Table of Contents
INTRODUCTION
The Contract of sale of goods is one of the specific forms of contracts recognized and regulated by law in India. A sale is a typical bargain between the buyer and the seller. The Sale of Goods Act, of 1930 allows the parties to modify the provisions
of the law by express stipulations
Sale of Goods Act, of 1930 is an Act to define and amend the law relating to the sale of goods. It extends to the
whole of India. It came into force on 1st July 1930.
DEFINITIONS
Buyer and Seller
Section 2(1) ‘Buyer’ means a person who buys or agrees to buy goods
Section 2(13) ‘Seller’ means a person who sells or agrees to sell goods
The two terms, ‘buyer’ and ‘seller’ are complementary and represent the two parties to a contract of sale of goods. Both the terms are, however, used in a sense wider than their common meaning. Not only the person who buys but also the one who agrees to buy is a buyer. Similarly, a ‘seller’ means not only a person who sells but also a person who agrees to sell
Section 2(7) “Goods”
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
“Goods” include both tangible goods and intangible goods like goodwill, copyrights, patents, trademarks, etc. Stock and shares, gas, steam, water, electricity, and decree of the court are also considered to be goods.
‘Actionable claims’
‘Actionable claims’ are claims, which can be enforced only by an action or suit, e.g., debt. Debt is not a movable property or goods.
Even Fixed Deposit Receipts (FDR) are considered goods under Section 176 of the Indian Contract Act read with Section 2(7) of the Sales of Goods Act
EXISTING GOODS
Section 6 EXISTING GOODS are such goods as are in existence at the time of the contract of sale, i.e., those owned or possessed or acquired by the seller at the time of the contract of sale.
KINDS OF EXISTING GOODS
Section 2(14) Specific goods means goods identified and agreed upon at the time a contract of sale is made
EXAMPLE Any specified and finally decided goods like a Samsung Galaxy S7 Edge, Whirlpool washing machine of 7 kg etc.
‘A’ had five cars of different models. He agreed to sell his ‘Santro’ car to ‘B’ and ‘B’ agreed to purchase the same car. In this case, the sale is for specific goods as the car has been identified and agreed at the time of the contract of sale.
Ascertained Goods
Those goods which are identified in accordance with the agreement after the contract of sale is made. This term is not defined in the Act but has been judicially interpreted. In actual practice, the term ‘ascertained goods’ is used in the same sense as ‘specific goods.’ When from a lot or out of large quantity of unascertained goods, the number or quantity contracted for is identified, such identified goods are called ascertained goods
EXAMPLE A wholesaler of cotton has 100 bales in his godown. He agrees to sell 50 bales and these bales were selected and set aside. On selection, the goods becomes ascertained. In this case, the contract is for the sale of ascertained goods, as the cotton bales to be sold are identified and agreed after the formation of the contract. It may be noted that before the ascertainment of the goods, the contract was for the sale of unascertained goods
Unascertained Goods
The goods which are not specifically identified or ascertained at the time of the making of the contract. They are indicated or defined only by description or sample.
EXAMPLE If A agrees to sell to B one packet of salt out of the lot of one hundred packets lying in his shop, it is a sale of unascertained goods because it is not known which packet is to be delivered. As soon as a particular packet is separated from the lot, it becomes ascertained or specific goods.
FUTURE GOODS
Section 2 (6) Goods to be manufactured or produced or acquired by the seller after making the contract of sale
A contract for the sale of future goods is always an agreement to sell. It is never actual sale because a person cannot transfer what is not in existence.
For EXAMPLE, 1,000 quintals of potatoes to be grown on A’s field, is not illegal, though the actual sale of future goods is not possible. This is an example of an agreement to sell.
CONTINGENT GOODS
Section 6(2) The acquisition of which by the seller depends upon an uncertain contingency (uncertain event) are called ‘contingent goods’
Contingent goods also operate as ‘an agreement to sell’ and not a ‘sale’ so far as the question of passing of property to the buyer is concerned. In other words, like the future goods, in the case of contingent goods also, the property does not pass to the buyer at the time of making the contract
EXAMPLE A agrees to sell to B a Picasso painting provided he is able to purchase it from its present owner. This is a contract for the sale of contingent goods.
EXAMPLE P contracts to sell 50 pieces of a particular article provided the ship which is bringing them reaches the port safely. This is an agreement for the sale of contingent goods
Section 2(2) Delivery
Delivery means voluntary transfer of possession from one person to another. As a general rule, delivery of goods may be made by doing anything, which has the effect of putting the goods in the possession of the buyer, or any person authorized to hold them on his behalf.
Forms of delivery
- Actual delivery
- Constructive delivery
- Symbolic delivery
Actual delivery
When the goods are physically delivered to the buyer. Actual delivery takes place when the seller transfers the physical possession of the goods to the buyer or to a third person authorized to hold goods on behalf of the buyer. This is the most common method of delivery.
Constructive delivery
When it is effected without any change in the custody or actual possession of the thing as in the case of delivery by attornment (acknowledgment)
EXAMPLE Where a warehouseman holding the goods of A agrees to hold them on behalf of B, at A’s request
Symbolic delivery
When there is a delivery of a thing in token of a transfer of something else, i.e., delivery of goods in the course of transit may be made by handing over documents of title goods, like bill of lading or railway receipt or delivery orders or the key of a warehouse containing the goods is handed over to the buyer. Where actual delivery is not possible, there may be delivery of the means of getting possession of the goods.
Goods are said to be in a deliverable state when they are in such a condition that the buyer would, under the contract, be bound to take delivery of them Section 2(3)
EXAMPLE When A contracts to sell timber and make bundles thereof, the goods will be in a deliverable state after A has put the goods in such a condition.
Section 2(4) Document of title to goods
Bill of lading, dock-warrant, warehouse keeper’s certificate,wharfingers’ certificate, railway receipt, multimodal transport document, warrant or order for the delivery of goods and any other document used in the ordinary course of business as proof of the possession or control of goods or is for authorizing or purporting to authorize, either by endorsement or by delivery, the possessor of the document to transfer or receive goods thereby represented
EXAMPLE Bill of lading, dock warrant, warehouse keeper’s certificate, wharfinger’s certificate, railway receipt, warrant, an order of delivery of goods.
Section 2(9) Mercantile Agent
It means an agent who in the customary course of business has, as such agent, authority either to sell goods or to consign goods for the purpose of sale or to buy goods or to raise money on the security of the goods.
EXAMPLE Such kind of agents are auctioneers or brokers, etc
Section 2(11) Property
‘Property’ here means ‘ownership’ or general property. In every contract of sale, the ownership of goods must be transferred by the seller to the buyer, or there should be an agreement by the seller to transfer the ownership to the buyer. It means the general property (right of ownership-in-goods) and not merely a special property.
EXAMPLE If A who owns certain goods pledges them to B, A has general property in the goods, whereas B has special property or interest in the goods to the extent of the amount of advance he has made.
Section 2(8) Insolvent
A person is said to be insolvent when he ceases to pay his debts in the ordinary course of business, or cannot pay his debts as they become due, whether he has committed an act of insolvency or not.
Section 2(10) Price
Price means the money consideration for a sale of goods. It is the value of goods expressed in monetary terms. It is the essential requirement to make a contract for sale of goods.
Section 2(12) Quality of goods
Quality of goods includes their state or condition