Kumar NN Management and commerce DepartmentMysore India kumarnncoorg@gmail.com

Sale of Goods Act came into existence on 1st July’1930.

It extends to the whole India except Jammu and Kashmir.

Sale of moveable goods are contained in the Sale of Goods Act, 1930.

Transactions relating to immovable properties, for example, the sale, lease, gift., are governed by a separate act known as Transfer of Property Act, 1882.

Sec 4 (1) “A contract of sale of goods is a Sec 4 (1) “A contract of sale of goods is a contract whereby the seller transfers or agrees contract whereby the seller transfers or agrees to transfer the property in the goods to the to transfer the property in the goods to the buyer for a price”buyer for a price”

Sale : Sale :

Sec 4(3) of sale of Goods Act, Sec 4(3) of sale of Goods Act,

““Where under a contract of sale, property in the Where under a contract of sale, property in the goods is transferred from the seller to the buyer, goods is transferred from the seller to the buyer, the contract is called a sale” the contract is called a sale”

Bilateral contract Bilateral contract : There must be 2 parties., i.e. buyer and seller.

GoodsGoods : - Subject matter of the contract.

- Deals with moveable property only.

Ex: stock, shares, growing crop, grass etc.

PricePrice : price is the consideration for the contract of sale and it must be money.

However , it may be partly in money and partly in goods.

Transfer of property Transfer of property : There must be an absolute transfer of ownership from the seller to the buyer.

Essential elements of valid contractEssential elements of valid contract: Lawful consideration, free consent, capacity of parties, lawful object, possibility of performance, etc.

SaleSale Agreement to Agreement to sellsell

Transfer of Transfer of property property

Transfer of Transfer of property take property take place place immediately immediately

Take place at Take place at future timefuture time

Type of Goods Type of Goods Only the Only the existing and existing and specificspecific

Future and Future and contingent contingent goods goods

Risk of Loss Risk of Loss On destruction On destruction of goods the of goods the loss falls on the loss falls on the buyer, even buyer, even though goods though goods are in are in possession of possession of the seller the seller

On destruction On destruction of goods the of goods the loss falls on the loss falls on the seller, even seller, even though goods though goods are in are in possession of possession of the buyer the buyer

SaleSale Agreement to Agreement to sellsell

Nature of Nature of contract contract

It is an It is an executed executed contract.contract.

It is an It is an executory executory contract contract

Right to re-sell Right to re-sell The seller The seller cannot re-sell cannot re-sell the goods …the goods …

He can sell the He can sell the goods goods

1.1. Goods Goods

2.2. Price Price

Goods means every kind of moveable moveable property property other than actionable claim or money.

i.e., Things which can be carried from one place to another that form ‘goods’;

Ex : things like goodwill, copyright, trade mark, patents, water, gas, electricity are all goods.

MoneyMoney : If money is exchanged for money, it is transaction of exchange and not of sale.

But if the consideration for transfer of property in goods consists of partly of goods and partly of money, it is treated as sale.

Actionable claim are things which a person cannot make use of, but which can be claimed by him by means of a legal actions,

For example : A debt

GoodsGoods

Existing Goods

Future Goods

Contingent Goods

Specific Specific Goods Goods

Ascertained Goods

Unascertained Goods

Existing goods are those which are owned or possessed by the seller at the time of the contract (Sec.6)

Specific Goods : Specific goods means goods identified and agreed upon at the time a contract of sale is made.

Ex: A wrest watch, A dog , A cow etc,.

Ascertained Goods : Identified in accordance with the agreement after the time a contract of sale is made.

Unascertained Goods : Indicated by description an not specifically identified.

Ex: X went to a computer shop and selected one among ten Samsung computer which were there. The selected computer is called ascertained goods. Until the selection of a particular computer from the lot, it is called undertrained goods

Future goods means goods to be manufactured or produced or acquired by the seller, after making the contract of sale;

Ex: An agreement to sell future crops of a particular field implied an agreement to sell future goods.

Contingent Goods : The acquisition of which by the seller, depends upon a contingency which may or may not happen. Contingent goods are part of future goods.

Ex: A contract to sell certain goods, which are in a particular ship after its arrival. The obligation to supply the goods depends upon the arrival of the ship with such goods.

Price Sec. 2 (10) of the sale of Goods Act has

defined price as the money consideration for a sale of goods. The price must be expressed in terms of money.

1. Fixation of price by the contract of sale : price may be expressly determined by the

contract of sale.

2. Fixation of price in a agreed manner in the contract of sale:

3. Fixation of price by course of dealings Based on the customs of trade certain principles

determine the price

Fixation of a reasonable price : when previous principle are not applicable, buyer shall pay to the seller a reasonable price.

- It is not necessarily the market price

Fixation of price by the third party: usually price will be fixed by the valuation of a

third party. Earnest money : money paid by one party,

in advance , to another party as a security.

Conditions : A condition is a stipulation which is essential to the main purpose of the contract.

It goes very root of the contract. It there is a breach of a condition, the

aggrieved party can treat the contract as repudiated.

Warranty : A warranty is a stipulation which is collateral to the main purpose of the contract.

If there is a breach of warranty, the aggrieved party can only claim damages and he has no right to treat the contract as repudiated.

Basis of Basis of Difference Difference

Condition Condition Warranty Warranty

Nature Nature It is a It is a stipulation stipulation which is which is essential to the essential to the main purpose of main purpose of the contract of the contract of sale sale

It is a It is a stipulation stipulation which is which is collateral to the collateral to the main purpose of main purpose of contract. contract.

Importance Importance Condition is Condition is essential for the essential for the existence of a existence of a contract of sale contract of sale

It is of It is of subsidiary or subsidiary or inferior inferior character. It character. It does not does not depend on the depend on the existence of the existence of the contract contract

Basis of Basis of Difference Difference

Condition Condition Warranty Warranty

Transfer of Transfer of ownershipownership

Ownership on Ownership on goods cannot be goods cannot be transferred transferred without fulfilling without fulfilling the condition the condition

Ownership on Ownership on goods can be goods can be transferred to transferred to the buyer the buyer without fulfilling without fulfilling the warranty the warranty

Effect on Effect on consideration consideration

Condition is Condition is effected on the effected on the total total consideration consideration

Warranty is Warranty is effected on effected on certain part of certain part of the the consideration consideration

Basis of Basis of Difference Difference

Condition Condition Warranty Warranty

Exemption from Exemption from performance performance

In case of In case of breach of breach of condition, the condition, the aggrieved party aggrieved party can repudiate can repudiate the contract and the contract and be exempted be exempted form form performance performance and can claim and can claim for damages for damages alsoalso

In the case of In the case of breach of breach of warranty, the warranty, the aggrieved party aggrieved party cannot rescind cannot rescind the contract, the contract, but can claim but can claim damages only. damages only.

Basis of Basis of Difference Difference

Condition Condition Warranty Warranty

Treatment Treatment A breach of A breach of condition may condition may be treated as a be treated as a breach of breach of warranty. This warranty. This would happen would happen where the where the injured party is injured party is satisfied with satisfied with damages only damages only

A breach of A breach of warranty cannot warranty cannot be treated as a be treated as a breach of breach of condition. condition.