Sale Of Goods Act: Section 3

SALE OF GOODS ACT

SECTION 3

Contract of sale of goods A

contract whereby the seller transfers or agrees to transfer the movable property/goods to the buyer for a buyer-----> SALE  A contract whereby the seller transfers the goods at a future date or subject to some conditions thereafter to be fulfilled AGREEMENT TO SALE

Essential Features  Two

parties (Seller & Buyer)  Movable goods (Immovable property not regulated by Sale of Goods Act)  Price  Transfer of general property e.g. If A owns certain goods, he has general property in goods.If A pledges to B, then B has special property in goods.

Sale 

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Agreement to sell

Immediate transfer of property

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Existing and specific goods Risk of loss falls on buyer

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In case of breach of contract, the seller can sue buyer for price

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Transfer of property takes place at future date or on fulfillment of certain conditions Future goods or contingent goods Risk of loss falls on seller In case of breach of contract, the seller can sue for damages only

Sale 

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Agreement to sell

The seller cannot resell the goods. The new buyer does not acquire the title

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JUS IN REM

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The seller can re-sell the goods. The new buyer acquires the title of goods. The original buyer can only sue for damages. JUS IN PERSONAM

Sale

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Agreement to sell

In case of insolvency of buyer, seller must return goods to the official receiver In case of insolvency of seller, buyer is entitled to receive goods for the official receiver

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In case of insolvency of buyer, the seller is not bound to part with goods In case of insolvency of seller, buyer is entitled only to receive rateable dividend

Classification of goods  Existing

goods a) Specific goods (Identified and agreed upon at a time of contract is made b) Ascertained goods c) Unascertained goods( Not identified and agreed upon at the time of contract)

Continued… Future goods e.g.-> A railway administration entered into a contract for sale of coal-ash that may be accumulated during the period of contract UNION OF INDIA v. TARA CHAND  Contingent goods e.g.->A agrees to sell specific goods to B to be delivered on the arrival of particular ship. If the ship arrives but with no such goods on board ,the seller is not liable. 

CONDITIONS & WARRANTIES

SECTION 12

A

condition is a stipulation which is essential to the main purpose of the contract. Its nonfulfilment upsets the very basis of contract  A warranty is a stipulation which is collateral to the main purpose of contract

CAVEAT EMPTOR or Let The Buyer beware Seller is under no obligation to reveal unflattering truths about the goods sold  There is a implied condition Section 16(1) that buyer must examine the goods before buying e.g. H sold 32 pigs by way of auction to W “with all faults of errors of description”.H knew that the pigs were suffering from swine fever. The sale is good and H is not liable for any damages WARD vs. HOBBS 

EXCEPTIONS  Fitness

for buyer’s purpose  Sale under a patent or trade mark  Merchantable quality  Usage of trade  Consent by Fraud