SESSION-4 Sale of Goods

7/26/2019 SESSION-4 Sale of Goods

1/63

Sale and Quality of Goods


2/63

DEFINITIONOF A CONTRACT OF SALE

Section 4 defines a contract of sale as a

contract !ere"y a seller transfers or

a#rees to transfer t!e $ro$erty in #oods to

t!e "uyer for a $rice%


3/63

ESSENTIALS OF A CONTRACT OF SALE

Fro& t!e definition' t!e folloin# essentials of t!econtract e&er#e(

1) There must be at least two parties

2) Transfer or agreement to transfer the ownership of

goods3) The subject matter of the contract must necessarily

be goods

4) Price is the consideration of the contract of sale

5)All other essentials of a alid contract as per the!ndian "ontract Act# 1$%2 must be present


4/63

ESSENTIALS))*contd

If for instance' #oods are offered as t!e

consideration for #oods' it ill not a&ount to

sale* It ill "e called a "arter*

+!ere #oods are sold for a definite su& andt!e $rice is $aid $artly in ter&s of ,alued u$ of

#oods and $artly in cas!' t!at is sale* T!ese are

-non as $art.e/c!an#e contracts*

To sum&up' the Act applies only when the

buyer pays by cash (or by cheue# credit

card# etc)


5/63

ESSENTIALS))*contd

0 1ay&ent "y install&ents( in t!e case of

sale of #oods' t!e $arties &ay a#ree t!at

t!e $rice ill "e $aya"le "y install&ents


6/63

Goods

!ncludes *oable property +toc, and shares# growing crops# things

attached to the land# grass# etc-

Actionable claims and money (currency)

not included

In #eneral' it is only t!e &o,a"les t!at foroods


7/63

Does electricity, water and gas also

comes under the definition of goods? Trans&itted' transferred ' deli,ered' stored

$ossessed and sold*

Why money not considered as goods?

It is in circulation' for&s consideration*

+!ereas' rare coins' old currency can "e

sold and can "e considered as #oods


8/63

+!at are actiona"le clai&s2

T!e actiona"le clai&s are t!in#s !ic! a

$erson cannot &a-e use of' "ut !ic! can

"e clai&ed "y !i& "y &eans of a le#al

action E/( A "orros Rs* 35. fro& 6 at 789 $er

annu& interest on 7st A$ril' 8: and $ro&ises

to $ay "ac- t!e a&ount it! interest on 7st ;uly'8:* Till 7st ;uly' 8:' t!e de"t is an accruin#

de"t and is an actiona"le clai&*


9/63

"onditions and .arranties

/0press conditions and warrantiesare

!ic!' are e/$ressly $ro,ided in t!e

contract*

!mplied conditions and warranties are

t!ose !ic! are i&$lied "y la or custo&uareColour( Hetal 1earl

Co&$onents( Ori#inal' &ade in ;a$an

Len#t! of s$iral cord( c&

T!e #oods ere to "e deli,ered on a fi/ed date*


18/63

Can t!e "uyer insist on ,isitin# t!e &anufacturer to

ins$ect t!e #oods under &anufacture or at t!e

sta#e of $ac-in#2


19/63

Ins$ection as a $art of t!e contract* T!e "uyer

ins$ected t!e #oods and t!e #oods ere deli,ered*

T!e s!a$e of t!e $!one unit as not s>uare* T!e

"uyer clai&s to ter&inate t!e contract*


20/63


ins$ected t!e #oods and t!e #oods ere deli,ered*

A !andset !ad to "e o$ened to fi/ a loose

connection* On o$enin#' it as realised t!at t!e

$arts ere &ade in orea and not ;a$an*


21/63


as #i,en t!e !and set in a "o/* T!e "uyer'

!oe,er' did not o$en t!e "o/ and c!ec- t!e $iece

inside* On recei,in# t!e #oods' it as noticed t!at

t!e unit as not s>uare in s!a$e*


22/63

Su&&ary

1- !f the buyer has not seen or e0amined the

goods# the supplied goods must meet thedescription-

8* If t!e "uyer !as seen or e/a&ined t!e #oods

"ut t!e de,iations fro& descri$tion ould not "ea$$arent on an ordinary e/a&ination' t!e #oods&ust &eet t!e descri$tion*

* If t!e "uyer !as seen or e/a&ined t!e #oodsand t!e de,iations fro& descri$tion ould "ea$$arent on an ordinary e/a&ination' t!edescri$tion ould "e &odified to t!e e/tent oft!e de,iations*


23/63

Defecti,e +as!in# Hac!ine

A "uyer "ou#!t a as!in# &ac!ine* It or-ed for a

day* T!ereafter' t!e as!in# &ac!ine sto$$edor-in# co&$letely* T!e "uyer !ad not si#ned on

any contract docu&ent*

+!at are t!e re&edies a,aila"le for t!e "uyer2

Goods &ust "e of &erc!anta"le >uality*

Consu&er #oods are e/$ected to last for a $eriod

of ti&e atleast !at is s$ecified in t!e arranty


24/63

Co&$ressor Bnder +arranty

Saini $urc!ased an air co&$ressor fro& a seller*

In t!e first ee- itself s&o-e and "urnin# s&ellca&e out fro& t!e co&$ressor and t!e unit sto$$ed

functionin#* T!e "uyer is a#itated and ants to

return t!e co&$ressor and #et !is &oney "ac-*

78 +arranty( T!e e>ui$&ent is arranted for a

$eriod of : &ont!s fro& t!e date of $urc!ase* +e

ill at our o$tion repair it' or replace parts* T!eli&ited one.year arranty and re&edy set fort!

a"o,e are in lieu of all implied or e0press

condition and warranty-


25/63

Jarranty li&its t!e ri#!ts of t!e "uyer Clai& da&a#es

Cannot ter&inate t!e contract


26/63

D!ru, $urc!ased !air drier fro& a s!o$*

Kis ife as usin# t!e !air drier* In t!e

first use itself' t!e !air drier &ac!ine "urnt

and #a,e D!ru,s ife "urns on !er face

and !air*

Can D!ru, return t!e drier 2

Can !e clai& !is &oney "ac-2

Can !e de&and co&$ensation for !is

ifes in?ury 2


27/63

Dee$i-a as-ed for a $articular "rand of

"iscuits* On reac!in# !o&e' s!e realiedt!at it as a different "rand of $ac- of

"iscuits* T!e $ac-et as identically si&ilar

to t!e one Dee$i-a anted* S!e ants to

return t!e $ac-et and clai& !er &oney*

Does s!e !a,e re&edy2


28/63

Case( Defecti,e 1!otoco$ierHone/ Li&ited "ou#!t 7 $!otoco$iers fro& a

seller of $!otoco$iers* T!e folloin# descri$tionas #i,en in t!e in,oice and ot!er docu&ents*

1!otoco$ier Hac!ine . 7 $ieces

7: 1$&A4 Or Hore

Scan Resolution 78 D$i Or Hore

S$eed Sec 1er 1a#e at *: "$s

T!e #oods su$$lied ere of t!e a"o,e descri$tion*

Koe,er' to of t!e $!otoco$iers' on e,ery use' #ot!eated >uic-ly' sto$$ed or-in#' and t!e $a$er

$er$etually #ot stuc- in t!e rollers* Is t!ere a

re&edy for t!e Hone/ Li&ited2


29/63

Coolin# Solutions

T!e "uyer as-ed for a coolin# syste& for storin#

c!eese in its retail store* If t!e te&$erature "eca&e,ery lo' c!eese ould freee and its taste and

te/ture c!an#e* If t!e te&$erature "eca&e !i#!'

c!eese could deteriorate* T!e freeer syste&'

"ein# in a retail store' ould "e o$ened fre>uently

"y t!e custo&ers*

T!e &anufacturer.seller reco&&ended andsu$$lied a &odel* T!e coolin# syste& did not ser,e

t!e $ur$ose*


30/63

Constant Geor#e ,* Di/on Store

Geor#e "ou#!t a co&$uter and $rinter for a

$urc!ase $rice of so&e M'3* T!e co&$uterco&$rised of a co&$uter unit' &ouse' -ey"oard'

&onitor and a re&ote control* T!e co&$uter or-ed

fine it! t!e &ouse and t!e -ey"oard* Koe,er' t!e

re&ote control' !ic! could do so&e of t!e

functions of &ouse' as not or-in#* Anot!er

softare for t!e re&ote control needed to "e loaded

in t!e co&$uter*

Geor#e insists on returnin# t!e set and #ettin# "ac-

!is &oney*


31/63

Case( I&itation 1earls

Ran?ani "ou#!t synt!etic $earls fro& a s!o$

Aest!etics( A o&ans S!o$% t!in-in# t!at t!eyere natural $earls* T!e $earls ere !un# onstands it! $rices ritten on t!e&* ou couldc!oose !at you anted* S!e ants to return "ac-

t!e $earls and clai& !er &oney "ac-*


32/63

ariation of t!e Case

T!e s!o$ !ad a "oard sayin# JAest!etics( A

o&ans S!o$ for Aut!entic ;eellery*


33/63


T!e section in t!e s!o$' fro& !ere Ran?ani $ic-ed

u$ !er $urc!ase' !ad t!e ord J$earls ritten ont!e s!elf*


34/63


Ran?ani !ad as-ed t!e s!o$-ee$er if t!e $earls

ere natural and !e !ad said yes*


35/63


T!e la re>uired t!at t!e sale of i&itation ?eellery

s!ould carry a declaration t!at t!e ite&s erei&itations* T!e s!o$ !ad &ade no declaration tot!is effect*

Su&&ary of 1rinci$les


36/63

Su&&ary of 1rinci$lesSr* es5No

7 If t!e contract is "y sale of sa&$le is iti&$lied t!at t!e "ul- corres$ond ill "eof sa&e >uality*

8 Sale of unascertained or future #oods

!as to "e "y descri$tion* All co&&unications "eteen t!e $arties

to a contract of sale #i,es rise to a Jsale"y descri$tion*

4 I&$lied conditions in a contract #i,es$rotection to t!e "uyer*

3 +arranty #rants ri#!t to ter&inate t!e

contract itself*

es

es

No

es

No

Su&&ary of 1rinci$les


37/63

Su&&ary of 1rinci$lesSr* es5No

: +arranty li&its t!e ri#!ts of t!e "uyer*

Is it co&$ulsory for courts to enforce allter&s and conditions in t!e contract*

P If #oods on e/a&inin# defects !a,e "een

"ou#!t out' does it "eco&e $art of t!edescri$tion2

esNo

es

TRG I d t i


38/63

TRG Industries

6uyer. TRG Industries

Hanufacturer. C!-.Dor&as! Ser,ices

Hr* !e&-a

Hac!ine deli,ered on Harc! 8 "ut could not "eco&&issioned till ;une end des$ite se,eral ,isits "y

tec!nicians*

d


39/63

) cond

+arranty ( T!e e>ui$&ent ill "e arranted for a$eriod of 78 &ont!s fro& t!e date of

co&&issionin# at site for any &anufacturin#

defects*

; d t


40/63

;ud#e&ent

Kirin# c!ar#es cannot "e clai&ed as da&a#es*

T!e "uyer could !a,e "ou#!t anot!er &ac!ine "ut

not !ired*

Hanufacturer and Hr* !e&-a are t!e res$onsi"le

$arties*

T!ere is no $ri,ity "eteen t!e $rocurer and t!e

"uyer*

d


41/63

) cond

T!e transaction "eteen t!e $arties is a

co&&ercial transaction* T!e &oney ) re&ained"loc-ed and t!e &ac!inery ne,er ser,ed t!e

$ur$ose for !ic! it as $urc!ased* T!e "uyer )

&ust "e $aid interest on t!e a&ount $aid toards

t!e $rice of t!e &ac!inery*T!e "uyer !as clai&ed

interest at t!e rate of ei#!teen $er cent $er annu&'

"ut ta-in# into consideration t!e &ar-et rate of

interest' I dee& it a$$ro$riate to #rant si&$leinterest at t!e rate of fifteen $er cent $er annu& on

t!e said a&ount of Rs*48' P' 4:5.* Suc! an

interest ould "e $aya"le fro& 8**88 till date

of $ay&ent*


42/63

Sale and Transfer of Oners!i$(

Cases


43/63

Oners!i$ si#nificant for t!e "uyer as ell

as seller* Oners!i$ furnis! e/clusi,e ri#!ts to t!e

oner*

Oners!i$ = $ossession are se$arate* A$erson can $osses a t!in# at t!e sa&e

ti&e &ay not on it*


44/63

Oners!i$ can transfer only in s$ecific

#oods or ascertained #oods*

Oners!i$ $asses as a#reed "eteen t!e

$arties in e/$ress or i&$lied ter&s

If t!e contract does not $ro,ide on t!e

ti&e of $assin# in e/$ress or i&$lied

ter&s' it $asses !en t!e contract is&ade*


45/63

Instances of oners!i$ and $ossession(

A car in a #ara#e for re$airin#* Trans$ort co&$any carryin# #oods fro& one

$lace to anot!er*

;eellery lyin# in t!e 6an- loc-er*


46/63

a&al $urc!ases clot!es ort! Rs*3'fro& a store for !is dau#!ters eddin#*

After $urc!asin# t!e clot!es !ere&e&"ers t!at !e !ad to $ic- u$ one&ore outfit for !is dau#!ter and re>uests

cas!ier to -ee$ t!e $urc!ased clot!esit! !i& for 7 &inutes* As soon as !e#oes t!ere is a fire in t!e store andunfortunately !is $urc!ased clot!es #et

destroyed* a&al de&andin# sa&e clot!es "ac-

fro& t!e store stoc- or &oney "ac-*


47/63

1rinci$les Oner is entitled to an e/clusi,e en?oy&ent of

t!e #oods as ell as for t!e loss of t!e #oodsor da&a#e*

Ris- also $asses it! oners!i$*

Contract of sale !ic! do not $ro,ide ti&e of

t!e transfer of oners!i$ in e/$ress or i&$liedter&s are called unconditional contracts

In case of s$ecific #oods' if t!e contract doesnot $ro,ide in eit!er e/$ress or i&$lied ter&s

on t!e $assin# of oners!i$' t!e oners!i$ istransferred to t!e "uyer !en t!e contract is&ade*


48/63

;os! as sellin# and installin# a LCD Tfor Tia* Tia !ad to $ay for t!e T in

ad,ance* T!e ter&s of t!e contract ere t!at

$ro$erty in t!e T ould $ass !en ;os!

installed t!e &ac!ine to t!e satisfaction ofTia* Durin# t!e course of installin# T #otda&a#ed* Tia is insistin# t!at s!e s!ould"e #i,en a ne T !ile ;os! says t!at

Tia &ust "ear t!e loss of t!e da&a#e* Decide*

Le#al 1ro,ision


49/63

Le#al 1ro,ision

+&4% +ellers lien

7 Su"?ect to t!e $ro,isions of t!is Act' t!e un$aidseller of #oods !o is in $ossession of t!e& isentitled to retain $ossession of t!e& until $ay&entor tender of t!e $rice in t!e folloin# cases'

na&ely(.a !ere t!e #oods !a,e "een sold it!out anysti$ulation as to creditue is Dis!onoured


53/63

T!e C!e>ue is Dis!onoured

Assured it! t!e a"o,e $rotection' Dennant let in#

ta-e aay t!e ,e!icles* T!e c!e>ue' !oe,er' asdis!onoured on $resentation and it trans$ired t!at

in# !ad no connection it! t!e in#s Hotors* In

t!is !ile' in# !ad sold t!e car to a $erson' !o in

turn sold it to S-inner' anot!er &otor car co&$any*

T!e $olice as infor&ed of t!e &atter* in#

$leaded #uilty and as con,icted* Dennant sou#!tto reco,er t!e car' clai&in# to "e !is $ro$erty' fro&

S-inner* S-inner and Dennant !ad a dis$ute as to

t!e oners!i$ of t!e car*

Le#al 1ro,ision


54/63

Le#al 1ro,ision

Section 7P of t!e 6ritis! Sale of Goods Act' 7P*

Section 7 of t!e Indian Sale of Goods Act$ro,ides(

+!ere t!ere is an unconditional contract for t!esale of s$ecific #oods' in a deli,era"le state' t!e

$ro$erty in t!e #oods $asses to t!e "uyer !en t!e

contract is &ade' and it is i&&aterial !et!er t!e

ti&e of $ay&ent or t!e ti&e of deli,ery or "ot! "e$ost$oned*

;ud#e&ent


55/63

;ud#e&ent

A contract of sale is concluded in an auction sale on

t!e fall of t!e !a&&er' and' indeed' t!e Sale ofGoods Act' 7P' s* 3P 8' so $ro,ides* )

Accordin#ly' on t!e fall of t!e !a&&er t!e $ro$erty

of t!is car $assed to in# unless t!at $ri&a facie

rule is e/cluded fro& a$$lyin# "ecause of a

different intention a$$earin# or "ecause t!ere as

so&e condition in t!e contract !ic! $re,ented t!e

rule fro& a$$lyin#*

;ud#e&ent


56/63

;ud#e&ent

T!e court constructed t!e su"se>uent si#nin# of

t!e docu&ent on oners!i$(

T!e docu&ent conte&$lates t!at t!e oners!i$of t!e ,e!icle !as not $assed to t!e "idder' "ut'

as I !a,e already said' in &y ?ud#&ent' it !ad$assed on t!e fall of t!e !a&&er' and' ifsu"se>uently t!e "idder e/ecuted t!e docu&entac-noled#in# t!at t!e oners!i$ of t!e ,e!icle

ould not $ass to !i&' t!at could not !a,e anyeffect on !at !ad already ta-en $lace*

;ud#e&ent


57/63

;ud#e&ent

) t!e $ro$erty !ad $assed on t!e fall of t!e

!a&&er' "ut still t!e $laintiff !ad a ri#!t to retain$ossession of t!e #oods until $ay&ent as &ade*If' !en !e as ready to deli,er t!e #oods'$ay&ent as not &ade' !e could !a,e sued for t!e

$rice' or !e could !a,e e/ercised $oers of re.sale'and !e could !a,e secured !i&self "y ay of lienon t!e #oods for t!e $rice' "ut once !e c!ose' forreasons #ood' "ad' or indifferent' as a result of

state&ents fraudulent or !onest' to $art it! t!e$ossession of t!e ,e!icle "y #i,in# deli,ery of it'

;ud#e&ent


58/63

;ud#e&ent

!e t!en lost !is sellers lien and !e no lon#er !ad a

ri#!t to $ossession of t!e ,e!icle* Ke !ad a ri#!tuntil it as deli,ered' "ut as t!e ri#!t of retainer as

not e/ercised !e !ad no ri#!t in t!e ,e!icle* T!e

$ro$erty in t!e ,e!icle !ad $assed to in#)* Kis

ri#!t to t!e $ro$erty !ad #one and !is ri#!t to

$ossession !ad #one*

;ud#e&ent


59/63

;ud#e&ent

T!e Court concluded(

In &y ,ie' t!e $ro$erty !ad $assed on t!e

fallin# of t!e !a&&er* T!e ri#!t to $ossession

!ad $assed !en t!e $laintiff' $ersuaded and&isled "y in#s lies' $arted it! !is sellers lien'

and t!ere as not!in# left on !ic! !e could

found a clai& a#ainst so&e t!ird $erson' in t!is

case t!e defendant' !o as t!us $ut in$ossession of t!e ,e!icle*


60/63

Hs* Harar Tent Factory ,* Bnion

of India

Loss in Transit


61/63

Loss in Transit

After t!e tents ere $assed "y t!e ins$ector' t!e

tents ere to "e des$atc!ed to Co&&andant'C*O*D*' an$ur* Tents ere to "e $ut on rails at;od!$ur under t!e ter&s of Jf*o*r* ;od!$ur* Deli,erynote as to "e sent to C*O*D* an$ur "y re#istered

$ost* On recei$t of t!e deli,ery note' C*O*D* as to$ay 39 of t!e $rice to t!e Harar Tent Co&$any*T!e re&ainin# 39 as to "e $aid after recei$t oft!e #oods in #ood condition "y t!e C*O*D*' an$ur*

A consi#n&ent of 73 tents as des$atc!ed "yt!e Harar Tent Co&$any* As a result of $ilfera#ein transit' C*O*D* an$ur recei,ed only 78: tents*It' t!us' deducted for t!e loss of 884 tents fro& t!e$ay&ent to Harar Tent Co&$any*

;ud#e&ent


62/63

;ud#e&ent

Bnder a free on rail contract F*O*R* t!e seller

underta-es to deli,er t!e #oods into railay a#onsor at t!e station de$endin# on t!e $ractice of t!e

railay at !is on e/$ense' and co&&only to

&a-e suc! contract it! t!e railay on "e!alf of t!e

"uyer as is reasona"le in t!e circu&stances* 1ri&a

facie t!e ti&e of deli,ery f*o*r* fi/es t!e $oint at

!ic!. $ro$erty and ris- $ass to t!e "uyer and t!e

$rice "eco&es $aya"le*

;ud#e&ent


63/63

;ud#e&ent

T!e ords f*o*r* are ell -non ords in

co&&ercial contracts* In &y ?ud#&ent t!ey &ean!en used to >ualify t!e $lace of deli,ery' t!at t!esellers lia"ility is to $lace t!e #oods free on t!e railas t!e $lace of deli,ery* Once t!at is done t!e ris-

"elon#s to t!e "uyer*

) in ,ie of t!e ter&s and conditions of t!econtract ) re#ardin# t!e $lace of deli,ery F*O*R*

;od!$ur' t!e $ro$erty in t!e #oods $assedi&&ediately on to t!e seller after deli,erin# t!e#oods and loadin# t!e sa&e in t!e railay a#onsat ;od!$ur for trans&ission to t!e "uyer )

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SESSION-4 Sale of Goods

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