Sale of Goods Act 1930

Sale of Goods Act  1930

The Sale of Goods Act is complimentary to The Contract Act. Basic provisions of The Contract Act apply to the contract of Sale of Goods as well. Basic requirements of contract i.e. offer and acceptance, legally enforceable agreement, mutual consent, parties competent to contract, free consent, lawful object, consideration etc. apply to the contract of Sale of Goods as well.

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. There may be a contract of sale between one part-owner and the another. A contract of sale may be absolute or conditional.

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.

Price - “Price” means the money consideration for a sale of goods.

How Contract of sale is made - A contract of sale is made by an offer to buy or sell goods for a price and the acceptance of such offer. The contract may provide for the immediate delivery of the goods or immediate payment of the price, or both, or for the delivery or payment by installments, or that the delivery or payment, or both, shall be postponed.

A contract of sale may be made in writing or by word of mouth, or partly in writing and partly by word of mouth or may be implied from the conduct of the parties.

Two parties to contract - Two parties are required for contract. - - “Buyer” means a person who buys or agrees to buy goods. “Seller” means a person who sells or agrees to sell goods. A part owner can sell his part to the another part-owner.

Contract of Sale includes 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 condition thereof to be fulfilled, the contract is called an agreement to sell. An agreement to sell becomes a ‘sale’ when the time elapses, or the conditions are fulfilled, subject to which the property in the goods is to be transferred.

Transfer of property - “Property” means the general property in goods i.e. ‘full ownership’. Thus, transfer of ‘general property’ is required to constitute a sale. Transfer of possession does not mean transfer of property. However, if goods remain in possession of seller after sale transaction is over, the ‘possession’ is with the seller, but ‘property’ is with the buyer.

As a general rule, time of payment is not essence of contract, unless there is a specific different provision in the Contract. In other words, time of payment specified is a ‘warranty’. If payment is not made in time, the seller can claim damages but cannot repudiate the contract.

Rights of seller against unpaid goods /buyer in case of breach of contract - After goods are sold and property is transferred to the buyer, the only remedy available with the seller is to approach a Court, if the buyer does not pay. Seller has no right to take forceful possession of goods from buyer, once the property in goods is transferred to the buyer.

In case of breach of contract, the Buyer can enforce his/her rights. Measure of compensation and damages will be as provided in the Contract Act.