.

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Example:

7) Sale by a finder of goods:

If the goods are perishable If the goods are non-perishable

If the expenses on the goods ≥ 2/3rd of Market Value

8) Sale by a person in possession under a voidable

contract: The buyer gets a valid title only if the
following conditions are satisfied:-
a. A person must obtain the possession of the
goods by coercion, undue influence, fraud or
misrepresentation.
b. The seller must have obtained the possession of
the goods under a voidable contract and not
under a void contract.
c. The contract must not have been rescinded (i.e.,
put to an end) at the time of sale
d. The buyer must act in a good faith.
Example:

9) Sale Under the Provision of Other Acts :

a. Sale by an Official Receiver or Liquidator of the
Company will give a valid title to the purchaser.
b. Sale by a pawnee/pledgee under default of
pawnor in repayment of debt will give valid title to
the purchaser.

In case of hire-purchase, hirer cannot pass a

good title even to a bonafide buyer.

• DELIVERY OF GOODS

A. Meaning:

“Delivery” means a voluntary transfer of possession from one person to
another”.

Delivery of goods may be actual, symbolic or constructive

B. Rules:
1. Buyer in position to access the goods:
The delivery of the goods may be made in any of the modes, but it must
have the effect of putting the goods in the possession of the buyer or his
agent.

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2. Demand for delivery of goods:

It is seller’s duty to put the goods in deliverable state and inform the buyer
regarding same. It is buyer’s duty to make a demand for the delivery of the
goods.
3. Goods in the possession of a third person:
Sometimes, at the time of sale, the goods are in the possession of a third
person. In such cases, the effective delivery takes place when such person
acknowledges to (i.e., inform) the buyer, that he holds the goods on his
(buyer’s) behalf.
4. Delivery to a carrier or wharfinger:
Where the sold goods are delivered to a carrier/wharfinger for the purpose
of transmission to the buyer or safe custody, the delivery of goods to the
carrier/wharfinger is treated as a delivery to the buyer
5. Place for the delivery of goods:

Specified in the Not specified in the contract

contract

In case of sale- Place of Sale
The goods must
In case of an agreement to sell- Place of
be delivered at agreement to sell
such place
If at the time of agreement to sell, the
goods are not in existence- Place of
manufacture

6. Time for the delivery of goods:

Specified in the Not specified in the contract

contract
The delivery of goods must be
The goods must be made within a reasonable time
delivered at such during business hours on a
specified time working day.

7. Time for demand or tender of delivery:

The demand of delivery by the buyer must be made within reasonable time
during business hours and on a working day.

8. Expenses for the delivery of goods:

The expenses of putting the goods into a deliverable state are borne by the
seller. And the expenses of receiving the goods are borne by the buyer.
However, the seller and the buyer may also agree otherwise

9. Deterioration of goods during transit:

The buyer shall bear the loss of deterioration of goods which is incidental
i.e. natural in transit unless otherwise agreed.

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10. Delivery of goods by instalments:

As a rule, the delivery of goods by instalments is not considered as a good
delivery and the buyer is not bound to accept the goods delivered to him by
instalments, unless otherwise agreed.

11. Part delivery of goods:

Where the part delivery is Where the part delivery is made

made in progress of the with the intention of separating it
whole delivery from the whole

Then it is treated as a Then it is not treated as a delivery

delivery of the whole and the of the whole and the ownership of
ownership of the whole the whole quantity is not
quantity is transferred to the transferred to the buyer.
buyer.

12. Delivery of wrong quantity:

Short delivery Excess delivery Mixed delivery

or or or or
Accept Reject Accept all Accept Reject Accept Reject
the the the the the the the
Goods Goods Goods quantity Goods Goods Goods
ordered

He shall have
to pay at the The buyer rejects the whole quantity the contract is
contract price not treated as cancelled, it is valid and subsisting.
for the goods The seller still has the right to tender again the
actually contract quantity of goods, and the buyer can
delivered to claim damages for delay.
him

• ACCEPTANCE OF DELIVERY OF GOODS

Acceptance is deemed to take place when the buyer-
(a) Intimates to the seller that he had accepted the goods; or
(b) Does any act to the goods, which is inconsistent with the ownership of the
seller; or
(c) Retains the goods after the lapse of a reasonable time, without intimating to
the seller that he has rejected them.

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UNIT 4 : UNPAID SELLER

• MEANING OF UNPAID SELLER:

A seller will be called ‘unpaid’ if the following conditions are fulfilled:
(1) The whole or part of the price has not been paid or tendered and that the
seller has immediate right of action for the price.
(2) A bill of exchange or other negotiable instrument has been received but the
same has been dishonoured.

• RIGHTS OF UNPAID SELLER

Against Goods Against Buyer

1. Suit for recovery of
When property in When property in price
goods is transferred goods is not transferred
2. Rescind the contract

1. Right of Lien 1. Right of 3. Suit for damages

withholding
2. Right of 4. Suit for interest
delivery
stoppage in
transit 2. Any other
right
3. Right of resale

(A) Rights against the Goods:

1. Where the ownership of the goods has transferred to the buyer: In this
case, the unpaid seller has the following rights:
(a) Right of lien

The right of lien is the right to retain possession of the goods.

This right can be exercised only when the possession of
goods is with the seller.

The unpaid seller of goods can retain his possession of goods
until payment of the price in following cases:
a) Where the goods are not sold on credit.
b) Where the goods have been sold on credit, but the term
of credit has expired
c) Where the buyer becomes insolvent.

The unpaid seller can retain the goods only for the payment of
the price of the goods: He cannot retain the goods for any
other charges, e.g., maintenance, charges for storage of
goods during the exercise of lien etc.

The right of lien is indivisible in nature.

Termination of Lien:
a) By delivery of goods to the carrier
b) By delivery of goods to the buyer
c) By waiver of the lien
d) By payment of price by the buyer

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Example:

(b) Right of stoppage in transit

The right of stoppage in transit is the right to regain
possession of the goods.

This right can be exercised only when,
(i) Seller should have parted with the possession
(ii) Possession should be with a carrier, &
(iii) Buyer has not acquired the possession.

The right of stoppage in transit can be exercised only if the
buyer has become insolvent.

The unpaid seller can stop the goods in transit only for the
payment of the price of the goods.

Distinction between Right of Lien and Right of Stoppage in
transit

Right of Lien Right of stoppage in transit

1. The essence of a right of lien is 1. The essence of stoppage in
to retain possession transit is to regain possession
2. Seller should be in possession 2. In stoppage in transit,
of goods under lien (i) seller should have parted with
the possession
(ii) possession should be with a
carrier, & (iii) buyer has not
acquired the possession.
3. Right of lien can be exercised 3. Right of stoppage in transit can
even when the buyer is not be exercised only when buyer
insolvent. becomes insolvent
4. Right of lien precedes right of 4. Right of stoppage in transit
stoppage in transit. begins when the right of lien ends

Example:

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(c) Right of Resale

The unpaid seller has the direct In any other case, the unpaid seller has theright to
right to resell the goods in the resell the goods by following the procedure:
following circumstances:
1. Unpaid seller should give a notice to the buyer
1. Where the goods are of of his intention to resell the goods
perishable nature (+)
2. Where the unpaid seller has Additional time for payment
expressly reserved his right of 2. If the buyer does not pay the price within a
resale. reasonable time, the seller may resell the goods

If the notice of resale is given then in case of
loss on resale, it can be recovered and in case
of profit on resale, it can be retained.

However the notice of resale is not given, the
seller cannot recover the loss suffered on
resale. Moreover, if there is any profit on
resale he must return it to the original buyer

2. Where the ownership of the goods has not been transferred to the
buyer:
(a) Right of Withholding Delivery
When the ownership of the goods sold is not transferred to the buyer,
if the buyer fails to pay the price, the unpaid seller may refuse to
deliver the goods to the buyer. Such right is known as right of
withholding the delivery of the goods.
(b) Any other right
Since ownership and possession of goods is with the seller, seller
can use, gift, resell the goods, etc.

(B) Rights against the Buyer

1. Suit for recovery of price
Where the buyer takes the ownership as well as possession of goods and
the buyer fails to pay the price of the goods, the seller can file a suit against
the buyer for recovery of the price.
2. Suit for damages for repudiation of the contract before the due date of
delivery of goods :
Where the buyer repudiates (i.e., puts an end to) the contract before the due
date of delivery of the goods, the seller has the following options:
(i) He may not immediately take any action against the buyer, and treat
the contract as subsisting and wait till the date of delivery of goods.
(ii) He may immediately treat the contract as repudiated and bring a
legal action against the buyer for the recovery of damages. Thus, the
option of bringing the action lies with the seller. He may either wait till
the date of delivery of goods arrives, or bring an immediate action for
damages.

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3. Suit for damages

Where the seller is ready and willing to deliver the goods to the buyer, but
the buyer wrongfully neglects or refuses to accept the goods and pay for
them, then the seller may bring a legal action against the buyer for the
recovery of damages suffered due to non-acceptance of the goods.
4. Suit for interest
The court may award the interest from the date of tender of the goods or
from the date when the price is payable. The rate of interest to be awarded
is at the discretion of the court.

• EFFECTS OF SUB-SALE OR PLEDGE BY BUYER

The right of lien or stoppage in transit is not affected by the buyer selling or
pledging the goods unless the seller has assented to it.

Exceptions:
(a) When the seller has assented to the sale, mortgage or other
disposition of the goods made by the buyer.
(b) When a document showing title to goods has been transferred to the
buyer and the buyer transfers the documents to a person who has
bought goods in good faith and for value.

Example:

• RIGHTS OF PARTIES IN BREACH OF CONTRACT

Rights of Seller against Buyer Rights of Buyer against Seller

1. Rescind the contract 1. Damages for non-delivery

2. Suit for recovery of price 2. Suit for specific performance
3. Suit for damages 3. Suit for breach of warranty
4. Suit for interest 4. Suit for breach of condition
5. Rescind the Contract
6. Suit for interest

• AUCTION SALES

An auction sale is a sale at which the auctioneer, as agent for the seller,
invites persons present to bid for goods sold.

Auctioneer acts in a dual capacity

He acts as an agent Subsequently, he

of the seller till the acts as an agent of
article is ‘knocked the buyer.
down’ to the bidder.

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Rules regarding Auction Sales:

1. Where goods are put up for sale in lots, they are deemed to be sold
in lots.
2. The sale is complete and ownership is transferred when the
auctioneer announces its completion by the fall of the hammer or in
any other customary manner.
3. Bidder may retract his bid anytime before auction sale is complete.
4. The sale may be notified to be subject to a ‘reserve price’ or ‘upset
price.’ When the sale is notified to be subject to a ‘reserve price’, the
bidding and knocking down of the article to the highest bidder are all
subject to the condition that the ‘reserve price’ should be reached.
5. If the seller makes use of pretended bidding to raise the price, the
sale is voidable at the option of the buyer.
6. A right to bid may be ‘reserved’ expressly by or on behalf of the seller
and, where such right is expressly so reserved, but not otherwise, the
seller or any other person on his behalf, may bid at the auction.
7. Implied warranties in auction sale: In an auction sale, the auctioneer
warrants the following :
1. that he has an authority to sell;
2. that he is not aware of any defect in the title of the principal;
3. that he undertakes to handover the quite possession of the
goods as soon as the price is paid to him.

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SUMMARY

UNIT 1:Formation of contract of sale

• INTRODUCTION
 It came into force on the 1st of July, 1930.
 It is applicable to whole of India except Jammu & Kashmir.
 The Law relating to this statute was contained in Indian Contract Act, 1872.
 Where the Sale of Goods Act is silent on any point, the general principles of
the law of contract apply.

• CONTRACT OF SALE

Sale Agreement to sell

(Executed) (Executory)

• DEFINITIONS
1. Buyer
2. Seller
3. Goods
4. Price
5. Property
6. Documents showing Title to Goods/ Documents of Title to Goods
7. Mercantile Agent
8. Delivery

• ESSENTIAL ELEMENTS OF A VALID CONTRACT OF SALE

• DISTINGUISH BETWEEN
1. Sale and agreement to sell
2. Sale and hire- purchase
3. Sale and bailment
4. Sale and contract for work and labour

• FORMATION AND MODES OF A CONTRACT OF SALE

• EFFECT OF DESTRUCTION OF GOODS
• PRICE AND MODES OF FIXING THE PRICE

UNIT 2: CONDITIONS AND WARRANTIES

• CONDITION
“A condition is a stipulation essential to the main purpose of the contract

• WARRANTY
“A warranty is a stipulation collateral to the main purpose of the contract

• WHEN A CONDITION CAN BE TREATED AS A WARRANTY

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J.K.SHAH CLASSES CA FOUNDATION - LAW

• CONDITIONS

EXPRESS CONDITIONS IMPLIED CONDITIONS

• WARRANTIES :

EXPRESS WARRANTIES IMPLIED WARRANTIES

• THE DOCTRINE OF CAVEAT EMPTOR

(BUYER BEWARE)

UNIT 3: TRANSFER OF OWNERSHIP AND DELIVERY OF GOODS

Transfer of property: Delivery of Goods: Acceptance

of Goods
1. Meaning 1. Meaning
2. Rules 2. Rules

UNIT 4 : UNPAID SELLER

• MEANING OF UNPAID SELLER

• RIGHTS OF UNPAID SELLER

Against Goods Against Buyer

1. Suit for recovery of
price
When property in When property in
goods is transferred goods is not transferred 2. Rescind the contract

3. Suit for damages

1. Right of
1. Right of Lien
withholding 4. Suit for interest
2. Right of delivery
stoppage in
2. Any other
transit
right
3. Right of resale
• EFFECTS OF SUB-SALE OR PLEDGE BY BUYER

• RIGHTS OF PARTIES IN BREACH OF CONTRACT

• AUCTION SALES
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J.K.SHAH CLASSES CA FOUNDATION - LAW

QUESTIONS

1. What are the consequences of "destruction of goods" under the Sale of Goods
Act,1930, where the goods have been destroyed after the agreement to sell but
beforethe sale is affected.
2. In what ways does a "Sale" differ from "Hire-Purchase"?
3. State briefly the essential element of a contract of sale under the Sale of Goods
Act,1930. Examine whether there should be an agreement between the parties in
orderto constitute a sale under the said Act.
4. What do you understand by "Caveat-Emptor" under the Sale of Goods Act, 1930?
What are the exceptions to this rule?
5. What are the implied conditions in a contract of 'Sale by sample' under the Sale
ofGoods Act, 1930? State also the implied warranties operatives under the said Act.
6. "There is no implied warranty or condition as to quality or fitness for any
particularpurpose of goods supplied under a contract of sale" Discuss the
significance andState exceptions, if any.
7. Distinguish between a 'Condition' and a 'Warranty' in a contract of sale. When shall
a'breach of condition' be treated as 'breach of warranty' under the provisions of
theSale of Goods Act, 1930? Explain.
8. "NemoDat Quod Non Habet" - "None can give or transfer goods what he does
nothimself own." Explain the rule and state the cases in which the rule does not
applyunder the provisions of the Sale of Goods Act, 1930.
9. What are the rules related to Acceptance of Delivery of Goods?
10. Explain the provisions of law relating to unpaid seller's 'right of lien' and distinguish
itfrom the "right of stoppage the goods in transit".
11. What do you understand by the term "unpaid seller" under the Sale of Goods
Act,1930? When can an unpaid seller exercise the right of stoppage of goods in
transit?
12. When can an unpaid seller of goods exercise his right of lien over the goods
underthe Sale of Goods Act? Can he exercise his right of lien even if the property in
goodshas passed to the buyer? When such a right is terminated? Can he exercise
his righteven after he has obtained a decree for the price of goods from the court?

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ADDITIONAL CASE LAW BASED QUESTIONS:

UNIT -1: FORMATION OF THE CONTRACT OF SALE

Q. 1. Ms Prachi Dutt has hired 100 laptops for her office @Rs30000 per laptop
(Rs3000000) for a monthly rent of Rs1 lakh. The stipulation is that if Ms Prachi
pays the rent regularly for 20 months, she is entitled to either exercise the
option of purchasing all the laptops or return the laptops immediately after 20
months. However, if purchase option is exercised, the installment facility would
continue. She decides to exercise the purchase option. Is this a valid contract?

Q. 2. Mr Jigar Dhuvad agrees to sell his second hand Maruti Omni Van to Mr Katta
for a price to be determined by Mr Dutta. Mr Katta took delivery of the Vehicle.
Mr Dutta refuses to fix the price. Mr Jigar Dhuvad wants the vehicle back. What
is the position?

Q.3. Mr Pruthvi Raj Chavan of Bangalore entered into contract for selling 10000 kgs
of grapes in his garden in Kolar with Mr Menezes of Goa, a fruit merchant. The
grapes were destroyed before the date of the agreement though Mr Pruthvi Raj
Chavan was not aware of the same. The grapes could, however, be used for
preparing wine. Mr Pruthvi Raj Chavan compels Mr Menezes to purchase the
same. Is the contract valid?

UNIT - 2: CONDITIONS & WARRANTIES

Q.1. Mr A sold a tin of cleaning acid to Mrs B. Mr A knew that it was likely to be
dangerous to Mrs B if she does not exercise caution and special care while
opening the lid. Mrs B opened the tin in the normal course and her face was
defaced by sprinkles of acid. Can she file a case against Mr A?

Q.2. Ms Pooja goes to a beauty salon. She asks for a facial and a hairdo. She does
not disclose any allergies to the beautician. The beautician applied some hair
dye without asking anything about the possible allergies. Ms Pooja developed
dermatitis. Is the beautician liable?

Q.3. X agrees to supply to Y a certain quantity of timber of half-inch thickness. The

timber actually supplied varies in thickness from one third inch to five-eight
inch. The timber is merchantable and commercially fit for the purpose for which
it was ordered. Y rejects the timber. Is his action justified?

UNIT - 3: TRANSFER OF OWNERSHIP AND DELIVERY OF GOODS

Q.1. Mr A, a farmer, sold his 4 cows to Mr B. In a period of 2 years, cows had given
birth to 2 calves. Now Mr.A demands the calves back as he claims that he has
just sold the cows and not the calves. State whether Mr. B is required to return
the calves?

Q.2. A contracts to sell to B all the oil to be produced from groundnut harvested from
A's farm. The crops having been harvested and oil made there from, A fills the
oil in cans supplied by B. However, A hasn’t yet informed B. Does the property
in oil pass to B?

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J K SHAH CLASSES C.A. FOUNDATION - LAW
Q.3. P brought a musical instrument from a musical shop on a condition that he will
purchase it, if he likes that instrument. After a week he has informed the shop
owner that he has agreed to purchase the musical instrument. When doesnthe
ownership get transferred?

Q.4. During ICL matches, P buys a TV set from R. R agrees to deliver the same to
P after some days. In meanwhile R sells the same to S, at a higher price, who
buys in good faith and without knowledge about the previous sale. Will S get a
good title?

UNIT - 4: UNPAID SELLER

Q.1. A bids for an antique painting at a sale by auction. After the bid, when the
auctioneer struck his hammer to signify acceptance of the bid, he hit the
antique which gets damaged. Who shall bear the loss? What will be your
answer if the antique gets damaged after the hammer was struck on table?

Q.2. A entered into a contract to sell cartons in possession of a whar finger to B and
agreed with B that the price will be paid to A from the sale proceeds recovered
from his customers. Now B sold goods to C and C duly paid to B. But anyhow B
failed to make the payment to A. A wanted to exercise his right of lien and
ordered the whar finger not to make delivery to C. Can he do so?

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ANSWERS

UNIT -1: FORMATION OF THE CONTRACT OF SALE

Ans.1. Contract of sale resembles with contracts of hire purchase very closely, and
the real object of a contract of hire purchase is the sale of the goods
ultimately.
Hire purchase agreements are governed by the Hire-purchase Act, 1972.
Term "hire- purchase agreement" means an agreement under which goods
are let on hire and under which the hirer has an option to purchase them in
accordance with the terms of the agreement and includes an agreement
under which—
(a) Possession of goods is delivered by the owner thereof to a person on
condition that such person pays the agreed amount in periodical
installments, and
(b) The property in the goods is to pass to such person on the payment of
the last of such instalments, and
(c) Such person has a right to terminate the agreement at any time before
the property so passes; None the less a sale has to be distinguished
from a hire purchase as their legal incidents are quite different.
In the given question, it is a hire purchase contract. It is a valid contract.

Ans.2. Section 10 of The Sale o provides for the determination of price by a third
party. Where there is an agreement to sell goods on the terms that price has
to be fixed by the third party and he either does not or cannot make such
valuation, the agreement will be void. In case the third party is prevented by
the default of either party from fixing the price, the party at fault will be liable
to the damages to the other party who is not at fault. However, a buyer who
has received and appropriated the goods must pay a reasonable price for
them in any eventuality. In the given question, Mr Jigar Dhuvad agrees to
sell his second hand Maruti Omni Van to Mr Katta for a price to be
determined by Mr Dutta. Mr Katta took delivery of the Vehicle. Mr Dutta
refuses to fix the price. Mr Jigar Dhuvad caanot get the vehicle back. Mr
Jigar has to accept a reasonable amount and Mr Katta has to pay a
reasonable amount. Mr Jigar cannot call back the goods.

Ans.3. As per section 7 of Sale of Goods Act,1930, where there is a contract for the
sale of specific goods, the agreement 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
contract. In the given question, Mr Pruthvi Raj Chavan of Bangalore entered
into contract for selling 10000 kgs of grapes in his garden in Kolar with Mr
Menezes of Goa, a fruit merchant. The grapes were destroyed before the
date of the agreement though Mr Pruthvi Raj Chavan was not aware of the
same.
Since the goods no longer answered the description of fruits, the agreement
is void.

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