SALE OF GOODS ACT

OF 1930
CS (Prof. ) Monica Suri
(Fellow Member of
The Institute of Company Secretaries
of India)
 THE SALE OF GOODS
ACT, 1930
SECTION 4 STATES SALE OF
GOODS IS A CONTRACT
WHEREBY THE SELLER :
•TRANSFERS OR AGREES TO TRANSFER THE
PROPERTY IN GOODS
•TO THE BUYER
•FOR MONEY CONSIDERATION.
•ALL ESSENTIAL ELEMENTS TO CONTRACT MUST
BE PRESENT.
 Case State of Gujarat Vs Raman Lal s. Co.
1965
Partnership dissolved and surplus divided to
show sale

AGREEMENT TO SELL
An Agreement to sell does not involve any
transfer of property. The transfer is said to
take place at a future date.
 Nature of Contract
 Nature of Rights( Ownership)
 Right to resell
 Risk of loss
 Remedy for breach ( personal/ suit)
 Effect of insolvency of the seller
 Transfer of owner ship
SUBJECT MATTER OF GOODS : WHAT ARE GOODS?

AS PER SECTION 2(7) GOODS MEANS EVERY KIND OF

MOVABLE PROPERTY OTHER THAN ACTIONABLE CLAIMSAND
MONEY / AND INCLUDES STOCKS, GROWING CROPS, GRASS
AND THINGS ATTACHED TO / OR FORMING PART OF THE LAND
AGREED TO BE SERVED ON SALE OR UNDER THE CONTRACT
OF SALE.
TYPES OF GOODS
-EXISTING :
1)MAY BE SPECIFIC OR GENERIC AND

2) ASCERTAINED OR UNASCERTAINED.
THESE ARE GOODS WHICH ARE EITHER EXISTING OR POSSESSED
BY THE SELLER AT THE TIME OF CONTRACT. UNASCERTAINED
GOODS BECOME ASCERTAINED BEFORE SALE.

-FUTURE : GOODS MANUFACTURED OR PRODUCED OR ACQUIRED

AFTER THE AGREEMENT OF CONTRACT OF SALE.
-CONTINGENT
 . Existing Goods
 Goods which physically exist and are owned
or possessed by the seller at the time of sale

 Can be :
 Specific Goods which are identified like
buying a LG Microwave
 Generic Goods which are defined by
description like choosing between LG,
Samsung, whirlpool microwave.
 Ascertained goods: Specific goods identified
at time of sale.
 Unascertained goods: generic goods
unidentified at the time of sale.

 2. Future Goods
 These goods are to be produced or
manufactured at a latter point of time
 3. Contingent goods are like future and
unascertained goods. However execution of
such contract is depended on the happening
or non-happeneing of an event.
 TRANSFER OF PROPERTY
 Depends on three stages
 Transfer of Property in goods
 Transfer of possession of goods
 Passing of the risk
 Rules regarding transfer of property

 1. Goods must be ascertained : No

property in goods can pass if the goods are
unascertained goods.
 2. Intention to pass the property: Intention
depends on the terms of the contract,
conduct of the parties and the circumstances
of the situation
 The Principle:

 “ PROPERTY IN GOODS MEANS OWNERSHIP OF

GOODS . THE TERM PROPERTY IN GOODS
MUST BE DISTINGUISHED FROM POSSESSION
OF GOODS WHICH REFERS TO CUSTODY OR
CONTROL OF GOODS “
 For eg : A carrier or servant entrusted with
goods is not the owner of the goods.
 DOCTRINE OF CAVEAT EMPTOR

IMPLIES “LET THE BUYER BE AWARE”

• IT STATES THAT THE BUYER SHOULD SATISFY

HIMSELF THAT THE GOODS HE IS PURCHASING ARE OF THE
QUALITY WHICH HE REQUIRES.
• NOT THE RESPONSIBILTY OF THE SELLER TO GIVE TO
BUYER THE GOODS WHICH ARE FIT FOR A SUITABLE
PURPOSE.
• THE BUYER SHOULD APPLY DUE DILLIGENCE IN
KNOWING THE SUBJECT MATTER, ELSE HE CANNOT BLAME
THE SELLER IF THE GOODS TURN OUT TO BE DEFECTIVE OR
DO NOT SERVE THE PURPOSE.
 CASE IN PT:
WARD
VS
HOBBS
FACTS :
-HOBBS AUCTIONED PIGS IN THE
MARKET.
-PIGS SUFFERED FROM TYPHOID FEVER
AND WERE UNHEALTHY.
-THERE WAS NO IMPLIED WAARRANTY
-WARD BOUGHT 32 PIGS
  EXCEPTIONS TO DOCTORINE OF CAVEAT
EMPTOR:

1. IMPLIED CONDITION AS TO FITNESS FOR BUYERS

PURPOSE
2. IMPLIED CONDITION AS TO MERCHNTABLE
QUALITY.
3. IMPLIED CONDITION ANNEXED BY USAGE OF
TRADE
 -SELLER MAKES FALSE REPRESNTATION.
 -SELLER CONCEALS MATERIAL FACTS.
 -GOODS BOUGHT FROM A SELLER WHO
DEALS IN THOSE GOODS.
 UNPAID SELLER SECTION 45

• WHEN WHOLE PRICE NOT PAID.

• SALE MADE BY A NEGOTIABLE INSTRUMENT AND

INSTRUMENT DISHONOURED.

AUCTION SALES

• A SALE WHERE GOODS ARE OFFERED TO BE TAKEN

BY BIDDERS.
• AS PER THE ACT SALE IS COMPLETE WHEN THE
AUCTIONEER ANOUNCES THE COMPLETION BY FALL OF THE
HAMMER.
 Sec 46
 1.Lien on goods
--Lien is a right to retain possession untill
payment is made

 2. Right to stoppage of goods

--The seller must not have been prevented by
other provision of the Act.
3. Right to resale
 If the goods are of perishable nature
 If the unpaid seller who have exercised right
of lien gives notice of his intention to the
buyer.
 RIGHTS AGAINST THE BUYER
1. SUIT FOR PRICE (SEC 55)

2. SUIT FOR DAMAGES FOR NON ACCEPTANCE

(SEC 56)

3. SUIT FOR INTEREST ( SEC 61)

 Section 12(2)
 A condition is a stipulation essential to the
main purpose of the contract, breach of
which may lead to contract being
Repudiated.”
 Section 12(3) A Warranty is a stipulation
collateral to the main purpose, the breach for
which gives rise to claim for damages
 but not to a right to reject the goods and
treat the contract repudiated.
 Difference
 Defintion
 Essential requirement
 Repudiate contract/ Damages
 Breach of Contract
 Suit/ Damages