Sale of Goods Act, 1930

Kalpeshkumar L Gupta
Assistant Professor of Law
April 4, 2015
1

Outline
1. Introductory Part
2. Sale & Quality of Goods
3. INCOTERMS
4. Performance of
Contract

Outline
1. Introductory Part
2. Sale & Quality of Goods
3. INCOTERMS
4. Performance of
Contract

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

Goods
Section 2(7) goods means every kind of
movable property other than actionable claims
and money; and includes stock and shares,
growing crops, grass, and things attached to or
forming part of the land which are agreed to be
severed before sale or under the contract of
sale.

Cont

Cont

Goods
Goodwill, trade marks, copyrights, patents right,
water, gas, electricity etc. are all regarded as
goods.
In the case of land the grass which forms part of
land have to be separated from the land. Thus
where trees sold so that they could be cut out
and separated from the land and then taken
away by the buyer, it was held that there was a
contract for sale of movable property or goods
(Kursell vs Timber Operators & Contractors Ltd.).
But contracts for sale of things forming part of
the land itself are not contracts for sale of goods.
For example, a contract for the sale of coal mine
or building-stone quarry is not a contract of sale
of goods.

Cont

Goods
Actionable Claims means claims which can be
enforced by a legal action or a suit, example a
book debt. A book debt is not goods because it can
only be assigned as per Transfer of Property Act
but cannot be sold. Same is case in the case of bill
of exchange, promissory note etc.
The negotiable instrument like promissory note
can be transferred under Negotiable Instruments
Act by mere delivery or endorsement and delivery,
such
instruments
cannot
be
sold.

Cont

Contract for Sale

(Section 5)

1. A contract for sale is made by an offer to buy or

sell goods for a price and the acceptance of
such offer. The contract may provide for
the immediate delivery of the goods or
immediate payment of the price or both, or for
the delivery or payment by installment or that
the delivery or payment or both shall be
postponed.
2. Subject to the provisions of any law for the time
or by being in force, a contract of sale may be
made in writing or by word of mouth, or partly
in writing and partly by word of mouth or may
be implied from the conduct of the parties.
Cont

Ownership, Delivery &

Possession
Only owner can transfer the ownership.
1. B gave his car to garage for repairing.
2. Z borrowed a book from his college library.
3. A

transporter

co.

is

carrying

the

goods

belonging to Reliance Ltd. from one factory

location to another.
4. A construction co. hired a crane from a leasing
co.
5. A thief walked away with the laptop of another
person.
Cont
Section 2(2) defines delivery means a voluntary

Cont

Ownership, Delivery &

Possession
Delivery (Section 33) Delivery of goods sold may
be made by doing anything which the parties
agree shall be treated as delivery or which has the
effect of putting the goods in the possession of the
buyer or of any person authorized to hold them on
his behelf.
1. A self-service store, after a customer paid the
bill, gave him the items purchased by him in a
bag.
2. Y bought a laptop from a store on Sunday. Y
sent his driver the next day to bring the laptop.
The store handed over the laptop to the driver.
3. The seller gave the key of the car sold to the
buyer.
4. The seller gave the key of the warehouse
in
Cont
which the sold goods were kept to the buyer.

10

Cont

Risk passes with the

ownership.

11

Outline
1. Introductory Part
2. Sale & Quality of Goods
3. INCOTERMS
4. Performance of
Contract

12

Sale & Quality of Goods

13

Condition (Section 12(2))

A condition is a stipulation which is essential to
the main purpose of the contract. It goes to the
root of the contract. Its non-fulfilment upsets the
very basis of the contract.
If there is breach of condition, the aggrieved
party can treat the contract as rejected.

14

Warranty (Section 12(3))

A condition is a stipulation which is collateral to
the main purpose of the contract. It is not so
vital importance as a condition is.
If there is breach of a warranty, the aggrieved
party can only claim damages and it has no right
to treat the contract as repudiated (rejected).

15

Condition - Warranty
Whether a stipulation in a contract of sale is
condition or a warranty depends in each case on
the construction of the contract as a whole.
The court is not be guided by the terminology
used by the parties to the contract. A stipulation
may be condition though called a warranty in
the contract. (Sec. 12(4))

16

Difference between Condition & Warranty

1. Difference as to value
A condition is a stipulation which is essential to the
main purpose of the contract. A warranty is a
stipulation which is collateral to the main purpose
of the contract.
2. Difference as to breach
If there is a breach of a condition, the aggrieved
party can reject the contract of sale; in case of a
breach of a warranty, the aggrieved party can
claim damages only.
3. Difference as to treatment
A breach of a condition may be treated as a breach
of a warranty. This would happen where aggrieved
party is contended with damages only. A breach of
a warranty, however cannot be treated as a breach

17

When condition to be treated as warranty

(Section 13)
1. Voluntary waiver of condition.
Where a contract of sale is subject to any
condition
to be fulfilled by the seller, the
buyer may waive the condition or elect to treat
the breach of the condition as a breach of
warranty.
2. Acceptance of goods by buyer.
Where a contract of sale is not severable and
the
buyer has accepted the goods or part
thereof, the breach of any condition to be
fulfilled by the seller can only be treated as a
breach of warranty, unless there is a term of
contract, express or implied to the contrary.

18

Implied Conditions
1. Condition as to title (Section 14 (a))
2. Sale by description (Section 15)
3. Condition

as

to

quality

or

fitness

(Section 16(1))
4. Condition as to merchantability (Section
16(2))
5. Condition implied by custom (Section
16(3))
6. Sale by sample (Section 17)
7. Condition as to wholesomeness.
19

Implied Conditions
1. Condition as to title (Section 14 (a))
an implied condition on the part of the seller
that, in the case of a sale, he has a right to sell the
goods and that, in the case of an agreement to
sell, he will have a right to sell the goods at the
time when the property is to pass.
e.g. R bought a car from D and used it for four
months. D had no title to the car and consequently
R had to hand over to the true owner.
Held R could recover the price paid (Rowland v/s.
Divali, 1923)
20

Implied Conditions
2. Sale by description (Section 15)
Where there is a contract for the sale of goods by
description, there is an implied condition that the
goods shall correspond with the description.
Buyer Beware. There is no protection for the buyer
in relation to the quality of goods except in
following situations.
a. Goods sold must be of merchantable quality.
However, if the buyer has examined the goods,
directs which such examination ought to have
revealed would be exempted from the
requirement of merchantable quality.
b. If the buyer has relied on the skill and judgment
of the seller, the goods should be fit for the
Cont
purpose described by the buyer.

21

Cont

Implied Conditions
2. Sale by description (Section 15)
e.g. A ship was contracted to be sold as a copperfastened vessel to be taken with all faults, without
any allowance for any defects whatsoever. The
ship turned out to be partially copper-fastened.
Held Buyer entitled to reject (Shepherd v/s. Kain,
1821)
---------In a auction sale of a set of napkins and table
cloths, these were described as dating from the
seventh century. The buyer bought the set after
seeing it. Subsequently found the set of an
eighteenth century set.
Held He could reject the set (Nicholson & Venn
v/s. Smith Marriot, 1947)

22

Cont

Implied Conditions
3. Condition as
(Section 16(1))

to

quality

or

fitness

If the buyer purchasing an article for a particular

use is suffering from an abnormally and it is not
made known to the seller at the time of sale,
implied condition of fitness does not apply.
e.g. G purchased a coat which caused
dermatitis due to her unusually sensitive skin.

her

Held the seller was not liable, the cloth being fit
for any one with a normal skin (Griffiths v/s. Peter
Conway Ltd., 1939)
23

Implied Conditions
3. Condition as
(Section 16(1))

to

quality

or

fitness

Where the buyer, expressly or by implication,

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

24

Implied Conditions
4. Condition as to merchantability (Section
16(2))
Where goods are bought by description from a
seller who deals in goods of that description
(whether he is the manufacturer or producer or
not), there is an implied condition that the goods
shall be of merchantable quality.
The term merchantable quality is not defined in
the Sale of Good Act.
But as per Sec. 62(1-A) of the English Sale of
Goods Act, 1893, Goods of any kind are of
merchantable quality if they are as fit for the
purpose or purposes for which goods of that kind
are commonly bought as it is reasonable to expect
Cont
having regard to any description applied to them,

25

Cont

Implied Conditions
4. Condition as to merchantability (Section
16(2))
If goods are of such a quality and in such a
condition that a reasonable person acting
reasonably would accept them after having
examined them thoroughly , they are of
merchantable quality. Thus a watch that will not
keep time, a pen that will not write and tobacco
that will not smoke, cannot be regarded as
merchantable under such names.
e.g. A manufacturer supplied 600 horns under a
contract. The horns were found to be dented,
scratched and otherwise of faulty manufacture.
Held, they were not of merchantable quality and
Cont
therefore the sellers suit for price was dismissed

26

Cont

Implied Conditions
Section 14(1) English Sale of Goods Act,
1893
Reliance on the skill and judgment of the seller.
Grant v/s. Australian Knitting Mills Ltd. (1935, All
ER Rep 209)
Grant bought two woollen underwear garments
from John Marlin & Co. who dealt in such goods.
John Marlin had purchased them in the ordinary
course, along with other stock from Australian
Knitting , the manufacturer.
Grant put on one suit on the morning of June 28,
1931. By the evening, he started to feel itchy.
Problem
became
serious.
He
consulted
dermatologist, who suspected the undergarments
to be cause of dermatitisdoctor treating Cont
Grant

27

Cont

Implied Conditions
The mfg. attempted to attribute the problem to
the sensitive nature of Grants skin and not to
the defect in garment. Detailed evidence was
brought out that mfg. process and the treating
of the garments with chemicals had left a
content of sulphites in the garments.
The Privy Council was of the opinion that the
case attracted both the clauses, relying on the
skill and judgement of the sellers and the goods
not being merchantable quality.
The reliance of the buyer on the seller need not
be expressed. If the goods are meant for only
one use, it is implied that the buyer relied on the
seller in giving goods that would be fit for that

28

Implied Conditions
5. Condition implied by custom (Section
16(3))
An implied warranty or condition as to quality or
fitness for a particular purpose may be annexed by
the usage of trade.
e.g. A bought a set of false teeth from a dentist.
The set did not fit into As mouth.
Held he could reject the set as the purpose for
which anybody would buy it was implicitly known
to the seller (Dr. Baretto v/s. T R Price, AIR 1939
Nag. 19)
29

Implied Conditions
6. Sale by sample (Section 17)
In the case of sale by sample, there is an implied
condition that the bulk will tally with the sample
and goods should be free from defect rendering
them unmerchantable, which would not be
apparent on reasonable examination of sample.
If the sale is by sample as well as by description, it
is not sufficient that the bulk of the goods
corresponds with the sample if the goods do not
also correspond with the description.
The goods must fully correspond with the sample
and with the description.
Cont

30

Implied Conditions
7. Condition as to wholesomeness
In the case of eatables and provisions, in addition
to the implied condition as to merchantability,
there is another implied condition that the goods
shall be wholesome.
e.g. C bought a bun containing a stone which broke
one of Cs teeth.
Held he could recover damages (Chaproniere v/s.
Mason, 1905)

31

Cont

Implied Conditions
6. Sale by sample (Section 17)
e.g. In a contract for the sale of brandy by sample,
brandy colored with a dye was supplied.
Held the buyer was not bound to the contract
even though goods supplied were equal to sample,
as the defects were not apparent on reasonable
examination of sample. (Mody v/s. Gregson, 1868)

32

Implied Warranties
1. An implied warranty that the buyer shall have
and enjoy quiet possession of the goods;
(Section 14(2)).
2. An implied warranty that the goods shall be
free from any charge or encumbrances
in favour of any third party not declared or
known to the buyer before or at the time
when the contract is made.(Section 14(c))
3. An implied warranty as to quality or fitness
for a particular purpose may be annexed by
the usage of trade. (Section 16(4))
4. Warranty to disclose dangerous nature of
Cont
goods.

33

Implied Warranties
4. Warranty to disclose dangerous nature of
goods.
e.g. A sold a tin of disinfectant powder to C. He
knew that it was likely to be dangerous to C if it
was opened without special care being taken. C
opened the tin whereupon the powder flew into
her eyes, causing injury.
Held A was liable in damages to C as he should
have warned C of the probable danger (Clarke
v/s. Army & Navy Co-operative Society Ltd.,
1963)
34

Specific Goods : Ownership Transfer as

intended by the Parties
A sale contract can be for specific goods/certained
or for unascertained goods.
Section 19 Property passes when intended
to pass.
- Where there is a contract for the sale of specific
or ascertained goods, the property in them is
transferred to the buyer at such time as the
parties to the contract intend it to be
transferred.
- For the purpose of ascertaining the intention of
the parties, regard shall be had to the terms of
the contract, the conduct of the parties and the
Cont
circumstances of the case.

35

Specific Goods : Ownership Transfer as

intended by the Parties
In the case of written contract, courts ordinarily
stick to the written terms and take it that the
parties intended the written terms alone to govern
the contract.
McEntire v/s. Crossley Brothers Ltd. (1895)
A hire-purchase agreement for a gas engine
provided that the gas-engine shall remain the sole
and absolute property of the owner.until all sums
of money due under this agreement are paid.

Cont

36

Specific Goods Unconditional Contract

A contract where the parties, in express or implied
terms, have stipulated some condition for the
transfer of ownership is called a conditional
contract.
e.g. ownership pass only on payment of price.
A contract which is silent on the transfer of
ownership is called an unconditional contract.

Cont

37

Section 20 Specific Goods in a deliverable

state.
Where there is an unconditional contract for the
sale of specific goods in a deliverable state*, the
property in the goods passes to the buyer when
the contract is made, and it is immaterial whether
the time of payment of the price or the time of
delivery of the goods or both is postponed.
*goods are in deliverable state when they are in
such state that the buyer would, under the
contract, be bound to take delivery of them.

Cont

38

Unascertained Goods
A sale contract whose subject matter is the sale of
certain specific identified goods is a sale of specific
goods.
Sale contracts can also be of unascertained goods.
In sale of unascertained goods, the goods are
described.
In the course of the performance of the contract,
the parties would come to settle on certain specific
goods meeting that description.

Cont

39

Ascertainment and Transfer of Ownership

Section 18 Goods must be ascertained
Where there is a contract for the sale of
unascertained goods, no property in the goods is
transferred to the buyer unless and untill the
goods are ascertained.
e.g. Under an agreement, the seller had to pour in
five liters of edible oil in a container given by the
buyer, from a tank containing edible oil, and bring
it to the buyer. The ownership in the oil was to get
transferred a week after delivery. The price had
already been paid. The seller poured the oil into
the container. ..At this stage, the goods
got ascertained and delivered and delivered to the
Cont
buyer. However ownership continued to be with

40

Ascertainment and Transfer of Ownership

Ascertainment is the process by which the goods
answering the description are identified and set
apart. Further the goods must also be appropriated
to the contract.
In the case of unconditional sale contracts in
specific goods, the ownership gets transferred at
the point of time when contract is made.
As the ownership in unascertained goods cannot
get transferred, the transfer of ownership must
wait till the goods get ascertained. Thus in the
case of sale of ascertained goods, where the
parties have not provided on the transfer of
ownership, the ownership would get transferred
Cont
when the goods get appropriated to the contract.

41

Rhode v/s. Thwaites (1827)

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

Cont

42

Carriage, Delivery & Ownership

A seller is deemed to have unconditionally
appropriated the goods to the contract where he
delivers them to the buyer or to a carrier or other
bailee for the purpose of transmission to the buyer,
and does not reserve the right to disposal (Sec.
23(2).
Delivery to the goods to the carrier is prima facie,
deemed to be a delivery of the goods to the buyer.
Thus, if the parties do not provide otherwise,
giving the goods to the carrier is taken as delivery
to the buyer.

Cont

Goods sent on approval or on sale or

return (Sec 24)
When goods are delivered to the buyer on
approval or on sale or return or other similar
terms the property therein passes to the buyer
1. When he signifies his approval or acceptance
to the seller;
2. When he does any other act adopting the
transaction.
3. If he does not signify his approval or
acceptance to the seller but retains the
goods without giving notice of rejection,
beyond the time fixed for the return of the
goods, or if no time has been fixed, beyond
reasonable time. (Section 63)
(Hooghly Chinsurah Municipality v/s. Spence
Ltd. AIR 1978 Cal. 49Tractor Case)

44

Reservation of right to disposal (Sec 25)

The property in goods, whether specific or
subsequently appropriated to the contract, does
not pass to the buyer if the seller reserves the
right to disposal of the goods untill certain
conditions are fulfilled.
Apart from an express reservation, the seller is
deemed to reserve the right of disposal.
e.g. B placed an order with S requesting him to
send the goods by sea. S took a bill of lading in
the name of B and sent it to his own agent. The
goods were destroyed in the course of voyage. S
had to suffer the loss as the ownership had not
passed to B.
45

Outline
1. Introductory Part
2. Sale & Quality of Goods
3. INCOTERMS
4. Performance of
Contract

46

INCOTERMS

47

INCOTERMS
INCOTERMS

stands

for

International

Commercial Terms.
Prepared by International Chamber of
Commerce (ICC) Paris.
INCOTERMS

prepared

to

facilitate

international business transaction.

First time in 1936 last edition came in
2010.
Some famous terms FOB, CIF etc.
48

Some
INCOTERMS
All modes of
Transport

Sea & Inland

Waterways

CIP Carriage & Insurance Paid

CPT Carriage Paid To.
DAP Delivered At Place
DAT Delivered at Terminal
DDP Delivered Duty Paid
EXW Ex Works
FCA Free Carrier
CFR Cost and Freight
CIF Cost, Insurance & Freight
FAS Free Alongside Ship
FOB Free on Board

49

EXW Ex Works
The seller makes the good available to the
buyer at his premises. The buyer bears all
the costs and the risk in taking the goods
from the sellers premises to his own
destination
Works stands for the premises of the seller.

50

FCA Free
Carriage
The buyer organizes for the carriage of the
goods and informs the seller about the
carrier and the place where the goods would
be handed over to the carrier.
The risk passes when the goods are handed
over to the carrier.
The term is followed by the name of the
place where the goods are to be handed
over to the carrier.

51

CPT Carriage
Paid To
The seller pays the freight for the carriage of
the goods to the named destination. The risk
in the goods passes to the buyer on delivery
of the goods to the first carrier.
The term is followed by the destination at
which the carrier has to deliver the goods.

52

CIP Carriage and

Insurance Paid To
The seller pays for carriage and insurance to
the named destination point. The risk passes
when the goods are handed over to the first
carrier.
The term is followed by the destination point
at which the carrier has to deliver the goods.

53

DAT Delivery at Terminal

The seller bears the cost and risk of carriage
of the goods to a named terminal in the
country of the buyer. The seller delivers the
goods to the buyer at the terminal. At this
point risk passes to the buyer.
The seller organises the export clearance.
However the buyer is responsible for the
import clearance and for paying the import
duty.
The term can be quay, warehouse, container
yard, rail, road, air terminal.
The term is followed by the name of the
terminal, port or place of destination.
54

DAP Delivery at Place

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

55

56

57

DDP Delivery Duty Paid

The seller pays for carriage to the named
destination in the country of the buyer. In
addition, the seller organises import
clearance and pays the custom duties.
The term is followed by the place of
destination.
e.g. DDP Dare Salam, Tanzania

58

FAS Free Alongside Ship

Exclusive for
Maritime
Trade

The seller pays for the transportation of the

goods to the port of shipment in his country.
The buyer pays the loading costs, freight,
insurance,
unloading
costs
and
transportation from the port of destination to
his premises.
The passing of risk occurs when the goods
are delivered to the dock at the port of
shipment.
The term is followed by the place from
where the goods are to be shipped.
e.g. FAS JNPT, Navi Mumbai
59

FOB Free on Board

Exclusive for
Maritime
Trade

The seller pays for the transportation of the

goods to the port of shipment and for their
loading on the ship. The buyer pays the
freight, insurance, unloading costs and
transportation from the port of destination to
his destination.
The passing of risk occurs when the goods
pass the ships rail at the port of shipment.
The term is followed by the name of the
place where the goods are put on ship.
e.g. FOB JNPT, Navi Mumbai
60

CFR Cost & Freight

Exclusive for
Maritime
Trade

The seller pays the costs and freight to bring

the goods to the port of destination.
However, risk is transferred to the buyer
once the goods are loaded on the ship.
The seller is not to bear the cost of maritime
insurance.
The term is followed by the
destination.
e.g. CIF, Dare Salam, Tanzania

port

of

61

Exclusive for
Maritime
Trade

CIF Cost, Insurance &

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

The risk of loss or damage is transferred

from the seller to the buyer when the goods
pass over the ships rail in the port of
shipment.
The term is followed by the
Destination.
e.g. CIF, Dare Salam, Tanzania

port

of

62

Marwar Tent Factory v/s. Union of India

(AIR 1990 SC 1753)
MTF won a tender to supply tents to the
defence establishment at Kanpur. Tents
inspection at Jodhpur.
Despatch to Commandant, Kanpur. The tents
were to be put on rails at Jodhpur under the
terms, F.O.R Jodhpur
A consignment of 1500 tents was despatched,
as a result of pilferage in transit only 1276
tents received by COD Kanpur. They deducted
the cost of 224 tents from the payment.
SC noted that in FOR contract, the seller
undertakes to deliver the goods into
railway wagons or at the station and
prima facie, this is the point at which

63

Manbre Saccharine Co. v/s. Corn Products

Co. Ltd. (1918)
Contract for the sale of American pearl starch
and corn syrup.
The term was on CIF terms.
The vessel was sunk by a German submarine.
The seller and buyer both knew that the
vessel had been sunk. The seller tendered the
documents, but the buyer refused to accept
the documents and pay the money.
The CIF contract, documents are taken to be
equivalent to goods and the buyer is bound to
accept them. There are two reasons for this.
One, the seller has only undertaken to deliver
the goods to the carrier. Second, the buyer
with the documents, can claim marine
insurance, which will give him the value of the

64

Outline
1. Introductory Part
2. Sale & Quality of Goods
3. INCOTERMS
4. Performance of
Contract

65

erformance of Contrac

66

Performance of Contract (Section 31)

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

67

Delivery of Goods
Delivery
means
voluntarily
transfer
of
possession of goods from one person to another
(Sec 2(2))
Delivery of goods sold may be made by doing
anything which the parties agree shall be
treated as delivery or which has the effect of
putting the goods in the possession of the buyer
of his agent. (Section 33)
Delivery of goods may be
1. Actual
2. Symbolic
3. Constructive Delivery
68

Delivery of Goods
1. Actual Delivery
Where the goods are handed over by the seller
to the buyer or his duly authorized agent, the
delivery is said to be actual.
2. Symbolic Delivery
Where goods are bulky and incapable of actual
delivery, delivery may be symbolic. Handling
over of the key of a warehouse to the buyer is
symbolic delivery of the goods to the buyer and
it is as effective as actual.
Cont

69

Cont

Delivery of Goods
3. Constructive Delivery
Where a third person who is in possession of the
goods of the seller at the time of the sale
acknowledges to the buyer that he holds the
goods on his behalf, there takes place a
constructive delivery.
e.g. A sells to B 10 bags of wheat lying in Cs
godown. A gives an order to C asking him to
transfer the goods to B. C assents to such order
and transfers the goods in his books to B. T

70

Acceptance of Goods (Section 42)

Receipt of goods by the buyer does not
necessarily means in acceptance of goods by
him under and in performance of the contract
for sale.
Acceptance is something more than mere
receipt or taking possession of the goods by
the buyer.
It means the final assent by the buyer that he
has received the goods under, and in
performance of, the contract for sale.
If he wrongfully refuses to accept the goods
under the contract, he is liable for damages.
Cont

71

Cont

Acceptance of Goods (Section 42)

The buyer is deemed to have accepted the
goods.
1. When he intimates to the seller that he has
accepted the goods.
2. When the goods have been delivered to him
and he does any action relation to them
which is inconsistent with the ownership of
the seller as, for instance where he (a) resells the goods or (b) uses the goods in a
manner proper only for the owner or (c)
makes some alteration in the goods (Section
42)
3. When, after the lapse of a reasonable time,
he retains the goods without intimation to the

72

Buyers liability in case of rejection of

goods (Section 43)
Unless otherwise agreed, where goods are
delivered to the buyer and he rejects them, he
is not bound to return them to seller.
It is sufficient if he intimates to the seller that
he has rejected the goods.
If the seller refuses to take away the goods,
the buyer becomes the bailee of the goods
and he may charge for keeping them.

73

Buyers liability for neglecting or refusing

delivery of goods (Section 44)
When seller is ready and willing to delivery the
goods and requests the buyer to take delivery
and the buyer does not, within a reasonable
time after such request, take delivery of goods,
he is liable to the seller for
a. Any loss occasioned by his neglect or refusal
to take delivery and
b. A reasonable charge for the care and custody
of the goods.
Where the neglect or refusal of the buyer to take
delivery amounts to repudiation of the contract,
the seller may sue for price and for damages.
74

Rights of the buyer

1. Right to have delivery as per contract (Sec.
31 & 32)
2. Right to reject the goods (Sec. 37)
3. Right to repudiate (Sec. 38(1))
4. Right to notice of insurance (Sec. 39(3))
5. Right to examine (Sec. 41)
Where the seller affords an opportunity to the
buyer to examine the goods but the buyer refuses
to do so, the buyer cannot say that the goods are
of an inferior quality and therefore cannot
repudiate the contract. If buyer repudiates the
contract, the seller is entitled to damages from
the buyer (Dharampal v/s. Ram Chander Rao, AIR
1980 All. 316)

75

Rights of the buyer

6.

Right

against

the

seller

for

breach

of

contract
a. Suit for damages (Sec. 57)
b. Suit for price
c. Suit for specific performance (Sec 58)
d. Suit for breach of warranty (Sec. 59)
e. Repudiation of contract before due date (Sec. 60)
f.

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

76

Duties of the buyer

1. Duty to accept the goods and pay for
them in exchange for possession (Sec. 31
& 32)
2. Duty to apply for delivery (Sec. 35)
3. Duty to demand delivery as reasonable
hour (Sec. 36(4))
4. Duty to accept installment delivery and
pay for it. (Sec. 38(2))
5. Duty to take risk of deterioration in the
course of transit (Sec. 40)Rusting on
Cont to
iron not more than necessarily incident

77

Cont

Duties of the buyer

6. Duty to intimate the seller where he
rejects the goods
(Sec. 43)
7. Duty to take delivery (Sec. 44)
8. Duty to pay price (Sec. 55)
9. Duty to pay damages for non-acceptance
(Sec. 56)

78

Rights of an Unpaid Seller

79

Rights of an Unpaid Seller against the

goods
1. Rights of lien
A lien is a right to retain possession of goods until
payment of the price.
.If he loses the possession of the goods,
he loses the right of lien also. The lien depends
on actual possession and not on title.
Termination of lien
- Waiver
- He delivers the goods to a carrier or other bailee
for the
purpose of transmission to the
buyer, without reserving the right of disposal of
the goods.
80

Rights of an Unpaid Seller against the

goods
2. Right of stoppage in transit
It is available
- When the buyer becomes insolvent and
- When the goods are in transit
The right of stoppage in transit is an extension of
the right of lien, but it arises only on the insolvency
of the buyer and when the goods are in transit.
Duration of transit
Transit is an intermediate stage. Goods are deemed
to be in course of transit from the time they are
delivered to a carrier or other bailee for the purpose
of transmission to the buyer untill the buyer or his
agent takes delivery of them from such carrier or
other bailee.
81

Rights of an Unpaid Seller against the

goods
How stoppage in transit is effected
1. By taking actual possession of the goods; or
2. By giving notice of his claim to the carrier or
other bailee
Notice of stopping the goods in transit may be
given either to the person in actual possession of
the goods or
to his principal.
Liability of carrier
If the carrier, after a proper notice by the seller to
him to stop the goods in transit, delivers them to
the buyer or refuses to them to the seller, he is
liable to the seller.
82

83