Unit: 3 The Sales of Goods Act 1930-I

1mark Questions

1. When did the Indian Sales of Goods Act came into force?

1st day of July, 1930

2. State two contracts that is not applicable in case of

Bailment of goods

Contract of work and skill

3. Mention two important elements of contract of sales.

(1) Transfer of ownership and (2) Price

(2) Which section of Sales of Goods Act provides rules for transfer of property in
specific goods?

Section 19 under Sales of Goods Act 1930

(3)

Specific goods denote goods indentified and agreed upon at the time a contract of sale is
made.

(4) What is the prime of aim of contract of sale?

Transfer of property in goods from the seller to the buyer.

(5)

Possession of goods implies the custody of goods.

(6) ?

(7) State cases where a non owner can convey better title to the bonafide buyer of goods
for value.

Sale by one of the joint owner

(8) Under which Section of Sale of Goods Act the buyer can treat the breach of a
condition as a breach of warranty?

Under Section 13(1) of the Sale of Goods Act 1930

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 2 Marks Questions

1. What is meant by symbolic delivery? Give an example

Delivery of good in case of transit may be made by handling over documents of title of
goods to buyer, like bill of landing or railway receipt.

2. Mention one difference between sale and agreement of sell on the bases of transfer of
ownership.

Sale: transfer of properly in goods passes immediately from the seller to the buyer.

Agreement to sell: it occur at future time or to fulfilment of certain condition.

3. What are the essential features of a contract of sale?

Parties

Subject matter

Price

Transfer of property

Condition

Sale and agreement to sell

Moveable property

4.

Where the transfer of property in the goods passes only after the seller has fulfilled certain
conditions subsequently is called an agreement to sell.

5. What is meant by implied conditions and warranties?

Implied conditions and warranties are those which the law incorporates into the contract
unless the parties stipulated to the contrary.

6. Differential between condition and warranty.

Condition: It is essential to the main purpose of the contract and the breach of the
condition effect to the legality of the contract

Warranty: It is subsidiary to the main purpose of the contract and the breach of the
warranty not effect to the legality of the contract.

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7. List three level process of performance of a contract of sale of goods by seller.

i. The transfer of property in goods

ii. The transfer of possession of the goods

iii. The passing of risk

8. State any two rules regarding transfer of property in specific goods.

Specific goods in deliverable state

Specific goods in a deliverable sate, when the seller has to do anything there to in
order to ascertain price.

9. Write any two conditions that needs to be satisfied in case of sales by person in
possession of goods under voidable contract.

The buyer must possess goods.

The contract must not have be rescinded at time of sale.

10. Write any one conditions to be when sale by person not the owner.

The buyer should act in good faith. He should presume that the mercantile agent has
authority to sell goods

5 Marks Questions

1. Give differential between sale and agreement to sell.

Basis Sale Agreement to sell
Nature of contract Executed contract. Executory contract.
Risk of loss The buyer bears loss even if the The buyer bears loss even if
goods are in the seller's the goods are in the seller's
possession. possession.
Breach of contract In case of breach of contract by If the buyer breaches, the
the buyer, the seller can sue seller can only sue for
even though the goods are still damages but not the price
in possession. If the seller although the goods are in the
breaches, the buyer has the legal buyer's possession. If the
right to get the possession of seller breaches, the buyer's
goods remedy is to claim damages
for non performance.
Basis Sale Agreement to sell
Type Sale means absolute sale. Agreement to sell means
conditional sale

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2. List the essential features of a contract of sale? Explain any six of them.
Parties
Subject matter
Price
Transfer of property
Absolute or conditional
Essential elements of contract
Sale and agreement to sell
Movable property
The following elements must co-exist so as to establish a contract of sale of goods under
the Sale of Goods Act, 1930:
1. Parties: There should be at least two parties, i.e. buyer and seller. A buyer means a
person who buys or agrees to buy. A seller means a person who sells or agrees to sell.
2. Subject matter: The subject matter of the contract must necessarily be goods.
3. Price: Price means the money consideration for a sale of goods.
4. Sale and agreement to sell: It includes both `sale' and `agreement to sell'.
5. Movable property: Transfer of movable goods is regulated by the Sale of Goods
Act.
6. Formalities: Formalities observed are not much stringent in entering into contract of
sale. It does not prescribe any specific form to form a valid contract of sale. It may be
made by simple offer and acceptance. Offer may be made either by the seller or the
buyer.
3. Differential between condition and warranty.

Condition Warranties
Relation to main purpose: It is Relation to main purpose: It is subsidiary to
essential to the main purpose of the the main purpose of the contract.
contract
Rights of aggrieved party: Breach of Rights of aggrieved party: Breach of
condition gives the aggrieved party warranty entitles the aggrieved party to
a right to repudiate the contract and get claim damages only
damages.
Treating condition as warranty: Under Treating condition as warranty:
certain circumstances, a breach of A warranty cannot become a
condition may be treated as a breach condition.
of warranty.
Legal effect of breach: Breach of Legal effect of breach: Breach of warranty
condition will affect the legality of the will not affect the legality of the contract.
contract

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 4. Under what circumstances breach of condition would be treated as a breach of
warranty?
A buyer can treat the breach of a condition as a breach of warranty. "where a contract of
sale is subject to any condition to be fulfilled by the seller, the buyer may waive the
condition or elect to treat the breach of the condition as a breach of warranty and not as a
ground for treating the contract as repudiated."
In the following cases, a contract is not avoided even on account of a breach of
condition:
i. Where the buyer altogether waives the performance of the condition, a party may, for
his own benefit, waive a stipulation.
ii. Where the buyer elects to treat the breach of condition as one of a warranty. That is to
say, he may only claim damages instead of repudiating the contract.
iii. Where the contract is non-severable and the buyer has accepted either the whole
goods or any part thereof. Acceptance means acceptance as envisaged in Section 72.

iv. Where the fulfillment of any condition or warranty is excused by law by reason of
impossibility or otherwise.

5.
sales by person not the owner.

A true seller can sell and transfer ownership title to the buyer. An absolute owner of the
goods can transfer absolutely to the buyer. Subject to provisions of this act and of any
other law for the time being in force, where goods are sold by a person who is not the
owner thereof and who does not sell them under the authority (or) with the consent of the
owner, the buyer acquires no better title to the goods than the seller had.

1. Sale by person not owner

2. Sale by one of the joint owners

3. Sale by a person in possession under a voidable contract

4. Sale by one who has already sold the goods but continues in possession thereof

5. Sale by buyer obtaining possession before the property in the goods has vested in him

6. Effect of estoppels

7. Sale by unpaid seller

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Sale by person not the owner (Section 27): As a rule, a mercantile agent having an
authority to sell goods grants a good title to the buyer. A mercantile agent can
communicate a good title to the buyer although he sells goods without having any
authority from the principal to do so, provided the following conditions are fulfilled:

(a) The mercantile agent should be in possession of the goods or documents of title to
the goods in his capacity as a mercantile agent and with the consent of the owner.

(b) The buyer should act in good faith. He should presume that the mercantile agent
has authority to sell goods.

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Unit: 4 The Sales of Goods Act 1930-II
1mark Question

1. When is the seller bound to deliver the goods?

Apart from any express contract, the seller of goods is not bound to deliver them until the
buyer applies for delivery

2. Who bares expenses to put goods into a deliverable state?

The seller bare expenses to put goods into a deliverable state

3. Mention any two rules for to delivery of goods.

(1) Place of delivery and (2) Time of delivery

4. How delivery of goods to the carrier is treated?

Delivery to the buyer

5. Mention any two modes of delivery of goods.

(1) Actual delivery and (2) Symbolic delivery

6. List any two right of an unpaid seller against the buyer personally.

(1)Suit for price and (2) Suit for damages

7. Who can be called an unpaid seller?

If the seller is not paid by the buyer, the seller is called the unpaid seller.

8. State the rights of an unpaid seller against the goods.

Lien

Stoppage in transit

Resale

9. List any two conditions that need to be fulfilled in right of stoppage.

The seller must be paid

He must have parted with the possession of goods

10. Give the alternative name for the rights against the buyer personally.

Right in personam

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2 Marks Question

1.

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

2. What is meant by concurrent condition?

The seller shall be ready and willing to give possession of the goods to the buyer in
exchange for price, and the buyer shall be ready and willing to pay the price in exchange
for possession of the goods

3. What are the options available to buyer if larger quantity is delivered?

Accept the contracted goods and reject the balance

Accept the whole bulk

Reject the whole lot

4. Mention two options available to buyer if mixed quantity is delivered?

Accept the contracted goods and reject the balance

Reject the whole lot

5. Under what circumstances acceptance is deemed to take place.

Intimated t the seller that he had accepted the goods,

Retains the goods after the lapse of a reasonable time, without intimating the seller
that he has rejected them

6. Mention any two warranties in an auction sale.

Auctioneer warranties that he has authority to sell.

He guarantees the quiet possession of the goods by the purchaser.

7. What is meant by lien ?

Lien means a right which a creditor has to retain possession of goods until payment of
the price.

8. auction sale ?

An auction sale is a method of selling merchandise by inviting bids to the world at

large, and property in merchandise is sold to the highest bidder.

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 9. Define knockout agreements .

Buyers join their hands to eliminate competition among themselves at an auction sale.
They agree that they will not raise the bid against each other. Among the buyers, only
one will bid at the auction.

10. State the rules of auction under section 64 of Sales of Goods Act.

Goods put up for sale in lot

Completion of sales

Right of seller to bid

Reserve price

Use of pretended bidding

5 Marks Question

1.
explain any of two.

According to Section 2(2), `delivery' means voluntary transfer of possession from one
person to another. Rules for valid delivery of goods

1. Place of delivery
2. Time of delivery
3. Goods in possession of a third person:
4. Expenses of delivery
5. Modes of delivery
6. Constructive delivery
7. Symbolic delivery

Place of delivery: In case the contract does not provide, goods sold are to be delivered at
the place at which they are at the time of sale. This is applicable to specific goods. In case
of unascertained goods, goods are to be delivered at the place at which they are produced.

Time of delivery: As per the contract, if not stipulated, within reasonable time. The
demand for delivery must be made within reasonable hours. What is reasonable is a
matter of fact.

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2. regarding

Acceptance (Section 42): Acceptance is deemed to take place when the buyer (a)
intimates to the seller that he had accepted the goods; or (b) does any act to the goods,
which is inconsistent with the ownership of the seller; or (c) retains the goods after the
lapse of a reasonable time, without intimating the seller that he has rejected them.

Buyer is not bound to return rejected goods (Section 43): The seller cannot compel
the buyer to return the rejected goods. But the seller is entitled to a notice of the
rejection.

Liability of buyer for neglecting or refusing delivery of goods (Section 44): When
the seller is ready and willing to deliver the goods and requests the buyer to take
delivery, and the buyer does not take delivery within a reasonable time, he is liable to the
seller for any loss occasioned by the neglect or refusal to take delivery, and also
reasonable charge for the care and custody of the goods.

3. Discuss rights of unpaid seller against goods.

Rights of lien (Section 47): The right of lien can be exercised by him in the following
cases only:

Where the goods have been sold without any stipulation of credit.

Where goods have been sold on credit but the terms of credit have expired

Where the buyer becomes insolvent.

Rights of stoppage in transit (Section 50): The right of stoppage in transit is

exercised only when the following conditions are fulfilled:

The seller must be unpaid.

He must have parted with the possession of goods.

The goods are in transit.

The buyer has become insolvent.

The right is subject to the provisions-of the Act.

Right of re-sale (Section 54): The unpaid seller can exercise the right to re-sell the
goods under the following conditions:

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 When the goods are of a perishable nature. In such a case, the buyer need not be
informed of the intention of re-sale.

When he gives notice to the buyer of his intention to re-sell the goods and the buyer
does not, within a reasonable time, pay or tender the price.

4. Differentiate between right of lien and right to stoppage in transit.

Right of lien Right of stoppage in transit

1.Essence: To retain possession 1. Essence: To regain possession.
2. Possession: The seller should be in 2. Possession: (i) The seller should have
possession of the goods under lien. parted with the pos-session, (ii) Possession
should be with a carrier and (iii) The buyer
has not acquired the possession
3. Ceasing of right of lien: The right of 3. Ceasing of right of stoppage: Right of
lien comes to an end when the stoppage of the goods in transit starts when
possession of the goods is surrendered goods have left the possession of the seller
by the seller. and continues until the buyer or his agent
acquired their possession.
4. Prerequisite: Possession must be with 4. Prerequisite: The seller must have parted
the seller. with possession.
5. Commencement: Starts with default 5. Commencement: Starts. Where lien ends.
of the buyer to pay.

5. List rights of unpaid seller against the buyer. Explain suit for price and suit for

damage for non- acceptance.

The right in personam are as follows:

1. Suit for price (Section 55)

2. Suit for damages for non-acceptance (Section 56)
3. Repudiation of contract before due date (Section60)
4. Suit for interest [Section 61(2)(a)]

Suit for price (Section 55): (a) when a property in goods has passed to the buyer and the
buyer wrongfully refuses to pay for the goods, the seller may sue him for the price of the
goods [Section 55(l)]. (b) When property in the goods has not passed to the buyer and the
goods have not been appropriated to the contract, if the price is payable on a certain day
irrespective of delivery, the seller may sue the buyer on his wrongful refusal to pay for
the price [Section 55(2)].

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 Suit for damages for non-acceptance (Section 56): Where the buyer wrongfully
neglects or refuses to accept and pay for the goods, the seller may sue him for damages
for non-acceptance.

Where there is no default of the seller and the buyer wrongfully refuses to take delivery of
the goods within reasonable time, the seller is entitled to recover from the buyer (i) any loss
caused by the buyer's refusal to take delivery; and (ii) any reasonable charge for the care
and custody of the goods.

6. Write a

An auction sale is a method of selling merchandise by inviting bids to the world at large,
and property in merchandise is sold to the highest bidder. An auctioneer is an agent
governed by the Law of Agency. When he sells, he is only the agent of the seller. The
auctioneer may, however, sell his own property as the principal and need not disclose the
fact he is so selling.

Different provisions of law on auction sale are dealt under Section 64 of the Sale of
Goods Act.

Where goods are put up for sale in lots, each lot is prima facie deemed to be subject
matter of a separate contract of sale [Section 64(1)].

The sale is complete when the auctioneer announces its completion by the fall of the
hammer or in any other customary manner and until such announcement is made, any
bidder may retract from his bid [Section 64(2)].

Right to bid may be reserved expressly by or on behalf of the seller and where such a
right is expressly reserved, but not otherwise, the seller or any one person on his
behalf may bid at the auction [Section 64(3)].

Where the sale is not notified to be subject to a right to bid on behalf of the seller, it
shall not be lawful for the seller to bid himself or to employ any person to bid at such
sale, or for the auctioneer knowingly to take any bid from the seller or any person
representing him. Any sale contravening this rule may be treated as fraudulent by the
buyer [Section 64(4)].

The sale may be notified to be subject to a reserved or upset price [Section 64(5)].

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