Brief information about what is goods, warrenties and condition of goods. and right of disposal of goods by bailee and bailer

1.  Goods and its types
 Warranties and conditions
 Right Of Disposal Of Goods
Presentation on
Presented By:
Arun Kumar
MBA

3. Types of
Goods
Existing Goods
Ascertained
Goods
Unascertained
Goods
Future Goods
Contingent
Goods

4. Existing
Goods
Contd…
Existing goods mean the goods which are either owned or possessed by the seller
at the time of contract of sale. Example- A sells 5 bags of Sugar to B, which is laying
down in the Godown... The Sugar Bags are called "existing goods.
Specific Goods
Unsanctioned
Goods
The existing goods may be specific or ascertained and unascertained or
unsanctioned as follows:
These are the goods which are identified and agreed upon at the
time when a contract of sale is made-For example, specified TV,
VCR, Car, Ring.
These are the goods which are not identified and agreed upon at
the time when a contract of sale is made e.g. goods in stock or
lying in lots.

5. Contd…
Future
Goods
Contingent
Goods
Future goods mean goods to be manufactured or produced or acquired by the
seller after the making of the contract of sale. There can be an agreement to sell
only. There can be no sale in respect of future goods because one cannot sell
what he does not possess.
For example: a farmer may agree to sell a buyer all of the milk produced by
his/her cows in the coming year. This is called an "agreement to sell."
These are the goods the acquisition of which by the seller depends upon a
contingency which may or may not happen.
For example: If the seller promises to the buyer that he will sell him the goods
on a certain date if he receives the goods from the manufacturer before that
date

6. M/S JCL International Ltd.
BHARAT PETROLEUM CORPORATION Ltd.

7. About PETITIONER & RESPONDENT
• Petitioner: M/s JCL International Ltd.
JCL provides solutions for supply & distribution of LPG as domestic,
industrial and automotive fuel. They carry out LPG bottling for Shell,
Bharat Petroleum and Hindustan Petroleum Corporation.
• Respondent: Bharat Petroleum Corporation Ltd.
Bharat Petroleum Corporation Limited is one of the largest public sector, oil
marketing company in India.
JCL’s Claim- To consider Provisional price as Final price

8. • Section 9 of the 1930 Act allows the parties not to fix the price at the
time of the transfer and to leave the determination of the amount of
consideration to a later date.
• Also re – fixing or revising of price was done with due notice and in
breach of terms and conditions of the contract and statutory
provisions.
• Thus, considering the provisions of Sales of goods act and the
contract Act, the fixing of Provisional price cannot be stated to be
impermissible and creates no right in favour of JCL’s Claims.
The Judgement

9. Conditions and Warranties
It is usual for both seller and buyer to make
representations to each other at the time of entering into
a contract of sale. Some of these representations are
mere opinions which do not form a part of contract of
sale. Whereas some of them may become a part of
contract of sale. Representations which become a part of
contract of sale are termed as stipulations which may
rank as condition and warranty e.g. a mere
commendation of his goods by the seller doesn’t become
a stipulation and gives no right of action to the buyer
against the seller as such representations are mere
opinion on the part of the seller. But where the seller
assumes to assert a fact of which the buyer is ignorant, it
will amount to a stipulation forming an essential part of
the contract of sale.

10. Meaning
Of
Conditions
According to
Section 12(2), “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.”

11. Meaning
Of
Warranty
According to Section
12(3) of sales of
good act, ”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”.

12. Conditions to be treated as Warranty
In the following three cases a breach of a condition is
treated as a breach of a warranty:
a) Where the buyer waives a condition; once the buyer
waives a condition, he cannot insist on its fulfilment e.g.
accepting defective goods or beyond the stipulated time
amount to waiving a condition.
b) Where the buyer elects to treat breach of the condition as a breach of warranty.
where he claims damages instead of repudiating the contract.
c) Where the contract is not severable and the buyer has accepted the goods or part
thereof, the breach of any condition by the seller can only be treated as breach of
warranty. It cannot be treated as a ground for rejecting the goods unless otherwise
specified in the contract. Thus, where the buyer after purchasing the goods finds
that some condition is not fulfilled, he cannot reject the goods. He has to retain the
goods entitling him to claim damages.

13. Types Of Warranties
and Conditions
Express
• Defined as promises expressed in a
specific statement concerning the
quality of the product.
• Can be written or oral.
• Example: A warranty card in the
box that states exactly what the
company will do if the product
does not work properly
Implied
• Defined as an unwritten ,
unstated warranty understood
by the consumer and the seller
that a product will perform as
expected.
• Example: when you purchase a
car with a stereo it will play
music.

14. Types of Implied Conditions
1. Conditions as to title
There is an implied condition on the part of the seller that. In the case
of a sale, he has a right to sell the goods, and 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.
2. Condition in case of sale by description and sample
If the sale is by sample as well as by description, the goods must
correspond with the sample as well as the description.

15. 3. Condition in case of sale by description
• Where there is a contract of sale of goods by description, there is an
implied condition that the goods shall correspond with description. The
main idea is that the goods supplied must be same as were described by
the seller. Sale of goods by description include many situations as under:
• Where the buyer has never seen the goods and buys them only on the
basis of description given by the seller.
• Where the buyer has seen the goods but he buys them only on the basis of
description given by the seller.
• Where the method pf packing has been described.
Contd…

16. Types of Implied Conditions
4. Condition in case of sale by sample:
A contract of sale is a contract for sale by sample when there is a term in the
contract, express or implied, to that effect. Such sale by sample is subject to
the following three conditions:
• The goods must correspond with the sample in quality.
• The buyer must have a reasonable opportunity of comparing the bulk with
the sample.
• The goods must be free from any defect which renders them
unmerchantable and which would not be apparent on reasonable
examination of the sample. Such defects are called latent defects and are
discovered when the goods are put to use.

17. 5. Condition as to quality or fitness
There is no implied condition as to the quality or fitness for any particular
purpose of goods supplied under a contract of sale. In other words, the
buyer must satisfy himself about the quality as well as the suitability of the
goods.
Expectations:
• The particular for which goods are required must have been disclosed
(expressly or impliedly) by the buyer to the seller.
• The buyer must have relied upon the seller’s skill or judgement.
• The seller’s business must be to sell such goods.
Contd…

18. 6. Condition as to merchantable quality
Where the goods are bought by description from a seller who deals in
goods of that description, there is an implied condition that the goods
shall be of merchantable quality. The expression ‘merchantable
quality’ means that the quality and condition of the goods must be
such that a man of ordinary prudence would accept them as the
goods of that description. Goods must be free from any latent or
hidden defects.
Contd…

19. 7. Condition as to wholesomeness
In case of eatables or provisions or foodstuffs, there is an implied
condition as to wholesomeness. Condition as to wholesomeness means
that the goods shall be fit for human consumption.
8. Conditions implied by custom
Condition as to quality or fitness for a particular purpose may be
annexed by the usage of trade.
Contd…

20. Implied warranties
• Warranty as to quiet possession
There is an implied warranty that the buyer shall have and enjoy quiet possession of the
goods. The reach of this warranty gives buyer a right to claim damages from the seller.
• Warranty of freedom from encumbrances
There is an implied warranty that the goods are free from any charge or encumbrance in
favour of any third person if the buyer is not aware of such charge or encumbrance. The
breach of this warranty gives buyer a right to claim damages from the seller.
• Warranty as to quality or fitness for a particular purpose annexed by usage of trade
Warranty to disclose dangerous nature of goods. In case of goods of dangerous nature,
the seller fails to do so, the buyer may make him liable for breach of implied warranty.

21. Case Breach of Conditions (Wills v Amber [1954])
…………

22. Case Breach of Conditions (Wills v Amber [1954])
……

23. Right of Disposal Of Goods:
• As a rule, the property in the goods can be transferred from the seller to the
buyer, if the goods are either specific or ascertained. In addition, for passing the
property to the buyer from seller, the seller should not have reserved his right of
disposal of the goods till the fulfilment of certain conditions.
• Where goods are shipped or delivered to a railway administration for carriage by
railway and by the bill of lading or railway receipt, as the case may be, the goods
are deliverable to the order of the seller or his agent
• Where the seller of goods draws on the buyer for the price and transmits to the
buyer the bill of exchange together with the bill of lading or, as the case may be,
the railway receipt, to secure acceptance or payment of the bill of exchange, the
buyer is bound to return the bill of lading or the railway receipt if he does not
honour the bill of exchange; and, if he wrongfully retains the bill of lading or the
railway receipt, the property in the goods does not pass to him

24. BAILMENT
• The word “bailment” has been derived from the French word
“ballier” which means “to deliver”. In general, Bailment means the
delivery of goods of a person to whom permission is given to have the
goods of another person.
• According to Section 148 of the Contract Act, “Bailment means the
delivery of goods by one person to another for some purpose, upon a
contract that they shall, when the purpose is accomplished, be
returned or otherwise disposed of according to the directions of the
person delivering them”.

25. BAILMENT
Please
Stich a
Shirt for
Me….. OKAY..
Come
after
7 days
Example: Sanju delivers a piece of cloth to
Manju, a tailor, to be stitched into a suit. There
is a contract of bailment between Sanju and
Manju.

26. What Is a Bailee?
• A bailee is an individual who temporarily gains possession, but not
ownership, of a good or other property. The bailee, who is also called
a custodian, is entrusted with the possession of the good or property
by another individual known as the bailor.
• This relationship, referred to in legal terms as a bailment, is based on
a contractual agreement between the bailor and the bailee. The
bailment specifies the terms and purpose of the change in custody
and is outlined in writing such as a receipt or chit.

27. Duties of a Bailee:
Reasonable care of the goods (Section 151):
• The Bailee is supposed to take care of the goods as they were to be his own.
He must take reasonable care of the goods as an ordinary and prudent man
of sound mind.
• Example: A delivers his car to B for servicing after bumping it in a tree. B
cannot bump the car in a tree because A did the same. He ought to take care
of the car.
Unauthorized Use of Goods (Section 154)
• If there be any unauthorized usage of the bailed good and there be any
damage arising out of the unauthorized usage then the Bailee is liable to
compensate the Bailor for the same.
• Example: A lends his car to B for driving. B gives it to his son C for joy riding.
C crashes the car. B is liable to compensate A for the damage as A had bailed
the car to B, and not C.

28. Duty of not Mixing the Goods (Section 155, 156)
• The Bailee has the responsibility keep his own goods and the Bailor’s good
separate. He should not mix the two without any prior permission of the Bailor. But
if any act of ignorance regarding the separation be done and the result of which be
the in-separation of the Bailor’s good, then the Bailee must compensate the Bailor
for the loss incurred.
• Example: A gives B a sack of Basmati rice. B mixes it with general rice. B is liable to
compensate A for his loss as the cost of Basmati rice is more than the cost of
normal rice.
Return the Goods (Section 161)
• The Bailee must return or deliver the good upon the fulfilment of the purpose. If
the Bailee retains the goods even after the lapse of the slated time period then the
Bailee is liable for any damages done.
• Example: A gives his documents to B for safe-keeping for a month. A does not take
it back even after 3 months and neither does B return it to A. The documents are
burnt in a fire. B is responsible for the loss as it was his duty too.
Contd…

29. Dispute as to ‘Who is the owner?’ (Section 117)
• If the Bailee has received the good from the Bailor then he must return
the good to the Bailor only. It does not matter if there a third person
who claims the good to be his. The Bailee has accepted the good to be
Bailor’s during bailment. The Bailee has no right to not re-deliver the
good to the Bailor on grounds that the Bailor is not the real owner.
• Example: A gives his car to B. C comes to B and claims the car to be his.
But B is responsible towards A, and an only as for this particular
bailment A is the Bailor and not C.
Contd…

30. A bailor is an individual who temporarily
relinquishes possession but not ownership of a
good or other property under a bailment. The
bailor entrusts the possession of the good or
property to another individual, known as the
bailee. A bailment is usually a contractual
agreement between the bailor and the bailee that
specifies the terms and purpose of the change in
possession.

31. 1) Disclosure of known faults (Section 150): Bailor is supposed to disclose the known
faults in the goods bailed to the bailee and if he fails to do so, he will be held liable for
the damage caused to the bailee due to such faults. If the bailor bails goods for hire,
he will be liable for even the faults which he isn’t aware of. However, in a bailment for
consideration, he can be held responsible only for the faults which he is aware of and
failed to disclose them.
2) Bear unordinary expenses of bailment (Section 158): The bailor has to bear any
unordinary expenses incurred under contract of bailment. In case of bailment for
consideration, when the goods are required to be carried or kept or some work is
done in relation to them by the bailee, the bailor is required to repay all the expenses
incurred by the bailee to him.

32. 3) Indemnification of bailee for incurring loss when bailment is terminated prior
to its term (Section 159): A bailment for consideration can be terminated at any
time by the bailor even when the bailment was for a specific purpose or time.
Any loss accrued to the bailee from such termination shall not more than the
benefit derived from the bailment. In case the loss is more than the benefit, the
bailee shall be indemnified by the bailor.
4) Receive back the goods: The bailor shall receive the goods back when the
bailee returns them after the expiry of term or fulfilment of purpose of
bailment. If the bailor denies the receipt of goods, the bailee shall receive
compensation from bailor for the expenses incurred due to custody of such
goods.
5) Indemnification of the bailee (Section 164): If the bailor’s title to the goods is
defective and he is not entitled to make bailment and the bailee suffers any loss
or damage as a consequence, the bailor will be liable for such loss or damage.
Contd…