The Sale of Goods Act

Topics: Contract, Contract law, Warranty Pages: 49 (14960 words) Published: May 8, 2013

What you should know?

✓ 15.1Formation of Contract of Sale
✓ 15.2Conditions and Warranties – Doctrine of Caveat Emptor. ✓ 15.3Transfer of Ownership from seller to buyer – Transfer by non-owners ✓ 15.4Performance of the Contract – Rules regarding delivery. ✓ 15.5Rights of Buyer

✓ 15.6Rights of Unpaid Seller
✓ 15.7Auction Sales

The Sale of Goods Act, 1930, governs transfer of property in goods. It does not include transfer of immovable property which is governed by the Transfer of Property Act, 1882. As per section 3 of the Sale of Goods Act, the principles of the Contract Act relating to formation of contract, performance of contract, law of damages etc are also applicable to contract of the sale of goods in so far as they are not inconsistent with the .express provisions of the Sale of Goods Act. The Sale of Goods Act, 1930, contains 66 sections in VII Chapters.


Sec.4 (1): Contract of sale; Sec 4(3): Agreement to sell and sale, Sec 5: Contract of sale how made.
Sec 6, 7, and 8: Goods - the subject -matter of contract of sale. Sec 9, 10: The price. Ascertainment of price.

15.1a What is a Contract of Sale?

Sec.4 (1) of the Sale of Goods Act defines a contract of sale of goods as -"a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price".

Essential characteristics of a contract of sale:

1. Two parties - there must be two parties a Buyer and a Seller. 2. Transfer of property - a transfer of property i.e. ownership, in goods from the seller to the buyer must take place 3. Goods- the subject matter of sale must be goods.

4. Price - transfer of property must take place for some money consideration called price. 5. It Includes both a ‘Sale’ and ‘An Agreement to Sell’. 6. It may be absolute or conditional.
7. It may be in writing/ oral or implied.
8. Essential elements of a valid contract must be present.

15.1b Sale & Agreement to Sell:

A contract for the sale of goods may be either a sale or an agreement to sell.


Where under a contract of sale the property in the goods (i.e. the ownership) is transferred from the seller to the buyer the contract is called a Sale. Sec.4(3). The transaction is a sale even though the price is payable at a later date or delivery is to be given in the future, provided the ownership of the goods is transferred from the seller to the buyer.


When the transfer of ownership is to take place at a future time or subject to some condition to be fulfilled later the contract is called An Agreement to Sell. Sec. 4(3) When an agreement to sell becomes a sale?

An agreement to sell becomes a sale when the prescribed time elapses or the conditions, subject to which the property in the goods is to be transferred, are fulfilled. Sec. 4(4).

Thus, if goods are delivered to the buyer on approval i.e. “On Sale or Return”, the transaction is an agreement to sell, but it becomes a sale and the property in the goods passes to the buyer where the buyer gives his approval or acceptance to the seller.

|SALE |AGREEMENT TO SALE | |Transfer of property: The title to the goods passes to the |The title to the goods passes to the buyer on future date or on | |buyer immediately. |fulfillment of some condition. | |Nature of Contract: It is an executed contract. It involves a |It is executory contract. The property in the goods does not pass | |contract plus a conveyance of the property. When the property |until a certain time has lapsed or until a certain condition is | |is transferred, the rights and liabilities attached to the...
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