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Goods Kinds Of Goods Contract Of Sale Sale Of Goods Shall Apply To Sale Of Goods Shall Not Apply To Importance of the Contract of sale of good Essential Of Contract Of Sale Sale and Agreement to Sale Difference Between Sale And Agreement To Sale Formalities Of Contract Of Sale Price Fixing The Price Subject Matter Of Contract Of Sale
Condition Or Warranties Difference Between Condition and Warranties Types Of Condition And Warranties Implied Conditions Implied Warranties When a Condition to be treated as Warranty Caveat Emptor Transfer of Property Transfer of Title Rules as to delivery of goods Unpaid Seller Features of the Unpaid Seller Rights of an Unpaid Seller Buyers right against seller
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Goods means every kind of movable property other than actionable claims and money; and includes stock and shares, growing crops, grass and things attached and forming part of lands which are agreed to be served before sale or under the contract of sale. Section 2(7).
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Kinds Of Goods:
Existing goods- Section 6(1) These are the goods which are in existence and are physically present in the sellers possession. Specific goods- Section 2(14) These are the goods identified and agreed upon at the time the contract is made. Ascertained goods- These are identified after the formation of the contract. Unascertained goods- These are the goods which are not specifically identified or agreed upon at the time of the contract of sale. Future goods Section 2(6) Goods which are to be manufactured or produced or acquired by the seller after making contract of sale. Contingent goods- Section 6(2).
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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(1) There may be a contract of sale between one part owner and another. A contract of sale may be absolute or conditional.
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A Contract only if the ownership of goods is transferred from one person to another immediately at the time of formation of contract or subsequent to formation of contract;
Bailment of goods; Pledge of goods ; Any contract relating to immovable property ; Contract of work and skill
There must be at least 2 parties. The Subject matter of contract must necessarily be goods. A price in money (not in kind) should be paid or promised. A transfer of property in goods from seller to buyer must take place. A contract of sale must be absolute or conditional. Section 4(2). All other essential elements of a valid contract must be presented in contract of sale.
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When property is transferred from seller to buyer at the time of formation of contract, an absolute sale occurs. When property in the goods is to be transferred at some future date and not at the time of contract, the contract of sale is termed as an agreement to sell.
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Agreement To Sale
1) 2) 3)
4)
5)
The Property in the goods passes to the buyer and along therewith the risk. It is an executed contract. The seller can sue the buyer for the price of the goods because of the passage of the property therein to buyer. A subsequent loss or destruction of goods is liability of buyer. Breach on the part of the sellers gives the buyer double remedy; a suit for damages against the seller and a proprietary remedy of recovering the goods from third parties who bought them.
4)
Since property in the goods does not pass to buyer, the risk also does not pass to him. It is an executory contract. The aggrieved party can sue for damages only and not for the price, unless the price was payable at a stated date. Such loss or destruction is the liability of the seller.
The seller, being still the owner of the goods, may dispose of them as he likes, and the buyers remedy would be to file a suit for damages only.
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5)
Contract can be made in any of the following modes: There may be immediate delivery of goods. There may be immediate payment of price, but it may be agreed that the delivery is to be made at some future date. There may be immediate delivery of goods and immediate payment of price. It may be agreed that delivery or payment or both are to be made in installments. It may be agreed that delivery or payment or both are to be made at some future date.
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Price
Sec.2(10) defines the price as the money consideration for the sale of goods. Price has to be in terms of money. All monitory payments do not amount to price.
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Condition Or Warranties
Condition: It is a stipulation essential to main purpose of the contract, the breach of which gives right to the repudiate the contract and to claim damages. Warranty: It is a stipulation collateral to main purpose of the contract, the breach of which gives rise to claim for damages but not the right to reject the goods and treat contract as repudiated.
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Warranty
1. 2.
3.
A condition is essential to the main purpose of the contract. The aggrieved party can repudiate the contract or claim damages or both in case of breach of condition. A breach of condition may be treated as breach of warranty.
It is only collateral to main purpose of contract. The aggrieved party can claim only the damages in case of breach of warranty. A breach of warranty cannot be treated as breach of condition.
3.
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Implied Conditions
1.
2.
Condition as to title
sell.
[sec.14(a)]
Sale by description
the description.
3.
4. 5. 6. 7.
Condition as to quality or fitness [sec16(1)] Condition as to merchantability [sec.16(2)] Condition implied by custom- fitness for a particular
purpose may be annexed by the usage of trade [sec.16(3)]
Implied Warranties
1. Warranty of quiet possession [sec.14(b)]. 2. Warranty of freedom from encumbrances
[sec.14(c)].
3. Warranty as to quality or fitness by usage of trade [sec16(4)]. 4. Warranty to disclose dangerous nature of goods.
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CAVEAT EMPTOR
In a contract of sale of goods the seller is under no duty to reveal unflattering truths about the goods sold. Therefore, when a person buys some goods, he must examine them thoroughly. If the goods turn out to be defective or do not suit his purpose, he cannot blame anybody excepting himself.
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Transfer of Property
Goods must be ascertained Specific goods in a deliverable state Specific goods to be put in a deliverable state Specific goods in a deliverable state when the seller has to do anything thereto in order to ascertain price Sale of unascertained goods and appropriation Goods sent on approval or on sale or return Reservation of right of disposal Risk prima facie passes with the property
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Transfer of Title
The general rule no one can give that which one has not got Sale by person not the owner effect of estoppel Sale by mercantile agent Sale by one of joint owners Sale by person in possession under voidable contract Seller in possession after sale Buyer in possession after sale Sale by an unpaid seller
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Place of delivery Time of delivery Goods in the possession of a third person Expenses of delivery Delivery of wrong quantity Installment deliveries Delivery to carrier or wharfinger Risk where goods are delivered at a distant place Buyers right of examining the goods Acceptance Buyer not bound to return rejected goods Liability of buyer for neglecting or refusing delivery of goods
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Unpaid Seller
The seller of goods is deemed to be unpaid (Sec. 45-1) I. When whole of the price has not been paid of tendered. II. When the bill of exchange or negotiable instrument has been received as a condition of payment and the condition on which it was received has not been fulfilled by the reason on dishonor of the instrument or otherwise.
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Rights of lien
The right of lien means lawfully right to retain the goods possession until the full price is received. An unpaid seller can exercise his right of lien in following cases. Sec 47-49 :
I. Where the goods have been sold on the cash basis. II. Where the goods have been sold on credit basis and the term of credit has expired. III. Where the buyer has become insolvent even if the period of credit has not been expired. Other rules to satisfy the conditions for this right are I. The unpaid seller must be in actual possession of the goods sold. II. It can be exercised even If the documents of title have been delivered to the buyer. III. It can be exercised for the price and not for other expenses IV. If the seller delivers some goods, it can be exercised on the remaining.
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The unpaid seller can not stop goods in transit in following cases:
I. When the goods reaches the destination. II. While the buyer or his agent takes possession of delivery even if it is not reached destination. III. In case the carrier is agent of the buyer, the transit comes to an end the instance carrier receives the goods and seller can not stop the transition IV. Carriers wrongful refusal to deliver goods to the buyer. Example: A sells TV set to B. A delivers the TV to the carrier to carry it to B. Later on gets news that B has become insolvent; A can stop delivery.
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Right of Resale:
If a buyer fails to pay or offer the price within a reasonable time, the unpaid seller has the right to resell the goods in the following circumstances. a) Where the goods are of perishable nature. b) Where the unpaid seller has exercised his right of lien or stoppage in transit and gives a notice to buyer of his intension of resell the goods. c) Where the unpaid seller has expressly reserved his right of resale. d) Where seller gives notice to the buyer of his intension to resell and the buyer does not pay within a reasonable time, he can a. Recover loss on resale of the goods, if any b. Retain any surplus on resale of goods, if any
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However if the seller sells without the notice to the buyer, he can not:
a. Recover any loss of the goods, if any b. Retain any surplus on the resale of the goods, if any Example: a) X sells vegetable to Y on credit, Y does not pay, X can resell to any other person. b) M sells 100 blankets to N and gives him one week for payment. N does not pay. M can resell those to any other person.
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Thank You
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