Kumar NN Management and commerce Department Mysore India

 Sale of Goods Act came into existence on 1 st July’1930.  It extends to the whole India except Jammu and Kashmir.  Sale of moveable goods are contained in the Sale of Goods Act, 1930.

Transactions relating to immovable properties, for example, the sale, lease, gift., are governed by a separate act known as Transfer of Property Act, 1882.

 Sec 4 (1) “A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in the goods to the buyer for a price”  Sale : Sec 4(3) of sale of Goods Act, “Where under a contract of sale, property in the goods is transferred from the seller to the buyer, the contract is called a sale”

 Bilateral contract  Bilateral contract : There must be 2 parties., i.e. buyer and seller.  Goods  Goods : - Subject matter of the contract. - Deals with moveable property only. Ex: stock, shares, growing crop, grass etc.  Price  Price : price is the consideration for the contract of sale and it must be money. However, it may be partly in money and partly in goods.

 Transfer of property  Transfer of property : There must be an absolute transfer of ownership from the seller to the buyer.  Essential elements of valid contract  Essential elements of valid contract : Lawful consideration, free consent, capacity of parties, lawful object, possibility of performance, etc.

Sale Agreement to sell Agreement to sell Transfer of property Transfer of property take place immediately Take place at future time Type of Goods Only the existing and specific Future and contingent goods Risk of Loss On destruction of goods the loss falls on the buyer, even though goods are in possession of the seller On destruction of goods the loss falls on the seller, even though goods are in possession of the buyer

Sale Agreement to sell Agreement to sell Nature of contract It is an executed contract. It is an executory contract Right to re-sell The seller cannot re-sell the goods … He can sell the goods

1. Goods 2. Price

moveable property  Goods means every kind of moveable property other than actionable claim or money.  i.e., Things which can be carried from one place to another that form ‘goods’;  Ex : things like goodwill, copyright, trade mark, patents, water, gas, electricity are all goods.

 Money  Money : If money is exchanged for money, it is transaction of exchange and not of sale.  But if the consideration for transfer of property in goods consists of partly of goods and partly of money, it is treated as sale.

 Actionable claim are things which a person cannot make use of, but which can be claimed by him by means of a legal actions,  For example : A debt

Goods Existing Goods Future Goods Contingent Goods Specific Goods Ascertained Goods Unascertai ned Goods

 Existing goods are those which are owned or possessed by the seller at the time of the contract (Sec.6)  Specific Goods : Specific goods means goods identified and agreed upon at the time a contract of sale is made. Ex: A wrest watch, A dog, A cow etc,.

 Ascertained Goods : Identified in accordance with the agreement after the time a contract of sale is made.  Unascertained Goods : Indicated by description an not specifically identified. Ex: X went to a computer shop and selected one among ten Samsung computer which were there. The selected computer is called ascertained goods. Until the selection of a particular computer from the lot, it is called undertrained goods

 Future goods means goods to be manufactured or produced or acquired by the seller, after making the contract of sale; Ex: An agreement to sell future crops of a particular field implied an agreement to sell future goods.

 Contingent Goods : The acquisition of which by the seller, depends upon a contingency which may or may not happen. Contingent goods are part of future goods. Ex: A contract to sell certain goods, which are in a particular ship after its arrival. The obligation to supply the goods depends upon the arrival of the ship with such goods.

Price  Sec. 2 (10) of the sale of Goods Act has defined price as the money consideration for a sale of goods. The price must be expressed in terms of money.

1. Fixation of price by the contract of sale : price may be expressly determined by the contract of sale. 2. Fixation of price in a agreed manner in the contract of sale: 3. Fixation of price by course of dealings Based on the customs of trade certain principles determine the price

 Fixation of a reasonable price : when previous principle are not applicable, buyer shall pay to the seller a reasonable price. - It is not necessarily the market price  Fixation of price by the third party : usually price will be fixed by the valuation of a third party. Earnest money : money paid by one party, in advance, to another party as a security.

 Conditions : A condition is a stipulation which is essential to the main purpose of the contract. It goes very root of the contract. It there is a breach of a condition, the aggrieved party can treat the contract as repudiated.

 Warranty : A warranty is a stipulation which is collateral to the main purpose of the contract. If there is a breach of warranty, the aggrieved party can only claim damages and he has no right to treat the contract as repudiated.

Basis of Difference ConditionWarrantyNature It is a stipulation which is essential to the main purpose of the contract of sale It is a stipulation which is collateral to the main purpose of contract. Importance Condition is essential for the existence of a contract of sale It is of subsidiary or inferior character. It does not depend on the existence of the contract

Basis of Difference ConditionWarranty Transfer of ownership Ownership on goods cannot be transferred without fulfilling the condition Ownership on goods can be transferred to the buyer without fulfilling the warranty Effect on consideration Condition is effected on the total consideration Warranty is effected on certain part of the consideration

Basis of Difference ConditionWarranty Exemption from performance In case of breach of condition, the aggrieved party can repudiate the contract and be exempted form performance and can claim for damages also In the case of breach of warranty, the aggrieved party cannot rescind the contract, but can claim damages only.

Basis of Difference ConditionWarrantyTreatment A breach of condition may be treated as a breach of warranty. This would happen where the injured party is satisfied with damages only A breach of warranty cannot be treated as a breach of condition.