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ABSTRACT

Sale of Goods Act is one of the important statutes which guides the sale of movable goods in
India, the act further more provides a set of principles which are imbibed to administer and
safeguard the rights of the sellers and the buyers. This research paper aims in providing a
critical analysis and explanation of all the different provision which includes passing of
property, transfer of title, performance of a contract, rights of an unpaid seller and the
remedies for breach of contract which are provided under the Sale of Goods Act, 1930.

INTRODUCTION

The Sale of Goods Act, 1930, was a special legislation introduced on March 15, 1930, and
came into force on July 1, 1930. It aimed to guide the sale of goods, which had been guided
by Sections 76 to 123 of the Indian Contract Act, 1872. Section 65 of the Act was later
repealed by the Repealing Act, 1938. The Act was deemed inconsistent and insufficient to
keep up with newer concepts and situations, leading to a drift and lag in the laws. As trade
and business expanded, it became clear that a separate statute would govern the laws relating
to the sale of goods. Sections 76 to 123 of the Act were derived from the English Common
Law, which was codified in 1893 as the Sale of Goods Act. In 1928, a draft bill was drafted to
amend the laws relating to the sale of goods in India. The Indian Government formed a
committee of lawyers to compare the bill with the English Act, 1893. The bill was approved
by the Special Committee and introduced in the Legislative Assembly in 1929. The bill was
passed in the form of the Indian Sale of Goods Act, 1930, incorporating several suggestions
from the committee.

SCOPE OF SALE OF GOODS ACT, 1930

The objective of Sale of Goods is to transfer the goods from one person to another 1. The act
deals with the contract of sale of goods wherein the seller agrees to transfer or transfer the
property to the buyer, the said act deals with both the agreements for sale of goods and
contracts which describes deeds of transfer of goods. It also seeks to balance the rights,
duties, claims and expatiation of the sellers and buyers of goods.

1
Rowland v. Diwall, (1923) 2 KB 500, 507.
DEFINITION OF GOODS IN SALE OF GOODS ACT, 1930

The term goods has been defined in Section 2(7) of the act which states that, “goods” means
every kind of moveable property other than actionable claims and money; and includes stack
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.

The term Movable Property has been further defined in Section 3(26) of the General Clauses
Act, 1897, which states, “Movable property shall mean property of every description, except
immovable property.”

TRANSFER OF PROPERTY AS BETWEEN SELLER AND BUYER

The concepts of Passing of Property, Transfer of Title come under the ambit of Chapter III of
the said act which extends from Section 18 to 30 of the Sale of Goods Act, 1930.

(1) Passing of Property

For passing of property, the essence of a contract of sale is the transfer of property form
the seller to the buyer. In Section 4(3) of Sale of Goods Act, 1930 the seller transfers or
agrees to transfer the said property to the buyer upon the agreed consideration. In coupled
with the prior mentioned necessity, it is necessary that the goods must be ascertained 2,
there cannot be a contract for sale of property if the good is unascertained. Unascertained
goods are not defined in the Sale of Goods Act but they are of three main categories, they
are-

a) Goods to be manufactured or grown by the seller which are necessarily future goods.
b) Generic goods,
c) Unidentified part of a specific whole good. For example 1000 tonnes of sugarcane out
of a particular lot of 5000 tons of sugarcane3.

The transfer of property from seller to buyer is a crucial phase determined by contract
parties, only occurring when goods are specific and ascertain. If unascertained, they must
be specified and ascertained before transfer can occur. Even if a contract exists for
unascertained goods, the transfer of property to the buyer will not occur until the seller
ascerts the goods.
2
Section 18 of Sale of Goods Act, 1930
3
Salar Jung Sugar Mills Ltd v. State of Mysore, (1972) 1 SCC 23.
 The intention of the parties in a contract is crucial, as it is determined through the terms
and clauses of the contract. For instance, in a motor car sale contract, payment would be
made through monthly instalments, and if there is a default, the seller would have the
right to return the car, but not refund the initial payment. Here the court held that the
intention of the parties was such that the property i.e., car would not pass to the buyer
until he paid the full price4.

Section 20 to 24 of the said act are for the ascertaining the intention of the parties as to
the time at which the property in the goods is to pass to the buyer will apply. Section 20 to
24 deals with 3 kinds of situations:

i) Sale of specific goods in a deliverable state.

ii) Sale of unascertained goods and appropriation.
iii) Sale of goods on approval or “on sale or return”.

i) Sale of specific goods in a deliverable state.

According to English law in a contract, “the property immediately vests in the buyer and
a right to the price in the seller, unless it can be shown that such was not the intention of
the parties5.” The same is held in India in the case of The Calcutta Company v. V. De.
Mattos6, and has also been incorporated as Section 20 of the said act.
There are 3 essentials which Section 20 contains:
a) The contract must be unconditional;
b) The contract must be for the sale of specific goods;
c) The goods must be in a deliverable state.

Section 20 of the contract must be unconditional, which is the first essential requirement.
If the contract is conditioned, it would attract Sections 21 and 22. If the contract is
unconditional, it is irrelevant whether payment or delivery of goods is postponed,
provided the contract is for specific goods in a deliverable state. The goods must be well-
identified and agreed upon to make the contract. The third essential good must be in a
deliverable state, requiring the buyer to take delivery at the time of making the contract.
If the good is not in a deliverable state at the time of contract, the seller has a duty to
make it to be in a deliverable state. The act of the seller must distinctively relate to

4
Amis v. Jal, AIR 1924 Bom 41.
5
Gilmour v. Supple, (1858) 11 Moo. PC 531, 556.
6
(1863) 32 LJQB 322.
 putting the goods in deliverable state. Where the goods are already in that state, the mere
fact that the seller has to perform some collateral act, does not prevent the property form
vesting in the buyer. If for example, a writer, having sold his literacy production to a
publisher, undertakes to revise and correct it, it does not obstruct the change of
ownership.7

Lord Blackburn pointed out, “where anything remains to be done to the goods for the
purpose of ascertaining the price as by weighing, measuring or testing the goods, where
the price is to depend on the quantity or quality of the goods, the performance of those
things, also shall be a condition precedent to the transfer of the property, although the
individual goods be ascertained and they are in the state in which they ought to be
accepted.”8 Where the seller has to take weight or measurement of the goods, or he has to
test them or to do something in reference to the goods for the purpose of ascertaining
their price, the property does not pass till such thing is done and the buyer has notice of
it.

ii) Sale of unascertained goods and appropriation

With respect to unascertained goods, the property in goods does not pass unless the goods
are ascertained.9 Section 23(1) of the said act talks about the rules regarding passing of
property in respect of unascertained goods, which reads as “where there is a contract for
the sale of unascertained or future goods by description and goods of that description are
in a deliverable state are unconditionally appropriated to the contract, either by the
Seiler, the property in goods thereupon passes to the buyer. Such assent may be express or
implied and may be given either before or after the appropriation is made.”

When selling unascertained or future goods by description in a deliverable state,

the property passes to the buyer when they are unconditionally appropriated. This
process requires ascertained goods, a deliverable state, and consent from both
parties, with implied consent determined by the case's circumstances.
iii) Sale of goods on approval or “on sale or return”

The rule states that property can be acquired through acceptance or failure to return
within a specified timeframe, and the term "buyer" is not used in the context of Section

7
M. Ramaiah Asari v. P.N. Chidambara Mudaliar, 1920 SCC OnlLine Mad 57.
8
Blackburn on Sale, page. 185
9
P.S.N.S. Ambalavam Chettiar & Co. v. Express Newspapers Ltd., AIR 1968 SC 741
 24 as defined in Section 2(1).The person is called the buyer is in law a bailee in
possession of goods with an option to purchase.10

Under the provision of Section 24, in the case of sale of goods on approval or “on sale of
return” property in goods passes in any of the following ways:

a) Approval or acceptance by buyer

When goods are delivered to the buyer on approval or on sale or return or
other similar terms, the property in goods passes to buyer when he signifies his
approval or acceptance to the seller.
b) When buyer does any other act adopting the transaction
When the goods are delivered to the buyer on approval or on sale or return, it
is not necessary in every case for passing of property that the buyer must
approve or accept.
c) When buyer retains the goods without giving notice of rejection
When goods are delivered to a buyer without their approval or acceptance, the
property passes to the buyer. If the buyer retains the goods without rejecting
them, they can return them if a set time has been set for the return, or if no
time has been set, within a reasonable time.

Reservation of right to disposal

By making the delivery conditional upon payment the seller had reserved the right of
disposal and that prevented the property from passing. On the sale of a quantity of iron, a
part of which was delivered to the buyer, the condition was that the buyer should withdraw
certain bills against the seller from circulation. 11 The buyer failed to do so. The seller was
held entitled to stop further supplies and also sue in trover for the deliveries already made.
Similarly, which he wants the buyer to accept or pay, then, even if the goods are delivered
to the buyer the property does not pass to him until he accepts the bill.12

(2) When goods are delivered to the railways for carriage, the seller has reserved the right
of disposal. If goods are deliverable to the buyer, the property remains with the seller.
If a bill of exchange is drawn on the buyer, the property doesn't pass until the buyer
accepts or pays.

10
Nirmalabai Misal v. State, AIR 1952 Nag 301,
11
Bishop v. Shillito, (1819) 2 B & Ald 329.
12
Barrow v. Coles, (1811) 2 Camp 92.
 Transfer of Title

Nemo Dat Quod Non Habet the said maxim guides the transfer of title, the maxim means
that a person cannot confer a better title that he has. This maxim has been incorporated
into Section 27 of the said which states, “Subject to the provisions of this Act and of any
other law for the time being in force, where goods are sold by a person who is not the
owner thereof and who does not sell them under the authority or with the consent of the
owner, the buyer acquires no better title to the goods than the seller had, unless the owner
of the goods is by his conduct precluded from denying the seller’s authority to sell.”

When a good is sold by a person who is not the owner i.e., by a finder or a thief the buyer
gets no title. In the case of In Farquharson Bros & Co. v. King & Co13, the judge observes
that, “If a person leaves a watch or a ring on a seat in the park or on a table at a café, and
it ultimately gets into the hands of a bona fide purchaser, it is no answer to the true owner
to say that it was his carelessness and nothing else, that it enabled the finder to pass it off
as his own.” Thus, where a stolen good was sold at a public auction, the fact of theft being
known neither to the auctioneer not to the buyer;14 where a person obtained goods under a
hire-purchase agreement and sold them;15 where the goods were sold by a person who
obtained them on approval subject to the condition that property would not pass until paid
for,16 in all these cases the buyers will not be entitled to have a clear legal title over the
concerned property.

With the development of society and the trade in the societies there have been a few
exceptions which have developed and are recognised by the said statue, they are:
a) Estoppel

According to S.27. the general principal will not apply where the seller is not the owner
of the goods but “the owner of the goods is by his conduct precluded from denying the
seller’s authority to sell”. When the owner is not permitted to deny the sellers authority
that is known as an estoppel against him, in other words ‘a party who negligently or
culpably stands by and allows another to contract on the faith and understanding of a fact
which he can contradict cannot afterwards dispute that in ana action against the person

13
1902 AC 324, 336 (HL)
14
Leo v. Bayes, (1856) 18 CB 588.
15
Helby v. Matthews, 1895 AC 471 (HL).
16
Edwards v. Vaughan, (1910) 26 TLR 545.
 whom he has himself assisted in declining’17. The principle of estoppel also applies where
there is an omission to perform one’s duty. But it must be neglect of some duty that is
owing to the person let into that belief or to the general public of whom the person is one,
and not merely the neglect of what could be prudent tin respect to the partly himself, or
even some duty owing to third persons with whom those seeking to set up estoppel are
not privy.18

b) Sale by Mercantile Agent

The second exception to the general principle is also defined in S.27 where it is stated
that, “Provided that, where a mercantile agent is, with the consent of the owner in
possession of the goods or of a document of title to the goods, any sale made by him,
when acting in the ordinary course of business of a mercantile agent, shall be as valid as
if he were expressly authorised by the owner of the goods to make the same.” The
provisio will apply only when the buyer acts in good faith and has not at the time of the
contract of sale notice that the seller has no authority to sell. In order to attract provisio to
S.27 the following conditions must be fulfilled:

i. The sale is to be made by a mercantile agent.

ii. The possession of the goods or of a document of title to the goods must be with
the mercantile agent.
iii. The mercantile owner must have the possession of the goods with the consent of
the owner.
iv. The mercantile agent must be acting through the ordinary course of business.
v. The buyer who purchase goods from the mercantile agent must do so in good faith
and must not have, notice at the time of the contract that the seller had no
authority to sell.

c) Sale by one of the joint owners

The S.28 deals with the sale by one of the joint owners where it becomes an exception to
the general principal when one of the several joint owner is in possession of the good with
the permission of the co-owners, and such co-owner sells the property to another person
and such person is not aware that the seller has no authority to sell the property. In order
to attract S.28 there are a few essentials which are to be fulfilled, they are:
17
Greg v. Wells, (1889) 10 A and E 90.
18
Swan v. North British Australian Co., (1863) 2 H&C 175.
 i. Sale must be by the joint owner.
ii. He must have possession of the good.
iii. Possession must be with the permission of other co-owners.
iv. The buyer buys the good in good faith 4and is not aware of the co-owner not
having powers to sell the property.
d) Sale by a person in possession under a voidable contract
Under S.19 and S.19A of the Indian Contract Act, 1872 any contract enforced by fraud,
coercion, undue influence, mistake, misrepresentation are voidable contracts at the
interest of the parties to the contract. Here when the contract has been rescinded at the
time of sale the buyers gets a good title over the concerned good only if he buys the
goods in good faith and without notice of sellers defect of title. A few essentials of S.29
are
i. The goods are to be in possession of the seller.
ii. Contract should be voidable under S.19 and S.19A of Indian Contract Act.
iii. Contract is not to be rescinded at the time of same.
iv. The buyer is to buy the good in good faith without being aware of defect in the
title of the seller.
e) Buyer or seller in possession after sale
There arises situation where the seller or a buyer will be in possession of the goods even
after there sale of the said good has taken place, in such cases S.30 of the Sale of Goods
Act gets invoked even when there is no explicit or an absolute agreement between the
parties and such agreement can also be conditional in nature.

PERFORMANCE OF THE CONTRACT

In order to fulfil the requirements of a contract and to perform a contract, there are several
duties which are to be fully performed by the sellers and the buyers of the goods. It is the
duty of the seller to deliver the goods and the buyer to accept and pay for, in accordance to
the terms and conditions of the contract, which emphasizes on the intention of the parties.
The parties may include as many conditions as they want to. 19 Section 32 of the said act
suggests that payment and delivery are concurrent conditions but this is subject to the
agreement between the parties. In the case of Vishnu Sugar Mills Ltd v. Food Corporation
19
Calcutta Co. v. De Mattos,
of India20, the Patna HC held that the law mandates that the tender of price and delivery of
goods be simultaneous and concurrent terms.
The delivery of goods may be done by doing something which the parties have agreed to do
so or handover the possession to the buyer or to any other person authorized by the buyer.
There are 3 kinds of deliveries –
a) Actual delivery – where there is actual physical delivery of goods by the seller to the
buyer.
b) Symbolic delivery – when goods are put in the possession of the buyer or his
authorized agent without making any change in their actual possession, the delivery is
said to be symbolic.
c) Constructive delivery – when without any change in the physical or actual custody of
goods, there is change in the legal character of the goods, the delivery is said to be
constructive.

The seller can deliver the goods in parts wherein the passing of the goods in parts has the
same effect as to the delivery of the goods completely. And the sellers is not bound to deliver
the goods until the buyer applies for delivery of the concerned good and until the buyer
applies for delivery of goods, the buyer will have no cause of action.21

During the course of delivery of goods there are a few set rules which are given in Section 36
of the act, which elaborates as

a. Place of delivery – when a buyer buys a good or even when a seller sells a good the
delivery of the good happens at the place of agreement or at the place of
manufacture/production or under the notice at any place of the buyer.
b. Time of delivery – the good need to be delivered within reasonable time, but
reasonable time is subjective and a question of fact. The buyer has the right to refuse
the delivery of goods of the goods being delivered after reasonable time.
c. Delivery of goods in possession of third persons – there is no delivery of possession
of good if the good is in the possession of a third person unless such third person
acknowledges to the buyer that he hold the goods on his behalf.
d. Reasonable hour of delivery – demand or tender of delivery may be treated as
ineffectual unless made at a reasonable hour. Reasonable hour is a question of fact.

20
AIR 1987 Pat. 22.
21
Shivayya v. Rangalauakulu, AIR 1935 PC 67
e. Expenses of and incidental to putting the goods in a deliverable state – unless other
agreed, the expense of and incidental to putting the goods into a deliverable state shall
be borne by the seller.

The buyer has the right to inspect and buy goods before buying them, just like the seller
has the right to sell them. When a seller sends a stock of goods, the buyer can examine it
before accepting delivery. If the buyer finds any goods to be rejected, they are not
required to inform the seller or return them unless they are already mentioned in the
contract for sale of goods.

RIGHTS OF UNPAID SELLER

Chapter V which extends from Section 47 to 54 talks about the rights of an unpaid seller.
The term unpaid seller has been defined in Section 45(1) of the act, where the rights of an
unpaid seller against goods and rights of an unpaid seller against the buyer; rights of an
unpaid seller against the buyer is explicitly delt in Chapter VI and the rights of an unpaid
seller against the goods are delt with Chapter V.

Rights of an unpaid seller against the goods are:

i) Unpaid seller’s lien

ii) Stoppage in transit
iii) Right of resale
iv) Right to withhold delivery of goods

i) Unpaid seller’s lien

Under the provision provided under Section 47 of the act, the unpaid seller of
goods who is in possession of the good is entitled to retain possession of the
property unless the payment or tender of the price in the following cases, namely:
a) Where the goods have been sold without aby stipulation as to credit;
b) Where the goods have been sold on credit, but the terms of the credit has
expired;
c) Where the buyer becomes insolvent
 The buyers right to lien lasts as long as he is in possession of the goods. The
unpaid seller has a right to retain the goods in his custody until the whole price is
paid to the seller. A lien necessarily presupposes that the property in the goods has
passes, as the seller cannot be said to possess a right of lien on his own property,
which is in the nature of a right distress over the property of another. The lien
ceases to subsist the moment the seller loses possession of the goods.22

In Grice vs Richardson23, the sellers had delivered a portion of the three bags of
tea under a contract of sale but had not been paid for the rest. Therefore, they
could keep them until the buyer paid the price.

Termination of Lien

The unpaid seller of the goods loses his right of lien in the following cases:

a) When he delivers the goods to a carrier or other bailee for delivery to the buyer
without reserving the right of disposal of the goods, or
b) When the buyer or his agent lawfully gets possession of the goods, or
c) When the seller waives his right of lien, or
d) When the buyer disposes of the goods by sale or in any other manner with the
consent of the seller, or
e) Where a document of title to goods has been issued or lawfully transferred to
any person as buyer or owner of the goods, and the buyer then transfers the
document by sale to someone taking it in good faith and for consideration.

ii) What Is Right to Stoppage of Goods in Transit

As per section 46(2) of the Sale of Goods Act, where the property in goods has
not passed to the buyer, the unpaid seller has, besides other remedies, a right to
withhold the delivery.

The unpaid seller delivered the goods to the carrier for transmission to the buyer,
and in the meantime, the buyer becomes insolvent, then the seller has the right to
stop and retain the goods in transit. Thus, the unpaid seller resumes possession of
the goods as long as it is in transit.

22
M/s. Jain Mills and Electrical Stores v. State of Orissa, AIR 1991 Ori. 117, 124.
23
[1877]UKPC 46.
 The unpaid seller can exercise the right of stoppage in transit only if he fulfils the
following conditions:
The seller must have parted with the possession of goods, i.e., the goods must not
be in the seller’s possession.
a) The goods must be in transit.
b) The buyer must have become insolvent.

In the case of The Great Indian Peninsula Railway vs The Municipal Corporation
Of Bombay24 the seller had consigned goods with the GIP Railway Company for
transportation to the buyer. Upon arrival at the destination, the company delivered
the goods to the buyer who loaded them onto his cart, but the cart had not yet left
the railway compound when a telegram was received to stop the goods. The
company failed to do so and was subsequently sued by the seller for damages. The
court held that the transit had ended as soon as the goods were handed over to the
buyer.

iii) Duration of Transit

As per section 51 of the Sale of Goods Act, the goods are in transit when they are
delivered to a carrier or bailee for transmission to the buyer and until the buyer or
his agents, on his behalf, take the delivery of those goods.
The unpaid seller loses the right to stoppage in transit in the following cases:
a) When the goods reach the destination, or
b) If the buyer or his agent on his behalf receives the goods before they reach their
destination, or
c) If the carrier or other bailee admits to the buyer or his agent that he has the
goods on his behalf and continues to possess them after the items arrive at the
designated destination, the transit is complete, or
d) If the carrier or other bailee wrongfully refuses to deliver the goods to the buyer
or his agent on his behalf, or
e) If they deliver part of the product to the buyer or his agent, the unpaid seller
may hold the rest of the shipment in transit if the portion transfer does not
enable the buyer to relinquish possession of the goods, or
f) If the seller has consented to the sub-sale or other disposition with the buyer.
24
(1914) 16 BOMLR 104
 Section 52 of the Sale of Goods Act provides that the unpaid seller may
exercise his right of stoppage in transit either:
a) By taking the actual position of the goods, or
b) By giving notice of his claim to the carrier or other bailee under whose
possession the goods are.

iv) What Is the Right to Resale the Goods

As per section 46(1) of the Sale of Goods Act, under the following circumstances,
the unpaid seller may resell the goods, if the goods are:
a) Of a perishable nature, or
b) When the unpaid seller exercised his right to lien or stoppage in transit and
gave notice to the buyer of his intention to resale.
We must note here that in such cases, on reselling the goods, it also entitles the
seller to:
a) Recover the difference between the contract price and the resale price from
the original buyer as damage.
b) Keep the profit if the resale price is higher than the contract price. But if the
unpaid seller does not give any notice, that shall not entitle such unpaid
seller to recover such damages, and the buyer can claim the profit on the
resale.

SUITS FOR BREACH OF CONTRACT

It is also known as the seller’s remedy for the breach of a contract of sale. These rights are as
follows:

i. Suit for damages

As per section 55 of the Sale of Goods Act, if the property in the goods has passed to
the buyer and he neglects or refuses to pay for it according to the contract, the seller
may sue him for the price of the goods.
ii. Suit for Damages for Non-acceptance

As per section 56 of the Sale of Goods Act, where the buyer wrongfully neglects or
refuses to accept the goods and pay for the goods, the seller may sue him for damages
for non-acceptance of the goods. For the measure of damages, section 73 of the Indian
Contract Act, 1872 applies.

ILLUSTRATION: For instance, X and Y entered into a contract for the sale of
wheat. X had to deliver 100 bags of wheat to Y on 15 th of the month. Y refused to take
delivery on 15thand on that day the price of one bag was Rs 5, 000. A suit was filed by
X for non-acceptance on 20th of the month and on that day the market price for a bag
of wheat was Rs 4,500. For the purpose of the suit, the market price will be
considered as Rs 5,000.

iii. Suit for Damages for Repudiation of the Contract

As per section 60 of the Sale of Goods Act, if the buyer repudiates the contract before the
due date for delivery, the seller may treat the contract as subsisting (maintain, survive,
keep active) and wait until the due date of delivery or treat the contract as
rescinded (revoke, cancel) and seek damages for the breach.

ILLUSTRATION: P is a seller and Q is a buyer. Q repudiates the contract before date,

but P does not accept the repudiation and keeps the contract alive. On the date of
performance, P delivers the products. But these are not according to the specification of
Q. in this case Q may reject the goods. P will not be able to avail any remedy. Or Q may
accept the goods and treat the breach of condition as a breach of warranty and recover
damages from P.

iv. Suit for Interest

As per section 61(2) of the Sale of Goods Act, a seller may sue the buyer for interest or
special damages in the event of a breach of contract while suing for an amount owed to
him. The point which is to be noted here that the seller can only claim interest when he is
 entitled to recover the price. When the seller is suing only for damages for breach of
contract, he cannot claim any interest. The same principle applies in the case of the buyer
also. He cannot claim an interest if he is suing the buyer for breach of warranty.

CONCLUSION

This research paper explores the Sale of Goods Act, its core principles and contemporary
relevance in commercial transactions. It highlights its resilience and adaptability , navigating
evolving business landscapes and technological advancements. The Act provides a structured
approach to contractual obligation and dispute resolution, but requires periodic amendments
to address modern challenges.

REFERENCES

i.