Sale of Goods Act

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Kalpeshkumar L GuptaAssistant Professor of Law

Sale of Goods Act, 1930

April 4, 2015

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Outline

1. Introductory Part

2. Sale & Quality of Goods

3. INCOTERMS

4. Performance of Contract

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Outline



3. INCOTERMS


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Sale of Goods

Sale of Goods is a contract where the ownership in goods is transferred for a price in cash.

In the language of contract law, a sale is a contract where the consideration for the buyer is the transfer of ownership and for the seller is a price in cash.

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Goods

Section 2(7) “goods means every kind of movable property other than actionable claims and money; and includes stock 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.”

Cont…

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Goods

Goodwill, trade marks, copyrights, patents right, water, gas, electricity etc. are all regarded as goods.

In the case of land the grass which forms part of land have to be separated from the land. Thus where trees sold so that they could be cut out and separated from the land and then taken away by the buyer, it was held that there was a contract for sale of movable property or goods (Kursell vs Timber Operators & Contractors Ltd.).

But contracts for sale of things ‘forming part of the land itself’ are not contracts for sale of goods. For example, a contract for the sale of coal mine or building-stone quarry is not a contract of sale of goods.

Cont…

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Goods

‘Actionable Claims’ means claims which can be enforced by a legal action or a suit, example a book debt. A book debt is not goods because it can only be assigned as per Transfer of Property Act but cannot be sold. Same is case in the case of bill of exchange, promissory note etc.

The negotiable instrument like promissory note can be transferred under Negotiable Instruments Act by mere delivery or endorsement and delivery, such instruments cannot be sold.

Cont…

Cont…

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Contract for Sale (Section 5)

1. A contract for sale is made by an offer to buy or sell goods for a price and the acceptance of such offer. ………The contract may provide for the immediate delivery of the goods or immediate payment of the price or both, or for the delivery or payment by installment or that the delivery or payment or both shall be postponed.

2. Subject to the provisions of any law for the time or by being in force, a contract of sale may be made in writing or by word of mouth, or partly in writing and partly by word of mouth or may be implied from the conduct of the parties.

Cont…

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Ownership, Delivery & Possession

Only owner can transfer the ownership.

1. B gave his car to garage for repairing.

2. Z borrowed a book from his college library.

3. A transporter co. is carrying the goods belonging to

Reliance Ltd. from one factory location to another.

4. A construction co. hired a crane from a leasing co.

5. A thief walked away with the laptop of another person.

Section 2(2) defines delivery means a ‘voluntary transfer of possession from one person to another’

Cont…

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Ownership, Delivery & Possession

Delivery (Section 33) Delivery of 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 of any person authorized to hold them on his behelf.

1. A self-service store, after a customer paid the bill, gave him the items purchased by him in a bag.

2. Y bought a laptop from a store on Sunday. Y sent his driver the next day to bring the laptop. The store handed over the laptop to the driver.

3. The seller gave the key of the car sold to the buyer.4. The seller gave the key of the warehouse in which the sold

goods were kept to the buyer.

Cont…

Cont…

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Risk passes with the ownership.

Cont…

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Outline



3. INCOTERMS


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Sale & Quality of Goods

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Condition (Section 12(2))

A condition is a stipulation which is essential to the main purpose of the contract. It goes to the root of the contract. Its non-fulfilment upsets the very basis of the contract.

If there is breach of condition, the aggrieved party can treat the contract as rejected.

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Warranty (Section 12(3))

A condition is a stipulation which is collateral to the main purpose of the contract. It is not so vital importance as a condition is.

If there is breach of a warranty, the aggrieved party can only claim damages and it has no right to treat the contract as repudiated (rejected).

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Condition - Warranty

Whether a stipulation in a contract of sale is condition or a warranty depends in each case on the construction of the contract as a whole.

The court is not be guided by the terminology used by the parties to the contract. A stipulation may be condition though called a warranty in the contract. (Sec. 12(4))

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Difference between Condition & Warranty1. Difference as to value

A condition is a stipulation which is essential to the main purpose of the contract. A warranty is a stipulation which is collateral to the main purpose of the contract.

2. Difference as to breach

If there is a breach of a condition, the aggrieved party can reject the contract of sale; in case of a breach of a warranty, the aggrieved party can claim damages only.

3. Difference as to treatment

A breach of a condition may be treated as a breach of a warranty. This would happen where aggrieved party is contended with damages only. A breach of a warranty, however cannot be treated as a breach of a condition.

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When condition to be treated as warranty (Section 13)

1. Voluntary waiver of condition.

Where a contract of sale is subject to any condition to be fulfilled by the seller, the buyer may waive the condition or elect to treat the breach of the

condition as a breach of warranty.

2. Acceptance of goods by buyer.

Where a contract of sale is not severable and the buyer has accepted the goods or part thereof, the breach of any condition to be fulfilled by the seller can only be treated as a breach of warranty, unless there is a term of contract, express or implied to the contrary.

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Implied Conditions

1. Condition as to title (Section 14 (a))

2. Sale by description (Section 15)

3. Condition as to quality or fitness (Section 16(1))

4. Condition as to merchantability (Section 16(2))

5. Condition implied by custom (Section 16(3))

6. Sale by sample (Section 17)

7. Condition as to wholesomeness.

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Implied Conditions

1. Condition as to title (Section 14 (a))

…an implied condition on the part of the seller that, in the case of a sale, he has a right to sell the goods and that, in the case of an agreement to sell, he will have a right to sell the goods at the time when the property is to pass.

e.g. R bought a car from D and used it for four months. D had no title to the car and consequently R had to hand over to the true owner.

Held – R could recover the price paid (Rowland v/s. Divali, 1923)

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Implied Conditions2. Sale by description (Section 15)

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.

Buyer Beware. There is no protection for the buyer in relation to the quality of goods except in following situations.

a. Goods sold must be of merchantable quality. However, if the buyer has examined the goods, directs which such examination ought to have revealed would be exempted from the requirement of merchantable quality.

b. If the buyer has relied on the skill and judgment of the seller, the goods should be fit for the purpose described by the buyer.

Cont…

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Implied Conditions2. Sale by description (Section 15)

e.g. A ship was contracted to be sold as a ‘copper-fastened vessel’ to be taken with all faults, without any allowance for any defects whatsoever. The ship turned out to be ‘partially copper-fastened.

Held – Buyer entitled to reject (Shepherd v/s. Kain, 1821)----------In a auction sale of a set of napkins and table cloths, these were described as ‘dating from the seventh century’. The buyer bought the set after seeing it. Subsequently found the set of an eighteenth century set.

Held – He could reject the set (Nicholson & Venn v/s. Smith Marriot, 1947)

Cont…

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Implied Conditions


If the buyer purchasing an article for a particular use is suffering from an abnormally and it is not made known to the seller at the time of sale, implied condition of fitness does not apply.

e.g. G purchased a coat which caused her dermatitis due to her unusually sensitive skin.

Held – the seller was not liable, the cloth being fit for any one with a normal skin (Griffiths v/s. Peter Conway Ltd., 1939)

Cont…

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Implied Conditions


Where the buyer, expressly or by implication, makes known to the seller, the particular purpose for which the goods are required, so as to show that the buyer relies on the seller’s skill and judgment, and the goods are of a description which it is in the course of the seller’s business to supply (whether he is the manufacturer or producer or not), there is an implied condition that the goods shall be reasonably fit for such purpose. e.g. An order was placed for some lorries to be used ‘for heavy traffic in a hilly area’. The lorries supplied were unfit and break down. There is breach of condition as to fitness.

Cont…

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Implied Conditions


Where goods are bought by description from a seller who deals in goods of that description (whether he is the manufacturer or producer or not), there is an implied condition that the goods shall be of merchantable quality.

The term merchantable quality is not defined in the Sale of Good Act.

But as per Sec. 62(1-A) of the English Sale of Goods Act, 1893, “Goods of any kind are of merchantable quality if they are as fit for the purpose or purposes for which goods of that kind are commonly bought as it is reasonable to expect having regard to any description applied to them, the price and all the other relevant circumstances.

Cont…

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Implied Conditions


If goods are of such a quality and in such a condition that a reasonable person acting reasonably would accept them after having examined them thoroughly , they are of merchantable quality. Thus a watch that will not keep time, a pen that will not write and tobacco that will not smoke, cannot be regarded as merchantable under such names.

e.g. A manufacturer supplied 600 horns under a contract. The horns were found to be dented, scratched and otherwise of faulty manufacture.

Held, they were not of merchantable quality and therefore the seller’s suit for price was dismissed (Jackson v/s. Rotax Motor & Cycle Co., 1910)

Cont…

Cont…

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Implied Conditions

Section 14(1) English Sale of Goods Act, 1893Reliance on the skill and judgment of the seller.Grant v/s. Australian Knitting Mills Ltd. (1935, All ER Rep 209)

Grant bought two woollen underwear garments from John Marlin & Co. who dealt in such goods. John Marlin had purchased them in the ordinary course, along with other stock from Australian Knitting , the manufacturer.

Grant put on one suit on the morning of June 28, 1931. By the evening, he started to feel itchy. Problem became serious. He consulted dermatologist, who suspected the undergarments to be cause of dermatitis……doctor treating Grant feared that he might die….

Cont…

Cont…

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Implied Conditions

The mfg. attempted to attribute the problem to the sensitive nature of Grant’s skin and not to the defect in garment. Detailed evidence was brought out that mfg. process and the treating of the garments with chemicals had left a content of sulphites in the garments.

The Privy Council was of the opinion that the case attracted both the clauses, relying on the skill and judgement of the sellers and the goods not being merchantable quality.

The reliance of the buyer on the seller need not be expressed. If the goods are meant for only one use, it is implied that the buyer relied on the seller in giving goods that would be fit for that purpose.

Cont…

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Implied Conditions

5. Condition implied by custom (Section 16(3))

An implied warranty or condition as to quality or fitness for a particular purpose may be annexed by the usage of trade.

e.g. A bought a set of false teeth from a dentist. The set did not fit into A’s mouth.

Held – he could reject the set as the purpose for which anybody would buy it was implicitly known to the seller (Dr. Baretto v/s. T R Price, AIR 1939 Nag. 19)

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Implied Conditions6. Sale by sample (Section 17)

In the case of sale by sample, there is an implied condition that the bulk will tally with the sample and goods should be free from defect ‘rendering them unmerchantable, which would not be apparent on reasonable examination of sample.

If the sale is by sample as well as by description, it is not sufficient that the bulk of the goods corresponds with the sample if the goods do not also correspond with the description.

The goods must fully correspond with the sample and with the description.

Cont…

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Implied Conditions7. Condition as to wholesomeness

In the case of eatables and provisions, in addition to the implied condition as to merchantability, there is another implied condition that the goods shall be wholesome.

e.g. C bought a bun containing a stone which broke one of C’s teeth.

Held – he could recover damages (Chaproniere v/s. Mason, 1905)

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Implied Conditions6. Sale by sample (Section 17)

e.g. In a contract for the sale of brandy by sample, brandy colored with a dye was supplied.

Held – the buyer was not bound to the contract even though goods supplied were equal to sample, as the defects were not apparent on reasonable examination of sample. (Mody v/s. Gregson, 1868)

Cont…

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Implied Warranties

1. An implied warranty that the buyer shall have and enjoy quiet possession of the goods; (Section 14(2)).

2. An implied warranty that the goods shall be free from any charge or encumbrances in favour of any third party not declared or known to the buyer before or at the time when the contract is made.(Section 14(c))

3. An implied warranty as to quality or fitness for a particular purpose may be annexed by the usage of trade. (Section 16(4))

4. Warranty to disclose dangerous nature of goods.

Cont…

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Implied Warranties

4. Warranty to disclose dangerous nature of goods.

e.g. A sold a ‘tin of disinfectant powder to C. He knew that it was likely to be dangerous to C if it was opened without special care being taken. C opened the tin whereupon the powder flew into her eyes, causing injury.

Held – A was liable in damages to C as he should have warned C of the probable danger (Clarke v/s. Army & Navy Co-operative Society Ltd., 1963)

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Specific Goods : Ownership Transfer as intended by the PartiesA sale contract can be for specific goods/certained or for unascertained goods.

Section 19 – Property passes when intended to pass.

- 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.

- 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.

Cont…

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Specific Goods : Ownership Transfer as intended by the PartiesIn the case of written contract, courts ordinarily stick to the written terms and take it that the parties intended the written terms alone to govern the contract.

McEntire v/s. Crossley Brothers Ltd. (1895)

A hire-purchase agreement for a gas engine provided that the ‘gas-engine shall remain the sole and absolute property of the owner….until all sums of money due under this agreement are paid.

Cont…

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Specific Goods – Unconditional Contract

A contract where the parties, in express or implied terms, have stipulated some condition for the transfer of ownership is called a conditional contract.

e.g. ownership pass only on payment of price.

A contract which is silent on the transfer of ownership is called an unconditional contract.

Cont…

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Section 20 Specific Goods in a deliverable state.

Where there is an unconditional contract for the sale of specific goods in a deliverable state*, the property in the goods passes to the buyer when the contract is made, and it is immaterial whether the time of payment of the price or the time of delivery of the goods or both is postponed.

*goods are in deliverable state ‘when they are in such state that the buyer would, under the contract, be bound to take delivery of them.

Cont…

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Unascertained Goods

A sale contract whose subject matter is the sale of certain specific identified goods is a sale of specific goods.

Sale contracts can also be of unascertained goods.

In sale of unascertained goods, the goods are described.

In the course of the performance of the contract, the parties would come to settle on certain specific goods meeting that description.

Cont…

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Ascertainment and Transfer of Ownership

Section 18 – Goods must be ascertained

Where there is a contract for the sale of unascertained goods, no property in the goods is transferred to the buyer unless and untill the goods are ascertained.

e.g. Under an agreement, the seller had to pour in five liters of edible oil in a container given by the buyer, from a tank containing edible oil, and bring it to the buyer. The ownership in the oil was to get transferred a week after delivery. The price had already been paid. The seller poured the oil into the container. ……………..At this stage, the goods got ascertained and delivered and delivered to the buyer. However ownership continued to be with the seller.

Cont…

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Ascertainment and Transfer of Ownership

Ascertainment is the process by which the goods answering the description are identified and set apart. Further the goods must also be appropriated to the contract.

In the case of unconditional sale contracts in specific goods, the ownership gets transferred at the point of time when contract is made.

As the ownership in unascertained goods cannot get transferred, the transfer of ownership must wait till the goods get ascertained. Thus in the case of sale of ascertained goods, where the parties have not provided on the transfer of ownership, the ownership would get transferred when the goods get appropriated to the contract.

Cont…

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Rhode v/s. Thwaites (1827)

e.g. In a sale of 20 hogheads of sugar out of larger quantity, 4 were filled and taken away by the buyer, The remaining 16 hogheads were subsequently filled and the buyer was informed for the same. The buyer promised to take them away, but before he could do so. The goods were lost.

Held :-

The property had passed to the buyer at the time of the loss.

Cont…

Carriage, Delivery & Ownership

A seller is deemed to have unconditionally appropriated the goods to the contract where he delivers them to the buyer or to a carrier or other bailee for the purpose of transmission to the buyer, and does not reserve the right to disposal (Sec. 23(2).

Delivery to the goods to the carrier is ‘prima facie’, deemed to be a delivery of the goods to the buyer. Thus, if the parties do not provide otherwise, giving the goods to the carrier is taken as delivery to the buyer.

Cont…

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Goods sent on approval or ‘on sale or return’ (Sec 24)

When goods are delivered to the buyer on approval or ‘on sale or return’ or other similar terms the property therein passes to the buyer –

1. When he signifies his approval or acceptance to the seller;

2. When he does any other act adopting the transaction.3. If he does not signify his approval or acceptance to the

seller but retains the goods without giving notice of rejection, beyond the time fixed for the return of the goods, or if no time has been fixed, beyond reasonable time. (Section 63) (Hooghly Chinsurah Municipality v/s. Spence Ltd. AIR 1978 Cal. 49……Tractor Case)

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Reservation of right to disposal (Sec 25)

The property in goods, whether specific or subsequently appropriated to the contract, does not pass to the buyer if the seller reserves the right to disposal of the goods untill certain conditions are fulfilled.

Apart from an express reservation, the seller is deemed to reserve the right of disposal.

e.g. B placed an order with S requesting him to send the goods by sea. S took a bill of lading in the name of B and sent it to his own agent. The goods were destroyed in the course of voyage. S had to suffer the loss as the ownership had not passed to B.

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Outline



3. INCOTERMS


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INCOTERMS

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INCOTERMS

• INCOTERMS stands for International Commercial

Terms.

• Prepared by International Chamber of Commerce

(ICC) Paris.

• INCOTERMS prepared to facilitate international

business transaction.

• First time in 1936 last edition came in 2010.

• Some famous terms FOB, CIF etc.

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Some INCOTERMS

All modes of Transport CIP – Carriage & Insurance PaidCPT – Carriage Paid To.DAP – Delivered At PlaceDAT – Delivered at TerminalDDP – Delivered Duty PaidEXW – Ex WorksFCA – Free Carrier

Sea & Inland Waterways CFR – Cost and FreightCIF – Cost, Insurance & FreightFAS – Free Alongside ShipFOB – Free on Board

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EXW – Ex Works

The seller makes the good available to the buyer at his premises. The buyer bears all the costs and the risk in taking the goods from the seller’s premises to his own destination

Works stands for the premises of the seller.

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FCA – Free Carriage

The buyer organizes for the carriage of the goods and informs the seller about the carrier and the place where the goods would be handed over to the carrier.

The risk passes when the goods are handed over to the carrier.

The term is followed by the name of the place where the goods are to be handed over to the carrier.

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CPT – Carriage Paid To

The seller pays the freight for the carriage of the goods to the named destination. The risk in the goods passes to the buyer on delivery of the goods to the first carrier.

The term is followed by the destination at which the carrier has to deliver the goods.

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CIP – Carriage and Insurance Paid To

The seller pays for carriage and insurance to the named destination point. The risk passes when the goods are handed over to the first carrier.

The term is followed by the destination point at which the carrier has to deliver the goods.

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DAT – Delivery at Terminal

The seller bears the cost and risk of carriage of the goods to a named terminal in the country of the buyer. The seller delivers the goods to the buyer at the terminal. At this point risk passes to the buyer.

The seller organises the export clearance. However the buyer is responsible for the import clearance and for paying the import duty.

The term can be quay, warehouse, container yard, rail, road, air terminal.

The term is followed by the name of the terminal, port or place of destination.

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DAP – Delivery at Place

The seller pays for carriage to the named destination in the country of the buyer. However import duty is paid by the buyer.

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DDP – Delivery Duty Paid

The seller pays for carriage to the named destination in the country of the buyer. In addition, the seller organises import clearance and pays the custom duties.

The term is followed by the place of destination.e.g. DDP Dare Salam, Tanzania

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FAS – Free Alongside Ship

The seller pays for the transportation of the goods to the port of shipment in his country. The buyer pays the loading costs, freight, insurance, unloading costs and transportation from the port of destination to his premises.

The passing of risk occurs when the goods are delivered to the dock at the port of shipment.

The term is followed by the place from where the goods are to be shipped.e.g. FAS JNPT, Navi Mumbai

Exclusive for Maritime Trade

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FOB – Free on Board

The seller pays for the transportation of the goods to the port of shipment and for their loading on the ship. The buyer pays the freight, insurance, unloading costs and transportation from the port of destination to his destination.

The passing of risk occurs when the goods pass the ship’s rail at the port of shipment.

The term is followed by the name of the place where the goods are put on ship.e.g. FOB JNPT, Navi Mumbai


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CFR – Cost & Freight

The seller pays the costs and freight to bring the goods to the port of destination. However, risk is transferred to the buyer once the goods are loaded on the ship.

The seller is not to bear the cost of maritime insurance.

The term is followed by the port of destination.e.g. CIF, Dare Salam, Tanzania


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CIF – Cost, Insurance & Freight

The seller pays the for the transportation of the goods to the port of shipment, loading and freight as well as for marine insurance.

The risk of loss or damage is transferred from the seller to the buyer when the goods pass over the ship’s rail in the port of shipment.

The term is followed by the port of Destination.e.g. CIF, Dare Salam, Tanzania


63

Marwar Tent Factory v/s. Union of India (AIR 1990 SC 1753)

• MTF won a tender to supply tents to the defence establishment at Kanpur. Tents inspection at Jodhpur.

• Despatch to Commandant, Kanpur. The tents were to be put on rails at Jodhpur under the terms, ‘F.O.R Jodhpur’

• A consignment of 1500 tents was despatched, as a result of pilferage in transit only 1276 tents received by COD Kanpur. They deducted the cost of 224 tents from the payment.

• SC noted that in FOR contract, the seller undertakes to deliver the goods into railway wagons or at the station and prima facie, this is the point at which property and risk pass to the buyer and the price becomes payable.

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Manbre Saccharine Co. v/s. Corn Products Co. Ltd. (1918)

• Contract for the sale of American pearl starch and corn syrup.

• The term was on CIF terms.

• The vessel was sunk by a German submarine. The seller and buyer both knew that the vessel had been sunk. The seller tendered the documents, but the buyer refused to accept the documents and pay the money.

• The CIF contract, documents are taken to be equivalent to goods and the buyer is bound to accept them. There are two reasons for this. One, the seller has only undertaken to deliver the goods to the carrier. Second, the buyer with the documents, can claim marine insurance, which will give him the value of the goods.

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Outline



3. INCOTERMS


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Performance of Contract

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Performance of Contract (Section 31)

Performance of a contract of sale means as regards the seller, delivery of the goods to the buyer and as regards the buyer, acceptance of the delivery of the goods and payment for them, in accordance with the terms of the contract of sale.

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Delivery of Goods

Delivery means voluntarily transfer of possession of goods from one person to another (Sec 2(2))

Delivery of 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 of his agent. (Section 33)

Delivery of goods may be

1. Actual2. Symbolic3. Constructive Delivery

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Delivery of Goods

1. Actual Delivery

Where the goods are handed over by the seller to the buyer or his duly authorized agent, the delivery is said to be actual.

2. Symbolic Delivery

Where goods are bulky and incapable of actual delivery, delivery may be symbolic. Handling over of the key of a warehouse to the buyer is symbolic delivery of the goods to the buyer and it is as effective as actual.

Cont…

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Delivery of Goods

3. Constructive Delivery

Where a third person who is in possession of the goods of the seller at the time of the sale acknowledges to the buyer that he holds the goods on his behalf, there takes place a constructive delivery.

e.g. A sells to B 10 bags of wheat lying in C’s godown. A gives an order to C asking him to transfer the goods to B. C assents to such order and transfers the goods in his books to B. T

Cont…

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Acceptance of Goods (Section 42)

Receipt of goods by the buyer does not necessarily means in acceptance of goods by him under and in performance of the contract for sale.

Acceptance is something more than mere receipt or taking possession of the goods by the buyer.

It means the final assent by the buyer that he has received the goods under, and in performance of, the contract for sale.

If he wrongfully refuses to accept the goods under the contract, he is liable for damages.

Cont…

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Acceptance of Goods (Section 42)

The buyer is deemed to have accepted the goods.

1. When he intimates to the seller that he has accepted the goods.

2. When the goods have been delivered to him and he does any action relation to them which is inconsistent with the ownership of the seller as, for instance where he (a) re-sells the goods or (b) uses the goods in a manner proper only for the owner or (c) makes some alteration in the goods (Section 42)

3. When, after the lapse of a reasonable time, he retains the goods without intimation to the seller that he has rejected the goods.

Cont…

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Buyer’s liability in case of rejection of goods (Section 43)

• Unless otherwise agreed, where goods are delivered to the buyer and he rejects them, he is not bound to return them to seller.

• It is sufficient if he intimates to the seller that he has rejected the goods.

• If the seller refuses to take away the goods, the buyer becomes the bailee of the goods and he may charge for keeping them.

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Buyer’s liability for neglecting or refusing delivery of goods (Section 44)

When seller is ready and willing to delivery the goods and requests the buyer to take delivery and the buyer does not, within a reasonable time after such request, take delivery of goods, he is liable to the seller for

a. Any loss occasioned by his neglect or refusal to take delivery and

b. A reasonable charge for the care and custody of the goods.

Where the neglect or refusal of the buyer to take delivery amounts to repudiation of the contract, the seller may sue for price and for damages.

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Rights of the buyer

1. Right to have delivery as per contract (Sec. 31 & 32)

2. Right to reject the goods (Sec. 37)

3. Right to repudiate (Sec. 38(1))

4. Right to notice of insurance (Sec. 39(3))

5. Right to examine (Sec. 41)Where the seller affords an opportunity to the buyer to examine the goods but the buyer refuses to do so, the buyer cannot say that the goods are of an inferior quality and therefore cannot repudiate the contract. If buyer repudiates the contract, the seller is entitled to damages from the buyer (Dharampal v/s. Ram Chander Rao, AIR 1980 All. 316)

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Rights of the buyer

6. Right against the seller for breach of contract

a. Suit for damages (Sec. 57)

b. Suit for price

c. Suit for specific performance (Sec 58)

d. Suit for breach of warranty (Sec. 59)

e. Repudiation of contract before due date (Sec. 60)

f. Suit for interest (Sec. 61(2)(b))

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Duties of the buyer

1. Duty to accept the goods and pay for them in exchange

for possession (Sec. 31 & 32)

2. Duty to apply for delivery (Sec. 35)

3. Duty to demand delivery as reasonable hour (Sec. 36(4))

4. Duty to accept installment delivery and pay for it. (Sec.

38(2))

5. Duty to take risk of deterioration in the course of transit

(Sec. 40)…Rusting on iron not more than necessarily

incident to the course of transit. Buyer was bound to pay

(Bull v/s. Robinson, 1854)Cont…

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Duties of the buyer

6. Duty to intimate the seller where he rejects the goods

(Sec. 43)

7. Duty to take delivery (Sec. 44)

8. Duty to pay price (Sec. 55)

9. Duty to pay damages for non-acceptance (Sec. 56)

Cont…

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Rights of an Unpaid SellerRights of an Unpaid Seller

Against the goodsGoods has passed

(Sec. 46(1))Lien (Sec. 47 to 49)

Stoppage in transit (Sec. 50 to 52)

Re-sale (Sec. 54)

Goods has not passed (Sec. 46(2))

Withholding delivery

Stoppage in transit

Against the buyer personallySuit for price (Sec. 55)

Suit for damages(Sec 56)

Repudiation of contract (Sec. 60)

Suit for interest (Sec. 61)

A

B

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Rights of an Unpaid Seller against the goods

1. Rights of lien

A lien is a right to retain possession of goods until payment of the price. ….If he loses the possession of the goods, he loses the right of lien also. The lien depends on actual possession and not on title.

Termination of lien

- Waiver

- He delivers the goods to a carrier or other bailee for the purpose of transmission to the buyer, without reserving the right of disposal of the goods.

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2. Right of stoppage in transit

It is available

- When the buyer becomes insolvent and- When the goods are in transit

The right of stoppage in transit is an extension of the right of lien, but it arises only on the insolvency of the buyer and when the goods are in transit.

Duration of transit

Transit is an intermediate stage. Goods are deemed to be in course of transit from the time they are delivered to a carrier or other bailee for the purpose of transmission to the buyer untill the buyer or his agent takes delivery of them from such carrier or other bailee.

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How stoppage in transit is effected

1. By taking actual possession of the goods; or

2. By giving notice of his claim to the carrier or other baileeNotice of stopping the goods in transit may be given

either to the person in actual possession of the goods or to his principal.

Liability of carrier

If the carrier, after a proper notice by the seller to him to stop the goods in transit, delivers them to the buyer or refuses to them to the seller, he is liable to the seller.

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Date post:	16-Jan-2016
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Sale of Goods Act

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