65c50195e7bcb90019c29ced ## The Sale of Goods Act, 1930 Ebook

CHAPTER
The Sale of Goods

3 Act, 1930
Unit-1: Formation of the Contract of Sale

PART-A
Buyer Seller Actionable
Buyer Seller Actionable
means means claims
means means claims
Are claims
Person who Agr ees to buy agrees to By action
Person who Agr ees to buy Who sells or agrees to wAhic
rehclaims
can be By action
buys or goods Who sells or sells goods whic or suit
buys or goods sells goods enfhorced
can be
or suit
enforced
Goods means
Goods means
Every kind of
Every kind of
movable property
movable property
Other than Includes

Other than Includes
Actionable Growing Crops, grass, things attached

Money Stock & shares Growing Crops, grass, things attached
Actionable Stock & shares to/forming part of land which are agreed to be
Claims Money
Claims to/sev
formi
ereng
d bpart
eforeofsaland
le orwhich
underare agreedoftosale
contract be
severed before sale or under contract of sale
Types of Goods
Types of Goods
Cont ingent
Existing Goods Future Goods Cont ingent
Existing Goods Future Goods Goods
Goods
Ascertained Unascertained
Specific Goods Ascertained Unascertained
Specific Goods Goods Goods
Goods Goods
Delivery means Quality of goods includes

Delivery means Quality of goods includes
Voluntary transfer of From one person to

Voluntary transfer of From one person to Their state Or condition
possession another Their state Or condition
possession another
Like bill of lading,
Galaxy S7 edge
2 Business Laws
Essential elements of Contract of Sale
1. Minimum 2 parties (Buyer and seller)
2. Subject Matter of Contract-Goods (Movable property)
3. Price–Wholly in Money or Par tly in Money and Par tly in kind
4. T ransfer of property (owners hip) of Goods-Immediately or future
5. May be Absolute or Conditional
6. All other essentials of a valid contract (Covered under ICA, 1872)
Unit-1: Formation of the Contract of Sale 3

rd
V aluation by 3 party
decided in contract
Valuation done V aluation not done
Price as per valuation Seller’s Fault Buyer’ s Fault

done by third party
Suit against party at fault & Agreement can be avoided
Various Mode of Contract of Sale : - Specific Goods perished

befor e
1. Immediate Delivery & Immediate Payment
2. Immediate Deliv ery & payment in future Making of contract sale but after making
of sale agreement to Sell
3. Immediate payment & delivery in future

Contract becomes Agr eement becomes
void void
4. Payment & Delivery both in future
5. Delivery/payment / both in instalments
OWNERSHIP JISKI RISK USKA
PRO PERTY JISKI RISK USKA
Risk passes with the property
Exception to risk follows ownership :-

If delivery has been delayed by the fault of the seller or the buyer, the goods shall
be at the risk of the party in default, as regards loss which might not have arisen
but for the default. 5
4 Business Laws
QUESTIONS FOR PRACTICE
PART-B
Q1. Distinguish between ‘Sale’ and ‘Hire Purchase’ under the Sale of Goods Act, 1930.
Sol.
Basis of difference Sale Hire- Purchase
Time of passing property Property in the goods is The property in goods passes
transferred to the buyer to the hirer upon payment
immediately at the time of of the last instalment.
contract.
Position of the party The position of the buyer The position of the hirer is
is that of the owner of the that of a bailee till he pays
goods. the last instalment.
Termination of contract The buyer cannot terminate The hirer may, if he so likes,
the contract and is bound to terminate the contract by
pay the price of the goods. returning the goods to its
owner without any liability
to pay the remaining
instalments.
Burden of Risk of The seller takes the risk of The owner takes no such
insolvency of the buyer any loss resulting from the risk, for if the hirer fails
insolvency of the buyer. to pay an instalment, the
owner has right to take
back the goods.
Transfer of title The buyer can pass a good The hirer cannot pass any
title to a bona fide purchaser title even to a bona fide
from him. purchaser.
Resale The buyer in sale can resell The hire purchaser cannot
the goods. resell unless he has paid all
the instalments.
Q2. What is meant by delivery of goods under the Sale of Goods Act, 1930? State various
modes of delivery.
Or

Explain the term “Delivery and its form” under the Sale of Goods Act, 1930.

Sol.
(a) Delivery of goods [section 2(2) of the Sale of Goods Act, 1930]: Delivery means
voluntary transfer of possession from one person to another. As a general rule,
delivery of goods may be made by doing anything, which has the effect of putting
the goods in the possession of the buyer, or any person authorized to hold them
on his behalf.
Modes of delivery: Following are the modes of delivery for transfer of possession:
(i) Actual delivery: When the goods are physically delivered to the buyer.
(ii) Constructive delivery: When it is effected without any change in the custody or actual
possession of the thing as in the case of delivery by attornment (acknowledgement)
e.g., where a warehouseman holding the goods of A agrees to hold them on behalf
of B, at A’s request.
(iii) Symbolic delivery: When there is a delivery of a thing in token of a transfer of
something else, i.e., delivery of goods in the course of transit may be made by
handing over documents of title to goods, like bill of lading or railway receipt or
delivery orders or the key of a warehouse containing the goods is handed over to
buyer.
Q3. Differentiate between Ascertained and Unascertained Goods with example.

Sol. Ascertained Goods are those goods which are identified in accordance with the agreement
after the contract of sale is made. This term is not defined in the Act but has been
judicially interpreted.
In actual practice the term ‘ascertained goods’ is used in the same sense as ‘specific

goods.’ When from a lot or out of large quantity of unascertained goods, the number
or quantity contracted for is identified, such identified goods are called ascertained
goods.
Example: A wholesaler of cotton has 100 bales in his godown. He agrees to sell 50 bales
and these bales were selected and set aside. On selection, the goods becomes ascertained.
In this case, the contract is for the sale of ascertained goods, as the cotton bales to be
sold are identified and agreed after the formation of the contract. It may be noted that
before the ascertainment of the goods, the contract was for the sale of unascertained
goods
Unascertained goods: The goods which are not specifically identified or ascertained

at the time of making of the contract are known as ‘unascertained goods’. They are
indicated or defined only by description or sample.
Example: X has ten horses. He promises to sell one of them but does not specify which

horse he will sell. It is a contract of sale of unascertained goods
Q4. State briefly the essential element of a contract of sale under the Sale of Goods Act,
1930.
Sol. Essentials of Contract of Sale
The following elements must co-exist so as to constitute a contract of sale of goods
under the Sale of Goods Act, 1930.
6 Business Laws
(i) There must be at least two parties
(ii) The subject matter of the contract must necessarily be goods
(iii) A price in money (not in kind) should be paid or promised.
(iv) A transfer of property in goods from seller to the buyer must take place.
(v) A contract of sale may be absolute or conditional [section 4(2)].
(vi) All other essential elements of a valid contract must be present in the contract of
sale.
Q5. Classify the following transactions according to the types of goods they are:
(i) A wholesaler of cotton has 100 bales in his godown. He agrees to sell 50 bales and
these bales were selected and set aside.
(ii) A agrees to sell to B one packet of sugar out of the lot of one hundred packets lying
in his shop.
(iii) T agrees to sell to S all the apples which will be produced in his garden this year.
Sol.
(i) A wholesaler of cotton has 100 bales in his godown. So, the goods are existing
goods. He agrees to sell 50 bales and these bales were selected and set aside. On
selection, the goods become ascertained.
In this case, the contract is for the sale of ascertained goods, as the cotton bales

to be sold are identified and agreed after the formation of the contract.
(ii) If A agrees to sell to B one packet of sugar out of the lot of one hundred packets
lying in his shop, it is a sale of existing but unascertained goods because it is not
known which packet is to be delivered.
(iii) T agrees to sell to S all the apples which will be produced in his garden this year.
It is contract of sale of future goods, amounting to ‘an agreement to sell.’
Q6. Archika went to a jewellery shop and asked the shopkeeper to show the gold bangles
with white polish. The shopkeeper informed that he has gold bangles with lots of
designs but not in white polish rather if Archika select gold bangles in his shop, he
will arrange white polish on those gold bangles without any extra cost. Archika select
a set of designer bangles and pay for that. The shopkeeper requested Archika to
come after two days for delivery of those bangles so that white polish can be done
on those bangles. When Archika comes after two days to take delivery of bangles, she
noticed that due to white polishing , the design of bangles has been disturbed. Now,
she wants to avoid the contract and asked the shopkeeper to give her money back
but shopkeeper has denied for the same.
(a) State with reasons whether Archika can recover the amount under the Sale of
Goods Act, 1930.
(b) What would be your answer if shopkeeper says that he can repair those bangles but
he will charge extra cost for same?
Sol.
Provision

As per Section 4(3) of the Sale of Goods Act, 1930, 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 thereafter to be fulfilled, the contract is
called an agreement to sell and as per Section 4(4), 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.
Analysis and conclusion

(a) On the basis of above provisions and facts given in the question, it can be said
that there is an agreement to sell between Archika and shopkeeper and not a sale.
Even the payment was made by Archika, the property in goods can be transferred
only after the fulfilment of conditions fixed between buyer and seller. As the white
polish was done but original design is disturbed due to polishing, bangles are not
in original position. Hence, Archika has right to avoid the agreement to sell and
can recover the price paid.
(b) On the other hand, if shopkeeper offers to bring the bangles in original position
by repairing, he cannot charge extra cost from Archika. Even he has to bear some
expenses for repair; he cannot charge it from Archika.
Q7. X contracted to sell his car to Y. They did not discuss the price of the car at all. X later
refused to sell his car to Y on the ground that the agreement was void being uncertain
about price. Can Y demand the car under the Sale of Goods Act, 1930?
Sol.
Provision

Payment of the price by the buyer is an important ingredient of a contract of sale. If
the parties totally ignore the question of price while making the contract, it would not
become an uncertain and invalid agreement. It will rather be a valid contract and the
buyer shall pay a reasonable price. (Section 9 of the Sale of Goods Act, 1930)

In the give case, X and Y have entered into a contract for sale of car but they did
not fix the price of the car. X refused to sell the car to Y on this ground. Y can legally
demand the car from X and X can recover a reasonable price of the car from Y.
Q8. Explain the term goods and other related terms under the Sale of Goods Act, 1930.
Sol. “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. [Section 2(7) of the Sales of Goods Act, 1930]
8 Business Laws
‘Actionable claims’ are claims, which can be enforced only by an action or suit, e.g., debt.

A debt is not a movable property or goods. Even the Fixed Deposit Receipts (FDR) are
considered as goods under Section 176 of the Indian Contract Act read with Section
2(7) of the Sales of Goods Act.
Q9. A agrees to buy a new TV from a shop keeper for Rs. 30,000 payable partly in cash
of Rs. 20,000 and partly in exchange of old TV set. Is it a valid Contract of Sale of
Goods? Give reasons for your answer.
Sol.
Provision

It is necessary under the Sales of Goods Act, 1930 that the goods should be exchanged
for money. If the goods are exchanged for goods, it will not be called a sale. It will
be considered as barter. However, a contract for transfer of movable property for a
definite price payable partly in goods and partly in cash is held to be a contract of Sale
of Goods.

In the given case, the new TV set is agreed to be sold for Rs. 30,000 and the price is
payable partly in exchange of old TV set and partly in cash of Rs. 20,000. So, in this
case, it is a valid contract of sale under the Sales of Goods Act, 1930.
Q10. A agrees to sell to B 100 bags of sugar arriving on a ship from Australia to India within
next two months. Unknown to the parties, the ship has already sunk. Does B have any
right against A under the Sale of Goods Act, 1930?
Sol.
Provision

Section 8 of the Sales of Goods Act, 1930 provides that where there is an agreement

to sell specific goods and the goods without any fault of either party perish, damaged
or lost, the agreement is thereby avoided. This provision is based on the ground of
supervening impossibility of performance which makes a contract void.

In this case, B, the buyer has no right against A the seller. as, all the following conditions
required to treat it as a void contract are fulfilled in the above case:
(i) There is an agreement to sell between A and B
(ii) It is related to specific goods
(iii) The goods are lost because of the sinking of ship before the property or risk passes
to the buyer.
(iv) The loss of goods is not due to the fault of either party.


CHAPTER
The Sale of Goods
3 Act, 1930
Unit-2: Condition & Warranties
PART-A
Types of Stipulations Types of Conditions
Conditions W arranties
Express Implied
Conditions Conditions
Essential to the main Collateral to the main

purpose of goods purpose of goods
Expressly agreed Presumed b y la w
between the to be present in
parties contract
On breach, only
On breach, contract
da mages can be
can be repudiated
claimed
4 Cases where Condition can be treated as Warranty
Buyer altogether waives the performance of the condition
Buyer elects to treat the breach of the conditions, as one of a warranty
Contract is non severable and the buyer has accepted either the whole goods
or part of it
Where the fulfilment of any condition or warranty is excused by law by reason of

impossibility or otherwise.
Quality or fitness Types of W arranty
General Rule Exception Express Implied

Warranty Warranty
(a) IF the buyer tells the purpose to

No implied
seller &
condition or Expressly agreed Presumed by la w
(b) Buyer relied on seller’ s skill &
warranty as to between the to be present in
judgement
quality or parties contract
(c) Seller’s business to supply goods
fitness
of that description
7 Implied Conditions
Condition as to title
Sale by sample
Condition as to quality or fitness
Condition as to wholesomeness
Condition as to description
Sale by sample as well as by description
Condition as to merchantability
4 Implied Warranties
W arranty as to undisturbed possession
warranty as to quality or fitness by usage of trade
Warranty as to non existence of encumbrances
disclosure of dangerous nature of goods
2 Business Laws
Unit-2: Condition & Warranties 3
PART-B
Q1. “A breach of condition can be treated as a breach of warranty”. Explain this statement
as per relevant provisions of the Sale of Goods Act, 1930.
Sol. Section 13 of the Sale of Goods Act, 1930 specifies cases where a breach of condition
be treated as a breach of warranty. As a result of which the buyer loses his right to
rescind the contract and can claim damages only.
In the following cases, a contract is not avoided even on account of a breach of a
condition:
(i) Where the buyer altogether waives the performance of the condition. A party may
for his own benefit, waive a stipulation. It should be a voluntary waiver by buyer.
(ii) Where the buyer elects to treat the breach of the conditions, as one of a warranty.
That is to say, he may claim only damages instead of repudiating the contract.
Here, the buyer has not waived the condition but decided to treat it as a warranty.
(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 of the Indian Contract Act, 1872.
(iv) Where the fulfilment of any condition or warranty is excused by law by reason of
impossibility or otherwise.
Q2. TK ordered timber of 1 inch thickness for being made into drums. The seller agreed to
supply the required timber of 1 inch. However, the timber supplied by the seller varies
in thickness from 1 inch to 1.4 inches. The timber is commercially fit for the purpose
for which it was ordered. TK rejects the timber. Explain with relevant provisions of the
Sale of Goods Act, 1930 whether TK can reject the timber.
Sol.
Provision

According to Section 15 of the Sale of Goods Act, 1930 where there is a contract
for the sale of goods by description, there is an implied condition that the goods shall
correspond with the description. The buyer is not bound to accept and pay for the
goods which are not in accordance with the description of goods.
Thus, it has to be determined whether the buyer has undertaken to purchase the goods
by their description, i.e., whether the description was essential for identifying the goods
where the buyer had agreed to purchase. If that is required and the goods tendered
do not correspond with the description, it would be breach of condition entitling the
buyer to reject the goods.

Analysis and Conclusion
In the instant case, as the timber supplied by seller varies in thickness from 1 inch to

1.4 inches, it does not correspond with the description ordered by TK i.e. of 1 inch, TK
may reject the timber.
4 Business Laws
Q3. What are the differences between a ‘Condition’ and ‘Warranty’ in a contract of sale?
Or
Difference between conditions and warranties.
Sol. The following are important differences between conditions and warranties:-
Point of differences Condition Warranty
Meaning A condition is a stipulation A warranty is a stipulation
essential to the main collateral to the main
purpose of the contract. purpose of the contract.
Right in case of breach The aggrieved party can The aggrieved party can
repudiate the contract or claim only damages in case
claim damages or both in the of breach of warranty.
case of breach of condition.
Conversion of stipulations A breach of condition may A breach of warranty cannot
be treated as a breach of be treated as a breach of
warranty. condition.
Q4. Mr. T was a retail trader of fans of various kinds. Mr. M came to his shop and asked
for an exhaust fan for kitchen. Mr. T showed him different brands and Mr. M approved
of a particular brand and paid for it. Fan was delivered at Mr. M’s house; at the time
of opening the packet he found that it was a table fan. He informed Mr. T about the
delivery of the wrong fan. Mr. T refused to exchange the same, saying that the contract
was complete after the delivery of the fan and payment of price.
(i) Discuss whether Mr. T is right in refusing to exchange as per provisions of Sale of
Goods Act, 1930?
(ii) What is the remedy available to Mr. M?
Sol.
Provision

(i) According to Section 15 of the Sale of Goods Act, 1930, where the goods are sold
by sample as well as by description, the implied condition is that the goods supplied
shall correspond to both with the sample and the description. In case, the goods
do not correspond with the sample or with description or vice versa or both, the
buyer can repudiate the contract.
Further, as per Section 16(l) of the Sales of Goods Act, 1930, when the buyer
makes known to the seller the particular purpose for which the goods are required
and he relies on the judgment or skill of the seller, it is the duty of the seller to
supply such goods as are reasonably fit for that purpose.
In the given case, Mr. M had revealed Mr. T that he wanted the exhaust fan for the

kitchen. Since the table fan delivered by Mr. T was unfit for the purpose for which Mr.
M wanted the fan, therefore, T cannot refuse to exchange the fan.

Provision

(ii) When one party does not fulfill his obligation according to the agreed terms, the
other party may treat the contract as repudiated or can insist for performance
as per the original contract.

Accordingly, the remedy available to Mr. M is that he can either rescind the contract

or claim refund of the price paid by him or he may require Mr. T to replace it with the
fan he wanted.
Q5. Mr. Das, a general store owner went to purchase 200 kg of Basmati Rice of specific
length from a whole seller. He saw the samples of rice and agreed to buy the one for
which the price was quoted as Rs. 150 per kg. While examining the sample Mr. Das
failed to notice that the rice contained a mix of long and short grain of rice.
The whole seller supplied the required quantity exactly the same as shown in the sample.
However, when Mr. Das sold the rice to one of his regular customers she complained
that the rice contained two different qualities of rice and returned the rice.
With reference to the provisions of the Sales of Goods Act, 1930, discuss the options
open to Mr. Das for grievance redressal. What would be your answer in case Mr. Das
specified his exact requirement as to length of rice?
Sol.
Provision

As per the provisions of Sub-Section (2) of Section 17 of the Sale of Goods Act, 1930,
in a contract of sale by sample, there is an implied condition that:
(a) the bulk shall correspond with the sample in quality;
(b) the buyer shall have a reasonable opportunity of comparing the bulk with the
sample.

In the instant case, Mr. Das on examination of the sample on which he agreed to buy,
failed to notice that it contained a mix of long and short grain of rice.
In the light of the provisions of Sub-Clause (b) of Sub-Section (2) of Section 17 of the
Act, Mr. Das will not be successful as he examined the sample of Basmati rice (which
exactly corresponded to the entire lot) without noticing the fact that even though the
sample was that of Basmati Rice but it contained a mix of long and short grains. It
could have been discovered by Mr. Das, by an ordinary examination of the goods that
it contained a mix of long and short grains. This reflects lack of due diligence on part
of Mr. Das.
Therefore, Mr. Das, the buyer does not have any option available to him for grievance
redressal.
In case Mr. Das specified his exact requirement as to length of rice, then there is an

implied condition that the goods shall correspond with the description. If it is not so,
then in such case, seller will be held liable.
6 Business Laws
Q6. M/s Woodworth & Associates, a firm dealing with the wholesale and retail buying
and selling of various kinds of wooden logs, customized as per the requirement of the
customers. They dealt with Rose wood, Mango wood, Teak wood, Burma wood etc. Mr.
Das, a customer came to the shop and asked for wooden logs measuring 4 inches broad
and 8 feet long as required by the carpenter. Mr. Das specifically mentioned that
he required the wood which would be best suited for the purpose of making wooden
doors and window frames. The Shop owner agreed and arranged the wooden pieces
cut into as per the buyers requirements. The carpenter visited Mr. Das’s house next
day, and he found that the seller has supplied Mango Tree wood which would
most unsuitable for the purpose. The: carpenter asked Mr. Das to return the
wooden logs as it would not meet his requirements. The Shop owner refused to return
the wooden logs on the plea that logs were cut to specific requirements of Mr. Das and
hence could not be resold.
(i) Explain the duty of the buyer as well as the seller according to the doctrine of
“Caveat Emptor”.
(ii) Whether Mr. Das would be able to get the money back or the right kind of wood
as required serving his purpose?
Sol. Duty of the buyer according to the doctrine of “Caveat Emptor”: In case of sale of goods,
the doctrine ‘Caveat Emptor’ means ‘let the buyer beware’. When sellers display their
goods in the open market, it is for the buyers to make a proper selection or choice of
the goods. If the goods turn out to be defective he cannothold the seller liable. The seller
is in no way responsible for the bad selection of the buyer. The seller is not bound to
disclose the defects in the goods which he is selling.
Duty of the seller according to the doctrine of “Caveat Emptor”: The following exceptions
to the Caveat Emptor are the duties of the seller:
1. Fitness as to quality or use
2. Goods purchased under patent or brand name
3. Goods sold by description
4. Goods of Merchantable Quality
5. Sale by sample
6. Goods by sample as well as description
7. Trade usage
8. Seller actively conceals a defect or is guilty of fraud
(ii) As Mr. Das has specifically mentioned that he required the wood which would be
best suited for the purpose of making wooden doors and window frames but the
seller supplied Mango tree wood which is most unsuitable for the purpose. Mr. Das

is entitled to get the money back or the right kind of wood as required serving
his purpose. It is the duty of the seller to supply such goods as are reasonably fit
for the purpose mentioned by buyer. [Section 16(1) of the Sale of Goods Act,
1930]
Q7. What is the Doctrine of “Caveat Emptor”? What are the exceptions to the Doctrine of
“Caveat Emptor”?
Or
Explain the term “Caveat-Emptor” under the Sale of Goods Act, 1930? What are the
exceptions to this rule?
Sol. Caveat Emptor
In case of sale of goods, the doctrine ‘Caveat Emptor’ means ‘let the buyer beware’. When

sellers display their goods in the open market, it is for the buyers to make a proper
selection or choice of the goods.
If the goods turn out to be defective, he cannot hold the seller liable. The seller is in no
way responsible for the bad selection of the buyer. The seller is not bound to disclose
the defects in the goods which he is selling.
The rule is enunciated in the opening words of section 16 of the Sale of Goods Act,
1930 which runs thus: “Subject to the provisions of this Act and of any other law for
the time being in force, there is no implied warranty or condition as to the quality or
fitness for any particular purpose of goods supplied under a contract of sale”
Exceptions: Following are the exceptions to the doctrine of Caveat Emptor:
1. Fitness as to quality or use: Where the buyer makes known to the seller the
particular purpose for which the goods are required, so as to show that he relies
on the seller’s skill or judgment and the goods are of a description which is in the
course of seller’s business to supply,
it is the duty of the seller to supply such goods as are reasonably fit for that purpose

[Section 16 (1) of the Sales of Goods Act, 1930].
2. Goods purchased under patent or brand name: In case where the goods are purchased
under its patent name or brand name, there is no implied condition that the goods
shall be fit for any particular purpose [Section 16(1)].
3. Goods sold by description: Where the goods are sold by description there is an
implied condition that the goods shall correspond with the description [Section
15]. If it is not so then seller is responsible.
4. Goods of Merchantable Quality: Where the goods are bought by description from
a seller who deals in goods of that description there is an implied condition that
the goods shall be of merchantable quality.
8 Business Laws
The rule of Caveat Emptor is not applicable. But where the buyer has examined
the goods this rule shall apply if the defects were such which ought to have not
been revealed by ordinary examination [Section 16(2)].
5. Sale by sample: Where the goods are bought by sample, this rule of Caveat Emptor
does not apply if the bulk does not correspond with the sample [Section 17].
6. Goods by sample as well as description: Where the goods are bought by sample as
well as description, the rule of Caveat Emptor is not applicable in case the goods
do not correspond with both the sample and description or either of the condition
[Section 15].
7. Trade Usage: An implied warranty or condition as to quality or fitness for a
particular purpose may be annexed by the usage of trade and if the seller deviates
from that, this rule of Caveat Emptor is not applicable [Section 16(3)].
8. Seller actively conceals a defect or is guilty of fraud: Where the seller sells the goods
by making some misrepresentation or fraud and the buyer relies on it or when the
seller actively conceals some defect in the goods
So that the same could not be discovered by the buyer on a reasonable examination,

then the rule of Caveat Emptor will not apply. In such a case the buyer has a right to
avoid the contract and claim damages.
Q8. Mrs. Geeta went to the local rice and wheat wholesale shop and asked for 100 kgs
of Basmati rice. The Shopkeeper quoted the price of the same as Rs. 125 per kg to
which she agreed. Mrs. Geeta insisted that she would like to see the sample of what
will be provided to her by the shopkeeper before she agreed upon such purchase. The
shopkeeper showed her a bowl of rice as sample. The sample exactly corresponded to
the entire lot The buyer examined the sample casually without noticing the fact that
even though the sample was that of Basmati Rice but it contained a mix of long and
short grains. The cook on opening the bags complained that the dish if prepared with
the rice would not taste the same as the quality of rice was not as per requirement of
the dish.
(i) Now Mrs. Geeta wants to file a suit of fraud against the seller alleging him of selling
mix of good and cheap quality rice. Will she be successful?
(ii) Explain the basic law on sale by sample under Sale of Goods Act 1930?
(iii) Decide the fate of the case and options open to the buyer for grievance redressal
as per the provisions of Sale of Goods Act 1930?
(iv) What would be your answer in case Mrs. Geeta specified her exact requirement as
to length of rice?
Sol.
(i) Provision
As per the provisions of Sub-Section (2) of Section 17 of the Sale of Goods Act, 1930,
a. the bulk shall correspond with the sample in quality;
b. the buyer shall have a reasonable opportunity of comparing the bulk with the
sample.
Analysis and Concluison

In the instant case, in the light of the provisions of Sub-Clause (b) of Sub-Section (2)
of Section 17 of the Act, Mrs. Geeta will not be successful as she casually examined the
sample of rice (which exactly corresponded to the entire lot) without noticing the fact
that even though the sample was that of Basmati Rice but it contained a mix of long
and short grains.
Sale by Sample: (Section 17 of the Sale of Goods Act, 1930): As per the provisions of
Sub-Section (1) of section 17 of the Sale of Goods Act, 1930, a contract of sale is a
contract for sale by sample where there is a term in the contract, express or implied,
to that effect.
As per the provisions of Sub-Section (2) of section 17 of the Sale of Goods Act, 1930,
a. that the bulk shall correspond with the sample in quality;
b. that the buyer shall have a reasonable opportunity of comparing the bulk with
the sample.
c. that the goods shall be free from any defect, rendering them unmerchantable,
which would not be apparent on reasonable examination of the sample.
In the instant case, the buyer does not have any option available to him for grievance
redressal.
(ii) In case Mrs. Geeta specified her exact requirement as to length of rice, then there
is an implied condition that the goods shall correspond with the description. If it
is not so, the seller will be held liable.
Q9. Explain the “condition as to Merchantability” and “condition as to wholesomeness”

Sol. Condition as to Merchantability [Section 16(2) of the Sale of Goods Act, 1930]: Where
goods are bought by description from a seller who deals in goods of that description
(whether he is the manufacturer or producer or not), there is an implied condition that
Provided that, if the buyer has examined the goods, there shall be no implied condition

as regards defects which such examination ought to have revealed.
The expression “merchantable quality”, though not defined, nevertheless connotes goods

of such a quality and in such a condition a man of ordinary prudence would accept
them as goods of that description. It does not imply any legal right or legal title to sell.
Example: If a person orders motor horns from a manufacturer of horns, and the horns
supplied are scratched and damaged owing to bad packing, he is entitled to reject them
as unmerchantable.
10 Business Laws
Condition as to wholesomeness: In the case of eatables and provisions, in addition to

the implied condition as to merchantability, there is another implied condition that
the goods shall be wholesome.
Example: A supplied F with milk. The milk contained typhoid germs. F’s wife consumed
the milk and was infected and died. Held, there was a breach of condition as to fitness
and A was liable to pay damages.
Q10. For the purpose of making uniform for the employees, Mr. Yadav bought dark blue
coloured cloth from Vivek, but did not disclose to the seller the purpose of said purchase.
When uniforms were prepared and used by the employees, the cloth was found unfit.
However, there was evidence that the cloth was fit for caps, boots and carriage lining.
Advise Mr. Yadav whether he is entitled to have any remedy under the sale of Goods
Act, 1930?
Sol.
Provision
Fitness of Cloth: As per the provision of Section 16(1) of the Sale of Goods Act, 1930,

an implied condition in a contract of sale that an article is fit for a particular purpose
only arises when the purpose for which the goods are supplied is known to the seller,
the buyer relied on the seller’s skills or judgement and seller deals in the goods in his
usual course of business.


In this case, the cloth supplied is capable of being applied to a variety of purposes, the
buyer should have told the seller the specific purpose for which he required the goods.
But he did not do so. Therefore, the implied condition as to the fitness for the purpose
does not apply. Hence, the buyer will not succeed in getting any remedy from the seller
Q11. What is an Implied Warranty and state the various types of Implied Warranties
Sol. Implied Warranties: It is a warranty which the law implies into the contract of sale. In
other words, it is the stipulation which has not been included in the contract of sale in
express words. But the law presumes that the parties have incorporated it into their
contract.
It will be interesting to know that implied warranties are read into every contract of
sale unless they are expressly excluded by the express agreement of the parties.
These may also be excluded by the course of dealings between the parties or by usage
of trade (Section 62).
Implied Warrants:
1. Warranty as to undisturbed possession [Section 14(b)]: An implied warranty that
the buyer shall have and enjoy quiet possession of the goods.
That is to say, if the buyer having got possession of the goods, is later on disturbed
in his possession, he is entitled to sue the seller for the breach of the warranty.

2. Warranty as to non-existence of encumbrances [Section 14(c)]: An implied warranty
that the goods shall be free from any charge or encumbrance in favour of any third
party not declared or known to the buyer before or at the time the contract is
entered into.
3. Warranty as to quality or fitness by usage of trade [Section 16(3)]: An implied
warranty as to quality or fitness for a particular purpose may be annexed or
attached by the usage of trade.
4. Disclosure of dangerous nature of goods: Where the goods are dangerous in nature
and the buyer is ignorant of the danger, the seller must warn the buyer of the
probable danger.
If there is a breach of warranty, the seller may be liable in damages.
Q12. Mrs. G bought a tweed coat from P. When she used the coat, she got rashes on her
skin as her skin was abnormally sensitive. But she did not make this fact known to the
seller i.e. P. Mrs. G filled a case against the seller to recover damages. Can she recover
damages under the Sale of Goods Act, 1930?
Sol.
Provision

According to Section 16(1) of Sales of Goods Act, 1930, normally in a contract of sale
there is no implied condition or warranty as to quality or fitness for any particular
purpose of goods supplied. The general rule is that of “Caveat Emptor” that is “let the
buyer beware”. But where the buyer expressly or impliedly makes known to the seller
the particular purpose for which the goods are required and also relies on the seller’s
skill and judgement and that this is the business of the seller to sell such goods in the
ordinary course of his business, the buyer can make the seller responsible.
In the given case, Mrs. G purchased the tweed coat without informing the seller i.e. P

about the sensitive nature of her skin. Therefore, she cannot make the seller responsible
on the ground that the tweed coat was not suitable for her skin. Mrs. G cannot treat
it as a breach of implied condition as to fitness and quality and has no right to recover
damages from the seller.
Q13. Mr. T was a retailer trader of fans of various kinds. Mr. M came to his shop and asked
for an exhaust fan for kitchen. Mr. T showed him different brands and Mr. M approved
of a particular brand and paid for it. Fan was delivered at Mr. M’s house; at the time
of opening the packet he found that it was a table fan. He informed Mr. T about the
delivery of the wrong fan. Mr. T refused to exchange the same, saying that the contract
was complete after the delivery of the fan and payment of price.
(i) Discuss whether Mr. T is right in refusing to exchange as per provisions of the Sale
of Goods Act, 1930?
(ii) What is the remedy available to Mr. M?
12 Business Laws
Sol.
Provision
According to Section 15 of the Sale of Goods Act, 1930, where the goods are sold by

sample as well as by description, the implied condition is that the goods supplied shall
correspond to both with the sample and the description. In case, the goods do not
correspond with the sample or with description or vice versa or both, the buyer can
repudiate the contract. Further, as per Section 16(1) of the Sales of Goods Act, 1930,
when the buyer makes known to the seller the particular purpose for which the goods
are required and he relies on the judgment or skill of the seller, it is the duty of the
seller to supply such goods as are reasonably fit for that purpose.

(i) In the given case, Mr. M had revealed Mr. T that he wanted the exhaust fan for
the kitchen. Since the table fan delivered by Mr. T was unfit for the purpose for
which Mr. M wanted the fan, therefore, T cannot refuse to exchange the fan.
(ii) When one party does not fulfill his obligation according to the agreed terms, the
other party may treat the contract as repudiated or can insist for performance
as per the original contract. Accordingly, the remedy available to Mr. M is that he
can either
(a) rescind the contract or
(b) claim refund of the price paid by him or
(c) he may require Mr. T to replace it with the fan he wanted.
Q14. AB Cloth House, a firm dealing with the wholesale and retail buying and selling of
various kinds of clothes, customized as per the requirement of the customers. They
dealt with Silk, Organdie, cotton, khadi, chiffon and many other different varieties of
cloth. Mrs. Reema, a customer came to the shop and asked for specific type of cloth
suitable for making a saree for her daughter’s wedding. She specifically mentioned
that she required cotton silk cloth which is best suited for the purpose. The Shop
owner agreed and arranged the cloth pieces cut into as per the buyers’ requirements.
When Reema went to the tailor for getting the saree stitched, she found that seller
has supplied her cotton organdie material, cloth was not suitable for the said purpose.
It has heavily starched and not suitable for making the saree that Reema desired for.
The Tailor asked Reema to return the cotton organdie cloth as it would not meet his
requirements. The Shop owner refused to return the cloth on the plea that it was cut
to specific requirements of Mrs. Reema and hence could not be resold.
(i) With reference to the doctrine of “Caveat Emptor’ explain the duty of the buyer
as well as the seller.
(ii) Also explain whether Mrs. Reema would be able to get the money back or the right
kind of cloth as per the requirement?

Sol.
(i) Duty of the buyer according to the doctrine of “Caveat Emptor”: In case of sale
of goods, the doctrine ‘Caveat Emptor’ means ‘let the buyer beware’. When sellers
display their goods in the open market, it is for the buyers to make a proper selecti
on or choice of the goods. If the goods turn out to be defective, he cannot hold the
seller liable. The seller is in no way responsible for the bad selection of the buyer.
The seller is not bound to disclose the defects in the goods which he is selling.
(ii) Provision
Duty of the seller according to the doctrine of “Caveat Emptor”: The following
exceptions to the Caveat Emptor are the duties of the seller:
a. Fitness as to quality or use
b. Goods purchased under patent or brand name
c. Goods sold by description
d. Goods of Merchantable Quality
e. Sale by sample
f. Goods by sample as well as description
g. Trade usage
h. Seller actively conceals a defect or is guilty of fraud

Based on the above provision and facts given in the question, it can be concluded

that Mrs. Reema is entitled to get the money back or the right kind of cloth as
required serving her purpose. It is the duty of the seller to supply such goods as are
reasonably fit for the purpose mentioned by buyer. [Section 16(1) of the Sale of
Goods Act, 1930].
Q15. Certain goods were sold by sample by A to B, who in turn sold the same goods by
sample to C and C by sample sold the goods to D. The goods were not according to the
sample. Therefore, D who found the deviation of the goods from the sample rejected
the goods and gave a notice to C. C sued B and B sued A. Advise B and C under the
Sale of Goods Act, 1930.
Sol.
Provision

when the goods are sold by sample the goods must correspond to the sample in quality
and the buyer should be given reasonable time and opportunity of comparing the bulk
with the sample.
14 Business Laws
In the instant case, D who noticed the deviation of goods from the sample can reject

the goods and treat it as a breach of implied condition as to sample Whereas C can
recover only damages from B and B can recover damages from A. For C and B it will
not be treated as a breach of implied condition as to sample as they have accepted and
sold the goods according to Section 13(2) of the Sales of Goods Act, 1930.
Q16. Ram consults Shyam, a motor-car dealer for a car suitable for touring purposes to
promote the sale of his product. Shyam suggests ‘Maruti’ and Ram accordingly buys it
from Shyam. The car turns out to be unfit for touring purposes. What remedy Ram is
having now under the Sale of Goods Act, 1930?
Sol.
Provision
Condition and warranty (Section 12): A stipulation in a contract of sale with reference
to goods which are the subject thereof may be a condition or a warranty. [Sub-
section (1)]
“A condition is a stipulation essential to the main purpose of the contract, the breach
of which gives rise to a right to treat the contract as repudiated”. [Sub-section (2)]
“A warranty is a stipulation collateral to the main purpose of the contract, the breach
of which gives rise to a claim for damages but not to a right to reject the goods and
treat the contract as repudiated”. [Sub-section (3)]
Whether a stipulation in a contract of sale is a condition or a warranty depends in
each case on the construction of the contract. A stipulation may be a condition, though
called a warranty in the contract. [Sub-section (4)]
In the instant case, the term that the ‘car should be suitable for touring purposes’ is a

condition of the contract. It is so vital that its non-fulfilment defeats the very purpose
for which Ram purchases the car. Ram is therefore entitled to reject the car and have
refund of the price.
Q17. “There is no implied warranty or condition as to quality or fitness for any particular
purpose of goods supplied under a contract of sale.” Discuss the significance and
State exceptions, if any.
Sol. The statement given in the question is the fundamental principle of law of sale of goods,
sometime expressed by the maxim ‘Caveat Emptor’ meaning thereby ‘Let the buyer be
aware’.
In other words, it is no part of the seller’s duty in a contract of sale of goods t o give
the buyer an article suitable for a particular purpose, or of particular quality, unless
the quality or fitness is made an express terms of the contract.
The person who buys goods must keep his eyes open, his mind active and should be

cautious while buying the goods.
If he makes a bad choice, he must suffer the consequences of lack of skill and judgement
in the absence of any misrepresentation or guarantee by the seller.
There are, however, certain exceptions to the rule which are stated as under:
1. Fitness as to quality or use: Where the buyer makes known to the seller the
particular purpose for which the goods are required, so as to show that he relies
on the seller’s skill or judgment and the goods are of a description which is in the
course of seller’s business to supply, it is the duty of the seller to supply such goods
as are reasonably fit for that purpose [Section 16 (1)].
2. Goods purchased under patent or brand name: In case where the goods are
purchased under its patent name or brand name, there is no implied condition
that the goods shall be fit for any particular purpose [Section 16(1)].
3. Goods sold by description: Where the goods are sold by description there is an
implied condition that the goods shall correspond with the description [Section
15]. If it is not so, then seller is responsible.
4. Goods of Merchantable Quality: Where the goods are bought by description from
a seller who deals in goods of that description there is an implied condition that
The rule of Caveat Emptor is not applicable. But where the buyer has examined
the goods, this rule shall apply if the defects were such which ought to have not
been revealed by ordinary examination [Section 16(2)].
5. Sale by sample: Where the goods are bought by sample, this rule of Caveat Emptor
does not apply if the bulk does not correspond with the sample [Section 17].
6. Goods by sample as well as description: Where the goods are bought by sample as
well as description, the rule of Caveat Emptor is not applicable in case the goods
do not correspond with both the sample and description or either of the condition
[Section 15].
7. Trade Usage: An implied warranty or condition as to quality or fitness for a
particular purpose may be annexed by the usage of trade and if the seller deviates
from that, this rule of Caveat Emptor is not applicable [Section 16(3)].
8. Seller actively conceals a defect or is guilty of fraud: Where the seller sells the goods
by making some misrepresentation or fraud and the buyer relies on it or when
the seller actively conceals some defect in the goods so that the same could not
be discovered by the buyer on a reasonable examination, then the rule of Caveat
Emptor will not apply.
In such a case the buyer has a right to avoid the contract and claim damages.
Q18. Prashant reaches a sweet shop and ask for 1 Kg of ‘Burfi’ if the sweets are fresh.
Seller replies’ “Sir, my all sweets are fresh and of good quality.” Prashant agrees
to buy on the condition that first he tastes one piece of ‘Burfi’ to check the quality.
Seller gives him one piece to taste. Prashant, on finding the quality is good, ask the
16 Business Laws
seller to pack. On reaching the house, Prashant finds that ‘Burfi’ is stale not fresh
while the piece tasted was fresh. Now, Prashant wants to avoid the contract and
return the ‘Burfi’ to seller.
State with reason whether Prashant can avoid the contract under the Sale of Goods
Act, 1930?
Will your answer be different if Prashant does not taste the sweet?
Sol.
Provision

By virtue of provisions of Section 17 of the Sale of Goods Act, 1930, in the case of a
contract for sale by sample there is an implied condition that the bulk shall correspond
with the sample in quality and the buyer shall have a reasonable opportunity of
comparing the bulk with the sample. According to Section 15, where there is a contract
for the sale of goods by description, there is an implied condition that the goods shall
correspond with the description. If the goods do not correspond with implied condition,
the buyer can avoid the contract and reject the goods purchased.


In the instant case, the sale of sweet is sale by sample and the quality of bulk does not
correspond with quality of sample. Hence, Prashant can return the sweet and avoid
the contract
In the other case, the sale of sweet is the case of sale by description and the quality of
goods does not correspond with description made by seller. Hence, answer will be same.
Prashant can return the sweet and avoid the contract.
Q19. Mr. P was running a shop selling good quality washing machines. Mr. Q came to his
shop and asked for washing machine which is suitable for washing woollen clothes. Mr.
P showed him a particular machine which Mr. Q liked and paid for it. Later on, when
the machine was delivered at Mr. Q’s house, it was found that it was wrong machine
and also unfit for washing woollen clothes. He immediately informed Mr. P about
the delivery of wrong machine. Mr. P refused to exchange the same, saying that the
contract was complete after the delivery of washing machine and payment of price.
With reference to the provisions of Sale of Goods Act, 1930, discuss whether Mr. P is
right in refusing to exchange the washing machine?
Sol.
Provision
According to Section 15 of the Sale of Goods Act, 1930, whenever the goods are sold

as per sample as well as by description, the implied condition is that the goods must

correspond to both sample as well as description. In case the goods do not correspond
to sample or description, the buyer has the right to repudiate the contract.
Further under Sale of Goods Act, 1930 when the buyer makes known to the seller the
particular purpose for which the goods are required and he relies on his judgment and
skill of the seller, it is the duty of the seller to supply such goods which are fit for that
purpose.
In the given case, Mr. Q has informed to Mr. P that he wanted the washing machine
for washing woollen clothes. However, the machine which was delivered by Mr. P was
unfit for the purpose for which Mr. Q wanted the machine.
Based on the above provision and facts of case, we understand that there is breach of
implied condition as to sample as well as description, therefore Mr. Q can either
(a) repudiate the contract or
(b) claim the refund of the price paid by him or
(c) he may require Mr. P to replace the washing machine with desired one.
Q20. A person purchased bread from a baker’s shop. The piece of bread contained a stone
in it which broke buyer’s tooth while eating. What are the rights available to the buyer
against the seller under the Sale of Goods Act, 1930?
Sol.
Provision

This is a case related to implied condition as to wholesomeness which provides that
the eatables and provisions must be wholesome that is they must be fit for human
consumption.

In this case, the piece of bread contained a stone which broke buyer’s tooth while eating,
thereby considered unfit for consumption. Hence, the buyer can treat it as breach of
implied condition as to wholesomeness and can also claim damages from the seller

18 Business Laws
CHAPTER
The Sale of Goods
3 Act, 1930
Unit-3: Transfer of Ownership and Delivery of Goods

PART-A
Transfer of Property
In case of Specific goods
in unascertained
goods
Already in Not in Deliverable General Rule (sec 18)

Deliverable state State
Not transferred until

further the goods are
No further
action Required ascertain
Action Required by Property does not
By seller to
Seller passes until such
ascertain price
goods are put into
deliverable state Deemed
A nd the buyer has Appropriation of
Property passes Property does not Goods
notice thereof
immediately when passes until action is
contract is made done
When the seller,
delivers the goods to
the
Seller
carrier or baileefor
the transmission to
the buyer
Puts condition Does not put
(Right of disposal) condition
& does not reserve

the right of disposal
Property in goods
Property does not
transferred as per
transfer unless
Normal Rules
condition(s) fulfilled
explained earlier
2 Business Laws
Acceptance of Goods
Sale for cash only or Return -: Buyer does any Retains the
wher e the goods have been delivered by a person on act to goods, goods after
Buyer
“sale or return” on the terms that the goods were to which is reasonable
intimates his
remain the property of the seller till they are paid inconsistent time w/o
acceptance
for, the property therein does not pass to the buyer with ownership intimating
to seller
until the terms are complied with, i.e., cash is paid of seller rejection
for.
Buyer does not take

Seller is ready and willing Seller request buyer to
delivery within reasonable
to deliver goods take delivery
time
Seller may also repudiate Any loss by buyer neglect

contract if he has a right or refusal & Reasonable
Seller is entitled for
even when he has claimed charges for care and
da mages custody of goods
Who will take the

Delivery of Goods Delivery
Putting in Doing anything to Buyer will take Seller sends them

possession of goods possession to buyer
Which the parties

Buyer or his agent As per contract As per contract
agrees
Part Delivery of Goods Express Contract w.r.t delivery
Intention not to
Intention to sever e No Y es
sever e
Delivery treated of Seller is not bound Delivery as per

Delivery treat ed of
part only which to deliver until ter ms of the
whole goods
actually delivered buyer applies for it Contract
Unit-3: Transfer of Ownership and Delivery of Goods 3

4 Business Laws
Exceptions to Nemo
DatQuod non habet
Sale by Sale by
Sale by buyer unpaid
Sale under
Sale by Sale by One Sale in case person who obtaining seller
the Effect of
Mercantile of the Joint of voidable has already possession exercising
before provisions Estoppel
Agent Owners contract sold the right of lien
property is of other act
goods or stoppage
transferred
rd
in transit
V aluation by 3 party to buyer
decided in contract
Sale by Sale by Wher e the
Agent ha s Sale by Sale by
Buyer person who buyer owner is
Possession One joint unpaid seller official
acquir e a has already obtaining est opped by
of owner
Valua tionhas
done good title to who had receiver/
sold the V aluapo
tion not
ssess ion done the conduct
Goods/docu sole exercised his Liquidator
the goods goods but befor e from
ment with possession right of lien of compa ny
sold by continues property is denying the
consent of of goods or stoppage will give
seller with the transferred seller’ s
ownerPrice as per valuation Seller’s Fault Bin tra
uye r’nsit
s Fault valid title
possession to buyer authority
done by third party
Suit against party at fault & Agreement can be avoided

Who He may Purchase of
Sale made of goods or The
Possession obtained sell, pledge goods from
by agent in documents transferee
is with the possession or otherwise who resells a finder of
ordinary of title, he will get a
consent of of goods dispose of the goods to goods under
course of may sell good title
Various Mood e rofjoint
the Contract ofunder
Sale : - the goods to Specific
other peGoo ds perische
rson erd
tain
business as them to against the
owners voidable a third befor e circumstances
agent thir d person true owner
1. Immediate Delivery & Im con
mtr
edaiact
te Payment person
2. Immediate Delivery & payment in future Making of contract sale but after making
Buyer acted Buyer acted of sale agreement to Sell
in good Contract Buyer acted Buyer acted Proof that
in good Buyer
3.
faith, no Immediate payment & dheas
liv n
e ot
ry i n futurein good in good A Sale by true owner
faith, no acquir es a
notice of been faith, faCo
ithn,tract becomes AgPaw neeentcabe
r eem n comes
has actively
notice of valid title
fact that rescinded without without void conve ya
void suffered
4. Paymenftac &t De
thalitvery both in future against the
seller has until the notice of notice of good title to /held out
seller has original
not time of the previous lien or other the buyer other person
not buyer
5.
authority to Delivery/pa y m e nt / bot hse inl le r
inst a l m ents sale right that as owner
authority to
sell sell
OWNERSHIP JISKI RISK USKA
PROPERTY JISKI RISK USKA
Risk passes with the property
Exception to risk follows ownership :-

If delivery has been delayed by the fault of the seller or the buyer, the goods shall
be at the risk of the party in default, as regards loss which might not have arisen
but for the default. 5

PART-B
Q1. “Risk Prima Facie passes with property.” Elaborate in the context of the Sales of Goods
Act, 1930.
Sol. Risk prima facie passes with property (Section 26 of the Sales of Goods Act, 1930)
According to Section 26, unless otherwise agreed, the goods remain at the seller’s risk

until the property therein is transferred to the buyer, but when the property therein
is transferred to the buyer, the goods are at the buyer’s risk whether delivery has been
made or not.
It is provided that, where delivery has been delayed because of the fault of either buyer

or seller, the goods are at the risk of the party in fault as regards any loss which might
not have occurred but for such fault.
Provided also that nothing in this section shall affect the duties or liabilities of either
seller or buyer as bailee of the goods of the other party.
Q2. What is appropriation of goods under the Sale of Goods Act, 1930? State the essentials
regarding appropriation of unascertained goods.
Or
State the various essential elements involved in the sale of unascertained goods and its
appropriation as per the Sale of Goods Act, 1930.
Sol. Appropriation of goods: Appropriation of goods involves selection of goods with the
intention of using them in performance of the contract and with the mutual consent
of the seller and the buyer.
The essentials regarding appropriation of unascertained goods are:
(a) There is a contract for the sale of unascertained or future goods.
(b) The goods should conform to the description and quality stated in the contract.
(c) The goods must be in a deliverable state.
(d) The goods must be unconditionally (as distinguished from an intention to appropriate)
appropriated to the contract either by delivery to the buyer or his agent or the
carrier.
(e) The appropriation must be made by:
(i) the seller with the assent of the buyer; or
(ii) the buyer with the assent of the seller.
(f) The assent may be express or implied.
(g) The assent may be given either before or after appropriation.
6 Business Laws
Q3. “A non-owner can convey better title to the bonafide purchaser of goods for value.”
Discuss the cases when a person other than the owner can transfer title in goods as
per the provisions of the Sales of Goods Act, 1930?
Or
Explain the circumstances in detail in which non-owner can convey better title to
Bona fide purchaser of goods for value as per the Sale of Goods Act, 1930.
Or
“Nemo Dat Quod Non Habet” – “None can give or transfer goods what he does not
himself own.” Explain the rule and state the cases in which the rule does not apply
under the provisions of the Sale of Goods Act, 1930.
Sol. In the following cases, a non-owner can convey better title to the bona fide purchaser
of goods for value.
(1) Sale by a Mercantile Agent: A sale made by a mercantile agent of the goods for
document of title to goods would pass a good title to the buyer in the following
circumstances; namely;
(a) If he was in possession of the goods or documents with the consent of the
owner;
(b) If the sale was made by him when acting in the ordinary course of business as
a mercantile agent; and
(c) If the buyer had acted in good faith and has at the time of the contract of
sale, no notice of the fact that the seller had no authority to sell (Proviso to
Section 27).
Mercantile Agent means an agent having in the customary course of business
as such agent authority either to sell goods, or to consign goods for the
purposes of sale, or to buy goods, or to raise money on the security of goods
[Section 2(9)].
(2) Sale by one of the joint owners (Section 28): If one of several joint owners of goods
has the sole possession of them by permission of the co-owners, the property in the
goods is transferred to any person who buys them from such joint owner in good
faith and has not at the time of the contract of sale notice that the seller has no
authority to sell.
(3) Sale by a person in possession under voidable contract: A buyer would acquire a good
title to the goods sold to him by a seller who had obtained possession of the goods
under a contract voidable on the ground of coercion, fraud, misrepresentation or
undue influence provided that the contract had not been rescinded until the time
of the sale (Section 29).

(4) Sale by one who has already sold the goods but continues in possession thereof: If a
person has sold goods but continues to be in possession of them or of the documents
of title to them, he may sell them to a third person, and if such person obtains
the delivery thereof in good faith and without notice of the previous sale, he would
have good title to them, although the property in the goods had passed to the first
buyer earlier.
A pledge or other disposition of the goods or documents of title by the seller in
possession are equally valid [Section 30(1)].
(5) Sale by buyer obtaining possession before the property in the goods has vested in
him: Where a buyer with the consent of the seller obtains possession of the goods
before the property in them has passed to him, he may sell, pledge or otherwise
dispose of the goods to a third person, and if such person obtains delivery of the
goods in good faith and without notice of the lien or other right of the original
seller in respect of the goods, he would get a good title to them [Section 30(2)].
However, a person in possession of goods under a ‘hire-purchase’ agreement which
gives him only an option to buy is not covered within the section unless it amounts
to a sale.
(6) Effect of Estoppel: Where the owner is estopped by the conduct from denying the
seller’s authority to sell, the transferee will get a good title as against the true
owner.
But before a good title by estoppel can be made, it must be shown that the true

owner had actively suffered or held out the other person in question as the true
owner or as a person authorized to sell the goods.
(7) Sale by an unpaid seller: Where an unpaid seller who had exercised his right of
lien or stoppage in transit resells the goods, the buyer acquires a good title to the
goods as against the original buyer [Section 54 (3)].
(8) Sale under the provisions of other Acts:
(i) Sale by an Official Receiver or Liquidator of the Company will give the purchaser
a valid title.
(ii) Purchase of goods from a finder of goods will get a valid title under circumstances
[Section 169 of the Indian Contract Act, 1872]
(iii) A sale by pawnee can convey a good title to the buyer [Section 176 of the
Indian Contract Act, 1872]
Q4. Mr. G sold some goods to Mr. H for certain price by issue of an invoice, but payment
in respect of the same was not received on that day. The goods were packed and lying
in the godown of Mr. G. The goods were inspected by H’s agent and were found to be
in order. Later on, the dues of the goods were settled in cash. Just after receiving cash,
Mr. G asked Mr. H that goods should be taken away from his godown to enable him to
store other goods purchased by him. After one day, since Mr. H did not take delivery
of the goods, Mr. G kept the goods out of the godown in an open space. Due to rain,
some goods were damaged.
8 Business Laws
Referring to the provisions of the Sale of Goods Act, 1930, analyse the above situation
and decide who will be held responsible for the above damage.

Will your answer be different, if the dues were not settled in cash and are still pending?
Sol.

Provision

According to section 44 of the Sales of Goods Act, 1932, when the seller is ready and
willing to deliver the goods and requests the buyer to take delivery, and the buyer does
not within a reasonable time after such request take delivery of the goods, he is liable
to the seller for any loss occasioned by his neglect or refusal to take delivery and also
for a reasonable charge for the care and custody of the goods
The property in the goods or beneficial right in the goods passes to the buyer at appoint

of time depending upon ascertainment, appropriation and delivery of goods. Risk of
loss of goods prima facie follows the passing of property in goods. Goods remain at the
seller’s risk unless the property there in is transferred to the buyer, but after transfer
of property therein to the buyer the goods are at the buyer’s risk whether delivery has
been made or not.
In the given case, since Mr. G has already intimated Mr. H, that he wanted to store

some other goods and thus Mr. H should take the delivery of goods kept in the godown
of Mr. G, the loss of goods damaged should be borne by Mr. H.
If the price of the goods would not have settled in cash and some amount would have
been pending then Mr. G will be treated as an unpaid seller and he can enforce the
following rights against the goods as well as against the buyer personally:
(a) Where under a contract of sale the property in the goods has passed to the buyer
and the buyer wrongfully neglects or refuses to pay for the goods according to the
terms of the contract, the seller may sue him for the price of the goods. [Section
55(1) of the Sales of Goods Act, 1930]
(b) Where under a contract of sale the price is payable on a day certain irrespective of
delivery and the buyer wrongfully neglects or refuses to pay such price, the seller
may sue him for the price although the property in the goods has not passed and
the goods have not been appropriated to the contract. [Section 55(2) of the Sales
of Goods Act, 1930].
Q5. Describe the consequences of “destruction of goods” under the Sale of Goods Act,
1930, where the goods have been destroyed after the agreement to sell but before the
sale is affected.
Sol. Destruction of Goods-Consequences: In accordance with the provisions of the Sale of
Goods Act, 1930 as contained in Section 7, a contract for the sale of specific goods is
void if at the time when the contract was made; the goods without the knowledge of
the seller, perished or become so damaged as no longer to answer to their description
in the contract, then the contract is void ab initio.
This section is based on the rule that where both the parties to a contract are under
a mistake as to a matter of fact essential to a contract, the contract is void.
In a similar way Section 8 provides that an agreement to sell specific goods becomes
void if subsequently the goods, without any fault on the part of the seller or buyer,
perish or become so damaged as no longer to answer to their description in agreement
before the risk passes to the buyer. This rule is also based on the ground of impossibility
of performance as stated above.
It may, however, be noted that section 7 and 8 apply only to specific goods and not
to unascertained goods.
If the agreement is to sell a certain quantity of unascertained goods, the perishing of
even the whole quantity of such goods in the possession of the seller will not relieve him
of his obligation to deliver the goods.
Q6. J the owner of a Fiat car wants to sell his car. For this purpose he hand over the car
to P, a mercantile agent for sale at a price not less than Rs. 50, 000. The agent sells
the car for Rs. 40, 000 to A, who buys the car in good faith and without notice of any
fraud. P misappropriated the money also. J sues A to recover the Car. Decide given
reasons whether J would succeed.
Sol.
Provision

The problem in this case is based on the provisions of the Sale of Goods Act, 1930
contained in the proviso to Section 27. The proviso provides that a mercantile agent
is one who in the customary course of his business, has, as such agent, authority either
to sell goods, or to consign goods, for the purpose of sale, or to buy goods, or to raise
money on the security of goods [Section 2(9)]. The buyer of goods from a mercantile
agent, who has no authority from the principal to sell, gets a good title to the goods
if the following conditions are satisfied:
1. The agent should be in possession of the goods or documents of title to the goods
with the consent of the owner.
2. The agent should sell the goods while acting in the ordinary course of business of
a mercantile agent.
3. The buyer should act in good faith.
4. The buyer should not have at the time of the contract of sale notice that the agent
has no authority to sell.

In the instant case, P, the agent, was in the possession of the car with J’s consent for
the purpose of sale. A, the buyer, therefore obtained a good title to the car. Hence, J
in this case, cannot recover the car from A.
10 Business Laws
Q7. What are the rules related to Acceptance of Delivery of Goods?
Sol. Rules related to acceptance of delivery: 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 to the
seller that he has rejected them (Section 42).
Ordinarily, a seller cannot compel the buyer to return the rejected goods; but the seller
is entitled to a notice of the rejection.
Where 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 (Sections 43 and 44).
Q8. Mr. S agreed to purchase 100 bales of cotton from V, out of his large stock and sent
his men to take delivery of the goods. They could pack only 60 bales. Later on, there
was an accidental fire and the entire stock was destroyed including 60 bales that were
already packed. Referring to the provisions of the Sale of Goods Act, 1930 explain as
to who will bear the loss and to what extent?
Sol.
Provision

Section 26 of the Sale of Goods Act, 1930 provides that unless otherwise agreed, the

goods remain at the seller’s risk until the property therein is transferred to the buyer,
but when the property therein is transferred to the buyer, the goods are at buyer’s
risk.
whether delivery has been made or not. Further Section 18 read with Section 23 of
the Act provide that in a contract for the sale of unascertained goods, no property in
the goods is transferred to the buyer, unless and until the goods are ascertained and
where there is contract for the sale of unascertained or future goods by description, and
goods of that description and in a deliverable state are unconditionally appropriated
to the contract, either by the seller with the assent of the buyer or by the buyer with
the assent of the seller, the property in the goods thereupon passes to the buyer. Such
assent may be express or implied.
Applying the aforesaid law to the facts of the case in hand, it is clear that Mr. S has
the right to select the good out of the bulk and he has sent his men for same purpose.
Hence the problem can be answered based on the following two assumptions and the
answer will vary accordingly.

(i) Where the bales have been selected with the consent of the buyer’s representatives:
In this case the 60 bales has been transferred to the buyer and goods have been
appropriated to the contract. Thus, loss arising due to fire in case of 60 bales would
be borne by Mr. S. As regards 40 bales, the loss would be borne by Mr. V, since
the goods have not been identified and appropriated.
(ii) Where the bales have not been selected with the consent of buyer’s representatives:
In this case, the goods has not been transferred at all and hence the loss of 100
bales would be borne by Mr. V completely.
Q9. Ms. R owns a two Wheeler which she handed over to her friend Ms. K on sale or return
basis. Even after a week, Ms. K neither returned the vehicle nor made payment for it.
She instead pledged the vehicle to Mr. A to obtain a loan. Ms. R now wants to claim
the two Wheeler from Mr. A. Will she succeed?
Examine with reference to the provisions of the Sale of Goods Act, 1930, what recourse
is available to Ms. R?
Would your answer be different if it had been expressly provided that the vehicle would
remain the property of Ms. R until the price has been paid?
Sol.
Provision
As per the provisions of Section 24 of the Sale of Goods Act, 1930, when goods are

delivered to the buyer on approval or “on sale or return” or other similar terms, the
property therein passes to the buyer-
(a) when the buyer signifies his approval or acceptance to the seller or does any other
act adopting the transaction;
(b) if he does not signify his approval or acceptance to the seller but retains the goods
without giving notice of rejection, then, if a time has been fixed for the return of
the goods, on the expiration of such time, and, if no time has been fixed, on the
expiration of a reasonable time; or
(c) he does something to the good which is equivalent to accepting the goods e.g. he
pledges or sells the goods.

Referring to the above provisions, we can analyse the situation given in the question:
(i) In the instant case, Ms. K, who had taken delivery of the two wheeler on Sale or
Return basis pledged the two wheeler to Mr. A, has attracted the third condition
that she has done something to the good which is equivalent to accepting the goods
e.g. she pledges or sells the goods. Therefore, the property therein (two wheeler)
passes to Mr. A. Now in this situation, Ms. R cannot claim back her two wheeler
from Mr. A, but she can claim the price of the two wheeler from Ms. K only.
12 Business Laws
(ii) It may be noted that where the goods have been delivered by a person on “sale or
return” on the terms that the goods were to remain the property of the seller till
they are paid for, the property therein does not pass to the buyer until the terms
are complied with, i.e., price is paid for. Hence, in this case, it is held that at the
time of pledge, the ownership was not transferred to Ms. K. Thus, the pledge was
not valid and Ms. R could recover the two wheeler from Mr. A.
Q10. A went to B’s shop and selected some jewellery. He falsely represented himself to
be a man of credit and thereby persuaded B to take the payment by cheque. He
further requested him to hand over the particular type of ring immediately. On
the due date, when the seller, B presented the cheque for payment, the cheque was
found to be dishonoured. Before B could avoid the contract on the ground of fraud
by A, he had sold the ring to C. C had taken the ring in good faith and without any
notice of the fact that the goods with A were under a voidable contract. Discuss if
such a sale made by non-owner is valid or not as per the provisions of Sale of Goods
Act, 1930?
Sol.
Provision
Section 27 of Sale of Goods Act, 1930 states that no man can sell the goods and give

a good title unless he is the owner of the goods. However, there are certain exceptions
to this rule of transfer of title of goods.
One of the exceptions is sale by person in possession under a voidable contract (Section
29 of Sale of Goods Act, 1930)
1. If a person has possession of goods under a voidable contract.
2. The contract has not been rescinded or avoided so far
3. The person having possession sells it to a buyer
4. The buyer acts in good faith
5. The buyer has no knowledge that the seller has no right to sell.
Then, such a sale by a person who has possession of goods under a voidable contract
shall amount to a valid sale and the buyer gets the better title.

Based on the provisions, Mr. A is in possession of the ring under a voidable contract as
per provisions of Indian Contract Act, 1872. Also, B has not rescinded or avoided the
contract, Mr. A is in possession of the ring and he sells it new buyer Mr. C who acts in
good faith and has no knowledge that A is not the real owner. Since all the conditions
of Section 29 of Sale of Goods Act, 1930 are fulfilled, therefore sale of ring made by
Mr. A to Mr. C is a valid sale.

Q11. Referring to the provisions of the Sale of Goods Act, 1930, state the circumstances
under which when goods are delivered to the buyer “on approval” or “on sale or
return” or other similar terms, the property therein passes to the buyer.
Ms. Preeti owned a motor car which she handed over to Mr. Joshi on sale or return basis.
After a week, Mr. Joshi pledged the motor car to Mr. Ganesh. Ms. Preeti now claims
back the motor car from Mr. Ganesh. Will she succeed? Referring to the provisions of
the Sale of Goods Act, 1930, decide and examine what recourse is available to Ms.
Preeti.
Sol.
Provision


(a) when the buyer signifies his approval or acceptance to the seller or does any other
(b) if he does not signify his approval or acceptance to the seller but retains the goods
(c) he does something to the good which is equivalent to accepting the goods e.g. he

Referring to the above provisions, we can analyse the situation given in the question.
Since, Mr. Joshi, who had taken delivery of the Motor car on Sale or Return basis and
pledged the motor car to Mr. Ganesh, has attracted the third condition that he has
done something to the good which is equivalent to accepting the goods e.g. he pledges
or sells the goods. Therefore, the property therein (Motor car) passes to Mr. Joshi. Now
in this situation, Ms. Preeti cannot claim back her Motor Car from Mr. Ganesh, but she
can claim the price of the motor car from Mr. Joshi only.
Q12. Akansh purchased a Television set from Jethalal, the owner of Gada Electronics on the
condition that first three days he will check its quality and if satisfied he will pay for
that otherwise he will return the Television set. On the second day, the Television set
was spoiled due to an earthquake. Jethalal demands the price of Television set from
Akansh. Whether Akansh is liable to pay the price under the Sale of Goods Act,1930?
If not, who will ultimately bear the loss?
Sol.
Provision


14 Business Laws
(d) when the buyer signifies his approval or acceptance to the seller or does any other
(e) if he does not signify his approval or acceptance to the seller but retains the goods
(f) he does something to the good which is equivalent to accepting the goods e.g. he
Further, as per Section 8, where there is an agreement to sell specific goods, and
subsequently the goods without any fault on the part of the seller or buyer perish or
become so damaged as no longer to answer to their description in the agreement before
the risk passes to the buyer, the agreement is thereby avoided.
According to above provisions and fact, the property is not passes to Akansh i.e. buyer

as no condition of Section 24 is satisfied. Hence, risk has not passed to buyer and the
agreement is thereby avoided. Akansh is not liable to pay the price. The loss finally
should be borne by Seller, Mr. Jethalal.
Q13. Sohan is a trader in selling of wheat. Binod comes to his shop and ask Sohan to show
him some good quality wheat. Binod is satisfied with the quality of wheat. Sohan agrees
to sell 100 bags of wheat to Binod on 10th June 2021. The delivery of wheat and
the payment was to be made in next three months i.e. by 10 th September 2021 by
Binod. Before the goods are delivered to Binod, Sohan gets another customer Vikram
in his shop who is ready to pay higher price for the wheat. Sohan sells the goods of
Binod (which were already lying in his possession even after sale) to Vikram. Vikram
has no knowledge that Sohan is not the owner of goods. With reference to Sale of Goods
Act,1930, discuss if such a sale made by Sohan to Vikram is a valid sale?
Sol.
Provision

The given question deals with the rule related to transfer of title of goods. Section 27
of the Sale of Goods Act ,1930 specify the general rule “ No man can sell the goods
and give a good title unless he is the owner of the goods”. The latin maxim “ NEMO
DET QUOD NON HABET”. However, there are certain exceptions to this rule. One of
the exceptions is given in Section 30 (1) of Sale of Goods Act,1930 wherein the sale by
seller in possession of goods even after sale is made, is held to be valid. If the following
conditions are satisfied, then it amounts to a valid sale although the seller is no more
the owner of goods after sale.
(i) A seller has possession of goods after sale
(ii) with the consent of the other party (i.e. buyer)
(iii) the seller sells goods (already sold) to a new buyer
(iv) the new buyer acts in good faith
(v) The new buyer has no knowledge that the seller has no authority to sell.

In the given question, the seller Sohan has agreed to sell the goods to Binod, but delivery
of the goods is still pending. Hence Sohan is in possession of the goods and this is with
the consent of buyer i.e. Binod. Now Sohan sell those goods to Vikram, the new buyer.
Vikram is buying the goods in good faith and also has no knowledge that Sohan is no
longer the owner of goods.
Since all the above conditions given under Section 30 (1) of Sale of Goods Act, 1930

are satisfied, therefore the sale made by Sohan to Vikram is a valid sale even if Sohan
is no longer the owner of goods.
Q14. Avyukt purchased 100 Kgs of wheat from Bhaskar at Rs. 30 per kg. Bhaskar says that
wheat is in his warehouse in the custody of Kishore, the warehouse keeper. Kishore
confirmed Avyukt that he can take the delivery of wheat from him and till then he is
holding wheat on Avyukt’s behalf. Before Avyukt picks the goods from warehouse, the
whole wheat in the warehouse has flowed in flood. Now Avyukt wants his price on the
contention that no delivery has been done by seller. Whether Avyukt is right with his
views under the Sale of Goods Act, 1930.
Sol.

Provision
As per the provisions of the Sale of Goods Act, 1930 there are three modes of delivery,
i) Actual delivery, ii) Constructive delivery and iii) Symbolic delivery. When delivery is
affected without any change in the custody or actual possession of the things, it is called
constructive delivery or delivery by acknowledgement. Constructive delivery takes place
when a person in possession of goods belonging to seller acknowledges to the buyer that
he is holding the goods on buyer’s behalf.
In the instant case, Kishore acknowledges Avyukt that he is holding wheat on Avyukt’s

behalf. Before picking the wheat from warehouse by Avyukt, whole wheat was flowed
in flood.
On the basis of above provisions and facts, it is clear that possession of the wheat has

been transferred through constructive delivery. Hence, Avyukt is not right. He cannot
claim the price back.
Q15. A, B and C were joint owner of a truck and the possession of the said truck was with
B. X purchased the truck from B without knowing that A and C were also owners of
the truck. Decide in the light of provisions of Sales of Goods Act 1930, whether the
sale between B and X is valid or not?
16 Business Laws
Sol.
Provision

According to Section 28 of the Sales of Goods Act, sale by one of the several joint
owners is valid if the following conditions are satisfied:-
¾ One of the several joint owners has the sole possession of them.
¾ Possession of the goods is by the permission of the co-owners.
¾ The buyer buys them in good faith and has not at the time of contract of sale
knowledge that the seller has no authority to sell.
In the above case, A, B and C were the joint owners of the truck and the possession

of the truck was with B. Now B sold the said truck to X. X without knowing this fact
purchased the truck from B.
The sale between B and X is perfectly valid because Section 28 of the Sales of Goods
Act provides that in case one of the several joint owners has the possession of the goods
by the permission of the co- owners and if the buyer buys them in good faith without
the knowledge of the fact that seller has no authority to sell, it will give rise to a valid
contract of sale.
Q16. X agreed to purchase 300 tons of wheat from Y out of a larger stock. X sent his men
with the sacks and 150 tons of wheat were put into the sacks. Then there was a sudden
fire and the entire stock was gutted. Who will bear the loss and why?
Sol.
Provision

According to Section 21 of the Sales of Goods Act, 1930, if the goods are not in a
deliverable state and the contract is for the sale of specific goods, the property does
not pass to the buyer unless:-
(i) The seller has done his act of putting the goods in a deliverable state and
(ii) The buyer has knowledge of it.
Sometimes the seller is required to do certain acts so as to put the goods in deliverable
state like packing, filling in containers etc. No property in goods passes unless such act
is done and buyer knows about it.
In the given case, X has agreed to purchase 300 tons of wheat from Y out of a larger
stock. X sent his men (agent) to put the wheat in the sacks. Out of 300 tones only 150
tons were put into the sacks. There was a sudden fire and the entire stock was gutted.
In this case, according to the provisions of law, 150 tons sale has taken place. So, buyer
X will be responsible to bear the loss. The loss of rest of the wheat will be that of the
seller Y.
The wheat which was put in the sacks fulfils both the conditions that are:-
(1) The wheat is put in a deliverable state in the sacks.
(2) The buyer is presumed to have knowledge of it because the men who put the wheat
in the sacks are that of the buyer.
Q17. The buyer took delivery of 20 tables from the seller on sale or return basis without
examining them. Subsequently, he sold 5 tables to his customers. The customer lodged
a complaint of some defect in the tables. The buyer sought to return tables to the seller.
Was the buyer entitled to return the tables to the seller under the provisions of the
Sale of Goods Act, 1930?
Sol.
Provision

According to Section 24 of the Sales of Goods Act, 1930, in case of delivery of goods
on approval basis, the property in goods passes from seller to the buyer:-
(iii) When the person to whom the goods are given either accepts them or does an act
which implies adopting the transaction.
(iv) When the person to whom the goods are given retains the goods without giving
his approval or giving notice of rejection beyond the time fixed for the return of
goods and in case no time is fixed after the lapse of reasonable time.

In the given case, seller has delivered 20 tables to the buyer on sale or return basis.
Buyer received the tables without examining them. Out of these 20 tables, he sold 5
tables to his customer. It implies that he has accepted 5 tables out of 20.
When the buyer received the complaint of some defect in the tables, he wanted to
return all the tables to the seller. According to the provisions of law he is entitled to
return only 15 tables to the seller and not those 5 tables which he has already sold
to his customer. These tables are already accepted by him so the buyer becomes liable
under the doctrine of “Caveat Emptor”.
Q18. A delivered a horse to B on sale and return basis. The agreement provided that B
should try the horse for 8 days and return, if he did not like the horse. On the third
day the horse died without the fault of B. A files a suit against B for the recovery of
price. Can he recover the price?
Sol.
Provision

According to Section 24 of the Sale of Goods Act, 1930, “When the goods are delivered
to the buyer on approval or on sale or return or other similar terms the property
passes to the buyer;
18 Business Laws
(i) when he signifies his approval or acceptance to the seller,
(ii) when he does any other act adopting the transaction and
(iii) if he does not signify his approval or acceptance to the seller but retains goods
beyond a reasonable time.”

A delivered the horse to B on sale or return basis. It was decided between them that
B will try the horse for 8 days and in case he does not like it, he will return the horse
to the owner A. But on the third day the horse died without any fault of B. The time
given by the seller A to the buyer B has not expired yet.
Therefore, the ownership of the horse still belongs to the seller A. B will be considered

as the owner of the horse only when B does not return the horse to A within stipulated
time of 8 days.
The suit filed by A for the recovery of price from B is invalid and he cannot recover

the price from B. [Section 24]


CHAPTER
The Sale of Goods
3 Act, 1930
Unit-4: Unpaid Seller

PART-A
Unpaid Seller
other
Whole of the been received And the received has As by reason
Where bill of negotiable
price has not as conditional condition on not been of dis honor or
exchange or instrument
been paid payment which it was fulfilled otherwise
has
Unpaid seller includes any person who is in the position of seller

Auction Rules
1. Separate contract of sale for each lot
2. Contract completed on fall of hammer
3. Right to bid may be reserved expressly
4. Fraud if right to bid not notified
5. Reserved or upset price may be notified
6. Sale voidable if seller use pretending bidding
When tax on goods (like excise/custom/GST) increase or decrease after

entering into contract o sale but before performance, then buyer would
When tax on goods (like excise/custom/GST) increase or decr ease after
have to pay
entering the
into revised oprice
contract f saleconsidering the revised
but before perform ancetax rates.
, then buyer would
have to pay the revised price considering the revised tax rates.
The effect of above provision can be excluded by an agreement to contrary.
The effect of above provision can be excluded by an agreement to
contrary
2 Business Laws
PART-B
Q1. AB sold 500 bags of wheat to CD. Each bag contains 50 Kilograms of wheat. AB
sent 450 bags by road transport and CD himself took remaining 50 bags. Before CD
receives delivery of 450 bags sent by road transport, he becomes bankrupt. AB being
still unpaid, stops the bags in transit. The official receiver, on CD’s insolvency claims the
bags. Decide the case with reference to the provisions of the Sale of Goods Act, 1930.
Sol.

Provision

Right of stoppage in transit (Section 50 of the Sale of Goods Act, 1930):
Subject to the provisions of this Act, when the buyer of goods becomes insolvent, the
unpaid seller who has parted with the possession of the goods has the right of stopping
them in transit, that is to say, he may resume possession of the goods as long as they are
in the course of transit and may retain them until paid or tendered price of the goods.
When the unpaid seller has parted with the goods to a carrier and the buyer has become
insolvent, he can exercise this right of asking the carrier to return the goods back, or
not to deliver the goods to the buyer.
In the instant case, CD, the buyer becomes insolvent, and 450 bags are in transit.

AB, the seller, can stop the goods in transit by giving a notice of it to CD. The official
receiver, on CD’s insolvency cannot claim the bags.
Q2. Ram sells 200 bales of cloth to Shyam and sends 100 bales by lorry and 100 bales
by Railway. Shyam receives delivery of 100 bales sent by lorry, but before he receives
the delivery of the bales sent by railway, he becomes bankrupt. Ram being still unpaid,
stops the goods in transit. The official receiver, on Shyam’s insolvency claims the goods.
Decide the case with reference to the provisions of the Sale of Goods Act, 1930.
Sol.
Provision
Right of stoppage of goods in transit: The problem is based on section 50 of the Sale

of Goods Act,1930 dealing with the right of stoppage of the goods in transit available
to an unpaid seller. The section states that the right is exercisable by the seller only if
the following conditions are fulfilled.
(i) The seller must be unpaid
(ii) He must have parted with the possession of goods
(iii) The goods must be in transit
(iv) The buyer must have become insolvent
(v) The right is subject to the provisions of the Act.
Unit-4: Unpaid Seller 3
Applying the provisions to the given case, Ram being still unpaid, can stop the 100

bales of cloth sent by railway as these goods are still in transit.
Q3. What are the rules which regulate the Sale by Auction under the Sale of Goods Act,
1930?
Or
Referring to the provisions of the Sale of Goods Act, 1930, state the rules provided to
regulate the “Sale by Auction.”
Sol. Legal Rules of Auction sale: Section 64 of the Sale of Goods Act, 1930 provides following
rules to regulate the sale by auction:
(a) Where goods are sold in lots: Where goods are put up for sale in lots, each lot is
prima facie deemed to be subject of a separate contract of sale.
(b) Completion of the contract of sale: The sale is complete when the auctioneer
announces its completion by the fall of hammer or in any other customary manner
and until such announcement is made, any bidder may retract from his bid.
(c) Right to bid may be reserved: 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.
(d) Where the sale is not notified by the seller: 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 such person; and any sale contravening this
rule may be treated as fraudulent by the buyer.
(e) Reserved price: The sale may be notified to be subject to a reserve or upset price; and
(f) Pretended bidding: If the seller makes use of pretended bidding to raise the price,
the sale is voidable at the option of the buyer.
Q4. Discuss the rights of an unpaid seller against the buyer under the Sales of Goods Act,
1930.
Sol. The right against the buyer are as follows:
1. Suit for price (Section 55)
(a) Where under a contract of sale, the property in the goods has passed to
the buyer and the buyer wrongfully neglects or refuses to pay for the goods
according to the terms of the contract, the seller may sue him for the price of
the goods. [Section 55(1)]
(b) Where under a contract of sale, the price is payable on a certain day irrespective
of delivery and the buyer wrongfully neglects or refuses to pay such price,
the seller may sue him for the price although the property in the goods
has not passed and the goods have not been appropriated to the contract.
[Section 55(2)].
4 Business Laws
2. 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.
As regards measure of damages, Section 73 of the Indian Contract Act, 1872
applies in this case.
3. Repudiation of contract before due date (Section 60): Where the buyer repudiates the
contract before the date of delivery, the seller may treat the contract as rescinded
and sue damages for the breach. This is known as the ‘rule of anticipatory breach
of contract’.
4. Suit for interest [Section 61]: Where there is specific agreement between the seller
and the buyer as to interest on the price of the goods from the date on which
payment becomes due, the seller may recover interest from the buyer.
If, however, there is no specific agreement to this effect, the seller may charge interest
on the price when it becomes due from such day as he may notify to the buyer.
In the absence of a contract to the contrary, the Court may award interest to the seller
in a suit by him at such rate as it thinks fit on the amount of the price from the date
of the tender of the goods or from the date on which the price was payable.
Q5. Mr. D sold some goods to Mr. E for Rs. 5,00,000 on 15 days credit. Mr. D delivered
the goods. On due date Mr. E refused to pay for it. State the position and rights of Mr.
D as per the Sale of Goods Act, 1930.
Sol.
(a) Position of Mr. D: Mr. D sold some goods to Mr. E for Rs. 5,00,000 on 15 days
credit. Mr. D delivered the goods. On due date Mr. E refused to pay for it. So, Mr.
D is an unpaid seller as according to section 45(1) of the Sale of Goods Act,1930
the seller of goods is deemed to be an ‘Unpaid Seller’ when the whole of the price
has not been paid or tendered and the seller had an immediate right of action for
the price.
Rights of Mr. D: As the goods have parted away from Mr. D, therefore, Mr. D
cannot exercise the right against the goods, he can only exercise his rights against
the buyer i.e. Mr. E which are as under:
(i) Suit for price (Section 55)
In the mentioned contract of sale, the price is payable after 15 days and Mr.
E refuses to pay such price, Mr. D may sue Mr. E for the price.
(ii) Suit for damages for non-acceptance (Section 56): Mr. D may sue Mr. E for
damages for non-acceptance if Mr. E wrongfully neglects or refuses to accept
and pay for the goods. As regards measure of damages, Section 73 of the
Indian Contract Act, 1872 applies.
(iii) Suit for interest [Section 61]: If there is no specific agreement between the
Mr. D and Mr. E as to interest on the price of the goods from the date on
which payment becomes due, Mr. D may charge interest on the price when it
becomes due from such day as he may notify to Mr. E.

Q6. What are the rights of an unpaid seller against goods under the Sale of Goods Act,
1930? Explain the rights of unpaid seller against the goods.
Sol.
(a) Rights of an unpaid seller against the goods: As per the provisions of Section 46 of
the Sale of Goods Act, 1930, notwithstanding that the property in the goods may
have passed to the buyer, the unpaid seller of goods, as such, has by implication
of law-
(a) a lien on the goods for the price while he is in possession of them;
(b) in case of the insolvency of the buyer, a right of stopping the goods in transit
after he has parted with the possession of them;
(c) a right of re-sale as limited by this Act. [Sub-section (1)]
Where the property in goods has not passed to the buyer, the unpaid seller has, in
addition to his other remedies, a right of withholding delivery similar to and co-extensive
with his rights of lien and stoppage in transit where the property has passed to the
buyer. [Sub-section (2)]
These rights can be exercised by the unpaid seller in the following circumstances:
(i) Right of lien (Section 47): According to sub-section (1), the unpaid seller of goods
who is in possession of them is entitled to retain possession of them until payment
or tender of the price in the following cases, namely:-
(a) where the goods have been sold without any stipulation as to credit;
(b) where the goods have been sold on credit, but the term of credit has expired;
(c) where the buyer becomes insolvent.
(ii) Right of stoppage in transit (Section 50): When the buyer of goods becomes insolvent,
the unpaid seller who has parted with the possession of the goods has the right
of stopping them in transit, that is to say, he may resume possession of the goods
as long as they are in the course of transit, and may retain them until paid or
tendered price of the goods.
(iii) Right to re-sell the goods (Section 54): The unpaid seller can exercise the right to
re-sell the goods under the following conditions:
1. Where the goods are of a perishable nature
2. Where he gives notice to the buyer of his intention to re-sell the goods
3. Where an unpaid seller who has exercised his right of lien or stoppage in transit
resells the goods
4. A re-sale by the seller where a right of re-sale is expressly reserved in a
contract of sale
5. Where the property in goods has not passed to the buyer
6 Business Laws
Q7. Describe the term “unpaid seller” under the Sale of Goods Act, 1930? When can an
unpaid seller exercise the right of stoppage of goods in transit?
Sol. Unpaid Seller : According to Section 45 of the Sale of Goods Act, 1930, the seller of
goods is deemed to be an ‘Unpaid Seller’ when-
(a) the whole of the price has not been paid or tendered.
(b) a bill of exchange or other negotiable instrument has been received as conditional
payment, and it has been dishonoured.
Right of stoppage of goods in transit

When the unpaid seller has parted with the goods to a carrier and the buyer has become
insolvent, he can exercise this right by asking the carrier to return the goods back, or
not to deliver the goods to the buyer.
However, the right of stoppage in transit is exercised only when the following conditions
are fulfilled:
(a) The seller must be unpaid.
(b) The seller must have parted with the possession of goods.
(c) The goods must be in the course of transit.
(d) The buyer must have become insolvent.
(e) The right is subject to provisions of the Act.
Q8. What are the rights of buyer against the seller, if the seller commits a breach of
contract under the Sale of Goods Act, 1930?
Sol. If the seller commits a breach of contract, the buyer gets the following rights against
the seller:-
1. Damages for non-delivery [Section 57]: Where the seller wrongfully neglects or
refuses to deliver the goods to the buyer, the buyer may sue the seller for damages
for non-delivery.
2. Suit for specific performance (Section 58): Where the seller commits of breach of
the contract of sale, the buyer can appeal to the court for specific performance.
The court can order for specific performance only when the goods are ascertained
or specific.
3. Suit for breach of warranty (Section 59): Where there is breach of warranty on
the part of the seller, or where the buyer elects to treat breach of condition as
breach of warranty, the buyer is not entitled to reject the goods only on the basis
of such breach of warranty. But he may –
(i) set up against the seller the breach of warranty in diminution or extinction of
the price; or
(ii) sue the seller for damages for breach of warranty.
4. Repudiation of contract before due date (Section 60): Where either party to a
contract of sale repudiates the contract before the date of delivery, the other may
either treat the contract as subsisting and wait till the date of delivery, or he may
treat the contract as rescinded and sue for damages for the breach.
5. Suit for interest:
(1) Nothing in this Act shall affect the right of the seller or the buyer to recover
interest or special damages, in any case where by law interest or special damages
may be recoverable, or to recover the money paid where the consideration for
the payment of it has failed.
(2) In the absence of a contract to the contrary, the court may award interest at
such rate as it thinks fit on the amount of the price to the buyer in a suit by
him for the refund of the price in a case of a breach of the contract on the
part of the seller from the date on which the payment was made.
Q9. Explain the provisions of law relating to unpaid seller’s ‘right of lien’ and distinguish it
from the “right of stoppage the goods in transit”.
Sol. Right of lien of an unpaid seller

The legal provisions regarding the right of lien of an unpaid seller has been stated from
Sections 47 to 49 of the Sale of Goods Act, 1930 which may be enumerated as follows:
(i) According to Section 47, the unpaid seller of the goods who is in possession of them
is entitled to retain possession of them until payment or tender of the price in the
following cases namely:
(a) where the goods have been sold without any stipulation as to credit.
(b) where the goods have been sold on credit, but the term of credit has expired; or
(c) where the buyer becomes insolvent.
The seller may exercise his right of lien not withstanding that he is in possession of the
goods as agent or bailee for the buyer.
(ii) Section 48 states that where an unpaid seller has made part delivery of the goods,
he may exercise his right of lien on the remainder, unless such part delivery has
been made under such circumstances as to show an agreement to waive the lien.
(iii) According to Section 49 the unpaid seller loses his lien on goods:
(a) when he delivers the goods to a carrier or other bailee for the purpose of
transmission to the buyer without reserving the right of disposal of the goods.
(b) when the buyer or his agent lawfully obtains possession of the goods;
(c) by waiver thereof.
The unpaid seller of the goods, having a lien thereon, does not lose his lien by reason
only that he has obtained a decree to the price of the goods.
8 Business Laws
Right of lien and Right to stoppage the goods in transit; distinction:
(i) The essence of a right of lien is to retain possession whereas the right of
stoppage in transit is right to regain possession.
(ii) Seller should be in possession of goods under lien while in stoppage in transit
(i) Seller should have parted with the possession (ii) possession should be with
a carrier and (iii) Buyer has not acquired the possession.
(iii) Right of lien can be exercised even when the buyer is not insolvent, but it is not
the case with right of stoppage in transit.
(iv) Right of stoppage in transit begins when the right of lien ends. Thus, the end
of the right of lien is the starting point of the right of stoppage the goods in
transit.
Q10. Suraj sold his car to Sohan for Rs. 75,000. After inspection and satisfaction, Sohan
paid Rs. 25,000 and took possession of the car and promised to pay the remaining
amount within a month. Later on Sohan refuses to give the remaining amount on the
ground that the car was not in a good condition. Advise Suraj as to what remedy is
available to him against Sohan.
Sol.
Provision

As per the section 55 of the Sale of Goods Act, 1930 an unpaid seller has a right to
institute a suit for price against the buyer personally. The said Section lays down that:-
(i) Where under a contract of sale the property in the goods has passed to buyer and
the buyer wrongfully neglects or refuses to pay for the goods, the seller may sue
him for the price of the goods [Section 55(1)].
(ii) Where under a contract of sale the price is payable on a certain day irrespective of
delivery and the buyer wrongfully neglects or refuses to pay such price, the seller
may sue him for the price. It makes no difference even if the property in the goods
has not passed and the goods have not been appropriated to the contract [Section
55(2)].
This problem is based on above provisions. Hence, Suraj will succeed against Sohan for

recovery of the remaining amount. Apart from this Suraj is also entitled to:-
(1) Interest on the remaining amount
(2) Interest during the pendency of the suit.
(3) Costs of the proceedings.

Q11. Rachit arranges an auction to sale an antic wall clock. Megha, being one of the bidders,
gives highest bid. For announcing the completion of sale, the auctioneer fall the hammer
on table but suddenly hammer brakes and damages the watch. Megha wants to avoid
the contract. Can she do so under the provisions of the Sale of Goods Act, 1930?
Sol.
Provision
By virtue of provisions of Section 64 of the Sale of Goods Act, 1930, in case of auction

sale, the sale is complete when the auctioneer announces its completion by the fall of
the hammer or in some other customary manner.
In the instant case, Megha gives the highest bid in the auction for the sale of antic wall
clock arranged by Rachit. While announcing the completion of sale by fall of hammer
on the table, hammer brakes and damages the clock.
On the basis of above provisions, it can be concluded that the sale by auction cannot
be completed until hammer comes in its normal position after falling on table. Hence,
in the given problem, sale is not completed. Megha will not be liable for loss and can
avoid the contract.
Q12. When can an unpaid seller of goods exercise his right of lien over the goods under the
Sale of Goods Act? Can he exercise his right of lien even if the property in goods has
passed to the buyer? When such a right is terminated? Can he exercise his right even
after he has obtained a decree for the price of goods from the court?
Sol.
A lien is a right to retain possession of goods until the payment of the price. It is available
to the unpaid seller of the goods who is in possession of them where-
(i) the goods have been sold without any stipulation as to credit;
(ii) the goods have been sold on credit, but the term of credit has expired;
(iii) the buyer becomes insolvent.
The unpaid seller can exercise ‘his right of lien even if the property in goods has passed
on to the buyer. He can exercise his right even if he is in possession of the goods as
agent or bailee for the buyer.
Termination of lien: An unpaid seller losses his right of lien thereon-
(i) When he delivers the goods to a carrier or other bailee for the purpose of transmission
to the buyer without reserving the right of disposal of the goods;
(ii) When the buyer or his agent lawfully obtains possession of the goods;
Yes, he can exercise his right of lien even after he has obtained a decree for the price
of goods from the court.
10 Business Laws
Q13. A agrees to sell certain goods to B on a certain date on 10 days credit. The period of
10 days expired and goods were still in the possession of A. B has also not paid the
price of the goods. B becomes insolvent. A refuses to deliver the goods to exercise his
right of lien on the goods. Can he do so under the Sale of Goods Act, 1930?
Sol.
Provision
Lien is the right of a person to retain possession of the goods belonging to another until

claim of the person in possession is satisfied. The unpaid seller has also right of lien over
the goods for the price of the goods sold.
Section 47(1) of the Sales of Goods Act, 1930 provides that the unpaid seller who is
in the possession of the goods is entitled to exercise right of lien in the following cases:-
1. Where the goods have been sold without any stipulation as to credit
2. Where the goods have been sold on credit but the term of credit has expired
3. Where the buyer has become insolvent even though the period of credit has not
yet expired.
In the given case, A has agreed to sell certain goods to B on a credit of 10 days. The
period of 10 days has expired. B has neither paid the price of goods nor taken the
possession of the goods. That means the goods are still physically in the possession of A,
the seller. In the meantime B, the buyer has become insolvent. In this case, A is entitled
to exercise the right of lien on the goods because the buyer has become insolvent and
the term of credit has expired without any payment of price by the buyer.
Q14. A, who is an agent of a buyer, had obtained the goods from the Railway Authorities
and loaded the goods on his truck. In the meantime, the Railway Authorities received
a notice from B, the seller for stopping the goods in transit as the buyer has become
insolvent. Referring to the provisions of Sale of Goods Act, 1930, decide whether the
Railway Authorities can stop the goods in transit as instructed by the seller?
Sol.
Provision

The right of stoppage of goods in transit means the right of stopping the goods after
the seller has parted with the goods. Thereafter the seller regains the possession of the
goods.
This right can be exercised by an unpaid seller when he has lost his right of lien over
the goods because the goods are delivered to a carrier for the purpose of taking the
goods to the buyer. This right is available to the unpaid seller only when the buyer has
become insolvent. The conditions necessary for exercising this right are:-

1 The buyer has not paid the total price to the seller
2 The seller has delivered the goods to a carrier thereby losing his right of lien
3 The buyer has become insolvent
4 The goods have not reached the buyer, they are in the course of transit. (Section
50, 51 and 52)
In the given case A, who is an agent of the buyer, had obtained the goods from the
railway authorities and loaded the goods on his truck. After this the railway authorities
received a notice from the seller B to stop the goods as the buyer had become insolvent.
According to the Sales of Goods Act, 1930, the railway authorities cannot stop the
goods because the goods are not in transit. A who has loaded the goods on his truck is
the agent of the buyer. That means railway authorities have given the possession of the
goods to the buyer. The transit comes to an end when the buyer or his agent takes the
possession of the goods.
Q15. J sold a machine to K. K gave a cheque for the payment. The cheque was dishonoured.
But J handed over a delivery order to K. K sold the goods to R on the basis of the
delivery order. J wanted to exercise his right of lien on the goods. Can he do so under
the provisions of the Sale of Goods Act, 1930?
Sol.
Provision
The right of lien and stoppage in transit are meant to protect the seller. These will not

be affected even when the buyer has made a transaction of his own goods which were
with the seller under lien. But under two exceptional cases these rights of the seller are
affected:-
1 When the buyer has made the transaction with the consent of the seller
2 When the buyer has made the transaction on the basis of documents of title such
as bill of lading, railway receipt or a delivery order etc.

In the given case, J has sold the machine to K and K gave a cheque for the payment.
But the cheque was dishonoured that means J, the seller is an unpaid seller. So, he is
entitled to exercise the right of lien, but according to section 53(1) his right of lien is
defeated because he has given the document of title to the buyer and the buyer has
made a transaction of sale on the basis of this document. So, R who has purchased the
machine from K can demand the delivery of the machine.

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CHAPTER

The Sale of Goods

Unit-1: Formation of the Contract of Sale

Other than Includes

Actionable Growing Crops, grass, things attached

Delivery means Quality of goods includes

Voluntary transfer of From one person to

1. Minimum 2 parties (Buyer and seller)

2. Subject Matter of Contract-Goods (Movable property)

3. Price–Wholly in Money or Par tly in Money and Par tly in kind

4. T ransfer of property (owners hip) of Goods-Immediately or future

5. May be Absolute or Conditional

6. All other essentials of a valid contract (Covered under ICA, 1872)

﻿Unit-1: Formation of the Contract of Sale 3

Valuation done V aluation not done

Price as per valuation Seller’s Fault Buyer’ s Fault

Suit against party at fault & Agreement can be avoided

Various Mode of Contract of Sale : - Specific Goods perished

1. Immediate Delivery & Immediate Payment

3. Immediate payment & delivery in future

5. Delivery/payment / both in instalments

OWNERSHIP JISKI RISK USKA

PRO PERTY JISKI RISK USKA

Risk passes with the property

Exception to risk follows ownership :-

﻿Unit-1: Formation of the Contract of Sale 5

Q3. Differentiate between Ascertained and Unascertained Goods with example.

﻿Unit-1: Formation of the Contract of Sale 9

Unit-2: Condition & Warranties

Types of Stipulations Types of Conditions

Essential to the main Collateral to the main

4 Cases where Condition can be treated as Warranty

Buyer altogether waives the performance of the condition

Buyer elects to treat the breach of the conditions, as one of a warranty

Where the fulfilment of any condition or warranty is excused by law by reason of

General Rule Exception Express Implied

(a) IF the buyer tells the purpose to

Condition as to quality or fitness

Sale by sample as well as by description

W arranty as to undisturbed possession

warranty as to quality or fitness by usage of trade

Warranty as to non existence of encumbrances

disclosure of dangerous nature of goods

﻿Unit-2: Condition & Warranties 5

1. Fitness as to quality or use

2. Goods purchased under patent or brand name

3. Goods sold by description

4. Goods of Merchantable Quality

6. Goods by sample as well as description

8. Seller actively conceals a defect or is guilty of fraud

﻿Unit-2: Condition & Warranties 7

Q9. Explain the “condition as to Merchantability” and “condition as to wholesomeness”

﻿Unit-2: Condition & Warranties 11

﻿Unit-2: Condition & Warranties 13

b. Goods purchased under patent or brand name

c. Goods sold by description

d. Goods of Merchantable Quality

f. Goods by sample as well as description

h. Seller actively conceals a defect or is guilty of fraud

Unit-1: Formation of the Contract of Sale 3

Unit-1: Formation of the Contract of Sale 5

Unit-1: Formation of the Contract of Sale 9

Unit-2: Condition & Warranties 5

Unit-2: Condition & Warranties 7

Unit-2: Condition & Warranties 11

Unit-2: Condition & Warranties 13

Unit-2: Condition & Warranties 17

Unit-3: Transfer of Ownership and Delivery of Goods 3

Unit-3: Transfer of Ownership and Delivery of Goods 5

Unit-3: Transfer of Ownership and Delivery of Goods 7

Unit-3: Transfer of Ownership and Delivery of Goods 11

Unit-3: Transfer of Ownership and Delivery of Goods 13

Unit-3: Transfer of Ownership and Delivery of Goods 19

Unit-4: Unpaid Seller 5

Unit-4: Unpaid Seller 9

Unit-4: Unpaid Seller 11