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Examples:
The Section may be illustrated by the following examples:
1. A agrees to buy a haystack from B on B’s land with liberty to come on B’s
land to take it away. This is a sale and B cannot revoke the licence given to
A to woo on his land. (Wood Vs Manley 1839)
2. Agreement by A to buy 20 tonnes of oil from the seller’s cisterns. The seller
has many cisterns, with more than 20 tonnes in them. This is merely an
agreement to sale. (White Vs Wilks, 1813)
3. Agreement for sale of a quantity of nitrate of soda to arrive at a certain ship.
This is an agreement to sell at a future date subject to the double condition
of the arrival of the ship with the specified cargo on board. (Johnson Vs
Macdonald 1842)
4. A customer who picks up goods in a self-service shop is merely offering to
buy them and the sale is not complete until they are paid for.
(Pharmaceutical Society Vs Boots, 1952)
Earnest :
The conclusion of a contract of sale is sometimes marked by the giving of
earnest this was expressly referred to in Sec. 78 of the Contract Act with
regard to the giving of earnest Fry L.J. said in Howe V.s Smith (1884).
The practice of giving something to signify the conclusion of the contract,
sometimes a sum of money, sometimes a ring or other object, to be repaid
or redelivered on the completion of the contract, appears to be one of great
antiquity and very general prevalence….. It was familiar to the law of Roam
( where the rule was that a defaulting buyer forfeited the earnest money
and a defaulting seller was bound to restore it two fold”.
Earnest whether given in money or not must be something of value really
given by the buyer and kept by the seller … A mere symbolic ceremony
such as one party drawing a coin across the other’s hand will not do.
When a deposit in the nature of earnest is paid for the same of immovable
property in India, a vendor by whose default the sale goes off must return
the sum so paid, but if the default is the purchasers the purchaser must
loose it.
As punctual payment does not go to the whole consideration of the sale, the
failure by the buyer to pay on the appointed day does not as a rule, entitle
the seller to treat the contract as repudiated, though he may be entitled to
withhold delivery until the price is paid and to resell the goods if the buyer
does not pay or tender the price within a reasonable time. Consequently, if
before such resale the buyer tenders the price, even though it be on a date
after the date name in the contract the seller cannot, in the absence of a
stipulation to the contrary, treat the contract as at an end and refuse to
allow the buyer to have the goods; and a subsequent resale by him will be
tortious. The time cannot be taken to be the essence of the contract in case
where the contract itself does not stipulate the time for payment of the price.
3. Stipulations as to time of performance of other terms
As the Act deals with all kinds of contracts of sale, and not only with
commercial contracts, the enactment as to stipulations as to time, other
than as to payment of the price, is necessarily put in somewhat general
language. If a man orders a suit of clothes, a promise by the tailor that he
shall have it by a certain date would not, generally speaking, be of the
essence of the contract, though it might be if he was ordering court dress
for the purpose of attending a court on a particular day. But in the case of
commercial contracts, although occasionally stipulations as to time may not
be of the essence, the usual rule is that they are.
Stipulations as to time may be waived by the party in whose favour they are
inserted either expressly or by implication, and if he does so he cannot
afterwards treat the failure to comply with them by other party as giving a
right to rescind the contract. Where, however, an initial stipulation making
time of the essence of the contract is waived, reasonable notice to make
time again of the essence would give rise to the right to rescind. There can,
strictly speaking, be no waiver after breach, but to accept goods, though
delivered late, is often spoken of as a waiver of the right of action which the
breach has given.
2. Express Conditions
The parties if they wish, may put the contents of any particular statement or
promise which passes between them on the same footing as the description
of the thing contracted for, so that if it is not made good by the party
undertaking it, the failure is deemed to be a total failure of the performance,
and the other is at least wholly discharged, and may in addition recover
damages for such failure of performance. This is a condition in the proper
sense, as defined in sub-s (2). In the usual sense, the condition means an
essential undertaking in the contract which one party promises will be made
good. If it is not made good, not only will the other party be entitled to
repudiate the contract, but also to sue for damages for breach.
3. Express warranties
There may also be, and there occur in common practice, auxiliary promises or
undertakings of which the breach is not intended to avoid the contract, but
only to give a remedy in damages. These are warranties in the proper sense,
as defined in sub-s (3). A condition of sale, protecting a seller in respect of
misdescription, may be overriden by a warranty given before the sale takes
place and damages may be recovered for breach of the warranty. Whether a
statement is to be regarded as warranty must be objectively ascertained by
asking whether adopting the standard of a reasonable man, the other party
assumed that the representor was to be regarded as undertaking legal liability
for his assertions. The importance of the statement, the relative knowledge
and means of knowledge of the parties, and the possibility of verification are
the relevant factors which would indicate whether the statement is a warranty.
Thus, statements may be warranties when made by dealers, though they
would not be warranties if made by private sellers; for the dealers may be in
possession of special knowledge, expertise and means of information not
available to ordinary persons.
4. Representations
Although the parties may have used no expressed words that would create
such a stipulation, the law annexes too many contracts, conditions, the breach
of which may be treated by the buyer as avoiding the contract or given a right
to damages. These are called as implied conditions and are enforced on the
grounds that the law infers from all the circumstances of the case, that the
parties intended to add such a stipulation to their contract, but did not put it
into expressed words.
Most of the statutory implied terms as to sellers duties as to title, confirmative
with description and quality, terms designated a conditions by the contract
itself, terms similar to those or already treated as conditions in another case,
time clauses in mercantile contracts and residual category where breached of
term is to be treated as giving right to treat the contract as discharged are
considered as terms likely to be treated as conditions.
The existence of an employed condition or warranty may be rebutted by proof
of facts, which show a contrary intention
6. Puffs
Synopsis
1. Transfer of property
2. Property cannot pass until the goods are identified
3. Part of a specific whole
4. Property and risk
5. Identification of goods
1. Transfer of property – This and the five following sections of the Act deal
with the question foreshadowed by section 4 of the Act and lay down rules
which assist in deciding the question when the object of the contract of sale,
namely, the transfer of the property in the goods to the buyer has been
affected.
2. Property cannot pass until the goods are identified – It is a condition
precedent to the passing of the property in every case that, the ‘individuality of
the thing to be delivered’ should be established. In any given case, there may
be question whether this condition is fulfilled or not, and it may be that the
property will not pass even if it is fulfilled, but until it is, there is no possibility of
the property passing. It is essential that the article should be specific and
ascertained in a manner binding on both the parties, for unless that be so, the
contract cannot be construed as contract to pas the property in that category.
Where according to the terms of the contract, the seller was to supply
waste coal ash as and when it was discharged from the bunkers of the
powerhouse, it was held that the contract was for the sale of unascertained
goods and, therefore no property passed to the buyer till the goods were
ascertained. (Tej Singh Vs State of Uttar Pradesh and others 1981)
It is obvious that if the contract is merely for the sale of goods by description,
such as a contract for sale of a certain quantity of malting barley, or future
goods, the necessary condition is not fulfilled. Nor is it fulfilled even if the
goods are so far ascertained that the parties have agreed that they shall be
taken from some specified larger stock. ‘The parties did not intend to transfer
the property in one portion of the stock more than in another, and the law
which only gives effect to their intention does not transfer the property in any
individual portion’(White Vs. Wilks 1813). And the mere fact that an order for
the delivery is given by the seller to the buyer, and is lodged by the buyer with
a warehouseman, who holds the specified larger stock out of which the goods
sold are to be taken, is not sufficient to transfer the property to the buyer.
(Laurie & Morewood Vs. Dudin & sons 1926) Thus, where the
ascertainment of the goods depends upon their being separated from the bulk
by the seller or a third party or the buyer, by their being severed, weighed or
measured or some other process, no property can pass until this is done
(National Coal Board Vs. Gamble 1959)
The contract itself may provide that the property shall pass on the happening
of some specified event, sufficient to identify the goods, and occasionally they
may become identified by other means. Thus, in a case where the seller sold
250 quarters of wheat out of a larger bulk belonging to him in a warehouse,
and the buyer took delivery of 400 quarters and pledged the remaining 850
quarters to a bank, and in the meantime the seller sold the remainder of the
bulk in the warehouse, of which delivery was taken, so that 850 quarters only
were left in the warehouse, it was held that by this process of exhaustion the
850 quarters became ascertained goods and property therein passed to the
buyer, so that the pledgee acquired a title thereto against the seller.(Wait &
Midland Bank 1926) In State of karnataka Vs. The West Coast Paper
Mills Ltd. AIR 1986 it was held that where under a contract a company was
permitted to remove bamboos from the forest area at Rs.10 /- per ton, and the
government by a subsequent order enhanced the price to Rs.20/- per ton, it
was held that the enhanced rate was no applicable to the bamboos cut
although not removed prior to the date of the government order, because on
the bamboos being cut and extricated, the goods being ascertained and in a
deliverable state, the property had passed to the company.
Synopsis
Example
This section may be illustrated by the following example:
1. Sale of 20 hogsheads of sugar out sugar out of a larger quantity. The
seller fills four hogsheads which the buyer takes away. Subsequently the
seller fills sixteen more hogsheads, and informs the buyer of this asking
him to come and take them away. The buyer promises to do so. The
property has passed to the buyer.
2. Mr A contracts to sell to Mr B a certain quantity of liquor out of a big
cask containing a much larger quantity. The required quantity is not
separated or bottled. The property in the liquor does not pass to the
purchaser.