STRUCTURE OF THE PRESENTATION

STRUCTURE OF THE PRESENTATION
Introduction Remedies of the Seller Against the Buyer Remedies of the Buyer Against the Seller

INTRODUCTION The term ‘breach of contract of sale’ may be defined as the non-fulfilment of the respective obligations of either party. In other words, when the buyer fails to pay the price or accept the goods, or the seller fails to deliver the goods, the breach is said to have occurred.

REMEDIES OF SELLER AGAINST THE BUYER
The seller has the following rights against the buyer: (1) Action or Sue for Price (2) damages for non-acceptance of goods (3) Sue for Damages for Repudiation of the Contract before the due date of delivery of goods (4) Sue for Interest

(1) Action or Sue for Price The payment of the price is the legal obligation of the buyer. On the transfer of the ownership of the goods to the buyer, he becomes bound to pay the price to the seller. If the seller does not pay price in terms of the contract, the seller may bring a legal action against the buyer for the payment of the price.

Section 49(1) of the Sale of Goods Act 1893 provides that “Where, under a contract of sale, the property in the goods has passed to the buyer, and the buyer wrongfully neglects or refuses to pay for the goods according to the terms of the contract, the seller may maintain an action against him for the price of the goods.”

Generally, the seller can sue for price of the goods sold only when ownership of the goods is transferred to the buyer. But sometimes, the contract of sale provides that the price shall be paid on a certain day whether the goods are delivered or not. In such cases, if the buyer fails to pay the price on that day, the seller may file a suit against the buyer for the recovery of the price. In such a case, the transfer of ownership of the goods to the buyer is immaterial for seller’s action for price.

Section 49(2) of the Sale of Goods Act 1893 provides that “Where, under a contract of sale, the price is payable on a day certain irrespective of delivery, and the buyer wrongfully neglects or refuses to pay such price, the seller may maintain an action for the price, although the property in the goods has not passed, and the goods have not been appropriated to the contract.”

(2) damages for non-acceptance of goods Sometimes, the seller is ready and willing to deliver the goods to the buyer, but the buyer wrongfully neglects or refuses to accept the goods and pay for them. In such cases, the seller may bring an action against the buyer for the recovery of damages suffered due to non-acceptance of the goods.

Section 50(1) of the Sale of Goods Act 1893 provides that “Where the buyer wrongfully neglects or refuses to accept and pay for the goods, the seller may maintain an action against him for damages for non-acceptance. (2) The measure of damages is the estimated loss directly and naturally resulting, in the ordinary course of events, from the buyer's breach of contract.”

The damages recoverable by the seller are ascertained according to the following rules: (i) Where there is ready market for the goods, the measure of damages is the difference between the contract price and the market price on the day of the breach, and if the difference between the contract price and market price is nil, the seller can get only nominal damages.

(ii) Where the goods do not have any ready market, the measure of damages will depend on the facts of each case. Generally, the damages will be such as directly and naturally arise in the ordinary course of events from the breach.

Section 50(3) of the Sale of Goods Act 1893 provides that “Where there is an available market for the goods in question the measure of damages is prima facie to be ascertained by the difference between the contract price and the market or current, price at the time or times when the goods ought to have been accepted or, if no time was fixed for acceptance, then at the time of the refusal to accept.”

(3) Sue for Damages for Repudiation of the Contract before the due date of delivery of goods Sometimes, the buyer repudiates, that is, puts an end to the contract before the due date of delivery of goods. In such cases, the seller may either treat the contract as subsisting (that is, existing and operative), and may not take any action against the buyer till the date of delivery of goods, or he may treat the contract as repudiated and bring an action against the buyer for the recovery of damages.

In other words, if the buyer repudiates the contract before the due date of delivery of goods, the seller has the following options: (i) He may not immediately take any action against the buyer, and treat the contract as subsisting and wait until the date of delivery of goods. (ii) He may immediately treat the contract as repudiated and bring a legal action against the buyer for the recovery of damages.

Therefore, the option of bringing the action lies with the seller. He may either wait till the date of delivery of goods arrives, or bring an immediate action for damages. If the seller treats the contract as operative and waits until the date of delivery arrives, then the buyer may demand the goods when the date for delivery arrives and the seller will be bound to deliver the goods.

In such cases, the seller can recover damages only if the buyer repudiates the contract on the arriving of the date of delivery of the goods. The amount of damages will be measured by the difference between the contract prices and the market price on the day fixed for delivery of goods. If he treats the contract as repudiated then he may bring an immediate action for damages. Then the amount of damages will be measured by the difference between the contract price and market price on the date of breach.

(4) Sue for Interest When the seller tenders the goods, but the buyer fails to accept and pay for them, then the seller may take legal an action for the recovery of the price. In such a suit, the seller may also claim interest on the amount of price payable by the buyer. The court may award the interest from the date of tender of the goods or from the date when the price is payable.

The rate of interest to be awarded is at the discretion of the court. It may be noted however, that the interest can be recovered by the seller only when he is entitled to recover the price. Therefore, when the seller’s remedy is for damages, he cannot file a suit for interest.

Section 54 of the Sale of Goods Act 1893 provides that “Nothing in this Act shall affect the right of the buyer or the seller to recover interest or special damages in any case where by law interest or special damages may be recoverable, or to recover money paid where the consideration for the payment of it has failed.”

REMEDIES OF BUYER AGAINST THE SELLER
The buyer’s remedies against the seller are as follows: (1) Action or Sue for Damages for non-delivery of goods (2) Action or Sue for Damages for Repudiation of the Contract before the due date of delivery of goods (3) Sue for Specific performance of Contract (4) Sue for Breach of Warranty (5) Sue for Interest

(1) Action or Sue for Damages for non-delivery of goods Sometimes, the buyer is ready and willing to take deliver the goods, but the seller wrongfully neglects or refuses to delivery the goods to him. In such cases, the buyer may bring an action against the seller for the recovery of damages suffered by him due to non-delivery of the goods.

Section 51(1) of the Sale of Goods Act 1893 provides that “Where the seller wrongfully neglects or refuses to non-delivery, deliver the goods to the buyer, the buyer may maintain an action against the seller for damages for non-delivery. (2) The measure of damages is the estimated loss directly and naturally resulting, in the ordinary course of events, from the seller's breach of contract.”

The rules regarding the ascertainment of the damages are the same as discussed under the seller’s right of suit for damages for non-acceptance of the goods by the buyer. However, where the buyer purchased the goods for resale and the seller knew of this fact, the damages will be ascertained as the difference between the contract price and the resale price.

Section 51(3) of the Sale of Goods Act 1893 provides that “Where there is an available market for the goods in question the measure of damages is prima facie to be ascertained by the difference between the contract price and the market or current price of the goods at the time or times when they ought to have been delivered, or, if no time was fixed, then at the time of the refusal to deliver.”

(2) Action or Sue for Damages for Repudiation of the Contract before the due date of delivery of goods Sometimes, the seller repudiates, that is, puts an end to the contract before the due date of delivery of goods. In such cases, the buyer may either treat the contract as subsisting (that is, existing and operative), and may not take any action against the seller till the date of delivery of goods, or he may treat the contract as repudiated and bring an action against the buyer for the recovery of damages.

In other words, if the seller repudiates the contract before the due date of delivery of goods, the buyer has the following options: (i) He may not immediately take any action against the seller, and treat the contract as subsisting and wait until the date of delivery of goods. (ii) He may immediately treat the contract as repudiated and bring a legal action against the seller for the recovery of damages.

Therefore, the option of bringing the action lies with the buyer. He may either wait till the date of delivery of goods arrives, or bring an immediate action for damages. If the buyer treats the contract as operative and waits until the date of delivery arrives, then the seller may deliver the goods when the date for delivery arrives and the buyer will be bound to accept them.

In such cases, the buyer can recover damages only if the seller repudiates the contract on the arriving of the date of delivery of the goods. The amount of damages will be measured by the difference between the contract prices and the market price on the day fixed for delivery of goods. If he treats the contract as repudiated then he may bring an immediate action for damages. Then the amount of damages will be measured by the difference between the contract price and market price on the date of breach.

(3) Sue for Specific performance of Contract On the seller’s failure to deliver the goods, buyer may commence a legal action for specific performance of contract against the seller. By such a legal action, the buyer may obtain an order from the court compelling the seller to deliver the goods sold to the buyer. The seller may be compelled to deliver the goods sold though he may be willing to pay damages for the breach of contract.

However, the remedy for specific performance is available to the buyer only in the following cases: (i) When the contract is for the sale of specific or ascertained goods, and (ii) The damages would not be an adequate remedy. It is worth noting that the passing of an order for the specific performance of the contract is at the discretion of the court, that is, the court may or may not allow the specific performance of the contract.

However, the courts generally do allow the specific performance when the damages would not be an adequate remedy or when it would not be possible to ascertain the actual loss, for example, where the goods are of unique or of special value such as a rare painting which may not be available in the market.

Section 52 of the Sale of Goods Act 1893 provides that “In any action for breach of contract to deliver specific performance ascertained goods the court may, if it thinks fit, application of the plaintiff, by its judgment or decree direct that the contract shall be performed specifically, without giving the defendant the option of retaining the goods on payment of damages. The judgment or decree may be unconditional, or upon such terms and conditions as to damages, payment of the price, and otherwise, as to the court may seem just, and the application by the plaintiff may be made at any time before judgment or decree.”

(4) Sue for Breach of Warranty In case of breach of warranty, the buyer cannot reject the goods. However, he has the right to claim damages from the buyer. Section 53 of the Sale of Goods Act provides the remedies which the buyer is entitled to when the seller breaches the warranty.

Section 53 of the Sale of Goods Act 1893 provides that “(1) Where there is a breach of warranty by the seller, Remedy for or where the buyer elects, or is compelled, to treat any breach breach of of a condition on the part of the seller as a breach warranty. of warranty, the buyer is not by reason only of such breach of warranty entitled to reject the goods; but he may (a) set up against the seller the breach of warranty in diminution or extinction of the price; or (b) maintain an action against the seller damages for the breach of warranty.

(2) The measure of damages for breach of warranty is the estimated loss directly and naturally resulting, in the ordinary course of events, from the breach of warranty. (3)In the case of breach of warranty of quality such loss is facie the difference between the value of the goods at the time of delivery to the buyer and the value they would have had if they had answered to the warranty.

(4) The fact that the buyer has set up the breach of warranty in diminution or extinction of the price does not prevent him from maintaining an action for the same breach of warranty if he has suffered further damage.”

(5) Sue for Interest Sometimes, the buyer has already paid the price but the seller fails to deliver the goods. In such cases, the buyer may take legal action for the recovery or refund of the price. In such a suit, the buyer may also claim interest on the amount of price paid by him. The court may award the interest from the date on which the payment of price was made.

It may be noted however, that the interest can be recovered only when the buyer is entitled to refund of the price. Therefore, when the buyer’s only remedy is for damages, he cannot file a suit for interest.

Section 54 of the Sale of Goods Act 1893 provides that “Nothing in this Act shall affect the right of the buyer or the seller to recover interest or special damages in any case where by law interest or special damages may be recoverable, or to recover money paid where the consideration for the payment of it has failed.”

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