Definition: A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the

buyer for price A contract to transfer property in goods i.e. legal ownership of goods from the seller to the buyer is known as a contract of sale.

A valid Contract of sale must have the following essentials: 1.Two Parties 2.Goods 3.Price 4.Transfer of Property 5.Includes both sale and an agreement to sell 6.No formalities to be observed.

SaleUnder the contract of sale , the property in the goods is transferred from seller to the buyer, it is called a sale. Agreement to sellIt means where under a contract of sale , the transfer of property in goods is to take place at a future date or subject to some condition thereafter to be fulfilled , the contract is called an agreement to sell.

Sale Agreement to sell 1.A sale is an executed 1.An agreement to sell contract. is an executory contract. 2.In an agreement to 2.In a sale, since the sell, in case of property has passed breach, the seller to the buyer , the can only sue for seller can sue the damages, unless the buyer for the price price was payable at of the goods a stated date.

SALE

Agreement To Sell

3.The property in goods 3.The risk and property passes to the buyer does not pass to the with the risk. buyer immediately 4.The seller cannot resell 4.The seller can resell the goods the goods. 5.In case of loss of 5.In case of loss of goods, the loss will be goods the loss will be borne by the buyer borne by the seller.

A contract of sale of goods contains various terms or stipulations regarding the quality of the goods ,the price and the mode of its payment ,the delivery of goods ,and its time and place. some of these stipulations may be major terms while others are minor terms In law of sales major terms are called conditions and minor terms are called warranties

1.A dealer in radio gives a Murphy radio to a customer on the terms that Rs. 100should be paid by him immediately and Rs.200 more In two monthly equal instalments.It was further agreed that if the radio is found defective the customer may return it within a week but not later. The customer makes default in paying the last instalment.Can the radio dealer take back the radio on his default.

A Condition has been defined by section 12(2)as A condition is a stipulation to the main purpose of the contract , the breach of which gives rise to a right to treat the contract as repudiated. Thus condition is regarded as the very basis of the contract .If there is a breach of a condition, the contract will fail and will entitle the party to put an end to the contract.

For ExampleP goes to R, a horse dealer, and says, I want a horse which can run at a speed of 30 kilometers per hour. The horse dealer points out a particular horse and says, "This will suit you, P buys the horse .Later on P finds that the horse can run only at a speed of 20 kilometers per hour. There is breach of condition, P can repudiate the contract, return the horse to R and get back the price.

 Section 12(3) defines warranty as if the

stipulation is collateral to the main purpose of the contract i.e. it is a subsidiary promise, it is a warranty. the effect of a breach of a warranty is that the party aggrieved cannot repudiate the contract but can only claim damage.

In a contract of sale of goods conditions may be either expressed or implied. They are said to be express when the terms of the contract expressly provide for them. They are said to be implied when the law deems their existence in the contract even without their actually having put in the contract.

Condition as to Title- The seller has the right to sell the goods ,if either he is the owner of the goods, as a result of this condition ,if the sellers title turns out to be defective the buyer is entitled to reject the goods and to recover his price. 2. Sale by description- where there is a contract of sale by description ,there is an implied condition that the goods shall correspond with the description.
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3.Condition in sale by sample- when under a contract of sale ,goods are to be supplied according to a sample agreed upon the implied conditions are : ii.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 the goods shall be free from any defect,i.e. latent defect.

4.Condition in a sale by sample as well as by description-when goods are sold by sample as well as by description ,there is an implied condition that the bulk of the goods shall correspond both with the sample and with the description. 5.Condition As to fitness or Quality-there is an implied condition that the goods supplied shall be reasonably fit for the purpose for which buyer wants them. 6.Condition as to merchantability- means it would be such that it would be sold again etc.

There are two implied warranties: 1.Warranty of quiet possession- the buyer has a right to enjoy quiet possession of the goods and if it is disturbed by a person having a superior right than that of a seller, the buyer can claim damages from the seller. 2.Warranty of freedom from encumbrancesthe second implied warranty on the part of the seller is that the goods shall be free from any charge or encumbrance in favour of the third party not declared or known to the buyer.

1.Worsted coating of quality equal to sample was sold to tailors who could not stitch it into coats owing to some latent defect in its texture .The tailors had examined the cloth before effecting the purchase .Are they entitled damages? 2.M was shopping in a self-service supermarket . He picked up a bottle of orange squash from a shelf. While h was examining it, the bottle exploded in his hand and injured him .Can M claim damages for the injury.

The maxim of Caveat Emptor means let the buyer beware". According to the doctrine of caveat emptor it is the duty of the buyer to be careful while purchasing goods of his requirement and in the absence of any enquiry from the buyer ,the seller is not bound to disclose every defect in goods of which he may be unaware. The buyer must examine the goods thoroughly and must see the goods he buys are suitable for the purpose for which he wants them.

If the goods turn out to be effective or do not suit his purpose ,the buyer cannot hold the seller liable for the same . For ExampleA purchases a horse from B .A needed the horse for riding but he not mention this fact to B. The horse is not suitable for riding but is suitable only for being driven in the carrige.Caveat Emptor being the rule. A can neither reject the horse nor can he claim any compensation from B.

1.Where the seller makes a mis-representation and the buyer relies on it, the doctrine of caveat emptor does not apply.-the buyer has right to rescind the contract 2.Where the seller makes a false representation amounting to fraud and the buyer relies on it, or where seller actively conceals a defect in the goods the buyer is entitled to avoid the contract and also claim damages for fraud. 3.Where the goods are purchased by description and they do not correspond with the description.

4. Where the goods are bought by sample as well as by description and the bulk does not correspond both with the sample and with the description ,the buyer is entitled to reject the goods. 5.Where the trade usage attaches an implied condition or warranty as to quality or fitness and the seller deviates from that ,the doctrine of caveat emptor does not apply and the seller is liable in damages.

Transfer of property in goods means transfer of ownership of the goods. There may be situations where a person is the owner of certain goods but is not in possession of the same or vice versa. The determination of the exact moment as to when the ownership pass from the seller to the buyer is important because: 1.If the goods are lost or damaged ,who will bear the loss shall depend upon as to whether the ownership is with the seller or the buyer.

2.In the case of damage to the goods by third parties, it is the owner who can take action. 3.In the event of insolvency of either seller or buyer, whether the official assignee or receiver can claim the goods shall depend upon whether the property has passed to the buyer or not.

It lays down the rules which determine when property passes from the seller to the buyer1.Transfer of Property in specific or ascertained goods. 2.Transfer of property in unascertained and future goods.

1.Transfer of Property in Specific Or Ascertained Goods- Where there is 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. Thus in case of specific goods ,the transfer of property takes place when the parties intend to pass it. When the intention of parties cannot be judged from their contract or conduct of the parties, the rules as regards intention are as follows:

1.When the goods are in a deliverable state where there is an unconditional for the sale of specific goods in a deliverable state, the property in the goods passes to the buyer as soon as the contract is made. 2.When the goods have to be put into a deliverable state where there is a contract for the sale of specific goods and the seller is bound to do something to the goods for the purpose of putting them into a deliverable state, the property does not pass until such thing is done and the buyer has notice thereof.

3.When the goods have to be measured etc, to ascertain price- Where there is a contract for the sale f specific goods in a deliverable state ,but the seller is bound to measure ,weigh, test or to do some other act or thing with reference to the goods for the purpose of ascertaining the price ,the property does not pass until such act or thing is done and the buyer has notice. 4.When goods are delivered on approval 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.

2.Transfer of property in Unascertained goodsthe rule relating to transfer of property in unascertained goods is that where the goods contracted to be sold are not ascertained the property in goods does not pass to the buyer unless until the goods are ascertained to the contract so as to bring them in a deliverable state, either by the seller with the assent of the buyer .

Who is an unpaid seller?

An unpaid seller of goods is a person who has not been paid the whole of the price or to whom the whole of the price has not been tendered. The seller of goods is deemed to be an unpaid seller if: (a) The whole of the price has not been paid or tendered; (b) When a bill of exchange or other negotiable instrument has been received as conditional payment, and the condition is not fulfilled

Rights of an unpaid seller may broadly be classified under two heads namely: 1.Rights against the goods 2.Rights against the buyer personally 1.Rights against goods: An Unpaid seller has the following right against goods: (i) Lien on the goods - Lien is the right to retain the possession of goods and refuse to deliver them to the buyer until the price due in respect of them is paid or tendered.

An unpaid seller in possession of goods sold is entitled to exercise his lien on the goods in the following cases: a)Where the goods have been sold without any stipulation as to credit b)Where the goods have been sold on credit ,but the terms of credit has expired. c) Where the buyer becomes insolent, even though the period of credit may not have yet expired.

ii)a right to stoppage of transit- means the right of stopping further transit of the goods while they are with a carries for the purpose of transmission to the buyer, resuming possession of them and retaining possession until payment or tender of the price. (iii)a right of resale Right to resell the goods can be exercised in the following cases: a. Where the goods are of a perishable nature b. Where such a right is expressly reserved in the contract in case the buyer should make a default

c. Where the seller has given a notice to the buyer of his intention to resell and the buyer does not pay or tender the price within a reasonable time

2.Right against the buyer personally: An Unpaid seller has following rights against the buyer personallya. Suit for the price b. Suit for damages

1.Delivery of part of goods sold may amount to delivery of the whole if it is so intended and agreed. But where the part is intended to be severed from the whole , part deliver does not amount to be delivery of the whole. 2.Unless agreed otherwise , the seller is not bound to deliver goods till the buyer applies for deliver . 3.Place of Delivery 4.Time of delivery.

5.Unless otherwise agreed , the expenses of and incidental to putting the goods into a deliverable state shall be borne by the seller. 6.Demand and tender must be at a reasonable hour. 7.Delivery of wrong quantity. 8.Instalment deliveries.