2. Sale Of Goods Act, 1930
Came into force on 1st July 1930
It extends to the whole of India [except the State of
Jammu and Kashmir].
Section4(1) defines contract of sale as under
A contract of sale of goods is a contract whereby
the seller transfers or agrees to transfer the
property in the goods to the buyer for a price.

3. The essentials of a valid contract of sale:
1.Two parties
2.The seller should transfer the property in the goods to the
buyer
3. The subject matter of the contract is ‘goods’
Sec 2(7) "goods" means every kind of movable 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
4. The transfer of property in the goods from seller to the
buyer is for consideration known as price.
5.Includes both sale and agreement to sell
6.No formalities to be observed.

4. “buyer" means a person who buys or agrees to
buy goods.
 "seller" means a person who sells or agrees to
sell goods .
"price" means the money consideration for a sale
of goods.

5. Classification of goods
1.Existing goods: are such goods as are owned or
possessed by the seller at the time of making of contract.
These goods are of three types
 specific goods- these are the goods which are actually
identified and agreed by the parties at the time of contract
of sale.
 Unascertained goods- not specifically identified or
ascertained at the time of contract of sale.

6. 2.“Future goods“: means goods to be
manufactured or produced or acquired by the seller
after making of the contract of sale;
3.Contingent goods-
The acquisition of goods by the seller depends upon
the uncertain contingencies .

7. Agreement to sell
“Where under a contract of sale the transfer of
property in the goods is to take place at a future time
or subject to some condition thereafter to be fulfilled,
the contract is called agreement to sell”

8. Sale and Agreement to sell
Property in the goods is transferred
from the seller to the buyer- sale
Transfer of the property in the goods is
to be taken place at some future date or
after fulfillment of some condition,
-AGREEMENT TO SALE
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9. Difference between Sale and agreement to sell
Transfer of ownership
Risk of loss
Consequences of breach
Right of sale.
Insolvency of buyer before he pays for the goods
Insolvency of seller if the buyer has already paid
the price.
Section 26, the goods are at the risk of the person
who is their owner at the relevant time

10. Earnest money:
Money deposited with the seller by the buyer as
security for due fulfillment of the contract .
Stipulations as to time:
1.Stipulations relating to time of delivery of goods
2. Stipulations relating to time of payment of the
price.

11. Effect of goods perishing
Perishing is not just physical destruction of the goods,
but it covers :
(a)Damage to goods so that the goods have ceased to
exist in the commercial sense
(b)Loss of goods by theft
(c)Where the goods have been lawfully requisitioned by
the government
- Perishing of specific and ascertained goods effect the
contract of sale.

12. 1.Goods perishing before making of contract
where there is a contract for the sale of specific goods, the
contract is void if the goods without the knowledge of the
seller have, at the time when the contract was made,
perished or become so damaged as no longer to answer
to their description in the contract.

13. 2) Goods perishing before sale but after agreement to
sale
When there is an agreement to sell specific goods
and subsequently the goods without any fault on the
part of the seller or buyer perish or become so
damaged as no longer to answer their description in
the agreement before the risk passes to the buyer,
the agreement is thereby avoided.

14. Condition And Warranty
 Condition:
 Condition is a stipulation essential to the main purpose of
the contract, the breach of which gives the aggrieved party
a right to repudiate the contract itself.
 - can maintain a action for damages.
 Warranties:
 is a stipulation collateral to the main purpose of the
contract, the breach of which gives the aggrieved party a
right to sue for damages only.
 Cannot avoid the contract

15. Difference
1. As to value
2. As to breach
3. As to treatment

16. When breach of condition can be treated as breach
of warranty
1.Voluntary waiver by buyer
2.Acceptance of goods by the buyer
Meaning of acceptance: Taking possession or delivery of the
goods does not by itself amount to acceptance.
1. When he intimates to the seller that he has accepted them
2. When he does any act in relation to goods which is
inconsistent with the ownership of the seller.
3. When, after the lapse of reasonable time he retains goods
without intimating the seller that he has rejected them.

17. EXPRESS AND IMPLIED CONDITIONS AND
WARRANTIES
Condition and warranty may be either express or implied.
- They are said to be express when at the will of the parties
they are inserted in the contract.
- They are said to be implied when the law presumes their
existence in the contract automatically.

18. IMPLIED CONDITIONS
1. Condition as to title: In a contract of sale, unless
the situation of the contract are such as to show a
different intention, there is an implied condition on part
of the seller that—
 In sale, he has right to sell goods.
 In agreement to sell, he will have a right to sell at the
time when property is to pass.
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19. Condition in a Sale By Description
 In sale by description there is an implied condition
that the goods shall correspond with description.
 This means “if you contract to sell peas, you cannot
oblige the party to take beans.”
 Hence if the description of the article tendered is
different then the buyer may not buy the goods.
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20. Condition in a Sale By Sample
 A contract of sale is a contract for sale by sample
where there is a term in the contract, express or
implied, to that effect.
1. That bulk shall correspond with the sample in
quality.
2. That the buyer shall have a reasonable opportunity
of comparing the bulk with the sample.
3. That the goods shall be free from any defects,
rendering them unmerchantable.
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21. Condition in a Sale by
Description and Sample
 If the sale is by sample as well as by description, it is
not sufficient that the bulk of goods corresponds with
the sample, if the goods do not also correspond with
the description.
 This means goods must match with the description
and sample.
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22. Condition As To Quality
Or Fitness
 Normally, in a contract of sale there is no implied
condition as to quality or fitness for particular
purpose.
 The buyer must test the goods before he buys them
in order to satisfy him self that the goods shall be
suitable for him.
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23. Condition Of Merchantability
 Where goods are bought by description from a seller who
deals in goods of that description there is an implied
condition that the goods are of merchantable quality.
 This means goods should be such that they are
commercially saleable, as per the description by which
they are known in the market at their full value.
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24. Condition As To Wholesomeness
 In the case of eatables and provisions, in addition to
the implied condition as to merchantability, there is
another implied condition that the goods shall be
wholesome.
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25. Implied warranties
1.Warranty of quiet possession:
In a contract of sale, unless there is a contrary
intention, there is an implied warranty that the
buyer shall have and enjoy quite possession of
the goods.
If the buyer is in any way disturbed in the
enjoyment of the goods in consequence of the
seller’s defective title to sell, he can claim
damages from the seller.
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26. 2.Warranty Of Freedom From
Encumbrances
In addition to the previous warranty, the
buyer is entitled to a further warranty that
the goods are not subject to any charge or
right in favor of a third party.
Ifthe possession is in any way disturbed by
reason of the existence of any charge or
encumbrances on the goods in favor of any
third party, he shall have a right to claim
damages for breach of this warranty.
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27. 3.Warranty To Disclose Dangerous Nature
Of Goods.
When a person sells goods knowing that the
goods are inherently dangerous or they are
likely to be dangerous to the buyer and that
the buyer is ignorant of the danger, he must
warn the buyer of the probable danger, other
wise he will be liable in damages.
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28. CAVEAT EMPTOR
 This means “LET THE BUYER BEWARE” i.e., the
seller is under no duty to reveal unflattering truths
about the goods sold.
 Therefore,when a person buys some goods, be must
examine them thoroughly.
 Ifthe goods turn out to be defective or do not suit his
purpose or he depends upon his own skills and makes
a bad decision, he cannot blame the seller.
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29. EXCEPTIONS TO CAVEAT
EMPTOR
Seller makes a misrepresentation
Seller makes a false representation amounting to fraud
Where the goods purchased by description but they
don't correspond with the description
Where the goods are not of merchantable quality
Bulk does not correspond with the sample.
Where the buyer relies on seller
Trade usages

30. Performance of the contract of sale
 Itis the duty of the seller to deliver the goods
 Buyer to accept and pay for them
 Performance of the contract of sale implies the delivery of
goods by the seller and acceptance of the delivery of goods
and payment of price by the buyer

31. Delivery
 Delivery of goods means voluntary transfer of possession
of goods from one person to another.
Modes of delivery:
1.Actual delivery
2.Symbolic delivery
3.Constructive delivery

32. Rules as to delivery of goods
1.Delivery may be either actual, symbolic or constructive
2. Delivery and payment are concurrent conditions
3.Effect of part delivery, when property in goods is to pass
on delivery
4.Buyer to apply for delivery
5.Time of delivery
6.Place of delivery

33. 7.Delivery of goods where they are in possession of a third
party
8.Expenses on delivery
9.Delivery of wrong quantity or different quality
10.Installment deliveries
11.Delivery to carrier or wharfinger
12.Liability of buyer for neglecting or refusing to take delivery
of goods.

34. unpaid seller
 Section 45 of sales Act defines unpaid seller as
“ the seller of the goods 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 dishonor of the instrument or otherwise.

35. Rights of unpaid seller
Against
the goods Against
Where the
the seller
Where the personally
property in
property
the goods
in the has not
goods has passed
passed Stoppage
With
in transit Stoppage holding
Lien in transit delivery
Re sale
Suit for Repudiation Suit for
Suit for price
damages of contract interest
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36. Rights of unpaid seller
1) Against the goods
2) Against the buyer personally
Against the goods
a) Where the ownership is transferred to the buyer
b) where the ownership is not transferred to the buyer

37.  Where the ownership is transferred
 Right of lien
 Right of stoppage in transit
 Right of resale

38. Right of Lien
“The unpaid seller of the goods who is in possession of
them, is entitled to retain his possession until the
payment or tender of the price in following cases
namely:
a) Where the goods have been sold without the
stipulation as to credit
b) where the goods have been sold on credit , but the
term of the credit has expired
c) where the buyer becomes insolvent”

39. When lien is lost?
 By delivery of goods to the carrier
 By delivery of goods to the buyer
 By waiver of lien
 By the tender of price by the buyer

40. Right of stoppage in transit
 It is defined as the state of transmission of goods
 It means the stopping of goods while they are in the
course of transit
 This right can be exercised if the following conditions
are satisfied:
a) The buyer has become insolvent
b) the goods are in the course of transit, but not reached
the possession of the buyer
c) the unpaid seller can exercise this right only for the
payment of the price of the goods

41. Duration of Transit
 This is the period between the commencement and the
end of transit. The transit commences from the time
when the goods are delivered to the middleman and it
continues till the buyer or his agent takes the delivery of
the goods.
 If the goods are rejected by the buyer and the carrier
continues to have the possession of the goods, the
transit does not cone to an end.

42.  If the goods are delivered to a ship chartered by the
buyer and the circumstances show that the carrier is
acting as an agent of the buyer , then transit comes to an
end.
 When the goods are delivered in parts , the seller may
stop the remainder of the goods unless the delivery of
the part of the goods shows an intention to give up the
possession of the goods.

43. Modes of exercising the right
a)By taking actual possession of the goods
b) By giving notice to the carrier to stop the goods and
redeliver them to the seller or according to his
directions

44. Right of resale
 Is one of the valuable right given to an unpaid seller.
 If the buyer fails to pay or offer the price within a
reasonable time , the unpaid seller has the right to resell
the goods in the following circumstances:
 Where the goods are of perishable nature
 Where he has exercised his right of lien and stoppage and
gives a notice to the buyer of his intention to resell the
goods.
 where the seller has expressly reserved his right of resale

45. Right wherein the ownership of the
goods is not transferred
Rightof withholding the delivery of the
goods sold

46. Right against the buyer
 Suit for price
 Suit for damages
 Suit for interest
 Suit for repudiation of contract