sale of godds act 1930 snehal

8/2/2019 Sale of Godds Act 1930 Snehal

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SALE OF GOODS ACT 1930

Prepared by

Snehal Jambhale

MFM 1st Year


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INDEX

1. Sale & Agreement to Sale.

2. Essential Requisites of Sale.

3. Formalities of a contract of sale.

4. Transfer of Property as Between Seller and Buyer

a) Transfer of property

b) Property cannot pass until the goods are identified

c) Part of a specific whole

d) Property and Risk

e) Identification of the goods.

5. Rights of Unpaid Seller against goods .


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SECTION 4 SALE AND AGREEMENT TOSALE1. The contract of sale of goods is a contract whereby the

seller transfers or agrees to transfer the property ingoods to the buyer for a price. There may be a contractof sale between one part owner and another.

2. A contract of sale may be absolute or conditional.

3. Where under a contract of sale the property in thegoods is transferred from the seller to the buyer, thecontract is called a sale, but where the transfer ofproperty in the goods is to take place at a future time orsubject to some conditions thereafter to be fulfilled, the

contract is called an agreement to sale.4. An agreement to sell becomes a sale when the time

elapses; all the conditions are fulfilled subject to whichthe property in the goods is to be transferred.


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SECTION 4 SALE AND AGREEMENT TOSALE Examples:

The Section may be illustrated by the following examples: A agrees to buy a haystack from B on Bs land with liberty to

come on Bs land to take it away. This is a sale and B cannotrevoke the licence given to A to woo on his land.

Agreement by A to buy 20 tonnes of oil from the seller. The seller

has many tanks, with more than 20 tonnes in them. This ismerely an agreement to sale.

Agreement for sale of a quantity of nitrate of soda to arrive at acertain ship. This is an agreement to sell at a future date subjectto the double condition of the arrival of the ship with the specified

cargo on board. A customer who picks up goods in a self-service shop is merely

offering to buy them and the sale is not complete until they arepaid for.


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ESSENTIAL REQUISITES OF SALE In the case of (state of Madras Vs Gannon Dunkerley and

Company Limited, 1958) the Supreme Court has held thataccording to the law, both of England and India, in order toconstitute a sale, it is necessary that there should be an

agreement between the parties for the purpose oftransferring title to goods, which of course presupposedcapacity to contract, that it must be supported by moneyconsideration, that as a result of transaction, the property

must actually pass in the goods. Unless all these elementsare present there would be no sale.


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The essential object of the contract of sale is the exchange ofproperty for a money price. There must be a transfer ofproperty or an agreement to transfer it, from one party, theseller, to the other, the buyer, in consideration of a money

payment or of a promise thereof by the buyer thereof. Bothunder the common law and the statute law relating to sale ofgoods England and in India, to constitute a transaction ofsale, there should be an agreement, expressed or impliedrelating to goods to be completed by passing of title inthose goods. It is the essence of the concept that both the

agreement and the sale should relate to the same subjectmatter. Transfer of property in goods for a price is thelinch pine of the definition. It is, however, not an inevitablerule that the price must be fixed. An allotment of goods amongpartners on dissolution of partnerships is not a sale.Exchange of property for something other than money is not a

sale. The difference between a sale and an exchange is thatin the former the price is paid in money while in the latter it ispaid in good by way of barter. But if the exchange is madepartly for goods and partly for a price, the contract is probablyone of a sale.


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FORMALITIES OF A CONTRACT OF SALE Section 5: Contract of Sale - how made

A contract of sale is made by an offer to buy or sellgoods for a price and the acceptance of such price.A contract may provide for the immediate delivery of

goods or immediate payment of the price or both, orfor the delivery or payment by instalments. Or thatthe delivery of payments or both shall be postponed.

Subject to the provisions of any law for the time

being enforced, a contract of sale may be in writingor by the word of mouth or may be impliedly or maybe implied from the conduct of the parties.


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FORMALITIES OF A CONTRACT OF SALE

A statement or conduct inviting the making of an offersuch as by display of goods in a shop does not buy itselfbind the shopkeeper to accept the customers offer evenat the price displayed or advertised. Such invitation totreat therefore differs from an offer, which is intended to

be binding on the person making it and is capable ofbeing accepted without any further negotiation. Where,however, the accessibility to goods in intended to anoffer capable of acceptance by customers act such asfilling the petrol tank of a car from a self service pump or

choosing items in a self service shop or taking goodsintended for sale for an automatic vending machine thequestion of obtaining sellers assent does not arise.


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FORMALITIES OF A CONTRACT OF SALE Sub-section 1 emphasis the consensual nature of a contract

of sale; the parties may agree to such terms as they think fit.A sale can be complete even without effecting immediatedelivery and immediate payment. In a contract of sale, the

title in goods passes immediately on the payment of pricewhile in an agreement to sale the title in goods passes at afuture time subject to conditions to be fulfilled thereafterhowever, when the goods are accepted by the buyer and

the price is received by the seller the sale is deemed to becomplete.


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TRANSFER OF PROPERTY AS BETWEENSELLER AND BUYER

SECTION 18 GOODS MUST BEASCERTAINED Goods must be ascertained: where there is

contract for the sale of unascertained goods, no

property in the goods is transferred to the buyerunless and until the goods are ascertained

Synopsis1. Transfer of property

2. Property cannot pass until the goods areidentified3. Part of a specific whole4. Property and risk

5. Identification of goods


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1. TRANSFER OF PROPERTY This and the five following sections of the Act deal with the

question foreshadowed by section 4 of the Act and laydown rules which assist in deciding the question when theobject of the contract of sale, namely, the transfer of the

property in the goods to the buyer has been affected.


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2. PROPERTY CANNOT PASS UNTIL THEGOODS ARE IDENTIFIED

It is a condition precedent to the passing of the property inevery case that, the individuality of the thing to be deliveredshould be established. In any given case, there may bequestion whether this condition is fulfilled or not, and it maybe that the property will not pass even if it is fulfilled, butuntil it is, there is no possibility of the property passing. It is

essential that the article should be specific and ascertainedin a manner binding on both the parties, for unless that beso, the contract cannot be construed as contract to pas theproperty in that category.

Where according to the terms of the contract, the seller wasto supply waste coal ash as and when it was dischargedfrom the bunkers of the powerhouse, it was held that thecontract was for the sale of unascertained goods and,therefore no property passed to the buyer till the goodswere ascertained.


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3. PART OF A SPECIFIC WHOLE

It is obvious that if the contract is merely for the sale of goods bydescription, such as a contract for sale of a certain quantity ofmalting barley, or future goods, the necessary condition is notfulfilled. Nor is it fulfilled even if the goods are so far ascertainedthat the parties have agreed that they shall be taken from somespecified larger stock. The parties did not intend to transfer the

property in one portion of the stock more than in another, andthe law which only gives effect to their intention does not transferthe property in any individual portion. And the mere fact that anorder for the delivery is given by the seller to the buyer, and islodged by the buyer with a warehouseman, who holds thespecified larger stock out of which the goods sold are to be

taken, is not sufficient to transfer the property to the buyer. Thus,where the ascertainment of the goods depends upon their beingseparated from the bulk by the seller or a third party or thebuyer, by their being severed, weighed or measured or someother process, no property can pass until this is done.


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4. PROPERTY AND RISK In this class of case, it is necessary to distinguish the passing

of the property from the transfer of the risk; the risk usuallypasses with the property, but may pass independently of it;Thus, acceptance of the delivery warrant for a certain quantityof spirit out of a larger bulk which was liable to deteriorate instorage was held to put the risk of deterioration on the buyer,

although he had acquired, not property but only undividedinterest in the whole bulk. Equally, it would seem that therecan be none in an individual part of a chattel, such as a treewhich has been felled, of which a marked portion was sold,and of which the other portion is to be retained by the seller.In such a case, it is conceived, the whole tree remains theproperty of the seller until the marked portion is severed, evenif the severance is to be done by the buyer.


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5. IDENTIFICATION OF THE GOODS The contract itself may provide that the property shall pass on the

happening of some specified event, sufficient to identify the goods,and occasionally they may become identified by other means. Thus,in a case where the seller sold 250 quarters of wheat out of a largerbulk belonging to him in a warehouse, and the buyer took delivery of400 quarters and pledged the remaining 850 quarters to a bank, andin the meantime the seller sold the remainder of the bulk in thewarehouse, of which delivery was taken, so that 850 quarters onlywere left in the warehouse, it was held that by this process ofexhaustion the 850 quarters became ascertained goods andproperty therein passed to the buyer, so that the pledge acquired atitle thereto against the seller. In State of Karnataka Vs. The WestCoast Paper Mills Ltd. AIR 1986 it was held that under a contract acompany was permitted to remove bamboos from the forest area atRs.10 /- per ton, and the government by a subsequent orderenhanced the price to Rs.20/- per ton, it was held that the enhancedrate was no applicable to the bamboos cut although not removedprior to the date of the government order, because on the bamboosbeing cut and extricated, the goods being ascertained and in adeliverable state, the property had passed to the company.


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RIGHTS OF UNPAID SELLER AGAINSTGOODSSection 45. Unpaid seller defined1. The seller of goods is deemed to be an unpaidseller within themeaning of this Act(a) when the whole of the price has not been paid or tendered ;(b) when a bill of exchange or other negotiable instrument has been

received as conditional payment, and the condition on which it wasreceived has not been fulfilled by reason of the dishonour of theinstrument or otherwise.2. In this chapter, the term seller includes any person who is in theposition of a seller, as, for instance, an agent of the seller to whom thebill of lading has been indorsed, or a consignor or agent who has

himself paid, or is directly responsible for, the priceExamplesThe section may be illustrated by the following example;

The seller draws bills for the price of the goods on the buyer, whoaccepts them, and the seller negotiates them. Before the bills arrive atmaturity the buyer fails. The seller is in position of an unpaid seller


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SECTION 46. UNPAID SELLERS RIGHTS1. Subject to the provisions of this Act and of and of any law forthe time being in force, notwithstanding that the property in thegoods may have passed to the buyer, the unpaid seller of goods,as such, has by implication of law

(a) a lien on the goods for the price while he is in possession ofthem;

(b) in case of the insolvency of the buyer a right of stopping thegoods in transit after he has parted with the possession of them ;

(c) a right of resale as limited by this Act.

2. Where the property in goods has not passed to the buyer,

the unpaid seller has, in addition to his other remedies, a right ofwithholding delivery similar to and co-extensive with his rights oflien and stoppage in transit where the property has passed tothe buyer.


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SECTION 46. UNPAID SELLERS RIGHTS

ExampleThe section may be illustrated by the following example :

Sale of goods to be delivered by instalments, each instalment tobe paid for in cash fourteen days after delivery. During thecurrency of the contract, the buyer becomes insolvent and theprice of one instalment is unpaid. The seller need not makefurther deliveries unless the price of that instalment is paid andcash is paid against delivery of subsequent instalments.

sale of godds act 1930 snehal

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