Sales Of Goods Act 1930 Notes & Preparation Strategy (Download Notes)

Author : Yogricha

Updated On : January 11, 2024

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Overview: The Sales of Goods Act forms an essential part of almost all state Judicial exams. Knowing the important sections, concepts, and everything around it is a must. For example, if you are preparing for MPCJ, DJS, HPSC-J or any other state exam, you should properly study the Sales of Goods Act.

In this article, we will cover:

  • Important Sections of the Act for Judiciary
  • Preparation Tips of Sales of Goods Act for the Judiciary
  • Download Notes for your preparation

Notes for Sales of Goods Act:

Introduction: 

Section 4(3) of the Sale of Goods Act provides definitions for sales and contracts of sale. A contract of sale is categorized as a "sale" when it involves the immediate transfer of property in the goods from the seller to the buyer, resulting in ownership being transferred from the seller to the buyer. Such a transaction can also be termed a "completed sales contract."

Conversely, a contract is labeled a "sales contract" when it is understood that the transfer of ownership of the goods will transpire at a later date or is contingent upon the fulfillment of specific conditions. This type of contract of sale can alternatively be referred to as a "contract of sale by execution."

In the case of State of Uttaranchal Vs. Khurana Brothers (2011), it was affirmed that a contract of sale evolves into a sale when time elapses or when the specified conditions are met.

Additionally, in the case of In-Camera House, Bombay Vs. State of Maharashtra (1969), the Bombay High Court clarified that the provision of prints, film processing, and studio photography are distinct transactions. While the initial two contracts necessitate the artistic skills and efforts of the photographer, the final agreement for delivering copies to customers constitutes the sales contract. This differentiation underscores the distinction between absolute and conditional contracts of sale.

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Definition:

  • In India, the Sale of Goods Act, 1930, regulates matters concerning the sale and agreement to sell goods.
  • Under Section 4 of this Act, a "contract of sale" is defined as a contractual arrangement in which the seller commits to transferring or agrees to transfer the ownership of goods to the buyer for an agreed price.
  • Section 2(10) of the Act defines an "agreement to sell" as a contract in which the transfer of ownership of goods is intended to occur at a future time or is contingent upon the fulfillment of specific conditions.

Essential Features of a Contract of Sale:

  • Two Parties: A contract of sale is characterized by the involvement of two parties—the seller (who either transfers or agrees to transfer ownership of goods) and the buyer (who either purchases or agrees to purchase the goods).
  • Goods: The contract pertains to goods that must be either existing or prospective. Goods typically encompass movable assets and exclude actionable claims, money, and immovable property.
  • Transfer of Ownership: The core aspect of the contract is the transfer or agreement to transfer ownership of the goods from the seller to the buyer.
  • Price: The contract necessitates an agreed-upon price, which typically involves monetary consideration but may also involve barter or exchange.
  • Consent: The contract must be willingly entered into by both parties, with their consent being free from coercion, fraud, undue influence, or mistake.
  • Legal Capacity: The parties involved in the contract must possess the legal capacity to participate in such agreements. They should not be legally disqualified, such as minors or individuals of unsound mind. 

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The Sale of Goods Act encompasses several essential elements, a few of which are elucidated below:

  1. Two Parties: Every sale transaction necessitates the involvement of at least two parties, namely the buyer and the seller, to bring the transaction to fruition.
  2. Mercantile Agent: Apart from the buyer and the seller, there may be mercantile agents involved in the sale and purchase process. These third-party agents, such as brokers and agents, play a pivotal role in facilitating and enhancing the sale process.
  3. Goods: The tangible products subject to exchange between the buyer and the seller are referred to as goods. It is imperative that the goods to be transacted are explicitly defined and specified in the sale contract, as mandated by the Sale of Goods Act.
  4. Price: The price denotes the monetary amount agreed upon for the goods being exchanged. The valuation of the goods is mutually determined and settled by both the buyer and the seller, serving as the basis for the transaction.

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Formation of a Contract of Sale:

  • Offer and Acceptance: The establishment of a contract of sale hinges on the presence of a valid offer and its subsequent acceptance. Either the seller or the buyer can initiate the offer, and the acceptance must be effectively communicated to the offeror.
  • Intention to Transfer Ownership: Both parties must share the intention to either transfer or acquire ownership of the goods. The agreement should unambiguously specify when the transfer of ownership occurs, transitioning from the seller to the buyer.
  • Price Determination: The contract must incorporate a mechanism for determining the price of the goods. If the price remains unspecified, it should be ascertained through the method outlined in the contract or calculated according to a reasonable standard.
  • Terms and Conditions: The contract may encompass precise terms and conditions relating to the quality, quantity, description, delivery, and payment of the goods. These terms can be either explicit (stated outright) or implicit (inferred from the circumstances).
  • Written or Oral Agreement: A contract of sale can materialize in written, oral, or implicit forms, deriving from the parties' conduct. Nevertheless, specific contract types, particularly those concerning goods of a certain value or falling under particular legal statutes, may necessitate written documentation or registration.
  • Risk and Title, Risk: In a contract of sale, the risk linked with the goods may shift from the seller to the buyer at a different juncture than the transfer of ownership. This timing is contingent upon the contract's provisions, including delivery terms and mutual agreements.
  • Title: The passage of ownership rights, known as the transfer of title, transpires when the seller intends to cede ownership to the buyer. The moment of title transfer may diverge according to the contract's stipulations, such as whether it constitutes a sale or an agreement to sell.

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Breach and Remedies:

  • Breach of Contract: Whenever one of the involved parties fails to meet their obligations under the contract, it constitutes a breach. This breach could take the form of non-delivery, non-payment, or any other contravention of the agreed-upon terms.

Remedies: In the event of a breach of contract, the injured party possesses several available remedies, including:

  • Damages: The party experiencing losses resulting from the breach may seek monetary compensation.
  • Specific Performance: Under specific circumstances, the court may compel the defaulting party to fulfill the contract in accordance with the initial agreement. • Repudiation: If the other party clearly indicates an intention to not honor the contract, the innocent party may treat it as repudiated.
  • Rescission: It is possible to annul the contract, allowing both parties to return to their pre-contractual positions.
  • Lien: The seller may withhold possession of the goods until the buyer satisfies their payment obligations.

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CONDITIONS AND WARRANTIES (SECTIONS 11 TO 17 & 62)

In contracts of sale, conditions and warranties are vital terms. Sections 11 to 17 and Section 62 of the Sale of Goods Act, 1930, outline the provisions pertaining to conditions and warranties. Let's delve into these sections in detail:

Conditions (Sections 12 to 15):

  • Section 12 defines a condition as a crucial stipulation central to the contract's primary purpose. Breaching this condition grants the aggrieved party the right to consider the contract as repudiated.
  • Section 13 stipulates that when a sale contract is contingent upon any condition, breaching that condition grants the injured party the right to reject the goods or treat the contract as repudiated.
  • Section 14 offers guidelines for determining whether a term constitutes a condition or a warranty. It asserts that a stipulation may qualify as a condition, irrespective of being termed a warranty in the contract, based on the significance assigned to it by the contracting parties.
  • Section 15 empowers the injured party to either waive or opt to consider a breach of condition as a breach of warranty.

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Warranties (Sections 12 to 15):

  • Section 12 defines a warranty as a subsidiary stipulation, not central to the contract's primary purpose. Breaching this warranty results in a claim for damages but does not grant the right to reject the goods or consider the contract as repudiated.
  • Section 13 states that when a sale contract is subject to any warranty, breaching that warranty only entitles the injured party to seek damages.
  • Section 14 provides guidance for distinguishing whether a term should be classified as a condition or a warranty. It asserts that a stipulation may qualify as a warranty, even if referred to as a condition in the contract, based on the importance attributed to it by the contracting parties.
  • Section 15 empowers the injured party to either waive or choose to consider a breach of warranty as a breach of condition.

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Implied Conditions and Warranties (Sections 16 & 17): • Section 16 addresses implied conditions regarding the quality or suitability of goods for a specific purpose. It specifies that in a contract of sale, certain conditions are automatically implied by law unless explicitly agreed otherwise. • Section 17 concerns implied warranties related to the title of goods. It ensures that in a sale contract, there is an implicit warranty that the seller possesses the right to sell the goods, and the buyer will enjoy undisputed ownership of the goods.

Sale by Description (Section 15):

Section 15 applies when goods are sold by description, whether verbally or in writing. It establishes an implied condition that the goods must conform to the description provided by the seller.

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Sale by Sample (Section 17):

Section 17 pertains to situations where goods are sold by sample, with the condition that the bulk of the goods must match the quality of the sample.

Application of Sections 11 to 17 (Section 62):

Section 62 explicitly clarifies that Sections 11 to 17 of the Sale of Goods Act, 1930, exclusively apply to contracts for the sale of goods and do not extend to any other types of contracts.

In summary, conditions and warranties hold significant importance in sale contracts. Conditions are fundamental stipulations, breach of which allows the aggrieved party to consider the contract as repudiated, while warranties are secondary stipulations leading to claims for damages but not granting the right to reject the goods. The Act also incorporates provisions for implied conditions and warranties, as well as specific guidelines for sale by description and sale by sample. It is essential to grasp these provisions when entering into a sale contract to safeguard the interests and rights of all parties involved.

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EFFECT OF BREACH OF CONDITIONS AND WARRANTIES WHEN CONDITION IS CONSIDERED AS A WARRANTY CONSEQUENCES OF CONTRACT TRANSFER OF PROPERTY IN GOODS (SECTIONS 18 TO 25)

Breach of Conditions: In the event of a breach of a condition within a sale contract, the injured party possesses the following entitlements: • Right to Terminate the Contract: The injured party may regard the contract as terminated, signifying its conclusion, and demand compensation for any resulting losses.

  • Right to Pursue Compensation: The injured party may initiate legal action against the breaching party, seeking damages to cover any losses or harm incurred as a result of the breach.
  • Right to Decline Goods: If the injured party has not accepted the goods or has identified the breach before acceptance, they have the option to reject the goods.

Breach of Warranties: In cases of a breach of warranties within a sale contract, the injured party has the following rights:

  • Right to Seek Compensation: The injured party may file a lawsuit against the party in breach to claim compensation for any losses or harm sustained due to the breach. However, they do not retain the authority to terminate the contract or refuse the goods.

When a Condition is to be Regarded as a Warranty: Section 13 of the Sale of Goods Act, 1930 provides criteria for determining when a condition should be treated as a warranty. It stipulates that if a sale contract includes a condition that is not fundamental to the primary purpose of the contract, and any breach of the condition can be adequately compensated through damages, then the condition can be regarded as a warranty. In such instances, the injured party is not entitled to terminate the contract but may seek damages for the breach.

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Effects of Contract: The Sale of Goods Act, 1930, outlines various effects stemming from a contract of sale, which encompass:

  • Transfer of Ownership: The contract of sale involves the transfer or agreement to transfer the ownership (property) of the goods from the seller to the buyer.
  • Passing of Risk: The risk associated with any potential damage or loss to the goods shifts from the seller to the buyer at a predetermined moment, as stipulated within the contract.
  • Contractual Performance: The involved parties are bound to fulfill their respective obligations as delineated by the terms and conditions articulated in the contract.
  • Payment of Price: The buyer bears the responsibility of disbursing the agreed-upon price for the goods, while the seller is entitled to receive this payment.
  • Delivery of Goods: The seller assumes the responsibility for delivering the goods to the buyer, who, in turn, is obligated to accept them. Transfer of Property in Goods (Sections 18 to 25): Sections 18 to 25 of the Sale of Goods Act, 1930, encompass regulations pertaining to the transfer of property (ownership) in goods. Key provisions include:
  • Transfer of Ownership via Agreement: The ownership of goods can be conveyed from the seller to the buyer through a mutually agreed-upon arrangement, as specified in the contract.
  • Specific Goods: When specific or identified goods are the subject of the sale, ownership transfers to the buyer at the juncture determined by the parties.
  • Unidentified Goods: In instances where goods lack specificity or identification at the time of contracting, ownership is transferred to the buyer when the goods are ascertained, and the seller completes any requisite measures for their identification.
  • Goods in a Deliverable State: When goods are in a condition ready for delivery, and the seller must perform an action before the delivery, ownership is passed to the buyer upon the completion of said action, provided the buyer is duly notified.
  • Reservation of Right of Disposal: The seller may retain the right to dispose of the goods until specific conditions are met, such as the payment of the price. In such scenarios, ownership is transferred to the buyer upon the fulfillment of these conditions.

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Title Transfer in the Sale of Goods Act, 1930 (Sections 27 to 30)

Sections 27 to 30 of the Sale of Goods Act, 1930, are focused on the conditions and guidelines for transferring ownership of goods from a seller to a buyer. These sections provide a framework for understanding how title to goods is legally moved under various circumstances. Here's a closer look at each section:

  • Section 27 - Sale by a Person Who is Not the Owner: This section covers scenarios where goods are sold by someone who doesn't actually own them. If the buyer isn't aware of the seller's lack of ownership and purchases the goods in good faith without any knowledge of the seller’s defective title, they legally acquire ownership of the goods.

  • Section 28 - Sale by a Co-owner: This applies when goods have multiple joint owners. If one of these owners, who has been entrusted with the goods by the others, sells the goods, the buyer gains legal ownership. This is contingent on the buyer purchasing the goods in good faith and without knowing about the seller’s limited authority to sell.

  • Section 29 - Sale under a Voidable Contract: When the seller has goods in their possession due to a contract that is voidable (as per Sections 19 or 19A of the Indian Contract Act, 1872), but the contract has not been annulled at the sale time, the buyer can obtain legal title. This is valid if the buyer is unaware of any flaws in the seller's title and acts in good faith.

In summary, these sections from the Sale of Goods Act, 1930, lay down the legal groundwork for the transfer of goods' title under various conditions, emphasizing the importance of good faith and awareness (or the lack thereof) of the buyer regarding the seller’s ownership or authority.

Section 30 - Possession of Goods After Sale by Seller or Buyer:

This section pertains to scenarios where an individual who has either sold goods or entered into an agreement to buy goods still retains possession of the said goods or the associated documents of title. Under such circumstances:

• If the seller, or a mercantile agent acting on their behalf, proceeds to deliver or transfer the goods or documents of title to the goods to another party in good faith and without prior knowledge of any previous sale, pledge, or alternative disposition, this delivery or transfer is deemed valid. The recipient of the goods or documents of title obtains a rightful title to the goods, as if the entity effecting the delivery or transfer had received explicit authorization from the owner of the goods.

• If the buyer, with the approval of the seller, gains possession of the goods or documents of title to the goods and subsequently, in good faith and without awareness of any lien or other claim by the original seller, delivers or transfers them to a third party, this delivery or transfer is considered legitimate. The recipient of the goods or documents of title is not affected by any lien or claim by the original seller and can rightfully acquire title to the goods.

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These sections are designed to safeguard the interests of bona fide purchasers who acquire goods in good faith and without knowledge of any defects or limitations in the seller's rights. They establish protocols for the transfer of title in specific scenarios, ensuring that innocent buyers secure rightful ownership of the goods, even when concerns arise regarding the seller's title or authority to sell.

These provisions regulate the transfer of title in various contexts, guaranteeing that a purchaser who acquires goods in good faith and without knowledge of any issues with the seller's title obtains lawful ownership of the goods. However, it is important to acknowledge that these provisions are subject to other applicable laws and legal principles, such as those concerning fraud, theft, or the rights of legitimate owners. Consequently, it is advisable for buyers to exercise due diligence and seek appropriate legal counsel to ensure the validity of the title when entering into a sales contract.

Performance of Contract of Sale of Goods (Sections 31-44):

The Sale of Goods Act, 1930, sets forth the provisions governing the execution of a contract for the sale of goods. Here are the key sections pertaining to this:

Duties of Seller and Buyer: 31. Responsibilities of Seller and Buyer: The seller bears the responsibility of delivering the goods, while the buyer is responsible for accepting and making payment for them, as per the terms outlined in the contract.

  1. Simultaneous Conditions for Payment and Delivery: Payment of the price and delivery of the goods are deemed to be simultaneous conditions, unless otherwise agreed upon. This implies that the seller must be prepared to transfer possession of the goods in exchange for the price, and the buyer must be ready to remit the price in return for possession of the goods.
  2. Delivery and Rules Related to Delivery:  Modes of Delivery: Goods can be delivered through any means agreed upon by the parties, or by any action that places the goods in the possession of the buyer or an authorized representative acting on behalf of the buyer.
  3. Partial Delivery: The delivery of a portion of the goods, while intending to deliver the entire consignment, has the same effect as delivering the entire goods. However, if part of the goods is delivered with the intent to separate it from the rest, it does not constitute delivery of the remaining goods.
  4. Buyer's Request for Delivery: Unless stipulated otherwise, the seller is not obligated to deliver the goods until the buyer formally requests such delivery.

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Section 36 - Guidelines for Delivery:

• Whether the buyer should take possession of the goods or the seller should dispatch them is determined by the contract. In the absence of a specific agreement, goods that have been sold must be delivered at their location at the time of the sale, while goods agreed to be sold must be delivered at the agreed-upon location or, if not specified, at the place of manufacture or production.

• If the seller is obligated to send the goods to the buyer but no specific timeframe is mentioned, the seller must dispatch them within a reasonable timeframe.

• If, at the time of sale, the goods are in the possession of a third party, there is no delivery by the seller to the buyer unless the third party acknowledges holding the goods on behalf of the buyer.

• Delivery or tender of delivery must occur during reasonable hours.

• The expenses incurred to place the goods in a deliverable state are borne by the seller, unless otherwise agreed upon.

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Section 37 - Delivery of Incorrect Quantity:

• If the seller delivers fewer goods than specified in the contract, the buyer may reject them. However, if the buyer accepts the delivered goods, they must pay for them at the contracted rate.

• If the seller delivers more goods than specified in the contract, the buyer may accept the goods that were part of the contract and reject the excess, or reject the entire delivery.

• If the seller delivers goods of a different description, not part of the contract, mixed with the contracted goods, the buyer may accept the conforming goods and reject the rest, or reject the entire delivery.

• These provisions are subject to any trade usage, special agreement, or customary practice between the parties.

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Section 38 - Instalment Deliveries:

The buyer is not obligated to accept goods delivered in instalments unless otherwise agreed upon. In the case of a contract for the sale of goods to be delivered in instalments, if there is a breach in the delivery of one or more instalments, whether it constitutes a repudiation of the entire contract or a severable breach leading to a claim for compensation depends on the contract terms and circumstances.

Section 39 - Delivery to Carrier or Wharfinger:

• If the seller is authorized or required to dispatch the goods to the buyer, delivering the goods to a carrier (whether specified by the buyer or not) for onward transmission to the buyer, or to a wharfinger for safekeeping, is considered as delivery to the buyer.

• If the seller fails to make a reasonable contract with the carrier or wharfinger on the buyer's behalf, and the goods are lost or damaged during transit or while in the wharfinger's custody, the buyer can refuse to accept the delivery or hold the seller responsible for any damages incurred.

• When the seller sends goods via sea transit, where it is customary to insure them, the seller must notify the buyer to allow them to arrange for insurance during the transit. Failure to provide such notice places the goods at the seller's risk during sea transit.

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Section 40 - Risk in Distant Delivery:

If the seller agrees to deliver the goods at a location different from the place of sale, any risk of deterioration in the goods that naturally occurs during transportation is borne by the buyer.

Section 41 - Buyer's Right to Examine Goods:

If the buyer receives goods without prior examination, they are not considered to have accepted the goods until they have had a reasonable opportunity to inspect them for compliance with the contract. The seller must grant the buyer a

reasonable opportunity to examine the goods upon offering delivery.

Section 42 - Acceptance:

The buyer is deemed to have accepted the goods when they notify the seller of their acceptance, perform an action inconsistent with the seller's ownership, or retain the goods for an unreasonable period without informing the seller of their intention to reject them.

Section 43 - Buyer's Refusal to Accept Goods:

If the buyer rightfully refuses to accept delivered goods, they are not obligated to return the goods to the seller. Simply notifying the seller of the refusal is sufficient.

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Section 44 - Buyer's Responsibility for Neglecting or Refusing Delivery:

When the seller is prepared and willing to deliver the goods and urges the buyer to accept delivery, but the buyer neglects or declines to do so within a reasonable timeframe, the buyer becomes liable to the seller for any losses resulting from the neglect or refusal. Additionally, the buyer is accountable for a reasonable fee associated with the care and safekeeping of the goods.

It is important to note that this section does not impact the seller's rights if the buyer's neglect or refusal constitutes a repudiation of the contract.

Rights of the Unpaid Seller Against the Goods (Section 45 to 54)

Section 45 - Definition of "Unpaid Seller": The term "unpaid seller" is defined within the Sale of Goods Act under two circumstances:

  1. When the full price of the goods remains unpaid or unoffered.
  2. When a bill of exchange or another negotiable instrument has been received as conditional payment, but the condition remains unfulfilled due to instrument dishonor or other reasons. In this context, the term "seller" encompasses anyone occupying the seller's position, including an agent endorsed on the bill of lading, a consignor, or an agent responsible for payment.

Section 46 - Rights of the Unpaid Seller: Despite the transfer of ownership in the goods to the buyer, an unpaid seller retains certain implicit rights under the law, including:

  1. The right to a lien on the goods for the price while in possession of them.
  2. The right, in case the buyer becomes insolvent, to halt the goods in transit after relinquishing possession.
  3. The right of re-sale, subject to specific limitations detailed in the Act.

Section 47 - Unpaid Seller's Lien: The unpaid seller of goods in possession has the right to retain possession until payment or tender of the price under the following conditions:

  • When the goods are sold without a stipulation for credit.
  • When the goods are sold on credit, but the credit period has lapsed.
  • When the buyer becomes insolvent. This right of lien is exercisable by the seller even if they possess the goods as an agent or bailee for the buyer.

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  1. Partial Delivery: In cases where an unpaid seller has made a partial delivery of the goods, they retain the right to exercise their lien on the remaining portion, unless the circumstances suggest an agreement to waive the lien.

  2. Termination of the Lien: The unpaid seller loses their lien on the goods under the following circumstances:

  • When they deliver the goods to a carrier or bailee for transmission to the buyer without reserving the right of disposal.
  • When the buyer or their agent lawfully takes possession of the goods.
  • If the seller willingly waives the lien. Obtaining a court decree for the price of the goods does not result in the loss of the unpaid seller's lien.
  1. Right to Stoppage in Transit: When the buyer becomes insolvent, the unpaid seller who has already relinquished possession of the goods retains the right to stop the goods in transit. This means they can regain possession and hold the goods until the price is paid or tendered.

  2. Duration of Transit:

  • Goods are considered in transit from the moment they are delivered to a carrier or bailee for transmission to the buyer until the buyer or their agent takes delivery from the carrier or bailee.
  • Transit ceases if the buyer or their agent takes delivery before the goods reach the destination or if the carrier or bailee acknowledges holding the goods on behalf of the buyer upon arrival at the destination.
  • If the buyer rejects the goods and the carrier or bailee continues to hold them, the transit is not considered terminated.
  • For goods delivered to a ship chartered by the buyer, the nature of possession depends on the specific circumstances.
  • If the carrier or bailee wrongfully refuses to deliver the goods to the buyer or their agent, the transit is deemed terminated.
  • In cases of partial delivery, the remaining goods can be stopped in transit unless there is evidence of an agreement to relinquish possession of the entire shipment.

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52. How stoppage in transit is effected:

The unpaid seller can exercise the right of stoppage in transit by either taking actual possession of the goods or by giving notice of their claim to the carrier or bailee in possession of the goods. • The notice can be given to the person in actual possession or to their principal. If given to the principal, it must be communicated to the servant or agent of the principal in a timely manner to prevent delivery to the buyer. • If notice is given to the carrier or bailee, they must redeliver the goods to the seller, and the expenses of redelivery are borne by the seller.

53. Transfer by buyer and seller:

Effect of sub-sale or pledge by buyer:

  • The unpaid seller's right of lien or stoppage in transit is generally not affected by any sale or other disposition of the goods made by the buyer, unless the seller has assented to it.
  • If a document of title to the goods has been issued or transferred to a person who takes it in good faith and for consideration, the unpaid seller's right of lien or stoppage in transit is defeated in the case of a sale. However, if the transfer is by way of pledge or disposition for value, the unpaid seller's right is subject to the rights of the transferee.

54. Sale not generally rescinded by lien or stoppage in transit:

  • The exercise of the unpaid seller's right of lien or stoppage in transit does not automatically rescind the contract of sale.
  • If the goods are perishable or the seller gives notice of intention to resell, and the buyer fails to pay or tender the price within a reasonable time, the seller may resell the goods and claim damages from the original buyer. The buyer is not entitled to any profit on the resale unless notice was not given.
  • If the unpaid seller resells the goods, the buyer of the goods acquires a good title against the original buyer, even if no notice of the resale was given.
  • If the seller explicitly reserves the right to resell in case of default by the buyer and resells the goods, the original contract of sale is rescinded, but the seller can still claim damages.

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Section 55 to 61 of the Sale of Goods Act cover the legal options available to parties when there is a breach of contract in the sale of goods. Below are concise explanations of each section:

  1. Seller's Remedies: When a buyer breaches the contract, the seller has the right to initiate legal action for damages due to the buyer's failure to accept the goods.

  2. Damages for Non-Acceptance: The seller can claim damages from the buyer if the buyer wrongfully refuses to accept the goods or neglects to pay the agreed-upon price.

  3. Specific Performance: In cases where the goods are unique or when monetary compensation is insufficient, the seller may seek a court order for specific performance, compelling the buyer to fulfill the contract.

  4. Damages for Non-Delivery: If the seller fails to deliver the goods as per the contract, the buyer can seek damages for non-delivery.

  5. Specific Performance by Seller: When the goods are unique or when damages alone won't suffice for non-delivery, the buyer has the option to request specific performance from the seller.

  6. Repudiation of Contract Before Due Date: If either the buyer or seller prematurely abandons the contract before the agreed-upon performance date, the innocent party can treat the contract as breached and pursue damages.

Now, on to Section 64, which relates to the sale of goods by auction.

Section 64 of the Sale of Goods Act pertains to auctions and includes the following regulations:

(a) The auctioneer has the prerogative to retract the goods at any point before concluding the auction by the fall of the hammer.

(b) The auctioneer is permitted to make bids on behalf of the seller, unless explicitly disallowed.

(c) The sale is finalized when the auctioneer declares it as such, typically by the fall of the hammer or through other established auction practices.

These stipulations delineate the unique procedures and responsibilities associated with auctions, particularly focusing on the auctioneer's role and actions.

Conclusion:

In conclusion, the enactment of the Sale of Goods Act in 1930 brought about a significant transformation in the landscape of sale and purchase in India. This legislation has instilled a heightened sense of accountability and transparency among both buyers and sellers, discouraging fraudulent practices. As a result, the rights and interests of both parties involved in transactions are safeguarded and upheld by this pivotal legal framework.

For Sales of Goods Act make sure that you focus on the important sections that have been listed in this article:

  • Take a note of all these sections.
  • Practice from previous year papers.
  • Make your own notes, you can take reference from this article.
  • Do not leave this subject for the last moment, you need to make sure that you study and revise sales of goods act properly.

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Sales Of Goods Act 1930 Notes & Preparation Strategy (Download Notes)

Author : Yogricha

January 11, 2024

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Overview: The Sales of Goods Act forms an essential part of almost all state Judicial exams. Knowing the important sections, concepts, and everything around it is a must. For example, if you are preparing for MPCJ, DJS, HPSC-J or any other state exam, you should properly study the Sales of Goods Act.

In this article, we will cover:

  • Important Sections of the Act for Judiciary
  • Preparation Tips of Sales of Goods Act for the Judiciary
  • Download Notes for your preparation

Notes for Sales of Goods Act:

Introduction: 

Section 4(3) of the Sale of Goods Act provides definitions for sales and contracts of sale. A contract of sale is categorized as a "sale" when it involves the immediate transfer of property in the goods from the seller to the buyer, resulting in ownership being transferred from the seller to the buyer. Such a transaction can also be termed a "completed sales contract."

Conversely, a contract is labeled a "sales contract" when it is understood that the transfer of ownership of the goods will transpire at a later date or is contingent upon the fulfillment of specific conditions. This type of contract of sale can alternatively be referred to as a "contract of sale by execution."

In the case of State of Uttaranchal Vs. Khurana Brothers (2011), it was affirmed that a contract of sale evolves into a sale when time elapses or when the specified conditions are met.

Additionally, in the case of In-Camera House, Bombay Vs. State of Maharashtra (1969), the Bombay High Court clarified that the provision of prints, film processing, and studio photography are distinct transactions. While the initial two contracts necessitate the artistic skills and efforts of the photographer, the final agreement for delivering copies to customers constitutes the sales contract. This differentiation underscores the distinction between absolute and conditional contracts of sale.

Learn more: Judiciary Exam 2023 Online Coaching

Definition:

  • In India, the Sale of Goods Act, 1930, regulates matters concerning the sale and agreement to sell goods.
  • Under Section 4 of this Act, a "contract of sale" is defined as a contractual arrangement in which the seller commits to transferring or agrees to transfer the ownership of goods to the buyer for an agreed price.
  • Section 2(10) of the Act defines an "agreement to sell" as a contract in which the transfer of ownership of goods is intended to occur at a future time or is contingent upon the fulfillment of specific conditions.

Essential Features of a Contract of Sale:

  • Two Parties: A contract of sale is characterized by the involvement of two parties—the seller (who either transfers or agrees to transfer ownership of goods) and the buyer (who either purchases or agrees to purchase the goods).
  • Goods: The contract pertains to goods that must be either existing or prospective. Goods typically encompass movable assets and exclude actionable claims, money, and immovable property.
  • Transfer of Ownership: The core aspect of the contract is the transfer or agreement to transfer ownership of the goods from the seller to the buyer.
  • Price: The contract necessitates an agreed-upon price, which typically involves monetary consideration but may also involve barter or exchange.
  • Consent: The contract must be willingly entered into by both parties, with their consent being free from coercion, fraud, undue influence, or mistake.
  • Legal Capacity: The parties involved in the contract must possess the legal capacity to participate in such agreements. They should not be legally disqualified, such as minors or individuals of unsound mind. 

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The Sale of Goods Act encompasses several essential elements, a few of which are elucidated below:

  1. Two Parties: Every sale transaction necessitates the involvement of at least two parties, namely the buyer and the seller, to bring the transaction to fruition.
  2. Mercantile Agent: Apart from the buyer and the seller, there may be mercantile agents involved in the sale and purchase process. These third-party agents, such as brokers and agents, play a pivotal role in facilitating and enhancing the sale process.
  3. Goods: The tangible products subject to exchange between the buyer and the seller are referred to as goods. It is imperative that the goods to be transacted are explicitly defined and specified in the sale contract, as mandated by the Sale of Goods Act.
  4. Price: The price denotes the monetary amount agreed upon for the goods being exchanged. The valuation of the goods is mutually determined and settled by both the buyer and the seller, serving as the basis for the transaction.

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Formation of a Contract of Sale:

  • Offer and Acceptance: The establishment of a contract of sale hinges on the presence of a valid offer and its subsequent acceptance. Either the seller or the buyer can initiate the offer, and the acceptance must be effectively communicated to the offeror.
  • Intention to Transfer Ownership: Both parties must share the intention to either transfer or acquire ownership of the goods. The agreement should unambiguously specify when the transfer of ownership occurs, transitioning from the seller to the buyer.
  • Price Determination: The contract must incorporate a mechanism for determining the price of the goods. If the price remains unspecified, it should be ascertained through the method outlined in the contract or calculated according to a reasonable standard.
  • Terms and Conditions: The contract may encompass precise terms and conditions relating to the quality, quantity, description, delivery, and payment of the goods. These terms can be either explicit (stated outright) or implicit (inferred from the circumstances).
  • Written or Oral Agreement: A contract of sale can materialize in written, oral, or implicit forms, deriving from the parties' conduct. Nevertheless, specific contract types, particularly those concerning goods of a certain value or falling under particular legal statutes, may necessitate written documentation or registration.
  • Risk and Title, Risk: In a contract of sale, the risk linked with the goods may shift from the seller to the buyer at a different juncture than the transfer of ownership. This timing is contingent upon the contract's provisions, including delivery terms and mutual agreements.
  • Title: The passage of ownership rights, known as the transfer of title, transpires when the seller intends to cede ownership to the buyer. The moment of title transfer may diverge according to the contract's stipulations, such as whether it constitutes a sale or an agreement to sell.

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Breach and Remedies:

  • Breach of Contract: Whenever one of the involved parties fails to meet their obligations under the contract, it constitutes a breach. This breach could take the form of non-delivery, non-payment, or any other contravention of the agreed-upon terms.

Remedies: In the event of a breach of contract, the injured party possesses several available remedies, including:

  • Damages: The party experiencing losses resulting from the breach may seek monetary compensation.
  • Specific Performance: Under specific circumstances, the court may compel the defaulting party to fulfill the contract in accordance with the initial agreement. • Repudiation: If the other party clearly indicates an intention to not honor the contract, the innocent party may treat it as repudiated.
  • Rescission: It is possible to annul the contract, allowing both parties to return to their pre-contractual positions.
  • Lien: The seller may withhold possession of the goods until the buyer satisfies their payment obligations.

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CONDITIONS AND WARRANTIES (SECTIONS 11 TO 17 & 62)

In contracts of sale, conditions and warranties are vital terms. Sections 11 to 17 and Section 62 of the Sale of Goods Act, 1930, outline the provisions pertaining to conditions and warranties. Let's delve into these sections in detail:

Conditions (Sections 12 to 15):

  • Section 12 defines a condition as a crucial stipulation central to the contract's primary purpose. Breaching this condition grants the aggrieved party the right to consider the contract as repudiated.
  • Section 13 stipulates that when a sale contract is contingent upon any condition, breaching that condition grants the injured party the right to reject the goods or treat the contract as repudiated.
  • Section 14 offers guidelines for determining whether a term constitutes a condition or a warranty. It asserts that a stipulation may qualify as a condition, irrespective of being termed a warranty in the contract, based on the significance assigned to it by the contracting parties.
  • Section 15 empowers the injured party to either waive or opt to consider a breach of condition as a breach of warranty.

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Warranties (Sections 12 to 15):

  • Section 12 defines a warranty as a subsidiary stipulation, not central to the contract's primary purpose. Breaching this warranty results in a claim for damages but does not grant the right to reject the goods or consider the contract as repudiated.
  • Section 13 states that when a sale contract is subject to any warranty, breaching that warranty only entitles the injured party to seek damages.
  • Section 14 provides guidance for distinguishing whether a term should be classified as a condition or a warranty. It asserts that a stipulation may qualify as a warranty, even if referred to as a condition in the contract, based on the importance attributed to it by the contracting parties.
  • Section 15 empowers the injured party to either waive or choose to consider a breach of warranty as a breach of condition.

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Implied Conditions and Warranties (Sections 16 & 17): • Section 16 addresses implied conditions regarding the quality or suitability of goods for a specific purpose. It specifies that in a contract of sale, certain conditions are automatically implied by law unless explicitly agreed otherwise. • Section 17 concerns implied warranties related to the title of goods. It ensures that in a sale contract, there is an implicit warranty that the seller possesses the right to sell the goods, and the buyer will enjoy undisputed ownership of the goods.

Sale by Description (Section 15):

Section 15 applies when goods are sold by description, whether verbally or in writing. It establishes an implied condition that the goods must conform to the description provided by the seller.

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Sale by Sample (Section 17):

Section 17 pertains to situations where goods are sold by sample, with the condition that the bulk of the goods must match the quality of the sample.

Application of Sections 11 to 17 (Section 62):

Section 62 explicitly clarifies that Sections 11 to 17 of the Sale of Goods Act, 1930, exclusively apply to contracts for the sale of goods and do not extend to any other types of contracts.

In summary, conditions and warranties hold significant importance in sale contracts. Conditions are fundamental stipulations, breach of which allows the aggrieved party to consider the contract as repudiated, while warranties are secondary stipulations leading to claims for damages but not granting the right to reject the goods. The Act also incorporates provisions for implied conditions and warranties, as well as specific guidelines for sale by description and sale by sample. It is essential to grasp these provisions when entering into a sale contract to safeguard the interests and rights of all parties involved.

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EFFECT OF BREACH OF CONDITIONS AND WARRANTIES WHEN CONDITION IS CONSIDERED AS A WARRANTY CONSEQUENCES OF CONTRACT TRANSFER OF PROPERTY IN GOODS (SECTIONS 18 TO 25)

Breach of Conditions: In the event of a breach of a condition within a sale contract, the injured party possesses the following entitlements: • Right to Terminate the Contract: The injured party may regard the contract as terminated, signifying its conclusion, and demand compensation for any resulting losses.

  • Right to Pursue Compensation: The injured party may initiate legal action against the breaching party, seeking damages to cover any losses or harm incurred as a result of the breach.
  • Right to Decline Goods: If the injured party has not accepted the goods or has identified the breach before acceptance, they have the option to reject the goods.

Breach of Warranties: In cases of a breach of warranties within a sale contract, the injured party has the following rights:

  • Right to Seek Compensation: The injured party may file a lawsuit against the party in breach to claim compensation for any losses or harm sustained due to the breach. However, they do not retain the authority to terminate the contract or refuse the goods.

When a Condition is to be Regarded as a Warranty: Section 13 of the Sale of Goods Act, 1930 provides criteria for determining when a condition should be treated as a warranty. It stipulates that if a sale contract includes a condition that is not fundamental to the primary purpose of the contract, and any breach of the condition can be adequately compensated through damages, then the condition can be regarded as a warranty. In such instances, the injured party is not entitled to terminate the contract but may seek damages for the breach.

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Effects of Contract: The Sale of Goods Act, 1930, outlines various effects stemming from a contract of sale, which encompass:

  • Transfer of Ownership: The contract of sale involves the transfer or agreement to transfer the ownership (property) of the goods from the seller to the buyer.
  • Passing of Risk: The risk associated with any potential damage or loss to the goods shifts from the seller to the buyer at a predetermined moment, as stipulated within the contract.
  • Contractual Performance: The involved parties are bound to fulfill their respective obligations as delineated by the terms and conditions articulated in the contract.
  • Payment of Price: The buyer bears the responsibility of disbursing the agreed-upon price for the goods, while the seller is entitled to receive this payment.
  • Delivery of Goods: The seller assumes the responsibility for delivering the goods to the buyer, who, in turn, is obligated to accept them. Transfer of Property in Goods (Sections 18 to 25): Sections 18 to 25 of the Sale of Goods Act, 1930, encompass regulations pertaining to the transfer of property (ownership) in goods. Key provisions include:
  • Transfer of Ownership via Agreement: The ownership of goods can be conveyed from the seller to the buyer through a mutually agreed-upon arrangement, as specified in the contract.
  • Specific Goods: When specific or identified goods are the subject of the sale, ownership transfers to the buyer at the juncture determined by the parties.
  • Unidentified Goods: In instances where goods lack specificity or identification at the time of contracting, ownership is transferred to the buyer when the goods are ascertained, and the seller completes any requisite measures for their identification.
  • Goods in a Deliverable State: When goods are in a condition ready for delivery, and the seller must perform an action before the delivery, ownership is passed to the buyer upon the completion of said action, provided the buyer is duly notified.
  • Reservation of Right of Disposal: The seller may retain the right to dispose of the goods until specific conditions are met, such as the payment of the price. In such scenarios, ownership is transferred to the buyer upon the fulfillment of these conditions.

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Title Transfer in the Sale of Goods Act, 1930 (Sections 27 to 30)

Sections 27 to 30 of the Sale of Goods Act, 1930, are focused on the conditions and guidelines for transferring ownership of goods from a seller to a buyer. These sections provide a framework for understanding how title to goods is legally moved under various circumstances. Here's a closer look at each section:

  • Section 27 - Sale by a Person Who is Not the Owner: This section covers scenarios where goods are sold by someone who doesn't actually own them. If the buyer isn't aware of the seller's lack of ownership and purchases the goods in good faith without any knowledge of the seller’s defective title, they legally acquire ownership of the goods.

  • Section 28 - Sale by a Co-owner: This applies when goods have multiple joint owners. If one of these owners, who has been entrusted with the goods by the others, sells the goods, the buyer gains legal ownership. This is contingent on the buyer purchasing the goods in good faith and without knowing about the seller’s limited authority to sell.

  • Section 29 - Sale under a Voidable Contract: When the seller has goods in their possession due to a contract that is voidable (as per Sections 19 or 19A of the Indian Contract Act, 1872), but the contract has not been annulled at the sale time, the buyer can obtain legal title. This is valid if the buyer is unaware of any flaws in the seller's title and acts in good faith.

In summary, these sections from the Sale of Goods Act, 1930, lay down the legal groundwork for the transfer of goods' title under various conditions, emphasizing the importance of good faith and awareness (or the lack thereof) of the buyer regarding the seller’s ownership or authority.

Section 30 - Possession of Goods After Sale by Seller or Buyer:

This section pertains to scenarios where an individual who has either sold goods or entered into an agreement to buy goods still retains possession of the said goods or the associated documents of title. Under such circumstances:

• If the seller, or a mercantile agent acting on their behalf, proceeds to deliver or transfer the goods or documents of title to the goods to another party in good faith and without prior knowledge of any previous sale, pledge, or alternative disposition, this delivery or transfer is deemed valid. The recipient of the goods or documents of title obtains a rightful title to the goods, as if the entity effecting the delivery or transfer had received explicit authorization from the owner of the goods.

• If the buyer, with the approval of the seller, gains possession of the goods or documents of title to the goods and subsequently, in good faith and without awareness of any lien or other claim by the original seller, delivers or transfers them to a third party, this delivery or transfer is considered legitimate. The recipient of the goods or documents of title is not affected by any lien or claim by the original seller and can rightfully acquire title to the goods.

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These sections are designed to safeguard the interests of bona fide purchasers who acquire goods in good faith and without knowledge of any defects or limitations in the seller's rights. They establish protocols for the transfer of title in specific scenarios, ensuring that innocent buyers secure rightful ownership of the goods, even when concerns arise regarding the seller's title or authority to sell.

These provisions regulate the transfer of title in various contexts, guaranteeing that a purchaser who acquires goods in good faith and without knowledge of any issues with the seller's title obtains lawful ownership of the goods. However, it is important to acknowledge that these provisions are subject to other applicable laws and legal principles, such as those concerning fraud, theft, or the rights of legitimate owners. Consequently, it is advisable for buyers to exercise due diligence and seek appropriate legal counsel to ensure the validity of the title when entering into a sales contract.

Performance of Contract of Sale of Goods (Sections 31-44):

The Sale of Goods Act, 1930, sets forth the provisions governing the execution of a contract for the sale of goods. Here are the key sections pertaining to this:

Duties of Seller and Buyer: 31. Responsibilities of Seller and Buyer: The seller bears the responsibility of delivering the goods, while the buyer is responsible for accepting and making payment for them, as per the terms outlined in the contract.

  1. Simultaneous Conditions for Payment and Delivery: Payment of the price and delivery of the goods are deemed to be simultaneous conditions, unless otherwise agreed upon. This implies that the seller must be prepared to transfer possession of the goods in exchange for the price, and the buyer must be ready to remit the price in return for possession of the goods.
  2. Delivery and Rules Related to Delivery:  Modes of Delivery: Goods can be delivered through any means agreed upon by the parties, or by any action that places the goods in the possession of the buyer or an authorized representative acting on behalf of the buyer.
  3. Partial Delivery: The delivery of a portion of the goods, while intending to deliver the entire consignment, has the same effect as delivering the entire goods. However, if part of the goods is delivered with the intent to separate it from the rest, it does not constitute delivery of the remaining goods.
  4. Buyer's Request for Delivery: Unless stipulated otherwise, the seller is not obligated to deliver the goods until the buyer formally requests such delivery.

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Section 36 - Guidelines for Delivery:

• Whether the buyer should take possession of the goods or the seller should dispatch them is determined by the contract. In the absence of a specific agreement, goods that have been sold must be delivered at their location at the time of the sale, while goods agreed to be sold must be delivered at the agreed-upon location or, if not specified, at the place of manufacture or production.

• If the seller is obligated to send the goods to the buyer but no specific timeframe is mentioned, the seller must dispatch them within a reasonable timeframe.

• If, at the time of sale, the goods are in the possession of a third party, there is no delivery by the seller to the buyer unless the third party acknowledges holding the goods on behalf of the buyer.

• Delivery or tender of delivery must occur during reasonable hours.

• The expenses incurred to place the goods in a deliverable state are borne by the seller, unless otherwise agreed upon.

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Section 37 - Delivery of Incorrect Quantity:

• If the seller delivers fewer goods than specified in the contract, the buyer may reject them. However, if the buyer accepts the delivered goods, they must pay for them at the contracted rate.

• If the seller delivers more goods than specified in the contract, the buyer may accept the goods that were part of the contract and reject the excess, or reject the entire delivery.

• If the seller delivers goods of a different description, not part of the contract, mixed with the contracted goods, the buyer may accept the conforming goods and reject the rest, or reject the entire delivery.

• These provisions are subject to any trade usage, special agreement, or customary practice between the parties.

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Section 38 - Instalment Deliveries:

The buyer is not obligated to accept goods delivered in instalments unless otherwise agreed upon. In the case of a contract for the sale of goods to be delivered in instalments, if there is a breach in the delivery of one or more instalments, whether it constitutes a repudiation of the entire contract or a severable breach leading to a claim for compensation depends on the contract terms and circumstances.

Section 39 - Delivery to Carrier or Wharfinger:

• If the seller is authorized or required to dispatch the goods to the buyer, delivering the goods to a carrier (whether specified by the buyer or not) for onward transmission to the buyer, or to a wharfinger for safekeeping, is considered as delivery to the buyer.

• If the seller fails to make a reasonable contract with the carrier or wharfinger on the buyer's behalf, and the goods are lost or damaged during transit or while in the wharfinger's custody, the buyer can refuse to accept the delivery or hold the seller responsible for any damages incurred.

• When the seller sends goods via sea transit, where it is customary to insure them, the seller must notify the buyer to allow them to arrange for insurance during the transit. Failure to provide such notice places the goods at the seller's risk during sea transit.

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Section 40 - Risk in Distant Delivery:

If the seller agrees to deliver the goods at a location different from the place of sale, any risk of deterioration in the goods that naturally occurs during transportation is borne by the buyer.

Section 41 - Buyer's Right to Examine Goods:

If the buyer receives goods without prior examination, they are not considered to have accepted the goods until they have had a reasonable opportunity to inspect them for compliance with the contract. The seller must grant the buyer a

reasonable opportunity to examine the goods upon offering delivery.

Section 42 - Acceptance:

The buyer is deemed to have accepted the goods when they notify the seller of their acceptance, perform an action inconsistent with the seller's ownership, or retain the goods for an unreasonable period without informing the seller of their intention to reject them.

Section 43 - Buyer's Refusal to Accept Goods:

If the buyer rightfully refuses to accept delivered goods, they are not obligated to return the goods to the seller. Simply notifying the seller of the refusal is sufficient.

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Section 44 - Buyer's Responsibility for Neglecting or Refusing Delivery:

When the seller is prepared and willing to deliver the goods and urges the buyer to accept delivery, but the buyer neglects or declines to do so within a reasonable timeframe, the buyer becomes liable to the seller for any losses resulting from the neglect or refusal. Additionally, the buyer is accountable for a reasonable fee associated with the care and safekeeping of the goods.

It is important to note that this section does not impact the seller's rights if the buyer's neglect or refusal constitutes a repudiation of the contract.

Rights of the Unpaid Seller Against the Goods (Section 45 to 54)

Section 45 - Definition of "Unpaid Seller": The term "unpaid seller" is defined within the Sale of Goods Act under two circumstances:

  1. When the full price of the goods remains unpaid or unoffered.
  2. When a bill of exchange or another negotiable instrument has been received as conditional payment, but the condition remains unfulfilled due to instrument dishonor or other reasons. In this context, the term "seller" encompasses anyone occupying the seller's position, including an agent endorsed on the bill of lading, a consignor, or an agent responsible for payment.

Section 46 - Rights of the Unpaid Seller: Despite the transfer of ownership in the goods to the buyer, an unpaid seller retains certain implicit rights under the law, including:

  1. The right to a lien on the goods for the price while in possession of them.
  2. The right, in case the buyer becomes insolvent, to halt the goods in transit after relinquishing possession.
  3. The right of re-sale, subject to specific limitations detailed in the Act.

Section 47 - Unpaid Seller's Lien: The unpaid seller of goods in possession has the right to retain possession until payment or tender of the price under the following conditions:

  • When the goods are sold without a stipulation for credit.
  • When the goods are sold on credit, but the credit period has lapsed.
  • When the buyer becomes insolvent. This right of lien is exercisable by the seller even if they possess the goods as an agent or bailee for the buyer.

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  1. Partial Delivery: In cases where an unpaid seller has made a partial delivery of the goods, they retain the right to exercise their lien on the remaining portion, unless the circumstances suggest an agreement to waive the lien.

  2. Termination of the Lien: The unpaid seller loses their lien on the goods under the following circumstances:

  • When they deliver the goods to a carrier or bailee for transmission to the buyer without reserving the right of disposal.
  • When the buyer or their agent lawfully takes possession of the goods.
  • If the seller willingly waives the lien. Obtaining a court decree for the price of the goods does not result in the loss of the unpaid seller's lien.
  1. Right to Stoppage in Transit: When the buyer becomes insolvent, the unpaid seller who has already relinquished possession of the goods retains the right to stop the goods in transit. This means they can regain possession and hold the goods until the price is paid or tendered.

  2. Duration of Transit:

  • Goods are considered in transit from the moment they are delivered to a carrier or bailee for transmission to the buyer until the buyer or their agent takes delivery from the carrier or bailee.
  • Transit ceases if the buyer or their agent takes delivery before the goods reach the destination or if the carrier or bailee acknowledges holding the goods on behalf of the buyer upon arrival at the destination.
  • If the buyer rejects the goods and the carrier or bailee continues to hold them, the transit is not considered terminated.
  • For goods delivered to a ship chartered by the buyer, the nature of possession depends on the specific circumstances.
  • If the carrier or bailee wrongfully refuses to deliver the goods to the buyer or their agent, the transit is deemed terminated.
  • In cases of partial delivery, the remaining goods can be stopped in transit unless there is evidence of an agreement to relinquish possession of the entire shipment.

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52. How stoppage in transit is effected:

The unpaid seller can exercise the right of stoppage in transit by either taking actual possession of the goods or by giving notice of their claim to the carrier or bailee in possession of the goods. • The notice can be given to the person in actual possession or to their principal. If given to the principal, it must be communicated to the servant or agent of the principal in a timely manner to prevent delivery to the buyer. • If notice is given to the carrier or bailee, they must redeliver the goods to the seller, and the expenses of redelivery are borne by the seller.

53. Transfer by buyer and seller:

Effect of sub-sale or pledge by buyer:

  • The unpaid seller's right of lien or stoppage in transit is generally not affected by any sale or other disposition of the goods made by the buyer, unless the seller has assented to it.
  • If a document of title to the goods has been issued or transferred to a person who takes it in good faith and for consideration, the unpaid seller's right of lien or stoppage in transit is defeated in the case of a sale. However, if the transfer is by way of pledge or disposition for value, the unpaid seller's right is subject to the rights of the transferee.

54. Sale not generally rescinded by lien or stoppage in transit:

  • The exercise of the unpaid seller's right of lien or stoppage in transit does not automatically rescind the contract of sale.
  • If the goods are perishable or the seller gives notice of intention to resell, and the buyer fails to pay or tender the price within a reasonable time, the seller may resell the goods and claim damages from the original buyer. The buyer is not entitled to any profit on the resale unless notice was not given.
  • If the unpaid seller resells the goods, the buyer of the goods acquires a good title against the original buyer, even if no notice of the resale was given.
  • If the seller explicitly reserves the right to resell in case of default by the buyer and resells the goods, the original contract of sale is rescinded, but the seller can still claim damages.

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Section 55 to 61 of the Sale of Goods Act cover the legal options available to parties when there is a breach of contract in the sale of goods. Below are concise explanations of each section:

  1. Seller's Remedies: When a buyer breaches the contract, the seller has the right to initiate legal action for damages due to the buyer's failure to accept the goods.

  2. Damages for Non-Acceptance: The seller can claim damages from the buyer if the buyer wrongfully refuses to accept the goods or neglects to pay the agreed-upon price.

  3. Specific Performance: In cases where the goods are unique or when monetary compensation is insufficient, the seller may seek a court order for specific performance, compelling the buyer to fulfill the contract.

  4. Damages for Non-Delivery: If the seller fails to deliver the goods as per the contract, the buyer can seek damages for non-delivery.

  5. Specific Performance by Seller: When the goods are unique or when damages alone won't suffice for non-delivery, the buyer has the option to request specific performance from the seller.

  6. Repudiation of Contract Before Due Date: If either the buyer or seller prematurely abandons the contract before the agreed-upon performance date, the innocent party can treat the contract as breached and pursue damages.

Now, on to Section 64, which relates to the sale of goods by auction.

Section 64 of the Sale of Goods Act pertains to auctions and includes the following regulations:

(a) The auctioneer has the prerogative to retract the goods at any point before concluding the auction by the fall of the hammer.

(b) The auctioneer is permitted to make bids on behalf of the seller, unless explicitly disallowed.

(c) The sale is finalized when the auctioneer declares it as such, typically by the fall of the hammer or through other established auction practices.

These stipulations delineate the unique procedures and responsibilities associated with auctions, particularly focusing on the auctioneer's role and actions.

Conclusion:

In conclusion, the enactment of the Sale of Goods Act in 1930 brought about a significant transformation in the landscape of sale and purchase in India. This legislation has instilled a heightened sense of accountability and transparency among both buyers and sellers, discouraging fraudulent practices. As a result, the rights and interests of both parties involved in transactions are safeguarded and upheld by this pivotal legal framework.

For Sales of Goods Act make sure that you focus on the important sections that have been listed in this article:

  • Take a note of all these sections.
  • Practice from previous year papers.
  • Make your own notes, you can take reference from this article.
  • Do not leave this subject for the last moment, you need to make sure that you study and revise sales of goods act properly.

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