Sale Of Goods Act, 1930 - Notes

Sale of Goods Act, 1930 A contract of sale of goods is acontract whereby the seller transfersor agrees to transfer the property ingoods to the buyer for a price.Sec.4(1)There may be a contract of salebetween one part owner andanother.A contract of sale may be absolute or

Essentials of contract of sale A contract (all essentials of validcontract applicable)Between two partiesTo transfer or agree to transfer thepropertyIn goodsFor a price, i.e. the consideration ismoney.

Transfer of property Transfer of property means transferof ownership. Mere transfer ofpossession can not be termed as asale.Sec.2(11) ‘Property means generalproperty in goods and not merely aspecial property.’General property means allownership rights and specialproperty means limited rights.

Goods Sec.2(7). ‘Goods means every kind ofmovable property other thanactionable claims and money, andincludes stock and shares, growingcrops, grass, and things attached toor forming part of the land which areagreed to be severed before sale orunder contract of sale.’

Kind of goods Existing goods- Sec.6(1) these are the goodswhich are in existence and are physicallypresent in the sellers possession. They arefurther classified asSpecific goods- 2(14) – these are the goodsidentified and agreed upon at the time thecontract is made.Ascertained goods- these are identified afterthe formation of the contract.Unascertained goods- these are the goodswhich are not specifically identified or agreedupon at the time of the contract of sale.Future goods -sec.2(6) and Contingent goods6(2)

Price considerationThe consideration for the contract ofsale must be money. If goods areexchanged against goods thetransaction is barter and not coveredby the act. However consideration maybe partly in money and partly in goods.NO SPECIAL FORMALITIES ARE REQUIREDFOR CONTRACT OF SALE. IT MAY BE INWRITING OR ORAL OR IMPLIED.

Sale and agreement to sale When property is transferred fromseller to buyer at the time offormation of contract, an absolutesale occurs.When property in the goods is to betransferred at some future date andnot at the time of contract, thecontract of sale is termed as anagreement to sell.

Points of distinction- sale andagreement to sell. Nature of contractexecuted / executory.Transfer of propertyimmediate / future date.Nature of rights of buyerjus in rem / jus inpersonemRights of buyer in case ofbreach-recovery ofgoods, specificperformance / Damages.Risk of loss- buyer’s /seller’s Rights of seller in case ofbreach-suit for the priceof goods / Damages.Right to resell- notavailable. / may resalebut liable for damages.Insolvency of sellerbuyer can recover goods/ if price already paidproportionate amountcan be recovered.Insolvency of buyer- ifprice is not paidproportionate amountcan be recovered.delivery of goods can bedemanded./ seller canrefuse delivery unless full

Subject matter of contract of saleGoods. 2.3.4.Goods may be classified as :Existing Goods- a) specific goods, b)ascertained goods, c) unascertainedgoods.Future goods- which do not exist with theseller at the time of sale. the contractthus is an agreement to sell.Contingent goods – a type of futuregoods, the acquisition of which dependsupon a contingency which may or maynot happen.

Perishing of goods 2.3.4.5.The possible causes of perishing ofgoods:Physical destruction of goods.Damage of goods in such a mannerthat they loose their commercialvalue.Loss of goods by theft.Lawful acquisition of goods bygovernment.

Effect of perishing of goods Goods perishing before formation of thecontract.- in case of specific goods suchcontract is void ab initio as theperformance of the contract is impossibledue to destruction of subject matter.Goods perishing before the sale but afterthe agreement to sell.:- in case of specificgoods the contract of sale becomes voidand both parties are excused from theperformance. (Sec.8)

Effect of perishing of goods Effect of perishing of future goods.:Sec.8 applies in this case also whichsays ‘where there is an agreement tosell specific goods, and subsequentlythe goods without any fault on thepart of the seller or buyer perish orbecome so damaged as no longer toanswer to their description in theagreement before the risk passes tothe buyer, the agreement is therebyavoided.’

Price Sec.2(10) defines the price as ‘themoney consideration for the sale ofgoods.’Price has to be in terms of money.All monitory payments do notamount to price.

Fixing the price Price is mentioned in the contract.The manner of fixing the price ismentioned in the contract.It is determined by the course ofdealings of the parties. when price isnot fixed by any of the above modesa ‘reasonable price’ is considered asthe price of the contract.

Time When time is stipulated regarding thepayment of price :- Time of payment is notconsidered the essence of the contract unlessa different intention appears from the terms ofthe contract. Thus if payment is not made intime the seller can not avoid the contract butcan claim damages.When time is stipulated regarding delivery ofgoods:- time of delivery of goods is normallyconsidered essence of the contract. Thus nonperformance at stipulated time will render thecontract voidable at the option of the buyer.

Subject matter of contract of sale-Goods. Goods may be classified as :-2. Existing Goods- a) specific goods, b) ascertained goods, c) unascertained goods. 3. Future goods- which do not exist with the seller at the time of sale. the contract thus is an agreement to sell. 4. Contingent goods - a type of future goods, the acquisition of which .