The Sale of Goods Act, 1930 governs contracts relating to the sale of goods in India. It came into force on July 1, 1930 and applies to all types of commercial transactions involving goods.
Table of Contents
Sale and Agreement to Sell
Section 4 defines contract of sale and provides that, “A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price.”
The essentials to constitute such a contract are:
- Two parties- Seller and buyer
- The subject matter of contract is goods
- The seller should transfer or agree to transfer the property in the goods to buyer.
- The transfer of property in the goods from the seller to buyer is for a consideration known as price.
Difference between Sale and Agreement to Sell:
| Type | Definition | Transfer of Ownership | Legal Effect |
|---|---|---|---|
| Sale | Ownership is transferred immediately | Immediate | Buyer gets ownership and can sue for goods |
| Agreement to Sell | Transfer of ownership is postponed | Future/Conditional | Becomes a sale when conditions are fulfilled |
Way in Which Contract of Sale is Made
A contract of sale is made by an offer to buy or sell goods and the acceptance of such offer. It can involve:
- Immediate payment or delivery
- Deferred payment or delivery
- Partial delivery or part-payment
Sale by Description
Section 15 of the Sale of Goods act, 1930 defines sale by description and provides that, when the goods are sold by description then there is a implied condition that goods supplied shall be in accordance with the description.
Manbre Saccharine Co. vs Corn Products co. [(1919) 1 K.B. 198] – In this case it was held that size of the goods also constitute part of description.
Sale by Sample
A contract of sale is by sample when there is a term sample present in the contract either expressly or impliedly
The implied conditions under Sale by sample are:
- That, the bulk shall correspond with the sample in quality
- That , the buyer shall have a reasonable opportunity to compare bulk with the the sample
- The goods should be free from defect
Condition and Warranty
Section 12 distinguishes between condition and warranty:
| Term | Meaning | Breach Consequence |
|---|---|---|
| Condition | Essential to the main purpose | Right to repudiate the contract |
| Warranty | Collateral to the main purpose | Right to claim damages, not reject goods |
Section 13 – When a Condition Becomes a Warranty:
Section 13 defines the time when condition is to be treated as warranty:-
- Where a contract of sale is subject to any condition fulfilled by buyer but buyer waive the condition and agreed to treat it as a warranty.
- Where the goods are not severable but buyer agreed to accept goods or any part of goods thereof.
Implied Conditions and Warranties
Implied Conditions (Section 14a):
- The seller has the right to sell the goods.
- In case of agreement to sell, he will have the right at the time of transfer.
Implied Warranties:
- Buyer shall have and enjoy quiet possession of goods (Section 14b).
- Goods sold should be free from third-party encumbrances (Section 14c).
Conclusion
The Sale of Goods Act, 1930 ensures smooth and fair commercial practices by clearly defining the roles and responsibilities of both buyers and sellers. Whether it’s a local deal or a large-scale transaction, this law lays down the foundation of trust and enforceability.
