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Sales of goods Flashcards

1
Q

Sales of goods Act, 1930

A
  • came into force on 1st July 1930
  • Based on English sales of goods Act, 1893
  • Law relating to this statue was contained in Chapter VII of the Indian Contract Act, 1872
  • Where sales of goods Act is silent on any point, the general principles of law of contract apply
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2
Q

Sales of goods Sec 4(1)

A

A contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price

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3
Q

Buyer

A

Sec 2 (1)
Who buys or agrees to buy the goods

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4
Q

Seller

A

Sec 2 (13)
who sells or agrees to sell goods

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5
Q

Delivery

A

Sec 2(2)
Voluntary transfer of possession of goods from one person to other

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6
Q

Price

A

Sec 2 (10)
The money consideration for the sale of goods

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7
Q

Goods

A

Sec 2 (7)
-Every kind of movable property other than actionable claims and money
- Form the subject matter of a contract of sale
- It includes stocks, shares, growing crops, grass and things attached to or forming part of the land, which agreed to be severed before sale or under contract of sale (Sec 2(7))
- Every kind of movable property
- Includes every kind of transportable property
- Excludes money and actionable claims.
- Goodwill, patents, copyrights, trademarks, gas, water etc., Can be the subject matter of contract of sale

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8
Q

What are goods

A

Obvious ones: Books, mobile, laptop, clothes
Not so obvious: Copyrights, patents, Goodwill, share, grass, trees, crops etc.,

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9
Q

What are not goods?

A
  • Immovable property - land, building, houses (transfer of property act 1882)
  • Money - (existing currency) except antique coins
  • Actionable claims
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10
Q

Essentials of contract of sale

A

Sec 4 and 5
Atleast 2 parties
Goods
Transfer of ownership
Price
All essentials of valid contract of sale
Includes both sale and an agreement to sell- sec 4 (3)
Delivery of goods

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11
Q

Sale of goods

A

Sec 4 (1)
A contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price

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12
Q

Classification of Goods

A

Goods
- Existing goods (goods that physically exist and belong to the seller at the time of contract of sale.)

-Specific goods (goods specifically identified at the time a contract of sale is made, e.g. a shirt made of cotton and with a Mickey Mouse cartoon on it. If the goods are not so identified)

-Ascertained goods(Goods that have been individually recognized and approved at the time of the selling contract ).

-Unascertained goods (Goods belonging to bulk, but keeping only a certain quantity of the bulk are for sale.)

-Future goods (goods that are not yet in existence or that do not yet belong to the seller when the contract of sale is made. )

-Contingent goods (The acquisition of which is dependent upon happening or non-happening of some future event )

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13
Q

Sale Vs Agreement to Sell

A

Ref ppt 10

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14
Q

Effect of Destruction of Goods

A

01
Destruction of goods
before contract of
sale- Section 7
• Void contract
• Risk with seller
02
Destruction of goods
after the contract of
sale- Section 8
• Valid Contract
• Risk with buyer

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15
Q

Mode of fixing price (Section 9 and 10)

A
  1. Price expressly fixed in the contract itself
    2.Price fixed in manner provided in the contract
  2. Fixation of price by course of dealings
    4.Price fixed by the valuation of a third party
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16
Q

Doctrine of Caveat Emptor

A

 ‘Let the buyer beware’
 It means that the buyer while purchasing goods must act with a “third eye and ear”
 Exceptions of Doctrine of Caveat Emptor(poor quality, fraudulent )

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17
Q

Transfer of Ownership

A

Property in the goods – the legal ownership of the goods.
 Risk passes with ownership
 Property rights over the goods
 Seller’s right for price

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18
Q

Rule s for Transfer of Ownership

A

Sale of Specific Goods
 Ownership is Transferred at the Time of Making Contract
 1. The contract is for specific goods.
 2. The goods are put in deliverable state.
 3. The contract of sale must be inconditional
 Ownership may also be transferred at some other time
 Where the goods are to be put in a deliverable state by the seller
- Where the goods are to be weighed or measured by the seller to ascertain the price

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19
Q

Rules Regarding Delivery of Goods
Sections 32–39

A

-Payment of Price
-Buyer’s Duty to Demand
Goods
-Types or Mode of Delivery
- Place of Delivery
-Time of Delivery
- Expenses
- Delivery of Wrong Quality–Quantity
- Delivery by Instalment
- Right to Examine—Section 41
- Seller Duty on Valid Delivery of Goods
- Acceptance of Delivery—Section 42
- Liability of the buyer for neglecting or refusing to take delivery

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20
Q

Payment of Price

A

The delivery of the goods and the payment of the price are concurrent conditions

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21
Q

Types or Mode of Delivery

A

 Actual Delivery
 Symbolic Delivery
 Constructive Delivery

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22
Q

Place of Delivery

A

Ref

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23
Q

Time of Delivery

A

 If the contract specified the time of delivery, the goods shall be delivered within
such time.
 If no time is specified in the contract - delivered within a reasonable time.

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23
Q

Time of Delivery

A

 If the contract specified the time of delivery, the goods shall be delivered within such time.
 If no time is specified in the contract - delivered within a reasonable time.

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24
Expenses
 All the expenses of making the delivery of goods shall be paid by the seller  the seller and the buyer may agree otherwise.
25
Delivery of Wrong Quality–Quantity
 Short delivery, excess delivery, or mixed delivery (Section 37).  The seller is bound to deliver the goods of exact quality–quantity otherwise the buyer may: 1. Reject the whole. 2. Reject the goods not complying with the quality or quantity and accept the rest.
26
Delivery by Instalment
The buyer is not bound to accept the goods delivered in instalment. The delivery by instalment is not valid except if the contract provides so or the buyer accepts the delivery in instalment.
27
Right to Examine—Section 41
Ref
28
Seller Duty on Valid Delivery of Goods
Buyer has the following duties: 1. To accept the goods. 2. To pay the unpaid price.
29
Acceptance of Delivery—Section 42
 The delivery of goods should be voluntary and lawful  The buyer is deemed to have accepted the goods under the following circumstances: 1. When he intimates the seller about the acceptance of goods. 2. After the receipt of goods, he does some act of confirmation. 3. When he does not inform the seller about the rejection of goods with in a reasonable time.
30
Liability of the buyer for neglecting or refusing to take delivery
Buyer is liable to the seller for 1. any loss occasioned by his neglect or refusal to take delivery and also 2. a reasonable charge for the care and custody of the goods.
31
Conditions and Warranties
 Conditions and warranties fall under the Sale of Goods Act 1930  Sections 12-15 gives a detailed explanation on conditions and warranties  The terms “Condition” and “Warranty” are set out in the contract of sale in order to determine remedies the parties can claim in case of a breach by either of the parties.
32
Condition
 In the context of the Sale of Goods Act, 1930, a condition is a foundation of the entire contract and integral part for performing the contract.  The breach of the conditions gives the right to the aggrieved party to treat the contract as repudiated.
33
Condition as to title (section 14)
 In contract of sale, unless the circumstances of the contract are such as to show a different intention, there is an implied condition on the part of the seller that- (a) In the case of a sale, he has a right to sell the goods, and (b) In the case of an agreement to sell, he will have a right to sell the goods at the time when the property is to pass. Example: A bought a car from B and used it for four months. B had no title to the car and consequently A had to hand it over to the true owner. Held, A could recover the price paid.
34
Sale by Description (Section 15)
When a buyer intends to buy goods by description, the goods must correspond with the description given by the buyer at the time of formation of the contract, failure in which the buyer can refuse to accept the goods
35
Sale by Sample (Section 17)
 A contract of sale is a contract for sale by sample where there is a term in the contract, express or implied, to that effect [Sec. 17 (1)].  In the case of a contract for sale by sample, there is an implied condition- (a) that the bulk shall correspond with the sample in quality; (b) that the buyer shall have a reasonable opportunity of comparing the bulk with the sample.
36
Sale by sample as well as Description (Section 15)
When the sale of goods is by a sample as well as a description the bulk of the goods should correspond with both, i.e. description and sample provided to the seller in the contract and not only sample or description.
37
Implied conditions as to quality or fitness
 There is no implied condition as to the quality or fitness for any particular purpose of goods supplied under any contract of sale.  This is expressed by the maxim caveat emptor(let the buyer beware) 1. If the buyer had made known to the seller the purpose of his purchase 2. and the buyer relied on the seller’s skill and judgement, and 3. seller’s business to supply goods of that description. [Section 16]
37
Implied conditions as to quality or fitness
 There is no implied condition as to the quality or fitness for any particular purpose of goods supplied under any contract of sale.  This is expressed by the maxim caveat emptor(let the buyer beware) 1. If the buyer had made known to the seller the purpose of his purchase 2. and the buyer relied on the seller’s skill and judgement, and 3. seller’s business to supply goods of that description. [Section 16]
38
Condition as to merchantability
Where goods are brought by description from a seller who deals in goods of that description, there is an implied condition that the goods are of merchantable quality Example A manufacturer supplied 600 horns under a contract. The horns were found to be dented, scratched and otherwise of faulty manufacture. Packing of goods is an equally important consideration in judging their ‘merchantability’ EXAMPLE : X asked for a bottle of stone’s ginger wine at Y’s shop which was licensed for the sale of wines. While X was drawing the cork, the bottle broke and X was injured
39
Condition as to wholesomeness
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 Examples: (a) F bought milk from A. The milk contained germs of typhoid fever. F’s wife took the milk and got infection as a result of which she died. Held, F could recover damages (FrostV. Aylesbury Dairy Co. Ltd., (1905) 1 K.B. 608]. (b) C bought a bun containing a stone which broke one of C’s teeth. Held, he could recover damages Chaproniere v. Mason, (1905) 21 T.L.R. 633)
40
EXPRESSED AND IMPILIED CONDITIONS AND WARRANTIES
 Conditions and Warranties may be either express or implied.  Expressed conditions and warranties are those which are expressly provided in the contract.  The implied conditions and warranties are those which are presumed by law to be present in the contract though they have not been put into it in expressed words.  Implied conditions are dealt with in Sections 14 to 17 of the Sale of Goods Act, 1930
41
Warranty
Warranty is the additional stipulation and a written guarantee that is collateral to the main purpose of the contract. The effect of a breach of a warranty is that the aggrieved party cannot repudiate the whole contract, however, can claim for the damages.
41
Differences between condition and warranty
Ref ppt 37
42
Transfer of Ownership-Unascertained Goods— sections 18 And 23
 Ownership is transferred to the buyer as soon as the goods are identified  When the goods are ascertained, and  When the goods are appropriated to the contract.
43
Unpaid Seller Section 45
 The seller to whom the full price of the goods sold has not been paid the price is known as an unpaid seller.  A seller of goods is deemed to be unpaid in the following cases: 1. The price must be due but not paid. 2. A negotiable instrument like cheque and bill of exchange was received but the same has been dishonoured. 3. When the seller has been paid a large amount but small portion of the payment remains to be paid.  The seller must have an immediate right of action for the price.
44
Rights of an unpaid seller
Unpaid seller has two kinds of rights: •Against the goods •Against the buyer personally
44
Rights of Unpaid Seller against the goods
ppt 41
45
Right of Lien
 Lien means the right to retain the possession of goods until the full price is received.  The seller can exercise his right of lien on the following two conditions: 1. He must be in possession of the goods. 2. He is an unpaid seller.
46
Right of Stoppage in Transit Sections 50–52
 Extension of the right of lien.  The right of stoppage in transit is a right to regain the possession.  The right of stoppage in transit can be exercised if  the goods are in transit and the buyer has become insolvent in the meantime  the unpaid seller where he has lost his right of lien
47
Rights of Unpaid Seller Against Buyer (Section 55 - 61)
- Suit for the Price - Suit for damages for non-acceptance - Repudiation of the contract before due date - Suit for interest
48
Buyer’s Right against the Seller or Remedies Against Seller Sections 55–61
1. Suit for Damage for Non-delivery 2. Suit for Specific Performance 3. Suit for Breach of Warranty 4. Right to Repudiate the Contract 5. Suit for Interest
49
 A agrees to deliver his old car valued at Rs. 100000 to B, a car dealer, in exchange for a new car, and agrees to pay the difference in cash.  It is valid contract of sale?  What would be your answer if he exchanges the car against the new car and does not pay any money?
answer
50
A contracts to sell B, by showing sample, certain quantity of seed oil described as ‘foreign refined seed-oil’. The oil when delivered matches with the sample, but is not ‘foreign refined seed oil’. Referring to the provisions of Sale of Goods Act, 1930 advise the remedy, if any, available to B.
ANs
51
Alan bought a second hand car from Jacob for Rs. 5,0000 and paid for it. After Alan had used the car for six months, he was deprived of it because Jacob had no title to it. Can Alan recover the price of the car from Jacob? Advise Alan?
ans
52
A goes to B's shop and purchases a silk saree thinking that it is made of Banarasi Silk. The shopkeeper knows that A's thinking. is wrong. He however, does not correct A's impression. Later on, when A discovers that the saree is not made of Banarasi-silk, he wants to avoid the contract. Would A succeed? Give reasons?
ans
53
Agency
The person who carried out the transaction on behalf of another is known as an agent. This arrangement is known as contract of agency.
54
Agent
An agent is a person employed to do any act for another person, or to represent another in his/her dealings with third persons (Section 182).
55
Principal
 The person for whom such an act is done or who is so represented is called the principal.
56
Essentials for a Valid Agency
 Agreement between the Principal and the Agent  Agreement must act in a representative capacity  Capacity of a party  Consideration
57
Principles of Agency
CREATION OF AGENCY Different Kinds of Agents Termination of Agency
58
CREATION OF AGENCY
 Agency by an Express Agreement  Agency by an Implied Agreement  Agency by Estoppel  Agency of Necessity  Husband and Wife relations  Agency by Operation of law  Agency by Ratification
59
Different Kinds of Agents
Based on the extent of authority  General Agent  Special Agent  Universal Agent Based on the nature of work performed  Mercantile Agents  Non-mercantile Agents
60
Termination of Agency
- THE TERMINATION OF THE AGENCY BY THE ACT OF PARTIES. - THE TERMINATION OF THE AGENCY BY THE OPERATION OF LAW.
61
The termination of the agency by the act of parties
 By an Agreement  By Revocation of an Authority  By Renunciation of Agency by Agent
62
The termination of the agency by the operation of law
By Performance By Death or Insanity By Insolvency By Expiry of Time Destruction of subject matter of the agency

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