Contracts project
Descrição do Produto
JamIA MILLIA ISLAMIA
The Sales of Goods act-1930
MOHD SAAD KHAN
BA.LLB (Sem –II)
4/25/2013
OF NATURE,FORMATION & TERMS OF CONTRACT OF SALE OF GOODS Ss 1-17
ACKNOWLEDGEMENT
I owe a great many thanks to a great many people who helped and supported me during the writing of this project. My deepest thanks to Professor, Dr. Iqbal Hussain.
the Guide of the project for guiding and correcting various documents of mine with attention and care. He has taken pain to go through the project and make necessary correction as and when needed. I express my thanks to the Dean of Faculty of Law, Jamia Millia Islamia, for extending her support. My deep sense of gratitude to my seniors at the faculty for their support and guidance. Thanks and appreciation to the helpful people at First Year class of the Law faculty, for their support . I would also thank my Institution and my faculty members without whom this project would have been a distant reality. I also extend my heartfelt thanks to my family and well wishers.
Contents
INTRODUCTION
ESSENTIALS OF CONTRACT OF SALE
DISTINGUISH BETWEEN SALE AND AGREEMENT TO SELL
DOCUMENTS OF TITLE TO GOODS`
CONDITIONS AND WARRANTIES
DOCTRINE OF CAVEAT EMPTOR
RIGHTS OF UNPAID SELLER
DELIVERY – RULES REGARDING DELIVERY
SALE BY AUCTION
Introduction
Originally, the law relating to sale of goods was contained in Chapter VII of the Indian Contract Act, 1872. The same was repealed and re-enacted by the Sale of Goods Act, III of 1930. The Sale of Goods Act, 1930 governs the contracts relating to sale of goods. It applies to the whole of India except the State of Jammu & Kashmir.
The contacts for sale of goods are subject to the general principles of the law relating to contracts i.e. the Indian Contact Act. A contract for sale of goods has, however, certain peculiar features such as, transfer of ownership of the goods, delivery of goods rights and duties of the buyer and seller, remedies for breach of contract, conditions and warranties implied under a contract for sale of goods, etc. These peculiarities are the subject matter of the provisions of the Sale of Goods Act, 1930
Definition
(Section 4)
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 price".
ESSENTIALS OF CONTRACT OF SALE
From the above definition, the following essentials of a contract of sale may by noted:
1. There must be at least two parties
2. Transfer or Agreement to transfer the ownership of goods.
3. The subject matter of the contract must necessarily be 'goods'.
4. The consideration is Price.
5.A Contract of sale may be in writing or by words
6. All other essentials of a valid contract must be present
The points mentioned above can be elaborated in the following way:
1. There must be at least two parties. A sale has to be bilateral because the property in goods has to pass from one person to another. The seller and the buyer must be different persons. A person cannot buy his own goods. However, a part-owner may sell to another part-owner.
Examples: A partnership firm was dissolved and the surplus assets, including some goods, were divided among the partners in specie. The sales-tax officer sought to tax this transaction. Held, this transaction did not amount to sale. The partners were themselves the joint owners of the goods and they could not be both sellers and buyers. Moreover, no money consideration was promised or paid by any partner to the firm as consideration for the goods allotted to him.
2. Transfer or agreement to transfer the ownership of goods. In a contract of sale, it is the ownership that is transferred (in the case of sale), or agreed to be transferred (in the case of agreement to sell), as against transfer of mere possession or limited interest (as in the case of bailment or pledge).
3. The subject matter of the contract must necessarily be goods. The sale of immovable property is not covered under Sale of Goods Act. The expression 'goods' is defined in Sec.2(7).
4. Price is the consideration of the contract of sale. The consideration in a contract of sale has necessarily to be 'money', (i.e., the legal tender money). If for instance, goods are offered as the consideration for goods, it will not amount to sale. It will be called a 'barter'.
Deeming provisions
3 (1) A thing is deemed to be done in good faith within the meaning of this Act when it is in fact done honestly, whether it be done negligently or not.
(2) A person is deemed to be insolvent within the meaning of this Act who either has ceased to pay his debts in the ordinary course of business or cannot pay his debts as they become due.
(3) Goods are in a deliverable state within the meaning of this Act when they are in such a state that the buyer would, under the contract, be bound to take delivery of them. R.S., c. 408, s. 3.
`
SALE` AND 'AGREEMENT TO SELL' DISTINGUISHED
Sale:
It is a contract where the ownership in the goods is transferred by seller to the buyer immediately at the conclusion contract. Thus, strictly speaking, sale takes place when there is a transfer of property in goods from the seller to the buyer. A sale is an executed contract.
It must be noted here that the payment of price is immaterial to the transfer of property in goods.
Ex -
A sells his Yamaha Motor Bicycle to B for Rs. 10,000. It is a sale since the ownership of the motorcycle has been transferred from A to B.
Agreement to sell:
It is a contract of sale where the transfer of property in goods is to take place at a future date or subject to some condition thereafter to be fulfilled.
Ex-
A agreed to buy from B a certain quantity of nitrate of soda. The ship carrying the nitrate of soda was yet to arrive. This is `an agreement to sale`. In this case, the ownership of nitrate of soda is to be to transferred to A on the arrival of the ship containing the specified goods (i.e. nitrate of soda) [Johnson V Mcdonald (1842) 9 M & W 600, 60 RR 838]
On 1st March 1998, A agreed to sell his car to B for Rs. 80,000. It was agreed between themselves that the ownership of the car will transfer to B on 31st March 1998 when the car is got registered in B`s name. It is an agreement to sell and it will become sale on 31st March when the car is registered in the name of B.
Other points of distinction between a sale and an agreement to sell are:
Sale and Hire Purchase Agreement
Hire Purchase Agreement
It is an agreement for hire, with an option to purchase.
The hirer, under this agreement, is required to pay every month a particular sum of money, and if he pays in that way for a fixed number of months, the hirer will become the owner of the goods on the payment of the last instalment. 00
But, if the hirer fails to pay any particular instalment, the owner can terminate the contract and take away the goods, because the ownership continues to remain in the owner. A "Hire-purchase agreement" is distinct from "Sale" in which price is payable by instalments
A 'Hire-purchase agreement,' does not result in passing of the property unless the option to purchase is exercised, usually by payment of all the instalments. Till such time, it constitutes bailment.
Sale:
ln case of sale, the property passes as soon as sale is made though price has not been fully paid.
In determining as to whether a particular contract belongs to one type or the other, regard shall have to be paid to the fact whether the hirer has merely an option to purchase, or whether he has bought or agreed to buy the goods.
GOODS
Definition of `GOODS` under the Act
'Goods' means every kind of moveable property 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.
Actionable claims and money are not included in the definition of goods.
Thus, goods include every kind of moveable property other than actionable claim or money. Example - goodwill, copyright, trademark, patents, water, gas, and electricity are all goods and may be the subject matter of a contract of sale.
The test is if the property on shifting its situation, does not lose its character, the said property shall be movable and fall within the definition of `Goods`.
Types of goods
Existing goods
Future goods
Contingent goods
Which documents are considered as `DOCUMENTS OF TITLE TO GOODS`
A document of title to goods may be described as any document used as proof of the possession or control of goods, authorising or purporting to authorise, either by endorsement or by delivery, the possessor of the document to transfer or receive goods thereby represented.
The following are documents of title to goods:
Bill of Lading;
Dock Warrant;
Warehouse keeper's Certificate;
Warfinger's Certificate;
Railway Receipt;
Warrant or order for the delivery of goods; and
Any other document used in the ordinary course of business as a document of title
CONDITIONS AND WARRANTIES
[Sections 11-17]
Sec 12(2) of Sales Of Goods Act, 1930 has defined Condition as:
"A condition is a stipulation essential to the main purpose of the contract, the breach of which gives rise to a right to treat the contract as repudiated".
Sec 12(3) of Sale Of Goods Act, 1930 has defined Warranty as :
"A warranty is a stipulation collateral to the main purpose of the contract, the breach of which gives rise to only claim for damages but not to a right to reject the goods and treat the contract as repudiated".
CASES OF TREATING THE BREACH OF CONDITION AS BREACH OF WARRANTY
[SECTION 13]
1. Voluntary Waiver .
2. Compulsory treatment of breach of condition as breach of Warranty.
EXPRESS AND IMPLIED CONDITIONS AND WARRANTIES
Conditions and Warranties may be either express or implied.
They are said to be "express" when they are expressly provided by the parties.
They are said to be 'implied' when the law deems their existence in the contract even without their actually having been put in the contract.
IMPLIED CONDITIONS
(1) Condition as to Title
(2) Sale by Description
(3) Condition as to Quality or Fitness
(4) Merchantable Quality
1)They are reasonably saleable under the description by which they are known in market.
2)They are purchased for the personal use they must be reasonably fit for the purpose for which they are generally held.
(5)Sale by sample-
Definition of sale by sample
18 (1) 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.
(2) In the case of a contract for sale by sample, there is an implied condition that
(a) the bulk shall correspond with the sample in quality;(b) the buyer shall have a reasonable opportunity of comparing the bulk with the sample; and
(c) the goods shall be free from any defect, rendering them unmerchantable, that would not be apparent on reasonable examination of the sample. R.S., c. 408, s. 18.
In a sale by sample, the following are the implied conditions:
1. The bulk shall correspond with the sample in quality;
2. That the buyer shall have a reasonable opportunity of comparing the bulk with the sample; and
3. That the goods shall be free from any defects rendering them unmerchantable, which would not be apparent on reasonable examination of the sample.
Implied warranties
1. Warranty of Quiet Possession
In a contract of sale, unless the circumstances of the contract are such as to show different intention, there is a implied warranty that the buyer shall have and enjoy quiet possession of the goods.
2. Warranty of Freedom from Encumbrances
DOCTRINE OF caveat emptor
Caveat Emptor is a fundamental principle of the law of sale of goods
It means "Caution Buyer", i.e. "Let the buyer beware".
Exceptions to the doctrine of Caveat Emptor (Sec.16)
In case of any misrepresentation by the seller
In case of concealment of latent defects by the sellers
In case of sale by descriptions and sample(Sec 15)
Conditions as to merchantability
Conditions as to quality of fitness for buyers purpose
Conditions of wholesomeness
TRANSFER OF PROPERTY BY NON-OWNERS
(Sec. 27-30)
The general rule is that only the owners of the property can transfer a goods title.
"Nemo dat quod non habet" which means
"no one can give which he himself has not"
EXCEPTIONS
UNDER THE SALE OF GOODS ACT
Estoppels (Sec . 27)
Sale by a mercantile agent
Sale by one of several joint
owners (Sec 28)
Sale by an unpaid seller
IN OTHER LAWS
Sale by a finder of lost goods
Sale by a Pawnee
Sale by Official Receiver
Purchase in market overt
Under Negotiable Instrument Act 1881
UNPAID SELLER
A seller deemed to be an unpaid seller
(a). When the whole of the price has not been paid or rendered
(b). When the bill of exchange or other negotiable instrument has been received as conditional payment and condition has not been fulfilled by the reason of the dishonor of the instrument or otherwise (Sec. 45)
RIGHTS OF UNPAID SELLER
AGAINST THE GOODS
Unpaid sellers lien
Stoppage in transit
Right of resale
AGAINST THE BUYER PERSONALLY
Right to sue for price
Right to sue for damage
Repudiation of contract before due date
DELIVERY
It has been defined as a voluntary transfer of possession from one person to another..
Delivery of the goods may, be:
I. Physical or Actual Delivery
2. Symbolic Delivery - e.g., delivery of a railway receipt properly endorsed, or delivery of the key of a warehouse;
3. Constructive Delivery or Attornment - only an acknowledgement by the person in possession that he holds them on behalf of another.
Rules regarding delivery
The seller is not bound to deliver goods till the buyer applies for delivery in terms of the contract.
Place of Delivery - goods sold are to be delivered at the place agreed for delivery in the contract.
Time of Delivery – as per contract otherwise within reasonable time.
The expenses of and incidental to putting the goods into a deliverable state shall be borne by the seller, as per the terms of the contact.
5 Demand and tender must be at a reasonable hour - What is a reasonable hour is a question of fact.
6 Delivery of Wrong Quantity -.
7 Instalment Deliveries - The buyer is not bound to accept delivery by instalment, unless otherwise agreed.
8 Delivery to the Carrier or Wharfinger –
9 Buyer not bound to return rejected goods -. 10 Liability of the Buyer -
SALE BY AUCTION (Section 64)
In the case of sale by auction the following rules apply:
At an auction, the sale is complete when the auctioneer announces its completion by the fall of the hammer
A bidder is at liberty to withdraw his bid at any time before it is accepted by auctioneer
Advertisement to auction is not an offer but mere invitation .
Auctioneer has right to make any condition he likes .
Biddings can be withdrawn before acceptance
Sale by Auction …..
6 In case of goods put up for sale in lots –
7 no seller or any person who has advertised can bid at an auction sale – unless right is notified
8 Knockout agreements are unlawful
9 Pretended bidding by seller to raise price is voidable at option of buyer
Effect on existing law
60 (1) The rules of the common law, including the law merchant, save in so far as they are inconsistent with the express provisions of this Act, and in particular the rules relating to the law of principal and agent and the effect of fraud, misrepresentation, duress or coercion, mistake or other invalidating cause, shall continue to apply to contracts for the sale of goods.
(2) Nothing in this Act affects any enactment relating to personal property security or any enactment relating to the sale of goods that is not expressly repealed by Chapter 1 of the Acts of 1910.
(3) The provisions of this Act relating to contracts of sale do not apply to any transaction in the form of a contract of sale to the extent that the transaction is intended to operate as an agreement that creates or provides for an interest in goods to secure payment or performance of an obligation. R.S., c. 408, s. 60; 1995-96, c. 13, s. 85.
Conclusion
The Sale of goods is the most common of all commercial transaction . Knowledge of sale of goods is important to all . Law relating to sale of goods is contained in sale of goods act 1930.
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