THE SALE OF GOODS ACT, 1930

CHAPTER I

PRELIMINARY

2. Definitions.—In this Act, unless there is anything repugnant in the subject or context,—

1. “buyer” means a person who buys or agrees to buy goods;

2. “delivery” means voluntary transfer of possession from one person to another;
3. goods are said to be in a “deliverable state” when they are in such state that the buyer
would under the contract be bound to take delivery of them;
4. “document of title to goods” includes a bill of lading, dockwarrant, warehouse keeper’s
certificate, wharfingers’ certificate, railway receipt, multimodal transport document,
warrant or order for the delivery of goods and any other document used in the ordinary
course of business as proof of the possession or control of goods, or authorising or
purporting to authorise, either by endorsement or by delivery, the possessor of the
document to transfer or receive goods thereby represented;
5. “fault” means wrongful act or default;
6. “future goods” means goods to be manufactured or produced or acquired by the seller
after the making of the contract of sale;
7. “goods” means every kind of moveable property other than actionable claims and
money; and includes stock and shares, growing crops, grass, and things attached to or
forming part of the land which are agreed to be severed before sale or under the contract
of sale;
8. a person is said to be “insolvent” who has ceased to pay his debts in the ordinary course
of business, or cannot pay his debts as they become due, whether he has committed an act
of insolvency or not;
9. “mercantile agent” means a mercantile agent having in the customary course of business
as such agent authority either to sell goods, or to consign goods for the purposes of sale,
or to buy goods, or to raise money on the security of goods;
10. “price” means the money consideration for a sale of goods;
11. “property” means the general property in goods, and not merely a special property;
12. “quality of goods” includes their state or condition;
13. “seller” means a person who sells or agrees to sell goods;
14. “specific goods” means goods identified and agreed upon at the time a contract of sale is
made; and
15. expressions used but not defined in this Act and defined in the Indian Contract Act, 1872
(9 of 1872), have the meaning assigned to them in that Act.

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Application of provisions of Act 9 of 1872 (Section 3)—The unrepealed provisions of the
Indian Contract Act, 1872, save in so far as they are inconsistent with the express provisions of
this Act, shall continue to apply to contracts for the sale of goods.

CHAPTER II

FORMATION OF THE CONTRACT

Contract of sale

Sale and agreement to sell (Section 4)

1. Definition of Sale of Goods: A contract of sale of goods involves the transfer of property
in goods from the seller to the buyer for a price. It is possible for a contract to exist
between part-owners of the goods.
2. Types of Contracts: Contracts of sale can be classified as either absolute (unconditional)
or conditional (dependent on certain events).
3. Sale vs. Agreement to Sell:
1) Sale: When the property in the goods is transferred immediately, it is called a sale.
2) Agreement to Sell: If the transfer is to occur at a future date or is contingent upon
specific conditions, it is termed an agreement to sell.
4. Conversion of Agreement to Sell into Sale: An agreement to sell becomes a sale when
either the stipulated time passes or the conditions for transfer are met.

Formalities of the contract

Contract of sale how made (Section 5)

Formation of a Contract of Sale:

1. A contract of sale is established through an offer to buy or sell goods for a specified price
and the acceptance of that offer.
2. The contract can outline various terms regarding the timing of delivery and payment,
which may include:
a. Immediate delivery of goods.
b. Immediate payment of the price.
c. Instalment payments or deliveries.
d. Provisions for postponing delivery or payment.

Form of the Contract: A contract of sale can be established in several ways, including:

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 a) In writing: A formal document outlining the terms.
b) Oral agreement: A verbal contract made between the parties.
c) Combination of both: Some terms may be written, while others may be spoken.
d) Implied by conduct: The actions of the parties may indicate a contract, even in
the absence of explicit terms.

Subject-matter of contract

Existing or future goods (Section 6)

1. Types of Goods: A contract of sale can involve either:

a. Existing Goods: Goods that are currently owned or possessed by the seller at the
time of the contract.
b. Future Goods: Goods that are not yet in existence or not yet owned by the seller
at the time of the contract.
2. Contingent Goods: Contracts can also be made for the sale of goods whose acquisition
by the seller is contingent upon a certain event occurring. This means that the seller may
not have the goods at the time of the contract, and the sale is dependent on whether the
specified event happens.
3. Present Sale of Future Goods: If a seller attempts to make a present sale of future
goods, the contract does not constitute an immediate sale. Instead, it is treated as an
agreement to sell. This indicates that the actual transfer of property will only occur once
the future goods come into existence or are acquired by the seller.

Goods perishing before making of contract (Section 7)

1. Contract for Specific Goods: A contract for the sale of specific goods refers to a
contract that identifies particular goods that are to be sold. These goods are specifically
described and are unique to the contract.
2. Void Contract:
1) If the specific goods have perished (meaning they are no longer in
existence) or have become so damaged that they no longer match their
description at the time the contract is made, the contract is considered
void.
2) The critical aspect here is that this condition applies without the
knowledge of the seller. If the seller was unaware of the goods’
destruction or damage, the contract cannot be enforced because it is based
on an assumption that the goods exist and are in a condition that meets the
contract's description.

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Goods perishing before sale but after agreement to sell (Section 8)

1. Agreement to Sell Specific Goods: An agreement to sell specific goods refers to a

contract where particular goods are identified for sale, but the actual transfer of
ownership may occur at a later date.
2. Perishing or Damage of Goods: If the specific goods perish (are destroyed) or become
so damaged that they no longer fit the description provided in the agreement, the
outcome depends on the timing of this event:
a. This condition applies before the risk passes to the buyer. Risk refers to the
responsibility for loss or damage to the goods.
3. Avoidance of the Agreement: In such a case, where the goods perish or become
damaged without any fault of either the seller or the buyer, the agreement is considered
avoided. This means that the parties are released from their obligations under the
contract.

The price

Ascertainment of price (Section 9)

1. Setting the Price: The price in a contract of sale can be established in several ways:
○ Fixed by the Contract: The contract explicitly states the price that the buyer will
pay for the goods.
○ Left to be Fixed: The contract may specify a method for determining the price at
a later time, such as a formula or agreement to be reached later.
○ Determined by Course of Dealing: The price may also be based on the previous
dealings between the parties, reflecting their established practices.
2. When Price is Not Determined:
1) If the price is not set according to the above provisions, the buyer is obligated to
pay the seller a reasonable pricefor the goods.
2) The determination of what constitutes a reasonable price is a question of fact and
varies based on the specific circumstances of each case. Factors that may
influence this could include market rates, the nature of the goods, and the context
of the sale.

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Agreement to sell at valuation (Section 10)

1. Valuation by a Third Party:

● If there is an agreement to sell goods where the price is to be set by a third party's
valuation, and that third party is unable or fails to provide the valuation, the
agreement is considered avoided. This means that the contract is no longer
enforceable.
● However, if any of the goods have been delivered to and appropriated by the
buyer, the buyer is required to pay a reasonable price for those goods. This
ensures that the seller is compensated for the goods that have already been
received.
2. Fault and Liability: If the inability of the third party to make the valuation is due to the
fault of either the seller or the buyer, the party that is not at fault may seek damages
against the party who is at fault. This provision ensures accountability and provides a
mechanism for the non-fault party to recover losses resulting from the failure to
determine the price.

Conditions and waranties

Stipulations as to time (Section 11)

1. Time of Payment: Generally, unless the contract explicitly states otherwise, stipulations
regarding the time of payment are not considered essential to the contract of sale. This
means that delays in payment may not necessarily constitute a breach of the contract,
unless the parties have indicated that timely payment is critical.
2. Essence of the Contract:
● The determination of whether any other stipulation concerning time is of the
essence depends on the specific terms of the contract. This includes aspects such
as:
○ Time of delivery.
○ Time for performance of any obligations.
● If the contract clearly indicates that certain time frames are critical to the
agreement, then failing to adhere to those time stipulations could be considered a
breach of contract.

Condition and warranty (Section 12)

1. Types of Stipulations: In a contract of sale, stipulations regarding the goods can be

classified as either a condition or a warranty.

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 2. Definition of Condition: A condition is a stipulation that is essential to the main purpose
of the contract. Breaching a condition gives the aggrieved party the right to treat the
contract as repudiated, meaning they can terminate the contract and seek remedies.
3. Definition of Warranty: A warranty is a stipulation that is collateral (secondary) to the
main purpose of the contract. If a warranty is breached, the aggrieved party is entitled to
claim damages but does not have the right to reject the goods or treat the contract as
repudiated.
4. Determining Conditions vs. Warranties:
● Whether a stipulation is classified as a condition or a warranty depends on the
construction of the contract. The intention of the parties and the specific
language used in the contract will guide this determination.
● Importantly, a stipulation labeled as a warranty in the contract may still be
considered a condition if its essentiality to the contract's purpose is established.

When condition to be treated as warranty (Section 13)

1. Waiving Conditions: If a contract of sale includes conditions that the seller must fulfill,
the buyer has the option to either:
○ Waive the condition: The buyer can choose to overlook the condition and
proceed with the contract.
○ Treat the breach as a breach of warranty: Instead of treating the breach as
grounds for contract repudiation, the buyer can classify it as a less serious issue,
thereby seeking damages but not rejecting the goods.
2. Non-Severable Contracts: In contracts that are not severable (i.e., the contract is
considered a whole and cannot be divided into parts), if the buyer has accepted the goods
or any part of them:
○ A breach of any condition to be fulfilled by the seller can only be treated as a
breach of warranty. This means the buyer cannot reject the goods or treat the
contract as repudiated, unless the contract explicitly states otherwise (through
express or implied terms).
3. Conditions and Warranties Excused by Law: The provisions mentioned do not affect
cases where the fulfillment of a condition or warranty is excused by law, such as due to
impossibility or other legal reasons. This means that if the law provides for exceptions,
those exceptions remain valid regardless of the contract terms.

Implied undertaking as to title, etc (Section 14)

1. Implied Condition of Right to Sell: In a contract of sale, it is implied that:

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 ○ For a sale: The seller has the right to sell the goods. This means the seller must
own the goods and have the authority to transfer ownership.
○ For an agreement to sell: The seller will have the right to sell the goods at the
time when ownership is supposed to transfer to the buyer.
2. Implied Warranty of Quiet Possession: There is an implied warranty that the buyer
shall have and enjoy quiet possession of the goods. This means the buyer should be able
to use and enjoy the goods without interference from the seller or any third parties
claiming rights over the goods.
3. Implied Warranty of Freedom from Encumbrances: There is also an implied warranty
that the goods are free from any charge or encumbrance in favor of any third party that
was not declared or known to the buyer before or at the time the contract was made. This
protects the buyer from hidden claims or liens on the goods that could affect their
ownership or use.

Sale by description (Section 15):

1. Implied Condition:
○ In a contract for the sale of goods by description, there is an implied condition
that the goods must correspond with the description provided in the contract.
This means that the actual goods delivered must match the specific description
given by the seller.

2. Sale by Sample and description:

○ If the sale is made by sample as well as by description, it is not enough for the
bulk of the goods to simply match the sample. The goods must also correspond
with the description provided.
○ This means that both the sample and the description are critical. If there is any
inconsistency between the goods and either the sample or the description, the
buyer has grounds to claim a breach of the contract.

Implied conditions as to quality or fitness (Section 16)

General Principles

1. No Implied Warranty or Condition:

○ Generally, under the law, there is no implied warranty or condition regarding
the quality or fitness of goods supplied under a contract of sale, except in specific
circumstances as outlined below.

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Specific Conditions and Warranties

2. Implied Condition for Particular Purpose:

○ If the buyer makes known to the seller, either expressly or implicitly, the
particular purpose for which the goods are required and relies on the seller's
skill or judgment, there is an implied condition that the goods shall be
reasonably fit for that purpose.
○ Exception: In the case of a contract for the sale of a specified article under its
patent or trade name, there is no implied condition regarding its fitness for any
particular purpose.
3. Implied Condition of Merchantable Quality:
○ When goods are bought by description from a seller who deals in that description
of goods (regardless of whether he is the manufacturer), there is an implied
condition that the goods shall be of merchantable quality.
○ Examination Exception: If the buyer has examined the goods, there will be no
implied condition regarding defects that should have been revealed by that
examination.
4. Usage of Trade:
○ An implied warranty or condition regarding quality or fitness for a particular
purpose may arise from usage of trade. This means that established practices in a
particular trade can influence the implied terms of a contract.
5. Express vs. Implied Warranties:
○ An express warranty or condition does not negate an implied warranty or
condition under this Act unless it is inconsistent with it. This ensures that both
express and implied warranties can coexist unless there is a conflict between
them.

Sale by sample (Section 17)

1. Sale by Sample: A contract of sale is considered a contract for sale by sample if there
is a term in the contract, whether express (clearly stated) or implied (inferred from
circumstances), that indicates the sale is based on a sample.
2. Implied Conditions in Sale by Sample: In a contract for sale by sample, there are
specific implied conditions that must be met:
a) Bulk Correspondence: The bulk of the goods supplied must correspond with
the sample in quality. This means that the goods delivered should match the
quality of the sample shown to the buyer.
b) Opportunity to Compare: The buyer must be given a reasonable opportunity
to compare the bulk of the goods with the sample. This ensures that the buyer can
adequately assess whether the goods meet the expected standards.

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 c) Freedom from Hidden Defects: The goods must be free from any defects that
render them unmerchantable, and which would not be apparent on a reasonable
examination of the sample. This protects the buyer from receiving goods that are
of inferior quality but appear acceptable based on the sample.

CHAPTER III

EFFECTS OF THE CONTRACT

Transfer of property as between seller and buyer

Goods must be ascertained (Section 18):

Where there is a contract for the sale of unascertained goods, no property in the goods is
transferred to the buyer unless and until the goods are ascertained.

Property passes when intended to pass (Section 19)

1. Transfer Timing: In a contract for the sale of specific or ascertained goods, the transfer
of property (ownership) from the seller to the buyer occurs at the time the parties intend
it to be transferred. This emphasizes the importance of mutual agreement regarding when
ownership changes hands.
2. Determining Intention: To ascertain the intention of the parties regarding the timing of
the property transfer, several factors are considered:
○ Terms of the Contract: The explicit provisions and language used in the contract
itself.
○ Conduct of the Parties: How the parties acted during the transaction, which may
reflect their intentions.
○ Circumstances of the Case: The context and surrounding facts related to the
transaction, which can provide insight into the parties’ intentions.
3. Rules for Ascertaining Intention: Unless there is a different intention explicitly stated
in the contract, the rules outlined in sections 20 to 24 of the applicable law (likely
referring to the Sale of Goods Act or similar legislation) are used to determine when the
property in the goods passes to the buyer. These sections typically contain specific rules
regarding different scenarios of property transfer.

Specific goods in a deliverable state (Section 20):

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 1. Unconditional Contract: When there is an unconditional contract for the sale of
specific goods, it means that the contract does not depend on any conditions being met or
events occurring before the transfer of ownership.
2. Goods in Deliverable State: The goods must be in a deliverable state. This means that
they are ready to be delivered to the buyer without any additional action required by the
seller to prepare them for sale.
3. Timing of Property Transfer: In such cases, the property in the goods passes to the
buyer at the moment the contract is made. This indicates that ownership is transferred
immediately upon the formation of the contract, without waiting for payment or delivery.
4. Postponement of Payment or Delivery: It is immaterial (irrelevant) whether the time
for payment of the price, the time of delivery of the goods, or both are postponed. The
ownership transfer occurs regardless of these factors.

Specific goods to be put into a deliverable state (Section 21):

1. Contract for Specific Goods: In a contract for the sale of specific goods, the focus is on
goods that are uniquely identified and agreed upon in the contract.
2. Seller's Obligation to Prepare Goods: If the seller is required to perform certain
actions on the goods to make them deliverable, the property (ownership) in the goods
will not pass to the buyer until:
a. The necessary actions are completed (e.g., repairs, packaging, etc.).
b. The buyer has been given notice that these actions have been completed.
3. Notice Requirement: The requirement for the buyer to have notice means that the seller
must inform the buyer that the goods are now in a deliverable state, which is essential for
the transfer of property.

Specific goods in a deliverable state, when the seller has to do anything thereto in
order to ascertain price (Section 22):

1. Contract for Specific Goods: In a contract for the sale of specific goods that are in a
deliverable state, the transfer of property (ownership) is typically straightforward.
2. Seller's Obligations: However, if the seller is required to weigh, measure, test, or
perform any other action to ascertain the price of the goods, the transfer of property will
not occur until:
a. The required action is completed.
b. The buyer has been given notice that this action has been completed.

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 3. Importance of Notice: The requirement for notice ensures that the buyer is aware that
the goods are now ready for transfer and that the price has been determined based on the
necessary measurements or assessments.

Sale of unascertained goods and appropriation (Section 23)

1. Appropriation of Goods: When there is a contract for the sale of unascertained or

future goods that are described, and goods of that description are in a deliverable state:
○ If the goods are unconditionally appropriated to the contract (meaning they are
set aside for this specific contract) with the assent of either party (seller or buyer),
the property in the goods passes to the buyer.
○ This assent can be express (clearly stated) or implied (inferred from actions or
circumstances) and can occur either before or after the appropriation is made.
2. Delivery to Carrier: When the seller delivers the goods to:
○ The buyer directly, or
○ A carrier or other bailee (third party) for the purpose of transmitting the goods to
the buyer,

And if the seller does not reserve the right of disposal (i.e., the right to reclaim or
control the goods), he is deemed to have unconditionally appropriated the goods to the
contract. This means the property in the goods passes to the buyer at the moment of
delivery to the carrier or bailee.

Goods sent on approval or “on sale or return” (Section 24):

1. Approval or Acceptance: The property in the goods passes to the buyer when he:
○ Signifies his approval or acceptance to the seller. This could be through explicit
communication indicating he wants to keep the goods.
○ Does any other act adopting the transaction, which means any action that
clearly demonstrates the buyer's intention to accept and keep the goods, such as
using or reselling them.
2. Retention Without Notice of Rejection: If the buyer does not explicitly signify approval
or acceptance but retains the goods, the property will pass under the following conditions:
○ If a specific time has been fixed for the return of the goods, the property passes
at the expiration of that time.
○ If no time has been fixed for the return of the goods, the property will pass at the
expiration of a reasonable time. What constitutes a reasonable time can depend
on the nature of the goods and the circumstances of the transaction.

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Reservation of right of disposal (Section 25):

1. Reservation of Right of Disposal: In a contract for the sale of specific goods, the seller
can reserve the right of disposal of the goods until certain conditions are met. This
means:
○ Even if the goods are delivered to the buyer, a carrier, or another bailee for the
purpose of transmission, the property in the goods does not transfer to the buyer
until the conditions imposed by the seller are fulfilled.
○ This provision protects the seller's interests, allowing them to retain control over
the goods until specific contractual obligations are satisfied.
2. Delivery to Railway Administration: When goods are shipped or delivered to a railway
administration for carriage, and the bill of lading or railway receipt indicates that the
goods are deliverable to the order of the seller or their agent, it is presumed that the seller
reserves the right of disposal. This indicates that:
○ The seller maintains a level of control over the goods until conditions are met,
reinforcing their rights in transport scenarios.
3. Seller Drawing on Buyer: If the seller draws on the buyer for the price and sends the bill
of exchange along with the bill of lading or railway receipt to secure acceptance or
payment, the buyer has the following obligations:
○ If the buyer does not honor the bill of exchange, they must return the bill of
lading or railway receipt.
○ If the buyer wrongfully retains the bill of lading or railway receipt, the property in
the goods does not pass to them. This protects the seller's interests, ensuring that
ownership does not transfer until payment or acceptance conditions are fulfilled.

Risk prima facie passes with property (Section 26)

1. Risk Retained by Seller: Unless the parties have agreed otherwise, the risk associated
with the goods remains with the seller until the property (ownership) in the goods is
transferred to the buyer. This means that the seller is responsible for any loss or damage
to the goods until ownership passes.
2. Risk Transferred to Buyer: Once the property in the goods is transferred to the buyer,
the risk also transfers to the buyer, regardless of whether delivery of the goods has
occurred. This means the buyer assumes responsibility for any loss or damage to the
goods after the transfer of ownership.
3. Fault and Delayed Delivery: If the delivery of goods is delayed due to the fault of
either the buyer or the seller, the goods remain at the risk of the party at fault for any

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 loss that occurs during the delay. This provision emphasizes accountability, ensuring that
the party responsible for the delay bears the risk of any resultant loss.
4. Duties and Liabilities as Bailee: The section clarifies that nothing in this provision
affects the duties or liabilities of either party when they act as a bailee for the other
party's goods. This means that even while the seller retains ownership, if they are holding
goods for the buyer, or vice versa, their responsibilities as bailees remain intact.

Transfer of title

Sale by person not the owner (Section 27):

1. No Better Title: When goods are sold by a person who is not the owner and who does
not have the authority or consent of the owner, the buyer acquires no better title to the
goods than the seller had. This means that the buyer's ownership rights are limited to
what the seller possessed, which is typically none.
2. Owner's Conduct: An exception arises when the owner's conduct precludes them from
denying the seller’s authority to sell. This means that if the owner has acted in a way that
leads the buyer to believe that the seller has the right to sell (for example, by giving the
seller a power of attorney or otherwise indicating consent), the owner may not be able to
claim that the sale was unauthorized.
3. Mercantile Agents:
● The provision further states that if a mercantile agent is in possession of the
goods or a document of title with the consent of the owner, any sale made by the
agent while acting in the ordinary course of business shall be valid, as if the
agent were expressly authorized by the owner.
● For this protection to apply, the buyer must:
○ Act in good faith, meaning they believe the transaction is legitimate.
○ Have no notice at the time of the contract of sale that the seller (the
mercantile agent) lacks authority to sell.

Sale by one of joint owners (Section 28):

1. Joint Ownership: In cases where goods are owned jointly by multiple owners, each
owner typically has an equal right to the goods. However, if one of the joint owners has
sole possession of the goods with the permission of the other co-owners, the legal
implications of selling those goods can vary.
2. Good Faith Purchaser: If a joint owner sells the goods to a buyer who acts in good faith
(meaning they believe the transaction is legitimate) and has no notice at the time of the
contract that the seller does not have the authority to sell, the property in the goods is

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 transferred to that buyer. This means that the buyer acquires valid ownership rights,
even if the seller was not the sole owner.
3. Notice of Authority: The protection for the buyer hinges on the lack of notice regarding
the seller's authority. If the buyer had reason to know that the joint owner lacked the
authority to sell (for instance, if the buyer was aware that the seller was not the only
owner), the transfer of property may not be valid.

Sale by person in possession under voidable contract (Section 29)

1. Voidable Contracts: A contract is said to be voidable if one party has the option to
affirm or rescind the contract due to certain legal grounds, such as misrepresentation,
coercion, undue influence, or lack of capacity (as per Sections 19 and 19A of the Indian
Contract Act, 1872). This means that the contract is valid until one party chooses to
rescind it.
2. Seller's Possession: If the seller has obtained possession of the goods under a voidable
contract, the contract has not yet been rescinded. This implies that the seller still holds a
semblance of authority over the goods.
3. Buyer’s Title: When a buyer purchases the goods from the seller, they can acquire a
good title to the goods, provided that:
○ The buyer acts in good faith: This means the buyer believes the transaction is
legitimate and intends to make a fair purchase.
○ The buyer has no notice of the seller's defect of title: This means the buyer is
unaware that the seller’s right to sell the goods is compromised or that the
contract is voidable.

Seller or buyer in possession after sale (Section 30)

1. Continuing Possession after Sale:

● If a person has sold goods but continues to possess them or the documents of title
(such as bills of lading or warehouse receipts), the delivery or transfer of those
goods or documents by that person (or by a mercantile agent acting on their
behalf) to another person will be valid if:
○ The recipient receives the goods or documents in good faith.
○ The recipient has no notice of the prior sale.
● In this case, the delivery or transfer will have the same effect as if the seller had
been expressly authorized by the original owner of the goods to make the transfer.
This provision protects buyers who purchase from a seller who still possesses the
goods, ensuring that their title is recognized.

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 2. Possession Obtained with Seller's Consent:
● When a person buys or agrees to buy goods and obtains possession of the goods
or documents of title with the consent of the seller, the following applies:
○ If this person (or a mercantile agent acting for them) then delivers or
transfers the goods or documents to another person in good faith and
without notice of any lien or other rights held by the original seller, the
transfer will be effective as if the lien or right did not exist.
● This means that even if the original seller had a lien (a right to retain possession
until a debt is paid) or some other claim, the new recipient of the goods can
acquire valid title as long as they acted in good faith and were unaware of the
seller's rights.

CHAPTER IV

PERFORMANCE OF THE CONTRACT

Duties, of seller and buyer (Section 31)

1. Seller's Duty: The seller has the obligation to deliver the goods as specified in the
contract. This includes:
○ Ensuring that the goods are delivered in the agreed-upon condition and at the right
time.
○ Transferring ownership and ensuring that the goods correspond with the
description or specifications outlined in the contract.
○ Complying with any other terms specified in the sale agreement, such as
packaging or transportation requirements.
2. Buyer's Duty: The buyer is obligated to accept the goods once they are delivered and to
pay for them according to the terms set forth in the contract. This includes:
○ Acknowledging the receipt of the goods and ensuring they meet the conditions of
the sale.
○ Paying the agreed-upon price within the specified timeframe.
○ If there are any issues with the goods (e.g., they are defective or do not match the
description), the buyer typically has the responsibility to address these issues
according to the terms of the contract.

Payment and delivery are concurrent conditions (Section 32):

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 1. Concurrent Conditions: Unless the parties have agreed otherwise, the delivery of
goods and payment of the price are considered concurrent conditions. This means that
both actions are mutually dependent on each other:
○ The seller must be ready and willing to provide possession of the goods at the
same time that the buyer is ready and willing to pay the price.
○ Conversely, the buyer must be prepared to pay the price simultaneously with
receiving possession of the goods.
2. Implications of Concurrent Conditions:
● This principle ensures that neither party is at a disadvantage during the
transaction. The seller cannot demand payment before delivering the goods, and
the buyer cannot insist on receiving the goods without making payment.
● It promotes fairness in commercial transactions by ensuring that both parties
fulfill their obligations simultaneously.
● If either party fails to fulfill their obligation (e.g., the seller is not ready to deliver
the goods, or the buyer is not ready to pay), the other party may have grounds to
refuse to perform their part of the contract.
3. Agreements to the Contrary: Parties can agree to different terms regarding the timing of
delivery and payment. For instance, a seller may agree to deliver goods before payment is
made, or a buyer may agree to pay in advance of delivery. These agreements must be
clearly outlined in the contract.

Delivery (Section 33)

Methods of Delivery

1) Agreed Methods of Delivery: Delivery of goods can occur in several ways, including
any method that the parties agree shall be treated as delivery. This implies that the parties
have the flexibility to define what constitutes delivery within the context of their
agreement.
2) Effect of Delivery: Delivery can also be achieved by any action that effectively puts the
goods in the possession of the buyer or a person authorized to hold the goods on the
buyer's behalf. This means that:
a) The buyer does not necessarily need to physically take possession of the goods for
the delivery to be considered valid.
b) Delivery can occur through various means, such as:
(1) Transfer of documents: For example, handing over a bill of
lading or warehouse receipt.
(2) Transfer of control: Allowing the buyer or their representative
access to the goods.

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 (3) Performance of an act: Such as installing goods at the buyer's
location or setting them aside for the buyer’s use.
3) Authorized Persons: The term "any person authorized to hold them on his behalf"
indicates that delivery can also be made to third parties who act as agents or
representatives for the buyer. This means that if the buyer designates someone to receive
the goods, delivery to that person is still valid.

Effect of part delivery (Section 34):

1. Partial Delivery as Full Delivery: A delivery of part of the goods during the process of
delivering the whole has the same effect regarding the passing of property (ownership) in
those goods as if the whole quantity were delivered at once. This means:
○ If the seller delivers a portion of the goods that are intended to be part of a larger
whole, the property in that portion is transferred to the buyer as if the entire
quantity had been delivered. This principle allows for practical transactions where
goods are delivered in stages.
2. Intent to Sever: However, if the seller delivers a part of the goods with the intention of
severing it from the whole (meaning they intend for this part to be treated as a separate
entity), this partial delivery does not operate as a delivery of the remainder. In this case:
○ The seller’s intention to treat the delivered portion as distinct from the remaining
goods means that the property in the remaining goods does not pass to the buyer.
○ The buyer cannot claim ownership of the rest of the goods simply because they
received a part that was intentionally separated.

Buyer to apply for delivery (Section 35)

1. General Principle: In the absence of an express contract that specifies different terms,
the seller of goods is generally not obligated to deliver the goods until the buyer applies
for delivery. This means that:
○ The seller is not required to take the initiative to deliver the goods unless the
buyer actively requests them.
2. Implications for Buyers: Buyers must be aware that they have the responsibility to
initiate the delivery process by making a request to the seller. This can include:
○ Contacting the seller to arrange for delivery.
○ Picking up the goods if they are located at the seller’s premises.

If a buyer fails to apply for delivery, the seller is not in breach of contract, as the
obligation to deliver is contingent upon the buyer’s action.

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 3. Express Contracts: If there is an express contract that states specific delivery terms
(such as a scheduled delivery date), the seller would then be obligated to fulfill those
terms, regardless of whether the buyer has made a request for delivery.

Rules as to delivery (Section 36)

1. Place of Delivery:
● Whether the buyer is to take possession of the goods or the seller is to send them
is determined by the contract between the parties, which can be express
(explicitly stated) or implied (inferred from circumstances).
● If there is no such contract, the rules for delivery are:
○ Goods Sold: They are to be delivered at the place where they are located
at the time of the sale.
○ Goods Agreed to be Sold: These should be delivered at the place where
they are located at the time of the agreement, or if not yet in existence, at
the place where they are manufactured or produced.
2. Timing of Delivery: If the seller is obligated to send the goods to the buyer but no
specific time for sending is stipulated in the contract, the seller must send the goods
within a reasonable time. This ensures that buyers do not face unnecessary delays in
receiving their goods.
3. Delivery Involving Third Parties:
● If the goods at the time of sale are in the possession of a third person (such as a
warehouse or another party), there is no delivery to the buyer until that third
person acknowledges holding the goods on behalf of the buyer.
● This acknowledgment is essential for the transfer of possession.
● The provision also notes that the transfer of any document of title (like a bill of
lading) is unaffected by this requirement, meaning that ownership rights can still
transfer through documentation.
4. Timing of Demand or Tender: A demand or tender of delivery may be considered
ineffective unless it is made at a reasonable hour. What constitutes a reasonable hour is
a question of fact and can vary based on the circumstances of the transaction.
5. Expenses of Making Goods Deliverable: Unless otherwise agreed, the expenses
associated with putting the goods into a deliverable state (such as packaging, handling, or
transport preparation) are to be borne by the seller. This protects the buyer from
unexpected costs associated with making the goods ready for delivery.

Delivery of wrong quantity (Section 37)

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 1. Delivery of Less Quantity: If the seller delivers a quantity of goods that is less than
what was contracted, the buyer has the right to:
○ Reject the goods. This means the buyer can refuse to accept the incomplete
delivery.
○ If the buyer chooses to accept the delivered goods, they must pay for them at the
contract rate. This establishes that acceptance implies payment for the goods
delivered, even if it is a lesser quantity.
2. Delivery of More Quantity: If the seller delivers a larger quantity of goods than what
was contracted:
○ The buyer has the option to:
■ Accept the goods that are included in the contract and reject the excess.
■ Reject the entire delivery.
○ If the buyer accepts the whole delivery (including the excess), they must pay for it
at the contract rate.
3. Mixed Delivery: If the seller delivers the contracted goods mixed with goods of a
different description not included in the contract:
○ The buyer can:
■ Accept the goods that conform to the contract and reject the others.
■ Alternatively, the buyer may reject the entire delivery.
○ This provision protects the buyer from having to accept unwanted goods that are
not part of the contract.
4. Trade Usage and Special Agreements: The provisions outlined are subject to any usage
of trade, special agreements, or course of dealing between the parties. This means that
established practices in a particular trade or specific agreements made between the buyer
and seller may modify or override the general rules stated above.

Instalment deliveries (Section 38)

1. Acceptance of Delivery: Unless there is an agreement to the contrary, the buyer is not
obligated to accept delivery of goods by installments. This means that if the seller
attempts to deliver the goods in parts (installments), the buyer can refuse to accept them
unless the contract explicitly states that delivery by installments is acceptable.
2. Delivery of Stated Installments: In cases where the contract specifies that goods are to
be delivered in stated installments that are to be paid for separately, the following
applies:
a) If the seller either fails to deliver or makes a defective delivery regarding one or
more installments, or if the buyer neglects or refuses to take delivery of or pay for
one or more installments, the situation becomes dependent on:
i) The terms of the contract.

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 ii) The circumstances of the case.
b) The critical consideration is whether the breach of contract amounts to a
repudiation of the entire contract or constitutes a severable breach. A severable
breach means that the breach pertains only to a specific installment and does not
affect the validity of the entire contract. In this case, the buyer may be entitled to
claim compensation for the breached installment but cannot treat the entire
contract as repudiated.

Delivery to carrier or wharfinger (Section 39)

1. Delivery to Carrier or Wharfinger: When the seller is authorized or required to send

the goods to the buyer, the delivery of the goods to a carrier(whether named by the buyer
or not) for transmission to the buyer, or delivery to a wharfinger (a person or company
that holds goods in custody) for safe custody, is generally considered a prima facie
(presumed) delivery to the buyer. This means:
○ The act of sending the goods to the carrier or wharfinger establishes a legal
presumption that the seller has fulfilled their delivery obligation to the buyer.
2. Contract with Carrier or Wharfinger:
● Unless the buyer authorizes otherwise, the seller must make a reasonable contract
with the carrier or wharfinger on behalf of the buyer, considering:
○ The nature of the goods.
○ Other circumstances relevant to the case.
● If the seller fails to make such arrangements and the goods are lost or damaged
during transit or while in the custody of the wharfinger, the buyer has options:
○ The buyer may decline to consider the delivery to the carrier or wharfinger
as a valid delivery to themselves.
○ Alternatively, the buyer can hold the seller responsible for damages
resulting from the loss or damage of the goods.
3. Notice for Insurance: Unless there is a different agreement, if the seller sends goods by
a route that involves sea transit and where it is customary to insure goods, the seller
must provide the buyer with notice that enables them to insure the goods during their sea
transit. If the seller fails to give such notice:
○ The goods will be considered to be at the seller’s risk during the sea transit. This
means that the seller is responsible for any loss or damage that occurs during
transit.

Risk where goods are delivered at distant place (Section 40)

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 1. Seller's Agreement to Deliver at His Own Risk: When the seller agrees to deliver the
goods at their own risk to a place different from where the goods are located at the time
of sale, this means that the seller takes on the responsibility for ensuring the goods are
delivered, regardless of the risks associated with that delivery.
2. Buyer's Risk of Deterioration: Unless otherwise agreed, the buyer is responsible for
any risk of deterioration in the goods that is necessarily incident to the course of
transit. This means:
○ While the seller may bear the responsibility for the delivery itself, the buyer
assumes the risk of any deterioration (such as spoilage, damage, or loss of quality)
that occurs as a natural part of transporting the goods to the designated location.

Buyer’s right of examining the goods (Section 41)

1. Opportunity for Examination:

● When goods are delivered to the buyer and the buyer has not previously
examined them, the buyer is not considered to have accepted the goods until they
have had a reasonable opportunity to examine them. This examination is
necessary for the buyer to determine whether the goods conform to the terms of
the contract.
● This provision protects the buyer's rights, ensuring they can verify that the
delivered goods meet the agreed specifications before accepting them.
2. Seller's Obligation to Afford Opportunity for Examination:
● Unless there is an agreement to the contrary, when the seller tenders delivery of
goods to the buyer, the seller is obligated, upon request, to provide the buyer with
a reasonable opportunity to examine the goods. This is essential for the buyer to
ascertain whether the goods are in conformity with the contract.
● This obligation reinforces the buyer's right to ensure that the goods meet the
required standards and specifications before accepting them.

Acceptance (Section 42):

1. Intimation of Acceptance: The buyer is considered to have accepted the goods when he
intimates (informs) the seller that he has accepted them. This can be a clear
communication or statement indicating the buyer's acceptance.
2. Acts Inconsistent with Seller's Ownership: The buyer is also deemed to have accepted
the goods when they have been delivered to him, and he performs any act in relation to
the goods that is inconsistent with the ownership of the seller. This means:

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 ○ If the buyer treats the goods as their own (for example, by using, modifying, or
reselling them), it indicates acceptance of ownership, regardless of any prior
agreement or examination.
3. Retention of Goods After a Reasonable Time: If the buyer retains the goods for a
period that exceeds a reasonable time without informing the seller that he has rejected
them, the buyer is considered to have accepted the goods. This implies that:
○ The buyer’s silence or inaction regarding the rejection of the goods after a
reasonable duration can be interpreted as acceptance.

Buyer not bound to return rejected goods (Section 43):

1. Refusal to Accept: Unless there is a specific agreement to the contrary, if the buyer
receives goods and has the right to refuse them (for instance, if they do not conform to
the contract), he is entitled to do so without being obligated to return the goods to the
seller.
2. Notification of Refusal: The buyer’s obligation in such a situation is fulfilled simply by
intimating (informing) the seller of his refusal to accept the goods. This means that:
a. The buyer does not have to physically return the goods to the seller; it is sufficient
to notify the seller of the refusal.

Liability of buyer for neglecting or refusing delivery of goods (Section 44)

1. Seller’s Readiness and Request: When the seller is ready and willing to deliver the
goods and formally requests the buyer to take delivery, the buyer has a responsibility to
act upon that request.
2. Failure to Take Delivery: If the buyer does not take delivery of the goods within a
reasonable time after the seller’s request, the buyer becomes liable for:
○ Any loss that arises from the buyer’s neglect or refusal to take delivery. This
means that if the goods are damaged or lost because the buyer did not accept
delivery, the buyer may be responsible for compensating the seller for that loss.
○ A reasonable charge for the care and custody of the goods during the time they
are held by the seller. This charge compensates the seller for any expenses
incurred in storing or caring for the goods that the buyer has not accepted.
3. Rights of the Seller: The provision also clarifies that if the buyer's neglect or refusal to
take delivery is severe enough to amount to a repudiation of the contract (essentially
indicating that the buyer no longer intends to fulfill their obligations under the contract),
the seller retains additional rights. This could include:
○ The right to terminate the contract.

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 ○ The right to seek damages for the breach of contract.

CHAPTER V
RIGHTS OF UNPAID SELLER AGAINST THE GOODS

“Unpaid seller” defined (Section 45):

1) Conditions for Unpaid Seller: A seller is considered an "unpaid seller" in the

following circumstances:
a) When the whole price for the goods has not been paid or tendered. This means
that if any portion of the payment is outstanding, the seller retains the status of an
unpaid seller.
b) When a bill of exchange or other negotiable instrument has been received as a
form of conditional payment, and the condition has not been fulfilled due to the
dishonor of the instrument (e.g., if the bill bounces) or other reasons. In such
cases, even though the seller accepted a negotiable instrument, they have not
received actual payment.
2) Broader Definition of Seller: In this context, the term "seller" is inclusive and extends
to anyone who occupies the position of a seller. This includes:
i) An agent of the seller who has received a bill of lading endorsed to them.
ii) A consignor (the person who sends goods) or an agent who has either
paid for the goods or is directly responsible for the payment. This broader
definition ensures that various stakeholders involved in the sale or transfer
of goods are recognized as having the rights of an unpaid seller if the
conditions apply.

Unpaid seller’s rights (Section 46):

1. Rights Despite Passing of Property: Even if the property (ownership) in the goods has
passed to the buyer, the unpaid seller retains certain rights by implication of law:
a. Lien on Goods: The seller has a lien on the goods for the price as long as he
remains in possession of them. This means the seller has the right to retain
possession of the goods until the buyer pays for them.
b. Right of Stoppage in Transit: If the buyer becomes insolvent (unable to pay
debts), the seller has the right to stop the goods in transit after he has parted with
possession. This allows the seller to reclaim goods that are on their way to the
buyer if the buyer's financial situation is questionable.

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 c. Right of Re-sale: The seller has the right to re-sell the goods, but this right is
limited by the provisions of the Act. This means that while the seller can resell the
goods under certain conditions, there are specific legal requirements that must be
met.
2. Rights When Property Has Not Passed: If the property in the goods has not passed to
the buyer, the unpaid seller has additional rights. In this scenario:
○ The seller has the right to withhold delivery of the goods. This right is similar to
and co-extensive with the rights of lien and stoppage in transit that apply when the
property has passed to the buyer. This ensures that the seller has strong
protections in both situations.

Unpaid seller’s lien

Seller’s lien (Section 47)

1. Entitlement to Retain Possession: Subject to the provisions of the Act, an unpaid seller
who is in possession of the goods is entitled to retain possession until payment or tender
of the price in the following cases:
a) No Stipulation for Credit: If the goods have been sold without any stipulation
as to credit, the seller can retain possession until payment is made. This means
that the buyer is expected to pay immediately upon delivery.
b) Expired Credit Terms: If the goods have been sold on credit but the
agreed-upon term of credit has expired, the seller is entitled to retain possession
until payment is received. This emphasizes that once the credit period ends,
payment becomes due.
c) Buyer Becomes Insolvent: If the buyer becomes insolvent, the seller has the
right to retain possession of the goods. This provision protects the seller from the
risk of non-payment due to the buyer's financial instability.
2. Right of Lien as Agent or Bailee: The seller may exercise their right of lien (the right to
retain possession) even if they are in possession of the goods as an agent or bailee for the
buyer. This means that:
○ The seller can still assert their right to retain the goods for payment, regardless of
their role in relation to the buyer, as long as they have not been paid.

Part delivery (Section 48):

1. Part Delivery: When an unpaid seller has made a part delivery of the goods, they retain
the right to exercise a lien on the remainder of the goods. This means:
○ The seller can retain possession of the remaining goods until the buyer pays for
them in full, even after delivering a portion of the total goods.

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 2. Conditions for Exercising the Lien: The seller's right to exercise this lien on the
remaining goods is valid unless the part delivery was made under circumstances that
indicate an agreement to waive the lien. This could include:
○ Explicit statements or actions from the seller indicating that they relinquish their
right to retain the remainder of the goods.
○ Situations where the buyer and seller have agreed that the lien will not apply after
part delivery.

Termination of lien (Section 49):

1. Circumstances Leading to Loss of Lien: The unpaid seller loses their lien on the goods
under the following conditions:
a) Delivery to Carrier or Bailee: When the seller delivers the goods to a carrier or
another bailee for the purpose of transmission to the buyer without reserving the
right of disposal of the goods. This means that if the seller does not specifically
retain control over the goods during transit, they forfeit their lien.
b) Buyer or Agent Obtains Possession: When the buyer or their agent lawfully
obtains possession of the goods. Once possession is transferred to the buyer (or
their authorized representative), the seller loses the lien.
c) Waiver of Lien: The lien can be lost through a waiver, which occurs when the
seller voluntarily gives up their right to the lien. This could be through explicit
agreement or actions that indicate the seller no longer intends to enforce their lien.
2. Lien Not Lost by Obtaining a Decree: The unpaid seller does not lose their lien on the
goods simply because they have obtained a decree (a court order) for the price of the
goods. This means:
○ Even if a seller has a legal ruling in their favor regarding payment, they still retain
their lien rights on the goods until payment is actually received.

Stoppage in transit

Right of stoppage in transit (Section 50)

1. Buyer’s Insolvency: When the buyer of goods becomes insolvent (unable to pay their
debts), the unpaid seller has specific rights to protect their interests.
2. Right to Stop Goods in Transit: The unpaid seller, who has parted with possession of
the goods, has the right to stop the goods in transit. This means that:
a. The seller can reclaim possession of the goods while they are still on their way to
the buyer, effectively halting the delivery process.

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 3. Conditions for Resuming Possession: The seller may resume possession of the goods as
long as they are in the course of transit. This indicates that:
a. The goods must not have been delivered to the buyer or their agent. Once the
goods have been delivered and are in the buyer's possession, this right no longer
applies.
4. Retention Until Payment: The seller can retain possession of the goods until payment
or tender of the price is made. This means that the seller can keep the goods until they
receive full payment, providing a measure of security in the face of the buyer's
insolvency.

Duration of transit (Section 51)

1. Definition of Transit: Goods are considered to be in the course of transit from the
moment they are delivered to a carrier or other bailee for transmission to the buyer, until
the buyer or their agent takes delivery from the carrier or bailee. This defines the period
during which the seller retains certain rights regarding the goods.
2. End of Transit: If the buyer or their agent takes delivery of the goods before they reach
the appointed destination, the transit is deemed to be at an end. This indicates that
ownership and risk transfer to the buyer at that point.
3. Arrival and Acknowledgment: Once the goods arrive at the appointed destination, if the
carrier or bailee acknowledges that they hold the goods on behalf of the buyer and
continues to possess them as a bailee, the transit is also deemed to be at an end. It is
immaterial if the buyer has indicated a further destination for the goods, as the
acknowledgment signifies completion of transit.
4. Rejection of Goods: If the buyer rejects the goods and the carrier or bailee retains
possession, the transit is not considered to have ended, even if the seller refuses to accept
the goods back. This means that the seller may still exercise their right to stop the goods
in transit.
5. Delivery to Chartered Ship: When goods are delivered to a ship chartered by the
buyer, it depends on the circumstances of the case whether the master of the ship is
acting as a carrier or as an agent of the buyer. This determination affects the rights and
obligations of the parties involved.
6. Wrongful Refusal by Carrier: If the carrier or bailee wrongfully refuses to deliver the
goods to the buyer or their agent, the transit is considered to be at an end. This means that
the seller can no longer assert lien rights or stop the goods, as the refusal creates a
situation where the buyer has effectively lost access to the goods.
7. Part Delivery: If part delivery of the goods has been made to the buyer or their agent, the
seller may still stop the remainder of the goods in transit unless the part delivery was
given under circumstances indicating an agreement to relinquish possession of the whole
goods. This provision protects the seller's rights even after partial delivery has occurred.

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How stoppage in transit is effected (Section 52)

1. Exercising the Right of Stoppage: The unpaid seller can exercise their right of stoppage
in transit in two ways:
○ Taking Actual Possession: The seller may take physical possession of the goods
from the carrier or bailee.
○ Giving Notice of Claim: The seller can also give notice of their claim to the
carrier or other bailee who is in possession of the goods. This notice can be
directed to:
■ The person who has actual possession of the goods (the carrier or bailee).
■ The principal of that person (the carrier or bailee's employer or owner).
○ When giving notice to the principal, it must be done in a manner and at a time that
allows the principal to communicate the notice to their servant or agent in time to
prevent delivery to the buyer. This emphasizes the need for timely communication
to ensure the seller's rights are protected.
2. Obligations of the Carrier or Bailee: Once the seller has given notice of stoppage in
transit to the carrier or bailee, that party is required to:
○ Re-deliver the goods to the seller or as per the seller's directions. This means the
carrier or bailee must return the goods rather than continue the delivery to the
buyer.
○ The expenses incurred for this re-delivery shall be borne by the seller. This
implies that while the seller can reclaim the goods, they are responsible for any
associated costs.

Transfer by buyer and seller

Effect of sub-sale or pledge by buyer (Section 53)

1. Unpaid Seller's Rights:

● An unpaid seller retains the right of lien or stoppage in transit, which means they
can hold onto goods until payment is made or stop goods in transit if the buyer
becomes insolvent.
● This right is not affected by any subsequent sale or disposition of the goods by the
buyer unless the seller has agreed to that sale or disposition.
2. Document of Title: If a document of title (like a bill of lading) has been issued or
transferred to a third party who becomes the buyer or owner of the goods, and that third
party subsequently transfers the document in good faith and for consideration:

27
 ○ If the transfer is by way of sale, the unpaid seller's right to lien or stoppage
in transit is defeated. This means they cannot reclaim the goods from the
buyer.
○ If the transfer is a pledge or other type of disposition for value, the unpaid
seller can only exercise their rights of lien or stoppage subject to the rights
of the new transferee.
3. Pledge: If the transfer of goods is by way of pledge, the unpaid seller can require the
pledgee (the person who received the pledge) to satisfy the amount secured by the pledge
from other goods or securities of the buyer that are in the pledgee's possession. This
means the seller can seek recovery through other assets before the pledged goods.

Sale not generally rescinded by lien or stoppage in transit (Section 54)

1. Non-Rescission of Contract: The mere exercise of the unpaid seller's right of lien or
stoppage in transit does not automatically rescind the contract of sale. This means the
contract remains valid, and the buyer still owes payment unless the seller takes further
action.
2. Re-sale of Perishable Goods:
● If the goods are perishable or if the unpaid seller gives notice of intent to re-sell,
the seller may re-sell the goods after a reasonable time if the buyer fails to pay or
tender the price. The seller can then recover damages from the original buyer for
any losses caused by the breach of contract.
● However, if the seller fails to give notice before re-selling, they cannot recover
damages, and the original buyer may benefit from any profits from the re-sale.
3. Good Title upon Re-sale: If an unpaid seller re-sells goods after exercising their right of
lien or stoppage in transit, the new buyer acquires a good title to the goods against the
original buyer, even if the original buyer was not notified of the re-sale. This provision
protects third-party buyers and ensures that they have a valid claim to the goods.
4. Express Reservation of Right to Re-sell: If the seller has expressly reserved the right to
re-sell in the event of the buyer's default, and the buyer does default, the seller may re-sell
the goods. In this case, the original contract of sale is rescinded, but the seller retains the
right to claim damages for any losses incurred due to the buyer's default.

CHAPTER VI

SUITS FOR BREACH OF THE CONTRACT

Suit for price (Section 55)

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 1. Right to Sue for Price After Property Transfer: When the property (ownership) in the
goods has passed to the buyer and the buyer wrongfully neglects or refuses to pay for
those goods as per the contract, the seller has the right to sue the buyer for the price of the
goods. This means that once the buyer legally owns the goods, the seller can demand
payment through legal action if the buyer defaults.
2. Right to Sue for Price Before Property Transfer:
● If the contract specifies that the price is due on a specific date, regardless of
delivery, the seller can still sue the buyer for the price if the buyer wrongfully
neglects or refuses to pay. This is applicable even if:
○ The property in the goods has not passed to the buyer.
○ The goods have not been specifically set aside or appropriated for the
contract.
● Essentially, this provision protects the seller's right to receive payment even if the
actual transfer of ownership has not occurred, provided that the payment was due
on a set date.

Damages for non-acceptance (Section 56)

Where the buyer wrongfully neglects or refuses to accept and pay for the goods, the seller may
sue him for damages for non-acceptance.

Damages for non-delivery (Section 57):

Where the seller wrongfully neglects or refuses to deliver the goods to the buyer, the buyer may
sue the seller for damages for non-delivery.

Specific performance (Section 58):

1. Specific Performance of Contract: In a suit for breach of contract related to specific or

ascertained goods, the court has the discretion to order that the contract be performed
specifically. This means the court can compel the defendant to fulfill their obligations
under the contract rather than merely awarding damages to the plaintiff.
2. Discretion of the Court: The court may decide whether to grant specific performance
based on what it deems appropriate. This gives the court significant discretion to assess
the situation and determine the best course of action.
3. No Option to Retain Goods: The court can issue a decree for specific performance
without giving the defendant the option to retain the goods by simply paying damages.

29
 This means the plaintiff can insist on receiving the actual goods rather than settling for
monetary compensation.
4. Conditions of the Decree: The decree for specific performance can be unconditional, or
it may include certain terms and conditions. These could relate to:
a. Payment of damages.
b. Payment of the price of the goods.
c. Any other conditions that the court considers just and equitable.
5. Timing of the Application: The plaintiff can apply for this relief at any time before the
court issues its decree. This flexibility allows the plaintiff to seek specific performance up
until a final decision is made by the court.

Remedy for breach of warranty (Section 59):

1. Breach of Warranty and Rights of the Buyer:

● Breach of Warranty: A warranty is a lesser assurance compared to a condition in
a contract of sale. A breach of warranty does not entitle the buyer to reject the
goods outright.
● Options Available to the Buyer: In the event of a breach of warranty, the buyer
has two main options:
a) Diminution or Extinction of Price: The buyer can reduce the amount
they owe the seller based on the breach of warranty. This means the buyer
can claim a reduction in the purchase price of the goods.
b) Sue for Damages: The buyer can file a lawsuit against the seller for
damages resulting from the breach of warranty. This means seeking
financial compensation for any losses incurred due to the breach.
2. Additional Damages: The provision states that if the buyer has already claimed a
reduction in price due to a breach of warranty, this does not prevent them from suing for
additional damages if they have experienced further losses. In other words:
○ A buyer can both reduce the price based on the warranty breach and seek
compensation for any additional damages that resulted from that breach.

Repudiation of contract before due date (Section 60):

1. Repudiation of Contract: When either party to a contract of sale repudiates the contract,
it means they indicate they will not perform their contractual obligations. This can occur
through explicit communication or through actions that demonstrate an intention not to
fulfill the contract.

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 2. Options for the Non-Repudiating Party: The party that has not repudiated the contract
has two main options in response to the repudiation:
a) Treat the Contract as Subsisting: The non-repudiating party can choose to keep
the contract in force. This means they may wait until the delivery date to see if the
repudiating party changes their mind or fulfills their obligations. This option
allows the contract to remain valid until the agreed-upon delivery date.
b) Treat the Contract as Rescinded: Alternatively, the non-repudiating party may
choose to treat the contract as rescinded. This means they consider the contract
void and can take legal action against the repudiating party for damages resulting
from the breach. By rescinding the contract, the non-repudiating party can seek
compensation for any losses incurred due to the other party's failure to perform.

Interest by way of damages and special damages (Section 61):

1. Right to Recover Interest or Special Damages:

● General Right: The provision clarifies that the Act does not limit the rights of
either the seller or the buyer to recover interest or special damages. This means
that if the law permits recovery of interest or special damages in specific
circumstances, such rights remain intact and can be pursued.
● Recovery of Money Paid: If the consideration for any payment has failed (e.g., if
the goods delivered were defective or not as described), the party can recover the
money paid. This provision protects parties from losing money due to failures in
the contract.
2. Court's Authority to Award Interest:
● Discretion of the Court: In the absence of any specific contract terms regarding
interest, the court has the discretion to award interest at a rate it deems
appropriate. This allows for flexibility based on the context of the case.
● Specific Scenarios for Interest Recovery:
a) To the Seller: If the seller sues for the price of the goods, the court may
award interest from either:
■ The date the goods were tendered (offered for delivery).
■ The date on which the price was payable.
b) To the Buyer: If the buyer sues for a refund of the price due to a breach of
contract by the seller, interest may be awarded from the date the payment
was made. This ensures that the buyer is compensated for the time value
of their money while they were without recourse due to the seller's breach.

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 CHAPTER VII

MISCELLANEOUS

Exclusion of implied terms and conditions (Section 62):

1. Implied Rights, Duties, or Liabilities: In contracts of sale, certain rights, duties, and
liabilities may arise by implication of law, meaning they are automatically included in the
contract even if not explicitly stated. These can include standard obligations such as the seller's
duty to deliver goods that are fit for purpose or the buyer's obligation to pay for goods delivered.

2. Modification of Implied Terms: The provision allows for these implied rights, duties, or
liabilities to be negatived (voided) or varied (changed) under certain circumstances:

○ Express Agreement: The parties can explicitly agree to modify or exclude certain
implied terms in their contract. This means they can create specific terms that
override any legal implications.
○ Course of Dealing: If the parties have a history of dealings that establish a pattern
or understanding between them, this can influence the interpretation of their
contract. A consistent course of dealing may demonstrate how certain terms
should be understood or applied, overriding standard implied terms.
○ Usage: Customary practices in the relevant industry or trade can also affect the
contract. If the usage is well established and both parties are bound by it, it can
serve to modify or negate the implied terms of the contract.

Reasonable time a question of fact (Section 63):

Where in this Act any reference is made to a reasonable time, the question what is a reasonable
time is a question of fact.

Auction sale (Section 64):

1. Separate Contracts for Each Lot: When goods are offered for sale in lots, each lot is treated
as a separate contract of sale unless stated otherwise. This means that the buyer’s obligation and
the seller’s obligation pertain specifically to each lot being auctioned.

2. Completion of Sale:

● Completion Announcement: A sale at auction is considered complete when the

auctioneer announces its conclusion, typically by the fall of the hammer or another
customary method.

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 ● Retraction of Bids: Until the auctioneer announces that the sale is complete, any bidder
retains the right to retract their bid. This allows for flexibility and prevents bidders from
being locked into a purchase prematurely.

3. Right to Bid Reserved:

● Express Reservation: The seller may reserve the right to bid at the auction, but this must
be explicitly stated. When this right is expressly reserved, the seller or a representative
may bid on the items.
● Restriction Without Reservation: If the right to bid is not explicitly reserved, the seller
or their representative cannot bid. This aims to ensure fair competition among bidders.

4. Prohibition on Seller Bidding Without Notification:

● No Bidding Allowed: If the auction does not indicate that the seller has a right to bid, it
is unlawful for the seller to bid on their own items or employ someone to do so.
● Auctioneer's Responsibility: The auctioneer must not accept bids from the seller or their
representative in this scenario.
● Fraudulent Sale: Any sale that contravenes this rule may be deemed fraudulent by the
buyer, potentially allowing the buyer to seek remedies.

5. Reserved or Upset Price:

● Notification of Price: The sale can be announced as being subject to a reserved or upset
price. This means there is a minimum price that must be met for the sale to proceed.

6. Pretended Bidding:

● Voidable Sale: If the seller engages in fictitious bidding (pretended bidding) to

artificially raise the price, the sale becomes voidable at the buyer's option. This provision
protects buyers from deceptive practices that manipulate the auction process.

In contracts of sale, amount of increased or decreased taxes to be added or deducted

(Section 64A)

1. General Principle:
● Default Position: Unless the contract specifies otherwise, the following rules
apply when there are changes to taxes related to the goods after the contract has
been made.
2. Impact of Tax Changes:

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 ● Types of Taxes Affected: The provision applies to customs or excise duties and any sales
tax related to the goods.
a) Imposition or Increase of Tax: If a new tax is imposed or an existing tax is increased
after the contract is made:
○ Seller's Right: The seller can add the amount of the new or increased tax to the
contract price. This allows the seller to adjust the price to reflect the additional tax
burden.
○ Right to Recover: The seller is entitled to collect this additional amount from the
buyer and may sue for it if necessary.
b) Decrease or Remission of Tax: If a tax decrease or remission takes effect after the
contract is made:
○ Buyer's Right: The buyer can deduct the amount of the decreased or remitted tax
from the contract price. This effectively lowers the buyer's cost based on the tax
changes.
○ No Liability for Deduction: The buyer is not liable to pay the seller for the
deducted amount and cannot be sued for this reduction.

65. [Repeal.] Rep. by the Repealing Act, 1938 (1 of 1938), s. 2 and Sch.

Savings (Section 66)

1. Non-Affecting Clause: This section clarifies that the enactment of this Act does not interfere
with certain rights and legal matters. Specifically:

a) Rights, Titles, Interests, Obligations, or Liabilities: Any rights, titles, interests,

obligations, or liabilities that were already acquired or incurred before the
commencement of this Act remain unaffected. This ensures that existing legal rights and
responsibilities are preserved.
b) Legal Proceedings or Remedies: Ongoing or future legal proceedings related to any
rights or obligations established before the Act came into effect are not impacted. This
means that any legal actions can continue as they were without being altered by the new
Act.
c) Actions Taken Before the Act: Any actions or events that occurred before the Act's
commencement remain valid and unaffected. This provides certainty to parties regarding
past transactions.
d) Other Enactments: Any other laws related to the sale of goods that are not expressly
repealed by this Act continue to apply. This ensures that previously established legal
frameworks remain in place unless explicitly stated otherwise.

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 e) Existing Rules of Law: Any rule of law that does not conflict with this Act remains
valid. This provision protects existing legal principles that are consistent with the new
regulations.

2. Insolvency Rules: The rules governing insolvency related to contracts for the sale of goods
remain applicable despite the provisions of this Act. This means that insolvency laws continue to
take precedence in relevant situations, ensuring that parties dealing with insolvent entities are
protected under established legal principles.

3. Exclusion of Certain Transactions: The provisions of this Act regarding contracts of sale do
not apply to transactions that are structured as contracts of sale but are intended to function as
mortgages, pledges, charges, or other forms of security. This exclusion ensures that the specific
rules governing secured transactions remain applicable and are not conflated with the rules for
ordinary sales.

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