Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
BHOPAL
PROJECT ON:
Law of contracts-2
TΟPIC:
DUTY OF SELLERS AND BUYERS UNDER SALES OF
GOODS ACT.
SUBMITTED BY:
JEEZAN RIYAZ, 2018BALLB22
MANN SHARMA, 2018BALLB35
AJITA DASH, 2018BALLB13
SHAMBHAVI KHARE, 2018BALLB30
CERTIFICATE
This is tο certify that the project titled “Duty Of Sellers And Buyers Under Sales Of Goods
Act.” has been prepared and submitted by Jeezan Riyaz, Ajita Dash, Shambhavi Khare and
Mann Sharma who are currently pursuing their B.A.L.L.B. (Hons.) at National Law
Institute University, Bhopal in fulfillment οf LAW OF CONTRACT-2. It is also certified
that this is their original project and this has not been submitted tο any other University.
Date:
2 | Pagе
TABLE OF CONTENTS
1. LIST OF ABBREVIATIONS..........................................................4
2. INTRODUCTION..............................................................................5
3. DUTIES OF BUYER..........................................................................6
4. DUTIES OF SELLER.........................................................................11
5. CONCLUSION....................................................................................15
6. BIBLIOGRAPHY................................................................................16
3 | Pagе
LIST OF ABBREVIATION
1. & - And
3. End -Edition
4. Co. -Company
5. Hon'ble -Honourable
6. Ltd -Limited
7. Ors. -Others
8. SC -Supreme Court
4 | Pagе
DUTIES OF SELLER AND BUYER UNDER SALES OF GOODS ACT.
INTRODUCTION
The term “contract” is defined in Section 2(h)of the Indian Contract Act, 18721 as follo
ws: An Agreement enforced by law. Sale of goods is also an agreement enforced by la
w.
The law of sale of goods was contained in chapter VII of the Indian contract Act. 1872(
Sections 76 of 123), but was found to be inadequate to deal with new situations arising
due to increase in mercantile transactions in the wake of rapid industrialisation. The cou
rts had to draw upon analogies from the decisions of English Courts to meet the new sit
uations. Hence the legislature intervened by passing the present Act (The Sale Of Good
s Act, 1930), incorporating therein the various provisions of English Sale Of Goods Act
, 1893.
Contracts for the sale of goods are subject to the general legal principles applicable to a
ll contracts, such as offer and its acceptance or other essential elements of a contract.
CONTRACT OF SALE OF GOODS
A contract of selling of goods is actually a contract by which the seller transfers or agr
ees to transfer the property in commodities to customer for a cost. The phrase contract
of sale is actually a generic phrase and includes both an agreement to sell and sale .
Where under sale,the property in the goods is transferred from the seller to the buyer, th
e contract is called a “sale” but in which the transfer of this property within the goods i
s actually taking place at a future period or maybe subject to several circumstances ther
eafter to be satisfied. The contract is actually called agreement to sell.
An agreement to promote gets to be a sale whenever the time elapses or the circumstan
ces, subject to that the property in the commodities would be to be transferred, are actu
ally fulfilled.
1:
Thе Indian contract Act,1872(9of 1872).
5 | Pagе
The real nature of the transaction evidenced by way of a composed understanding has t
o be ascertained through its covenants and not just from what the parties decide to call i
t.The Supreme Court in this situation reported that for considering whether a specific tra
nsaction is actually a sale or p not the Court has got to think about whether as a conseq
uence of this transaction the property within the commodities transferred to another in e
xchange for price.It is the substance of the transaction evidenced by the agreement whic
h must be looked at2. The substance of the matter must be ascertained by a consideratio
n of the whole of agreement.3
BUYER AND SELLER
According to Section 2(1) of The Sales of Goods Act, “buyer” means a person who buy
s or agrees to buy goods and Section 2(13) says “seller “means a person who sells or a
grees. to sell. In a Sale of Goods the two parties are the buyer and seller, and each has
his obligations and duties to perform.
DUTIES OF BUYER
The duty of buyer is to accepting the goods as well as to pay for it. Both these duties ar
e actually to be carried out in accordance with the terms of the contract of sale. under
section 31 of the Sale of goods act the term ‘in accordance with the terms of the contr
act of sale” is intended to show that the parties are free to modify the conditions and te
rms. In absence of a contract to the contrary these duties are conditions mentioned in t
he following section.So this may mean that the buyer and seller may agree among the
mselves to create certain rights and obligations.
One of the main duties of buyer among many is to apply for delivery. The buyer has n
o cause of action against the seller if he has not applied for delivery and4 he must menti
on that cause of action in his plaint.5
2
Khеdut Sahakari Ginning & Prеssing Sociеty v. Statе of Gujarat, A.I.R 1972.S.C.1786
3 Hеlby v. Mathеws 1895 .A.c.471
4
Ramamorthy v. p. Satyanarayana AP 550
5
Sivayya v.Ranganayakulu(l935)37 Bomba.L.R
6 | Pagе
In a case where the contract provided that seller should give notice of the arrival of the
goods (such as railway receipt), the buyer is still under an obligation to pay.
In the case Ganesh Das V Ram Nath6, it was decided that the buyer is under a duty to
apply for delivery even if the seller is under a duty or obligation to give notice.
The application for delivery should be in such a manner that the buyer must be ready
& intending to pay the price in exchange of goods
7
In a case, E buys goods from D, and assigns the benefit of the contract to F. Fapplies f
or delivery. E then takes a reassignment from F and Sues D on the contract without ma
king any demand for the goods. It is found that the assignment to F was fictitious. E is
not entitled to adopt the demand for delivery made by F. Such a demand is no demand
for the goods.
In Section 35 of sales of goods act it is written” Apart from any express contract”, selle
r is not bound to deliver the goods to the buyer
The buyer’s duty to apply for delivery does not arise where the seller has refused to per
form his part of the contract without any justification even before the final date of deliv
ery has arrived as it would become an idle formality to apply for delivery.
Next duty of the buyer is payment in the absence of any specific agreements, the buyer
must make payment at the time and place he receives the goods. When a sale is made o
n credit, the buyer is obliged to pay according to the specified credit terms, not when th
e goods are received. The credit period usually begins on the date of shipment. Payment
can be made by any means agreed on between the parties-
cash or any other method generally acceptable in the commercial world. If the seller de
mands cash when the buyer offers a check, credit card, or the like, the seller must perm
it the buyer reasonable time to obtain cash.
6
Ganеsh Das v. Ram Nath 1928
7
Sivayya v. Ranganayakulu 62 AIR 1935
7 | Pagе
Buyer’s Liability for delay in taking delivery
The Buyer has got the right of Inspection under Sales of goods act, 1930 section 40 Unl
ess otherwise agreed, and also for cash on delivary transactions, the buyer has an absol
ute right to examine the products. This right enables the buyer to confirm, prior to maki
ng payment, that the products tendered or even sent are what have been contracted for .
In case the goods aren't what the buyer ordered, the buyer is not under a duty to pay.
A chance for inspection is consequently an ailment precedent on the right of the seller t
o enforce transaction.unless otherwise agreed, inspection can take place in any reasona
ble manner at any reasonable place and time Generally, what is reasonable or not is as
certained by custom of the trade, past practices of the parties, and the likes. Expense of
inspecting conforming foods are borne by the buyer unless otherwise agreed.
Despite examination of the goods by the buyer in consonance with the right of his, the
buyer enjoys the right to refuse the products if a concealed, not obvious, defect is subse
quently found out.the buyer isn't under an obligation to return rejected items, in which
the buyer rejects items if not in consonance with the agreement description, it's not the
responsibility of his to post them to the seller, it's enough for him to offer a clear notice
that they're not approved after which they're for sellers risk.
The buyer is under the obligation to admit, the buyer is able to reveal assent to the sent
items in the following methods, each one of which comprises as acceptance:
1.Three is an acceptance when the buyer, after having had a reasonable opportunity to e
xamine the goods, signifies agreement to the seller that the goods are either conforming
or are acceptable inspite their nonconformity.
2.Acceptance is presumed when the buyer has had a reasonable opportunity to examine
the goods and has failed to reject them within a reasonable duration of time.
3.In sales contracts, the buyer will be deemed to have accepted the goods when he perf
orms any act which is inconsistent with the seller's ownership, for e.g., use or resale of
the goods.
Buyer’s Liability for delay in taking delivery section 44 of Sales of goods act,
8 | Pagе
Section 44 of Sales of goods act, contemplates the case where in the property in good
s has been passed to the buyer and he has become the owner thereof. The mere fact that
the seller has been given the right to recover expenses for custody and care and to reco
ver the loss shows that the buyer’s neglect doesn't entitle the seller to place an end to th
e agreement, that the property in goods has passed to the buyer and that the goods are k
ept against the will of the seller. In such a case if the buyer fails to take delivery within
a reasonable duration of time, he is liable to the seller for any damage caused by his d
efault and also for a reasonable charge for the care and custody of the goods.
DUTIES OF SELLER
The major obligation of the seller within a sales contract is to tender conforming goods
to the buyer. Tender of delivery requires that the seller have and hold conforming goods
at the disposal of the buyer and give the buyer any such notification notification whic
h is reasonably necessary to enable the buyer to take the delivery. Conforming goods ar
e those goods that conform identically to the description of the goods in the contract.
Tender must occur in a reasonable manner and also at a reasonable hour. Unless if the
parties have agreed otherwise, the goods must be tendered for delivery at some reasona
ble time and must be kept available for a reasonable duration of time to enable the buy
er to take possession of it. All goods called for by a contract must be tendered in a sing
le delivery unless the parties have agreed otherwise, or the circumstances are such that
either parties can rightfully request for delivery in lots.
Delivery
It is the obligation of the seller to deliver the goods and also of the buyer to accept an
d pay for it, in accordance with the terms and conditions of the contract of sale.
Unless agreed, delivery of goods and payment of the price are conditions concurrent to
each other, in other words, the seller shall be ready and intending to give possession of
the goods to the buyer in exchange of the price, and the buyer shall be ready and inten
ding to pay the price in exchange of possession of the goods.
Risk of deterioration in the goods
9 | Pagе
When the seller assents or agrees to deliver the goods at his own risk at a location other
than that where they are when sold, the buyer shall, nevertheless, unless otherwise agre
ed, take any risk of deterioration in the quality of goods, necessarily incident in the co
urse of transit.
Damages for non-delivery
Where the seller of goods wrongfully, neglects or refuses to deliver the goods to the bu
yer, the buyer can sue the seller for damages for non-delivery.
Specific Performance
Under specific circumstances when any suit for a breach of contract to deliver specific
or ascertained goods, the Court may depending if it thinks fit, the application of the pla
intiff, by its decree may order that the contract shall be performed specifically. The pow
er of the court to direct specific performance in such cases is to be used in accordance t
o rules contained in the Specific Relief Act regarding specific performance of contracts.
Place of Delivery
The UCC provides for the place of delivery pursuant to the contract when the contract
does not Of course, the parties may agree on a particular destination, or their contract's
terms or the circumstances may indicate the place.
Noncarrier Cases
If the contract doesn’t designate a place of delivery for the goods, and the buyer is exp
ected to pick them up, the place of delivery is assumed to be the seller's place of busine
ss or, if the seller has no such place, the residence of the seller will be considered, if th
e contract involves the sale of identified goods, and the parties are aware when they en
ter into the contract that these goods are located somewhere other than of the seller's pl
ace of business, then that location of the goods is the place for their delivery.
Carrier Cases
It is the duty of the seller to do whatever is necessary to assure the carrier’s responsibili
ty for the safe delivery of the goods to the buyer so that in the event of damage or loss,
10 | Pagе
the buyer shall have his indemnity against the carrier8
In various instances, attendant circumstances or delivery conditions in the contract make
it apparent that the parties intend that the carrier be used to move goods. There are t
wo ways in which a seller can complete performance of the obligation to deliver the go
ods in carrier cases — through a destination contract and through a shipment contract
Shipment Contracts: Unless agreed otherwise, the seller must do the following:
● place the goods in the hands of the carrier.
● Make a contract for there transportation which is reasonable according to the nat
ure of the goods and also their value.
● Obtain and swiftly deliver or tender to the buyer any document which is necessa
ry to enable the buyer to obtain possession of goods from the carrier.
● Promptly and swiftly inform the buyer that the shipment has been made.
If the seller fails to notify or inform the the buyer that shipment has been made or if h
e fails to make proper contract for transportation, and a material loss or damage of the
goods or a significant time delay results, the buyer may reject the shipment of goods.
Of course, the parties may agree that a lesser amount of loss or any delay will be consi
dered a ground for rejection.
Destination Contracts: under a destination contract, the seller of goods agrees to see th
at the conforming goods will be duly tendered to the buyer of goods at a particular loc
ation or destination. The goods must be tendered at a reasonable time and held at the bu
yer’s disposal for a reasonable duration of time. The seller must also give the buyer app
ropriate notice of the same. In addition to it , the seller must provide the buyer of goods
with any documents of title which is necessary to enable the buyer to obtain delivery fr
om the carrier(s). Sellers most often do this by tendering the documents through the me
ans of ordinary banking channels.
8
Clarkе v. Hutchis (1811)14 еast
11 | Pagе
The Perfect Tender Rule
The seller has a duty to ship or tender conforming goods, and this entitles the buyer to
accept and pay for the goods in accordance with the terms and conditions of the contrac
t. Under common law, the seller was under a duty to deliver the goods in conformity
with the terms of the contract in every minute detail. This was termed as the the perfect
tender rule. The UCC preserves the perfect tender rule by saying that when the goods
or tender of delivery fail in any manner to conform to the contract, the buyer has the ri
ght to accept the shipment , reject the entire shipment, or accept a part of it and reject
a part of it..
Exceptions to the Perfect Tender Rule
due to thw the rigidity of the perfect tender rule, various exceptions to the rule have b
een made. They are: (1) Agreement of the concerned parties; (2)Substitution of Carrier
s; (3) Right to cure; (4)Destruction of Identified Goods. (5) Commercial Impracticability
; (6) Installment contracts;
Section 45 lays down that a seller is unpaid :
(1) When the whole price has not been tendered or paid.
(2) When any negotiable instrument or a bill of exchange has been received as provi
sional or conditional payment and the condition in which it was received has no
t been satisfied by reason of the dishonor of the instrument or otherwise.
The seller remains to be an unpaid seller as long as any portion of the price, however s
mall in amount, remains unpaid. Where the whole price has been tendered, and the selle
r has refused to accept such tender, seller then in that case ceases to be an unpaid seller
. In such a scenario the seller loses all his right against the goods.
If there is a period of credit in that case the seller is not unpaid until the price becomes
due. Against if there is a condition attached to payment then it has be fulfilled.
The right of the unpiad seller can be exercised by an agent of the seller to whom the b
ill of leading has been endorsed, or a consignor or an agent who has himself paid, or is
12 | Pagе
directly accountable for such price.
Rights of an unpaid seller
. If seller is not been paid he has some right under this act .The sale of Goods Act has
explicitly and clearly provided two kinds of right to an unpaid seller of goods, :
(1) Against the goods
(a) When property in the goods has passed
(i) Right of lien
(ii) Right of stoppage of goods in transit
(iii) Right of re-sale
(b) When property in the goods has not passed
(2) Against the buyer personally
(i) Right to use for price
(ii) Right to sue for damages
(iii) Right to sue for interest
Among these the Right of lien is the most important .
Right of lien
The lien of an unpaid seller is a right to retain possession of the goods till the time ten
der or payment of the price is recieved. A person cannot on his own goods M. On the b
asis of this principle, when the statute gives a right of lien to the seller, it assumes that
the property in goods has been passed to the buyer9.it then depends on actual possessi
on and not on title, and then it is not affected by his having separated with a document
capable of transferring the title. He may have given a bill of lading which passes the le
9
Nippon Yusеn Kaisha v. Ramjiban (1938) A.P.C.(155).
13 | Pagе
gal property in the goods, or he may have given an order of delivery, Which though it
doesn’t pass the legal title or property in the goods, entitles the person receiving it to ta
ke possession of the goods and take a title in that way, but what so ever he has done i
n that respect doesn’t deprive him of his right of lien till the time he keeps possession
of the goods as a vendor.10
Under sub-sec(2), an unpaid seller can enforce his right of lien even if his character of an
unpaid vendor has ceased and thereby has become the bailee of the buyer. Accordingly, it
has been held that giving a delivery order by a seller of goods to a buyer doesn’t per se give
the buyer such a possession of goods so as to deprive the seller’s lien for the price. But the
seller’s lien can be defeated if at all the conditions of the case are such so as to stop him
from denying that payment had been received for goods to which the delivery order is
related to.
10
Impеrial Bank v. London and St. Kathеrinе Docks Co.(1877)5 Ch. Div.195.200.
14 | Pagе
CONCLUSION
It is the duty of the seller of goods to deliver the goods and that of the buyer to accept and
duly pay for them, in consonance with the terms and conditions of the contract of sale.
A contract of sale of goods is a contract in which the seller transfers or agrees to transfer
the property in goods to the buyer of goods for a particular or specific price. For a contract
of sale to be created , an offer to sell or buy goods must be there. Provision relating to
payment of price and delivery of goods must also be there.
For better and swift functioning of the contract of sales. The sales of goods act has laid
down certain duties to seller and buyer, which they shall abide during payment and also
during delivery of goods or price.
The obligations of the seller and buyer were discussed in the research, of those as mentioned
earlier in the research work is. The seller’s main duty is to deliver the goods while the buyer
is to accept the goods. Other various obligations under provisions of Sales of goods act,
1930, were discussed throughout the research work.
A contract of sale of goods is a contract in which the seller transfers or agrees to transfer
the property in goods to buyer for a specific price. The term “ contract of sale” is a generic
term and includes both a sale and an agreement to sell.
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 conditions thereafter to be fulfilled. The
contract is called “agreement to sell.
An agreement to sell becomes a sale when the time elapses or the conditions, subject to
which the property in die goods is to be transferred, are fulfilled.
The true nature of a transaction evidenced by a written agreement has to be ascertained
from its covenants and not merely from what the parties choose to call it.
If both the seller and buyer agrees to abide by their duties only then a contract is compl
ete by the sales of goods Act, 1930.
15 | Pagе
BIBLIOGRAPHY
STATUTES
2. H.S. Pathak, Mulla Sales of Goods Act And Indian Partnership Act, 9th edition, 2009
3. Avatar Singh, Law of Sales Of Goods
LIST OF CASES
1. Khedut Sahakari Ginning & Pressing Society vs. State of Gujarat, A.I.R 1972.S.C. 1786.
2. Helby vs. Mathews 1895 . A.C.471
3. Sivayya vs .Ranganayaknluai A.I.R 1935 P.C.67.
4. Ramamorthy vs. p. Satyanarayana A. I.R 1935 P.C.67
5. Ganesh Das vs. Ram Nath (1928)A. Lah.20(27)
6. Sivayya vs. Ranganayakulu A.I.R.1935 P.C.67,58 Mad.670.1541.C. 1097
7. Nippon Yusen Kaisha vs. Ramjiban (1938) A.P.C.(155).
8. Imperial Bank vs. London and St. Katherine Docks Co.(1877)5 Ch. Div.195.200.
9. Clarke vs. Hutchis (1811)9 Cal.473.
10. Isherwood vs. Whitmore (1874) L.R.9 C.P.208
11. Greaves vs. ashlin (1813)3 Camp. 426
12. Randall vs. Newson (1872) 2Q.B.D.102
WEBSITES
• http://en.wikipedia.org/wiki/Sale_of_Goods_Act_1979
• http://220.227.161.86/168131930ofsga.pdf
• http://www.publishyourarticles.org/eng/articles/duties-of-seller-of-goods.htm
• http://www.ricardobarrazacom/Duties%20of%20Seller's%20Agent,%20Buyer's%2
0 Agent,%20and%20Transaction%20Broker.htm
16 | Pagе
DUTIES OF SELLER AND BUYER UNDER THE SALES OF GOODS ACT
● http://www.heinonline.org/HOL/Page?handle=hein.beal/lutitmtsgw0001&id=l&co
lle ction=beal
● http://www.wipo.com
● http://www.manupatra.com
● http://westlawindia.com
(3) Aiyar Ramanatha P, The Law Lexicon, 2nd Edition, Reprint 2006, Wadhwaa
Nagpur.
(4) Garner Bryan A. Black’s law Dictionary, 6th Edition, 1990, West.
17 | Pagе