SALE OF GOODS ACT 1930 Goods include every kind of movable property other than actionable claims and

money and includes stockas, shares, growing crops etc.. Goods may be existing or future things like water, gas, electricity, copy right and trade mark-are all goods. SALE AND AGREEMENT TO SELL :

Where the right of ownership in the goods is transferred from

the seller to the buyer in exchange of money - is sale. It may be absolute or conditional in conditional sale the

process is completed subject to certain conditions.

In an agreement to sell, the transfer of ownership in the goods take place at a future time. It is conditional. Differences are
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Differences are : 1. Transfer of Property: In sale immediate effect of transferring property - in agreement to sell, ownership passes on a future date. 2. Risk In sale, risk passes to buyer in agreement to sell the seller remains owner and run all the risk. 3. Breach by the buyer- the seller may sue the buyer for the price. 4. Nature of contract. an agreement to sell is an executory contract while a sale is an executed contract. 5. Breach by the seller. Sale makes the buyer owner of the goods- if the seller refuses to deliver the goods the buyer may sue for delivery by specific performance 6. When goods are destroyed the buyer has to bear the loss in case of sale if goods are destroyed by accident.
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ESSENTIAL ELEMENTS OF SALE: 1. A contract 2. Existence of two parties- buyer and seller 3. Transfer of ownership 4. Subject matter of sale of Goods 5. Price

SALE AND HIRE PURCHASE : A hire purchase agreement is

for hiring with an option to purchase. It resembles a sale. In sale ownership is transferred. In hire purchase

ownership is transferred only on payment of fixed number

of installments. In sale the buyer becomes owner. In hire purchase he is hirer and a bailee.
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CONDITION AND WARRANTY : A condition is a stipulation which is essential to the main purpose of the contract, the breach of which gives rise to a right to treat the contract as repudiated. A warranty is a stipulation collateral to the main purpose of the contract. A

breach of this will give rise to a claim for damages. It will not
entitle the party to reject the goods / treat the contract as repudiated. When a condition is reduced to a warranty the

effect is not that the condition becomes a warranty but it is

only the remedy that change.
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DISTINCTION BETWEEN A CONDITION AND A WARRANTY : 1. A condition is a term essential to the main purpose of the contract. 2. Warranty is only collateral to the main purpose. 3. Main purpose of contract cannot be fulfilled unless the

condition is fulfilled. Fulfillment of contract does not

depend upon the fulfillment of a warranty. 4. A breach of condition would entitle the other party to

repudiate the contract altogether . A breach of warranty

will give right only to claim damages and not to avoid the contract.
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5. A breach of condition may be treated as a breach of warranty, and the affected party may be satisfied with damages only. A breach of warranty cannot be treated as a breach of condition. IMPLIED CONDITION : In a contract of sale of goods the conditions and

warranties

may

be

expressed

or

implied.

Express

conditions are expressly agreed upon by the parties at the time of contract for sale. But when the conditions and

warranties are not written in the contract, but applied to

the contract by operation of law or by trade or custom they are called implied condition and warranties. They are
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1. Conditions as to title of goods sold. 2. Goods sold should correspond to description. 3. Condition as to quality or fitness. 4. Condition as to Merchantability. 5. Condition as to wholesomeness. 6. Condition as to sample. Some important implied warranties. 1.Warranty for quiet possession.

2. Warranty against encumbrance.

3. Implied warranty as to usage of trade.
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Rights of Buyer. 1. Entitled to get delivery of the goods in accordance with the contract. 2. Is entitled to claim the whole goods and not in installments. 3. He is entitled to a reasonable opportunity to examine the

goods before taking delivery.

4. Right to accept / reject. 5. Has right to sue for damages in case of breaches.

6. Entitled to claim interest if he has paid the whole price / a

portion in case of breach.
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Rights of Seller : 1. Where the buyer refuses to accept and pay for the goods sold, the seller has a right to sue for damages. 2. Right to recover price. Rights of an unpaid seller : 3. Claim interest.

When ownership in the goods is transferred to buyer the

unpaid vender has the following rights. 1. Right of lien. If the buyer does not pay the price, the seller

has the right to retain the goods until the whole price is
paid. Lien means a right to retain the goods of another till the charges due to him are paid.
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2. Right to stoppage of goods in transit. It is just an extension of the right of lien. When the goods

are in sellers possession he is always entitled to exercise

his lien and he can retain the goods with him. Where the goods have come into the possession of the buyer, his right

of lien is lost. When the seller has parted with the

possession of the goods but have not actually come into the hands of the buyer/ the goods are in transit the seller has the right to stop the goods in transit and regain possession.
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3. Right of resale. The unpaid seller can resume possession of the goods and upon insolvency of the buyer, can resell the goods if it is in perishable nature. Other wise he may call upon the buyer to pay the amount and incase of failure can resell.

FAS Contract :
FAS stands for free alongside ship. The Ownership in goods sold under an FAS contract passes from the seller to

the buyer when the goods are delivered alongside the ship
named by the buyer under a contract of carriage.
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F.O.B AND F.O.R CONTRACTS: F.O.B stands for Free on Board and F.O.R Free on Rail. In such contracts the seller has to put the goods on board / rail at sellers expense. The buyer is free from the bearing the cost of putting the goods on board/ rail. But he is responsible for freight, insurance and subsequent expenses . The seller

does not insure the goods as the ownership passes to the

buyer as soon as the goods are put on board / rail. So far as F.O.B contract is concernedthe buyer must name the ship

to which goods are to be delivered / he may authorise the

seller to select the ship.
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Where the buyer does not name the ship by which goods are to be sent, the seller should not despatch the goods through a ship of his choice. In F.O.B or F.O.R contracts ownership passes to the buyer as soon as the goods are put on board or on rail.

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