Unit- 5 Indian Sale of Goods Act, 1930
1. Contract of Sale – Meaning
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. There may be a contract of sale between one part-owner and another [Sec 4(1)]. A contract of sale may be absolute or conditional [Sec 4(2)].
The term ‘contract of sale’ includes both a ‘sale’ and an ‘agreement to sell’.
2. Essentials of a Contract of Sale (Refer text for details) a. Two Parties: There must be two distinct i.e., a buyer and a seller, to effect a contract of sale and they must be competent to contract. ‘Buyer’ means a person who buys or agrees to buy goods [Sec 2(1)]. ‘Seller’ means a person who sells or agrees to sell goods [Sec 2(13)] (State of Gujarat vs. Raman Lal & Co., 1965) b. Goods: There must be some goods the property in which is or is to be transferred from the seller to the buyer. The goods which form the subject-matter of the contract of sale must be movable. Transfer of immovable property is not regulated by the Sale of Goods Act.
c. Price: The consideration for the contract of sale, called ‘Price’, must be money. When goods are exchanged for goods, it is not a sale but a barter. There is, however, nothing to prevent the consideration from being partly in money and partly in goods. (Aldridge vs. Johnson, 1857)
d. Transfer of General Property: There must be a transfer of general property as distinguished from special property in goods from the seller to the buyer. e. Essential Elements of a Valid Contract: All the essential elements of a valid contract must be present in the contract of sale.
3. Sale and Agreement to Sell
Where under a contract of sale, the property in the goods is transferred from the seller to the buyer, the contract is called a ‘Sale’, but where the transfer of the property in the goods is to take place at a future time or subject to some conditions thereafter to be fulfilled, the contract is called an ‘Agreement to Sell’ [Sec 4(3)].
An agreement to sell becomes a sale when the time elapses or the conditions, subject to which the property in the goods is to be transferred are fulfilled [Sec 4(4)]. Transfer of property in goods for a price is the linchpin of the definition of contract of sale. ‘Property’ means the general property in goods, and not merely a special property. In other words, it means ‘the right of ownership’. When we say that the property in goods has passed from the seller to the buyer, it means that the seller ceases to be, and the buyer becomes, the owner of the goods.
3. Distinction between Sale and Agreement to Sell
a. Transfer of Property: In a sale, the property in the goods passes from the seller to the buyer immediately so that the seller is no more the owner of the goods sold. In an agreement to sell, the transfer of property in the goods is to take place at a future time or subject to certain conditions to be fulfilled. Thus, a sale is an executed contract and an agreement to sell is an executory contract. b. 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. c. 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.
d. Consequences of Breach: In a sale, if the buyer fails to pay the price of the goods or if there is a breach of contract by the buyer, the seller can sue for the price even though the goods are still in his possession. In an agreement to sell if there is a breach of contract by the buyer, seller can only sue for damages and not the price even though the goods are in possession of the buyer.
e. Right to Re-sell: In a sale, the seller cannot re-sell the goods (except for certain specific...
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