Sale Of Goods Act, 1930

Question 1

Definition of Buyer

Answer 1

Buyer means a person who buys or agrees to buy goods

Question 2

Definition of Seller

Answer 2

Seller means a person who sells or agrees to sell goods

Question 3

Goods means

Answer 3

Means every kind of movable property

Other than Actionable Claims, Money in circulation

Also Includes Stock & Shares, Growing crops, Grass and Things attached to or forming part of land which agreed to be served

Question 4

Types Goods

Answer 4

Existing Goods
Future Goods
Contingent Goods

Question 5

Existing Goods

Answer 5

EXISTING GOODS are such goods as are in existence at the time of the contract of sale, i.e.. those owned or possessed or acquired by the seller at the time of contract of sale

Question 6

Classification of Existing Goods

Answer 6

Specific goods means goods identified and agreed upon at the time a contract of sale is made.

Ascertain goods are those goods which are identified in accordance with the agreement after the contract of sale is made

Unascertained goods are the goods which are not specifically identified or ascertained at the time of making of the contract.

Question 7

Future Goods

Answer 7

FUTURE GOODS means goods to be manufactured or produced or acquired by the seller after making the contract of sale

Question 8

Contingent Goods

Answer 8

The acquisition of which by the seller depends upon an uncertain contingency (uncertain event) are called ‘contingent goods’

Question 9

Delivery

Answer 9

Delivery means voluntary transfer of possession from one person to another. As a general rule, delivery of goods may be made by doing anything, which has the effect of putting the goods in the possession of the buyer, or any person authorized to hold them on his behalf.

Question 10

Forms of delivery

Answer 10

Actual Delivery
Constructive Delivery
Symbolic Delivery

Question 11

Actual Delivery

Answer 11

When the goods are physically delivered to the buyer. Actual delivery takes place when the seller transfers the physical possession of the goods to the buyer or to a third person authorised to hold goods on behalf of the buyer. This is the most common method of delivery

Question 12

Constructive Delivery

Answer 12

When it is effected without any change in the custody or actual possession of the thing as in the case of delivery by attornment (acknowledgement)

Constructive delivery takes place when a person in possession of the goods belonging to the seller acknowledges to the buyer that he holds the goods on buyer’s behalf.

Question 13

Symbolic Delivery

Answer 13

When there is a delivery of a thing in token of a transfer of something else, ie . delivery of goods in the course of transit may be made by handing over documents of title to goods, like bill of lading or railway receipt or delivery orders or the key of a warehouse containing the goods is handed over to buyer

Question 14

Document of title

Answer 14

“Document of title to goods” includes bill of lading, dock-warrant, warehouse keeper’s certificate, wharfingers’ certificate, railway receipt, multimodal transport document, warrant or order for the delivery of goods and any other document used in the ordinary course of business as proof of the possession or control of goods or is for authorizing or purporting to authorize, either by endorsement or by delivery the possessor of the document to transfer or receive goods thereby represented.

Question 15

Mercantile Agent

Answer 15

It means an agent who in the customary course of business has, a such agent, authority either to sell goods or to consign goods for the purpose of sale or to buy goods o
to raise money on the security of the goods.

Question 16

Property

Answer 16

Property’ here means ‘ownership’ or general property. In every contract of sale, the ownership of 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.

Question 17

Insolvent

Answer 17

A person is said to be insolvent when he ceases to pay his debts in the ordinary course of business, or cannot pay his debts as they become due, whether he has committed an a insolvency or not

Question 18

Contract of sale

Answer 18

According to section 4(1), “A contract of sale of goods is a contract whereby the seller transfers or agrees t transfer the property in goods to the buyer for a price.”

Question 19

Sale

Answer 19

Where under a contract of sale the property in the goods is transferred from the seller to the buyer, the contract is called a sale.

Question 20

Agreement to sell

Answer 20

Where the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, it is called an agreement to sell.

Question 21

Essentials to Contract of Sale

Answer 21

i) There must be at least two parties, the seller and the buyer and the two must be different persons. A person cannot be both the seller and the buyer and sell his goods to himself.

ii)The subject matter of the contract must necessarily be goods covering only movable property. It may be either existing goods, owned or possessed by the seller or future goods

iii)A price in money (not in kind) should be paid or promised. But there is nothing to prevent the consideration from being partly in money and partly in kind.

iv)A transfer of property in goods from seller to the buyer must take place. The contract of sale is made by an offer to buy or sell goods for a price by one party and the acceptance of such offer by other.

v)A contract of sale may be absolute or conditional

vi)All other essential elements of a valid contract must be present in the contract of sale, e.g. free consent of parties, competency of parties, legality of object and consideration etc.

Question 22

Condition

Answer 22

A condition is a stipulation essential to the main purpose of the contract, the breach of which gives rise to a right to treat the contract as repudiated

Question 23

Warranty

Answer 23

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 to a right to reject the goods and treat the contract as repudiated.

Question 24

When condition are treated as warranty

Answer 24

Where the buyer altogether waives the performance of the condition. A party may for his own benefit waive a stipulation.

Where the buyer elects to treat the breach of the conditions, as one of a warranty.

Where the contract is non-severable and the buyer has accepted either the whole goods or any part thereof.

Where the fulfilment of any condition or warranty is excused by law by reason of impossibility or otherwise.

Question 25

Implied Conditions

Answer 25

Condition as to title

Condition as to description

Sale by sample

Sale by sample as well as by description

Condition as to quality or fitness

Condition as to merchantability

Condition as to wholesomeness

Question 26

Condition as to title

Answer 26

The condition implied is that the seller has the right to sell the goods at the time when the property is to pass. If the seller’s title turns out to be defective, the buyer must return the goods to the true owner and recover the price from the seller.

Question 27

Sale by description

Answer 27

Where there is a contract of sale of goods by description, there is an implied condition that the goods shall correspond with the description. This rule is based on the principle that “if you contract to sell peas, you cannot compel the buyer to take beans.” The buyer is not bound to accept and pay for the goods which are not in accordance with the description of goods.

Question 28

Sale by sample

Answer 28

In a contract of sale by sample, there is an implied condition that

(a)the bulk shall correspond with the sample in quality

(b) the buyer shall have a reasonable opportunity of comparing the bulk with the sample

Question 29

Sale by sample as well as by description

Answer 29

Where the goods are sold by sample as well as by description the implied condition is that the bulk of the goods supplied shall correspond both with the sample and the description. In case the goods correspond with the sample but do not tally with description or vice versa or both, the buyer can repudiate the contract.

Question 30

Condition as to quality and fitness

Answer 30

There is implied condition on the part of the seller that the goods supplied shall be reasonably fit for the purpose for which the buyer wants them, provided the following conditions are fulfilled:

(a) The buyer should have made known to the seller the particular purpose for which goods are
required.

(b)The buyer should rely on the skill and judgement of the seller.

(c) The goods must be of a description dealt in by the seller, whether he be a manufacturer or not.

Question 31

Condition as to Merchantability

Answer 31

Where goods are bought by description from a seller who deals in goods of that description (whether he is the manufacturer or producer or not), there is an implied condition that the goods shall be of merchantable quality.

Question 32

Condition as to wholesome

Answer 32

In the case of eatables and provisions, in addition to the implied condition as to merchantability, there is another implied condition that the goods shall be wholesome

Question 33

Implied Warranties

Answer 33

Warranty as to undisturbed possession

Warranty as to non- existence of encumbrances

Warranty as to quality or fitness by usage of trade

Disclosure of the dangerous nature of goods

Question 34

Warranty as to undisturbed possession

Answer 34

An implied warranty that the buyer shall have and enjoy quiet possession of the goods. That is to say, if the buyer having got possession of the goods, is later on disturbed in his possession, he is entitled to sue the seller for the breach of the warranty.

Question 35

Warranty as to non encumbrance

Answer 35

An implied warranty that the goods shall be free from any charge or encumbrance in favour of any third party not declared or known to the buyer before or at the time the contract is entered into.

Question 36

Warranty as to quality or fitness by usage of trade

Answer 36

An implied warranty as to quality or fitness for a particular purpose may be annexed or attached by the usage of trade.

Question 37

Disclosure of dangerous nature of goods

Answer 37

Where the goods are dangerous in nature and the buyer is ignorant of the danger, the seller must warn the buyer of the probable danger. If there is a breach of warranty, the seller may be liable in damages.

Question 38

Caveat Emptor

Answer 38

In case of sale of goods, the doctrine Caveat Emptor means let the buyer beware. When sellers display their goods in the open market, it is for the buyers to make a proper selection or choice of the goods. If the goods turn out to be defective, he cannot hold the seller liable. The seller is in no way responsible for the bad selection of the buyer. The seller is not bound to disclose the defects in the goods which he is selling

Question 39

Exceptions to Caveat Emptor

Answer 39

1. Fitness as to quality or use.
2. Goods sold by description
3. Goods of Merchantable quality
4. Sale by sample
5. Goods sold by sample as well as description

6.Trade usage

7. Selles actively conceals a defect or is guilty of fraud

Question 40

Passing of the property

Answer 40

The rules regarding transfer of property in goods from the seller to the buyer depend on two basic factors.

Identification of Goods: Where there is a contract of sale for unascertained goods, the property in goods cannot pass to the buyer unless and until the goods are ascertained. The buyer can get the ownership right on the goods only when the goods are specific and ascertained

Intentions of parties: The property in goods is transferred to the buyer at such time as the parties to the contract intends it to be transferred

Question 41

Passing of property in
Specific goods in a deliverable state

Answer 41

Where there is an unconditional contract for the sale of specific goods in a deliverable state, the property in the goods passes to the buyer when the contract is made, and it is immaterial whether the time of payment of the price or the time of delivery of the goods, or both, is postponed.

Question 42

Specific goods to be put into a deliverable state

Answer 42

Where there is a contract for the sale of specific goods and the seller is bound to do something to the goods for the purpose of putting them into a deliverable state, the property does not pass until such a thing is done and
the buyer has noticed thereof

Question 43

Specific goods in a deliverable state, when the seller has to do anything thereto in order to ascertain price

Answer 43

Where there is a contract for the sale of specific goods in deliverable state, but the seller is bound to weigh, measure, test or do some other act or thing with reference to the goods for the purpose of ascertaining the price, the property does not pass until such an act or thing is done and the buyer has notice thereof.

Question 44

Sale of ascertain good by description

Answer 44

Where there is a contract for the sale of unascertained or future goods by description and goods of that description and in a deliverable state are unconditionally appropriated to the contract, either by the seller with the assent of the buyer or by the buyer with the assent of the seller, the property in the 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.

Question 45

Delivery to the carrier

Answer 45

Where, in pursuance of the contract, the seller delivers the goods to the buyer or to a carrier or other bailee (whether named by the buyer or not) for the purpose of transmission to the buyer, and does not reserve the right of disposal, he is deemed to have unconditionally appropriated the goods to the contract.

Question 46

Goods sent on approval or “sale or return”

Answer 46

When goods are delivered to the buyer on approval or “on sale or return” or other similar terms, the
property therein passes to the buyer-

(a) when he signifies his approval or acceptance to the seller or does any other act adopting the transaction

(b)if he does not signify his approval or acceptance to the seller but retains the goods without giving notice of rejection, then, if a time has been fixed for the return of the goods, on the expiration of such time, and, if no time has been fixed, on the expiration of a reasonable time: or

(c) he does something to the good which is equivalent to accepting the goods e.g. he pledges or sells the goods

Question 47

Reservation of right of disposal

Answer 47

Where there is a contract for the sale of specific goods or where goods are subsequently appropriated to the contract, the seller may, by the terms of the contract or appropriation, reserve the right of disposal of the goods until certain conditions are fulfilled. In such a case, notwithstanding the delivery of the goods to a buyer, or to a carrier or other bailee for the purpose of transmission to the buyer, the property in the goods does not pass to the buyer until the conditions imposed by the seller are fulfilled

Question 48

Risk Prima Facie

Answer 48

Unless otherwise agreed, the goods remain at the seller’s risk until the property therein is transferred to the buyer, but when the property therein is transferred to the buyer, the goods are at the buyer’s risk whether delivery has been made or not.

It is provided that, where delivery has been delayed because of the fault of either buyer or seller, the goods are at the risk of the party in fault as regards any loss which might not have occurred but for such fault.

Question 49

Transfer of Title by Non Owners

Answer 49

1)Sale by Mercantile Agent:

2) Sale by one of the join owner

3)Sale by a person in possession under a voidable contract

4) Sale by one who has already sold the goods but continues in possession there of.

5)Sale by the buyer obtaining possession before the property in the goods has vested in him.
[ Here purchase not covered in this ]

6] Effect of Estoppel

7] Sale by an unpaid seller

8] Sale under the provision of other Act

Question 50

Sale by Mercantile Agent

Answer 50

A sale made by a mercantile agent of the goods for document of title to goods would pass a good title to the buyer in the following circumstances; namely:
(a) If he was in possession of the goods or documents with the consent of the owner

b) If the sale was made by him when acting in the ordinary course of business as a mercantile agent, and

c) If the buyer had acted in good faith and has at the time of the contract of sale, no notice of the fact that the seller had no authority to sell

Question 51

Sale by one of the Joint owners

Answer 51

If one of several joint owners of goods has the sole possession of them by permission of the co-owners, the property in the goods is transferred to any person who buys them from such joint owner in good faith and has not at the time of the contract of sale notice that the seller has no authority to sell.

Question 52

Sale by a person in possession under voidable contract

Answer 52

A buyer would acquire a good title to the goods sold to him by a seller who had obtained possession of the goods under a contract voidable on the ground of coercion, fraud, misrepresentation or undue influence provided that the contract had not been rescinded until the time of the sale

Question 53

Sale by one who has already sold the goods but continues in possession thereof

Answer 53

If a person has sold goods but continues to be in possession of them or of the documents of title to them, he may sell them to a third person, and if such person obtains the delivery thereof in good faith and without notice of the previous sale, he would have good title to them, although the property in the goods had passed to the first buyer earlier

Question 54

Sale by buyer obtaining possession before the property in the goods has vested in him

Answer 54

Where a buyer with the consent of the seller obtains possession of the goods before the property in them has passed to him, he may sell, pledge or otherwise dispose of the goods to a third person, and if such person obtains delivery of the goods in good faith and without notice of the lien or other right of the original seller in respect of the goods, he would get a good title to them

Question 55

Effect of Estoppel

Answer 55

Where the owner is estopped by the conduct from denying the seller’s authority to sell, the transferee will get a good title as against the true owner. But before a good title by estoppel can be made, it must be shown that the true owner had actively suffered or held out the other person in question as the true owner or as a person authorized to sell the goods.

Question 56

Sale by an unpaid seller:

Answer 56

Where an unpaid seller who had exercised his right of lien or stoppage in transit resels the goods, the buyer acquires a good title to the goods as against the original buyer

Question 57

Rights of an Unpaid Seller against goods

Answer 57

Right of lien

Right of stoppage in transit

Right of re sell

Question 58

Right of lien

Answer 58

An unpaid seller has a right of lien on the goods for the price while he is in possession, until the payment or tender of the price of such goods. It is the right to retain the possession of the goods and refusal to deliver them to the buyer until the price due in respect of them is paid or tendered.

Question 59

Exercise of Right of Lien can be done

Answer 59

(a) where goods have been sold without any stipulation of credit; (i.e., on cash sale

(b) where goods have been sold on credit but the term of credit has expired; or

(c) where the buyer becomes insolvent.

Question 60

Right of stoppage in transit

Answer 60

When the buyer of goods becomes insolvent, the unpaid seller who has parted with the possession of the goods has the right of stopping them in transit, that is to say, he may resume possession of the goods as long as they are in the course of transit and may retain them until paid or tendered price of the goods

Question 61

Right of Resell

Answer 61

The right of resale is a very valuable right given to an unpaid seller. In the absence of this right, the unpaid seller’s other rights against the goods that is lien and the stoppage in transit would not have been of much use because these rights only entitled the unpaid seller to retain the goods until paid by the buyer

Question 62

Exercise of Right of resell can be done

Answer 62

i)where the goods are of a perishable nature

ii) where he gives notice to the buyer of his intention to re-sell the goods

iii)Where unpaid seller who has excercised his right of lien or stappage in transit.

iv] A re-sale by the seller where a right of resell is expressly reserved in contract of sale.

v] Where the property in goods has not passed to the buyer

Question 63

Right of Unpaid Seller against Buyer

Answer 63

1] Suit for price

2] Suit for damages for non-acceptance

[3] Repudiation of contract before due date

4] Suit for interest

Question 64

Remedies of Buyer Against the Seller

Answer 64

[1] Damages for non-delivery

[2] suit for specific performance

[3] Suit for breach of warranty.

[4] Repudiation of contract before due clate, may treat the contract rescinded and sue for the damages upon breat

[5] Suit for interest

Question 65

Lega Rules Regarding Auction Sale

Answer 65

a) Where goods are sold in lots: Where goods are put up for sale in lots, each lot is prima facie deemed to be subject of a separate contract of sale.

b) Completion of the contract of sale: The sale is complete when the auctioneer announces its completion by the fall of hammer or in any other customary manner and until such an announcement is made, any bidder may retract from his bid.

(c) Right to bid may be reserved: Right to bid may be reserved expressly by or on behalf of the seller and where such a right is expressly reserved, but not otherwise, the seller or any one person on his behalf may bid at the auction.

(d) Where the sale is not notified by the seller: Where the sale is not notified to be subject to a right to bid on behalf of the seller, it shall not be lawful for the seller to bid himself or to employ any person to bid at such sale, or for the auctioneer knowingly to take any bid from the seller or any such person; and any sale contravening this rule may be treated as fraudulent by the buyer.

e)Reserved price: The sale may be notified to be subject to a reserve or upset price, and

f)Pretended bidding: If the seller makes use of pretended bidding to raise the price, the sale is voidable
at the option of the buyer.