1. M A D E B Y : -
VISHAKHA
UTSAV GUPTA
ANUJ CHAUDHARY
SHAILENDER SINGH
LEGAL INCIDENTS OF SALE
&
AGREEMENT TO SELL

2. INTRODUCTION
 Prior to 1930, The Laws Relating to Sale and Purchase of Goods was
Dealt by:
The Indian Contract Act, 1872
 In 1930, Sections 76 to 123 of The Contract Act were repealed and a
separate Act Known as Sale of Goods Act,1930 was passed.
 The Sale of Goods Act, 1930 was laid down to define and amend the law
relating to the sale of Goods or Movables. The Act Came into Force on
the 1st Of July, 1930; extending to Whole of the India Except
Jammu and Kashmir.

3. CONTRACT OF SALE:
 Section 4(1) of the Sale of Goods Act,1930 Defines the Term
“Contract of Sale” as-
A Contract of Sale of Goods is a Contract Whereby the
Seller Transfers or Agrees to Transfer the Property in
Goods to the Buyer for a Price.
 The Contract of Sale Can be Clubbed in Two Types:
: SALE
: AGREEMENT TO SELL

4. MEANING OF:
SALE:
It is a Contract where the ownership in the Goods is
Transferred by the Seller to the Buyer Immediately at the
Conclusion Contract.
AGREEMENT TO SELL:
It is a contract of sale where the transfer of property in Goods is
to take place at a future date or subject to some condition
thereafter to be fulfilled.

5. ESSENTIALS OF A CONTRACT OF SALE:
 There must be at-least Two Parties.
 The Subject Matter of the Contract Must be Goods.
 Price.
 Transfer of Property in Goods.
 Absolute or Conditional.
 All Other Essentials of a Valid Contract.

6. DIFFERENCE
BASIS SALE AGREEMENT TO
SELL
1. TRANSFER OF
PROPERTY
The Property of Goods
Passes from the seller to
the Buyer immediately. So
the seller is no more
owner of the Goods sold.
It is an Executed Contract.
The transfer of property of
the Goods is to take place
at a future time or subject
to certain conditions to be
fulfilled. It is an executory
contract.
2. TYPE OF GOODS A sale can only be in-case
of existing and specific
Goods only.
An Agreement to sell is
mostly in-case of future
and contingent goods.
Although it may refer to
uncertain existing goods.
3. RISK OF LOSS In a Sale, If the Goods Are
Destroyed, the loss falls
on the buyer even though
the goods are in the
possession of the seller.
In an agreement to sell, if
the goods are destroyed,
the loss falls on the seller
even though the goods are
in the possession of the
buyer.

7. BASIS SALE AGREEMENT TO SELL
4. CONSEQUENCES OF
THE BREACH
In a sale, if the buyer fails
to pay the price of goods or
if there is a breach in the
contract, the seller can sue
for the price even though
the goods are still in his
possession.
If there is a breach of contract by the
buyer, the seller can only sue for the
damages and not for the price.
4. RIGHT TO RE-SELL The seller cannot resell the
goods.
The buyer who takes the goods for
consideration and without notice of
the prior agreement gets him a good
title. The original buyer can only sue
he seller for damages
5. GENERAL AND
PARTICULAR PROPERTY
The sale of contract plus
conveyance, creates “Jus in
Rem”, ie: Give right to the
buyer to enjoy the goods as
against the word and large
including the seller.
An agreement to sell is merely a
contract, pure and simple and creates
“jus in personam”,ie: Gives a right to
the buyer against the seller to sue for
the damages

8. BASIS SALE AGREEMENT TO SELL
7. INSOLVENCY OF
THE BUYER
In a sale, if the buyer
becomes insolvent
before he pays for goods,
the seller in the absence
of the lien over the
goods, must return them
to the official receiver or
assignee. He can only
claim the reteable
dividend for the price of
the goods.
If the buyer becomes
insolvent, and has not
yet paid the price, the
seller is not bound to
part with the goods until
he is paid for.
8. INSOLVENCY OF
THE SELLER
If the seller becomes
insolvent, the buyer
being the owner is
entitled to recover the
goods from the official
receiver of the assignee.
If the buyer who has
paid the price, finds that
the seller has become
insolvent, he can only
claim a reteable
dividend and not the
goods because property
in them has not yet

9. Legal incidents

10. Cehave N.V. v. Bremer Handelsgesellschaft mbH; the Hansa Nord
[1976] Q.B. 44.
Summary of the fact:
A written contract to sell fruit pellets contained the express stipulation,
“shipment to be made in good condition.” In fact, some of the pellets were
not in good condition when shipped. However, they were, on arrival, still
fit to be used for the purpose the buyer had intended and although they
were worth less than they should have been, they could still have been re-
sold at a reduced price.
Issue:
1.Whether there is a breach of condition?
2.Whether the buyer is entitled to repudiate the contract and reject the
goods?

11. Contd.
Decision:
It was held that there was no breach of condition and the buyer was not entitled
to repudiate the contract and to reject the goods. But the buyer is entitled to
damages.
Reasoning:
The sellers were not in breach of the implied conditions as to fitness for purpose
and merchantable quality. The express stipulation in the contract was not a
condition and the sellers’ breach of it had not been serious enough to go to the
root of the contract. Therefore the buyers were entitled only to damages.

12. Rowland v. Divall [1923] 2 K.B. 500.
Summary of fact:
Rowland bought a motor-car from Divall and used it for four months. Divall
had no title to the car, and consequently Rowland had to surrender it to the
true owner. Rowland sued to recover the total purchase price he had paid to
Divall.
Issue:
1.Whether there is a breach of condition?
2.Whether the buyer is entitled to recover the total purchase price?

13. Decision:
It was held that there is a breach of implied condition as to title by the seller and
therefore the buyer is entitled to recover the purchase price in full, notwithstanding that
he used the car for four months.
Reasoning:
There was a breach of condition. Consequently the buyer can repudiate the contract and
reject the goods. But in this case the car was already taken by the real owner; hence no
question of rejection of goods arises. Therefore, the buyer can repudiate the contract by
taking back the full purchase money as damages due to the breach of condition. The
consideration had totally failed on the part of the seller. The use of the car that he had
had was no part of the consideration that he had contracted for, which was the property
in and lawful possession of the car, whereas what he got was an unlawful which exposed
him to the risk of an action at the suit of the true owner.

14. Beale v. Taylor [1967] 1 W.L.R. 1193.
Summary of the fact:
A buyer responded to an advertisement describing a car for sale as a “1961”
model. He inspected the car before buying it. After buying it he discovered that
the car consisted of half a 1961 model and half of an earlier car.
Issue:
1.Whether there was a breach of implied condition as to description?
2.Whether the buyer was entitled to reject the car?

15. Contd.
Decision:
It was held that the seller was liable for breach of condition as to description
and the buyer is entitled to reject the goods thereby.
Reasoning:
The buyer had relied at least to some extent on the description of the goods
which becomes a condition. Therefore dissimilarity with the description of the
delivered goods caused the breach of such condition.

16. Nichol v. Godts (1854) 10 Ex. 191
Summary of the Fact:
Nichol agreed to sell to Godts some oil described as “foreign refined rape oil,
warranted only equal to sample.” Nichol delivered oil equal to the quality of
the samples, but which was not “foreign refined rape oil.”
Issue:
1.Whether a breach of condition has occurred?
2.Whether the buyer is entitled to refuse the goods?

17. Contd.
Decision:
It was held that breach of condition occurred and Godts could refuse to accept
the goods.
Reasoning:
Where there is a sale of goods by sample as well as by description, the goods
must correspond with the description as well as sample. Here the goods
corresponded with the sample but not with the description.

18. Re Moore & Co. v. Landauer & Co. [1921] 2 K.B. 519
Summary of Fact:
Moore sold to Landauer 3,100 cases of Australian canned fruits, the cases to
contain 30 tins each. Moore delivered the total quantity, but about half the
cases contained 24 tins, and the remainder 30 tins. Landauer rejected the
goods. There was no difference in market value between goods packed 24 tins
and goods packed 30 tins to the case.
Issue:
1.Whether a breach of condition has occurred?
2.whether the buyer is entitled to reject the goods/

19. Contd.
Decision:
It was held that Landauer could reject the whole goods as there was a breach
of condition.
Reasoning:
As the goods delivered did not correspond with the description of those
ordered.

20. Brown (B.S.) & Son Ltd. V. Craiks Ltd. [1970] 1 W.L.R.
752
Summary of fact:
The buyer of “industrial fabric” found that it was unsuitable for making into
dresses but that it was suitable for other industrial purposes; as such it was
commercially saleable, though at a slightly reduced price.
Issue:
1.Whether the goods were of merchantable quality?

21. Decision:
It was held that the goods were of merchantable quality.
Reasoning:
The goods could be used for some other purposes and it had commercial
value. Therefore it meets the demand of merchantable quality. If the goods
supplied are useless for any purpose for which goods of that description are
usually used then they are probably not of merchantable quality. On the other
hand, if they are still suitable for some of the purposes for which goods of that
description are usually used and could be re-sold for the same or very nearly
the same price as if they were suitable for every purpose, they will remain of
merchantable quality.

22. Reference
 http://ahsanlaw.blogspot.in/2012/01/case-laws-on-sales-of-goods-act-
1930.html