THE LAW RELATING
TO
SALE OF GOODS
Definitions:
➢ Buyer: Buyer means a person who buys or agrees to buy goods.----- Sec 2(1)
➢ Seller: Seller means a person who sells or agrees to sell goods. ---- Sec 2(13)
➢ Price: Price, means the money consideration for a sale of goods.
➢ Goods: the term “Goods” includes every kind of movable property except (i)
actionable claims and (ii) money. Goods may be classified into three types:
1. Existing goods: Existing goods are goods which are already in existence and which
are physically present in some person’s possession and ownership. – Sec 6(1)
Existing goods may be either (i) Specific and ascertained goods, and(ii) Generic and
unascertained goods.
i. Specific / Ascertained Goods: Specific / Ascertained goods identified and agreed
upon at the time when a contract of state is made.
ii. Generic / Unascertained Goods: Generic / Unascertained goods are not
identified and agreed upon at the time when a contract of state is made.
2. Future goods: Future goods mean goods to be manufactured or produced by the
seller after the making of the contract of sale.
3. Contingent goods : There may be a contract for the sale of goods for the
acquisition of which by the seller depends upon a contingency which may or may
not be happen.
➢ Sale
Where under a contract of sale the title/property in goods (the ownership) is
transferred from the seller to the buyer, the contract is called a sale.
➢ Agreement to sell
When the ownership is transferred at a future time or subject to some conditions
to be fulfilled later, the contract is called an agreement to sell .
➢ Difference between Sale and Agreement to sell
i. Transfer of property/ownership
ii. Transfer of risk
iii. Remedial measures
iv. Nature of contract ( Executed and executor)
➢ The Essential elements of a contract for sale of goods
i. Moveable goods
ii. Moveable goods for money
iii. Two parties-Buyer and seller
iv. A contract of sale
v. Terms and condition as per negotiation
vi. Other essential elements of a contract
➢ Condition
A condition is stipulation/terms essential to the main purpose of contract, the breach of
which gives rise to right to treat the contract as repudiated/rejected.
➢ Warranty
A warranty is stipulation/terms collateral ( subsidiary to main purpose) to the main
purpose of contract, the breach of which gives rise to claim for damages but not a
right to reject the goods and treat the contract as repudiated.
➢ When a condition can be treated as a warranty
i. Voluntary waiver of a condition
ii. Compulsory waiver of a condition: Goods partly accepted/consumed
➢ Implied conditions
i. Condition as to tile
ii. Sale by description
iii. Sale by sample
iv. Sale by sample and description
v. Condition as to fitness or quality
➢ Differences between Condition and Warranty:
1.Definition
2.Term
3.Breach of condition and breach of warranty
4.conversion
The Doctrine of Caveat Emptor:
Caveat Emptor is a Latin expression which means “ Buyers beware”.
Ordinarily a buyer must buy goods after satisfying himself of quality of goods and
fitness. If he makes a bad choice he cannot blame the seller or recover damages from
him.
Exceptions:
i. When the buyer relies upon the skill and judgment of seller
ii. Where by custom an implied condition of fitness is annexed to a contract of sale
iii. Where there is a sale of goods by description, there is an implied condition that
the goods are fit for sale
iv. Where the seller is a guilty of fraud.
➢ Delivery:According to Sec. 2(2) of the Act, delivery means “voluntary transfer of possession of goods from
one person to the other person.” –
Types of delivery of Goods:
1) Actual Delivery: Where the seller or his authorized agent physically handover the contracted goods to
buyer or his authorized agent by giving in possession.
2) Symbolic Delivery: When the goods are bulkier (or ponderous), where actual handover is not possible,
a symbolic handover is done. (Ex: handover of key of car or warehouse or papers)
3) Constructive Delivery or Delivery by Attornment: where a third person i.e. an agent or bailer, who
holds the goods on behalf of the buyer and acknowledges the buyer.
➢ Rules regarding delivery:
• Possession of Buyer. • Delivery of the wrong quantity.
• Effect of part delivery. • Installment delivery.
• Application for delivery. • Delivery to the Carrier.
• Place of delivery. • Examining the goods.
• Time of delivery. • Acceptance.
• Possession of a third person. • Buyer is not bound to return rejected goods.
• Expenses of delivery. • Liability of Buyer.
Duties of buyer of goods: Duties of seller of goods:
i. Payment of price i. Delivery of goods
ii. Compensation for non acceptance of goods ii. Risk of deterioration in the
iii. Delivery goods
iv. Liability /compensation/charge for not taking delivery of iii. Damages for non delivery
goods iv. Specific performance
v. Interest and special damages
Right of buyer of goods: Right of seller of goods:
i. Delivery. i. Remedies.
ii. Repudiation. ii. Enforcement of liabilities of
iii. Buyer’s right of examining goods. buyer.
iv. Buyer is not bound to return rejected goods. iii. Other rights
v. Damages for non-delivery. a) Damages for non -delivery.
vi. Specific performance. b) Remedy for breach of
vii. Remedy for breach of warranty. warranty.
viii.Repudiation of Contract. c) Repudiation of contract.
ix. Effect of tax changes. d) Interest and special damages.
