Sale of GoodsFrequently Asked Questions on Sale of Goods
(a) The Act embodies the principle that the question whether a contract for the sale of goods does or does not pass the property in the goods from the buyer to the seller, must in all cases be determined by the intention of the parties to the contract. The provisions of the old law contained in Chapter VII of the Contract Act were vague and conflicting on this point. The Act lays down rules by which intention of the parties to the contract may be ascertained in cases in which the parties have either formed no intention or failed to express it.
(b) The distinction between the sale and an agreement to sell, which was not clear before, has been clearly brought out.
(c) The law relating to warranties and conditions was in a very confused state and the present Act has removed this confusion.
(d) The law relating to sales by ostensible owners has been simplified.
(e) The rule relating to delivery to carriers, stoppage in transit and auction sales have been elaborated.
"A contract of sale of goods is a contract whereby seller transfers or agree to transfer the property in goods to buyer for a price."Essentials of contract of sale. - 1. The first essential of a contract of sale is that either there is actual transfer of property i.e., ownership or there is an agreement, to transfer property on some future date on the fulfilment of some condition, e.g., payment of price on delivery of goods, etc. Where property, i.e., ownership passes immediately from the seller to the buyer, it is a sale but where property is to pass on some future date, it is an agreement to sell. But both sale and an "agreement to sale" are included in a contract of sale. This essential feature distinguishes sale from bailment, in which there is neither actual transfer nor agreement to transfer property in goods but where goods are delivered to transferee property in goods and for some specific purpose on the condition that they shall be returned after the purpose is over. 2. The second essential of a contract of sale is that the transfer of property is from the seller to the buyer. In other words, in every contract of sale, there must be at least two parties the seller and the buyer, and no one can be a seller to himself. 3. The third essential is that there is transfer or agreement to transfer property i.e., ownership and not merely delivery of possession. 4. The fourth essential is that goods are to be transferred or agreed to be transferred for a price. In other words in a contract of sale the consideration is always money. Where there is no consideration, the transaction amounts to gift and not a contract of sale. Similarly where the consideration is delivery of some other goods, the transaction is not a contract of sale but is a contract of exchange or barter. A contract of sale is made by an offer to buy or sell goods for a price and the acceptance of such an offer. The contract may provide for the immediate delivery of the goods or immediate payment of the price or both or for the delivery or payment by instalments, or that the delivery or payment or both shall be postponed. A contract of sale may be made in writing or by word of mouth, or partly in writing, and partly by word of mouth or may be implied from the conduct of the parties. But this is a subject to the provisions of any law for the time being in force (Section 5) (b) Goods - Section 2(2) of Sales of Goods Act says - "Goods means every kind of moveable property other than actionable claims and money and includes stock and stores, 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." So Goods means and includes -
(i) Every moveable property other than actionable claims or money.
(ii) Goods includes growing crops, grass, things attached to land or forming part of land provided they are agreed to be severed before sale or under the contract of sale.Goods are primarily of two kinds :- (i) Specific Goods - Section 2(14) of Sales of Goods Act says specific goods are those goods which have been identified or agreed upon at the time of contract of sale. Specific goods are distinct from generic or unascertained goods. In order that goods may be specific, they must be identified and not merely identifiable. Under a contract for specific goods, the seller does not fulfil his contract by delivering any goods other than those agreed upon, e.g., if A agrees to sell his white cow to B which is pointed out at the time of the contract, the contract is for `specific goods' and A can fulfil it only by delivering that very white cow. When the contract is for "unascertained goods", the seller can fulfil his contract by delivering goods which answer to the description in the contract, e.g., if A agrees to sell 20 maunds of wheat from his wheat stock, the contract is for unascertained goods and it will become one for "specific goods" only when A separates 20 maunds of wheat from his stock and B assents to it. (ii) Future Goods - "Future goods" means goods to be manufactured or produced or acquired by the seller after the making of the contract of sale. They are not the same thing as unascertained goods. Where an oil merchant agrees to sell oil to be processed from seeds in his possession, the contract is for sale of future goods. A contract of sale of goods to be delivered at a future date is valid even though the seller has no goods nor any other means of getting them except to go into the market and buy them. Section 6 of the Sale of Goods Act lay down that -
(1) The goods which form the subject of a contract of sale may be either existing goods, owned or possessed by the seller, or future goods.
(2) There may be a contract for sale of goods, the acquisition of which by the seller depends upon a contingency which may or may not happen.
(3) Where by a contract of sale the seller purports to effect a present sale of future goods the contract operates as an agreement to sell the goods.It is, therefore, clear that for a contract of sale it is not necessary that the goods should be existing goods, owned or possessed by the seller at the time of the contract but they can be future goods also which are to be manufactured, or produced or acquired by the seller, in future. But in case of future goods there cannot be any present sale, i.e., immediate transfer of property from seller to buyer but the contract can operate only as an agreement to sell. (c) Price :- Section 2(10) of Sales of Goods Acts says :-
"Price means money consideration for sale of goods." In a contract of sales of goods consideration must be money which is called price of goods. As in case of any other contract, in contract of sale also, "Price" is essential. If the goods are transferred without price, then it will not be a sale. So for contract of sale, price is one of the important essentials. Price may be paid or promised to be paid in future but it should always be in form of money.In a contract of sale of goods price of goods can be ascertained in the following ways :-
(1) The contract may expressly state the price of goods and in such a case there is no difficulty.
(2) The contract may provide a manner, in which the price is to be fixed.
(3) The price may be determined by the course of dealing between the parties.
(4) Where neither the contract expressly states the price of goods nor the contract provides the manner in which the price is to be fixed, the buyer is to pay to the seller reasonable price.
(5) The contract may provide that the price is to be fixed by the valuation of a third party. If such third party fails or refuses to make the valuation, the sale is avoided. If, however, the goods or any part thereof have been delivered to the buyer and he has appropriated them, but the valuer fails to value the goods, the buyer is to pay reasonable price of the goods. [Section 10].
(i) the possession of goods is delivered by the owner to a person on condition that such person pays the agreed amount (i.e. rent) in periodical instalments,
(ii) the property in the goods is to pass to such person on the payment of the last of such instalments,
(iii) such person (i.e. hirer) has a right to terminate agreement at any time before the property so passes.
CONTRACT OF SALE
1. In it, the seller transfer or agrees to transfer the property in the goods to buyer for a price, whether paid at once or later in instalments
In it, there is no such agreement. It is a contract of hire and it may eventually ripen into a sale.
2. Buyer become owner of goods and has all rights of owner.
A hirer is only a bailee of goods (i.e. in possession of goods for some time).
3. Ownership transfers immediately from seller to buyer.
Ownership transfers only when certain number of instalments paid, and at the option of hirer.
4. Buyer cannot terminate a contract and is bound to pay price. An agreement to buy imports a legal obligation to buy. If there was no such obligation, there cannot properly be said to have been an agreement.
Hirer cannot be compelled to buy. Hirer may terminate bailment by returning the article to its owner, without any liability to pay remaining instalments. If hirer defaults in payment, owner has a right to immediately resume possession of goods, without any liability to refund amount received till then.
5. If the seller or buyer sold goods to a third party, then such a person gets a good title, if he was acting in good faith and unaware of previous sale or any lien or right of original seller.
If a hirer assigns his right to a third party (or make a sale/pledge of goods to him), then such person won't get a good title, as a hirer is not the buyer.
"The primary difference between a contract for work or service and the contract for sales of goods is that in the former there is in the person performing work or rendering service, no property in the thing produced as a whole notwithstanding that a part or even the whole of the materials used by him may have been his property. In case of contract of sale, the thing produced as a whole has individual existence as the sole property of the party who produced it, at some time before delivery and the property therein passes only under the contract relating thereto in goods used in the performance of the contract is not sufficient to constitute sale, there must be an agreement express or implied relating to sale of goods and completion of the agreement by passing of title in the very goods contracted to be sold."So even in a contract purely of works or service, it is possible that articles may have to be used by person executing the work and property in such article or material may pass to other party. That would not necessarily convert the contract into one of sale of those materials. In every case, court will have to find out what was the primary object of the transaction and the intention of parties while entering into it. In the case in hand bulk of materials used in manufacturing the wagons belongs to manufacturer, who has agreed to sell the product for a price. This fact is a strong pointer to the conclusion that the contract is in substance, one for sales of goods and not for work and labour. See Union of India v. C.I.M. Mfg. Co., AIR 1975 SC 1537.
"Where there is a contract for sale of specified goods the contract is void if the goods without the knowledge of the seller have, at the time when the contract was made, perished or become so damaged as no longer to answer to their description in the contract."Section 8 of Sales of Goods Act lays down that "Where there is an agreement to sell specific goods and subsequently the goods without any fault on the part of the seller or buyer perishes or becomes so damaged as no longer to answer to their description in the agreement before the risk passes to the buyer the agreement is thereby avoided." So this Section 8 of Act is applicable when the goods to be sold are `specific' and there is merely an agreement to sell. Question involved in the case in hand is whether agreement to sell the grain that may be produced on his farm, is specific or unascertained. In Howell v. Coupland, (1876) 1 Q.B.D. 258 C.A, it was observed "specific goods has a wider meaning than that given in definition and may be extended so as to include unascertained goods which form a part of specific subject matter, whether existing at the time that contract is made or to come into existence thereafter." In that case Department in the month of March agreed to sell to plaintiff 200 tons of legent potatoes, grown in land belonging to Defendant at particular price and to be delivered in the month of October. Defendant had 68 acres of land which was sown, but without fault on the part of the defendant, in August, the crop was attacked by the potato disease and defendant could not deliver the whole quantity of product. It was observed "This is not like the case of contract to deliver so many goods of particular kind, where no specific goods are sold. Here there was an agreement to sell and buy particular crop to be grown on specific land; so it is an agreement to sell specific things and therefore neither party is liable, if the performance becomes impossible." So in view of above discussion, Agreement is void in view of Section 8 of Act and A has to suffer the Loss.
Q. 8 `A' was shopping in the super market, he picked up a bottle of soft drink from a shelf with the intention to buy it. While he has examining it, the bottle exploded in his hand and injured him. A sued both the management of super market and the company which had bottled the drink to recover damages for breach of condition arising from the sale of good. Will he succeed.
(a) Repudiate the contract (Section 12(2), or
(b) Waive the condition (Section 13(1),
(c) treat the breach of condition as breach of warranty and not repudiating the contract.Breach of warranty is not considered serious in contract of sale of goods and only entitles the other party to claim damages but can not avoid the contract on ground of breach of warranty. IMPLIED CONDITIONS AND WARRANTIES Parties to contract of sales of goods may expressly provide any conditions or warranties. Apart from what may be provided by the parties in the contract, certain conditions and warranties as provided in Sections 14 to 17 are impliedly there in every contract of sale of goods IMPLIED CONDITIONS (1) IMPLIED CONDITION AS TO TITLE : Section 14(a) of Act says "In every contract of sale, unless the circumstances are such as to show a different intention, there is an implied condition on the part of seller that, in case of sale, he has right to sell the goods and that in case of agreement to sell, he will have right to sell the goods at the time when the property in them is to pass. (2) IMPLIED CONDITION OF SALE BY DESCRIPTION : Section 15 of Act says "Where there is a contract for the sale of goods by description, there is an implied condition that the goods shall correspond with the description and if the sale is by sample as well as by description, it is not sufficient that the bulk of the goods corresponds with the sample if the goods do not also correspond with the description." (3) IMPLIED CONDITION AS TO QUALITY AND FITNESS : As a general rule there is no implied condition or warranty in contract of sale of goods as regards the quality or fitness of the goods for any particular purpose. However Section 16 (1) of Act says : (i) 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 buyer relies on the seller's skill or judgement and (ii) Goods are of description which it is in the course of the seller's business to supply. Then there is implied condition that goods shall be reasonably fit for such purpose. So Section 16 (1) of Act embodies the first of the exceptions to the rule of "Caveat emptor". However proviso to Sub-Section (1) to Section 16 says in case of contract of 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. (4) IMPLIED CONDITION AS TO MERCHANTABLE QUALITY : Section 16 (2) says "Where goods are bought by description from a seller who deals in goods of that description, there is an implied condition that good shall be of merchantable quality." The term `Merchantable quality' has not been defined in the Act. In Bristol Tramways v. Fiat Motors Ltd., (1910) 2 K.B. 831 "Merchantable quality means the article is of such quality and in such condition that a reasonable man acting reasonably, would after a full examination accept it under the circumstances of the case in performance of his offer to buy that article, whether he buys for his own use or to sell again." So joint reading of Section 16 (1) and (2) of Act makes it clear that even when the goods are purchased by their trade name there may not be implied condition as to quality and fitness of goods bought for particular purpose, in view of proviso to sub-Section (1) But implied condition as to merchantable quality, could still be invoked. Proviso to Section 16 (2) however says if the buyer has examined the goods, there shall be no implied condition as regards the defects which such examination ought to have revealed or in respect of patent defects (5) IMPLIED CONDITION IN SALE BY SAMPLE : Section 17(2) of Act says: "In case of contract of sale by sample there is an implied condition:
(a) that the bulk shall correspond with the sample in quality.
(b) that the buyer shall have reasonable opportunity of comparing the bulk with the sample.
(c) that the goods shall be free from any defect rendering them unmerchantable, which would not be apparent on reasonable examination of the sample.IMPLIED WARRANTIES (1) Section 14(b) of Act says "In contract of sale unless the circumstances of the case show different intention, there is an implied warranty that buyer shall have and enjoy possession of goods (2) Section 14(c) of Act says that in case of contract of sale there is an implied warranty that goods shall be free from any charge or encumbrance in favour of any third party not declared or known to the buyer before or at the time when the contract is made.
Q. 15 A manufacturer of woollen cloths sold woollen cloth to a tailor on the basis of particular sample. The tailor had purchased the cloth for particular purpose but he had not told the seller about the same. Owing to latent defect in cloth as well as in sample, the cloth turned out to be unfit for purpose for which tailor had purchased though the same was fit for other purpose. Tailor filed suit for damage. Decide.
(i) Bulk of Goods supplied by seller shall correspond with sample in quality.
(ii) Buyer shall have opportunity to compare the bulk of goods with sample so as to satisfy that bulk of goods correspond with sample.
(iii) Bulk of goods shall be free from any defect rendering it unmerchantable as regard those defect which are latent or are not apparent by reasonable examination of sample.In present case, the sale of goods is by sample though in case in hand there was no implied condition of quality and fitness of goods to particular purpose because buyer did not specifically disclose the purpose for which goods were required to be. However, in case of sale by sample seller owe a implied condition that bulk of goods and sample shall be free from any latent defect rendering goods unmerchantable in view of legal position, tailor is entitled to damages.
Q. 16 (a) What is meant by `Sale by Sample' ? What are the conditions implied in sale by sample ? (b) Vulcanized rubber material was agreed to be sold in rolls 40 ft. long under the description of Linatex and with small soft piece as sample. Following a request from buyer, the seller sent ten rolls directly to customer of buyer to whom it had been resold by description and same sample. Customer rejected the goods on the ground that goods were crinky, hard and folded. Seller sues the buyer for price. Court found that simple process of heating and pressing would correct the defect. Was the customer justified in rejecting the goods ? Can the buyer avoid payment altogether or must they be content with reduction in price ?
(i) First implied condition is that bulk of goods shall correspond with sample in quality.
(ii) Second implied condition in sale of sample is that buyer shall have reasonable opportunity of comparing the bulk of goods with sample to satisfy that bulk are in accordance with sample.
(iii) Third implied condition in sale by sample is that bulk of goods should be free from any defect which render them unmerchantable which would be latent (not apparent) by reasonable examination of sample.(b) Section 15 of Sales of Goods Act says where there is contract of sale of goods by description there is an implied condition that goods shall correspond with description and where there is contract of sale by description as well as by sample, it is not sufficient that bulk of the goods corresponds the sample if goods do not also corresponds with the description. Section 17(2) of Act says in case of contract of sale of goods by sample there are following implied conditions (a) Bulk of goods shall correspond with sample in quality (b) Buyer will have opportunity to compare the bulk of goods with sample so as to satisfy that bulk of goods are in accordance with sample (c) Bulk of goods shall be free from any defect rending them unmerchantable which are latent. In case in hands it is evident that goods supplied did not correspond with sample in quality as rolls of goods (i.e. rubber material) were crinkly, hard and folded. Fact that these defects can be corrected by process of heating and pressing would not make correct and proper compliance of contractual obligation and goods are thus not corresponding with sample in quality. Question which is now for consideration that whether buyer can reject the goods. Section 42 of Act enacts that buyer is deemed to have accepted the goods when he intimates to seller that he has accepted them when goods have been delivered to him or when he does any act in relation to goods which is inconsistent with ownership of seller or when after lapse of reasonable time, buyer has not sent any notice of rejection of goods. In case in hand buyer had accepted the goods when following the request from buyer, seller sent 10 rolls directly to customer of buyer to whom it was resold by same description and sample. Therefore in view of provisions of Section 42 of Act, buyer is deemed to have accepted the goods or in other words has waived his option to repudiate the contract and thus buyer can at the most be entitled to claim damages even in breach of implied condition.
1. Specific goods and 2. Unascertained goods1. Specific Goods : Section 2(14) of Act says specific goods are those goods which have been identified and agreed upon at the time of contract of sale. Sections 19, 20, 21, 22 and 24 of Act provide different situations when property in specific goods transfer from seller to buyer. 2. Unascertained Goods : Unascertained goods are those which are not identified or fixed or ascertained. TRANSFER OF PROPERTY IN SPECIFIC GOODS 1. Property Transferred as intended : Section 19(1) of Act says `where there is a contract for the sale of specific goods, the property in them is transferred to the buyer at such time as the parties to contract intend it to be transferred. Section 19(2) further provides that for ascertaining the intention of parties, regard shall be had to the terms of the contract, the conduct of parties and circumstances of case. In M/s Rane (Madras) Ltd., N Kozhikode v. State of Kerala, AIR 1968 Ker. 74 It was observed "The governing principle which should determine as to the passing of the property in goods must be to find out what is intention of parties. It is open to parties to make express provision as to when property in goods will pass " However in the absence of any express or implied intention of parties, property in specific goods passes to buyer as per provisions of Sections 20, 21, 22 and 24 of Act. 2. Specific Goods in Deliverable State : Section 20 of Act says "Where there is an unconditional contract for sale of specific goods in deliverable state the property in goods passes to the buyer when the contract is made and it is immaterial whether the time of payment of the price or the time of delivery of goods or both is postponed. 3. Specific Goods not in Deliverable State : Section 21 of Act says "Where there is a contract for sale of specific goods and the seller is bound to do something to the goods for the purpose of putting them into deliverable state, the property does not pass until such thing is done and the buyer has notice thereof. 4. Specific Goods to be Weighed etc. : Section 22 of Act then lays down that where there is a contract of sale of specific goods in deliverable state, but the seller is bound to weigh, measure test or do some other act or thing with reference to the goods for the purpose of ascertaining the price, the property does not pass until such act or thing is done and the buyer has notice thereof. In Shoshi Mohan Pal v. Nobo Krishto, I.L.R. (1979) 4 Cal. 801 there was a contract for the sale of whole amount of rice in golab which according to seller amounted to 975 mounds. The buyer was to remove the rice after weighing. Delivery of only 130 mounds were taken and the rest was destroyed by fire. Seller sued for recovery of price for whole amount of rice. It was held that property in whole goods had passed because nothing remained to be done by seller to ascertain the price and buyer had to get the rice weighed for his own satisfaction, since the ownership in the rice had passed to buyer therefore buyer will be liable to pay price. 5. Specific Goods Delivered on Approval Basis : Section 24 of Act says "When goods are delivered to buyer on approval or on sale or return or other similar terms, the property therein passes to the buyer. (a) When he signifies his approval or acceptance to the seller or does any other act adopting the transaction (b) if he does not signify his approval or acceptance to seller but retains the goods without giving notice of rejection then if a time has fixed for the return of goods, on the expiration of such time and if no time has been fixed, on the expiration of a reasonable time." Transfer of Property in Unascertained Goods : Section 18 says where there is contract of sale of unascertained goods, the property therein does not pass at the time of making of contract, property in unascertained goods cannot pass until the goods are ascertained. Section 23 of Act then says "(1) Where there is contract for sale of unascertained goods or future goods by description and goods of that discription and in deliverable state are unconditionally appropriate to the contract either by the seller with the assent of the buyer or by buyer with the assent of the seller, the property in goods thereupon passes to buyer. Such assent may be either expressed or implied and may be given either before or after the appropriation is made." Section 23(2) says where in pursuance of the contract, the seller delivers the goods to the buyer or to a carrier or bailee for the purpose of transmission to buyer and does not reserve any right of disposal. He is deemed to have unconditionally appropriated the goods to contract."
Q. 19 `A' delivers a jewellery to `B' on approval, specifying that in case of non-acceptance it should be returned within 15 day. `B' begins to use the jewellery without communicating his acceptance, after 10 days the jewellery is stolen from B's house. Can `A' recover the price of jewellery from B ?
(a) When he signifies his approval or acceptance to the seller or does any other act adopting the transaction.
(b) If he does not signify his approval or acceptance to seller but retains the goods without giving notice of rejection, then if a time has been fixed for the return of the goods, on the expiration of such time, and if no time has been fixed, on the expiration of a reasonable time."So when the goods are sold on approval basis or sale or return basis, property in goods does not pass to buyer, on delivery of goods it passes (1) when buyer signify his acceptance or (2) when buyer adopts the transaction or (3) when buyer does not return the goods after stipulated time or reasonable time. Section 42 of Act is important here which says "The buyer is deemed to have accepted the goods when he intimates to the seller that he has accepted them or when the goods have been delivered to him and does any act in relation to them which is inconsistent with the ownership of seller..." In case in hand also `B' after having taken the delivery of jewellery from seller on approval basis started using the jewellery which implies the `B' has adopted the transaction, therefore property in goods passes to B, therefore if jewellery is stolen, then B has to sustain the loss and A can recover the price of jewellery.
"Unless otherwise agreed the goods remain at the seller's risk until the property therein is transferred to buyer but when the property therein is transferred to buyer, the goods are at the risk of buyer whether delivery has been made or not.
Provided that where delivery has been delayed through the fault of either buyer or seller the goods are at the risk of party in default as regard any loss which might not have occurred but for such fault.
Provided also that nothing in this Section shall affect duties or liabilities of either seller or buyer as bailee of goods of other party." Thus in case of either contract of sale or an agreement to sell after the parties have entered into contract, whoever is the owner of goods, goods shall be at his risk notwithstanding he may not be in possession of or delivery of goods may not be made to him."Rule `Risk prima facie follows with property' has following 3 exception:
(1) If Parties Have Decided Contrary.
(2) If Delivery of Goods Is Delayed Through fault of either Party.
(3) If Goods Are In Possession of Either Party As Bailee.
Q. 23 "No person can pass a better title to another than what he possess" - Explain ! What are the exceptions of this rule ? Or A finds a gold ring. He makes all reasonable efforts but fails to discover the owner. He sells the ring to B who does not know that A is only a finder of ring. True owner C claims the ring. Decide.
"Unless the owner of goods is by his conduct precluded from denying the seller's authority to sell."In other words when lawful owner of goods by his word or conduct make it believe to buyer that seller has authority to sell, then owner of goods will be estopped from denying that seller has no authority. 2. Sale by Merchantile Agent (Proviso to Section 27) : Proviso to Section 27 says where a Merchantile agent is with the consent of owner in possession of goods or document of title to goods and sale made by him in ordinary course of his business, the buyer gets the proper title. It is also necessary that buyer acted in good faith without having any notice that Merchantile agent did not have any authority to sell. 3. Sale by Joint Owner (Section 28) : Sale by one of joint owners constitute another exception to the rule of "Nomo dat Quod non habet." According to Section 28 joint owner who is in sole possession of goods with the permission of other co-owner a sale by him will convey good title to buyer. Provided buyer acted in good paith and without notice that seller had no authority. 4. Sale By Person In Possession Under Voidable Contract : Section 29 provides that if a person has obtained the possession of some goods under a contract which is voidable u/s 19 or 19A of Contract Act and he sells those goods before the contract has been avoided by party entitled to do so the buyer of such goods acquires good title to them. Provided buyer acted in good faith without notice of seller's defect of title. 5. Sale By Seller In Possession : If seller having already sold the goods and property in goods has passed to buyer, the seller can not deal with such goods. If he deals with them, buyer can sue him for tort of conversion. Section 30(1) however provides that if a seller having sold the goods is still in possession thereof or of document of title to them, delivery or transfer of goods or documents of title under any sale, pledge or other disposition thereof by seller, will convey a good title to the buyer provided buyer has been acting in good faith and he has no notice of previous sale. 6. Sale by Buyer in Possession : (Section 30(2)) deals with case where buyer is in possession of goods but the property in them has not yet passed to him. It says that if buyer has obtained possession of goods or document of title to goods with the consent of seller any sale, pledge or other disposition thereof to any person will convey a good title to transferee provide he is receiving goods in good faith without notice as regard any lien or other right of original seller. In view of law discussed above `C' is entitled to recover his golden ring from B. Plea of B that he has purchased for valuable consideration, bonafide in good faith and without notice of any such defect in title or authority of A is no defence against the claim of C (true owner).
"Subject to the provisions of this Act and of any other law for the time being in force, where goods are sold by a person who is not the owner thereof and who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title to the goods then the seller had..."Therefore in the case in hand, when A sells the scooter to B, A had no title or authority to sell the scooter, therefore B had not got the good title of scooter. So B is certainly entitled to recover the price, which B paid to A.
(a) By doing any thing which the parties agree, shall be treated as delivery
(b) By doing anything which has the effect of putting the goods in the possession of the buyer or any person authorized to hold them on his behalf (Section 33)Section 33 of Act also says seller of goods is not bound to give delivery of goods unless the buyer applies for delivery. But parties may enter into express contract by which the seller may be required to deliver the goods without being asked to do so by the buyer. Section 36 lays down the general rules regarding the delivery of goods by the seller to the buyer. But these rules can be varied by a specific agreement between the parties. 1. Whether it is for the buyer to take possession of the goods or for the seller to send them to the buyer is a question depending in each case on the contract, express or implied between the parties. Apart from any such contract, goods sold are to be delivered at the place at which they are at the time of the sale, and goods agreed to be sold are to be delivered at the place at which they are at the time of the agreement to sell. If the goods are not in existence at the time of agreement to sell, i.e., goods are future goods, they are to be delivered at the place at which they are manufactured or produced. 2. Where under the contract of sale, the seller is bound to send the goods to the buyer without any demand from the buyer, and no time has been fixed for sending them, the seller is bound to send them within a reasonable time. As to what is a reasonable time depends upon the circumstances of each case. 3. Where the goods at the time of sale are in possession of a third person, there is no delivery by the seller to the buyer unless and until such third person acknowledges to the buyer that he hold the goods on his behalf. All the three parties to the contract must agree, viz., the seller, the buyer and the third person in whose possession the goods actually are. It has been specifically mentioned that nothing in this section shall effect the operation of the issue or transfer of any document of title to goods. Therefore, if the goods are dispatched by rail and the railway receipt is transferred to the buyer, it operates as a delivery of the goods and it is not necessary that the railway company should acknowledge to the buyer that in future it will hold those goods on his behalf. 4. Demand for delivery of goods must be made at reasonable hour. As to what it is a reasonable hour is a question of fact. 5. The expenses of and incidental to putting the goods into a deliverable state (i.e., a state which the buyer is bound to take delivery) shall be borne by the seller. This is subject to a contract between the parties.
Q. 28 A a dealer at Chandigarh places an order with B a trader at Delhi for supply of certain goods on terms `FOR Delhi payment against document'. B delivers the specified goods to Railway at Delhi for transmission to A the consignee and sends the railway receipt to his Bank at Chandigarh for handing over the same to A against payment. Intimation is also sent separately to A. The goods are destroyed by fire before these are loaded in Wagon at Delhi. A dishonours the document B sues A for price. Will B succeed ? Decide.
(1) When he intimates to the seller that he has accepted them.
(2) When the goods have been delivered to him and he does any act in relation to them which is inconsistent with the ownership of the seller e.g., re-sale.
(3) When after the lapse of a reasonable time, he retains the goods without intimating to the seller that he has rejected them. What is a reasonable time is a question of fact in each case. (Section 42).It is manifest from Section 42 that the mere act of retention of goods is not enough to constitute acceptance unless such retention is continued for a reasonable time without the fact of rejection being communicated to the seller. Hence, where only 4 days had elapsed between the receipt of the goods and the filing of the suit for the amount paid to the seller and damages. it that there has been an acceptance of the Bhagwat Saran v. Baijnath Prasad, I.L.R., 1950, All. 12
(i) a Lien on the goods, for the price while he is in possession of them. (Section 47 to 49).
(ii) Right of stopping the goods in transit (Section 50 to 52).
(iii) Right of Resale (Section 54).(1) RIGHT OF LIEN : An unpaid seller has right of lien over the goods for price. Lien means retaining the goods or refusing to deliver them until the price in respect of them has been paid by buyer. By way of exercise of this right seller can refuse to deliver the goods to buyer until the payment of price, even though the ownership of goods may have been transferred from seller to buyer, where:
(A) Goods have been sold without any stipulation as to credit.
(B) Where goods have been sold on credit but the term of credit has expired.
(C) Where buyer has become insolvent.Section 48 of Act says if part of goods has been delivered, seller can exercise right of lien over remaining goods unless such part delivery was made in such circumstances as to show an agreement to waive the lien. Section 49 of Act then provide that an unpaid seller loses his lien thereon:
(a) When he delivers the goods to carrier or other bailee for the purpose of transmission to the buyer without reserving the right of disposal of the goods
(b) When the buyer or his agent lawfully obtains possession of the goods
(c) by waiver thereof.(2) Stoppage in Transit : Unpaid seller can exercise this right when goods have been already delivered to carrier for being transmitted to buyer and goods are still in transit the carrier at seller's request is to deliver goods back to seller and not to deliver to buyer, even though buyer might have got possession of document of title to goods This right can be exercised when buyer has become insolvent. An unpaid seller can exercise this right only during the period when it is transmitted to buyer till it is received by buyer. If buyer has received its possession, then seller has no right to stoppage in transit. Section 51 says goods are deemed to be transit from the time when they are delivered to carrier or other bailee for the purpose of transmission to buyer and transit continues until buyer or his agent in this behalf takes delivery of them from such carrier or bailee. It is only when buyer or his agent obtains possession of goods at the place of destination or at some other place before destination or when carrier or other bailee acknowledges to buyer, the transit is said to be at end. 3. Right of Resale : Section 52 of Act provide that where goods are of perishable nature or where an unpaid seller who has exercise his right of lien or stoppage in transit, give notice to buyer of his intention to resell, the unpaid seller may if the buyer does not within reasonable time pay or tender the prices, resell the goods and can recover from original buyer damages for any loss occasioned by his breach of contract.
(a) Where the goods have been sold without any stipulation as to credit;
(b) Where the goods have been sold on credit, but the time of credit has expired;
(c) Where the buyer becomes insolvent.Where an unpaid seller has made part-delivery of the goods, he may exercise his right of lien on the remainder, unless such part-delivery has been made under such circumstances as to show an agreement to waive the lien. [Section 58]. Such an agreement would be implied in cases where part delivery is made under such circumstances as to operate as a delivery of the whole. (Section 34). It should be clear that a part-delivery or even of the bulk of a cargo, is not prima facie a delivery of the whole and those who rely upon the part-delivery as a constructive delivery of the whole are bound to show that the part- delivery took place under such circumstances as to make it a constructive delivery of the whole. The unpaid seller or goods loses his lien thereon -
(a) When he delivers the goods to a carrier or other bailee for the purpose of transmission to the buyer without reserving the right of disposal of the goods.
(b) When the buyer or his agent lawfully obtains possession of the goods.
(c) By waiver thereof. The waiver may be express or implied.An unpaid seller's lien is not lost by reason of his obtaining a decree for the price of the goods. [Section 49]. But the seller loses his lien if he causes the goods to be taken in execution at his own suit, for the Amin acquires possession. [Jacobs v. Latour, (1828) 5 Bing 130].
(1) The seller must be unpaid.
(2) The buyer must be insolvent.
(3) The seller must have parted with the possession of the goods.
(4) The property in the goods must have passed to the buyer.
(5) The buyer must not have acquired possession of the goods, that is the goods must be in the course of transit.Goods are deemed to be in the course of transit from the time when they are delivered to a carrier or other bailee for the purpose of transmission to the buyer, until the buyer or his agent in that behalf takes delivery of them from such carrier or other bailee. The goods are thus deemed to be in course of transit so long as they are in the hands of the carrier or other bailee for transmission, in his capacity as such, and it is immaterial whether the goods are actually in motion on their journey, or are lodged in any place in the course of transmission. If the buyer or his agent, in that behalf obtains delivery of goods before their arrival at the appointed destination the transit is at an end the right of stoppage in transit is lost. The transit also comes to an end when after arrival of the goods at the appointed destination, the carrier or other bailee acknowledges to the buyer or his agent that he holds the goods on his behalf and continues in possession of them as bailee for buyer or his agent. [Section 51]. The following are the limitations to the exercise of this right.- Where a document of title to goods have been issued or lawfully transferred to any person as buyer or owner of the goods and that person transfers the document to a person who takes the documents in good faith and for consideration, then, if such last mentioned transfer was by way of sale, the unpaid seller's right of stoppage in transit is defeated, and, if such last mentioned transfer was by way of pledge or other disposition for value, the unpaid seller's right of stoppage in transit can only be exercised subject to the right of the transferee. When the transfer is by way of pledge, the unpaid seller may require the pledge to have the amount secured by the pledge satisfied in the first instance, as far as possible out of any other goods or securities of the buyer in the hands of pledge as available against the buyer. In other words, an unpaid seller has a right to insist on the pledge marshaling the securities. The unpaid seller may exercise his right of stoppage in transit either by taking actual possession of the goods, or by giving notice of his claim to the carrier of other bailee in whose possession the goods are. Such notice may be given either to the person in actual possession of the goods or to his principal. When the notice is given to the principal it, to be effectual, shall be given at such time and in such circumstances that the principal by the exercise of reasonable diligence may communicate it to his servant or agent in time to prevent a delivery to the buyer. [Section 52(1)].