SALE OF GOODS ACT1930
Introduction
Definition
Enacted -1 July 1930
The Indian Sale of Goods Act, 1930 is a mercantile law which came into existence on 1 July 1930, during the British Raj, borrowing heavily from the United Kingdom's Sale of Goods Act 1893. It is applicable all over India. Under the act, goods sold from owner to buyer must be sold for a certain price and at a given period of time. The act was amended on 23 September 1963 and was renamed the Sale of Goods Act, of 1930
APPLICABILITY OF THE ACT
DEFINITIONS (Sec. 2)
Delivery :
According to the Sale of Goods Act Sn. 2(2), delivery means voluntary transfer of possession from one person to another. The essence of it is that the deliverer places the delivery in the same position of control over the goods as he himself held before the delivery. Delivery may be symbolic or constructive.
Symbolic:
The delivery of the key of a godown is a symbolic delivery of the goods stacked there. A sells his specific goods to B and delivers the key of the godown where the goods were stored, to B. This is symbolic delivery.
Constructive:
There is a voluntary transfer of possession, but in reality, there is no physical or actual delivery of the goods.
A sells 100 bales of cotton to B. B asks A to keep the goods for 15 days, in A's godown. A agrees, there is the transfer of possession from A to B, but no physical transfer. This is constructive delivery.
If the seller agrees to sell his goods which are with C, to B, there is "attornment", if C agrees to keep the goods as bailee of B. This is also constructive delivery. The leading case is Hurry V. Mangles.
The sale of goods act has provided for provisions relating to delivery, part delivery, installment delivery, etc. in sections 33 to 34.
Goods, future, and specific goods :
"Goods" means every kind of Movable property. It includes stock and shares, growing crops, grass, severed things which were attached to land or forming part of the land.
Goods does not include "Money" and "Actionable claims".Similarly, Coal, minerals, gravel etc. which are part of the soil are not "Goods" and hence, cannot be the subject of the sale of goods. However, after removing from the soil these become goods and may be sold as such.
Future goods: means goods that are to be manufactured or produced or acquired by the seller after the making of the contract of sale. These are goods that are not identified and agreed upon and hence are also called "generic" or "unascertained goods". A contract for the sale of 10,000 vials of penicillin, which are to be manufactured is a contract for the sale of future goods. The property (title) in the goods passes to the buyer when the goods are made ready and notice is given to the buyer.
Specific goods : (Existing or ascertained goods)
These are goods that are identified and appropriated to the contract of sale. The sale of ready TV., or radio sets is specific. Similarly, sale of 1000 bales of cotton identified, is specific.
The property in the goods passes, according to the intention of the parties. Sn. 20 to 23 sale of goods act deal with such passing of property to the buyer.
Documents of title to goods :
According to Sn. 2(4) of the Sale of Goods Act, the document of title to goods includes :
a) Bill of lading
b) Dock warrant
c) Warehouse-Keeper's certificate
d) Wharfinger's certificate
e) Railway receipt, warrant or order for delivery of goods.
f) Any other document used in the ordinary course of business as proof by the possessor to receive the goods. Eg. Lorry Way Bill.
These documents may be transferred by endorsement or delivery. The transferee thereby acquires the right either to transfer the documents or to receive the goods.
Price : (Sns. 9 & 10) :
Price according to Sn. 2(10) of the sale of goods act means the money consideration for the sale of goods. The price may be fixed by the contract itself, or maybe fixed in a manner agreed to under the contract by the parties. Price may also be determined according to the course of dealings in business by the parties. In such cases, there is an implied condition to pay a reasonable price. What is reasonable, depends on the facts and circumstances of each case. Where there is market price, that price is reasonable. Where the price is to be fixed by a third party (valuer) according to the contract of sale, then, such third party may fix up such a price. If he does not or cannot fix up, then the contract is avoided. However, if in the meanwhile the goods or any part have been delivered and appropriated according to the contract of sale, then the buyer must pay a "reasonable price".
Where a party prevents such a valuer from fixing up the price, then the party not at fault, may file a suit to recover damages against the other party.
Difference Between Sale and Agreement to Sell
Sale | Agreement to sell |
1.A sale creates a jus in rem. | 1. An agreement to sell creates |
Immediate transfer of ownership to buyer It is executed contract It creates right in rem for buyer Seller can use for price – if not buyer Risk passes to buyer Buyer can get goods even if seller has becomes insolvent Delivery to receiver if buyer becomes insolvent before the payment of price | Ownership remains with the seller It is an executory contract It provides right in personam for buyer and seller Seller can sue for damages Risk doesn’t passes to buyer Buyer can get proportionate share in money but can’t get goods Delivery can be refused by seller if buyer becomes insolvent. |
| It is an executory contract In case of breach, the seller can only sue for damages, unless the price was payable at a stated date. The loss in this case shall be borne by the seller, even though the goods are in the possession of the buyer In this case, the buyer cannot claim the goods, but only a rateable dividend for the money paid |
In a contract of sale, the property in the goods is transferred to the buyer; where the transfer of the property in the goods is to take place at a future time or subject to some conditions, thereafter to be fulfilled, the contract is an agreement to sell.
An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled.
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