The sale of goods act, 1930

Contract of Sale of Goods: It is a contract whereby the seller transfer or agrees to transfer
the property in goods to the buyer for a price.

Essentials of Contract of Sale

1. There must be at least two parties: - Seller and buyer, as the property in the goods
have to pass from one person to another. The buyer and the seller must be
different persons. A person cannot by his own goods.
2. Transfer or Agreement to transfer the “ownership” of goods: -
3. Subject matter must be “Goods”:- Sale of immovable property is not covered by
this Act.
4. Consideration is price : - Consideration in a contract of sale, has to be the legal
tender. Where goods are exchanged for goods, it would amounts to Barter, not
sale. Similarly, where there in no consideration, it would be a gift and not a sale.
Where goods are sold for a price, which is to be paid partly in cash and partly in
goods, that is a sale.
5. Absolute or qualified: - A contract of sale may be absolute or conditional.
6. All other essentials or a valid contract must be present.

Goods
1. 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.
2. Thus, immovable are not goods and the Act does not apply to sale of immovable
property like land, building, plant erected at site etc. Thing attached to earth like
‘Standing crop or ‘tree’ is ‘goods’ only when it is agreed to be served before sale
or under contract of sale.
3. Actionable claim is a claim which can be enforced by going to the court. An
overdue debt is an actionable claim, since the creditor can take action against the
debtor to enforce the claim by going to a court of law. Thus, an actionable claim
cannot be bought and sold as goods, though it can be assigned.

Existing goods are such goods as are in existence at the time of the contract of sale, i.e.,
those owned or possessed by the seller.

Future goods: means goods to be manufactured or produced or acquired by the seller after
making the contract of sale. Thus, under the Act, a contract of sale of future goods, e.g.
1,000 quintals of potatoes to be grown on A’s field, is not illegal, though the actual sale of
future goods is not possible. This is an example of “agreement to sell”

Contingent Goods: - Goods, the acquisition of which by the seller depends upon
happening/ non – happening of an uncertain event (contingency). They are also a type of
future goods. E.g.: x agrees to sell 10 units of an article provided the ship, which is
bringing them reaches the port safely.

Specific, ascertained and unascertained Goods:

(i) Specific Goods: - Goods identified and agreed upon at the time a
contract of sale is made Eg: A car, a table.
(ii) Ascertained Goods: - Goods identified subsequent to the formation of
the contract of sale. The terms, ascertained and specific are commonly
used for the same kind of goods. The goods are ascertained when out
of a mass of unascertained goods, the quantity contracted for is
identified and set aside, Eg: - A, a TV shop owner, agreed to sell B a
particular model TV identified by the customer out of the several TVs
on display.
(iii) Unascertained Goods: - Goods not identified at the time of making of
the contract of sale. They are no definite and specific. They are goods
defined by description only. Eg. A visits a TV sales showroom and
agrees to buy a TV out of the 50 models on display. The shop owner
agrees to sell. This sale agreement is for unascertained goods as the
specific TV is yet to be identified.

Sale and Agreement to sell

In sale of goods, the property in them is transferred from the seller to the buyer
immediately, but whereas in an agreement of sale, the property in the goods passes only
after the seller has fulfilled certain conditions subsequently.

‘Sale and Agreement to sell’ distinguished

Sale Agreement to sell

Time of transfer of ownership
The transfer of ownership passes from
seller to buyer immediately.
Risk of loss of goods
The goods are at the risk of the buyer as
soon as sale takes place.
Remedies for breach by seller
In case of breach by seller, the buyer has
the legal right to obtain the possession of
the goods.
Remedies for breach by the buyer
In case of breach by the buyer, the seller
has the legal right to sue the buyer for
recovery of price of goods.
The transfer of ownership passes from
seller to buyer subsequent to the formation
of agreement to sell.
The goods are at the risk of the seller until
the agreement to sell becomes a sale.
In case of breach by seller, the buyer’s
remedy is to claim damages for non –
performance of the contract.
In case of breach by the buyer, the seller
can not sue the buyer for recovery of price
of goods. His right is limited to claim
damages.
Right of resale
In case of sale, the seller has no legal right
to resell the goods.
Insolvency of the buyer
If the buyer becomes insolvent, the official
assignee/ official receiver shall have a right
over the goods.
Insolvency of the seller
If the seller becomes insolvent, the official
assignee/ official receiver shall have no
right over the goods.
Nature of rights
In case of ‘sale’ the buyer gets the right
against the whole world, i.e.. jus in rem.
In case of agreement to sell, the seller can
resell the goods to any other person.
If the buyer becomes insolvent, the official
assignee/ official receiver shall have no
right over the goods.
If the seller becomes insolvent, the official
assignee/ official receiver shall have a right
over the goods.
In case of ‘agreement o sell’ the buyer gets
the rights only against the seller, i.e.. jus in
personam.