Business Law
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Sales of goods act 1930
Learning Objectives
2. Introduction 3. Essentials of Contract of Sale 4. Difference between Sale and gree!ent to Sell 5. Condition and "arrant# 6. $assing of $ro%ert# in &oods 7. 'ransfer of 'itle 'itle b# (on)owners 8. $erfor!ance of Contract of Sale 9. *ig+ts of ,n%aid Seller
10 Breac+ of Contract of Sale -
Essentials of contract of saleThe following are the essentials of contract of sale-
1) Movale !oo"s# $The sale of !oo"s act onl% relates to &ovale goo"s. 'n"er (ection 2 7) of the *ct goo"s is "efine" as ever% +in" of &ovale ,ro,ert% ece,t actionale clai&s an" &one%. Things attache" to the earth are not &ovale. /t growing cro,s an" grass which can easil% eas il% e se, se,ara arate te" " fr fro& o& the ea earth rth ef efor oree sal salee ar aree inc incl/" l/"e" e" in th thee "e "efin finiti ition on of !o !oo" o"s. s. 2) Two 0arties# - * sale of goo"s is a ilateral contract. To eec/te a sale there &/st e /%er an" seller. * ,erson never can /% his own goo"s. f co/rse a ,art owner &a% sell to another ,art owner. i+ewise a ,artner &a% sell goo"s to his fir& or a fir& &a% sell to a ,art%. 3) onsi"eration# n or"er to &a+e a vali" contract of sale of goo"s the consi"eration &/st e in ter& of &one%. *n echange of goo"s for goo"s cannot e "efine" as sale. /t if the echange is &a"e ,artl% for goo"s an" ,artl% for &one% then it can e regar"e" as sale. Mere noneistence of consi"eration will treate" it as gift. 4) ali" ontract# To e a contract of sale it &/st satisf% all the essentials of a vali" contract s/ch s/c h as val vali" i" off offer er a va vali" li" acc acce, e,tan tance ce fr free ee co conse nsent nt of th thee ,ar ,arti ties es a val vali" i" an an" " la lawf/ wf/ll 1$age $re%ared b# .o!al Sing+ C+au+an sit- $rof- /ive /ive College of anage!ent and 'ec+nolog# 'ec+nolog#
Business Law
Sales of goods act 1930
consi"eration
etc.
5) *gree&ent to transfer the ownershi,# % the contract of sale the seller &/st agree to transfer his goo"s to /%er with or witho/t ,h%sical ,ossession of the goo"s. 6) Metho" of for&ation of contract# To &a+e a contract of sale /n"er (ection 5 2) it &/st e in writing or % wor" of &o/th or i&,lie" fro& the acts of the ,arties. 7) Ter&s of ontract# n the asis of ti&e ,lace an" &o"e of "eliver% of goo"s the ,arties will agree /,on an% ter&. The ter&s incl/"e oth essential an" non-essential ter&s. The essential ter& i&,lies the con"itions an" a non-essential ter& i&,lies warranties. (o in case of all contracts of sale certain con"itions an" warranties are to e i&,lie". E:E;E ET
1- (ature2 sale is an eecuted contract- But4 an agree!ent to sell is an eecutor# contract- sale is called an eecuted contract because of t+e fact t+at in sale4 considerations and deliver# of goods taes %lace si!ultaneousl#- On t+e ot+er +and4 an agree!ent to sale is called an eecutor# contract because t+e consideration is given at a future date and goods are delivered to t+e bu#er at a future date5- 'ransfer of owners+i%2 In case of sale4 t+e owners+i% of t+e goods is transferred to t+e bu#er i!!ediatel#- So4 t+e bu#er in case of sale beco!es t+e owner of t+e goods- But4 an agree!ent to sell beco!es a sale onl# w+en t+e owners+i% of t+e goods is transferred to t+e bu #er- '+e owners+i% of t+e goods is transferred to t+e bu#er at so!e future date3- 'ransfer of ris2 In case of sale4 t+e bu#er will +ave to bear t+e loss4 even t+oug+ t+e goods are in %ossession of t+e seller- Because4 in case of sale t+e ris is associated wit+ owners+i%s- But in case of an agree!ent to sell4 t+e seller is to bear t+e ris of loss4 even t+oug+ t+e goods are in t+e %ossession of t+e bu#er6- Conse7uence of t+e breac+2 In case of breac+ of an agree!ent to sell b# t+e seller4 t+e bu#er can recover t+e da!ages fro! t+e seller- If t+e bu#er fails to %a# t+e consideration t+e seller can sue and recover for da!ages fro! t+e bu#er- But incase of breac+ of t+e contract b# t+e seller4 t+e bu#er can sue for t+e deliver# of goods and sue for da!ages8- Insolvenc# of t+e bu#er2 In case of sale4 if t+e bu#er beco!es an insolvent before %a#ing t+e %rice4 t+e seller s+all +ave to deliver t+e goods to t+e Official ssignee or *eceiver ece%t w+ere +e +as a lien over t+e goods- But in case of agree!ent to sell4 t+e seller can refuse to deliver t+e goods to t+e Official ssignee or *eceiver until +e is %aid t+e full %rice of t+e goods- Insolvenc# of t+e seller2 In case of sale4 if t+e seller beco!es insolvent4 t+e bu #er can recover t+e goods fro! t+e official receiver or assignee as t+e %ro%ert# of goods is wit+ t+e bu#er- But in case 2$age $re%ared b# .o!al Sing+ C+au+an sit- $rof- /ive College of anage!ent and 'ec+nolog#
Business Law
Sales of goods act 1930
of agree!ent to sell4 if t+e bu#er can clai! onl# a ratable dividend and not t+e goods4 if t+e seller beco!es insolvent and goods are taen fro! +i! b# t+e *eceiver or Official ssignee4 t+e bu#ers cannot recovers t+e goods fro! t+e *eceiver or Official ssignee as +e is not t+e owner of t+e goods:- &eneral and %articular %ro%ert#2 B# t+e contract of sale4 a rig+t is created against t+e w+ole world- '+is !eans t+at t+e bu#er +as t+e rig+t to use t+e %arties to use t+e goods against ot+ers- But4 b# t+e agree!ent to sell4 t+e bu#er gets t+e rig+ts over t+e goods onl# against t+e seller;- *ig+t of *e)Sale2 '+e seller cannot re)sell t+e goo ds in case of sale4 t+oug+ t+e %ossession of goods sold re!ains wit+ t+e seller- But4 t+e +ire %urc+aser cannot re)sell till t+e ti!e +e %a#s all t+e install!ent of +ire-
;T; *; <*::*;T= t t+e ti!e of selling of goods4 t+e seller !aes certain state!ents or re%resentations wit+ a view to induce t+e bu#er to %urc+ase t+e goods-'+ese state!ents !a# for! a %art of contract of sale and t+e bu#ers rel# u%on t+e!- '+ese re%resentations are called 5? of t+e Sale of &oods ct4 a condition is a sti%ulation essential to t+e !ain %ur%ose of t+e contract4 t+e breac+ of w+ic+ gives rise to a rig+t to treat t+e contract as re%udiated- '+ere are !ainl# t+ree essentials of a co ndition4 suc+ as I? Condition is essential to t+e !ain %ur%ose of t+e contractII? '+e cause of non)fulfill!ent of condition is irre%arable da!age to t+e aggrieved %art#III? s a result of breac+ of a condition t+e aggrieved %art# will get t+e rig+t to rescind t+e contract and recover t+e da!ages for breac+ of conditionccording to Section 15 >3? 4 a warrant# +as a sti%ulation collateral to t+e !ain %ur%ose of t+e contract4 t+e breac+ of w+ic+ gives rise to a clai! for da!ages but not to a rig+t to reject t+e goods and treat t+e contract re%udiatedLie condition4 t+e warrant# is to fulfill t+ree essentials4 suc+ as) I? "arrant# is collateral to t+e !ain %ur%ose of t+e contractII? '+e breac+ of warrant# does not breac+ t+e !ain %ur%ose of t+e contract and it causes da!ages to t+e aggrieved %art#III? '+e aggrieved %art# can onl# clai! da!ages for breac+ of warrant#Ea!%le2 3$age $re%ared b# .o!al Sing+ C+au+an sit- $rof- /ive College of anage!ent and 'ec+nolog#
Business Law
Sales of goods act 1930
$ went to @ as to s+ow a +orse w+ic+ could run at a s%eed of 38 !- %- +- @ %ointed out at a %articular +orse and said t+at it will suit +is %ur%ose- $ boug+t and discovered t+at t+e +orse run at a s%eed of 50 !- %- +- (ow4 $ !a# reject t+e +orse as t+e re%resentation !ade b# @ w+ic+ is t+e condition of sale is not fulfilledDifferences between a condition and a warrant#2) i? Essential of Contract2 ) ,nder Section 15 >5? of t+e Sale of &oods ct 19304 a condition is defined as a sti%ulation w+ic+ is essential to t+e !ain %ur%ose of t+e contractOn t+e ot+er +and4 warrant# is defined under Section 15 >3? as a sti%ulations t+at is collateral to t+e !ain %ur%ose of t+e contractii? Effect on breac+2 '+e breac+ of condition give rise to a rig+t to treat t+e contract as re%udiated- But t+e breac+ of warrant# gives rise to t+e clai! for da!ages but not to a rig+t to reject t+e goods and treat t+e contract as re%udiatediii? O%tion of treat!ent2 In case of condition4 a breac+ of condition can be treated as a breac+ of warrant# as an o%tion on t+e %art of t+e aggrieved %art#- But4 in case of breac+ of warrant# no suc+ o%tion is essential to t+e aggrieved %art#- So t+e breac+ of warrant# can not be treated as breac+ of condition'+e distinctions between condition and warrant# can be easil# !ore understood fro! t+e ea!%le given belowEa!%le2 $ went to @ and ass to s+ow a +ealt+# +orse w+ic+ could run at a s%eed of 38 ! %- +- @ %ointed out at a %articular +orse and said t+at it will suit +is %ur%ose- $ boug+t and discovered t+at t+e +orse run at a s%eed of 50 !- %- +- and wea- (ow4 $ !a# reject t+e +orse as t+e re%resentation !ade b# @ w+ic+ is t+e condition of sale is not fulfilledLE' ,S .(O" '+e Sale of &oods ct4 1930 deals wit+ t+e law relating to sale of goods in India onl#- '+e Sale of &oods ct4 1930 is !ainl# based on t+e Englis+ Sale of &oods ct4 1;93- Before t+e Sale of &oods ct 19304 t+e law relating to sale of good s was covered under t+e c+a%ter /II of Indian Contract ct4 1;:54 t+e %rovision of w+ic+ was found to be inade7uate- '+erefore4 a strong need was felt to +ave an inde%endent Sale of &oods ct and conse7uentl# a new ct called Sale of &oods ct4 1930 was %assed- '+e %resentl# ct containing sections ca!e into force fro! 1st Aul# 1930 w+ic+ etends to w+ole of India ece%t t+e State of Aa!!u and .as+!ir-
4$age $re%ared b# .o!al Sing+ C+au+an sit- $rof- /ive College of anage!ent and 'ec+nolog#
Business Law
Sales of goods act 1930
0*((;! 0:0E:T= ; !(
contract of sale can be %erfor!ed b# t+e two wa#s1. 0ro,ert% in goo"s or ownershi, of goo"s an" 2. 0ossession of the goo"s -
%erson !a# +ave %ossession of goods but +e !a# not be t+e owner e-g- a servant4 agent etc- On t+e ot+er +and4 a %erson !a# be t+e owner but !a# not +ave t+e %ossession of goods- In t+e contract of sale4 w+en t+e owners+i% of goods is transferred to t+e bu#er fro! t+e sellers4 +e beco!es t+e owner of t+e goodss %er general rule4 t+e transfer of owners+i% de%end s on t+e intention of t+e %arties to t+e contract- But so!eti!es t+e intention of t+e %arties cannot be ascertained fro! t+e contractIn t+at case4 t+e intention of t+e %arties is ascertained on t+e basis of %rovisions laid down in Sections 1; to 56 of t+e Sale of &oods ct- '+ese %rovisions are discussed as under 1? Incase of t+e unascertained goods >Section 1; and 53? 5? Incase of s%ecific goods >Section 50 to 55? and 3? Incase of sale on a%%roval >Section 56? '*(SE* O O"(E*SI$ I( CSE O ,(SCE*'I(ED &OODS2 a? ,nascertained &oods2 ,nder Section 1; o f t+e Sale of &oods ct4 t+e unascertained goods are not transferred unless t+e goods are ascertained- '+eses goods are not s%ecificall# identified at t+e ti!e of contract of sale- It is identified and is set a%art for t+e %ur%ose of delivering to t+e bu#er b? '+e Intention of t+e %arties2 ,nder section 19 t+e transfer of owners+i% de%ends u%on t+e intention of bot+ t+e %arties and owners+i% transfer fro! t+e seller to t+e bu#er at t+e ti!e fied b# t+e %artiesc? ,nascertained or future goods2 ,nder section 534 in sale of unascertained or future goods4 goods are %assed to t+e bu #er b# descri%tion- "+en goods of t+at descri%tion in a deliverable state are unconditionall# a%%ro%riated to t+e co ntract4 t+en t+e %ro%ert# in goods %asses to t+e bu#er- It is to be done b# t+e seller wit+ t+e assent of t+e bu#er or b# t+e bu#er wit+ t+e assent of t+e sellerEa!%le2 FG agrees to sell FBG 500 g of *ice out of a large 7uantit# of =s godown4 w+atever t+e %rice t+at is to be %aid on t+e s%ecific da# under t+e contract- Ot+erwise t+e 100 g of *ice t+at was se%arated fro! t+e godown of <= will not %ass fro! to B5$age $re%ared b# .o!al Sing+ C+au+an sit- $rof- /ive College of anage!ent and 'ec+nolog#
Business Law
Sales of goods act 1930
'*(SE* O O"(E*SI$ I( CSE O S$ECIIC &OODS2 a? S%ecific goods2 ) ,nder Section 504 t+e goods are deliverable state and t+e owners+i% transferred fro! t+e seller to t+e bu#er at t+e ti!e of !a ing of contract of sale b? "+en seller +as so!et+ing to do2) ,nder Section 51 in case of sale of s%ecific goods if t+e goods are not in a deliverable state and t+e seller +as to do so!et+ing to %ut t+e goods in a deliverable state4 t+e owners+i% does not %asses until suc+ t+ing is done and t+e bu#er +as notice t+ereofc? "+en goods are to be !easured4 tested2 ,nder Section 554 in case of a contract of sale of s%ecific goods and t+e goods are in a deliverable state but4 t+e seller +as to weig+t4 !easure4 test or %erfor! so!e ot+er act or t+ing wit+ reference to t+e goods for ascertaining t+e %rice4 t+e owners+i% does not %ass until suc+ act or t+ing is done and t+e bu#er +as noticed t+ereof'*(SE* O O"(E*SI$ I( CSE O SLE O( $$*O/L2 a? &oods sent on a%%roval2 ) In case of sale on a%%roval or sale on return4 t+e bu#er +as an o%tion to return t+e goods to t+e seller wit+in a reasonable %eriod of ti!e- '+us4 t+e owners+i% transferred to t+e bu#er w+en +e acce%ts t+e goods- If t+e bu#er does not return t+e goods wit+in t+e reasonable ti!e4 t+e seller can recover t+e %rice of t+e goods fro! t+e bu#erIn case of sale on a%%roval4 t+e owners+i% to t+e bu#er is transferred in t+ree wa#s2 H "+en t+e goods are acce%ted b# t+e bu#er4 or H "+en t+e bu#er %erfor!s so!e acts w+ic+ indicates i!%lied acce%tan ce of t+e bu#er4 or H '+e bu#er fails to return t+e goods wit+in a reasonable ti!e ,nder Section 564 w+en goods are sold under a contract of sale or return or on a%%roval4 t+e sale is a conditional sale- s a result of significance of t+e bu#er=s a%%roval4 t+e goods will %ass to t+e bu#er b? *eservation of *ig+t of Dis%osal2 ,nder Section 584 reservation of t+e rig+t of dis%osal is defined as an# action !ade b# t+e seller4 w+ere it is e%ressed t+at an intention on +is %art not to %art wit+ control over t+e goods until certain condition are fulfilled- '+en4 t+e %ro%ert# will be %assed subject to fulfill!ent of t+ese conditionsEa!%le2 <= su%%lies 100 bags of *ice to
0E::M*;E ;T:*T (*E 6$age $re%ared b# .o!al Sing+ C+au+an sit- $rof- /ive College of anage!ent and 'ec+nolog#
Business Law
Sales of goods act 1930
,nder section 5 >5? of t+e Sale of &oods ct4 t+e ter!
/arious rules regarding and ot+er !atters relating to t+e %erfor!ance of t+e contract of sale are %rovided under different Sections4 w+ic+ are as b elow) 1- ode of Deliver#2 ,nder Section 334
8- $lace of Deliver#2 ,nder Section 3 >i?4 at w+ic+ %lace t+e deliver# is to be !ade will be !entioned in t+e agree!ent between t+e %arties- %art fro! an# suc+ contract t+e goods 7$age $re%ared b# .o!al Sing+ C+au+an sit- $rof- /ive College of anage!ent and 'ec+nolog#
Business Law
Sales of goods act 1930
will be delivered at t+e %lace at w+ic+ t+e# are sold- 'i!e of Deliver#2 ,nder Section 3 >5? and >6?4 of t+e Contract of Sale of &oods ct4 w+ere t+e seller is bound to send t+e goods to t+e bu#er 4 but no ti!e for sending t+e! in fied t+e seller is bound to send t+e! wit+in a reasonable ti!e and at a reasonable +our:- anner of Deliver#2 ,nder Section 3>3?4 at t+e ti!e of sale4 if t+e goods are in t+e %ossession of a t+ird %erson t+en t+ere is no deliver# b# t+e seller to bu#er till suc+ t+ird %erson acnowledges to t+e bu#er t+at +e +olds t+e good on +i!self- '+e transfer of docu!ent of title of goods o%erates as deliver # ins%ite of %ossession of goods b# t+ird %art# and t+is will not a%%l# in suc+ case;- E%enses of deliver#2 ,nder Section 3 >8? t+e bu#er is to bear t+e e%enses of or incidental to receive t+e deliver#- But4 an# e%ense of %utting t+e goods into a deliverable state is to bear b# seller- If t+ere is an# agree!ent between t+e %arties wit+ res%ect to t+e cost of %utting t+e goods in a deliverable state or of e%enses incidental to % utting into t+e deliverable state4 t+en t+is agree!ent will deter!ine t+e rig+t of t+e %arties9- Deliver# of wrong 7uantit#2 ,nder Section 3:4 it is a dut# of seller to co!%l# wit+ t+e order of t+e bu#er regarding ind4 7ualit# and 7uantit# of goods- Deliver# s+ould be according to t+e s%ecification of order- In case of defective deliver#4 t+e bu#er can reject t+e goods10- Install!ents of deliveries2 ) ,nder Section 3;4 t+e bu #er is not bound to receive t+e goods of deliver# b# install!ents unless ot+erwise !entioned in t+e ag ree!ent- '+e %erfor!ance of t+e contract can be s%lit u% wit+ !utual consent- "+ere %a#!ent is !ade in install!ents in a contract4 t+an failure of suc+ %a#!ent o f install!ent breac+ t+e contract11- Deliver# of carrier2 ,nder Section 394 it is %rovided t+at if t+e seller is aut+oried to send t+e goods to t+e bu #er4 t+en t+e seller !ust tae all safet# !easure to %rotect t+e goodsIt is t+e dut# of seller to contract wit+ t+e ca rrier- In case of sending goods b# sea route4 t+e seller !ust infor! t+e bu#er to insure t+e! against sea %erils15- &oods delivered at a distance %lace2 ,nder Section 604 in case of agree!ent4 w+ere seller agrees to deliver t+e goods at +is own ris t+e bu#er s+all bear t+e loss of deterioration of t+e goods in transit-
13- Ea!ining t+e goods on deliver#2 ,nder Section 614 if t+e bu#er +ad not ea!ined t+e goods4 t+e seller will not deliver t+e goods u ntil t+e bu#er +as avail t+e o%%ortunit# of ea!ining t+e goods- '+e bu#er !ust give a reasonable o%%ortunit# of ea!ining t+e goods in order to deter!ine w+et+er t+e# are as %er contract ot+erwise t+e bu#er !a# reject t+e 8$age $re%ared b# .o!al Sing+ C+au+an sit- $rof- /ive College of anage!ent and 'ec+nolog#
Business Law
Sales of goods act 1930
goods16- cce%tance co!%lete on deliver#2 ,nder Section 654 t+e bu#er +as to be dee!ed to +ave acce%ted t+e goods in case of t+e bu#er inti!ates to t+e seller t+at +e acce%ted t+at goods or goods was delivered to t+e bu#er and +e %erfor! an#t+ing %ertaining to t+e!- ore over4 t+e bu#er retains t+e goods be#ond a reasonable ti!e wit+out inti!ation of rejection to t+e seller18- Bu#er not bound to return rejected goods2 ,nder Section 634 it is laid down t+at in case of goods delivered to t+e bu#er and if t+e bu#er refuses to acce%t t+e goods4 t+en +e !a# not return t+e goods to t+e seller- '+is inti!ation to seller is sufficient t+at +e refuses to acce%t t+e goods- '+is rule will be a%%licable subject to t+e condition of contract between t+e %arties1- Liabilit# of bu#er for neglecting or refusing deliver# of goods2 ,nder Section 664 for an# loss occurred due to neglect of bu#er or a reasonable c+arge for t+e care and custod# of t+e goods4 t+e bu#er will be liable4 w+ere t+e seller is willing to deliver t+e goods and re7uest t+e bu#er to acce%t +is deliver#- It is furt+er)%rovided b# Section 664 t+at t+e seller can eercise t+e rig+t !entioned above ins%ite of t+e neglect to refusal !ade b# t+e bu#er to receive t+e deliver# and it will a!ounts to a re%udiation of t+e contractLE' ,S .(O" contract sale involves reci%rocal %ro!ises4 because4 t+e seller %ro!ising to deliver t+e goods and t+e bu#er to undertae to %a# for t+e goods- '+e deliver# of goods and %a#!ent of %rice are concurrent conditions on t+e contrar#4 t+ere are i!%lied %ro!ises on t+e %art of t+e seller to deliver goods wit+out dela# and an undertaing on t+e %art of t+e bu#er to acce%t t+e goods and %a# t+e %rice- So4 it is t+e dut# of seller to deliver t+e goods to t+e bu#er- Of course4 +e cannot do so until t+e bu#er a%%lies for deliver#-
:E*> ;T:*T (*E In case of contract of sale4 w+ere one %art# re%udiates t+e contract b# refusing to %erfor! +is obligation4 t+en +e is said to +ave co!!itted a breac+ of t+e contract- s soon as %art# co!!its a breac+ of t+e contract t+e ot+er %art# beco!es entitled to an# one of t+e following re!edies-
*e!edies to seller2 In case of breac+ of contract of sale4 t+e following re!edies are available to t+e seller) i) (/it for ,rice. ii) (/it for "a&ages for non-acce,tance of the goo"s iii) (/it for interest. 9$age $re%ared b# .o!al Sing+ C+au+an sit- $rof- /ive College of anage!ent and 'ec+nolog#
Business Law
Sales of goods act 1930
iv) (/it for "a&ages for re,/"iation of contract % the /%er efore the "/e "ate.
oreover4 t+e seller +as two !ore re!edies4 if a contract of sale is re%udiated b # t+e bu#er before t+e due date of deliver#i? '+e seller !a# treat t+e contract as subsisting and +e can wait till t+e date of deliver#ii? '+e seller !a# treat t+e contract as rescinded and +e can sue for da!ages for t+e breac+*e!edies to bu#er2) In case of breac+ of t+e contract of sale b# t+e seller4 t+e bu#er +as t+e following re!edies) i? e can sue for da!ages for non)deliver# of t+e goodsii? e can sue for s%ecific %erfor!anceiii? e can sue for breac+ of warrant#iv? e can sue for da!ages for re%udiation of contract b# t+e seller before d ue dateIn case of breac+ of condition t+e bu#er can reject t+e goods- Of course +e cannot reject t+e goods under t+e following cases-) i? Bu#er waives t+e breac+ of condition and elects to treat it as a breac+ of warrant#ii? If t+e contract is not reversible and t+e bu #er +as acce%ted t+e goods or %art of t+e goodsiii? '+e contract is for s%ecific goods and t+e %ro%ert# +as %assed to t+e bu#erOn t+e ot+er +and4 in case of breac+ of warrant#4 t+e bu#er can do an# one of t+e following i? Set u% against t+e seller t+e breac+ of warrant# in di!inution or etinction of t+e %rice or ii? Sue t+e seller for da!ages for breac+ of warrant# >Section89? In case of breac+ of warrant# da!ages are !easured b# esti!ating loss arising directl# and naturall# fro! t+e breac+-
:!>T( ';0* (EE: '+e seller of goods is called un%aid seller4 w+en t+e w+ole of t+e %rice +as not been %aid or tendered or w+ere a bill of ec+ange or ot+er negotiable instru!ent is received as a conditional %a#!ent- fter all4 t+e seller re!ains un%aid till t+e %rice or an# %ortion of t+e %rice re!ain t+e un%aid'+e rig+ts of an un%aid seller can be classified !ainl# into two categories- Suc+ as) I- *ig+t of un%aid seller against t+e goodsII- *ig+t of un%aid seller against t+e bu#er %ersonall#- '+e rig+t of un%aid seller against t+e goods2 Ins%ite of %assing t+e %ro%ert# in t+e goods to t+e bu#er4 t+e un%aid seller +as t+e following rig+ts against t+e goodsa- *ig+t of Lien2 Lien i!%lies suc+ t#%e of rig+t4 w+ic+ can retain %ossession of goods an d refuse to deliver t+e! to t+e bu#er till t+e %rice is %aid- '+e un%aid seller can eercise +is rig+t of lien in t+ree cases as !entioned below) i? "+ere t+e goods are sold wit+out an# sti%ulation as to credit1? $ a g e $re%ared b# .o!al Sing+ C+au+an sit- $rof- /ive College of anage!ent and 'ec+nolog#
Business Law
Sales of goods act 1930
ii? "+ere t+e goods are sold on credit4 but t+e ter! of credit +as e%irediii? "+ere t+e bu#er beco!es insolvent4 but t+e ti!e of credit is not e%iredIf t+e bu#ers beco!e insolvent4 t+e lien eists ins%ite of goo ds is sold on credit and %eriod of credit is not #et e%ired- In case of goods sold on credit4 it is %resu!ed t+at t+e bu#er s+all ee% +is credit good- So4 before %a#!ent if t+e bu#er beco!es insolvent4 t+e seller will be entitled to %la# t+is rig+t and +old t+e goods as securit# for t+e %rice b- *ig+t of sto%%age of goods in 'ransit2 '+e rig+t of sto%%age i!%lies t+e rig+t of sto%%ing t+e goods w+ile t+e# are wit+ a carrier for t+e %ur%ose trans!ission to t+e bu#er- So rig+t of sto%%age can be defined as an etension of t+e rig+t of lien as because it entitles t+e seller to retain t+e %ossession of t+e goods even t+e seller +as %arted wit+ t+e %ossession- ccording to Section 804 un%aid sellers can eercise t+is rig+t onl# on t+e following conditionsi? "+en t+e bu#er beco!es insolventii? "+en t+e %ro%ert# +as %assed to t+e bu#eriii? "+en t+e goods are in t+e course of transiturt+er4 under Section 814 it is laid down t+at t+e rig+t of sto%%age in transit can be eercised onl# so long as t+e goods are in t+e course of transit- But4 t+e rig+t of sto%%age cannot be eercised w+en t+e transit co!es to an end- s %er section 81 t+e goods are dee!ed to be in course of transit fro! t+e ti!e w+en t+e# are delivered to a carrier or ot+er bailee for t+e %ur%ose of trans!ission to t+e bu#er- ,ntil t+e bu#er or +is agent taes deliver# of t+e!- On t+e ot+er +and4 t+e transit is dee!ed to be at an end in t+e following cases) i? "+en t+e bu#er taes t+e deliver# after t+e goods +ave reac+ed destinationii? "+en t+e bu#er obtains deliver# of goods before arrival of t+e goods at t+e a%%ointed destinationiii? "+en t+e goods +ave arrived at t+e destination and t+e carrier acnowledges to t+e bu#er t+at +e +olds t+e goods on +is be+alfiv? "+en t+e goods are arrived at t+eir destination but t+e bu#er re7uests t+e carrier4 instead of taing deliver# re7uest t+e carrier to carr# t+e goods to so!e furt+er destination and if t+e carrier agrees to tae t+e! to t+e new destinationv? "+en t+e carrier wrongl# refuses to give deliver# of t+e goods to t+e bu#erc- *ig+t of *esale2 Besides t+e above two rig+ts4 t+e un%aid seller can also eercise t+e rig+t of resale- ,nder Section 864 so!e circu!stances are %rovided w+ere t+e rig+t of resale can be eercised- '+ese are) i? &oods !ust be of a %eris+able natureii? '+e un%aid seller !ust eercise t+e rig+t of lien and sto%%age in transitiii? '+e seller !ust give a notice to t+e bu#er regarding +is intention to resale-
11 $ a g e $re%ared b# .o!al Sing+ C+au+an sit- $rof- /ive College of anage!ent and 'ec+nolog#
Business Law
Sales of goods act 1930
'+e seller can recover t+e loss of resale if an#4 fro! t+e defaulting bu#er- '+e seller can ee% a sur%lus on t+e resale wit+ +i!- '+e un%aid seller +as a rig+t of wit++olding deliver# of goods w+ic+ are t+e subject !atter of t+e contract- '+is rig+t can be eercised b # t+e un%aid seller even if t+e sale was on credit or in case of s%ecific and unascertained goodsII- *ig+ts of un%aid seller against t+e bu#er %ersonall#2 '+e rig+t of un%aid seller can be discussed as follows) a- Suit for %rice2 ,nder Section 88 in case of %ro%ert# of goods %assing to t+e bu#ers and wrongfull# t+e bu#er neglects or refuses to %a# for t+e goods4 t+en t+e seller !a# sue wit+ for %rice of t+e goods,nder Section 88 >5?4 in case of t+e %rice of goods is %a#able b# t+e bu#ers to t+e seller on a certain da# irres%ective of t+e deliver# of goods and t+e bu#er neglects or refuses to %a# suc+ %rice4 t+en t+e seller can sue +i! for t+e %rice of goods4 even t+oug+ t+e owners+i% of t+e goods are not transferred to t+e bu#er b- Suit for da!ages for non)acce%tance2 In case4 w+ere t+e bu#er wrongfull# neglects or refuses to acce%t and %a# for t+e goods4 t+e seller !a# sue +i! for da!ages for non) acce%tance- ,nder t+e %rovision laid down in t+e Section :3 of t+e Indian Contract ct4 suc+ da!ages are !easured- '+ese %rovision are given below) i? In case of +aving available !aret for t+e goods in 7uestion4 t+e difference between t+e contract %rice and t+e !aret %rice on t+e date of breac+ will be !easure of da!agesii? In case of +aving no suc+ availabilit# of !aret4 t+e !easures will be t+e esti!ated loss suffered directl# or indirectl# resulting in t+e ordinar# cause of events fro! suc+ breac+-
12 $ a g e $re%ared b# .o!al Sing+ C+au+an sit- $rof- /ive College of anage!ent and 'ec+nolog#
