Sale Of Goods Act

1930
Section 4 – Sale and
Agreement
1. The contract of saleto 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.
2. A contract of sale may be absolute or conditional.
3. 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.
4. 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.
Section 4 – Sale and
Agreement
Examples: to Sale
 The Section may be illustrated by the following examples:
 A agrees to buy a haystack from B on B’s land with liberty to
come on B’s 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 seller’s 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)
 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.
 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.
 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.
 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
seller’s 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.)
 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.
Formalities of a contract
ofA statement
 sale: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 customer’s 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 customer’s 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 seller’s assent does not arise.
 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.
 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
other’s 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.
 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.
 2. 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.
 3. 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.
4. 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.
 Section 12. Condition and
1. Warranty
A stipulation in a contract of sale with reference to goods which
are subject thereof may be a condition or a warranty.
2. 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.
3. 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.
4. 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
 1. Conditions and
 This section
Warranties
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.
 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.
 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.
 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.
 5. Implied Conditions and
would create such Warranty
 Although the parties may have used no expressed words that
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
 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.
 Section 13 : When condition
to be treated as warranty,
1. 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.
2. 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
3. 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.
 Transfer of Property as
Between Seller and Buyer
Section 18 – Goods must be
 Goods mustascertained
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
1. Transfer of property
2. Property cannot pass until the goods are identified
3. Part of a specific whole
4. Property and risk
5. Identification of goods
 1. 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.
2. 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)
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)
 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.
 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.
 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
1. Principles for determining whether the property is transferred
2. Intention of the parties
3. Ascertained goods
 1. Principles for
determining whether the
property is transferred
 When it appears that the goods -- the subject of the
contract—are 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.
 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.
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
 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.
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 seller’s land at
the price of £145 to the paid on the 4th February, the hay to
be allowed to remain on the seller’s 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)
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)
 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)
Section 22 : Specific goods in
a deliverable state , when
the seller has to do anything
thereto in order to ascertain
 Where there is a price : the sale of specific
contract for
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.
 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 seller’s and buyer’s 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)
 Section 23 : Sale of
unascertained goods and
appropriation.
1. 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.
2. 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.
 Section 23 : Sale of
unascertained goods and
 Example appropriation
 This section may be illustrated by the following example:
1. 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.
2. 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.
Section 24 Goods sent on
approval or ‘on sale or
 When goods are return’
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.
 Section 24 Goods sent on
approval or ‘on sale or
 Examples
return’
 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.
Section 26 Risk prima facie passes with
property
 unless otherwise agreed, the goods remain at the
seller’s 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 buyer’s 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.
 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)
 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
 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.
 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.
 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.
 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.
 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 day’s 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)
 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
 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 buyer’s
boxes in the buyer’s presence, but they remain in the seller’s premises.
This is not a delivery. Boulter Vs. Arnott (1833)
 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.
 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)
 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.
 Section 46. Unpaid Seller’s 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.
 Section 46. Unpaid Seller’s 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.
 Section 47. Seller’s 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 seller’s 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 seller’s lien is ‘ to protect a
vendor from incurring an expense in manufacturing or acquiring goods for which
payment remains justly in doubt ’. The seller’s 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
vendor’s lien.
 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.
 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.
 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 buyer’s 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
 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 satisfied—the 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.
 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.
 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
 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.