AMITY UNIVERSITY, DUBAI

ACADEMIC SESSION: 2021-2026

COURSE CODE: B.B.A L.L.B (HONS)

LAW OF CONTRACT-II

TOPIC- THE SALE OF GOODS ACT, 1930

UNDER THE GUIDANCE OF: SUBMITTED BY:

MISS PALAK JAGTIANI SHIRIN RAZDAN

MITHILESH KORE
B.B.A L.L.B (HONS)
II SEM
 AMITY UNIVERSITY, DUBAI

BONAFIDE CERTIIFICATE

Certified that this project work “The Sale of Goods Act, 1930” is the bonafide
work of ‘Shirin Razdan, Mithilesh Kore’ who carried out the project work under
my supervision.

Date-
Internal Examiner-
External Examiner-
 ACKNOWLEDGMENT
Apart from the efforts of myself, the success of any project depends largely on
the encouragement and guidelines of many others. I take this opportunity to
express my gratitude to the people who have been instrumental in the successful
completion of this project.
Foremost, I would like to offer this endeavour to Almighty God for the wisdom
he bestowed upon me and his increasing gift of knowledge and strength that has
helped me to complete the entire project work.
I express my deep indebtedness to my parents, friends, and well-wishers for
their valuable and sincere assistance throughout the project.
I would like to express my special gratitude and thanks to my advisor PROF
PALAK JAGTIANI. I can’t say thank you enough for his tremendous support
and help. I feel motivated and encouraged every time in his presence. Without
his encouragement and guidance this project would not have materialized. The
guidance and support received from all the members who contributed and who
are contributing to this project, was vital for the success of the project. I am
grateful for their constant support and help.
I am highly indebted to Amity University, Dubai for providing an opportunity
to letting me work on this project and develop my research skills .I am grateful
to all of them for their encouragement and constant support
 RESEARCH METHADOLOGY
A research methodology is the primary principle that will guide your research. 
It becomes the general approach in conducting research on your topic and
determines what research method you will use.
A research methodology is different from a research method because research
methods are the tools you use to gather your data.
You must consider several issues when it comes to selecting the most
appropriate methodology for your topic. Issues might include research
limitations and ethical dilemmas that might impact the quality of your research.
I will be using secondary data as my source for the project. Hence, secondary
data is the data collected by somewhere else than the research work. The
sources of secondary data include Books, Journals, Newspapers, Magazines and
websites etc.
 SCOPE
The Sale of Goods Act governs the sale of goods and, when appropriate, the
barter of goods. If the lease of the property is transferred concurrently, the Act
does not apply to a contract for the construction of a building or a conveyance
of a building on third-party land.
In addition, the Act does not apply to the provision of products to be
manufactured or produced if the ordering party agrees to contribute a significant
portion of the materials required for the manufacturing or production.
Students should know the way to deal with doctrine of caveat emptor and its
applicability in daily to daily life. It should be noted that the act deals with
goods not with other movable properties which means that other than good sand
immovable property. Hence, it doesn’t deal with movable property. The sale of
goods act doesn’t deal with mortgage and pledge except ‘sale’.
Lastly, the Act also aids in determining if a transaction is lawful and, if so, what
remedies are available to the aggrieved party.
I.INTRODUCTION OF THE TOPIC:
On 1st July 1930, the law relating to sale of goods contained in sale of goods act,
1930 came into force. The whole objective of sale of goods is to transfer
property from one person to another. The act contains 66 sections within it
whereas a few amendments were made into sale of goods (amendments) Act,
1963 which extends to whole of India except the state of J&K.
The law of sale of goods seek to balance the duties, rights, claims and
expectations of buyers and sellers of goods. It’s also known as ‘consensual
transaction’ where a contract of sale of goods results, like any other contract, by
an offer by one party and its acceptance by the other.
The general provisions of the Indian contract act continue to be applicable to the
contract of sale of goods in so far as they are not inconsistent with the express
provisions of the contract act relating to capacity of the parties, free consent,
agreements in restraint of trade, wagering agreements and measure of damages
continue to be applicable to the contract of sale of goods.
But the definition of consideration stands modified to the extent that in a
contract of sale of goods consideration must be by way of price i.e., only money
consideration.
It simply lays down certain positive rules of general application for those cases
where the parties have failed to contemplate expressly for contingencies which
may interrupt the smooth performance of a contract of sale, such as the
destruction of the thing sold, before it is delivered or the insolvency of the
buyer, etc.
II. HISTORY & DEVELOPMENT OF LAW OF SALE OF GOODS

2.1 HISTORY:

Chapter VII (sections 76–123) of the Indian Contract Act, 1872 governed the
selling of goods in India until July 1, 1930. So because Indian Contract Act is
based on English Common Legislation, the law governing the sale of
commodities in India adhered to English Common Law principles, including the
Law Merchant.

By 1920, it was recognized in India that the legislation dealing to the sale of
commodities included in Chapter VII of the Indian Contract Act was
insufficient to suit the demands of the society, and that certain of the provisions
of this branch of the law needed to be revised in light of new developments in
commercial operations. The legislative amendments brought about by judicial
decisions in England and reflected in the Sale of Goods Act of 1893 were not
found in the comparable portions of the Indian Contract Act. It was also felt
necessary to separate the legislation controlling commodity sales into a separate
act.

As a result of this analysis, a draft-Bill was developed in 1928. The draft Bill
was examined by a Special Committee of eminent lawyers in 1929, and the
draft Bill, as revised by this Committee and later by a Select Committee of the
Legislature, was enacted as the Indian Sale of Goods Act, 1930 (III of 1930),
section 65 of which repealed Chapter VII of the Indian Contract Act, 1872. The
Act's provisions were essentially based on those of the English Act of 1893,
which had been revised in light of subsequent judicial judgments in England
and India.

2.2 DEVELOPMENT:

Only a few alterations or revisions have been made to the Sale of Goods Act
since its passage in 1930. The changes that were incorporated through the
Indian sale of goods amendments act, 1963 .The changes bought by the
amendments act were the following:

i. The word India was deleted from the title of the act. The title of the
act now is sale of goods act, 1930.
ii. The words “or where the contract is for specific goods the property in
which has passed to the buyer were deleted in sub-section (2) of
section 13.
iii. The wording of sub-section (3) was slightly rearranged and an
explanation of sub-sections (2) and (3) was added.
 iv. A new section 64-A entitled “In contracts of sale amounts of increased
or decreased taxes to be added or deducted” was substituted.

III.FORMATION OF CONTRACT OF SALE

3.1 Definition:-

A contract of sale is defined in Section 4(1) of sale of Goods Act, 1930.It

provides:

“A contract of Sale of Goods Act is a contract whereby the seller transfer or

agrees to transfer the property in order to the buyer for a price. There may be a
contract of sale between one part owner and another.”

3.2 Essential Elements:-

a. Two Parties-: As mentioned before, the two parties in the Sale of Goods Act
1930 are the buyers and the sellers.

 A buyer is a person who is willing to or has agreed to buy a good.

 A seller is a person who is willing to or has agreed to sell a good.
b. Goods-: The primary reason for creating a buyer and a seller is to achieve an
agreement on the goods to be sold. These items must be correctly described
in the sale contract, according to the Sales of Products Act.

In other words, the contract states that any movable thing specified within a
contract that is to be transferred of ownership in accordance with the contract
(except money and actionable claims) is considered good.
The Act only recognizes transportable property such as crops, stocks, and
shares, as well as cars. This Act does not apply to moveable property, such as
land.

c. Agreement-: To constitute a transaction there should be an agreement

express or implied related to goods to be completed by passing of title in the
goods.

d. Price:-The price must most certainly be included in the contract; otherwise,

the contract is deemed redundant. A sale is defined by the exchange of
ownership of a good between two parties at a specific price, and thus it is a
critical element of the Sale of Goods Act India. A transfer of ownership of
goods can only be done with the payment or promise of fulfillment of the
price mentioned in the contract.
e. Transfer of Property in Goods:-A contract of sale of goods is a contract
whereby the seller either seller transfers the property (ownership) or agrees
to transfer the property in goods to the buyer. Transfer of property i.e. the
ownership in the goods from seller to the buyer, is the essence of the
contract. A contract under which there neither is a transfer of property in
goods not there is an agreement to transfer the same cannot be considered as
to be a contract of sale.

3.3 Distinction between sale and agreement to sale:-

1. When the vendor sells goods to the customer for a price, and the transfer
of goods from the vendor to the customer takes place at the same time,
then it is known as Sale. When the seller agrees to sell the goods to the
buyer at a future specified date or after the necessary conditions are
fulfilled then it is known as Agreement to sell.

2. The nature of sale is absolute while an agreement to sell is conditional.

3. A contract of sale is an example of Executed Contract whereas the

Agreement to Sell is an example of Executory Contract.

4. Risk and rewards are transferred with the transfer of goods to the buyer in
Sale. On the other hand, risk and rewards are not transferred as the goods
are still in possession of the seller.

3.4 Distinction between sale and bailment:-

1. A bailment is the delivery of goods by one person to another for some

purpose, upon a contract that they shall, when the purpose is
accomplished, be returned or otherwise disposed of according to the
directions of persons delivering to them.

2. While in a sale, the parties are called seller and buyer, in case of bailment
the parties are called bailor and bailee.

3. In case of a sale, when property in goods is transferred from seller to the

buyer, the buyer becomes the owner becomes the owner of the property
and also becomes responsible to the risk of the property. But in bailment
the goods are delivered to the bailee for a purpose and he does not
become the owner and has to return the goods or dispose them of
according to the directions of the bailor.
3.5 Distinction between sale and barter or exchange:-

1. One of the main feature which distinguishes sale from other transactions
is that the consideration must always be price i.e. consideration in terms
of money.

2. On the other hand, this special feature is conspicuous by its absence in

case of barter or exchange where goods are exchanged for goods.

3. However, where though goods are exchanged for goods yet some money
for the difference in value of the goods is also paid, the transaction will
constitute a sale.

3.6 Distinction between sale and gift:-

The main difference between sale and gift is that while in the former
consideration in terms of money price is an essential element of the contract, in
case of gift the element of consideration is absent and the goods are transferred
by one person to another without any consideration.

IV.ASCERTAINMENT OF PRICE:

According to section 9 of the sale of goods act, 1930:-

(1) The price of a contract maybe fixed by (i) the contract or (ii) maybe left to
be fixed in manner thereby agreed or (iii) may be determined by the course
of dealing between the parties.

(2) When the price is not determined in accordance with the forgoing
provisions, the buyer shall pay the seller a reasonable price. What is a
reasonable price is a question of fact dependent on the circumstances of each
particular case.

(3) In Aluminum Industries ltd vs. minerals and metals trading corporation of
India ltd the contract was for sale of aluminum by government undertaking
to the allottes subject to the condition that the price ruling on date of delivery
would apply.

In this case the delivery order was issued providing for the delivery on 23-03-
1981. When the petitioner went on the said date to take delivery, the respondent
corporation delivery refused delivery without assigning any reason but probably
the delivery orders were given to a large number of persons and for that reason
delivery could not be given to the petitioner.
The single judge of the madras high court held that after issuing the delivery
order when the petitioner had fulfilled all its obligations and performed its part
of contract, the first respondent could not delay delivery or postpone the
delivery without any valid reason and then insist for increased price on the basis
of the revised price. When the delivery orders were issued it should be
considered that the consignment was ready and hence the price prevailing at that
time would apply.
According to section 9 of the sale of goods act, 1930, the parties may not to fix
the price at the time of the transfer and to leave the determination of amount of
consideration to a later date. An agreement which provides for the future
fixation of the price otherwise by parties themselves or by a third party is
capable of being certain and is not valid under section 29 of the contract act,
1872. This has been held by the Supreme Court in a recent case, M.S
Madhasoodhanan vs. Kerala Kaumadi Pvt Ltd.
V. CONDITION & WARRANTIES

5.1 Meaning of stipulation [Sec. 12(1)]:- The representation as to the fact

which becomes a part of the contract of sale is called stipulation. The stipulation
may be a condition or warranty depending upon its importance in relation to the
contract.

5.2 Definition of Condition [Sec 12(2)]:- If the stipulation forms the very basis
of the contract or is essential to the main purpose of the contract, it is a
condition. – The breach of the condition gives the suffering party a right to treat
the contract as repudiated (cancelled). Thus, if the seller fails to fulfil a
condition, the buyer may treat the contract as repudiated, refuse the goods and,
if he has already paid for them, recover the price. He can also claim damages
for the breach of contract.

5.3 Definition of Warranty [Sec.12(3)]:-A warranty is a stipulation which is

collateral to the main purpose of the contract, and the breach of which gives the
aggrieved party a right to claim damages but not a right to reject goods and to
terminate the contract.

5.4When condition to be treated as Warranty[Sec.13]:- Where the buyer

waives a condition; Where the buyer elects to treat breach of the condition as a
breach of warranty; Where the contract is not severable and the buyer has
accepted the goods or part thereof.
VI.TYPES OF CONDITION AND WARRANTIES

6.1. IMPLIED CONDITIONS:-The parties to a contract may include as many

conditions as they like. But apart from the conditions they expressly include in
their contract there are certain conditions which are implied by law. These
implied conditions are stated in sections 14 to 17. They are:

(1) Implied conditions as to title:-Section 14(a) of sale of goods act, 1930

provides:

“In a contract of sale unless the circumstances of the contract are as such as to
show a different intention, there is an implied condition on the part of the seller
that, in case of a sale, he has a right to sell the goods and that in case of
argument to sell; he will have the right to sell the goods at the time when
property is to pass”

In view of the above provision, if a seller, who has no right to sell, sells the
goods to the buyer, the seller will be bound to pay the price to the buyer. A
person may not have a right to sale because of two reasons,-(ii) he may not be
the owner of goods he sells or (ii) he may be the owner on account of certain
reasons he may not have the right to sell.

In regards, the former reason or circumstance reference may be made to an

illustrative case namely, Roland vs. Divial.

(2) Implied condition of sale by description:-The principle finds expression

in section 15 of the sale of goods act 1930 which is as follows:

“Where there is a contract for the sale of goods by description, there is an

implied condition that the goods shall correspond with the description”

The rule relating to sale by description ordinally applies to cases where the
buyer has not seen the goods. For example, in Varley vs. Whipp, the contract
was for the sale of reaping machine which had not seen by the buyer but was
described as a new machine before and having reaped 50 to 60 acres. When the
reaping machine was delivered to the buyer, it was found by the buyer that the
machine was old and the description it used to reap 50 to 60 acres was false.
The buyer therefore rejected the goods. The plaintiff sued the defendant (buyer)
for the price. His suit was dismissed and it was held that the defendant was not
liable.

(3) Implied Conditions as to sale by sample- In case of a contract of sale by

sample there is an implied condition-
(i) that the bulk shall correspond with the sample in quality;

(ii) that the buyer shall have a reasonable opportunity of comparing the bulk
with the sample;

(iii) that he goods shall be free from any defect, rendering them
unmerchantable, which would not be apparent on reasonable examination.

(4)Implied condition as to sale by sample as well as description- According

to section 15, there is a sale by sample as well as description it is not sufficient
that the bulk of goods correspond with the sample if the goods do not
correspond with the description. This can be illustrated with the help of a
famous case Wallis vs. Patt.

(5)Implied condition as to quality of fitness or exceptions to the principle of

caveat emptor- The expression ‘caveat emptor’ means ‘Buyer Beware’. In
other words, before buying the goods it is the duty of the buyer to ensure that
the goods are of quality which he wants.

The principle was prevalent during the times when the goods were bought in the
open markets the buyer could see and examine the goods before buying. But
whether they were the quality and needs for his requirement. Once the goods
were bought the buyer could not claim that the goods were unsuitable for his
purpose. He could not hold the seller responsible for any defects in the goods.

For example in Word vs. Hobbs, a number of pigs were sold in an auction in
which seller excluded all the warranties with respect to any defect or
description. The pigs bought by the buyer in the auction were diseased although
the buyer wanted and paid for healthy pigs. Not only most of the said pigs
bought by the buyer died, they also infected some of the pigs of the buyer. The
auction bought about the buyer was rejected as there was no breach of any
implied condition or warranty.

6.2 EXPRESS CONDITIONS:-An express condition is any stipulation,

essential to the main function of the contract, which is put in the contract at the
will of the two parties. It is made clear that in section 16(4) that an express
warranty or condition does not negative a warranty or condition implied by the
Act unless inconsistent therewith that is to say, a mere mention of an express
ambition does not negate a condition implied by the Act. An implied condition
can be negated by an express condition only when it is inconsistent with the
implied condition i.e in Bigge vs. Parkinson.

6.3 IMPLIED WARRANTIES:-According to Sale of Goods Act, a contract of

sale has following implied warranties:
(1) Implied Warranty of Quiet Possession: According to Section 14(b) of the
sale of goods act, in a contract of sale unless the circumstances of the case are
such as to show a different intention there is “an implied warranty that the buyer
shall have and enjoy quiet possession of the goods”. Thus along with the
implied condition as to title provided under section 14. Section 14 also provides
that there is an implied warranty that the buyer shall have and enjoy quiet
possession of the goods.

(2) Implied Warranty against charges or encumbrances:-According to

Section 14(c) in a contract of sale, unless the circumstances of the case are such
as to show a different intention there is an implied warranty that the goods shall
be free from any encumbrances in a favor of third party not declared or known
to the buyer before or at the time when the contract is made.

(3) Implied warranty annexure by the usage of trade:-According to section

16(3), an implied warranty as to quality or fitness for a particular purpose may
be annexed by the usage of trade. This is, however, subject to the provisions of
the Act and of any other law for the time being in force.

VII. TRANSFER OF PROPERTY

Sale of goods involves transfer of ownership of property from the seller to the
buyer. It is necessary to determine the precise moment of time at which the
ownership of the goods passes from the seller to the buyer, because of the
following reasons:

(a) Risk passes with property:-The general rule is that risk prima facie passes
with the property. If the goods are lost or damaged by accident or otherwise,
then, subject to certain exceptions, the loss falls on the person who is the owner
at the time when the goods are lost or damaged.

(b) Action against third parties:-If the goods are damaged by the action of
third parties it is the owner who can take action.

(c) The effect of insolvency:-In case of insolvency of either the buyer or the
seller it is necessary to know whether the goods will be taken over by the
Official Assignee

(d) Suit for price:-Unless the contract provides otherwise, a suit for price by
the seller does not lie unless the property has passed to the buyer.

A. Transfer of Property in Unascertained Goods:-When there is a contract

for the sale of unascertained goods, property in the good is not transferred to the
buyer unless and until the goods are ascertained. [Sec.18]
B Transfer of Property in Ascertained Goods:-Where there is a contract for
the sale of specific or ascertained goods the property in them is transferred to
the buyer at such time as the parties to the contract intend it to be transferred
[Sec. 19(1)]. For the purpose of ascertaining the intention of the parties regard
shall be had to— the terms of the contract, - the conduct of the parties, and - the
circumstances of the case. [Sec. 19(2)]

C. Transfer of Property in sale by Approval:-When goods are delivered on

approval (Sec. 24): When goods are delivered to the buyer on approval or ‘on
sale or return,’ or on other similar terms, the property therein passes to the
buyer: (i) When he signifies his approval or acceptance to the seller, or (ii)
When the buyer does any other act adopting the transaction, e.g., pledges the
goods or resells them. (iii) When the buyer retains the goods, without giving
notice of rejection, beyond the time fixed for the return of goods, or if no time
has been fixed, beyond a reasonable time. In short, the property passes either by
acceptance or by failure to return the goods within specified or reasonable time.

D. Transfer of Property when Right of Disposal is reserved:-The object of

reserving the right of disposal of goods is to secure that the price is paid before
the property passes to the buyer. For example, under the VPP (Value Pre Paid)
system the ownership passes to the buyer when the price is paid against the
delivery of goods, till then the seller retains control over the goods.

VIII. TRANSFER OF TITLE

A sale is a contract plus a conveyance. As a conveyance it involves transfer of

title of goods from the seller to the buyer. If the seller’s title is defective, the
buyer’s title will also be defective. A person can only transfer what he has. No
one can transfer a better title to the goods than he himself possesses. This
principle is expressed by the Latin phrase, “Nemo dat quad non habet”, which
means “none can give who does not himself possess”. Exceptions - In each of
the following cases, a person who is not an owner can give to the transferee a
valid title to the goods:

1. Transfer of title by estoppel [(Sec. 27)]:-When the true owner of the goods
by his conduct or words or by any act or omission leads the buyer to believe
that the seller is the owner of the goods or has the authority to sell them, he
cannot afterwards deny the seller’s authority to sell. The buyer in such a case
gets a better title than that of the seller.

Example: 1. ‘O’ who is the true owner of the goods, causes the buyer ‘B’ to
believe that ‘S’ has the authority to sell the goods. ‘O’ cannot afterwards
question the seller’s want of title on the goods. 2. ‘A’ was the true owner of
goods. ‘B’ the seller told the buyer ‘C’ that the goods belonged to him. ‘A’ was
present but remained silent. ‘C’ purchased the goods from ‘B’. Can ‘A’ question
the title of ‘C’ over the goods.

2. Sale by a mercantile agent [Proviso to Sec. 27]:-Sale of goods by a

mercantile agent gives a good title to the purchaser even in cases where the
agent acts beyond his authority, provided the following conditions are
satisfied— (i) The agent is in possession of the goods or of a document of
title to the goods. (ii) Such possession is with the consent of the owner. (iii)
The agent sells the goods in the ordinary course business. (iv)The purchaser
acts in good faith and has no notice that the agent had no authority to sell.

3. Document of Title to Goods [Sec. 2(4)]:-A document of title to goods is a

document representing goods and is used in the ordinary course of business -
as proof of the ownership, possession or control of goods. It authorises the
possessor of such document to receive or transfer the goods represented
thereby.

E.g. Delivery of railway receipt is enough to constitute delivery of goods

represented by railway receipt. Document of title shall be distinguished from
document showing title to the goods. In case of document showing title to the
goods, ownership cannot be transferred by endorsement or mere delivery unlike
as in document of title to the goods.

 Bill of lading:-When the goods are carried by sea, the carrier of goods
issues to the shipper a bill of lading. It is a document of title. Transfer of
goods can be affected by transfer of bill of lading. The buyer may
demand delivery of goods at the destination on the basis of the bill of
lading.
 Wharfinger’s certificate:-A Wharf is a platform alongside the water for
loading and unloading a ship. A wharfinger’s certificate is a document
issued by a wharfingers.It certifies that the goods specified in it are in the
wharf.

3. Sale by one of several joint owners [Sec. 28]:- This section enables a co-
owner to sell not only his own share but also of his other co-owners. If one of
several joint owners of goods has the sole possession of them by permission of
the co-owners, the property in the goods is transferred to any person who buys
them from such joint owner provided the buyer acts in good faith and without
notice that the seller had no authority to sell

4. Sale of goods obtained under a voidable agreement [Sec. 29]:-When the

seller of goods has obtained possession thereof under a voidable agreement but
the agreement has not been rescinded at the time of sale, the buyer obtains a
good title to the goods, provided he buys them in good faith and without notice
of the seller’s defect of title. It is to be noted that the above section applies when
the goods have been obtained under a voidable agreement, not when the goods
have been obtained under a void or illegal agreement. If the original agreement
is of no legal effect (void-ab-initio) the title to the goods remains with the true
owner and cannot be passed on to anybody else.

5. Sale by the seller in possession of goods after sale [Sec. 30(1)]:- Under this
exception, a second sale by the seller remaining in possession of the goods will
give a good title to the buyer acting in good faith and without notice. Three
conditions should be fulfilled under this exception: (a) The seller must continue
in possession of the goods or of the documents of title to the goods as seller.
Possession as a hirer or bailee of the goods from the buyer after delivery of the
goods to him will not do. (b) The goods must have been delivered or transferred
to the buyer or the documents of title must have been transferred to him. (c)
Good faith and absence of notice of the previous sale on the part of the second
buyer.

6. Sale by buyer in possession of goods over which the seller has some
rights [Sec. 30(2)]:- This exception deals with the case of a sale by the buyer of
goods in which the property has not yet passed to him. When goods are sold
subject to some lien or right of the seller (for example for unpaid price) the
buyer may pledge, or otherwise dispose of the goods to a third party and give
him a good title, provided the following conditions for sell, are satisfied: (i) The
first buyer is in possession of the goods or of the documents of title to the goods
with the consent of the seller. (ii) Transfer is by the buyer or by a mercantile
agent acting for him. (iii) The person receiving the same acts in good faith and
without notice of any lien or other right of the original seller.

7. Sale by an unpaid seller [Sec. 54]:-An unpaid seller of goods can, under
certain circumstances, re-sells the goods. The purchaser of such goods gets a
valid title of the goods.

8. Sale under the Contract Act:

(a) The purchaser under such a sale gets a good title. [Sec. 176 of Contract Act]

(b) A finder of goods can sell the goods under certain circumstances. The
purchaser gets a good title. [Sec. 169 of Contract Act]

(c) Sale by an Official Receiver of Liquidator of the company will give the
purchaser a valid title.

IX. PERFORMANCE OF CONTRACT

The parties to any contract are bound to perform their obligations under the
contract. So far as a contract of sale of goods is concerned, it is the duty of the
seller to deliver the goods and of the buyer to accept and pay for them in
accordance with the terms of the contract of sale.

9.1 Seller’s duty to deliver the goods:-

According to Section 31, it is the duty of the seller to deliver the goods under
the contract of sale of goods. Delivery of goods, according to Section 2(2),
means voluntary transfer of possession of goods from one person to another.
Delivery of the goods sold may be made by doing anything which the parties
agree shall be treated as delivery or which has the effect of putting the goods in
the possession of the buyer or his agent as per Section 33 of the Act. It means
that the delivery may either be actual or symbolic or constructive.

 Actual Delivery: When the goods which constitute the subject-matter of the
contract, are handed over by the seller to the buyer, there is the actual
delivery of the goods. The goods don’t need to be delivered immediately.
The actual control of goods can be possible even after 
 Symbolic Delivery: In symbolic delivery, there is no actual transfer of the
goods from one hand to another but some symbols representing those goods
are transferred from one person to another so that the transferee can have
control over the goods. In this case, the goods may remain where they are
but the control over them shifts from one person to another. For example, the
key of the warehouse is transferred by which a transferee has control over
the goods.
 Constructive Delivery: When there is neither an actual delivery of the
goods nor a symbolic delivery of anything representing those goods but there
is only doing of something which the parties treat as the delivery of the
goods. It is also known as fictitious delivery or delivery by
attornment/acknowledgment.

In the case of CTI Group Inc. v. Tran clear, it was held that before the default
of a supplier could be attributed to a seller, the supplier had to legally oblige the
seller to make the supply. If a supplier who failed to make the contemplated
supply was not legally bound to make the supply, he could not be said to have
been at fault and that there was no relevant fault to be attributed to the seller.

9.2 Rules Regarding Delivery:-

 Delivery according to contract: According to Section 31, the seller is

bound to deliver the goods under the contract. The contract may provide
 about the time, place, and the manner of delivery of the goods, the seller is
bound to observe the same.
 Time of delivery: If the contract between the parties does not provide
anything different, then according to Section 32, the delivery of the goods
and the payment of the price are concurrent conditions, which means that the
seller shall be prepare and willing to deliver the goods to the buyer in
reciprocity for the price, and the buyer shall be prepare and willing to pay
the price in exchange for the delivery of the goods.

In Vishnu Sugar Mills Ltd. v. Food Corporation of India, the respondent,

i.e., Food Corporation of India purchased some ‘levy sugar’ from the petitioner,
i.e., Vishnu Sagar Mills under a statute that requires the compulsory sale of
sugar at certain rates. The said Corporation had always been paying against the
deliveries, but then it unilaterally changed the procedure of payment for the
sugar purchased. The new procedure was a bit complex and involved a
considerable delay in the payment after the sugar got delivered. In a writ
petition by the petitioner, it was held by the Full Bench of the Patna High Court
that where there is a compulsory sale of sugar under a Statute, and there is no
agreement regarding the time/ delivery of the goods, then there should be
concurrent tender of price against the delivery, as envisaged under Section 32 of
the Sale of Goods Act, 1932. Therefore, the difference procedure adopted by the
Food Corporation of India was illegal and hence, quashed.

 Buyer’s duty to apply for delivery: According to Section 35 of the Sale of

Goods Act, 1930, the buyer is bound to apply for the delivery of the goods
before the seller can be expected to deliver them. The application for
delivery must have been properly made. Such an application for delivery by
the buyer is required both in the ready and future goods. Also, the buyer’s
demand delivery is subject to any express contract between the parties.

In Food Corporation of India v. Arosan Enterprises Ltd., there was a

contract for the sale of sugar to a buyer for his urgent need for Dussehra, Diwali
festivals. The buyer agreed to the extension of the delivery date but the sugar
was not supplied even then. It was held that since he needed the sugar urgently
for festivals, he was justified in not extending the delivery period any further.
Additionally, According to Section 55 of the Indian Contract Act, 1872, if there
is a delay in the delivery of the goods by the seller and the time of delivery is
the essence of the contract, the buyer may reject the goods, but if the time is not
the essence of the contract, such delay would entitle the buyer to claim
compensation only.
 Place of Delivery: The parties to the contract are free to decide about the
place of the delivery of the goods and construe the agreement for the same.
If the contract does not indicate the place of delivery, like in the case of a
sale, the place of delivery is the place where the goods are at the time of sale.
In an agreement to sell, the place of delivery is the place where the goods are
at the time of agreement to sell. In the case of future goods which are yet to
be manufactured or produced, the place of delivery is the place at which they
are manufactured or delivered.
 Expenses of delivery: According to Section 36(5), the incidental expenses
of putting the goods in a deliverable state shall be borne by the seller unless
otherwise agreed that means if the goods are not in a deliverable state at the
time of the contract, then the buyer is bound under the contract to take their
delivery, the expenses of putting them in a deliverable state must be borne by
the seller. If such expenses have been borne by the buyer, then he or she can,
later on, recover them from the seller.
 Effect of part delivery on the passing of property: It may be agreed
between the parties that the property in the goods would pass when the
goods are delivered. However, sometimes only a part of the goods is
delivered and hence, a question arises- Does the property only in the part of
the goods which have been delivered or that in the whole of the goods, pass
from the seller to the buyer. According to section 34, the circumstances in
which the delivery had been made have to be looked into and the position,
are contained in that section, is as under:
 Delivery of goods in wrong quantity or of different description: Seller
must deliver the good following the terms of the contract. This includes the
duty to deliver goods of the same quality, in the requisite quantity, and
accordance with their description given in the contract. Section 37 covers the
cases where the performance is not according to the contract. These are:

When the goods are delivered in less quantity than the seller contracted to sell:
In this case, the buyer has full right either to reject the goods or accept them.
The buyer’s right of rejection is subject to the rule de minimis non curat lex (the
law does not take trivial action into account), and, therefore, if there is a slight
deficiency in the goods supplied that must be overlooked. In the case of Barium
Chemicals Ltd. v. Andhra Pradesh Mining Corporation Ltd a contract was
to supply 16,000 kg’s of rice, but there was a shortage of only 522 Kgs. The ‘de
minimis’ rule was applicable, and the buyer could not refuse to take the delivery
of the goods.

 Installment deliveries: -According to Section 38(1), it is expected that

the seller shall deliver the goods in one lot and the buyer shall not be
bound to accept the delivery in installments. If, however, the parties so
 agree, the delivery of the goods may be made by installments. Also,
under Section 38(2), we have to look at the terms of the contract and the
circumstances of the case before deciding whether it amounts to the
breach of the whole of the contract or a breach of the part only. Two
factors have to be kept in mind, firstly, the quantitative proportion which
the breach bears to the whole contract and, secondly, the degree of
probability of the repetition of the breach.

In Moti Lal vs. The Netha Cooperative Spinning Mills Ltd., there was a
contract for supplying 500 bales of cotton of a certain variety. The first
installment of 50 bales was supplied and accepted but the buyers rejected the
second installment of 50 bales as they were adulterated with waste cotton mix
and the cotton was of inferior quality and asked the seller not to supply further
goods. It was held that the buyer was justified in repudiating the whole contract.
Moreover, the sellers were not entitled to claim any damages, as they did not
tender any further installments within the contract period but agreed to the
repudiation of the contract made by the buyer.

 Delivery to Carrier or Wharfinger:-According to Section 39(1) of the

Act, the effect of delivery of the goods to the carrier or wharfinger’s
without reservation of the right of disposal will be deemed to be delivery
to the buyer and the property and the risk of loss to the goods will have to
be borne by the buyer. This presumption can be rebutted by the seller
reserving the right of disposal by taking the document of title in his name
or the name of some third person, and in such a case, the delivery of the
goods is not deemed to be to the buyer but to some other person who is
entitled to receive the goods under the document of title. Section 39(2)
imposes a duty upon the seller when he delivers the goods to the carrier
or wharfinger to make such contract with the carrier or the wharfinger on
behalf of the buyer as may be reasonable having regard to the nature of
the goods and the other circumstances of the case. If the seller omits to do
that and the goods are lost or damaged in the course of transit or whilst in
the custody of the wharfinger’s, the buyer may decline to treat the
delivery to the carrier or wharfinger as a delivery to himself or may hold
the seller responsible in damages. Additionally, under Section 39(3), the
seller has a further duty to give notice to the buyer which will enable him
to insure the goods during sea transit, if the goods require such insurance.

In Young v. Hobson, the sellers were to dispatch electric engines by Rail to the
buyers. The sellers dispatched the engines through Railway and instead of
sending them at the Railway’s risk; they sent them at the owner’s risk. On the
way, the engines were damaged. It was held that the contract of carriage made
by the sellers was not reasonable in the circumstances of the case and buyers
were entitled to reject the engines.

 Risk where goods are delivered at a distant place:-According to

Section 40 of the Act, even if the seller undertakes to be liable for the loss
or damage to the goods during transit, such loss does not include loss
which is caused by deterioration in the goods necessarily incident to the
course of transit. In Bull v. Robinson, the seller sent hoop iron from
Staffordshire, the place of its manufacture, to Liverpool. The iron was
clean and bright when it was despatched but became rusted before it
reached its destination. It was held that the seller was not responsible for
such deterioration.

X. RIGHTS OF AN UNPAID SELLER AGAINST GOODS:

10.1 UNPAID SELLER:-According to Section 45, “When the whole of the

price has not been paid or tendered; or when a bill of exchange or other
negotiable instrument has been received as conditional payment, and the
condition on which it was received has not been fulfilled by reason of the
dishonor of the instrument or otherwise”, then the seller of goods is said to
be an “Unpaid seller”.
10.2 RIGHT OF LIEN:-The right of lien is one of the rights against goods
that an unpaid seller might exercise. Lien is keeping custody of respective
goods or refusing to deliver them to the purchaser until the buyer has paid
the agreed sum of money or consideration for them. When the buyer fails to
pay the agreed consideration or price for the goods, the seller might use the
power of lien and keep proprietorship of the items as a representative of the
master or bailee for the buyer.

1. Seller’s Lien (Section 47)

As per Section 47, the unpaid seller can only hold the goods, only under three
conditions:

 When the goods have been sold without any credit stipulation;
 When the goods have been traded on credit, but there is expiration term
of credit;
 When the purchaser turns insolvent.

2. Part-delivery (Section 48)

According to Section 48, if an unpaid vendor only delivers half of the items, he
makes the use of his claim on the remaining products. This is true, unless the
buyer and seller have agreed to waive the lien in the event of partial delivery.
 3. Termination of Lien (Section 49)

According to Section 49(1) of SOGA, 1930, an unpaid seller loses his right of
lien:

 If he delivers the goods to a carrier or any other bailee for transmission to

the buyer without reserving the right of disposing of the goods.
 At what time the buyer or his agent lawfully obtains proprietorship of the
goods.
  Waiving the goods off.

In addition, Section 49(2) says “An unpaid seller with a lien does not lose his
lien just because he has won a decree for the price of the goods”.

10.3 RIGHT OF STOPPAGE IN TRANSIT:-Section 50 says, “When the

buyer of goods becomes insolvent, the unpaid seller who has parted with the
possession of the goods has the right of stopping them in transit, that is to say,
he may resume possession of the goods as long as they are in the course of
transit, and may retain them until payment or tender of the price.”

After the unpaid seller has lost custody of the commodities, the buyer has the
right to halt the goods in transit. This power allows the seller to reclaim
possession of the property. When the buyer falls insolvent while the goods are
in route, the unpaid seller has this right. If goods are handed to a carrier or other
bailee for the purpose of transmission to the buyer, they are considered to be in
transit until the buyer or his agent takes conveyance of them.
10.4 DURATION OF TRANSIT (SECTION 51):-As long as the goods
are in transit, the right of stoppage in transit can be invoked. As a result, the
halting the goods in between the time of transit becomes critical, i.e., when the
time transit starts and when it ends. The regulations and procedures for this can
be found in Section 51 of SOGA. The goods are considered to be in transit
under section 51(1) from the time they are transferred to the carrier or any other
bailee for the purpose of safely delivering the goods to the buyer. The buyer or
his/her agent takes delivery from the carrier or bailee until the buyer or his/her
representative takes custody from the carrier or bailee. This indicates that the
transit will continue as long as the items are with a carrier and when the goods
come under the possession, transit period comes to an end.

10.5 SITUATIONS FOR TERMINATING THE TRANSIT :-

4. The purchaser or his agent obtains delivery of the items before they arrive
at their particular agreed destination. When this occurs, the transit period
ends when the delivery is completed.
5. The transit is completed when the items arrive at their destination and the
bailee informs the purchaser or his representative that he is holding the
commodities.
6. When the customer discards the goods and the seller trashes to accept
them back, the transit period does not end.
7. In some instances, goods are delivered to a buyer-chartered ship.
Depending on the case, it is determined that if the master is operational as
an agent or carrier of the goods.
8. The transit ends if the carrier or other bailee refuses to deliver the items to
the buyer or his representative erroneously.
9. The transit for those commodities has ended if the items have been
delivered in part and the unpaid seller has stopped the remaining goods in
transit. This is presuming that no agreement to relinquish custody of all
goods has been reached.

XI. SUIT FOR BREACH OF CONTRACT

11.1 Suits by the seller against the buyer:

1. Suit for price:-The buyer has a duty to pay the price in accordance with the
contract. Apart from exercising rights against the goods, if the buyer does
not pay for them, seller may sue the buyer to recover the prices.
2. Suit for damages:-According to section 56, where the buyer wrongfully
neglects or refuses to accept and pay for the goods, the seller may sue him
for the damages for non-acceptance. Such a suit generally arises when the
property in the goods has not yet passed to the buyer. The seller being still
the owner of the goods can dispose them of and recover from the buyer the
damages for the loss accruing to him in accordance with the rules regarding
damages contained in section 73 of the Indian Contract Act

11.2 Suits by the buyer against the seller:

1. Damages for non-delivery:- Section 55 and 56 deal with the rights of the
seller of goods by way of suits against the buyer either for the recovery of
the price or for the non acceptance of the goods. The seller’s duty as stated
in sec 31 is to deliver the goods to the buyer in accordance with the terms
of the contract. When the seller wrongfully neglects or refuses to deliver
the goods the buyer, the buyer may sue him for the damages of the non-
delivery of the goods.

2. Suit for specific performance:-Section 57 entitles the buyer to sue the

seller for damages if the latter neglects or refuses to deliver the goods.
Damages may be not an adequate remedy, for instance, when the subject
matter of the contract is not rare good. Section 58 entitles the buyer to bring
an action for the specific performance of the contract.

3. Remedy for breach of contract:-Section 59 explains as to how the buyer

may exercise his right of claiming damages, on the breach of the warranty,
by the seller. He may-

 Set up against the seller the breach of warranty in diminution or

extinction of the price; or
 Sue the seller for damages for breach of warranty.
XII. CONCLUSION

The Sale of Goods Act, 1930 is meant to regulate the mercantile sector in
selling and buying goods. The Act mainly concludes that there must be a
contract, and in such contract, the seller must transfer or agrees to transfer the
property in goods to the buyer; there must be a price fixed for such transfer.

A sale must be made between two parties; the contract of sale could either be
absolute or conditional; if at the time of the agreement the goods are in
existence the contract shall be treated as the contract of sale; for goods that are
to be transferred in future, it shall be an agreement to sell.

The Act’s essence lies in demarcating the buyer and seller’s rights and liabilities
and other obligations and safeguarding any breach that could arise in the course
of a commercial agreement. The Act marked the pragmatic importance
of caveat emptor and caveat venditor that regulates and safeguards both the
buyer and seller’s interest in a commercial arena.

The act came into existence to regulate the sale of goods under specified terms.
This act guarantees protection to the seller from any breach of contract or
damages incurred by him. The act provides the essentials of a contract of sale.

It also contains the remedial provisions to protect the seller’s rights. The act also
prescribes duties for both the seller and buyer and some of the obligations on
both parties for the better implementation of the contract.

Both the parties should be aware of their rights and duties to avoid any
subsequent endurance in a sale. The sale should occur under a contract with all
the terms and conditions specified and agreed upon between both parties.
 XIII. BIBIOGRAPHY

 Websites:-

1) https://indiankanoon.org/

2) https://scholar.google.com/

3) https://www.casemine.com/

4) https://legislative.gov.in/sites/default/files/A1930-3_0.pdf

6) https://en.wikipedia.org/wiki/Indian_Sale_of_Goods_Act_1930

7) https://www.vedantu.com/commerce/sale-of-goods-act-1930-
important-terms

 Books:-

1) Law of contract-II: R.K Bangia

2) Law of contract-II: S.K Kapoor

3) Law of contract: Avtar Singh