Unit 2: Sale of Goods Act

A contract of sale is one where the seller transfers or agrees to transfer property in goods to the buyer for a price (Section 4).

• Essentials: two parties, goods (movable property — existing, future or contingent; specific, ascertained or unascertained), price in money, transfer of property, all essentials of a valid contract.
• Formalities (Section 5): made by offer and acceptance; may be in writing, by word of mouth, partly both, or implied from conduct; may provide for immediate or instalment delivery and payment.
• Price (Section 9): fixed by the contract, by agreed manner, or by course of dealing; otherwise a reasonable price.

• Condition (Section 12(2)): a stipulation essential to the main purpose — breach gives the right to repudiate the contract.
• Warranty (Section 12(3)): a stipulation collateral to the main purpose — breach gives only a claim for damages.
• A breach of condition may be treated as a breach of warranty (Section 13) — e.g., when the buyer accepts the goods.

• Implied warranties: quiet possession, freedom from encumbrances, disclosure of dangerous nature of goods.
• Caveat emptor ("let the buyer beware" — Section 16): the buyer must examine goods; exceptions: fitness for purpose when the buyer relies on the seller's skill, merchantability, sale by description, trade usage, fraud, sale by sample.

• Specific goods in a deliverable state: property passes when the contract is made (Section 20).
• Specific goods to be put in deliverable state, weighed or measured: when that is done and the buyer has notice.
• Goods on approval / sale or return: when the buyer signifies approval or retains beyond the time fixed.
• Unascertained goods: when goods are ascertained and unconditionally appropriated to the contract (Section 23).
• Risk prima facie passes with property (Section 26).
• Transfer of title by non-owner — nemo dat quod non habet (no one can give what they do not have); exceptions: mercantile agent, joint owner, voidable contract, seller or buyer in possession.

Performance means the seller delivers the goods and the buyer accepts and pays for them according to the contract (Section 31).

• Acceptance (Section 42): buyer intimates acceptance, does an act inconsistent with the seller's ownership, or retains goods beyond a reasonable time.
• Buyer's duties: accept delivery, pay the price, take delivery within a reasonable time after notice.
• Remedies for breach: seller — suit for price, damages for non-acceptance; buyer — damages for non-delivery, specific performance, suit for breach of warranty, interest.