FUNDAMENTAL DEFINITIONS
1)
Buyer:
As per the sec 2(1)
of the Act, a buyer is someone who buys or has agreed to buy goods. Since a
sale constitutes a contract between two parties, a buyer is one of the parties
to the contract.
2) Seller:
The Act
defines seller in sec 2(13). A seller is someone who
sells or has agreed to sell goods. For a sales contract to come into existence,
both the buyers and seller must be defined by the Act. These two terms
represent the two parties of a sales contract.
3) Delivery:
Section 2(2) The delivery of goods
signifies the voluntary transfer of possession from one person to another.
4) Future
Goods:
Section 2(5) future goods are goods
to be manufactured or produced or acquired by the seller after the making of
the contract of sale.
5) Goods:
Section 2(7) “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 will be
considered goods”
6) Price:
[Section 2(10)]
“In the Act, the price is defined as the money consideration for a sale of
goods”. The price is mandatory in terms of money. If goods are exchanged for
goods, it is not deemed to be sale, and the transaction is not covered by the
sale of goods act.
CONTRACT OF SALE
MEANING AND DEFINITION
·
The section 4(1) of
the Sale of Goods Act, – ‘A contract of sale of goods is a contract whereby the
seller either transfers or agrees to transfer the property in goods to the
buyer for a decided price.’
·
According to black stone, “when one
person transfers the ownership of goods to another for the consideration of a
price, a sale is said to have been made”
FEATURES
OF CONTRACT OF SALE
1.
Two parties: The first essential is that there must
be two distinct parties to a contract of sale, viz., a buyer and a seller, as a
person cannot buy his own goods. However, there may be a
2.
Transfer of property: ‘Property’ here means ‘ownership’.
Transfer of property in the goods is another essential of a contract of sale of
goods. A mere transfer of possession of the goods cannot be termed as sale
3.
Goods: The subject-matter of the contract of sale must be
‘goods’. According to Section 2(7), “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.”
4. Price: The
consideration for a contract of sale must be money consideration called the
‘price.’ If goods are sold or exchanged for other goods, the transaction is
barter, governed by the Transfer of Property Act and not a sale of goods under
this Act.
5.
Includes both a ‘sale’ and ‘an agreement to sell:
The term ‘contract of sale’ is a generic term and includes both a ‘sale’ and an
‘agreement to sell’ [as is clear from the definition of the term as per Section
4(1) given earlier)].
SALE AND AGREEMENT TO SELL SALE:
The Section 4(3)
of the Act says that “where under a contract of sale the property in the goods
is transferred from the seller to the buyer, the contract is then known as a
sale.”
Example:
a) Ashok pays Rs900 to Rajesh and buys a watch, or
he promises to pay Rajesh Rs 500 and buys a watch.
b) Ashok pays Rs500 to Rajesh and buys a watch. He
does not able to take the watch then and says he will take it later.
AGREEMENT TO SELL:
• In an agreement to sell, the ownership of the
property in goods is not transferred immediately.
• The objective of the agreement is to transfer the
goods at a future date, once some contingent clauses in the agreement or
certain conditions are satisfied.
• 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.”
TYPES OF GOODS IN SALE OF GOODS ACT
1. Existing Goods:
In sec 6 of the Act, the existing goods are those goods which are in
the legal possession or are owned by the seller at the time of the formulation
of the contract of sale.
The existing goods are further of the following
types:
a) Ascertained goods:
Existing goods that
have been specified by both parties to a contract of sale are called
ascertained goods. Example: A has a stock of 100 bags of sugar and makes a
contract to sell 10 bags to B. with the consent of B, he separates 10 bags of
sugar. The goods, in this case, are deemed to be ascertained existing goods.
b) Unascertained goods:
These are the goods
that have not been specifically identified but have rather been left to be
selected from a larger group. Example: from your 500 apples, you decide to sell
200 apples but you don’t specify which ones you want to sell. A seller will
have the liberty to choose any 200 apples from the lot. These are thus the
unascertained goods.
2) Future Goods:
In sec 2(6) of the Act, future goods have been
defined as the goods that will either be manufactured or produced or acquired by
the seller at the time the contract of sale is made. The contract for the sale
of future goods will never have the actual sale in it, it will always be an
agreement to sell. FOR EXAMPLE, you have an apple orchard with apples in it.
You agree to sell 1000 apples to a buyer after the apples ripe. This is a sale
that has to occur in the future but the goods have been identified already and
the agreement made. Such goods are known as future goods.
3. Contingent Goods:
Contingent goods are actually a subtype of future
goods in the sense that in contingent goods the actual sale is to be done in
the future. These goods are part of a sale contract that has some contingency
clause in it. For example, if you sell your apples from your orchard when the
trees are yet to produce apples, the apples are a contingent good. This sale is
dependent on the condition that the trees are able to produce apples, which may
not happen.
ASCERTAINMENT OF PRICE IN SALE OF GOODS ACT
1) By contract:
The parties to a contract of sale can ascertain any price for the goods to be
sold, which will be paid by the buyer to the seller. The court does not
investigate a whether or not a piece is reasonable.
2) By the course of mutual dealings: The price can be settled by the course of mutual
dealings of the parties. If no specific price is mentioned in the contract, and
it also does not specify any method to fix the price, it may be ascertained by
the course of dealing between the parties.
3) By fixing it in the manner agreed: the price can be fixed in a manner agreed in the
contract. Example; it can be agreed to pay as much for the goods as others pay.
4) By fixing the reasonable price: when nothing is mentioned in the contract about
price, the law implied that if the contract is executed, the buyer pays a
reasonable price for the goods. What is the reasonable price is an important
and depends upon the circumstances of the case. The prevailing market price,
for instance, could be reasonable price.
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