A Presentation On

Presented By:

Sahaj Singh Puri

Anantdeep Singh Puri 1

 CONTENTS
 Goods
 Condition Or Warranties
 Kinds Of Goods
 Difference Between Condition
and Warranties
 Contract Of Sale  Types Of Condition And
 Sale Of Goods Shall Apply To Warranties
 Sale Of Goods Shall Not Apply  Implied Conditions
To  Implied Warranties
 Importance of the Contract of
sale of good
 When a Condition to be treated
as Warranty
 Essential Of Contract Of Sale  Caveat Emptor
 Sale and Agreement to Sale  Transfer of Property
 Difference Between Sale And
Agreement To Sale
 Transfer of Title
 Formalities Of Contract Of Sale
 Rules as to delivery of goods
 Price
 Unpaid Seller
 Fixing The Price
 Features of the Unpaid Seller
 Subject Matter Of Contract Of
 Rights of an Unpaid Seller
Sale  Buyer’s right against seller
Anantdeep Singh Puri 2
Goods means every kind of movable property
other than actionable claims and money; and
includes stock and shares, growing crops,
grass and things attached and forming part of
lands which are agreed to be served before
sale or under the contract of sale. Section
2(7).
Anantdeep Singh Puri 3
 Kinds Of Goods:
• Existing goods- Section 6(1) These are the goods
which are in existence and are physically present in
the seller’s possession.
• Specific goods- Section 2(14) – These are the goods
identified and agreed upon at the time the contract is
made.
• Ascertained goods- These are identified after the
formation of the contract.
• Unascertained goods- These are the goods which are
not specifically identified or agreed upon at the time of
the contract of sale.
• Future goods – Section 2(6) Goods which are to be
manufactured or produced or acquired by the seller
after making contract of sale.
• Contingent goods- Section 6(2).

Anantdeep Singh Puri 4

 Contract of Sale:

 A contract of sale of goods is a contract

whereby the seller transfers or agrees to
transfer the property in goods to the buyer
for a price. Sec.4(1)
 There may be a contract of sale between
one part owner and another.
 A contract of sale may be absolute or
conditional.

Anantdeep Singh Puri 5

 The Sale of Goods Act shall
apply to
 A Contract only if the ownership
of goods is transferred from one
person to another immediately
at the time of formation of
contract or subsequent to
formation of contract;

Anantdeep Singh Puri 6

Sale of Goods Act shall not apply
to
 Bailment of goods;
 Pledge of goods ;
 Any contract relating to
immovable property ;
 Contract of work and skill

Anantdeep Singh Puri 7

Importance of the Contract of
sale of good:
A contract of sale of goods is essential for the smooth operations and
exchange of goods in the economy. It is always preferred to have written contract
as it serves as proof in legal proceedings. A written and attested contract ensures
quality of the subject matter. The Seller, thus is duty-bound to warrant that the
goods are merchantable, conforms to Industry Standards and specifications. It
prevents fraud and deception on behalf of the subject-matter of price by either of
the parties. It assigns specific responsibilities upon the buyer and seller which they
are bound to perform. The Buyer has a responsibility to reasonably examine goods
prior to acceptance and to notify the seller of any defect of the goods – hence it
make a buyer more aware of what s/he is buying, thus preventing flaw. A written
contract ensures transfer of ownership of the goods to the buyer. The seller
through the contract warrants that the goods are free from any security interest
liens, outstanding titles, claims or any other outstanding encumbrances. A
contract ensures authenticity of the two parties involved in the exchange. It also
serves as a proof of a legal transaction and prevents the selling party to make an
unlawful mark-up on any product sold. In a nutshell, a contract binds and well as
benefits both the parties in the contract.

Anantdeep Singh Puri 8

 Essential of Contract Of Sale:
 There must be at least 2 parties.
 The Subject matter of contract must necessarily
be goods.
 A price in money (not in kind) should be paid or
promised.
 A transfer of property in goods from seller to
buyer must take place.
 A contract of sale must be absolute or
conditional. Section 4(2).
 All other essential elements of a valid contract
must be presented in contract of sale.

Anantdeep Singh Puri 9

 Sale and Agreement to Sale:
 When property is transferred from
seller to buyer at the time of
formation of contract, an absolute
sale occurs.
 When property in the goods is to be
transferred at some future date and
not at the time of contract, the
contract of sale is termed as an
agreement to sell.
Anantdeep Singh Puri 10
 Difference Between Sale And
Agreement To Sale
Sale
1) The Property in the goods
passes to the buyer and along
therewith the risk.
2) It is an executed contract.
3) The seller can sue the buyer for
the price of the goods because
of the passage of the property
therein to buyer.
4) A subsequent loss or
destruction of goods is liability
of buyer.
5) Breach on the part of the sellers
gives the buyer double remedy;
a suit for damages against the
seller and a proprietary remedy
of recovering the goods from
third parties who bought them.
Anantdeep Singh Puri
Agreement To Sale
1) Since property in the goods does not
pass to buyer, the risk also does not
pass to him.
2) It is an executory contract.
3) The aggrieved party can sue for
damages only and not for the price,
unless the price was payable at a
stated date.
4) Such loss or destruction is the
liability of the seller.
5) The seller, being still the owner of
the goods, may dispose of them as
he likes, and the buyer’s remedy
would be to file a suit for damages
only.
11
Formalities Of Contract Of Sale:
Contract can be made in any of the following
modes:
 There may be immediate delivery of goods.
 There may be immediate payment of price, but
it may be agreed that the delivery is to be
made at some future date.
 There may be immediate delivery of goods and
immediate payment of price.
 It may be agreed that delivery or payment or
both are to be made in installments.
 It may be agreed that delivery or payment or
both are to be made at some future date.
Anantdeep Singh Puri 12
 Price

Sec.2(10) defines the price as ‘the money

consideration for the sale of goods.’
Price has to be in terms of money.
All monitory payments do not amount to price.

Anantdeep Singh Puri 13

 Fixing the price
Price is mentioned in the contract.
The manner of fixing the price is mentioned
in the contract.
It is determined by the course of dealings of
the parties. when price is not fixed by any of
the above modes a ‘reasonable price’ is
considered as the price of the contract.

Anantdeep Singh Puri 14

Subject Matter Of Contract Of Sale
The subject matter of contract of sale is always the goods. This is
enshrined in the Sale of Goods Act 1930, under Section 6, 7 and 8.
Under Section 6:
The subject matter of contract must always be goods. The goods may be
existing or future goods.
Like an ordinary contract, a contract of sale of goods can also be made
with regard to the goods, the acquisition of which by sellers depends
upon a contingency, which may or may not happen. Thus, a contract for
sale of certain cloth to be manufactured by a certain mill is a valid
contract. Such contracts are called contingent contracts.
When the seller purports by his contract of sale to effect a sale of future
goods, the contract will operate only as an agreement to sell the goods
and not as sale.

Anantdeep Singh Puri 15

Under Section 7 & 8:

Goods not existing at the time of contract: If at the time a sale is

entered into, the subject- matter of a contract being specific
goods, which without the knowledge of the seller have been
destroyed or so damaged as not to answer to the description in
the contract, and then the contract is void ab initio.
Goods perishing after contract is made: Where there is an
agreement to sell specific goods and the goods, subsequently
without any fault of seller or the buyer perish or suffer such
damages as not to answer to the description in the agreement
before the risk passes to the buyer.

Anantdeep Singh Puri 16

 Condition Or Warranties
Condition: It is a stipulation essential to
main purpose of the contract, the breach
of which gives right to the repudiate the
contract and to claim damages.
Warranty: It is a stipulation collateral to
main purpose of the contract, the breach
of which gives rise to claim for damages
but not the right to reject the goods and
treat contract as repudiated.

Anantdeep Singh Puri 17

 Difference Between
Condition and Warranties
Condition
1. A condition is essential to
the main purpose of the
contract.
2. The aggrieved party can
repudiate the contract or
claim damages or both in
case of breach of condition.
3. A breach of condition may
be treated as breach of
warranty.
Anantdeep Singh Puri
Warranty
1. It is only collateral to main
purpose of contract.
2. The aggrieved party can
claim only the damages in
case of breach of warranty.
3. A breach of warranty cannot
be treated as breach of
condition.
18
 Types of conditions and
warranties
1) Express – which are expressly provided
in the contract.

2) Implied- which the law implies into the

contract unless the parties stipulate
to the contrary.

Anantdeep Singh Puri 19

 Implied Conditions
1. Condition as to title [sec.14(a)] - seller has the right to
sell.
2. Sale by description (sec.15)- goods shall correspond with
the description.
3. Condition as to quality or fitness [sec16(1)]
4. Condition as to merchantability [sec.16(2)]
5. Condition implied by custom- fitness for a particular
purpose may be annexed by the usage of trade [sec.16(3)]
6. Sale by sample (sec.17)
7. Condition as to wholesomeness

Anantdeep Singh Puri 20

 Implied Warranties

1. Warranty of quiet possession [sec.14(b)].

2. Warranty of freedom from
encumbrances [sec.14(c)].
3. Warranty as to quality or fitness by
usage of trade [sec16(4)].
4. Warranty to disclose dangerous nature
of goods.

Anantdeep Singh Puri 21

 When is a condition considered to
be a warranty:
According to the Sale of Goods Act, a condition is taken as warranty for
repudiation purpose under the following:
i. Where a contract of sale is subject to any condition to be fulfilled by the
seller, the buyer may waive the condition or elect to treat the breach of
the condition as a breach of warranty and not as a ground for treating
the contract as repudiated. Section 13(1)
ii. Where a contract of sale is not severable and the buyer has accepted the
goods or part thereof, the breach of any condition to be fulfilled by the
seller can only be treated as a breach of warranty and not as a ground
for rejecting the goods and treating the contract as repudiated, unless
there is a term of the contract, express or implied, to that effect. Sction
13(2)
iii. Nothing in this section shall affect the case of any condition or warranty fulfillment of which
is excused by law by reason of impossibility or
otherwise. Section 13(3)

Anantdeep Singh Puri 22

 CAVEAT EMPTOR
In a contract of sale of goods the seller is under
no duty to reveal unflattering truths about the
goods sold. Therefore, when a person buys
some goods, he must examine them
thoroughly. If the goods turn out to be
defective or do not suit his purpose, he cannot
blame anybody excepting himself.

Anantdeep Singh Puri 23

Transfer of Property

 Goods must be ascertained

 Specific goods in a deliverable state
 Specific goods to be put in a deliverable
state
 Specific goods in a deliverable state when
the seller has to do anything thereto in
order to ascertain price
 Sale of unascertained goods and
appropriation
 Goods sent on approval or “ on sale or
return”
 Reservation of right of disposal
 Risk prima facie passes with the property

Anantdeep Singh Puri 24

Transfer of Title

 The general rule “ no one can give

that which one has not got”
 Sale by person not the owner – “effect
of estoppel”
 Sale by mercantile agent
 Sale by one of joint owners
 Sale by person in possession under
voidable contract
 Seller in possession after sale
 Buyer in possession after sale
 Sale by an unpaid seller

Anantdeep Singh Puri 25

Rules as to delivery of goods

 Place of delivery
 Time of delivery
 Goods in the possession of a third person
 Expenses of delivery
 Delivery of wrong quantity
 Installment deliveries
 Delivery to carrier or wharfinger
 Risk where goods are delivered at a distant
place
 Buyer’s right of examining the goods
 Acceptance
 Buyer not bound to return rejected goods
 Liability of buyer for neglecting or refusing
delivery of goods

Anantdeep Singh Puri 26

Unpaid Seller
The seller of goods is deemed to be unpaid
(Sec. 45-1)
I. When whole of the price has not been paid
of tendered.
II. When the bill of exchange or negotiable
instrument has been received as a
condition of payment and the condition on
which it was received has not been fulfilled
by the reason on dishonor of the
instrument or otherwise.
Anantdeep Singh Puri 27
Features of the Unpaid Seller
I. He must sell goods on the cash basis and must be unpaid.
II. If he sells on credit basis, he is not an unpaid seller during the period of
credit.
III. The term of credit has expired and the price has not been paid to him.
IV. He must be unpaid wholly or partially. If a part of price remains unpaid, he is
unpaid.
V. When the price is paid in the form of negotiable instruments and it has been
dishonored.
VI. If buyer offers payment and seller refuses to accept, the seller is not an
unpaid seller.
Example:
I. Party A sells a car on cash basis to party B and the price has not been received
yet.
II. A sells good to B on 5 months credit period and B turns insolvent after 2
months.
III. A sells TV set to B on the same day cheque basis, the cheque is dishonored
due to insufficient funds. A is an unpaid seller.

Anantdeep Singh Puri 28

Rights of an Unpaid Seller
The unpaid seller has following rights:
1) Rights against the goods.
i. Rights of lien
ii. Right of stoppage of goods in transit
iii. Right of rescale
2) Rights against buyer personally
i. Suit for price
ii. Suit for damages for non-acceptance
iii. Suit for special damages and interest

Anantdeep Singh Puri 29

Rights of lien
The right of lien means lawfully right to retain the goods possession until
the full price is received. An unpaid seller can exercise his right of lien
in following cases. Sec 47-49 :
I. Where the goods have been sold on the cash basis.
II. Where the goods have been sold on credit basis and the
term of credit has expired.
III. Where the buyer has become insolvent even if the period of
credit has not been expired.
Other rules to satisfy the conditions for this right are
I. The unpaid seller must be in actual possession of the goods
sold.
II. It can be exercised even If the documents of title have been
delivered to the buyer.
III. It can be exercised for the price and not for other expenses
IV. If the seller delivers some goods, it can be exercised on the
remaining.

Anantdeep Singh Puri 30

Termination of right of lien
Seller’s right of lien is terminated in following cases.
I. When he delivers the goods to the carrier or other
bailey for transmission to the buyer
II. When the buyer or his agent lawfully obtains the
possession of the goods
III. When seller waives his right of lien on the goods
IV. The right of lien once lost will not be restored
V. When the buyer further sells the goods and the seller
agrees
Example:
A seller “S” sells a TV set to “B” and delivers it to “B” and
since the TV set was not functioning properly, “B”
delivered it back to “S” for the repairs. It was held
that “S” can not exercise his right of lien over TV set.

Anantdeep Singh Puri 31

Right of stoppage of goods in
Transit:
It means stoppage of goods while they are in
transit to take possession until the price is
paid (sec. 50-52). Unpaid seller can stop
the goods in transit in the following cases.
I. While the buyer becomes insolvent.
II. While the goods are out of actual
possession of seller, but have not reached
buyer’s possession i.e. goods are in transit
with career.
III. The unpaid seller can stop the goods in
transit only for payment of the price of the
goods and not for any other charges.

Anantdeep Singh Puri 32

The unpaid seller can not stop
goods in transit in following cases:
I. When the goods reaches the destination.
II. While the buyer or his agent takes possession of
delivery even if it is not reached destination.
III. In case the carrier is agent of the buyer, the transit
comes to an end the instance carrier receives the
goods and seller can not stop the transition
IV. Carrier’s wrongful refusal to deliver goods to the
buyer.
Example:
“A” sells TV set to “B”. “A” delivers the TV to the carrier to
carry it to “B”. Later on gets news that “B” has
become insolvent; “A” can stop delivery.

Anantdeep Singh Puri 33

Right of Resale:
If a buyer fails to pay or offer the price within a
reasonable time, the unpaid seller has the right to
resell the goods in the following circumstances.
a) Where the goods are of perishable nature.
b) Where the unpaid seller has exercised his right of lien
or stoppage in transit and gives a notice to buyer of
his intension of resell the goods.
c) Where the unpaid seller has expressly reserved his
right of resale.
d) Where seller gives notice to the buyer of his intension
to resell and the buyer does not pay within a
reasonable time, he can
a. Recover loss on resale of the goods, if any
b. Retain any surplus on resale of goods, if any

Anantdeep Singh Puri 34

However if the seller sells without
the notice to the buyer, he can not:

a. Recover any loss of the goods, if any

b. Retain any surplus on the resale of the
goods, if any
Example:
a) “X” sells vegetable to “Y” on credit, “Y”
does not pay, “X” can resell to any other
person.
b) “M” sells 100 blankets to “N” and gives him
one week for payment. “N” does not pay.
“M” can resell those to any other person.

Anantdeep Singh Puri 35

Suit for Price:
Where ownership of the goods has
passed to the buyer and the buyer
refuses to pay the price according to
the terms of the contract, the seller
can sue the buyer for price,
irrespective of delivery of the goods.
(Sec. 55).

Anantdeep Singh Puri 36

Suit for damages for non-delivery:
Where the buyer refuses to accept and
pay for the goods, the seller may sue
him for damages for nonacceptance.
The seller can recover damages only
and not the full price (Sec. 56)

Anantdeep Singh Puri 37

Suit for special damages and
Interest:
The seller can sue the buyer for special
damages where the parties are aware
of such damages at the time of
contract. The unpaid seller can
recover interest at a reasonable rate
on the total unpaid price of goods,
from the time it was due until it is
paid. (Sec. 61).

Anantdeep Singh Puri 38

Buyer’s right against seller:
• Suit for damages for non-delivery
• Suit for specific performance
• Suit for damages for breach of
warranty
• Suit for cancellation and damages for
breach of contract
• Suit for recovery of price with
interest.
Anantdeep Singh Puri 39
Suit for damages for non-delivery:
When the seller wrongfully refuses to
deliver the goods to the buyer, the
buyer may sue the seller for damages
for non-delivery (Sec. 57)

Anantdeep Singh Puri 40

Suit for specific performance
Where there is a breach of contract for
sale of specific goods, the buyer may
file a suit for specific performance.
The remedy is granted when subject
matter of the contract is rare goods,
say, a picture by a dead painter (Sec.
58)

Anantdeep Singh Puri 41

Suit for damages for breach of
warranty
Where there is a breach of warranty, the
buyer is entitled to sue for damages if
he had paid the price to the seller.
But if he has not paid the price yet,
he may ask the seller for a
reasonable reduction in the price.
(Sec. 59)

Anantdeep Singh Puri 42

Suit for cancellation and damages
for breach of contract
Where there is a breach of contract by
the seller, the buyer may avoid the
contract and claim damages.

Anantdeep Singh Puri 43

Suit for recovery of price with
interest.
If the buyer has already paid the price
to the seller and the seller does not
deliver the goods to the buyer, he can
sue the seller for refund of price and
interest at a reasonable rate. (Sec.
61)

Anantdeep Singh Puri 44

Thank You

Anantdeep Singh Puri 45