THE SALES OF GOODS ACT,1930

ESSENTIALS OF A VALID SALES CONTRACT

Two parties: There must be two distinct parties i.e. a buyer and a

seller.Goods: Goods which form the subject matter of the contract

of sale must be movable. Price: The consideration of the contract of sale, called

price, must be money.Hence in nutshell a contract is made by an offer to

buy or sell goods for a price and the acceptance of such offer.

basis sale Agreement to sell

1. payment Immediate payment is not necessary and can be done at a future date.

Ownership is to be given at a future date.

2 contract Its an executed contract

Its an executory contract

3.Right on goods

Jus-in-rem Jus-in-personam

4.risk There is a risk because the goods passes to the buyer without payment

There is no risk.

CONDITION

It is a stipulation essential to the main purpose of the contract, the breach of which gives the aggrieved party a right to repudiate the contract itself. In addition, he may maintain an action for damages for loss suffered, if any, on the footing that the whole contract is broken and the seller is guilty of non-delivery.

EXAMPLE-P , goes to R , a horse dealer, and says, I want a horse which can run at a speed of 30km.perhour . The horse dealer points out a particular horse and says , this will suit you. P buys the horse . Later on P finds that the horse can run only at a speed of 20km./hr . There is a breach of condition,P can repudiate the contract , return the horse to R and get back the price.

WARRANTY

A warranty is a stipulation collateral to the purpose of the contract, the breach of which gives the aggrieved party a right to sue for damages only ,and not to avoid the contract

EXAMPLE-Assume that a farmer ,intending to plant no-till

soybeans ,approaches a seller to buy her biocide . Assume further that the buyer requests a particular herbicide mix but the seller suggests a less expensive mix . If the chemicals fail to kill crabgrass and the farmer has a low yield of soybeans , the farmer could sue the seller for breach of the warranty of fitness for a particular purpose because the seller knew what the farmer required

The rights and duties of Buyer and Seller

Rights and duties of seller

Unpaid Seller

Unpaid Seller Seller to whom the full price of

the goods sold has not been paid.As per section 45 of Sale of Goods ActWhen the whole of the price has not been

paidWhen a bill of exchange or other negotiable

instrument has been received as conditional payment and the condition on which it was received has not been fulfilled by reason of dishonour of the instruments or otherwise

Rights of Unpaid Seller

Rights Against Goods Where the ownership of goods is transferred

to buyer(2) Rights Against BuyerWhere the ownership of goods is not

transferred to buyer.

Rights Against Goods

Right of Lien Right to retain possession of goods until

payment of priceIt can be exercised when

Goods have been sold without any stipulation as to credit

Goods sold on credit but the term of credit has expired Buyer becomes insolvent

Continued

2. Right of stoppage in transit

Right of stopping the goods in transit after the unpaid seller has parted with the goods.

Exercised when: when buyer becomes insolvent Goods are in transitOnly for the payment of price of the goods

Continued

3.Right of Re-sale

The unpaid seller can re-sale the goods when The goods are of perishable nature Seller gives notice to the buyer of

his intention to re-sale the goods Seller has reserved his rights of

resale

Rights Against Buyer

1. Suit for price The buyer fails to pay the price of goods The seller can file a suit against the buyer for recovery

of the price.

2.Suit for Damages for Non-Acceptance The seller is ready to deliver the goods to the buyer But the buyer wrongfully neglects or refuses to accept

the goods and pay for them.

Continued

3. Repudiation of contract before due dateWhen the buyer puts an end to the contract before due

date of delivery of goods, the seller may either

Treat the contract as subsisting and wait till the date of delivery of goods

Treat the contract as repudiated and bring the legal action against the buyer for the recovery of the damages.

Continued

4. Suit for InterestSpecific agreement between buyer and sellerRegarding interest on the price of goods from the date on

which payment becomes dueThe seller can recover interest from the buyer

Caveat emptor means ‘LET THE BUYER BEWARE’

EXCEPTIONS TO THE DOCTRINE OF CAVEAT EMPTOR

In case of misrepresentation by seller. In case of concealment of latent defect. In case of sale by description. In case of sale by sample. In case of sale by description and sample. Fitness for a particular purpose

CAVEAT EMPTOR

EXAMPLES

Ex. Pigs were sold subject to all faults and these pigs being infected caused typhoid to other healthy pigs of the buyer, it was held that the seller was not bound to disclose that the pigs were unhealthy. The rule of the law being caveat emptor.

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