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• The Sale of Goods Act 1930

What is the Sale of Goods Act 1930?

Contracts of sale are those contracts that act as proof of the transfer of ownership of any object from one person to another in exchange for a price. The Sale of Goods Act India came up amidst the British Raj. The Sale of Goods Act 1930 was a law enacted in colonial, pre-Independence India for the benefit of merchants in India. The act relates to contracts for the sale of goods for all the states of India except for Jammu & Kashmir. Contracts of sale include the agreement on the part of the buyer as well as that of the seller.

Elements of the Sales of Goods Act India 1930

While trying to understand the Sale of Goods Act, it is imperative to understand the key terms used in the Act. These include the two parties (i.e., the buyer and the seller), the mercantile agent, goods, price, and the transfer of general property.

Let’s discuss these various elements to understand better.

Two Parties

As mentioned before, the two parties in the Sale of Goods Act 1930 are the buyers and the sellers.

A buyer is a person who is willing to or has agreed to buy a good.

A seller is a person who is willing to or has agreed to sell a good.

There has to be an agreement between these two parties for there to be a sale as per the Sale of Goods Act 1930. You can note here that a sale need not have gone through for the contract to designate a buyer as a buyer, and a seller as a seller; the contract is enough to assign these roles to the parties.

Mercantile Agent

Rather than the buyer and supplier negotiating between themselves, a third-party agent can be used to coordinate the specifics of the contract on behalf of these parties. This third-party agent is called the mercantile agent, and they come in the form of brokers, auctioneers, and others.

The primary purpose of establishing a buyer and a seller is so that there is an agreement about the good which is supposed to be for sale. These goods need to be clearly defined in the sale contract as per the Sales of Good Act.

In differing words, the contract states that any movable property which is listed within a contract, which is to go through the transfer of ownership as per the contract (except for money and actionable claims), is considered a good.

The Act only recognises movable property like growing crops, stocks, shares, vehicles, among others. Immovable property such as land is not under the jurisdiction of this particular Act.

The goods for sale may be either existing, future goods, or contingent goods. Existing goods are those which are already in existence when the contract is formed. Future goods refer to goods that will be produced after the creation of the contract. Contingent goods are an extension of future goods, but they have contingency clauses within the contract of sale.

The price must most certainly be included in the contract; otherwise, the contract is deemed redundant. A sale is defined by the exchange of ownership of a good between two parties at a specific price, and thus it is a critical element of the Sale of Goods Act India. A transfer of ownership of goods can only be done with the payment or promise of fulfilment of the price mentioned in the contract.

There are two ways in which the price can be paid by the sales contract. The Sale of Goods Act 1930 says that the payment must be made either in the form of full cash, or part of it with the promise to pay the rest of it later.

The price mentioned in the contract should be pre-decided by the parties at hand.

Transfer of General Property

The transfer of general property is differentiated from the transfer of specific property. General property refers to any property owned by a seller, whereas specific property refers to the property the seller is transferring the ownership of to someone else through a sales contract. The Sale of Goods Act 1930 looks only at the transfer of general property.

Important Topics covered Under the Sales of Goods Act 1930

The Sale of Goods Act of 1930 governs contracts or agreements relating to the sale of goods. Except for the state of Jammu & Kashmir, this act took effect on July 1, 1930, throughout India. Vedantu provides you with complete guidance to study. The Sale of Goods Act 1930 – Elements and Transfer of General Property. Let's go through some of the act's key terminology and sections.

Important Term Definitions

Sale and Purchase Agreement

Calculation of the Price

Condition and Warranty Concept

Conditions (Express and Implied)

Warranties, both express and implied

The Caveat Emptor Doctrine

Part 1 of the property transfer process

Part 2 of Property Transfers

Risk passing

Transfer of Ownership

Performance of a Sales Contract

Unpaid Seller's Rights Against Goods

Unpaid Seller's Rights Against Buyer

Auctioneering

FAQs on The Sale of Goods Act 1930

1. What are the Kinds of Goods that can be Sold through Contracts under the Sales of Goods Act 1930?

All kinds of goods, except for immovable property, are sold through sales contracts under the Sales and Goods Act. Available goods for sale can be either existing, future or contingent goods.

Existing goods refer to those which have already been produced and are ready to be sold. Future goods refer to those goods which are agreed to be produced and only then paid for through the contract. Contingent goods are a sort of extension to future goods, where the sale depends on the ability of the producer to supply the buyer with that good, which may not always be the case.

2. What does the Sale of Goods Act Entail?

The Sale of Goods Act India is an act that was formulated for smooth sales of different goods between different buyers and sellers in India, with the exception of Jammu & Kashmir. The act was passed amidst India’s colonial era, in the year 1930, to make buyer-seller relations easier.

The Act looks at formulating sales contracts for the transfer of movable property between two willing parties, at a price decided by these parties themselves. The act encompasses a wider range of clauses and exceptions and a very important law in Indian business circle

The essentials of sales contracts under the Sales of Good Act are the two parties (buyer and seller), the goods for sale, the price for which the goods will be sold, and the transfer of general property.

3. What is the importance of the sales of Goods Act?

The Sale of Goods Act is a crucial piece of legislation for consumers since it establishes several rights and remedies. It accomplishes this in two ways: Regardless of what the parties have (or have not) agreed on, the Act considers several rights to be part of a sale of goods contract. These are referred to as "implied terms."

The contract in which the seller transfers or agrees to transfer the ownership of the goods to the buyer for any monetary consideration is known as the sale of goods. An agreement to sell is said to be made when ownership of the goods is to be transferred at a later date.

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Sales of Goods Act 1930 | Business Law

• Post last modified: 29 May 2023
• Reading time: 25 mins read
• Post category: Business Law

Sale of Goods Act, 1930

In trade and commerce, sales and purchase of goods are very common transactions. Originally, the transactions related to sale and purchase of goods was regulated by Chapter VII (Sections 76 to 123) of the Indian Contract Act 1872 – which was broadly based on English common law.

A separate act, the Sales of Goods Act 1930 came into force on 1st July 1930. It extends to the whole of India. It does not affect rights, interests, obligations and titles acquired before the commencement of the Act. The Act deals with the sale but not with mortgage or pledge of the goods.

Contract of Sale

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 [Sec.4] . A contract of sale may be absolute or conditional.

Table of Content

• 1 Sale of Goods Act, 1930
• 2 Contract of Sale
• 3.1 Buyer – Sec 2 (1)
• 3.2 Delivery- Sec 2 (2)
• 3.3 Deliverable state- Sec 2 (3)
• 3.4 Document of Title- Sec 2 (4)
• 3.5 Fault – Sec 2 (5)
• 3.6 Future goods- Sec 2 (6)
• 3.7 Goods- Sec 2 (7)
• 3.8 Insolvent- Section 2 (8)
• 3.9 Mercantile agent- Section 2 (9)
• 3.10 Price – Section 2(10)
• 3.11 Property- Section 2(11)
• 3.12 Seller- Section 2 (13)
• 3.13 Specific goods- Section 2(14)
• 4.1 Two parties
• 4.3 Transfer of Property
• 5 How the Contract of Sale Comes About
• 6 Difference Between Sale And Agreement To Sell
• 7 Difference Between Sale and a Hire Purchase
• 8 Difference Between Sale and a Bailment
• 9 Business Law Notes
• 10 Business Law Book References

Definitions

Buyer – sec 2 (1).

Buyer means a person who buys or agrees to buy goods.

Delivery- Sec 2 (2)

Delivery means voluntary transfer of the possession from one person to another.

Deliverable state- Sec 2 (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.

Document of Title- Sec 2 (4)

A document of the title to goods may be described as any document used as proof of the possession or control of goods, authorizing or purporting to authorize, either by endorsement or by delivery, the possessor of the document to transfer or receive goods thereby represented.

Fault – Sec 2 (5)

Fault means wrongful act or default.

Future goods- Sec 2 (6)

Future goods mean goods to be manufactured or produced or acquired by the seller after the making of the contract of sale.

Goods- Sec 2 (7)

Goods mean 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.

Insolvent- Section 2 (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.

Mercantile agent- Section 2 (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.

Price – Section 2(10)

Price means the money consideration for a sale of goods.

Property- Section 2(11)

Property means the general property in goods and not merely a special property.

Seller- Section 2 (13)

Seller means a person who sells or agrees to sell goods.

Specific goods- Section 2(14)

Specific goods mean goods identified and agreed upon at the time a contract of sale is made.

Elements of Contract of Sale

The five essentials of valid sales act of sale are as discussed below:

Two parties

• Transfer of General Property
• Valid Contract

You may form a mental model of the formation of contract. In other words, you will deal with four main concepts of the formation of a contract.

There must be a seller as well as a buyer. ‘Buyer’ means a person who buys or agrees to buy goods [Section 2 (1)]. ‘Seller’ means a person who sells or agrees to sell goods [Section 2(13)]. A person cannot be a seller as well as a buyer as a person cannot buy his own goods.

There must be some goods. ‘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 [Sale 2(7)]. Contracts relating to actionable claims, immovable property and services are not covered by this Act.

• The ‘actionable claims’ mean a claim which can be enforced through the courts of law. Eg., a due from one person to another is an actionable claim.
• The ‘money’ here means the legal tender (i.e., currency of the country) and not old coins.
• Transfer of Property

Property means the general property in goods, and not merely a special property [Section 2(11)]. General property in goods means ownership of the goods. Special property in goods means possession of goods.

Thus, there must be either a transfer of ownership of goods or an agreement to transfer the ownership of goods. The ownership may transfer either immediately on completion of sale or sometime in future in agreement to sell.

There must be a price. Price here means the money consideration for a sale of goods. When the consideration is only goods, it amounts to a ‘barter’ and not sale.

When there is no consideration, it amounts to gift and not sale. However, the consideration may be partly in money and partly in goods because the law does not prohibit as such.

How the Contract of Sale Comes About

As you have learnt in the Contract Act, no particular form is necessary to constitute a contract of sale.

There are offer and acceptance, the communication may be formal, informal, or implied. The sale and transfer may occur immediately before, after simultaneous, or payment in instalments.

In order to understand exactly how the contract of sale comes about, you must learn some fundamental distinctions. Table: distinguishes between each of the following:

• Sale and agreement to sell
• Sale and hire-purchase
• Agreement to sell and hire-purchase
• Sale and bailment
• Sale and contract for work and materials

The table is a logical consequence of the principles of contract that you studied in Contract Act Chapter which covered the Contract Act, 1872.

It goes to prove that both the Contract Act and Sale of Goods Act are complementary and both are based fundamentally on the same principles.

Difference Between Sale And Agreement To Sell

A contract of sale is a generic term and includes both an actual sale and an agreement to sell. Section 4 provides that if the property in goods is transferred from the seller to the buyer under a contract, the contract is called a sale.

Where the transfer of the property in the goods will take place at a future time or is subject to some condition which has to be fulfilled, the contract is called an agreement to sell.

Such an agreement to sell becomes a sale when the prescribed time lapses or the conditions are fulfilled.

Difference Between Sale and a Hire Purchase

A Hire purchase agreement is an agreement for hire of goods where the person who hires the goods has an option to purchase the goods at the end. The possession of the goods is delivered to such a hirer and he has to pay via instalments. The property in the goods passes to the hirer on the payment of the last instalments.

Difference Between Sale and a Bailment

Sale and Bailment are two different types of contracts. A contract of sale is a straight forward contract where a person may buy goods, services or property from a seller in exchange for remuneration, usually in the form of money. Essentially, in a bailment contract, the bailor gives the goods, assets or property to the bailee for a specific amount of time. However, the goods, assets or property still belongs to the bailor.

Business Law Notes

( Click on Topic to Read )

• What is Business Law?
• Indian Contract Act 1872
• Types of Contract
• Offer: Types, Elements
• Elements of a Valid Contract
• Performance of a Contract
• Discharge of Contract
• Sales of Goods Act 1930
• Goods & Price: Contract of Sale
• Conditions and Warranties
• Doctrine of Caveat Emptor
• Rights of Unpaid Seller
• Negotiable Instruments Act 1881
• Types of Negotiable Instruments
• Types of Endorsement
• Promissory Note
• Bill of Exchange
• Crossing of Cheque

Business Law Book References

• Goel, P. K. (2006). “ Business Law for Managers ” Wiley
• Sheth, T. (2017). “ Business Law ” (2ed.) Pearson.
• Kuchhal. M.C. & Prakash. “ Business Legislation for Management ” (2ed.) Vikas Publishing.

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Home » Sale of Goods Act, 1930

Sale of Goods Act, 1930

Section-61 (2)

Section 61 (2) provides that the court may award interest at such rate as it thinks fit on the amount of the price to the seller in a suit by him for  the amount of the price from the date of the tender of the goods or from the date of which the price is payable. [Para- 12]

Sonali Bank Vs M/S. Kanraphuli Works Ltd. 2 BLT (AD)-78.

Sale of Goods Act [III of 1930]

Section 2(7)—

In the present case concerning adjustment of loan by share certificates, the provisions of Banking Companies Ordinance shall be read and construed in addition to section 171 of the Contract Act. From the provision of the Sale of Goods Act it appears that the shares of a company are also goods and as such moveable property. Money is a species of goods over which lien may be exercised. Where a banker has advanced money to another, he has a lien on all securities which come within his hand for the amount of his general balance unless there is an express contract to the contrary.

Sonali Bank vs Bengal Liner Ltd 42 DLR 487.

The right of pre-emption is attached to immovable properties, but the shares of a company are not properties in that sense, they are goods as defined and described in Sale of Goods Act.

United Chemicals and Pharma­ceuticals Ltd and others vs Niranjan Dey and others 47 DLR 423.

Sale of Goods Act

(III of 1930)

S. 2(14). Specific goods.

“Specific goods” according to the definition given in sub-section (14) of Section 2 of the Act, means “goods identified and agreed upon at the time a contract for sale is made”.

Ahmed Abdul Gani Vs. Rahmania Trading (1958) 10 DLR 348=8 PLR (Dac.) 576.

S. 13. Buyer’s option.

Buyer’s option either to waive the condition in a contract the breach of which entitles him to treat the contract as repudiated or he may treat such a breach as breach of warranty and stick to the bargain with a right to claim damages. Ibid.

—The section does not contemplate the case of a seller failing to tender delivery of goods. Ibid.

S. 13(1)(2): Buyer’s option of treating a breach of a condition in a contract as a breach of warranty. Ibid.

Sec. 13(1)(2): Both sub-section (1) and the first part of sub-sec. (2) of section 13 are based on the same principle which gives the buyer the option of treating a breach of a condition in a contract to be fulfilled by the seller as a breach of warranty. In the one case he exercises his option by express words and in the other law presumes exercise of the option from his conduct.   Ibid.

Fraud etc., on a contract of sale .

There was no provision in the Sale of Goods Act bearing on the effect of fraud, misrepresentation, coercion and undue influence on a contract of sale. Therefore, the relevant provisions of the Contract

Act on these questions continued to be applicable to contracts of sale despite the provisions of section 13, Sale of Goods Act. That section also did not contain any reference to cases of fraud, etc., and apparently contemplated such cases as involved a breach of condition, without fraud, misrepresentation and the like- affecting the formation of the contract itself in its inception. If thus interpreted, there was no difficulty in holding that section 19, Contract Act, could stand with section 13 of the Sale of Goods Act. The result was that in cases of fraud and misrepresentation etc., vitiating the contract unless there was a waiver on the part of the party affected, the right of reels ion was not lost.

Accordingly, the remedy of rescission of the contract was open to the respondent in the present case on the condition that restitution in integrum took place in a just manner. PLR. (1960) (WP) 524.

Sees. 32, 33, 36(2)—Sellers were bound to make delivery within a reasonable time.

Except the term “f.o.r” and it’s necessary implication, there were no terms expressed in contract  fixing either the time for delivery or the time for payment. It necessarily follows from the statutory provisions contained in sections 32, 35, 36(2) of the Act that the sellers were hound to make delivery within a reasonable time, subject to the feasibility of obtaining wagons and the buyer was to make payment concurrently with those deliveries.

Tarani Ch. Gupta Chowdhury Vs. Jagannath Rice Mills (1951) 3 DLR 23.

S. 18. Effect of contract for sale on goods— For enforcement of such contract goods—i must be specific and in a deliverable state.

In order to pass title from the seller to the buyer goods must he specific and in a deliverable state. If these two conditions are not fulfilled then the title to the goods does not pass by the contract.

Title to the goods will pass from the seller to the buyer (irrespective of the time of payment of price or the time of delivery) when there is unconditional contract for sale of goods, which are identified and agreed upon at the time of the contract and are in deliverable state.

Pak. Mercantile Corps. Vs. Madan Mohan Oil Mills (1966) 18 DLR 487.

Contract of the sale of moveable property

Presumption is that the purchaser has become the owner when the contract is made.

If property in the goods continued to vest in the owner, there could be no question of the hire-purchaser having a right to any part of the sale proceeds. Moreover, the goods in question being moves property, the ordinary presumption would be that she property in the apparatus passed to the alleged hire-purchaser when the contract was made, it being immaterial whether the time of payment of the price was postponed beyond the date of the contract.

Section 20 of the Sale of Goods Act embodies a principle which may be extended to cover a case where there are terms in the contract which purport retain ownership in the vendor until the fulfillment of a certain condition relating to the price, alongside with other conditions from which an equally clear conclusion may be drawn that ownership in the odds became vested in the vendee upon the making of the contract.

Shewram Das Vs. Arobinda Poddar (1961) 13 DIR (SC) 141.

S. 20 . Sale of goods affected not by free agreement between the parties, but under the orders of the Government—Date of such sale is not the date when rods were delivered but the date when Government order were received and invoices delivered for goods sold.

Sale-tax becomes payable when invoices arc delivered and since the Pakistan General Sales-tax Act which imposes the liability to sale-tax came into force on 1448, no sales tax becomes due in respect of sales of goods for which invoices, in the manner referred above, were delivered before 1.4.48.

Goods legally passed to the defendant from the date of delivery of invoices though goods were not actually delivered then.

M/S Hanif vs. Mohini Mills (1964) 16 DLR 135.

“For re-submission as per instructions” explained—

After receipt of invoices by the defendant the latter sent back the same to the plaintiff with respect “for re-submission as per instructions” and it was thereupon contended that the date of re-submission should be the date on which the invoices should be treated as being sent to the defendant.

Held: The expression used in the letter “for resubmission as per instructions” does not constitute a refusal, rather it means that the defendant accepted the goods hut the invoices should have been submitted as per instructions given by the defendant. Ibid.

S. 20: Goods in the present case, the subject- matter of the suit, had been purchased and not merely agreed to be purchased by the defendant. The mere fact that the plaintiff complained about procrastination of wcighment by the defendant does not change the nature of the transaction. In the present case the goods remained with the seller after they were approved and sold and therefore necessity was felt of satisfying the buyers that they had not been tampered with when they had remained in possession with the seller.

Messrs. Arag Ltd. V.s. Messrs. Muhammad Ismail, (1968) 20 DLR (WP) 242.

S. 34. Effect of part delivery of goods—

When a part delivery of the goods is made in progress of delivery of the whole, the first delivery will have the effect of passing the property in such goods as the delivery of whole, hut the delivery of a part of the goods with an intention of severing it from the whole, does not operate as delivery of the remainder or in other words, does not pass any title in the remainder to the buyer. The word “whole” in this section means the goods identified in terms of section 20 of the Act.

Hatu Mallik Vs. State (1966) 18 DLR 437.

S. 37(I). Delivery of lesser quantity of goods—Buyer can either accept it or he can reject it-If he accepts, he will have to pay for it at the contract rate.

Ahmed Abdul Gani Vs. Rahmania Trading (1958) 10 DLR 348.

—It follows that when the part which was not tendered previously is tendered afterwards it cannot be referred back to any subsisting contract between the buyer and the seller. Ibid.

Secs. 37(1) and 38 (1)— When a part of the goods contracted to be sold is offered and accepted by the buyer, he is not bound to accept the remaining part when offered later on. Ibid.

S. 39: Provisions of the section explained—

Section 39 of the Sale of Goods Act merely contemplates that prima facie the seller discharges his duties as soon as he delivers the goods to a carrier for the purpose of transmission to the buyer or he delivers the goods to a wharfinger for safe custody. In such cases under section 39 of the Sale 01 Goods Act the buyer may decline to treat the delivery to a common carrier or wharfinger as a delivery to the buyer himself. Section 39 of the Sale of Goods Act will assume importance if a dispute is raised with regard to passing of title from the seller to the buyer or if any risk is involved after the delivery of the goods by the seller to a common carrier or wharfinger. In the present case no such dispute has been raised by either party.

Ralli Brothers Vs. Abul Lais, (1973) 35 DLR 99.

Ss. 46 (1) (c) and 56 : So far as the right of unpaid seller is concerned it is the quantum of damages for non-acceptance of goods property in which already passed to buyer—Measure of damages is the difference between the contract price anti the market price as prevailed on the date when non- acceptance took place.

Messrs Arag Ltd Vs. Messrs Muhammad Ismail (1968) 20 DLR (WP) 242.

S. 60 “Anticipatory breach”—

Section 60 of the Sale of Goods Act avoids the difficulties wrapped up in the phrase “an anticipatory breach.”

Tarain Ch. Gupta Chowdhury Vs. Jagannalh Rice Mills (1951) 3 DLR 23.

S. 61(2). Awarding of interest to a seller—No interest payable on damage for breach of contract.

Sub-section (2) of section 61 of the Sale of Goods Act empowers the Court to award interest to seller for the price of his goods at such rate as it thinks fit. Under this section a party, however, cannot claim interest on damages for breach of a contract.

A. Z. Co. Vs. S. Maula Bakhsh (1965) 17 DLR (SC) 405.

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The Sale of Goods Act, 1930 is considered a Mercantile law and it is a type of Indian Contract Act. This act came into force on 1st July 1930. This Act is recognized as a contract and in this; the seller transmits or does approve to transfer the ownership of the goods to the buyer for consideration. Students who are studying The Sale of Goods Act are usually given the task of completing assignments on this topic. When they wish to get flying colors in their assignments, they find it suitable to take The Sale of Goods Act, 1930 assignment help only from the writers of BookMyEssay. We have carved a niche for itself in the world of assignment writing.

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The Definition of the Sale of Goods

In the Sales of Goods Act, 1930 a contract of sale gets made by an offer for buying or selling goods for a cost and the acceptance is done by the other party for such a proposal. This contract can either be oral or written, and it can be conditional or absolute. Some important terms of this contract are as follows:

• Buyer  – The person who buys or decides to purchase the goods
• Seller – The person who sells or chooses to sell goods
• Goods – Goods include every type of movable property but not actionable things or money.
• Existing goods – These goods are in existence when the contract of sale is being made.
• Future goods – These goods are to be produced or manufactured by the seller post making a contract of sale.
• Particular goods – Goods that are identified plus agreed upon during the time of making the contract of sale.

Essentials for the Sale

The five essential features of a contract of sale are:

• Two parties – A deal must be bilateral as the goods get passed from one individual to another. Here, there ought to be a buyer, means who purchases or approves of buying and a seller means the person who sells or decides to sell goods. Both the seller and the buyer must be different people.
• Subject matter to be goods – Goods means every type of movable property besides actionable claims plus money. Goods include shares and stocks, grass, crops, and things that form the portion of the land. Money can’t be sold, as money is meant legal tender instead of the old coins that can be sold or purchased as goods.
• Transfer of possession of goods – This ought to be the transfer of possession of goods from the part of the seller to the buyer, and this is not the transfer of limited interest or mere possession that happens with the pledge, hire or lease purchase agreement.
• Consideration is price – The consideration that arises in the contract of sale ought to be the price, which is money. If the goods are proposed in the form of consideration in exchange for goods, then it will not result in a sale. This will be recognized as barter. Again, if there isn’t any consideration, then it will be termed a gift.
• Essential components of a legal contract – Every crucial factor of a valid deal ought to be present, free consent, competent parties, legitimate object, etc. The transmission of ownership and possession under this act needs to be voluntary instead of contaminated with coercion or fraud.

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Definitions of Important Terms

Sale of commodities constitutes one of the important types of contracts under the law in India. India is one of the largest economies and also a great country where and thus has adequate checks and measures to ensure the safety and prosperity of its business and commerce community. Here we shall explain The Sale of Goods Act, 1930 which defines and states terms related to the sale of goods and exchange of commodities.

Sale of Goods Act, 1930 – Important Terms

The Sale of Goods Act, 1930 herein referred to as the Act, is the law that governs the sale of goods in all parts of India. It doesn’t apply to the state of Jammu & Kashmir. The Act defines various terms which are contained in the act itself. Let us see below:

I. Buyer And Seller

As per the sec 2(1) of the Act, a buyer is someone who buys or has agreed to buy goods. Since a sale constitutes a contract between two parties, a buyer is one of the parties to the contract.

The Act defines seller in sec 2(13). A seller is someone who sells or has agreed to sell goods. For a sales contract to come into existence, both the buyers and seller must be defined by the Act. These two terms represent the two parties of a sales contract.

A faint difference between the definition of buyer and seller established by the Act and the colloquial meaning of buyer and seller is that as per the act, even the person who agrees to buy or sell is qualified as a buyer or a seller. The actual transfer of goods doesn’t have to take place for the identification of the two parties of a sales contract.

One of the most crucial terms to define is the goods that are to be included in the contract for sale . The Act defines the term “Goods” in its sec 2(7) as all types of movable property. The sec 2(7) of the Act goes as follows:

“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 will be considered goods”

As you can see, shares and stocks are also defined as goods by the Act. The term actionable claims mean those claims which are eligible to be enforced or initiated by a suit or legal action. This means that those claims where an action such as recovery by auction, suit, refunds etc. could be initiated to recover or realize the claim.

We say that goods are in a deliverable state when their condition is such that the buyer would, under the contract, be bound to take delivery of these goods. Goods may be further understood in the following subtypes:

(Source: SimplyNotes)

1. Existing Goods

The goods that are referred to in the contract of sale are termed as existing goods if they are present (in existence) at the time of the contract. In sec 6 of the Act, the existing goods are those goods which are in the legal possession  or are owned by the seller at the time of the formulation of the contract of sale. The existing goods are further of the following types:

A) Specific Goods

According to the sec 2(14) of the Act, these are those goods that are “identified and agreed upon” when the contract of sale is formed. For example, you want to sell your mobile phone online. You put an advertisement with its picture and information. A buyer agrees to the sale and a contract is formed. The mobile, in this case, is specific good.

B) Ascertained Goods:

This is a type not defined by the law but by the judicial interpretation. This term is used for specific goods which have been selected from a larger set of goods. For example, you have 500 apples. Out of these 500 apples, you decide to sell 200 apples. To sell these 200 apples, you will need to separate them from the 500 (larger set). Thus you specify 200 apples from a larger group of unspecified apples. These 200 apples are now the ascertained goods.

C) Unascertained Goods:

These are the goods that have not been specifically identified but have rather been left to be selected from a larger group. For example, from your 500 apples, you decide to sell 200 apples but you don’t specify which ones you want to sell. A seller will have the liberty to choose any 200 apples from the lot. These are thus the unascertained goods.

2. Future Goods

In sec 2(6) of the Act, future goods have been defined as the goods that will either be manufactured or produced or acquired by the seller at the time the contract of sale is made. The contract for the sale of future goods will never have the actual sale in it, it will always be an agreement to sell.

For example, you have an apple orchard with apples in it. You agree to sell 1000 apples to a buyer after the apples ripe. This is a sale that has to occur in the future but the goods have been identified already and the agreement made. Such goods are known as future goods.

3. Contingent Goods

Contingent goods are actually a subtype of future goods in the sense that in contingent goods the actual sale is to be done in the future. These goods are part of a sale contract that has some contingency clause in it. For example, if you sell your apples from your orchard when the trees are yet to produce apples, the apples are a contingent good. This sale is dependent on the condition that the trees are able to produce apples, which may not happen.

III. Delivery

The delivery of goods signifies the voluntary transfer of possession from one person to another. The objective or the end result of any such process which results in the goods coming into the possession of the buyer is a delivery process. The delivery could occur even when the goods are transferred to a person other than the buyer but who is authorized to hold the goods on behalf of the buyer.

There are various forms of delivery as follows:

• Actual Delivery : If the goods are physically given into the possession of the buyer, the delivery is an actual delivery.
• Constructive delivery : The transfer of goods can be done even when the transfer is effected without a change in the possession or custody of the goods. For example, a case of the delivery by attornment or acknowledgment will be a constructive delivery. If you pick up a parcel on behalf of your friend and agree to hold on to it for him, it is a constructive delivery.
• Symbolic delivery : This kind of delivery involves the delivery of a thing in token of a transfer of some other thing. For example, the key of the godowns with the goods in it, when handed over to the buyer will constitute a symbolic delivery.

IV. The Document of Title to Goods

From the Sec 2(4) of the act, we can say that this “includes the bill of lading, dock-warrant, warehouse keeper’s 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 authorizing or purporting to authorize, either by endorsement or by delivery, the possessor of the document to transfer or receive goods thereby represented.”

V. Mercantile Agent [Section 2(9)]

Mercantile agent is someone who has authority in the customary course of business, either to sell or consign goods under the contract on behalf of the one or both of the parties. Examples include auctioneers, brokers, factors etc.

VI. Property [Section 2(11)]

In the Act, property means ‘ownership’ or the general property i.e. all ownership right of the goods. A sale constitutes the transfer of ownership of goods by the seller to the buyer or an agreement of the same.

VII. Insolvent [Section 2(8)]

The Act defines an insolvent person as someone who ceases 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.

VIII. Price [Section 2(10)]

In the Act, the price is defined as the money consideration for a sale of goods.

IX. Quality of Goods

In Sec 2(12) of the Act, the quality of goods is referred to as their state  or condition.

Solved Question on Definitions of Important Terms

Q: List the various types of goods as included in the Sale of Goods Act, 1930?

Ans: Following is a list of the different types of goods as defined by the Act:

• Existing Goods: They are further classified into Specific, Ascertained and Unascertained Goods.
• Future Goods.
• Contingent Goods.

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The Sale Of Goods Act 1930

• Express and Implied Warranties
• Express and Implied Conditions
• Concept of Condition and Warranty
• Ascertainment of Price
• Rights of Unpaid Seller Against Goods
• Performance of Contract of Sale
• Transfer of Title
• Passing of Risk
• Passing of Property – Part 2
• Passing of Property – Part 1

3 responses to “Passing of Property – Part 1”

Lovely page very easy and good language I really appreciate this And good genuine true knowledge of business law… specially for LLB students

thnq uhh soo much u have just provided easy language of law which is very helpful

Very helpful. Thanks for providing this.

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