1. The Sale of Goods Act,1930
By
Dr. Sridevi Krishna
Asst. Professor
VVLC
2. Introduction
• The whole object of sale of goods is to transfer
property from one person to another.
• Prior to the act, the law of sale of goods was
contained in section 76 to 123 of IC Act, 1872.
• Amended in 1963.
3. Sale
• Section 4 (1): 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. There may be a contract of sale
between one part owner and another.”
• Essentials elements-
• There are two parties- seller and buyer. They
must be different persons for a person cannot
buy his own goods.
4. Exception
• Auction sale: permits the seller to reserve a right
of making a bid.
• Execution of decree- where goods are sold in
execution of decree against him, he may come
forward and purchase his own goods.
• Between part owners- there can also be a
contract of sale between part owner and another.
There can also be a contract of sale between one
partner and another or between a partner and
partnership firm.
5. Goods – subject matter of contract
• Section 2(7) defines goods- 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 served before sale or
under the contract for sale.
6. Agreement
• To constitute a transaction of sale there
should be an agreement express or implied,
relating to goods to be completed by passing
of title in those goods. There must be an
agreement between the parties for the sale of
the very goods in which eventually property
passes.
7. Transfer of property
• Transfer of property in goods to the buyer.
• 5. Price- there must be a consideration in a sale.
Consideration in terms of money. Thus to
constitute valid sale-
• The parties must be competent to contract
• There must be mutual consent
• There must be transfer of property in goods from
the seller to the buyer.
• There must be money consideration called price.
8. Contract of sale & contract of work & labour
• Nature and substance is the
determining factor.
• If the property in goods is to be
passed, it is a contract of sale but
where the essence of contract is to
provide skill and labour, it will be a
contract of work and labour.
10. Sale and agreement to sell
• S4(3) 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, but
• 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, the contract is called an agreement to
sell.
11. SALE AGREEMENT TO SELL
In a sale the transfer of property take
s place immediately
In an
agreerment to sell something remains
to be done. It shall become sale
only when the conditions of
contract are fulfilled
sale creates ‘Jus in rem’, i.e, right in th
e goods against the whole world.
An agreement to sell creates a ‘Jus in
personam’, i.e., a personal
right only against the buyer
in a sale, the seller can sue for
the price of the goods. In
addition to that he has the right of lie
n, stoppage in transit and re-sale.
In an agreement to sell, the seller can
sue only for damages for non-
performance of contract by the buyer.
In case of breach of contract of sale
by the seller, the buyer can sue for th
e delivery of goods or for damages
in an agreement to sell the buyer has
Only a personal remedy against
the seller
12. Sale and bailment
bailment sale
Bailment is the delivery of good
s from one person to another u
pon a condition thatthe
shall return the goods to the
bailor when his purpose is acco
mplished.
Sale is with consideration.
Bailment may be with
or without consideration.
In bailment bailee does not
become absolute owner.
the buyer becomes the
absolute owner of goods in sale
13. Sale & Hire Purchase agreement
SALE HIRE PURCHASE
the property passes to the
buyer immediately on making
the contract
A hire purchase agreement is o
ne under which a person takes
delivery of goods
promising
to pay the price by a certain
number of installments and, un
til full payment is made, to pay
hire charges for using the good
s.
14. SUBJECT MATTER OF SALE
• The subject matter of contract of sale is essentiall
y the goods.
• Section 2 (7) says that “goods”
means every kind of
movable property other than money or actionabl
e claims, it
includes stock and shares, growing crops, and thi
ngs attached to the earth which are to be
removed because of the contract of sale. Accordi
ng to this definition money and actionable
claims are not goods and cannot be bought and s
old.
15. Continued..
• Goods may be classified into three types :
• (1) Existing goods (2) Future Goods, and
• (3) Contingent Goods.
• (1) Existing Goods are goods which are already in existence and which are p
hysically present in some
person’s possession and ownership. Existing goods may be either (i) Specific
and Ascertained or (ii) Generic and Unascertained.
• (i) Specific goods are those goods which are identified and agreed upon at t
he time of the contract of
sale; i.e., a particular painting by a painter, a horse pointed out and recogniz
ed as separate from other
horses in a stable. The term Ascertained goods is used in the same
sense as Specific Goods.
• (ii) Generic or Unascertained Goods are those goods which are not specific
ally identified but are indicated
by description. If A agrees to supply one bag of wheat from his go down to
B, it is a contract relating to
unascertained goods because it is not known which bag will be
delivered. As soon as a particular bag is
separated from the lot and making or identified for
delivery it becomes specific goods.
16. Continued..
• (2) Future Goods are goods which the seller does not
own or possess at the time of the contract, but
which he will manufacture or produce or acquire after t
he making of the contract.
• For example, A agree to sell
to B all the oranges which will be produced in his garde
n next year. This is an agreement for the sale of
future goods.
• (3) Contingent goods are those goods which the seller
will acquire on the happening of a contingency. An
agreement to sell contingent goods can also be made.
17. Section 7
• Goods perishing before making of contract.—Where there is a
contract for the sale of specific goods, the contract is void if the
goods without the knowledge of the seller have, at the time when
the contract was made, perished or become so damaged as no
longer to answer to their description contract
• Essentials –
• The contract must be sale of specific goods which according to
s2(14) are goods identified and agreed at the time a contract is
made.
• The goods must have perished or damaged as no longer to
answer their description in the contract at the time of making the
contract.
• The goods perished or damaged without the knowledge of the
seller.
• Then the contract will be void.
18. Section 8
• Goods perishing before sale but after agreement to
sell.—Where there is an agreement to sell specific
goods, and subsequently the goods without any fault
on the part of the seller or buyer perish or become
so damaged as no longer to answer to their
description in the agreement before the risk passes
to the buyer, the agreement is thereby avoided.
• There is an agreement to sell.
• The agreement to sell is in respect of specific goods.
• They are no longer answerable to the description.
• Goods perished before the risk passes to the buyer.
• Without any fault of the buyer or seller.
19. Section 9
• Ascertainment of price.—
• (1)The price in a contract of sale may be fixed
by the contract or may be left to be fixed in
manner thereby agreed or may be determined
by the course of dealing between the parties.
• (2)Where the price is not determined in
accordance with the foregoing provisions, the
buyer shall pay the seller a reasonable price.
What is a reasonable price is a question of fact
dependent on the circumstances of each
particular case.
20. Section 10
• Agreement to sell at valuation.—
• (1) Where there is an agreement to sell goods on
the terms that the price is to be fixed by the
valuation of a third party and such third party
cannot or does not make such valuation, the
agreement is thereby avoided:
• Provided that, if the goods or any part thereof
have been delivered to, and appropriated by, the
buyer, he shall pay a reasonable price therefor.
• (2) Where such third party is prevented from
making the valuation by the fault of the seller or
buyer, the party not in fault may maintain a suit
for damages against the party in fault.
21. Conditions & warranties
• A lady orders a red saree to be worn
on the date of her wedding on 15th
June 2021. It was agreed that the
saree would be sent through a parcel
and then the seller would be paid on
delivery.
22. Conditions & Warranties
• Section 12(1):A stipulation in a contract of sale, with
reference to goods which are the subject thereof may be a
condition or warranty.
• 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.
• Section 12(3): 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 a right to reject the goods and treat
the contract as repudiated.
• Section 12(4): Whether a stipulation in a contract of sale is a
condition or a warranty depends in each case on the
construction of the contract. A stipulation may be a condition,
though called a warranty in the contract.
23. Baldry V Marshall
• The plaintiff asked the defendants, who were
motor dealers, to supply a car that would be
suitable for touring purposes. The defendants
recommended a Bugatti, which the plaintiff
bought. The written contract excluded the
defendant's liability for any "guarantee or
warranty, statutory or otherwise". The car
turned out to be unsuitable for the plaintiff's
purposes, so he rejected it and sued to
recover what he had paid.
24. Continued..
• The Court of Appeal held that the requirement
that the car be suitable for touring was a
condition. Since the clause did not exclude
liability for breach of a condition, the plaintiff was
not bound by it.
• If breach of condition has been treated as a
breach of warranty , only damages can be
claimed under section 12(3) of the sale of goods
act and the plaintiff cannot claim the right to
reject the goods and refund of the price.
25. Stipulation as to time
• Section 11: Unless a different intention appears from the
terms of the contract, stipulations as to time of payment are
not deemed to be of the essence of a contract of sale.
Whether any other stipulation as to time is of the essence of
the contract or not depends on the terms of the contract.
• Section 55 of Indian Contract Act: When a party to a contract
promises to do a certain thing at or before a specified time, or
certain things at or before specified times, and fails to do any
such thing at or before the specified time, the contract, or so
much of it as has not been performed, becomes voidable at
the option of the promisee, if the intention of the parties was
that time should be of the essence of the contract.
26. When time is essence of the contract
• Where the parties have expressly agreed to
consider time is the essence of the contract
• Where delay operates as an injury
• Where the nature and necessity of the
contract require it to be so construed.
• The said stipulations can be waived by the
party and in such cases his right to rescind the
contract ceases.
27. When condition to be treated as warranty
• In case of breach of condition , the aggrieved party
can treat the contract as repudiated. It is the right of
the aggrieved party. But he need not exercise this
right in every case. Law confers upon such a party
the right to treat the breach of condition as breach of
warranty.
• Instead of ending the contract, he may continue the
contract and claim damages for the breach of
condition as if a breach of warranty.
28. Section 13
• By waiver: Where a contract of sale is subject to any condition to be
fulfilled by the seller, the buyer may waive the condition or elect to treat
the breach of the condition as a breach of warranty and not as a ground
for treating the contract as repudiated.
• By acceptance: Where a contract of sale is not severable and the buyer
has accepted the goods or part thereof, the breach of any condition to be
fulfilled by the seller can only be treated as a breach of warranty and not
as a ground for rejecting the goods and treating the contract as
repudiated, unless there is a term of the contract, express or implied, to
that effect.
• Section 42: The buyer is deemed to have accepted the goods when he
intimates to the seller that he has accepted them, or when the goods have
been delivered to him and he does any act in relation to them which is
inconsistent with the ownership of the seller, or when, after the lapse of a
reasonable time, he retains the goods without intimating to the seller that
he has rejected them.
29. Wallis Son & Wells V Pratt Haynes
• In this case on e of the clauses of a contract of a sale by
sample of a seed called “ Common English Sainfoin” as per a
condition sellers gave the warranty express or implied as to
the growth description or any other matters. Instead of
delivering common English sainfoin, the sellers delivered
another seed called “giant sainfoin” but it could be discovered
only after sowing. The said seeds were sold by the buyer to a
third party who after sowing discovered that the seeds were
in fact gain sainfoin whose market value was much lower.
• Held: the buyer had to pay damages. In an action brought
against the seller, it was held that the sellers were bound to
pay damages.
30. Implied conditions
• Apart from the conditions expressly included in
the contract there are certain conditions which
are implied by law.
• 1. Implied condition as to title-
• Section 14: In a contract of sale, unless the
circumstances of the contract are such as to show
a different intention there is—
• (a) 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 that, 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;
31. • A person sometimes may not have the right to
sell the goods because
• He may not be the owner of the goods he sells
• He may be the owner yet on account of certain
reasons he may not have the right to sell.
• Roland V Divial: the defendants sold a car though
they had no title to the car. After using the car for
some time the plaintiff had to hand over the car
to the real owner. The plaintiff sued the
defendants to recover the price of the car. It was
held that the plaintiff was entitled to recover the
price of the car even though he had used the car
for some time
32. Niblett v Confectioners Material Co
• Under CIF contract from New York to London, the defendants
sold to the plaintiff condensed milk of Nissly brand which was
an infringement of the trade mark of a manufacturer of
condensed milk bearing Nestle brand. At the request of the
manufacturers of condensed milk of Nestle Brand, the goods
were retained at the customs by customs authorities. The
buyer was later on permitted to take possession of the tins only
after removing the brand i.e Nissly brand. Since the tins had no
brand on it, the buyers could sell them at a reduced value and
thus suffered losses. The buyers sued the sellers to recover the
damages for the loss suffered.
• The court of appeal held that the buyers were entitled to get
damages for the loss suffered as there was a breach of an
implied conditions to time as well as the breach of implied
warranty of possession.
33. 2. Implied condition of sale by description
• Section 15: Where there is a contract for the
sale of goods by description, there is an
implied condition that the goods shall
correspond with the description; and, if the
sale is by sample as well as by description, it is
not sufficient that the bulk of the goods
correspond with the sample if the goods do
not also correspond with the description.
• The rule applies when the buyer has not seen
the goods.
34. Example Varley V Whipp
• The contract was for the sale of a reaping
machine which had not seen by the buyer but
was described as a new machine a year before
and having reaped 50 to 60 acres. When the
reaping machine was delivered to the buyer, it
was found by the buyer that the machine was
old and the description that it used to reap 50
to 60 acres was false. The buyer rejected the
goods. The Plaintiff sued the
defendants(buyer) for the price.
• His suit was dismissed and the defendants
were not liable.
35. Continued
• The rule of implied condition of sale by
description also applies where the buyer has
seen the goods yet he relies on the
description of the goods by the seller
• Ex: the buyer buys two picture of a renowned
artist, he will be entitled to reject the two
pictures if it is subsequently discovered that
they are not genuine pictures of the said
renowned artist.
36. 3. Implied condition as to sale by sample
• Section 17- (1) 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.
• (2) 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;
• (c) that the goods shall be free from any defect,
rendering them unmerchantable, which would not
be apparent on reasonable examination of the
sample.
37. Godley V Perry
• A retailer bought a number of plastic toy catapults from a
wholesaler under a contract of sale by sample. The retailer
sold a toy catapult to a boy of 6years when while trying to
play was so seriously injured that his left eye had to be
removed. As a result of this the retailer had to pay
compensation to the boy because the accident had taken
place due to a defect in the toy. The retailer sued the
wholesaler to recover the compensation.
• In this case though the sample has been shown to the retailer
yet the defect was a latent one and the retailer could not find
it by seeing the sample.
• Therefore it was held that the goods were unmercantable and
the wholesaler was liable to indemnify the retailer for the loss
suffered by him.
38. Section 41
• Buyer’s right of examining the goods.—
• (1) Where goods are delivered to the buyer which
he has not previously examined, he is not
deemed to have accepted them unless and until
he has had a reasonable opportunity of
examining them for the purpose of ascertaining
whether they are in conformity with the contract.
• (2) Unless otherwise agreed, when the seller
tenders delivery of goods to the buyer, he is
bound, on request, to afford the buyer a
reasonable opportunity of examining the goods
for the purpose of ascertaining whether they are
in conformity with the contract.
39. 4. Implied condition as to sale by sample as well as description
• Section 15 Where there is a contract for the sale of goods by
description, there is an implied condition that the goods shall
correspond with the description; and, if the sale is by sample
as well as by description, it is not sufficient that the bulk of
the goods correspond with the sample if the goods do not
also correspond with the description.
• 5. Implied condition as to quality of fitness or exceptions to
the principal of “ caveat emptor”. “Buyer beware”.
• Section 16 Subject to the provisions of this Act and of any
other law for the time being in force, there is no implied
warranty or condition as to the quality or fitness for any
particular purpose of goods supplied under a contract of sale,
40. Exceptions
• 1. Implied condition as to fitness for buyer’s purpose- Where
the buyer, expressly or by implication, makes known to the
seller the particular purpose for which the goods are required,
so as to show that the buyer relies on the seller’s skill or
judgment, and the goods are of a description which it is in the
course of the seller’s business to supply , there is an implied
condition that the goods shall be reasonably fit for such
purpose:
• Provided that, in the case of a contract for the sale of a
specified article under its patent or other trade name, there is
no implied condition as to its fitness for any particular
purpose.
41. Priest V Last
• The plaintiff purchased a hot-water bottle
from the defendant, a chemist. The defendant
knew well in advance that hot-water bottle is
generally used for applying heat to the human
body. While the hot water bag was used by
the wife of the plaintiff, it burst and injured
her.
• Held: there was a breach of implied condition
and that the seller was liable to pay
compensation.
42. Continue..
• If the goods of such kind the buyer does not inform to the
seller the particular purpose for which he wants to buy the
goods, the seller will not be liable if the goods is unfit for the
particular purpose of the buyer.
• Re Andrew Yule & Co- the contract was for the sale of hessian
cloth for packing purpose. The buyer wanted it for packing
foodstuffs but it was unfit for the purpose because of unusual
smell coming from it. The buyer had not disclosed his
particular purpose to the seller. Though the cloth was unfit for
packing foodstuffs , yet it was fit for packing of other goods.
• Held: the seller was not liable and the buyer could not reject
the goods.
43. Sale under patent or trade name
• If a person orders a goods known by a patent
or trade name and he gets it, he cannot
subsequently complain that it will not answer
some specific purpose for which he wanted it .
• But where the buyer buys the goods under a
patent or trade name but still relies on the
skill and judgment of the seller, implied
condition as to the fitness or quality of goods
for buyer’s purpose will apply.
• Baldry v Marshall.
44. 2. Implied condition of merchantable quality
• Section 16(2): Where 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:
• Provided that, if the buyer has examined the goods,
there shall be no implied condition as regards defects
which such examination ought to have revealed.
• The goods are of merchantable quality if they are fit
for the purpose for which goods of that kind are
commonly bought.
45. Examination of goods by buyer
• If buyer has examined t he goods there shall
be no implied condition as regards defects
which such examination ought to have
revealed.
• Section 16(3) An implied warranty or
condition as to quality or fitness for a
particular purpose may be annexed by the
usage of trade.
46. Implied Warranties
• Implied warranty of quiet possession- s 14(b):
unless the circumstances of the contract are
such as to show a different intention there is
an implied warranty that the buyer shall have
and enjoy quiet possession of the goods.
47. Implied warranty against charges or
encumbrances
• Section 14(c )- unless the circumstances of the
contract are such as to show a different
intention, there is an implied warranty that
the goods shall be free from any charges or
encumbrances in favour of a third party not
declared or known to the buyer before or at
the time when contract is made.
48. Implied warranty annexure by the usage of trade
• Section 16(3) An implied warranty or
condition as to quality or fitness for a
particular purpose may be annexed by the
usage of trade.
• Exclusion of implied condition and warranties-
• By express agreement
• By course of dealing between the parties.
• By usage binding both the parties to contract.
