1. The Sales of Goods Act-
1930, An Introduction
Mercantile Law
2. MERCANTILE LAWS
• Mercantile laws are the laws that
govern and regulate trade and
commerce.
• These law deals with rights and
obligations of parties to a mercantile
agreement.
Mercantile Law:The Sales of 2
Goods Act-1930, An
3. SCOPE OF MERCANTILE
LAWS
Indian Mercantile Laws covers various
Acts such as :
• The Indian Contract Act,1872.
• The Sales of Goods Act,1930.
• The Partnership Act,1932.
• The Companies Act,1956 .
• Copyright Act,etc.
Mercantile Law:The Sales of 3
Goods Act-1930, An
4. The Sale of Goods Act,1930
• Originally,the law relating to the sale
of goods or movables was contained in
the chapter VII of the Indian Contract
Act,1872.
Mercantile Law:The Sales of 4
Goods Act-1930, An
5. • The Indian Contract Act,1872
embodied the simple and elementary
rules relating to the sale of goods. The
developments of modern business
relations found the Indian Contract
Act inadequate to deal with the new
regulations or give effect to the new
principles.
Mercantile Law:The Sales of 5
Goods Act-1930, An
6. • Subsequently the provisions relating to
the sale of goods contained in the
Indian Contract Act,1872 was repealed
and re-enacted by the Sale of Goods
Act,1930.
Mercantile Law:The Sales of 6
Goods Act-1930, An
7. • This Act has seen several amendments
and adaptation orders in due
course.The latest one of such was the
Multimodal Transportation of Goods
Act,1993.
Mercantile Law:The Sales of 7
Goods Act-1930, An
8. Introduction
• The Sale of Goods Act,1930 was laid
down to define and amend the law
relating to the sale of goods or
movables.The Act came into force on
the 1st day of July,1930.It extends to
the whole of India except Jammu and
Kashmir.
Mercantile Law:The Sales of 8
Goods Act-1930, An
9. • This Act lays down special provisions
governing the contract of sale of goods.
The general law of contract is also
applicable to contracts for the sale of
goods unless they are inconsistent with
the express provisions of the Sale of
Goods Act.
Mercantile Law:The Sales of 9
Goods Act-1930, An
10. DEFINITIONS
• Section 2 of the Sale of Goods Act,
1930 defines the terms which have been
frequently used in the Act, which are
as follows –
Mercantile Law:The Sales of 10
Goods Act-1930, An
11. • Buyer and Seller: ‘Buyer’ means a
person who buys or agrees to buy
goods [Sub Section (1)]; ‘seller’
means a person who sells or agrees to
sell goods [Sub Section (13)].
Mercantile Law:The Sales of 11
Goods Act-1930, An
12. • Goods and other related terms
(a)"Goods” means every kind of movable
property other than actionable claims
and money; and includes stock 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; [Sub Section (7)].
Mercantile Law:The Sales of 12
Goods Act-1930, An
13. (b) Existing goods are such goods as are
in existence at the time of the contract
of sale, i.e., those owned or possessed
by the seller (Section 6).
Mercantile Law:The Sales of 13
Goods Act-1930, An
14. (c) Future goods means goods to be
manufactured or produced or acquired
by the seller after making the contract
of sale [Section 2 (6)].
Mercantile Law:The Sales of 14
Goods Act-1930, An
15. (d) Specific goods means goods identified
and agreed upon at the time the
contract of a sale has been made
[Section 2(14)].
Mercantile Law:The Sales of 15
Goods Act-1930, An
16. (e) Unascertained' goods defined only by
description and not identified and
agreed upon.
(f) Ascertained goods have been held to
mean goods identified in accordance
with the agreement after the contract
of sale has been made.
Mercantile Law:The Sales of 16
Goods Act-1930, An
17. (g) Goods are said to be in a deliverable
state when they are in such a condition
that the buyer would, under contract,
be bound to take delivery of them.
Mercantile Law:The Sales of 17
Goods Act-1930, An
18. • Delivery - its forms and derivatives:
Delivery means voluntary transfer of
possession by one person to another
[(Section 2(2)].
Mercantile Law:The Sales of 18
Goods Act-1930, An
19. • Delivery may be of three kinds,
which may be enumerated as follows:
(i) Actual delivery: It is actual when the
goods are physically delivered to the
buyer.
(ii) Constructive delivery: 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)
Mercantile Law:The Sales of 19
Goods Act-1930, An
20. (iii) Symbolic delivery: When there is a
delivery of a thing in token of a
transfer of something else.
Mercantile Law:The Sales of 20
Goods Act-1930, An
21. • "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.
Mercantile Law:The Sales of 21
Goods Act-1930, An
22. • It is used in the ordinary course of
business as proof of the possession or
control of goods or authorising or
purporting to authorise, either by
endorsement or by delivery, the
possessor of the document to transfer
or receive goods thereby represented;
Mercantile Law:The Sales of 22
Goods Act-1930, An
23. • Mercantile Agent [Sub-section (9)]: It
means an agent having in the
customary course of business as such
agent an 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 the goods
Mercantile Law:The Sales of 23
Goods Act-1930, An
24. • Property [Sub-section (11)]: It means
the general property (right of owner-
ship-in goods) and not merely a special
property.
Mercantile Law:The Sales of 24
Goods Act-1930, An
25. Flow chart
Sale of goods
Formation of Performance Suit for breach
Contract of Contract of Contract
Effects of Unpaid
the contract Seller
Mercantile Law:The Sales of 25
Goods Act-1930, An
26. Formation of the contract
General Price
Subject- Conditions
matter &
Warranties
Mercantile Law:The Sales of 26
Goods Act-1930, An
27. General
Formalities of
Contract of sale
The contract
Agreement
Sale
to sell
Mercantile Law:The Sales of 27
Goods Act-1930, An
28. Subject- matter
Goods perishing
before making
of contract
Existing Goods perishing
or before sale but
future goods after agreement
to sell
Mercantile Law:The Sales of 28
Goods Act-1930, An
29. The Price
Ascertainment Agreement
of to sell
price at valuation
Mercantile Law:The Sales of 29
Goods Act-1930, An
30. CONTRACT OF SALE
Mercantile Law:The Sales of 30
Goods Act-1930, An
31. • Section 4 (1) of the Sale of Goods
Act, 1930 defines the term ‘Contract
of Sale’ as – a contract of sale of
goods is a contract whereby the seller
transfers or agrees to transfer the
property in goods to the buyer for a
price.
Mercantile Law:The Sales of 31
Goods Act-1930, An
32. • Essentials of contract of sale:-
(i) There must be at least two parties .
(ii) The subject matter of the contract
must be goods.
(iii) price
(iv) transfer of property in goods
(v) absolute or conditional .
(vi) All other essential elements of a valid
contract
Mercantile Law:The Sales of 32
Goods Act-1930, An
33. • SALE AND AN AGREEMENT TO
SELL
The term Sale is defined in the Section
4(3) of the Sale of Goods Act, 1930 as –
“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.”
Mercantile Law:The Sales of 33
Goods Act-1930, An
34. Example
• A sells his Yamaha motorcycle to B for
Rs.10,000. It is sale since the ownership
of the motorcycle has been transferred
from A to B.
Mercantile Law:The Sales of 34
Goods Act-1930, An
35. • The term “Agreement to sell” is
defined in Section 4(3) of the Sale of
Goods Act, 1930, as – where under a
contract of sale 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, the
contract is called an agreement to sell.
Mercantile Law:The Sales of 35
Goods Act-1930, An
36. Example
X agrees with Y on 10th of April that
he will sell his house to Y on 10th of
May for a sum of Rs.3 lakhs. It is an
agreement to sell .Since X agrees to
transfer the ownership of his house to
Y in future.
Mercantile Law:The Sales of 36
Goods Act-1930, An
37. Differences
Basis Sale Agreement to
sell
Nature Sale is an Agreement to
of executed sell is an
Contract contract. executory
contract
Mercantile Law:The Sales of 37
Goods Act-1930, An
38. Basis Sale Agreement to
sell
Transfer Sale gives to An agreement
of the buyer to sell secure
Owner- absolute to the buyer
ship ownership of only the right
the goods. against a
particular
individual.
Mercantile Law:The Sales of 38
Goods Act-1930, An
39. Basis Sale Agreement to
sell
Subject Goods may The goods will
matter be be
ascertained unascertained.
or specific
Mercantile Law:The Sales of 39
Goods Act-1930, An
40. Basis Sale Agreement to
sell
Remedy In case of In case of
for breach,the breach,the
breach seller can seller can only
only sue for sue for
the price of damages
the goods
Mercantile Law:The Sales of 40
Goods Act-1930, An
41. Sale distinguished from other
similar contracts
• Sale and Hire Purchase:
The hire purchase contract is a
development of modern commercial
transactions.Here the owner of goods
delivers the goods to a person who
agrees to pay certain stipulated
periodical payments as hire charges.
Mercantile Law:The Sales of 41
Goods Act-1930, An
42. Distinction between the ‘sale’
and ‘hire-purchase’
Basis Sale Hire
purchase
Transfer of Property in The goods
ownership the goods is passes to the
transferred hirer upon
to the buyer payment of
immediately the last
at the time installment.
of contract
Mercantile Law:The Sales of 42
Goods Act-1930, An
43. Basis Sale Hire-purchase
Position The position The position
of the buyer is of the hirer is
that of the that of a bailee
owner of the till he pays the
goods last
installment
Mercantile Law:The Sales of 43
Goods Act-1930, An
44. Basis Sale Hire purchase
Terminatio- The buyer The hirer
n cannot may,terminate
terminate the the contract,by
contract and is returning the
bound to pay goods to its
the price of the owner without
goods. any liability to
pay the
remaining
installment
Mercantile Law:The Sales of 44
Goods Act-1930, An
45. Sale and Bailment
• A ‘bailment’ is the delivery of goods
for some specific purpose under a
contract on the condition that the same
goods are to be returned to the bailor
or are to be disposed of according to
the directions of the bailor.
Mercantile Law:The Sales of 45
Goods Act-1930, An
46. Difference
Basis Sale Bailment
Transfer of The property There is only
ownership in goods is transfer of
transferred possession of
from the goods from the
seller to the bailor to the bailee
buyer for any of the
reasons like safe
custody, carriage
etc.
Mercantile Law:The Sales of 46
Goods Act-1930, An
47. Basis Sale Bailment
Return of The return of The bailee must
goods goods in return the goods
contract of to the bailor on
sale is not the
possible. accomplishment
of the purpose
for which the
bailment was
made.
Mercantile Law:The Sales of 47
Goods Act-1930, An
48. Basis Sale Bailment
Considera The The
-tion consideration consideratio
is the price in n may be
terms of gratuitous
money or non-
gratuitous
Mercantile Law:The Sales of 48
Goods Act-1930, An
49. Sale and contract for work
and labour
• A contract of sale of goods is one in
which some goods are sold or are to be
sold for a price. But where no goods
are sold, and there is only the doing or
rendering of some work of labour, then
the contract is only of work and labour
and not of sale of goods
Mercantile Law:The Sales of 49
Goods Act-1930, An
50. Example
• where gold is supplied to a goldsmith
for preparing an ornament or when
an artist is asked to paint a picture,
even when he himself arranges for all
colours etc is a contract for work and
labour.
Mercantile Law:The Sales of 50
Goods Act-1930, An
51. Formalities
of contract
of sale
Mercantile Law:The Sales of 51
Goods Act-1930, An
52. • Section 5 of the Sale of Goods Act,
1930 lays down the rule as to how a
contract of sale may be made and has
nothing to do with the transfer or
passing of the property in the goods.
Mercantile Law:The Sales of 52
Goods Act-1930, An
53. • A contract of sale may be made in any
of the following modes :
(i) There may be immediate delivery of
the goods; or
(ii) There may be immediate payment
of price, but it may be agreed that the
delivery is to be made at same future
date; or
Mercantile Law:The Sales of 53
Goods Act-1930, An
54. (iii) There may be immediate delivery of
the goods and an immediate payment of
price; or
(iv) It may be agreed that the delivery or
payment or both are to be made in
installments; or
(v) It may be agreed that the delivery or
payment or both are to be made at some
future date.
Mercantile Law:The Sales of 54
Goods Act-1930, An
55. Subject matter of contract of
sale
Mercantile Law:The Sales of 55
Goods Act-1930, An
56. • The subject matter of contract of sale
is always the goods. This is enshrined
in the Sale of Goods Act, 1930 under
Sections 6,7 and 8. Thus every type of
movable property falls with in the
definition of the”goods” given under
section2(7)of the Sales of goods.
Mercantile Law:The Sales of 56
Goods Act-1930, An
57. • Goodwill,patents,trademark,copy,
rights etc. are considered as movable
properties. Though actionable claims
and money have been excluded. Money
here means current money,but not the
rare or old coins which may be treated
as goods bought and sold as such.
Mercantile Law:The Sales of 57
Goods Act-1930, An
58. Existing or future goods
• The subject matter of contract must
always be goods. The goods may be
existing or future goods Section 6).
Mercantile Law:The Sales of 58
Goods Act-1930, An
59. Destruction of subject matter of a
contract
(i) Goods not existing at the time of
contract: If at the time a contract of
sale is entered into, the subject-matter
of a contract being specific goods,
which without the knowledge of the
seller have been destroyed or so
damaged as not to answer to the
description in the contract, and then
the contract is void ab initio(Section 7).
Mercantile Law:The Sales of 59
Goods Act-1930, An
60. (ii) Goods perishing after the contract is
made: Where there is an agreement to
sell specific goods and the goods,
subsequently without any fault of the
seller or the buyer perish or suffer
such damages in the agreement before
the risk passes to the buyer, the
agreement becomes void (Section 8).
Mercantile Law:The Sales of 60
Goods Act-1930, An
61. Types of Goods
Goods
Existing Future Contingent
Mercantile Law:The Sales of 61
Goods Act-1930, An
62. Existing
Specific Ascertained Unascertained
Mercantile Law:The Sales of 62
Goods Act-1930, An
63. Existing Goods
• Goods which are owned or possessed
by the seller at the time of making the
contract of sale are called existing
goods
Mercantile Law:The Sales of 63
Goods Act-1930, An
64. Example
• Where A agrees to sell his horse to B,
believing that it exists ,When in fact the
horse is dead ,no contract will arise.
Mercantile Law:The Sales of 64
Goods Act-1930, An
65. • The existing goods may be:
(a) Specific goods: goods identified and
agreed upon at the time of making of
the contract of sale.
(b) Ascertained goods: Goods identified
subsequent to the formation of the
contract of sale is known as
ascertained goods.
Mercantile Law:The Sales of 65
Goods Act-1930, An
66. Example
• X goes to Maruti car centre to purchase a
car.The dealer has 20 models in his
shop.These 20 cars shall be called
unascertained goods.Now,’X” selects a
particular car of a specific model and the
dealer agrees to deliver the same.The car so
selected and approved by X shall be called
as ascertained Goods.
Mercantile Law:The Sales of 66
Goods Act-1930, An
67. • Unascertained or generic goods:
goods which are not specifically
identified by the buyer, but are
contracted on the basis of description.
Mercantile Law:The Sales of 67
Goods Act-1930, An
68. Example
• X has ten horses. He promises to sell
one of them but does not specify which
horse he will sell.It is a contract of sale
of ‘ unascertained goods.’
Mercantile Law:The Sales of 68
Goods Act-1930, An
69. Future Goods
• Those goods which a seller does not
possess or own at the time of the
contract. It is to be manufactured or
produced or acquired by the seller
after making the contract of sale.
Mercantile Law:The Sales of 69
Goods Act-1930, An
70. Example
• C agrees to buy the entire production
of cotton that would yield in D’s
farm,at the rate of Rs.1000 per
quintal.This is an agreement of sale of
future goods not in possession of the
seller at the time of contract,they can
become the subject matter of an
agreement to sell only and not of sale.
Mercantile Law:The Sales of 70
Goods Act-1930, An
71. Contingent Goods
• Goods the acquisition of which by the seller
depends upon a contingency which may or
may not happen [(Section 6(2)].
Mercantile Law:The Sales of 71
Goods Act-1930, An
72. Example
• P contracts to sell 50 pieces of
particular article provided the ship
which is bringing them reaches the
port safely. This is an agreement for
the sale of contingent goods.
Mercantile Law:The Sales of 72
Goods Act-1930, An
74. • ‘Price’ means the monetary
consideration for sale of goods [Section
2 (10)]. Money means legal tender or
money in circulation. Old and rare
coins not come under the scope of this
definition.
• Price must be either certain and
definite or must be determined .
Mercantile Law:The Sales of 74
Goods Act-1930, An
75. Conditions and warranties
• These are the stipulations in a contract
of sale with reference to subject-matter
of sale.These stipulations forms a part
of the contract of sale and breach of it
provides a remedy to the buyer against
the seller.
Mercantile Law:The Sales of 75
Goods Act-1930, An
76. Summary
Contract of sale of goods
• is either sale or an
agreement to sell.
• Subject-matter must
always be movable
goods.
• Consideration may be
price in terms of
money.
Mercantile Law:The Sales of 76
Goods Act-1930, An
77. Differences
Contract Contract for Hire purchase
of sale work and agreement
labour
It Here the Here property
contempla substance of passes only
the contract is
tes the after the
the exercise of
delivery of skill or labour. payment of all
goods. Goods delivery hire-
is subsidiary. instalments.
Mercantile Law:The Sales of 77
Goods Act-1930, An
79. (1) The Sales of goods act
governs ------------------
a.contract of sale of goods
b.general law of contract
c.law of partnership
d.hire purchase contracts
Mercantile Law:The Sales of 79
Goods Act-1930, An
80. (1) The Sales of goods act
governs ------------------
a. contract of sale of goods
b. general law of contract
c. law of partnership
d. hire purchase contracts
Mercantile Law:The Sales of 80
Goods Act-1930, An
81. (2) The sales of goods act deals
with----------------
a. movable property
b. mortgage
c. pledge
d. actionable claim
Mercantile Law:The Sales of 81
Goods Act-1930, An
82. (2) The sales of goods act deals
with----------------
a.movable property
b.mortgage
c. pledge
d.actionable claim
Mercantile Law:The Sales of 82
Goods Act-1930, An
83. (3) The main object of a contract
of sale is-
a.transfer of possession of goods
b. transfer of property in goods
c.delivery in goods
d.payment in price
Mercantile Law:The Sales of 83
Goods Act-1930, An
84. (3) The main object of a
contract of sale is-
a.transfer of possession of
goods
b.transfer of property in goods
c.delivery in goods
d.payment in price
Mercantile Law:The Sales of 84
Goods Act-1930, An
85. (4) A contract whereby the seller
transfers the property in goods
to the buyer for a price, is a-
a.barter system
b.exchange
c.sale
d.mortgage
Mercantile Law:The Sales of 85
Goods Act-1930, An
86. (4) A contract whereby the seller
transfers the property in goods
to the buyer for a price, is a-
a. barter system
b. exchange
c.sale
d.mortgage
Mercantile Law:The Sales of 86
Goods Act-1930, An
87. (6) A Corn was delivered on terms that
on demand either the price would
be paid or an equal quantity of corn
would be returned.This is held to
be-
a. agreement to sell
b. Sale
c. Barter
d. exchange
Mercantile Law:The Sales of 87
Goods Act-1930, An
88. (6) A Corn was delivered on terms that
on demand either the price would
be paid or an equal quantity of corn
would be returned.This is held to
be-
a. agreement to sell
b. sale
c. barter
d. exchange
Mercantile Law:The Sales of 88
Goods Act-1930, An
89. (7) Goods which are in
existence at the time of the
Contract of Sale is known as
a.present Goods.
b.existing Goods.
c.specific Goods.
d.none of the above
Mercantile Law:The Sales of 89
Goods Act-1930, An
90. (7) Goods which are in existence
at the time of the Contract of
Sale is known as
a.present Goods.
b.existing Goods.
c.specific Goods.
d.none of the above
Mercantile Law:The Sales of 90
Goods Act-1930, An
91. (8) A contract for the sale of
future goods is-
a. sale
b. void
c. hire purchase contract
d. agreement to sell
Mercantile Law:The Sales of 91
Goods Act-1930, An
92. (8) A contract for the sale of
future goods is-
a. sale
b. void
c. hire purchase contract
d. agreement to sell
Mercantile Law:The Sales of 92
Goods Act-1930, An
93. (9) The goods identified and
agreed upon at the time of the
contract of sale is ------------
a. existing goods
b.future goods
c.specific goods
d.unascertained goods
Mercantile Law:The Sales of 93
Goods Act-1930, An
94. (9) The goods identified and
agreed upon at the time of the
contract of sale is ------------
a. existing goods
b. future goods
c. specific goods
d. unascertained goods
Mercantile Law:The Sales of 94
Goods Act-1930, An
95. (10) In a hire purchase
agreement ,the hirer-
a.has an option to buy the goods
b.must buy the goods
c.is not given the possession of
goods
d.must return the goods
Mercantile Law:The Sales of 95
Goods Act-1930, An
96. (10) In a hire purchase
agreement ,the hirer-
a.has an option to buy the goods
b.must buy the goods
c.is not given the possession of
goods
d.must return the goods
Mercantile Law:The Sales of 96
Goods Act-1930, An
97. (11) Consideration in the
contract of sale may be in
terms of-
a. price
b. kind
c. exchange of the goods
d.all of the above
Mercantile Law:The Sales of 97
Goods Act-1930, An
98. (11) Consideration in the
contract of sale may be in
terms of-
a.price
b.kind
c.exchange of the goods
d.all of the above
Mercantile Law:The Sales of 98
Goods Act-1930, An
99. (12) Contract of sale of goods
must constitute-
a.atleast two parties
b. subject matter must be the
goods
c. transfer of ownership
d. all the above
Mercantile Law:The Sales of 99
Goods Act-1930, An
100. (12) Contract of sale of goods
must constitute-
a. atleast two parties
b. subject matter must be the
goods
c. transfer of ownership
d. all the above
Mercantile Law:The Sales of 100
Goods Act-1930, An
101. (13) If P makes an agreement with
Q, an artist, to paint a portrait of P
for 200 dollars & Q uses his own
canvas & paint.Here it is--
a.Contract of sale.
b.Contract of work & materials.
c.Sale on approval.
d.Hire-Purchase agreement.
Mercantile Law:The Sales of 101
Goods Act-1930, An
102. (13) If P makes an agreement with
Q, an artist, to paint a portrait of P
for 200 dollars & Q uses his own
canvas & paint.Here it is--
a. Contract of sale.
b. Contract of work & materials.
c. Sale on approval.
d.Hire-Purchase agreement.
Mercantile Law:The Sales of 102
Goods Act-1930, An
103. (14) R agrees to deliver his old
motorcycle valued at Rs.25000 to S
in exchange for a new motorcycle
and agrees to pay the difference in
cash it is-
a. contract of sale
b. agreement to sell
c. exchange
d.barter
Mercantile Law:The Sales of 103
Goods Act-1930, An
104. (14) R agrees to deliver his old
motorcycle valued at Rs.25000 to S
in exchange for a new motorcycle
and agrees to pay the difference in
cash it is-
a. contract of sale
b. agreement to sell
c. exchange
d. barter
Mercantile Law:The Sales of 104
Goods Act-1930, An
105. (15) X, the owner of certain goods,
being not aware of this fact.A
pretending to be an owner of the
goods sells them to X .This
constitutes -
a.sale
b.agreement to sell
c.no sale
d.none of the above
Mercantile Law:The Sales of 105
Goods Act-1930, An
106. (15) X, the owner of certain goods,
being not aware of this fact.A
pretending to be an owner of the
goods sells them to X .This
constitutes -
a. sale
b. agreement to sell
c. no sale
d.none of the above
Mercantile Law:The Sales of 106
Goods Act-1930, An