L 1 Sales Act
L 1 Sales Act
L 1 Sales Act
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Introduction
• The law relating to sale and purchase of goods, prior to 1930 were
dealt by the Indian Contract Act, 1872.
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Introduction
• Transaction in the nature of sale of goods form the subject
matter of the Sale of Goods Act -1930
The act covers following topics:-
Concept of sales of Goods
Warranties & Conditions arising out of sale
Delivery of Goods & passing of property & other obligations of buyer & seller
The Act also covers the field of documents of title to Goods & the transfer of
ownership on the basis of such documents.
The Act came into being on 01 July 1930, it extends to whole of India except
Jammu & Kashmir .
Business persons/entities have worked out several varieties of contracts of sale
of goods e.g. fob( free on board), c.i.f.(cost, insurance & freight) & ex ship etc.
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Essential Features of Sale
• Bilateral Contract
• Money Consideration
• Goods
• Transfer of Property
• Essential Elements of a Contract
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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 a price. (Sec. 4)
• The term contract of sale is a generic term, which includes sale and agreement to
sale both.
Essentials of a contract of Sale
There must be at least two parties: A person can not sell to himself or a person
can not buy his own goods.
However a part owner may sell to another part owner
Transfer or agreement to transfer the ownership of Goods: In a contract of sale it
is the ownership that is transferred , or agreed to be transferred , as against the
transfer of mere possession or limited transfer(as in the case of bailment or
pledge)
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Essentials of a contract of Sale
3. Price is the consideration of the contract of sale:
If goods are offered as the consideration for goods, it will not amount to
sale. It will be called as Barter.
If price paid partly as cash & partly as value of goods, that is considered as
Sale. These are known as part –exchange contracts.
EX: 50 Chairs valued at Rs300/= per chair. Consideration paid 100 Kg of
wheat at Rs 25/= per kg & balance amount paid as cash/cheque or by
credit card
4. Payment by Installments
In case of sale, parties may agree that the price will be paid by installments.
Also the terms may stipulate some amount as down payment & the balance
in installments.
In case possession is handed over to buyer & buyer defaults in payment of
installment, the seller can not take back the goods, he can only file suit for
recovery of installments
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Essentials of a contract of Sale
5. A contract of sale may be absolute or conditional.
6. All other conditions as per Indian contract act must be present in the
contract of sale.
a) Parties to contract must be competent to contract.
b) Object of the contract must not be unlawful.
c) Consent of the parties must be free
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Goods
Goods means every kind of movable property other than
• actionable claims and money and
• includes stocks and shares, growing crops, grass and
• things attached to or forming part of the land
• which are agreed to be severed before sale or under the contract of sale. [Sec
2(7)]
• Example : Trade marks, patents, copyright, good will, water,gas, electricity
are all goods & dealt under sales Act
• Actionable claims are things which a person can not make use of , but which
can be claimed by him by means of a legal action , e.g. , a debt
• ‘Money’ itself can not be the subject of sale . Because price of goods has to
be expressed in terms of money. Therefore money itself can not be the
subject of sale. Foreign currency may , however be bought & sold
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•
Classification of Goods
• a) Existing goods - Goods which either owned or possessed by the seller at the
time of contract of sale.
• i) Specific goods - Means goods identified and agreed upon at the time a
contract of sale is made.
• ii) Ascertained goods - When, out of a mass or a lot of unascertained
goods, the quantity extracted is identified and earmarked for a given contract.
• iii) Unascertained goods : Generic or unascertained goods are goods
indicated by description & not specifically identified.
• EX: , Anthony , who owns a TV show room , has 100 TV sets on display &
agrees to sell one of them to Mathew . The contract is for unascertained
goods, since which particular TV set is to be sold has not been specified at the
time of sale.
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Classification of Goods
• b) Future goods - Means goods to be manufactured or produced or
acquired by the seller after making of the contract of sale.
• Ex: Kulkarni agrees to sell future crop of a particular agricultural field in the
next season. This is called a contract to sell future goods.
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The Price
• Price means the money consideration for a sale of goods. [Sec 2(10)]
Price can be fixed in the following ways :
• by the contract or terms of agreement, or
• may be determined by course of dealing between the parties.
When price is not capable of being fixed by any of the above modes,
the buyer shall pay the seller a reasonable price.
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Sale & Agreement to Sale
• Where under a contract of sale, the property(ownership ) in goods is
transferred from seller to buyer, it is called sale( Sec 4(3))
• A sale is an Executed Contract
Ex : Sham sells his car to Bhim for Rs 1 lakh. Thus sale takes place when the
ownership of the car stands transferred from Sham To Bhim.
• This is so even if payment of price of car, the delivery of car or
both have been postponed.
5 In case, the buyer pays the price, In this case the buyer can not claim the
& the seller thereafter becomes goods but only a ratable dividend for
Insolvent , the buyer can claim the the money paid.
goods from the official receiver or
assignee as the case may be .
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Distinction between Sale & Agreement to Sell
S.No Sale Agreement to sell
5 In case, the buyer pays the price, In this case the buyer can not claim the
& the seller thereafter becomes goods but only a ratable dividend for
Insolvent , the buyer can claim the the money paid.
goods from the official receiver or
assignee as the case may be .
6 If the buyer becomes insolvent Under this, the seller can refuse to
without paying the price, the deliver the goods to the official receiver
ownership having passed to the or assignee , as the case may be
buyer,
the seller shall have to deliver the
goods to the official receiver or
assignee,
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Effect of Perishing of Goods [Sec 7]
• A contract for the sale of specific goods is void if the goods have perished at
the time of contract.
• Contract is void ab initio if the goods perished before the formation of
contract.
• In agreement to sell it becomes void if
• subsequently the goods have perished before the risk passes to the buyer.
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THANKS
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