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4 (1) of the Sale of Goods Act defines a contract of sale of goods as a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price.

1. 2. 3. 4. 5.

Two parties Transfer of property (ownership) Goods Price Sale or Agreement to sell

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2(7) 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.

Sale 1.Under sale, the property has passed to the buyer. 2. In case loss to goods, the loss will be borne by the buyer even if the possession of the goods is with seller. 3.In insolvency of seller, the official assignee will not be able to take over the goods but will recover the price from the buyer. 4. In insolvency of buyer, his official assignee will have control over the goods and the seller will get only a ratable dividend from the buyer. 5. Sale creates a jus-in-rem i.e. a right over the goods.

Agreement to sell 1.Under the agreement to sell, the property shall pass to buyer in future. 2. The loss in this case shall be borne by the seller, even though the goods are in the possession of the buyer. 3. In this case, the official assignee of insolvent seller will acquire control over the goods but the price will not be recoverable. 4. In this case, his official assignee will not keep any control over the goods which will go to the seller. 5.An agreement to sell creates a jusin-personam, i.e. a personal right against the seller.

1. 2. 3. 4.

Price may be expressly stated in the contract. A mode of price fixation may be stated in the contract. Price may be determined by course of dealings. In cases other than these, price would be a reasonable price.

1. 2. 3.

Existing goods Future goods Contingent goods

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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.
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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 to a right to reject the goods and treat the contract as repudiated.

1. 2. 3.

Voluntary waiver by buyer Reduction of condition to warranty Acceptance of Goods by buyer

Basis 1. Importance

Condition Condition is essential to the main purpose of contract.

Warranty Warranty is only collateral to the main purpose of the contract.

2. Remedy on breach

Reject the goods & claim Suitable reduction in damages. price and claim for damages.

3. Treatment by buyer

Option to treat condition as a warranty.

No option to treat a warranty as a condition.