Introduction
The Sale of Goods Act, 1930 is a landmark legislation in India that governs contracts relating to the sale and purchase of goods. Enacted to codify the law relating to the sale of goods, it provides a clear legal framework for transactions involving goods, rights and duties of buyers and sellers, and remedies in case of breach of contract.
The Act applies to movable goods and ensures that commercial transactions are conducted fairly and efficiently. It is central to trade, commerce, and business law in India, protecting the interests of parties involved in buying and selling goods.
Definition of Sale and Goods
Sale
Section 4 of the Act defines a sale as:
“A contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price.”
A contract of sale may be absolute or conditional. It distinguishes between a sale and an agreement to sell — the latter is enforceable only upon fulfillment of conditions.
Goods
Goods are movable property, other than actionable claims and money, classified as:
- Existing Goods: Owned and possessed by the seller at the time of contract.
- Future Goods: To be manufactured or acquired later.
- Contingent Goods: Dependent on the occurrence of a future uncertain event.
Essentials of a Contract of Sale
- Two Parties: Buyer and Seller.
- Goods: Must be movable property.
- Price: Must be certain or ascertainable.
- Consent: Free consent of both parties.
- Consideration: Price paid or promised in return for goods.
Implied Conditions and Warranties
Conditions
- Condition as to Title (Section 14): Seller must have the right to sell goods.
- Condition as to Merchantable Quality: Goods must be of reasonable quality fit for purpose.
- Condition as to Fitness for Purpose: If buyer specifies purpose, goods must be suitable.
Warranties
- Warranty of Free from Encumbrances: Goods must not be subject to claims.
- Warranty of Quiet Possession: Buyer should enjoy undisturbed possession.
Transfer of Property and Risk
Transfer of Property
Property in goods passes from seller to buyer in accordance with the intention of the parties. This is essential to determine ownership rights and remedies.
Transfer of Risk
Risk passes with property unless otherwise agreed. The buyer bears risk once ownership passes, even if delivery is pending.
Performance of Contract
- Delivery of Goods by Seller: Must be made according to contract terms.
- Payment by Buyer: Must pay price at the proper time and place.
- Acceptance by Buyer: Buyer must accept goods unless they fail to meet contract conditions.
Remedies for Breach
Remedies for Buyer
- Damages: Compensation for loss due to seller’s breach.
- Specific Performance: Court may compel delivery.
- Rejection of Goods: Buyer may refuse defective goods.
Remedies for Seller
- Action for Price: Recover price when property has passed.
- Damages for Non-Acceptance: Compensation for buyer’s refusal to accept.
- Resale of Goods: Seller can resell in case of buyer’s default.
Important Case Laws
- Nathulal v. State of Bihar (1968): Clarified delivery and acceptance obligations.
- Bharat Steel Tubes v. Mohanlal (1973): Affirmed implied conditions on quality and title.
- Chowdhury Bros v. Union of India (1971): Transfer of property vs. risk distinguished.
Conclusion
The Sale of Goods Act, 1930 is the backbone of commercial transactions in India, providing clear rules for sale, delivery, risk, and remedies. It protects both buyers and sellers, ensures fair trade, and reduces disputes in the sale of goods. Understanding its provisions is essential for businesses, legal professionals, and commerce students.
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Also Read: Contract of Agency under the Indian Contract Act, 1872