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Examples:
The Section may be illustrated by the following examples:
1. A agrees to buy a haystack from B on B’s land with liberty to come on B’s
land to take it away. This is a sale and B cannot revoke the licence given to
A to woo on his land. (Wood Vs Manley 1839)
2. Agreement by A to buy 20 tonnes of oil from the seller’s cisterns. The seller
has many cisterns, with more than 20 tonnes in them. This is merely an
agreement to sale. (White Vs Wilks, 1813)
3. Agreement for sale of a quantity of nitrate of soda to arrive at a certain ship.
This is an agreement to sell at a future date subject to the double condition
of the arrival of the ship with the specified cargo on board. (Johnson Vs
Macdonald 1842)
4. A customer who picks up goods in a self-service shop is merely offering to
buy them and the sale is not complete until they are paid for.
(Pharmaceutical Society Vs Boots, 1952)
Earnest :
The conclusion of a contract of sale is sometimes marked by the giving of
earnest this was expressly referred to in Sec. 78 of the Contract Act with
regard to the giving of earnest Fry L.J. said in Howe V.s Smith (1884).
The practice of giving something to signify the conclusion of the contract,
sometimes a sum of money, sometimes a ring or other object, to be repaid
or redelivered on the completion of the contract, appears to be one of great
antiquity and very general prevalence….. It was familiar to the law of Roam
( where the rule was that a defaulting buyer forfeited the earnest money
and a defaulting seller was bound to restore it two fold”.
Earnest whether given in money or not must be something of value really
given by the buyer and kept by the seller … A mere symbolic ceremony
such as one party drawing a coin across the other’s hand will not do.
When a deposit in the nature of earnest is paid for the same of immovable
property in India, a vendor by whose default the sale goes off must return
the sum so paid, but if the default is the purchasers the purchaser must
loose it.
As punctual payment does not go to the whole consideration of the sale, the
failure by the buyer to pay on the appointed day does not as a rule, entitle
the seller to treat the contract as repudiated, though he may be entitled to
withhold delivery until the price is paid and to resell the goods if the buyer
does not pay or tender the price within a reasonable time. Consequently, if
before such resale the buyer tenders the price, even though it be on a date
after the date name in the contract the seller cannot, in the absence of a
stipulation to the contrary, treat the contract as at an end and refuse to
allow the buyer to have the goods; and a subsequent resale by him will be
tortious. The time cannot be taken to be the essence of the contract in case
where the contract itself does not stipulate the time for payment of the price.
3. Stipulations as to time of performance of other terms
As the Act deals with all kinds of contracts of sale, and not only with
commercial contracts, the enactment as to stipulations as to time, other
than as to payment of the price, is necessarily put in somewhat general
language. If a man orders a suit of clothes, a promise by the tailor that he
shall have it by a certain date would not, generally speaking, be of the
essence of the contract, though it might be if he was ordering court dress
for the purpose of attending a court on a particular day. But in the case of
commercial contracts, although occasionally stipulations as to time may not
be of the essence, the usual rule is that they are.
Stipulations as to time may be waived by the party in whose favour they are
inserted either expressly or by implication, and if he does so he cannot
afterwards treat the failure to comply with them by other party as giving a
right to rescind the contract. Where, however, an initial stipulation making
time of the essence of the contract is waived, reasonable notice to make
time again of the essence would give rise to the right to rescind. There can,
strictly speaking, be no waiver after breach, but to accept goods, though
delivered late, is often spoken of as a waiver of the right of action which the
breach has given.
2. Express Conditions
The parties if they wish, may put the contents of any particular statement or
promise which passes between them on the same footing as the description
of the thing contracted for, so that if it is not made good by the party
undertaking it, the failure is deemed to be a total failure of the performance,
and the other is at least wholly discharged, and may in addition recover
damages for such failure of performance. This is a condition in the proper
sense, as defined in sub-s (2). In the usual sense, the condition means an
essential undertaking in the contract which one party promises will be made
good. If it is not made good, not only will the other party be entitled to
repudiate the contract, but also to sue for damages for breach.
£. Express warranties
There may also be, and there occur in common practice, auxiliary promises or
undertakings of which the breach is not intended to avoid the contract, but
only to give a remedy in damages. These are warranties in the proper sense,
as defined in sub-s (3). A condition of sale, protecting a seller in respect of
misdescription, may be overriden by a warranty given before the sale takes
place and damages may be recovered for breach of the warranty. Whether a
statement is to be regarded as warranty must be objectively ascertained by
asking whether adopting the standard of a reasonable man, the other party
assumed that the representor was to be regarded as undertaking legal liability
for his assertions. The importance of the statement, the relative knowledge
and means of knowledge of the parties, and the possibility of verification are
the relevant factors which would indicate whether the statement is a warranty.
Thus, statements may be warranties when made by dealers, though they
would not be warranties if made by private sellers; for the dealers may be in
possession of special knowledge, expertise and means of information not
available to ordinary persons.
4. Representations
Although the parties may have used no expressed words that would create
such a stipulation, the law annexes too many contracts, conditions, the breach
of which may be treated by the buyer as avoiding the contract or given a right
to damages. These are called as implied conditions and are enforced on the
grounds that the law infers from all the circumstances of the case, that the
parties intended to add such a stipulation to their contract, but did not put it
into expressed words.
Most of the statutory implied terms as to sellers duties as to title, confirmative
with description and quality, terms designated a conditions by the contract
itself, terms similar to those or already treated as conditions in another case,
time clauses in mercantile contracts and residual category where breached of
term is to be treated as giving right to treat the contract as discharged are
considered as terms likely to be treated as conditions.
The existence of an employed condition or warranty may be rebutted by proof
of facts, which show a contrary intention
6. Puffs
Section 13
Section 18
Goods must be ascertained: where there is contract for the sale of
unascertained goods, no property in the goods is transferred to the buyer
unless and until the goods are ascertained
Synopsis
1. Transfer of property
2. Property cannot pass until the goods are identified
3. Part of a specific whole
4. Property and risk
5. Identification of goods
1. Transfer of property – This and the five following sections of the Act
deal with the question foreshadowed by section 4 of the Act and lay
down rules which assist in deciding the question when the object of the
contract of sale, namely, the transfer of the property in the goods to the
buyer has been affected.
The contract itself may provide that the property shall pass on the
happening of some specified event, sufficient to identify the goods, and
occasionally they may become identified by other means. Thus, in a case
where the seller sold 250 quarters of wheat out of a larger bulk belonging
to him in a warehouse, and the buyer took delivery of 400 quarters and
pledged the remaining 850 quarters to a bank, and in the meantime the
seller sold the remainder of the bulk in the warehouse, of which delivery
was taken, so that 850 quarters only were left in the warehouse, it was
held that by this process of exhaustion the 850 quarters became
ascertained goods and property therein passed to the buyer, so that the
pledgee acquired a title thereto against the seller.(Wait & Midland Bank
1926) In State of karnataka Vs. The West Coast Paper Mills Ltd. AIR
1986 it was held that where under a contract a company was permitted to
remove bamboos from the forest area at Rs.10 /- per ton, and the
government by a subsequent order enhanced the price to Rs.20/- per ton,
it was held that the enhanced rate was no applicable to the bamboos cut
although not removed prior to the date of the government order, because
on the bamboos being cut and extricated, the goods being ascertained
and in a deliverable state, the property had passed to the company.
Synopsis
When it appears that the goods -- the subject of the contract—are specific
or ascertained, so that it is possible for the property to pass to the buyer, it
becomes necessary to determine whether it has actually passed;
This section reproduces this statement in statutory form, and the rules of
construction adopted by courts are those set out in Ss 20 to 24.
3. Ascertained goods
Then term ‘ascertained goods’, which also occurs in Section 58, is not
defined by the Act. It is, however, clear that the words ‘specific goods’
bear the meaning assigned to them in the definition clause, ‘goods
identified and agreed upon at the time a contract of sale is made.’
Ascertained’ probably means ‘identified in accordance with the
agreement after the time a contract of sale is made’. Sections 23 and
25, therefore, must also be read subject to the provisions of this
section, and regard must be had to the intention of the parties when
considering whether the property has or has not passed in the
circumstances dealt with by those sections. Where teak trees to be
cut were of more than 12 inches girth, it was held that till it was
ascertained as to which trees fell within the description they were not
ascertained goods. Badri Prasad Vs. The State of Madhya Pradesh
AIR 1970 SC.
Examples
Example
This section may be illustrated by the following example: Sale of
the whole contents of a cistern of oil, the oil to be put into casks by the
seller and then taken away by the buyer. Some of the casks are filled in
the presence of the buyer, buy before any are removed, or the
remainder are filled, filled, fire destroys the whole of the oil. The buyer
must bear the loss of the oil which had been put into the casks, the
seller that of the remainder .Rugg Vs. Minett (1089)
Examples
This section may be illustrated by the following examples:
Example
This section may be illustrated by the following example:
1. Sale of 20 hogsheads of sugar out sugar out of a larger quantity.
The seller fills four hogsheads which the buyer takes away.
Subsequently the seller fills sixteen more hogsheads, and informs the
buyer of this asking him to come and take them away. The buyer
promises to do so. The property has passed to the buyer.
2. Mr A contracts to sell to Mr B a certain quantity of liquor out of a big
cask containing a much larger quantity. The required quantity is not
separated or bottled. The property in the liquor does not pass to the
purchaser.
Section 24 Goods sent on approval or ‘on sale or return’
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.
Examples
The section may be illustrated by the following examples:
Examples
This section may be illustrated by the following examples;
Section 31. Duties of the seller and buyer It shall be the duty of the
seller to deliver the goods and of the buyer to accept and pay for them,
in accordance with the terms of the contract of sale.
The general rule enunciated in this section follows from the nature of
the contract of sale, by which the property in the goods is transferred,
or agreed to be transferred, from the seller to the buyer in return for the
price.
Examples
The section may be illustrated by the following examples:
3. Sale of a stack of hay. The buyer asked the permission of the seller
to cut and remove part of the stack, which was granted. The clear
intention of the parties being to separate the part delivered of the
whole.
Section 35 Buyer to apply for delivery Apart from any express contract,
the seller of the goods is not bound to deliver them until the buyer applies for
the delivery
This section reproduces s93 of the contract Act except that for the words ‘in
the absence of any specific promise’, the words ‘apart from any express
contract’ have been substituted. The words ’in the absence of any special
promise’ have been construed to mean an express stipulation as to delivery6
which relieves the buyer from the obligation to apply for delivery or the
necessary implication of such a stipulation from the nature of the contract as
expressed. It might also arise out of usage or custom.
Even if there is an obligation on the part of the seller to inform the buyer when
the goods are in a deliverable state, it is not a ‘special promise’, though it may
postpone the obligation of the buyer to apply for delivery, and after the lapse
of a reasonable time, to enable the goods to be procured by the seller, the
buyer would be entitled and bound to apply for delivery.
When the applies for delivery and the seller then fails to deliver, the seller is
guilty of a breach of contract. So where the contract provided for delivery in
all November on seven day’s notice from the buyer, and the buyer gave the
notice early in November, it was held that by the terms of the contract the
buyer had the right to fix the date in November on which the delivery should
be made, and the seller having failed to deliver as required by the notice, was
guilty of a breach of contract. Juggernath Khan Vs. Machlachar (1881)
Examples
The section may be illustrated by the following examples :
3. Sale of goods for ready money. The seller packs them up in the buyer’s
boxes in the buyer’s presence, but they remain in the seller’s premises. This
is not a delivery. Boulter Vs. Arnott (1833)
Examples
The section may be illustrated by the following examples :
Examples
The section may be illustrated by the following example;
The seller draws bills for the price of the goods on the buyer, who accepts
them, and the seller negotiates them. Before the bills arrive at maturity the
buyer fails. The seller is in position of an unpaid seller.
Section 46. Unpaid Seller’s rights 1. Subject to the provisions of this Act
and of and of any law for the time being in force, notwithstanding that the
property in the goods may have passed to the buyer, the unpaid seller of
goods, as such, has by implication of law—
(a) a lien on the goods for the price while he is in possession of them;
(b) in case of the insolvency of the buyer a right of stopping the goods in
transit after he has parted with the possession of them ;
(c) a right of resale as limited by this Act.
2. Where the property in goods has not passed to the buyer, the unpaid
seller has, in addition to his other remedies, a right of withholding delivery
similar to and co-extensive with his rights of lien and stoppage in transit where
the property has passed to the buyer.
Example
The section may be illustrated by the following example :
Sale of goods to be delivered by instalments, each instalment to be paid for
in cash fourteen days after delivery. During the currency of the contract, the
buyer becomes insolvent and the price of one instalment is unpaid. The seller
need not make further deliveries unless the price of that instalment is paid and
cash is paid against delivery of subsequent instalments.
Section 47. Seller’s lien 1. Subject to the provisions of this Act, the unpaid
seller of goods who is in possession of them is entitled to retain possession of
them until payment or tender of the price in the following cases, namely :
(a) Where the goods have been sold without any stipulation as to credit ;
(b) where the goods have been sold on credit, but the term of credit has
expired ;
(c) where the buyer becomes insolvent.
2. The seller may exercise his right of lien notwithstanding that he is in
possession of the goods as agent or bailee for the buyer.
Section 48. Part delivery Where an unpaid seller has made part delivery of
the goods, he may exercise his right of lien on the remainder, unless such
part delivery has been made under such circumstances as to show an
agreement to waive the lien.
Section 49. Termination of lien 1. The unpaid seller of goods loses his lien
thereon—
(a) when he delivers the goods to a carrier or other bailee for the purpose of
transmission to the buyer without reserving the right of disposal of goods;
(b) when the buyer or his agent lawfully obtains possession of the goods;
(c) by waiver thereof.
2. The unpaid seller of goods, having a lien thereon, does not lose his lien by
reason only that he has obtained a decree for the price of the goods.
Examples
This section may be illustrated by the following examples:
1. Goods were sold and sent by the sellers at the request of the buyer to
shipping agents of the buyer, and were put on board a ship by those agents.
Subsequently, they were re-landed and sent back to the sellers for the
purpose of re-packing. While they were still in the possession of the sellers
for that purpose, the buyer became insolvent. Thereupon the sellers refused
to deliver them to the buyer’s trustee in bankruptcy except upon payment of
the price. Held, that the sellers had lost their lien by delivering the goods to
the shipping agents, and their refusal to deliver the goods to the trustee was
wrongful. Valpy Vs. Gibson 1847
2. Sale of a stack of hay for £ 86, to be paid for as it is taken away, the
whole to be removed by a certain date. Part, but only part, was paid for and
removed by a certain date, and two months after that date the seller cut up
and used the remainder. By doing so, the seller waived his lien, and the
buyer successfully maintained an action against him. Gurr Vs. Cuthbert
1843
In order that the right may be exercised, the following conditions must all be
satisfied—the seller must be unpaid, the seller must have parted with the
possession of the goods and the buyer must not have acquired it. This last
condition, as appears from the next section is that which is shortly expressed
by saying that the goods are in transit. Further, the right can only be
exercised by a seller or a person in a position analogous to that of a seller,
the right to stop in transit is unknown outside the law of sale of goods. Lastly,
it is a right against the goods themselves only.
Examples
The section may be illustrated by the following examples :
2. the sale is complete when the auctioneer announces its completion by the
fall of the hammer or in other customary manner; and, until such
announcement is made, any bidder may retract his bid;
3. a right to bid may be reserved expressly by or on behalf of the seller and,
where such right is expressly so reserved, but not otherwise, the seller or any
one person on his behalf may, subject to the provisions hereinafter contained,
bid at the auction;
4. 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 ;
5. the sale may by notified to be subject to a reserved or upset price ;
6. if the seller makes use of pretended bidding to raise the price, the sale is
voidable at the option of the buyer.