Sale Of Goods Act 1930

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Sale Of Goods Act 1930
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Section 4 Sale and Agreement to Sale

• The 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. There may be a contract of sale between
  one part owner and another.
• A contract of sale may be absolute or
  conditional.
• Where under a contract of sale the property in
  the goods is transferred from the seller to the
  buyer, the contract is called a sale, but where
  the transfer of property in the goods is to take
  place at a future time or subject to some
  conditions thereafter to be fulfilled, the
  contract is called an agreement to sell.
• An agreement to sell becomes a sale when the time
  elapses all the conditions are fulfilled subject
  to which the property in the goods is to be
  transferred.

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Section 4 Sale and Agreement to Sale

• Examples
• The Section may be illustrated by the following
  examples
• A agrees to buy a haystack from B on Bs land
  with liberty to come on Bs land to take it away.
  This is a sale and B cannot revoke the licence
  given to A to woo on his land. (Wood Vs Manley
  1839)
• Agreement by A to buy 20 tonnes of oil from the
  sellers cisterns. The seller has many cisterns,
  with more than 20 tonnes in them. This is merely
  an agreement to sale. (White Vs Wilks, 1813)
• Agreement for sale of a quantity of nitrate of
  soda to arrive at a certain ship. This is an
  agreement to sell at a future date subject to the
  double condition of the arrival of the ship with
  the specified cargo on board. (Johnson Vs
  Macdonald 1842)
• A customer who picks up goods in a self-service
  shop is merely offering to buy them and the sale
  is not complete until they are paid for.
  (Pharmaceutical Society Vs Boots, 1952)

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Essential Requisites of Sale

• In the case of (state of Madras Vs Gannon
  Dunkerley and Company Limited, 1958) the Supreme
  Court has held that according to the law, both of
  England and India, in order to constitute a sale,
  it is necessary that there should be an agreement
  between the parties for the purpose of
  transferring title to goods, which of course
  presupposed capacity to contract, that it must be
  supported by money consideration, that as a
  result of transaction, the property must actually
  pass in the goods. Unless all these elements are
  present there would be no sale.

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• The essential object of the contract of sale is
  the exchange of property for a money price. There
  must be a transfer of property or an agreement to
  transfer it, from one party, the seller, to the
  other, the buyer, in consideration of a money
  payment or of a promise thereof by the buyer
  thereof. Both under the common law and the
  statute law relating to sale of goods England and
  in India, to constitute a transaction of sale,
  there should be an agreement, expressed or
  implied relating to goods to be completed by
  passing of title in those goods. It is the
  essence of the concept that both the agreement
  and the sale should relate to the same subject
  matter. Transfer of property in goods for a price
  is the linch pine of the definition. It is,
  however, not an inevitable rule that the price
  must be fixed. An allotment of goods among
  partners on dissolution of partnerships is not a
  sale. Exchange of property for something other
  than money is not a sale. The difference between
  a sale and an exchange is that in the former the
  price is paid in money while in the latter it is
  paid in good by way of barter. But if the
  exchange is made partly for goods and partly for
  a price, the contract is probably one of a sale.

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Sale and Agreement to Sale

• An agreement to sell, which is also called an
  executive contract of sale, is a contract simply,
  and creates only a jus in personance the
  property in the goods which forms subject matter
  of the contract remains in the seller, so that
  they may be taken in execution of his debts, and
  belongs on his bankruptcy to his trusty in
  bankruptcy if they are destroyed the loss will,
  in the absence of excess agreement, have to be
  borne by him and a breach by either party of the
  agreement will normally only give the other party
  a right to sue for damages.
• The term contract of sale includes both actual
  sales and agreement for sale.

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• The Supreme Court distinguished these two classes
  of contract thus
• An agreement to sell is a contact pure and simple
  whereas a sale is a contract plus conveyance. By
  an agreement to sale a jus in personance is
  caused by a sale a jus in rem also is
  transferred. Where goods have been sold and the
  buyer makes the fault, the seller may sue for the
  contract price on the count of goods bargained
  and sold but when an agreement to buy is broken,
  the sellers normal remedy is an action for
  unliquidity damages. If an agreement to sell be
  broken, by the seller, the buyer has only a
  personal remedy against the seller. The goods are
  still the property of the seller, and he can
  dispose of them as he likes, but if there has
  been a sale and a seller breaks his engagement to
  deliver the goods, the buyer has not only a
  personal remedy against the seller but also the
  usual proprietary remedies in respect of the
  goods themselves. In many cases, too, he can
  follow the goods into the hands of third parties.
  Again, if there be an agreement of sale, and the
  goods are destroyed the loss as a rule falls on
  the seller, while if there has been a sale, the
  loss as a rule falls up on the buyer though the
  goods may have never come to his position. (The
  Instalment Supply Limited Vs STO Ahmedabad and
  others, 1974.)

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Formalities of a contract of sale

• Section 5 Contract of Sale - how made
• A contract of sale is made by an offer to buy or
  sell goods for a price and the acceptance of such
  price. A contract may provide for the immediate
  delivery of goods or immediate payment of the
  price or both, or for the delivery or payment by
  instalments. Or that the delivery of payments or
  both shall be postponed.
• Subject to the provisions of any law for the time
  being enforced, a contract of sale may be in
  writing or by the word of mouth or may be
  impliedly or may be implied from the conduct of
  the parties.

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Formalities of a contract of sale

• A statement or conduct inviting the making of an
  offer such as by display of goods in a shop does
  not buy itself bind the shopkeeper to accept the
  customers offer even at the price displayed or
  advertised. Such invitation to treat therefore
  differs from an offer, which is intended to be
  binding on the person making it and is capable of
  being accepted without any further negotiation.
  Where, however, the accessibility to goods in
  intended to an offer capable of acceptance by
  customers act such as filling the petrol tank of
  a car from a self service pump or choosing items
  in a self service shop or taking goods intended
  for sale for an automatic vending machine the
  question of obtaining sellers assent does not
  arise.

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Formalities of a contract of sale

• Sub-section 1 emphasis the consensual nature of a
  contract of sale the parties may agree to such
  terms as they think fit. A sale can be complete
  even without effecting immediate delivery and
  immediate payment. In a contract of sale, the
  title in goods passes immediately on the payment
  of price while in an agreement to sale the title
  in goods passes at a future time subject to
  conditions to be fulfilled thereafter however,
  when the goods are accepted by the buyer and the
  price is received by the seller the sale is
  deemed to be complete.

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• Earnest
• The conclusion of a contract of sale is sometimes
  marked by the giving of earnest this was
  expressly referred to in Sec. 78 of the Contract
  Act with regard to the giving of earnest Fry L.J.
  said in Howe V.s Smith (1884). The practice of
  giving something to signify the conclusion of the
  contract, sometimes a sum of money, sometimes a
  ring or other object, to be repaid or redelivered
  on the completion of the contract, appears to be
  one of great antiquity and very general
  prevalence.. It was familiar to the law of Roam
  ( where the rule was that a defaulting buyer
  forfeited the earnest money and a defaulting
  seller was bound to restore it two fold.
• Earnest whether given in money or not must be
  something of value really given by the buyer and
  kept by the seller A mere symbolic ceremony
  such as one party drawing a coin across the
  others hand will not do.
• When a deposit in the nature of earnest is paid
  for the same of immovable property in India, a
  vendor by whose default the sale goes off must
  return the sum so paid, but if the default is the
  purchasers the purchaser must loose it.

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Conditions and Warranties

• Sec. 11 - Stipulation as to time Unless a
  different intention appears from the terms of the
  contract, stipulation as to time of payment are
  not deemed to be of the essence of a contract of
  sale. Whether any other stipulation as to time is
  of the essence of the contract or not depends on
  the terms of the contract. Examples The section
  may be illustrated by the following examples
• 1) Sale of some stacks of oak on the sellers
  ground, upon the terms that they might remain
  there for four months and the buyer should pay
  within 12 weeks of the contract. The seller on
  the expiration of 12 weeks demanded the price
  which the buyer failed to pay. Later the buyer
  asked for further time which the seller refused
  to give, and said that as the buyer had not paid
  he should not have the stacks. The buyer later
  tendered the price, but the seller refused to
  accept it and subsequently resold the stacks. The
  Buyer was held entitled to recover in an action
  of trover. ( Martin Dale V/s. Smith 1841)
• 2) Sale of goods to be shipped and bill of lading
  to be dated December January. Goods were
  shipped on 30th January but the bill of lading
  was dated 2nd February the buyer was held
  entitled to reject.

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Stipulations as to time of payment

• As punctual payment does not go to the whole
  consideration of the sale, the failure by the
  buyer to pay on the appointed day does not as a
  rule, entitle the seller to treat the contract as
  repudiated, though he may be entitled to withhold
  delivery until the price is paid and to resell
  the goods if the buyer does not pay or tender the
  price within a reasonable time. Consequently, if
  before such resale the buyer tenders the price,
  even though it be on a date after the date name
  in the contract the seller cannot, in the absence
  of a stipulation to the contrary, treat the
  contract as at an end and refuse to allow the
  buyer to have the goods and a subsequent resale
  by him will be tortious. The time cannot be taken
  to be the essence of the contract in case where
  the contract itself does not stipulate the time
  for payment of the price.

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Stipulations as to time of performance of other
terms

• As the Act deals with all kinds of contracts of
  sale, and not only with commercial contracts, the
  enactment as to stipulations as to time, other
  than as to payment of the price, is necessarily
  put in somewhat general language. If a man
  orders a suit of clothes, a promise by the tailor
  that he shall have it by a certain date would
  not, generally speaking, be of the essence of the
  contract, though it might be if he was ordering
  court dress for the purpose of attending a court
  on a particular day. But in the case of
  commercial contracts, although occasionally
  stipulations as to time may not be of the
  essence, the usual rule is that they are.
• In contracts of sales of goods, the computation
  of the time of performance from a particular
  date, act or event is prima facie exclusive of
  the day, act or event and inclusive of the day of
  performance, although this presumption may be
  displaced by a contrary intention appearing from
  the contract and its surrounding circumstances.

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Waiver of the stipulations

• Stipulations as to time may be waived by the
  party in whose favour they are inserted either
  expressly or by implication, and if he does so he
  cannot afterwards treat the failure to comply
  with them by other party as giving a right to
  rescind the contract. Where, however, an initial
  stipulation making time of the essence of the
  contract is waived, reasonable notice to make
  time again of the essence would give rise to the
  right to rescind. There can, strictly speaking,
  be no waiver after breach, but to accept goods,
  though delivered late, is often spoken of as a
  waiver of the right of action which the breach
  has given.

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Section 12. Condition and Warranty

• A stipulation in a contract of sale with
  reference to goods which are subject thereof may
  be a condition or a warranty.
• A condition is a stipulation essential to the
  main purpose of the contract, the breach of which
  gives rise to a right to treat the contract as
  repudiated.
• A warranty is a stipulation collateral to the
  main purpose of the contract, the breach of which
  gives rise to a claim for damages but not to a
  right to reject the goods and treat the contract
  as repudiated.
• Whether a stipulation in a contract of sale is a
  condition or a warranty depends in each case on
  the construction of the contract. A stipulation
  may be a condition, though called a warranty in
  the contract.
• Synopsis
• 1. Conditions and warranties 2. Express
  Conditions
• 3. Express Warranties 4. Representations
• 5. Implied conditions and warranties 6. Puffs

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1. Conditions and Warranties

• This section is in effect an additional
  definition or interpretation section and supplies
  a want long felt in India. At the time when the
  Contract Act was passed the phrase warranty had
  been and used with several different meanings and
  shades of meaning, and the difficulty had been
  increased by some of those meanings overlapping
  some of the meanings of the word condition.
  The Contract Act used the word warranty in this
  ambiguous sense and did not define it. The result
  was that the courts had to decide on the
  construction of each section whether the word
  warranty was used in the strict sense of the
  English Law, as it was . The present Act avoids
  this confusion and uses the words condition,
  and warranty and draws a distinction between
  the two.

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2. Express Conditions

• The parties if they wish, may put the contents of
  any particular statement or promise which passes
  between them on the same footing as the
  description of the thing contracted for, so that
  if it is not made good by the party undertaking
  it, the failure is deemed to be a total failure
  of the performance, and the other is at least
  wholly discharged, and may in addition recover
  damages for such failure of performance. This is
  a condition in the proper sense, as defined in
  sub-s (2). In the usual sense, the condition
  means an essential undertaking in the contract
  which one party promises will be made good. If
  it is not made good, not only will the other
  party be entitled to repudiate the contract, but
  also to sue for damages for breach.

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3. Express Warranties

• There may also be, and there occur in common
  practice, auxiliary promises or undertakings of
  which the breach is not intended to avoid the
  contract, but only to give a remedy in damages.
  These are warranties in the proper sense, as
  defined in sub-s (3). A condition of sale,
  protecting a seller in respect of misdescription,
  may be overridden by a warranty given before the
  sale takes place and damages may be recovered for
  breach of the warranty. Whether a statement is to
  be regarded as warranty must be objectively
  ascertained by asking whether adopting the
  standard of a reasonable man, the other party
  assumed that the representor was to be regarded
  as undertaking legal liability for his
  assertions. The importance of the statement, the
  relative knowledge and means of knowledge of the
  parties, and the possibility of verification are
  the relevant factors which would indicate whether
  the statement is a warranty. Thus, statements
  may be warranties when made by dealers, though
  they would not be warranties if made by private
  sellers for the dealers may be in possession of
  special knowledge, expertise and means of
  information not available to ordinary persons.

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4. Representations

• An affirmation as regards the goods, if it is to
  have contractual effect, must be part of the
  contract if it is not, it is only a
  representation, the untruth of which will not, in
  the absence of fraud, give rise to an action an
  for damages, though it may enable the other party
  to rescind the contract and sometimes a
  representation may amount to a condition
  precedent to the formation of the contract, so
  that if be untrue, the other party is discharged
  from all liability. It depends upon the intention
  of the parties whether an affirmation made at the
  time of, or during the negotiations for sale, is
  to be treated as a condition, a warranty or a
  mere representation and although an assertion
  made by the seller of a fact unknown to the
  purchaser may be strong evidence that it was
  intended as a warranty, it is not necessary so in
  law. If the representation does not form part of
  the contract, that is, if it is neither a
  condition nor a warranty, it amounts to an
  expression of opinion not intended to enter the
  bargain and its no fulfilment does not give rise
  to any right to a legal action.

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5. Implied Conditions and Warranty

• Although the parties may have used no expressed
  words that would create such a stipulation, the
  law annexes too many contracts, conditions, the
  breach of which may be treated by the buyer as
  avoiding the contract or given a right to
  damages. These are called as implied conditions
  and are enforced on the grounds that the law
  infers from all the circumstances of the case,
  that the parties intended to add such a
  stipulation to their contract, but did not put it
  into expressed words.
• Most of the statutory implied terms as to sellers
  duties as to title, confirmative with description
  and quality, terms designated a conditions by the
  contract itself, terms similar to those or
  already treated as conditions in another case,
  time clauses in mercantile contracts and residual
  category where breached of term is to be treated
  as giving right to treat the contract as
  discharged are considered as terms likely to be
  treated as conditions.
• The existence of an employed condition or
  warranty may be rebutted by proof of facts, which
  show a contrary intention

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6. Puffs

• A mere puff is a vague and extravagant statement
  so preposterous in its nature that nobody could
  believe that anyone was misled by it. The extent
  to which a statement may be so categorised
  depends on the degree or obviousness of its
  untruth. The circumstances of its making and in
  particular on the expertise and knowledge
  attributable to the person whom it is made.

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Section 13 When condition to be treated as
warranty,

• 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 an not as a ground for treating the
  contract as repudiate.
• Where a contract of sale is not severable and the
  buyer has accepted a goods or part thereof, or
  where the contract is for specific goods, the
  property in which has passed to the buyer, the
  breach of any condition to be fulfilled by the
  seller can only be treated as s breach of
  warranty and not as ground for rejecting the
  goods and treating the contract as repudiated
  unless, there is a term of a contract, expressed
  or implied to that effect
• Nothing in this section shall affect the case of
  any condition or warranty fulfilment of which is
  excused by law, by reason of impossibility or
  otherwise.

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Transfer of Property as Between Seller and
BuyerSection 18 Goods must be ascertained

• Goods must be ascertained where there is
  contract for the sale of unascertained goods, no
  property in the goods is transferred to the buyer
  unless and until the goods are ascertained
• Synopsis
• Transfer of property
• Property cannot pass until the goods are
  identified
• Part of a specific whole
• Property and risk
• Identification of goods

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Transfer of property

• This and the five following sections of the Act
  deal with the question foreshadowed by section 4
  of the Act and lay down rules which assist in
  deciding the question when the object of the
  contract of sale, namely, the transfer of the
  property in the goods to the buyer has been
  affected.

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Property cannot pass until the goods are
identified

• It is a condition precedent to the passing of the
  property in every case that, the individuality
  of the thing to be delivered should be
  established. In any given case, there may be
  question whether this condition is fulfilled or
  not, and it may be that the property will not
  pass even if it is fulfilled, but until it is,
  there is no possibility of the property passing.
  It is essential that the article should be
  specific and ascertained in a manner binding on
  both the parties, for unless that be so, the
  contract cannot be construed as contract to pas
  the property in that category.
• Where according to the terms of the contract, the
  seller was to supply waste coal ash as and when
  it was discharged from the bunkers of the
  powerhouse, it was held that the contract was for
  the sale of unascertained goods and, therefore no
  property passed to the buyer till the goods were
  ascertained. (Tej Singh Vs State of Uttar Pradesh
  and others 1981)

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3. Part of a specific whole

• It is obvious that if the contract is merely for
  the sale of goods by description, such as a
  contract for sale of a certain quantity of
  malting barley, or future goods, the necessary
  condition is not fulfilled. Nor is it fulfilled
  even if the goods are so far ascertained that the
  parties have agreed that they shall be taken from
  some specified larger stock. The parties did
  not intend to transfer the property in one
  portion of the stock more than in another, and
  the law which only gives effect to their
  intention does not transfer the property in any
  individual portion(White Vs. Wilks 1813). And
  the mere fact that an order for the delivery is
  given by the seller to the buyer, and is lodged
  by the buyer with a warehouseman, who holds the
  specified larger stock out of which the goods
  sold are to be taken, is not sufficient to
  transfer the property to the buyer.(Laurie
  Morewood Vs. Dudin sons 1926) Thus, where
  the ascertainment of the goods depends upon their
  being separated from the bulk by the seller or a
  third party or the buyer, by their being severed,
  weighed or measured or some other process, no
  property can pass until this is done (National
  Coal Board Vs. Gamble 1959)

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4. Property and Risk

• In this class of case, it is necessary to
  distinguish the passing of the property from the
  transfer of the risk the risk usually passes
  with the property, but may pass independently of
  it Thus, acceptance of the delivery warrant for
  a certain quantity of spirit out of a larger bulk
  which was liable to deteriorate in storage was
  held to put the risk of deterioration on the
  buyer, although he had acquired, not property but
  only undivided interest in the whole bulk.
  Equally, it would seem that there can be none in
  an individual part of a chattel, such as a tree
  which has been felled, of which a marked portion
  was sold, and of which the other portion is to be
  retained by the seller. In such a case, it is
  conceived, the whole tree remains the property of
  the seller until the marked portion is severed,
  even if the severance is to be done by the buyer.

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5. Identification of the goods

• The contract itself may provide that the property
  shall pass on the happening of some specified
  event, sufficient to identify the goods, and
  occasionally they may become identified by other
  means. Thus, in a case where the seller sold 250
  quarters of wheat out of a larger bulk belonging
  to him in a warehouse, and the buyer took
  delivery of 400 quarters and pledged the
  remaining 850 quarters to a bank, and in the
  meantime the seller sold the remainder of the
  bulk in the warehouse, of which delivery was
  taken, so that 850 quarters only were left in the
  warehouse, it was held that by this process of
  exhaustion the 850 quarters became ascertained
  goods and property therein passed to the buyer,
  so that the pledgee acquired a title thereto
  against the seller.(Wait Midland Bank 1926)
  In State of karnataka Vs. The West Coast Paper
  Mills Ltd. AIR 1986 it was held that where under
  a contract a company was permitted to remove
  bamboos from the forest area at Rs.10 /- per ton,
  and the government by a subsequent order enhanced
  the price to Rs.20/- per ton, it was held that
  the enhanced rate was no applicable to the
  bamboos cut although not removed prior to the
  date of the government order, because on the
  bamboos being cut and extricated, the goods being
  ascertained and in a deliverable state, the
  property had passed to the company.

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Section 19. Property passes when intended to
pass

• 1. 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.
• 2. 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
  circumstances of the case.
• 3. Unless a different intention appears, the
  roles contained in section 20 to 24 are rules for
  ascertaining the intention of the parties as to
  the time at which the property in the goods is to
  pass to the buyer.
• Synopsis
• Principles for determining whether the property
  is transferred
• Intention of the parties
• Ascertained goods

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1. Principles for determining whether the
property is transferred

• When it appears that the goods -- the subject of
  the contractare specific or ascertained, so that
  it is possible for the property to pass to the
  buyer, it becomes necessary to determine whether
  it has actually passed
• This section reproduces this statement in
  statutory form, and the rules of construction
  adopted by courts are those set out in Ss 20 to
  24.

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2. Intention of the parties

• The governing principle which should determine as
  to the passing of the property in the goods must
  be to find out what is the intention of the
  parties. It is open to the parties to agree that
  the property shall pass ipso facto immediately
  the goods become ascertained or even that it
  shall pass at some time after the delivery is
  effected. The desirability of making express
  provisions to this effect is demonstrated by the
  consequences of its omission from the Contract
  Act. It might have been thought that, even in the
  absence of such a provision, the courts would be
  free to give effect to the intention of the
  parties to a lawful contract of sale on such an
  important element of the contract as the transfer
  of the property, and that view has on some
  occasions been acted upon.

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2. Intention of the parties

• Where a company had transferred its plant and
  machinery to the finance corporation and the only
  right the company had was to redeem and it was
  clear that the company could not sell the same
  without the concurrence of the finance
  corporation it was held that the intention of the
  parties notwithstanding the language of the
  document between the company and M/s Ranga
  Engineering Company was to transfer the property
  only after obtaining the consent of the finance
  corporation and there was no sale until
  then.(PPLooke Vs. NJ Mathew others 1967) Sale
  of shares becomes complete as soon as property in
  the shares is intended to be transferred to the
  buyer. Such intention does not depend on any
  particular form or mode of transfer and has to be
  gathered from the facts of each particular case.
  Unity Company Pvt. Ltd. Vs. Diamond Sugar Mills
  others AIR 1971

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3. Ascertained goods

• Then term ascertained goods, which also occurs
  in Section 58, is not defined by the Act. It is,
  however, clear that the words specific goods
  bear the meaning assigned to them in the
  definition clause, goods identified and agreed
  upon at the time a contract of sale is made.
  Ascertained probably means identified in
  accordance with the agreement after the time a
  contract of sale is made. Sections 23 and 25,
  therefore, must also be read subject to the
  provisions of this section, and regard must be
  had to the intention of the parties when
  considering whether the property has or has not
  passed in the circumstances dealt with by those
  sections. Where teak trees to be cut were of
  more than 12 inches girth, it was held that till
  it was ascertained as to which trees fell within
  the description they were not ascertained goods.
  Badri Prasad Vs. The State of Madhya Pradesh
  AIR 1970 SC.

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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 or the time of
  delivery of goods, or both, is postponed.
• Examples
• This section may be illustrated by the following
  examples
• 1. Sale on the 4th January of a haystack on the
  sellers land at the price of 145 to the paid on
  the 4th February, the hay to be allowed to remain
  on the sellers land until the 1st May no hay to
  be cut until the price was paid. The property in
  the haystack passed on the making of the contract
  and on the stack being destroyed by fire, the
  buyer must bear the loss Tarling Vs. Baxter
  (1827)

36
Section 20 Specific goods in a deliverable state

• Examples
• 2. Sale of a specified number of bushels of oats,
  the contents of a bin in a warehouse. The seller
  gives a delivery order to the buyer, addressed to
  the warehouseman, authorising delivery of the
  oats tio the buyer, and asking the warehouseman
  to weigh them,. The warehouseman accepts the
  order and enters it in his books. The property
  has passed to the buyer, as the weighing was not
  necessary to identify the oats or to ascertain
  the price, but was merely for the satisfaction of
  the buyer. Swanwik Vs. Sothern (1839)

37
Section 21 Specific goods to be put into a
deliverable state

• Where there is a contract for the sale of
  specific goods and the seller is bound to do
  something to the goods for the purpose of putting
  them into a deliverable state, the property does
  not pass until such thing is done and the buyer
  has notice thereof.
• Example
• This section may be illustrated by the following
  example Sale of the whole contents of a cistern
  of oil, the oil to be put into casks by the
  seller and then taken away by the buyer. Some of
  the casks are filled in the presence of the
  buyer, buy before any are removed, or the
  remainder are filled, filled, fire destroys the
  whole of the oil. The buyer must bear the loss
  of the oil which had been put into the casks, the
  seller that of the remainder .Rugg Vs. Minett
  (1089)

38
Section 22 Specific goods in a deliverable
state , when the seller has to do anything
thereto in order to ascertain price

• Where there is a contract for the sale of
  specific goods in a deliverable state, but the
  seller is bound to weigh, measure, test or do
  some other act or thing with reference to the
  goods for the purpose of ascertaining the price,
  the property does not pass until such act or
  thing is done and the buyer has notice thereof.

39
Section 22

• Examples
• This section may be illustrated by the following
  examples
• 1. Sale of a stack of bark at a certain price per
  ton, the bark to be weighed by the sellers and
  buyers agents. Part was weighed and taken away,
  but before anything more was done a flood carried
  away the remainder. The loss of this fell on the
  seller. Simmons Vs Swift (1826)
• 2. Sale of 289 specified bales of goatskin,
  containing 5 dozen in each bale, at a certain
  price per dozen. By the usage of the trade, it
  was the sellers duty to see whether the bales
  contain the number specified in the contract.
  Before the seller had done this the bales were
  destroyed by fire. The loss fell on the seller.
  Zagury vs Furnell(1809)

40
Section 23 Sale of unascertained goods and
appropriation.

• Where there is a contract for the sale of
  unascertained or future goods by description and
  goods of that description and in a deliverable
  state are unconditionally appropriated to the
  contract assent of the buyer or by the buyer with
  the assent of the seller, the property in the
  goods there upon passed to the buyer. Such assent
  may be expressed or implied, and may be given
  either before or after the appropriation made.
• Delivery to the carrier - Where in pursuance of
  the contract the seller delivers the goods to the
  buyer or to the carrier or other bailee (whether
  named by the buyer or not) for the purpose of
  transmission to the buyer, and does not reserve
  the right of disposal, he is deemed to have
  unconditionally appropriated the goods to the
  contract.

41
Section 23 Sale of unascertained goods and
appropriation

• Example
• This section may be illustrated by the following
  example
• Sale of 20 hogsheads of sugar out sugar out of a
  larger quantity. The seller fills four hogsheads
  which the buyer takes away. Subsequently the
  seller fills sixteen more hogsheads, and informs
  the buyer of this asking him to come and take
  them away. The buyer promises to do so. The
  property has passed to the buyer.
• Mr A contracts to sell to Mr B a certain quantity
  of liquor out of a big cask containing a much
  larger quantity. The required quantity is not
  separated or bottled. The property in the liquor
  does not pass to the purchaser.

42
Section 24 Goods sent on approval or on sale or
return

• 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
• (a) when he signifies his approval or acceptance
  to the seller or does any other act adopting the
  transaction
• (b) if he does not signify his approval or
  acceptance to the seller but retains the goods
  without giving notice of rejection, then, if a
  time has been fixed for the return of the goods,
  on the expiration of such time, and, if no time
  has been fixed, on the expiration of a reasonable
  time.

43
Section 24 Goods sent on approval or on sale or
return

• Examples
• The section may be illustrated by the following
  examples
• 1.Goods delivered on sale or return are pledged
  by the deliveree. He thereby becomes the buyer of
  the goods, and the original owner cannot recover
  the goods from the pledgee.
• 2. Goods delivered on sale or return to the
  defendant are delivered by him on similar terms
  to another. The latter in turn hands them to a
  fourth person, who loses them. The defendant,
  being unable to return the goods, must pay for
  them as if he had actually agreed to become the
  buyer.

44
Section 26 Risk prima facie passes with property

• unless otherwise agreed, the goods remain at the
  sellers risk until the property therein is
  transferred to the buyer, but when the property
  therein is transferred to the buyer, but when the
  property therein is transferred to the buyer, the
  goods are at the buyers risk whether delivery
  has been made or not.
• Provided also that nothing in this section shall
  affect the duties or liabilities of either seller
  or buyer as a bailee of the goods of the other
  party.

45
Section 26 Risk prima facie passes with property

• Examples
• This section may be illustrated by the following
  examples
• 1. Goods in a house held on lease and belonging
  to the tenant were sold by auction under
  conditions expressly providing that all lots
  should be taken to be delivered at the fall of
  the hammer, after which time they should remain
  at the exclusive risk of the purchaser. The rent
  of the house was in arrear, and after the sale
  the landlord threatened to distress on these
  goods to prevent distress, the auctioneer paid
  the rent and handed the net proceeds of the sale
  to the original owner of the goods, the tenant.
  It was held that the auctioneer had no right to
  make this deduction, as the property in the goods
  had passe0d to the respective buyers and the
  seller, therefore, had no further interest in
  them the auctioneer, in consequence, had no
  implied authority from him to pay the rent in
  order to save the goods from distress. Sweeting
  Vs. Turner (1871)

46
Section 26 Risk prima facie passes with property

• 2. The defendant purchased 975 bales of rice,
  being the whole contents of a gola, paid earnest
  money, and took part delivery of the rice. The
  rest was afterwards destroyed by fire. The
  property in the whole had passed to him and he
  was held liable to pay the balance of the price.
  The Union of India Vs. The West Punjab
  Factories Ltd. AIR 1966 SC
• 3. The defendant contracted to purchase 30 tons
  of apple juice. The plaintiff crushed the
  apples, put the juice in casks and kept it
  pending d3elivery. The defendant delayed taking
  delivery and the juice went putrid and had to be
  thrown away. The defendant was liable to pay the
  price the seller had been in a position to sell
  the goods elsewhere and acquire other goods for
  the postponed time of delivery and he had not
  done so and there was some loss in the meanwhile,
  the responsibility for the loss would have fallen
  on him, but in the present case the seller had to
  keep the goods ready for delivery as and when the
  buyer proposed to take them. Demby Hammilton
  Co. Ltd. Vs. Barden (Endeavour Wines Ltd) 1949

47
PERFORMANCE OF THE CONTRACT

• Section 31. Duties of the seller and buyer It
  shall be the duty of the seller to deliver the
  goods and of the buyer to accept and pay for
  them, in accordance with the terms of the
  contract of sale.
• The general rule enunciated in this section
  follows from the nature of the contract of sale,
  by which the property in the goods is
  transferred, or agreed to be transferred, from
  the seller to the buyer in return for the price.
• There would be breach of the duty to accept
  when the buyer unjustifiably rejects the goods.
  Taking of delivery of the goods is an important
  aspect of the duty to accept and refusal to do
  so will constitute rejection of the goods and
  therefore , would amount to a non-acceptance of
  the goods. There is however a distinction between
  acceptance of goods and taking delivery of them.
  The buyer signifying his approval of the goods
  accepts them though he may not have taken
  delivery of the goods. It will be noticed that
  the Act does not expressly impose any duty to
  take delivery although it prescribes sanctions
  when there is delay in taking delivery.

48
Section 32 Payment and delivery are concurrent
conditions

• Unless otherwise agreed, delivery of the goods
  and payment of the price are concurrent
  conditions, that is to say, the seller shall be
  ready and willing to give possession of the goods
  to the buyer in exchange for the price, and the
  buyer shall be ready and willing to pay the price
  in exchange for the possession of the goods.
• A contract of sale is an example of a contract
  consisting of reciprocal promises to be
  simultaneously performed. In accordance, thereof,
  with the general principle laid down in s.51 of
  the contract Act, the seller is not bound to
  deliver, and commits no breach of contract in
  failing to deliver, if the buyer is not ready and
  willing to pay the price, and is not liable to an
  action for failure to accept the goods, if the
  seller was not ready and willing to let the buyer
  have goods on demand. The owes to the buyer as
  onerous a duty to deliver the goods, as the buyer
  owes to the seller the duty to accept and pay for
  them.

49
Section 34. Effect of part delivery

• A delivery of part goods, in progress of the
  delivery of the whole, has the same effect, for
  the purpose of passing the property in such
  goods, as a delivery of the whole but a delivery
  of the part of the goods with an intention of
  severing it from the whole, does not operate as a
  delivery of the remainder.
•  Examples
• The section may be illustrated by the following
  examples 
• 1. Sale of a quantity of goods lying at a
  wharf. The seller left an order with the
  wharfinger to deliver the goods to the buyer, who
  had paid for them by a bill. The buyer
  subsequently weighed the goods and took away part
  of them. This was held to amount to a delivery of
  the whole of the goods.

50
Section 34. Effect of part delivery

• 2. A ship arrived in port with a cargo of
  wheat. The master reported her at the Customs
  House and made an oath that the cargo was for
  A., the indorsee of the bill of lading. Next
  day, A made entry of the wheat in his name at
  the Customs House. Part of the cargo was
             then delivered to A. This constituted
  a deliver of the whole.
• 3. Sale of a stack of hay. The buyer asked
  the permission of the seller           to cut and
  remove part of the stack, which was granted. The
  clear           intention of the parties being to
  separate the part delivered of the
            whole.

51
Section 35 Buyer to apply for delivery

• Apart from any express contract, the seller of
  the goods is not bound to deliver them until the
  buyer applies for the delivery
• This section reproduces s93 of the contract Act
  except that for the words in the absence of any
  specific promise, the words apart from any
  express contract have been substituted. The
  words in the absence of any special promise
  have been construed to mean an express
  stipulation as to delivery6 which relieves the
  buyer from the obligation to apply for delivery
  or the necessary implication of such a
  stipulation from the nature of the contract as
  expressed. It might also arise out of usage or
  custom.
• Even if there is an obligation on the part of the
  seller to inform the buyer when the goods are in
  a deliverable state, it is not a special
  promise, though it may postpone the obligation
  of the buyer to apply for delivery, and after the
  lapse of a reasonable time, to enable the goods
  to be procured by the seller, the buyer would be
  entitled and bound to apply for delivery.
• When the applies for delivery and the seller then
  fails to deliver, the seller is guilty of a
  breach of contract. So where the contract
  provided for delivery in all November on seven
  days notice from the buyer, and the buyer gave
  the notice early in November, it was held that by
  the terms of the contract the buyer had the right
  to fix the date in November on which the delivery
  should be made, and the seller having failed to
  deliver as required by the notice, was guilty of
  a breach of contract. Juggernath Khan Vs.
  Machlachar (1881)

52
Section 36. Rules as to delivery

• 1. Whether it is for the buyer to take
  possession of the goods or for the seller to send
  the goods to the buyer is a question depending in
  each case on the contract, express or implied,
  between the parties. Apart from any such
  contract, goods sold are to be delivered at the
  place at which they are at the time of the sale,
  and goods agreed to be sold are to be delivered
  at the place at which they are at the time of the
  agreement to sell., if not then in existence, at
  the place at which they are manufactured or
  produced.
• 2. Where under the contract of sale the seller
  is bound to send the goods to he buyer, but no
  time for sending is fixed, the seller is bound to
  send them within a reasonable time.
• 3. Where the goods at the time of sale are in
  the possession of a third person, there is no
  delivery by seller to buyer unless and until such
  third person acknowledges to the buyer that he
  holds the goods on his behalf
• Provided that nothing in this section shall
  affect the operation of the issue or transfer of
  any document of title to goods.
• 4. Demand or tender of delivery may be treated
  as ineffectual unless made at a reasonable hour.
  What is reasonable hour is a question of fact.
• 5. Unless otherwise agreed, the expenses of and
  incidental to putting the goods into a
  deliverable state shall be borne by the seller

53
Section 36. Rules as to delivery

• Examples
• The section may be illustrated by the following
  examples
• 1. Sale of 12 puncheons of rum, made from
  molasses, of which 4 were delivered. The buyer
  pressed for delivery of the remainder, but the
  seller delayed and in the meanwhile an Act of
  Parliament was passed prohibiting the
  distillation of spirits from molasses, and
  annulling all contracts for the sale of such
  spirits. The sellers were held liable in damages
  as having failed to deliver within a reasonable
  time. Phillips Vs. Blair and Martin (1801)
• 2. Sale of goods to be sold to be delivered in
  the last fortnight of March. Delivery is
  tendered at 9 p.m. on 31 March. It is a question
  of fact whether this is a reasonable hour. If it
  is not, there is no delivery, and the buyer may
  repudiate. Startup Vs. macdonald (1843)
• 3. Sale of goods for ready money. The seller
  packs them up in the buyers boxes in the buyers
  presence, but they remain in the sellers
  premises. This is not a delivery. Boulter Vs.
  Arnott (1833)

54
 Section 38. Instalment Deliveries

• 1. Unless otherwise agreed, the buyer of goods
  is not bound to accept delivery thereof by
  instalments.
• 2. Where there a contract for the sale of goods
  to be delivered by stated instalments which are
  to be separately paid for, and the seller makes
  no delivery or defective delivery in respect of
  one or more instalments, or the buyer neglects or
  refuses to take delivery of or pay for one or
  more instalments, it is a question in each case
  depending on the terms of the contract and the
  circumstances of the case, whether the breach of
  the contract is a repudiation of the whole
  contract, or whether it is severable breach
  giving rise to a claim for compensation, but not
  to a right to treat the whole contract as
  repudiated.

55
 Section 38. Instalment Deliveries

• Examples
• The section may be illustrated by the following
  examples
• 1. Sale of 25 tons of pepper October /November
  shipment. The sellers shipped 20 tons in November
  and 5 tons in December. The buyers were entitled
  to reject the whole 25 tons. Reuter Vs. Sala
  (1879)
• 2. Sale of 200-300 tons of coal to be shipped
  as early as possible by a named ship or other
  vessel. The named ship was not available and the
  seller shipped 152 tons on another ship,
  informing the buyer that he had done so and that
  he had drawn on him for the price and proposing
  to ship the remainder later. The buyer made no
  reply to this communication. The ship was lost.
  In an action by the seller for the price it was
  held that the buyer had impliedly assented to the
  shipment of the smaller quantity as an instalment
  and was liable to pay for it. Riichardson Vs.
  Dunn (1841)

56
 Rights of Unpaid Seller against goods

• Section 45. Unpaid seller defined
• 1. The seller of goods is deemed to be an
  unpaid seller within the meaning of this Act
• (a) when the whole of the price has not been
  paid or tendered
• (b) when a bill of exchange or other negotiable
  instrument has been received as conditional
  payment, and the condition on which it was
  received has not been fulfilled by reason of the
  dishonour of the instrument or otherwise.
• 2. In this chapter, the term seller includes
  any person who is in the position of a seller,
  as, for instance, an agent of the seller to whom
  the bill of lading has been indorsed, or a
  consignor or agent who has himself paid, or is
  directly responsible for, the price
• Examples
• The section may be illustrated by the following
  example
• The seller draws bills for the price of the goods
  on the buyer, who accepts them, and the seller
  negotiates them. Before the bills arrive at
  maturity the buyer fails. The seller is in
  position of an unpaid seller.

57
 Section 46. Unpaid Sellers rights

• 1. Subject to the provisions of this Act and of
  and of any law for the time being in force,
  notwithstanding that the property in the goods
  may have passed to the buyer, the unpaid seller
  of goods, as such, has by implication of law
• (a) a lien on the goods for the price while he
  is in possession of them
• (b) in case of the insolvency of the buyer a
  right of stopping the goods in transit after he
  has parted with the possession of them
• (c) a right of resale as limited by this Act.
• 2. Where the property in goods has not passed
  to the buyer, the unpaid seller has, in addition
  to his other remedies, a right of withholding
  delivery similar to and co-extensive with his
  rights of lien and stoppage in transit where the
  property has passed to the buyer.

58
  Section 46. Unpaid Sellers rights

• Example
• The section may be illustrated by the following
  example
• Sale of goods to be delivered by instalments,
  each instalment to be paid for in cash fourteen
  days after delivery. During the currency of the
  contract, the buyer becomes insolvent and the
  price of one instalment is unpaid. The seller
  need not make further deliveries unless the price
  of that instalment is paid and cash is paid
  against delivery of subsequent instalments.
•  

59
 Section 47. Sellers lien

• 1. Subject to the provisions of this Act, the
  unpaid seller of goods who is in possession of
  them is entitled to retain possession of them
  until payment or tender of the price in the
  following cases, namely
• (a) Where the goods have been sold without any
  stipulation as to credit
• (b) where the goods have been sold on credit,
  but the term of credit has expired
• (c) where the buyer becomes insolvent.
• 2. The seller may exercise his right of lien
  notwithstanding that he is in possession of the
  goods as agent or bailee for the buyer.
• A sellers lien is described as an additional
  security given to a person who has a right to be
  paid, but he has a right to be paid besides and
  independently of his lien. One of the objects of
  S.47 which confers the sellers lien is to
  protect a vendor from incurring an expense in
  manufacturing or acquiring goods for which
  payment remains justly in doubt . The sellers
  lien is a particular lien arising in the precise
  circumstances specified by the Act and not a
  general lien for all his debts due from the buyer
  and he cannot rely on the equitable principle of
  the vendors lien.

60
  Section 48. Part delivery

• Where an unpaid seller has made part delivery of
  the goods, he may exercise his right of lien on
  the remainder, unless such part delivery has
  been made under such circumstances as to show an
  agreement to waive the lien.

61
 Section 49. Termination of lien

• 1. The unpaid seller of goods loses his lien
  thereon
• (a) when 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 goods
• (b) when the buyer or his agent lawfully obtains
  possession of the goods
• (c) by waiver thereof.
• 2. The unpaid seller of goods, having a lien
  thereon, does not lose his lien by reason only
  that he has obtained a decree for the price of
  the goods.

62
  Section 49. Termination of lien  

• Examples
• This section may be illustrated by the following
  examples
• 1. Goods were sold and sent by the sellers at
  the request of the buyer to shipping agents of
  the buyer, and were put on board a ship by those
  agents. Subsequently, they were re-landed and
  sent back to the sellers for the purpose of
  re-packing. While they were still in the
  possession of the sellers for that purpose, the
  buyer became insolvent. Thereupon the sellers
  refused to deliver them to the buyers trustee in
  bankruptcy except upon payment of the price.
  Held, that the sellers had lost their lien by
  delivering the goods to the shipping agents, and
  their refusal to deliver the goods to the trustee
  was wrongful. Valpy Vs. Gibson 1847
• 2. Sale of a stack of hay for 86, to be paid
  for as it is taken away, the whole to be removed
  by a certain date. Part, but only part, was paid
  for and removed by a certain date, and two months
  after that date the seller cut up and used the
  remainder. By doing so, the seller waived his
  lien, and the buyer successfully maintained an
  action against him. Gurr Vs. Cuthbert 1843

63
   Section 50 Right of stoppage in transit

• Subject to the provisions of this Act, when the
  buyer of goods become insolvent, the unpaid
  seller, who has parted with the possession of the
  goods has the right of stopping them in transit,
  that is to say, he may resume possession of the
  goods as long as they are in the course of
  transit, and may retain them until payment or
  tender of the price.
• In order that the right may be exercised, the
  following conditions must all be satisfiedthe
  seller must be unpaid, the seller must have
  parted with the possession of the goods and the
  buyer must not have acquired it. This last
  condition, as appears from the next section is
  that which is shortly expressed by saying that
  the goods are in transit. Further, the right can
  only be exercised by a seller or a person in a
  position analogous to that of a seller, the right
  to stop in transit is unknown outside the law of
  sale of goods. Lastly, it is a right against the
  goods themselves only.

64
   Section 52. How stoppage to transit is
effected

• 1. The unpaid seller may exercise his right of
  stoppage in transit either by taking actual
  possession of the goods, or by giving notice of
  his claim to the carrier or other bailee in whose
  possession the goods are. Such notice may be
  given either to the person in actual possession
  of the goods or to his principal. In the latter
  case the notice, to be effectual, shall be given
  at such time and in such circumstances that the
  principal, by the exercise of reasonable
  diligence, may communicate it to his servant or
  agent in time to prevent a deliver to the buyer.
• 2. When notice of stoppage in transit is given
  by the seller to the carrier or other bailee in
  possession of the goods, he shall redeliver the
  goods to, or according to the directions of, the
  seller. The expenses of such re-delivery shall be
  borne by the seller.

65
   Section 52. How stoppage to transit is
effected

• Examples
• The section may be illustrated by the following
  examples
• 1. A railway company is in possession of goods
  as carriers when the sellers give notice of
  stoppage in transit. A sum of money is owing by
  the buyers to the railway company. The railway
  company is not entitled to set up in priority to
  the sellers right of stoppage in transit a
  general lien exercisable by the company against
  the buyers as owners of the goods.
• 2. An unpaid seller stops goods sent by sea at
  a port short of their destination. He is liable
  for the fright, not only to the part where the
  goods were actually landed, but also to the port
  of their ultimate destination. Booth Co. vs.
  Cargo Fleet Iron Co. Ltd. 1916

66
   Section 64. Auction sale

• In a case of a sale by auction
• 1. Where goods are put up for sale in lots, each
  lot is prima facie deemed to be the subject of a
  separate contract of sale
• 2. the sale is complete when the auctioneer
  announces its completion by the fall of the
  hammer or in other customary manner and, until
  such announcement is made, any bidder may retract
  his bid
• 3. a right to bid may be reserved expressly by
  or on behalf of the seller and, where such right
  is expressly so reserved, but not otherwise, the
  seller or any one person on his behalf may,
  subject to the provisions hereinafter contained,
  bid at the auction
• 4. where the sale is not notified to be subject
  to a right to bid on behalf of the seller, it
  shall not be lawful for the seller to bid himself
  or to employ any person to bid at such sale, or
  for the auctioneer knowingly to take any bid from
  the seller or any such person and any sale
  contravening this rule may be treated as
  fraudulent by the buyer
• 5. the sale may by notified to be subject to a
  reserved or upset price
• 6. if the seller makes use of pretended bidding
  to raise the price, the sale is voidable at the
  option of the buyer.