The Sale of Goods Act-1930

 

The Sale of Goods Act-1930

The Essential Elements of a contract of sale:

The essential elements of a contract of sale of goods are enumerated below:

1.(1) Movable goods- The Sale of Goods Act deals only with movable goods, excepting actionable claims and money.

2.(2) Movable goods for money- there must be a contract for the exchange of movable goods for money.

(3) There must be a buyer and a seller in the contract of goods. These buyer and seller must be a different person.

(4) The terms of contract- the parties may agreed upon any term concerning the time , place, and mode of delivery. The terms may be two types:

     i) Essential terms or Conditions and

    ii) Non-essential terms or Warranties.

Conditions and Warranties

Conditions

A condition is a major term of the contract which goes to the root of the contract. If a condition is breached the innocent party is entitled to repudiate (end) the contract and claim damages.

Case study: Poussard v Spiers (1876) 1 QBD 410
Madame Poussard entered a contract to perform as an opera singer for three months. She became ill five days before the opening night and was not able to perform the first four nights. Spiers then replaced her with another opera singer.

Held:
Madame Poussard was in breach of condition and Spiers were entitled to end the contract. She missed the opening night which was the most important performance as all the critics and publicity would be based on this night. 

Warranties 

Warranties are minor terms of a contract which are not central to the existence of the contract. If a warranty is breached the innocent party may claim damages but can not end the contract.

Case study:

Bettini v Gye (1876) QBD 183

Bettini agreed by contract to perform as an opera singer for a three month period. He became ill and missed 6 days of rehearsals. The employer sacked him and replaced him with another opera singer.

Held:
Bettini was in breach of warranty and therefore the employer was not entitled to end the contract. Missing the rehearsals did not go to the root of the contract.

 

“Price” means the money consideration for the sale of goods. Sec 2(10)

Earnest money is the initial cash deposit that makes a sales contract legally enforceable. In the case of a purchase of something like a vehicle, the earnest money can also be the down payment.

There is usually as understanding that if the contract is broken by the buyer, the seller is to retain the earnest money.

Hire purchase 

A hire-purchase agreemet is one under which a person takes delivery of goods promising to pay the price by a certain number of installment and, until full payment is made, to pay hire charges for using the goods.

From this definition it can be said that a hire-purchase agreement is a Bailment plus as agreement to sell.

The Sale of Goods Act-1930

 

The Sale of Goods Act-1930

 

Caveat Emptor

 

Caveat Emptor is a Latin expression which means, “buyers beware”.

The doctrine of caveat emptor means that, ordinarily, a buyer must buy goods after satisfying himself of their quality and fitness.

If he makes a bad choice he can not blame the seller or recover damages from him.

 

The rule probably originated at a time when goods are mostly sold in market overt, and the buyer therefore had every opportunity to satisfy himself as to the quality of the goods or their fitness for a particular purpose.

 

Exceptions:

(a)Where the buyer relies upon the skill and judgment of the seller.

(b)Where by custom an implied condition of fitess is annexed to a contract of sale.

(c)Where there is a sale of goods by description, there is an implied condition that the goods are fit for sale.

(d)Where the seller is guilty of fraud.

 

Exceptions:

A contract of sale of goods must satisfy all the essential elements of a contract and therefore if the consent of the buyer was obtained by fraud the seller is not protected by the doctrine of caveat emptor.

 

Liabilities of a seller 

Sometimes seller may also be liable to pay damages under the Law of Torts if he causes injury by a wrongful act.

Example, N sold to C a tin of disinfectant powder knowing that it would be dangerous to open te tin without special care. C without knowledge of the danger,  opened the tin, whereupon the powder flew  into her eyes and injured them. C sued for damages.

 

Held, N should have warned C of the possible danger and having failed to do so, was liable to pay damages.

      - Clarke v. Army Navy Co-operative Society Ltd, 1903

 

The case of patented articles:

 Ïn the case of a contract for the sale of a specified article under its patent or other trade name, there is no implied condition as to its fitness for any particular purpose”-Sec16(1)

If a buyer writes to the manufacturer, “send me one of your patented cotton cleaning machines”, he can not claim the damages if he finds the machine useless

 

But if the buyer asks the manufacture to supply a machine which will clean cotton, he relies on the judgement of the manufacturer and if the machine supplied is found to be unsuitable, he can claim damages.

 

Example, B told a motor car dealer that he wanted a comfortable car for touring purposes. The dealer recommended a car which was being sold under the trade name of X.

       The car was found to be unsuitable and B sued the dealer for damages. It was held that B had relied on the skill and judgment of the dealer and was entitled to get 

 

Transfer of Ownership 

 

Sale of goods involve transfer of ownership of property from the seller to the buyer. The following factors is to be considered:

1. Risk passes with property: The general rule is that risk passes with the property. If the goods are lost or damaged by an accident or otherwise, then, subject to certain exceptions, the loss falls on the person who is the owner at the time when the goods are lost or damaged.

 

2. Who can take action?: When there is danger of goods being damaged by the action of third parties it is the owner who take action.

Passing of risk:

Section 26 lays down the rules regarding the passing of risk.

The general rule is that goods remain at the seller’s risk until the ownership is transferred to the buyer.

 

Passing of risk:

After the ownership has passed to the buyer, the goods are at the buyer’s risk whether delivery has been made or not.

Therefore it is saying that, “Risk follows ownership”. There are 02 exceptions:

1. Where delivery has been delayed through the fault of either the buyer or the seller, the goods are at the risk of the party in fault.

 

Therefore it is saying that, “Risk follows ownership”. There are 02 exceptions:

2. The parties may agreed that the risk will pass at a time different from the time when ownership passed. For example, the seller may, in a particular case, agreed to be responsible for the goods even after the ownership has passed to the buyer.

 

Transfer of title by Non-owner:

The general rule is that only the owner of goods can sell the goods. No one can convey to a transferee a better title than he himself.

If a person transfers articles not belonging to him, the transferee gots no title. This principles is expressed by the Latin phase, “Nemo quid qui non habet”.

 

Exception of the phase “Nemo quid qui non habet”:

1.Estoppel: Under certain circumstances the true owner may be prevented, by his conduct, from denying the seller’s authority to sell.

Suppose that X is the owner of certain goods. X acts in such a manner that Y is induced to believe that the goods belongs to Z. On that belief Y buys the goods from Z.

 

 Under this circumstances, the court will not allow X to provide his ownership. Thus Y gets a good title to the goods even though he has purchased them from Z who is not their owner.

 

The Sale of Goods Act-1930

 

The Sale of Goods Act-1930

 

Implied Conditions 

 

•Condition as to title:

   There is an implied condition on the part of the seller that, in the case of a sale he has the right to sell the goods, and in the case of agreement to sell, he will have the right to sell the goods at the time when he property is to pass. –Sec. 14 (a)

 

Example, R bought  a motor car from D and use it for four months. D had no title to the car. R was forced to return the car to the true owner.

Held, there is a breach of the implied condition as to title and R is entitled to  get back the purchase money paid not withstanding the fact that he has used the car for 4 months.

      -Rowland v. Divell, 1923

 

2.Sale by Description:

Where there is a contract of for the sale of goods by description, there is a implied condition that the goods shall correspond with the description. Sec.-15

Goods are to be sold by description when the contract contains a description of the goods to be supplied.

 

 

M sold to L, 3000 cases of canned fruits, each case to contain 30 tins. M delivered 3000 cases, but about half the cases contain 24 tins each. Although the market value of the 24 tins cases were the same as the 30 tin cases, it was held that the buyer was entitled to reject the goods.

       - Re Moore & Co. v Landauer & Co. 1921 

 

3.Sale by Sample:

When goods are to be supplied according to a sample agreed upon, the following conditions are implied-

(a)The bulk shall correspond with the sample in quality,

(b)The buyer shall have a reasonable opportunity of comparing the goods with the sample,

(c)The goods shall be free from any defect rendering them unmerchantable, which would not be apparent on reasonable examination of the sample.

 

4.Sale by Sample as well as description:

 When goods are sold by sample as well as by description, the goods shall correspond both with the sample and with the description.

      -Sec.15

5. Implied condition as to quality or fitness:

There is an implied condition as to quality or fitness for the purpose of the buyer under the following circumstances:

 

(1) Where the buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are required, so as to show that the buyer relies on the seller’s skill or judgment, and the goods are of a description which it is in the course of the seller’s business to supply (whether he is the manufacturer or producer or not), there is an implied condition that the goods shall be reasonably fit for such purpose. 

 

(2) 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 the goods shall be of merchantable quality.

Merchantable quality means fit for sell or use.

 

Example for 01-

M, a milk dealer supplies F with milk which was consumed by F and his family. The milk contained germs of typhoid. F’s wife was infected and died.

Held, there was a breach of an implied condition of fitness and M was liable to pay damages.

      - Frost v. Aylesbury Dairy co. 1905

 

Example for 02-

M asked for a bottle of Stone’s ginger wine in a restaurant. When he was drawwing the cork the bottle broke and M was injured.

Held, the sale was one by description and since the bottle was unmerchantable, M was entitled to recover damages.

       - Morelli v. Fitch Gibbons, 1928