LAW OF SALE OF GOODS

BY:
Muhammad Fahim
Qasmi 1
TODAY’S AGENDA;
1. What is contract of sale?
2. What is agreement to sell?
3. What is the subject matter of
sale?
4. Implied and Expressed Conditions
and Warranties
5. Fitness and Merchantable quality
6. Sale by description
7. Sale by sample
8. Doctrine of Caveat Emptor
9. Performance of a contract of Sale
by Delivery of Goods
10. Who is Unpaid Seller and what are
there RIGHTS?
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 INTRODUCTION
 Most common of all the
commercial contracts
 Came into force on 1st JULY,1930.
 Are subject to the general legal
principles applicable to all the
contracts such as, offer & its
acceptance, consideration.
 Some special features
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 SALE OF GOODS ACT
Contract of sale of Goods Act, 1930 defines as,
“A contract whereby the seller transfers or
agrees to transfer the property in goods to
the buyer for a PRICE”.

“Transfer the Ownership

of Goods”.

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ESSENTIALS OF VALID SALE
CONTRACT
 Two parties:
There must be 2 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 for the contract of sale, called price, must
be money
 Essential elements of a valid contract:
A contract is made by an offer to buy or sell goods
for a price and the acceptance of such offer.

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 SALE AND AGREEMENT TO
SELL
 Property in the goods is transferred from
the seller to the buyer- SALE

 Transfer of the property in the goods is

to be taken place at some future date or
after fulfillment of some condition,
-AGREEMENT TO SALE

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 SALE AND AGREEMENT TO
SELL
Sale Agreement to sell
1. Ownership is with the 1. Ownership is with the
buyer seller
2. Executed contract 2. Executory contract
3. Sue for price, in case 3. Sue for damages
of breach only, in case of
4. Goods lost by accident breach
then loss falls on the 4. Goods lost by
buyer. accident then loss
falls on the Seller.

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 KINDS OF GOODS

1. Existing Goods
1. Specific Goods
2. Ascertained Goods
3. Unascertained Goods
2. Future Goods
3. Contingent Goods

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 CONDITION AND WARRANTY

Condition Warranty
1. Its is a term in 1. Its a term in contract
contract which is which is collateral.
essential.
2. When warranty
2. When condition breaches?
breaches?
3. Breach of warranty
3. Breach of condition cannot be breach of
can be breach of condition.
warranty

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 EXPRESS AND IMPLIED
CONDITIONS AND WARRANTIES
 Condition or warranty may be
expressed

 Express condition and warranty are

expressly provided in the contract.

 Implied Condition or warranty are

provided by the law.
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 Condition as to title:
In a contract of sale, unless the situation of the
contract are such as to show a different
intention, there is an implied condition on part of
the seller that—

 In sale, he has right to sell goods.

 In agreement to sell, he will have a right

to sell at the time when property is to
pass. 11
 SALE BY DESCRIPTION
 In sale by description there is an implied
condition that the goods shall correspond
with description.

 This means “if you contract to sell peas,

you cannot oblige the party to take
beans.”

 Hence if the description of the article

tendered is different then the buyer may
not buy the goods.
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 SALE BY DESCRIPTION
AND SAMPLE
 If the sale is by sample as well as by
description, it is not sufficient that the bulk
of goods corresponds with the sample, if the
goods do not also correspond with the
description.

 This means goods must match with the

description and sample.
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 CONDITION AS TO
QUALITY OR FITNESS
 Normally, in a contract of sale there is no
implied condition as to quality or fitness
for particular purpose.

 The buyer must test the goods before he

buys them in order to satisfy him self that
the goods shall be suitable for him.

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 CONDITION OF
MERCHANTABILITY
 Where goods are bought by description from a seller
who deals in goods of that description there is an
implied condition that the goods are of merchantable
quality.

 This means goods should be such that they are

commercially saleable, as per the description by which
they are known in the market at their full value.

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CONDITION IMPLIED BY
CUSTOM
 An implied condition as to quality or fitness
for a particular purpose may be annexed by
the usage of trade.

 This means that the goods which are

required may be ascertained from the acts
and from the nature of description of that
article.
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 SALE BY SAMPLE
 A contract of sale is a contract for sale by sample where
there is a term in the contract, express or implied, to
that effect.
1. That bulk shall correspond with the sample in quality,
2. That the buyer shall have a reasonable opportunity of
comparing the bulk with the sample.
3. That the goods shall be free from any defects, rendering
them unmerchantable.

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CONDITION AS TO
WHOLESOMENESS
 In the case of eatables and
provisions, in addition to the
implied condition as to
merchantability, there is another
implied condition that the goods
shall be wholesome.
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 WARRANTY OF QUIET
POSSESSION
 In a contract of sale, unless there is a
contrary intention, there is an implied
warranty that the buyer shall have and
enjoy quite possession of the goods.

 If the buyer is in any way disturbed in the

enjoyment of the goods in consequence of
the seller’s defective title to sell, he can
claim damages from the seller.

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 WARRANTY OF FREEDOM FROM
ENCUMBRANCES
 In addition to the previous warranty, the
buyer is entitled to a further warranty that
the goods are not subject to any charge or
right in favor of a third party.

 If the possession is in any way disturbed

by reason of the existence of any charge
or encumbrances on the goods in favor of
any third party, he shall have a right to
claim damages for breach of this warranty.
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 WARRANTY AS TO QUALITY OR
FITNESS BY USAGE OF TRADE

 Animplied warranty as to
quality or fitness for a particular
purpose may be annexed by the
usage of trade.

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 WARRANTY TO DISCLOSE
DANGEROUS NATURE OF GOODS.

 When a person sells goods knowing that

the goods are inherently dangerous or
they are likely to be dangerous to the
buyer and that the buyer is ignorant of
the danger, he must warn the buyer of the
probable danger, other wise he will be
liable in damages.

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 CAVEAT EMPTOR
 This means “LET THE BUYER BEWARE” i.e., the seller
is under no duty to reveal unflattering truths about
the goods sold.

 Therefore, when a person buys some goods, be must

examine them thoroughly.

 If the goods turn out to be defective or do not suit his

purpose or he depends upon his own skills and makes
a bad decision, he cannot blame the seller.

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 EXCEPTIONS TO CAVEAT
EMPTOR
Fitness for buyer’s purpose

Sale under a patent or trade name

Merchantable quality

Usage of trade

Consent by fraud

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 WHO IS AN UNPAID SELLER
 A seller of goods is deemed to be an
unpaid seller:-

 When the whole of the price has not

been paid or tendered

 When any negotiable instrument is

dishonoured
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 Rights of unpaid seller
Against
the goods Against
Where the seller
the Where the
property in personally
property
the goods
in the has not
goods passed
has Stoppage
With
passed in transit Stoppage holding
Lien in transit delivery

Re sale

Suit for Repudiation Suit for

Suit for price
damages of contract interest 26
 PERFORMANCE OF
CONTRACT OF SALE
 DELIVERY OF GOODS
 A voluntary transfer of possession from one
person to another.
 It is a bilateral act.

 Requires two parties to act.

Example:
IMRAN steal goods from JAVERIA,
there is no delivery of Goods from
JAVERIA to IMRAN though possession
is transferred.
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 RULES OF DELIVERY
 Mode of delivery  Time of delivery
 Delivery and  Goods in
payment con possession of a
current condition third party
 Effects of part  Cost of delivery
delivery  Delivery of wrong
 Buyer to apply for quantity
delivery  Installment
 Place of delivery deliveries

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 FREE ON BOARD
Seller’s duties:
 To deliver the goods on
board the ship named by
the buyer
 Once goods are put on
board the ship, they are at
the risk of the buyer.
 The duty of the seller ends
when he delivers the
goods to the ship at the
port of shipment.
 BUYER’S DUTY:
 Arrange for the
contract of
affreightment
 Name the ship on
which goods are to be
delivered.
 It becomes the duty of
the buyer once the
goods are on the ship.
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 COST, INSURANCE, FREIGHT

 Seller’s duty:  Buyer’s duty

 Make out an invoice
of the goods sold.
 To pay unloading
 Procure a contract of charges, wharf age
affreightment. charges, etc.

 To arrange for an  To pay custom and

insurance. import duties.
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 AUCTION SALE
 A sale by auction is a public sale where
different intending buyers try to outbid
each other.

 The goods are ultimately sold to the

highest bidder.

 The auctioneer who sells the goods by the

auction is an agent of the seller, i.e. the
owner. 31
RULES OF AUCTION SALE
 Completion of sale:-

The sale is complete when the

auctioneer announces its completion
by the fall of the hammer or in some
other customary manner like “one two
three” or “going going, gone”

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RIGHT OF SELLER TO BID
Aright to bid may be reserved
expressly by or on behalf of the
seller. Where such right is
expressly reserved, the seller or
any one person on his behalf
may bid at the auction.

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 SALE NOT NOTIFIED SUBJECT
TO A RIGHT TO BID
 It is not lawful
1. For the seller to bid himself or to employ
any person to bid at such sale.
2. For the auctioneer knowingly to take any
bid from the seller or any such person.
3. Any sale against this rule may be treated
as fraudulent.

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 RESERVE PRICE
 It is the price below which the auctioneer
will not sell.
 Where the sale is subject to a reserve
price, every bid is accepted conditionally
on the reserve price being reached.
 But where the sale is without reserve, the
goods will be sold to the highest bidder.

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 USE OF PRETENDED
BIDDING
 Ifthe seller makes use of
pretended bidding to
raise the price, the sale
is void able at the option
of the buyer.
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KNOCK OUT OR AGREEMENT NOT
TO BID AGAINST EACH OTHER
 Where a group of persons form a
combination to prevent competition
between themselves at an auction
and arrange that only one of them
will bid and share anything so
obtained among themselves.
 This is called knock out which is
legal.
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 PRESENTED BY:-
151 157
ANITA 152
AUSTOSH
154
159
MAULI 160
DHARAK 155
156 161
AVANI
NISHIT 162
DEEP 163
POOJA
NISHIT
HIREN
ANKIT

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