Unit 3

The Sale of Goods Act, 1930

Q1) Define the terms ‘conditions’ and ‘warranties’.  2017                  5

A1) Meaning of condition

Sec 12(2) of Sales of Goods Act, 1930 has defined Condition as: “A condition is a stipulation essential to the main purpose of the contract, the breach of which gives rise to a right to treat the contract as repudiated”.

• A condition is a stipulation

(a) Which is essential to the main purpose of the contract?

(b) The breach of which gives the aggrieved party a right to terminate the contract.

• It goes to the root of the contract.
• Its non-fulfillment upsets the very basis of the contract.

Example:-

By charter party( a contract by which a ship is hired for the carriage of goods), it was agreed that ship m of 420 tons “now in port of Amsterdam” should proceed direct to new port to load a cargo. In fact at the time of the contract the ship was not in the port of Amsterdam and when the ship reached Newport, the charterer refused to load. Held, the words “now in the port of Amsterdam” amounted to a condition, the breach of which entitled the charterer to repudiate the contract.

Warranty

Sec 12(3) of Sale Of Goods Act, 1930 has defined Warranty as : “A warranty is a stipulation collateral to the main purpose of the contract, the breach of which gives rise to only claim for damages but not to a right to reject the goods and treat the contract as repudiated”.

• It is a stipulation collateral to the main purpose of the contract
• It is of secondary importance
• If there is a breach of a warranty, the aggrieved party can only claim damages and it has no right to treat the contract as repudiated.

Q2) Explain in detail implied conditions and warranties. Also distinguish between conditions and warranties.                                    2017           8

A2) IMPLIED CONDITIONS AND WARRANTIES

1. Implied undertaking as to title, etc. (sec. 14)—

In a contract of sale, unless the circumstances of the contract are such as to show a different intention, there is—

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

(b) an implied warranty that the buyer shall have and enjoy quiet possession of the goods;

(c) an implied warranty that the 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.

2. Sale by description (sec. 15)

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 conditions as to quality or fitness (sec 16)

Subject to the provisions of this Act and of any other law for the time being in force, there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale, except as follows:—

(a) 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 shallbe reasonably fit for such purpose: Provided that, in 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.

(b) 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:

(c) An implied warranty or condition as to quality or fitness for a particular purpose may be annexed by the usage of trade.

(d) An express warranty or condition does not negative a warranty or condition implied by this Act unless inconsistent therewith.

Distinction between condition and warranty

Q3) “A seller cannot convey better title than he himself has.”- Discuss the rule with exceptions.  2018, 2019                          5

A3) “A seller cannot convey better title than he himself has.” The provisions related to transfer of ownership are discussed below-

Sale by person not the owner (Section 27)

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 than the seller had, unless the owner of the goods is by his conduct precluded from denying the seller’s authority to sell: Provided that, where a mercantile agent is, with the consent of the owner, in possession of the goods or of a document of title to the goods, any sale made by him, when acting in the ordinary course of business of a mercantile agent, shall be as valid as if he were expressly authorised by the owner of the goods to make the same; provided that the buyer acts in good faith and has not at the time of the contract of sale notice that the seller has not authority to sell.

Sale by one of joint owners (Section 28)

If one of several joint owners of goods has the sole possession of them by permission of the co-owners, the property in the goods is transferred to any person who buys them of such joint owner in good faith and has not at the time of the contract of sale notice that the seller has not authority to sell.

Sale by person in possession under voidable contract (Section 29)

When the seller of goods has obtained possession thereof under a contract voidable under section 19 or section 19A of the Indian Contract Act, 1872 (9 of 1872), but the contract has not been rescinded at the time of the sale, the buyer acquires a good title to the goods, provided he buys them in good faith and without notice of the seller’s defect of title.

Seller or buyer in possession after sale (Section 30)

(1) Where a person, having sold goods, continues or is in possession of the goods or of the documents of title to the goods, the delivery or transfer by that person or by a mercantile agent acting for him, of the goods or documents of title under any sale, pledge or other disposition thereof to any person receiving the same in good faith and without notice of the previous sale shall have the same effect as if the person making the delivery or transfer were expressly authorised by the owner of the goods to make the same.

(2) Where a person, having bought or agreed to buy goods, obtains, with the consent of the seller, possession of the goods or the documents of title to the goods, the delivery or transfer by that person or by a mercantile agent acting for him, of the goods or documents of title under any sale, pledge or other disposition thereof to any person receiving the same in good faith and without notice of any lien or other right of the original seller in respect of the goods shall have effect as if such lien or right did not exist.

Q4) Distinguish between sale and agreement to sale.         2018            5

A4) The sale is an executed or absolute contract whereas ‘an agreement to sell’ is an executory contract and implies a conditional sale. The difference between sale and agreement to sale are-

Q5) Define the contract of sale of goods. Also discuss the essential elements of contract of sale of goods act, 1930.                            8

A5) As per Sec 4(1) of the Indian Sale of Goods Act, 1930 defines the contract of sale of goods in the following manner:

“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”.

Essentials elements of contract of sale

The following six features/elements are essential elements of any contract of sale of goods.

Figure: Essential elements of contract of sale

1. Two Parties:

A contract of sale of goods is bilateral in nature wherein property within the goods has got to pass from one party to a different. One cannot buy one’s own goods. For example, A is that the owner of a grocery shop. If he supplies the goods (from the stock meant for sale) to his family, it doesn't amount to a sale and there's no contract of sale. This is often so because the vendor and buyer must be two different parties, together person can't be both a seller also as a buyer. However, there shall be a contract of sale between part owners. Suppose A and B jointly own a tv set, A may transfer his ownership within the tv set to B, thereby making B the only owner of the goods. Within the same way, a partner may buy goods from the firm during which he's a partner, and vice-versa. However, there's an exception against the overall rule that nobody should purchase his own goods. Where a pawnee sells the goods pledged with him/her on non-payment of his/her money, the pawnor may buy them in execution of a decree.

2. Goods:

The topic matter of a contract of sale must be goods. All kinds of movable property except actionable claims and money are considered ‘goods’. Contracts concerning services aren't considered as contract of sale. Immovable property is governed by a separate statute, ‘Transfer of Property Act’.

3. Transfer of ownership:

Transfer of property in goods is additionally integral to a contract of sale. The term ‘property in goods’ means the ownership of the goods. In every contract of sale, there should be an agreement between the buyer and therefore the seller for transfer of ownership. Here property means the overall property in goods, and not merely a special property. Thus, it's the overall property, which is transferred under a contract of sale as distinguished from special property, which is transferred just in case of pledge of goods, i.e., possession of goods is transferred to the pledgee or pawnee while the ownership rights remain with the pledger. Thus, during a contract of sale there must be an absolute transfer of the ownership. It must be noted that the physical delivery of products isn't essential for transferring the ownership.

4. Price:

The customer must pay some price for goods. The term ‘price’ is ‘the money consideration for a purchase of goods’. Accordingly, consideration during a contract of sale has necessarily to be in money. Where goods are offered as consideration for goods, it'll not amount to sale, but it'll be called barter or exchange, which was prevalent in past. Similarly, if an individual offers the goods to somebody else inconsiderately, it amounts to a present or charity and not sale. In explicit terms, goods must be sold for a particular amount of cash, called the worth. However, the consideration is often partly in money and partly in valued up goods. Furthermore, payment isn't necessary at the time of creating the contract of sale.

5. All essentials of a valid contract:

A contract of sale may be a special form of contract, therefore, to be valid, it must have all the essential elements of a valid contract, viz., free consent, consideration, competency of contracting parties, lawful object, legal formalities to be completed, etc. A contract of sale is going to be invalid if important elements are missing. As an example , if A agreed to sell his car to B because B forced him to try and do so by means of undue influence, this contract of sale isn't valid since there's no free consent on the a part of the transferor.

6. Includes both a ‘Sale’ and ‘An Agreement to Sell’:

The ‘contract of sale’ may be a generic term and includes both sale and an agreement to sell. The sale is an executed or absolute contract whereas ‘an agreement to sell’ is an executory contract and implies a conditional sale. A contract of sale is often made merely by an offer, to buy or sell goods for a price, followed by acceptance of such an offer. Interestingly, neither the payment of price nor the delivery of goods is important at the time of creating the contract of sale unless otherwise agreed. Subject to the provisions of the law for time being effective, a contract of sale could also be made either orally or in writing, or partly orally and partly in writing, or may even be implied from the conduct of the parties.

Q6) Define goods under the sale of goods act, 1930. Also state the types of contract.                                               5

A6) According to section 7 of the Sale of goods act, 1930 'Goods' means every kind of moveable property 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. Thus, goods include every kind of moveable property other than actionable claim or money. Example - goodwill, copyright, trademark, patents, water, gas, and electricity are all goods and may be the subject matter of a contract of sale.

TYPES OF GOODS

Goods may be classified as-

1. Existing goods [section 6(1)]:

Goods which are physically in existence and which are in seller's ownership and/or possession, at the time of entering the contract of sale are called 'existing goods.' Where seller is the owner, he has the general property in them. For example, A sale land to B for cash.

2. Future goods [section 6(3)]:

Goods to be manufactured, produced or acquired by the seller after the making of the contract of sale are called 'future goods' These goods may be either not yet in existence or be in existence but not yet acquired by the seller. Example, A agrees to sell to B all the milk that his cow may yield during the coming year. This is a contract for the sale of future goods.

3. Contingent goods [Sec. 6 (2)]:

Though a type of future goods, these are the goods the acquisition of which by the seller depends upon a contingency, which may or may not happen.

Example- A agrees to sell to B a specific rare painting provided he is able to purchase it from its present owner. This is a contract for the sale of contingent goods.

Q7) What is unpaid seller? What are the remedies for unpaid seller?   5

A7) A seller of goods is deemed to be an unpaid seller when:-

• The whole of the price has not been paid or tendered;
• A bill of exchange or other negotiable instrument has been received as a conditional payment, and the condition on which it was received has not been fulfilled by reason of the dishonor of the instrument or otherwise.

RIGHTS OF AN UNPAID SELLER

• Against goods : Where the property in goods has passed to the buyer:

Right of lien, right of stoppage in transit, right of resale

• Against buyer personally : Where the property in goods has not passed to the buyer: Withholding delivery, Stoppage in transit, Resale

Right of lien (sec.47-49)

• The right of lien means the right to retain the possession of the goods until the full price is received.
• Circumstances under the right of lien can be exercised
• Where the goods have been sold without any stipulation to credit 
• Where the goods have been sold on credit, but the term of credit has expired
• Where the buyer becomes insolvent

Right of stoppage of goods in transit (sec.50-52)

• Right of stoppage in transit means the right of stopping the goods while they are in transit, to regain possession and to retain them till the full price is paid.
• Conditions under which Right of stoppage in transit can be exercised

(i) Seller must have parted with the possession of goods i.e., the goods must not be in the possession of the seller

(ii) The goods must be in course of transit

(iii) Buyer must have become insolvent

Right of resale (sec.54)

An unpaid seller can resell the goods under the following circumstances:

Where the goods are of a perishable nature

1. Where the seller expressly reserves the right of resale if the buyer commits a default in making payment
2. Where the unpaid seller who has exercised his right of lien or stoppage in transit gives a notice to the buyer about his intention to resell and buyer does not pay or tender within a reasonable time.

Q8) State the provisions delivery of goods under the Sale of Goods Act, 1930.  8

A8) The provisions related to delivery of goods under the sale of goods act are stated below-

Delivery (Section 33)

Delivery of goods sold may be made by doing anything which the parties agree shall be treated as delivery or which has the effect of putting the goods in the possession of the buyer or of any person authorised to hold them on his behalf.

Effect of part delivery (Section 34)

A delivery of part of goods, in progress of the delivery of the whole, has the same effect, for the purpose of passing the property in such goods, as a delivery of the whole; but a delivery of part of the goods, with an intention of severing it from the whole, does not operate as a delivery of the remainder.

Buyer to apply for delivery (Section 35)

Apart from any express contract, the seller of goods is not bound to deliver them until the buyer applies for delivery. 36. Rules as to delivery.—

(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, or, if not then in existence, 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, but no time for sending them is fixed, the seller is bound to send them within a reasonable time.

(3) Where the goods at the time of sale are in the possession of a third person, there is no delivery by seller to buyer unless and until such third person acknowledges to the buyer that he holds the goods on his behalf: Provided that nothing in this section shall affect the operation of the issue or transfer of any document of title to goods.

(4) Demand or tender of delivery may be treated as ineffectual unless made at a reasonable hour. What is a reasonable hour is a question of fact.

(5) Unless otherwise agreed, the expenses of and incidental to putting the goods into a deliverable state shall be borne by the seller.

Delivery of wrong quantity (Section 37)

(1) Where the seller delivers to the buyer a quantity of goods less than he contracted to sell, the buyer may reject them, but it the buyer accepts the goods so delivered he shall pay for them at the contract rate.

(2) Where the seller delivers to the buyer a quantity of goods larger than he contracted to sell, the buyer may accept the goods included in the contract and reject the rest, or he may reject the whole. If the buyer accepts the whole of the goods so delivered, he shall pay for them at the contract rate.

(3) Where the seller delivers to the buyer the goods he contracted to sell mixed with goods of a different description not included in the contract, the buyer may accept the goods which are in accordance with the contract and reject the rest, or may reject the whole.

(4) The provisions of this section are subject to any usage of trade, special agreement or course of dealing between the parties.

Instalment deliveries (Section 38)

(1) Unless otherwise agreed, the buyer of goods is not bound to accept delivery thereof by instalments.

(2) Where there is a contract for the sale of goods to be delivered by stated instalments which are to be separately paid for, and the seller makes no delivery or defective delivery in respect of one or more instalments, or the buyer neglects or refuses to take delivery of or pay for one or more instalments, it is a question in each case depending on the terms of the contract and the circumstances of the case, whether the breach of contract is a repudiation of the whole contract, or whether it is a severable breach giving rise to a claim for compensation, but not to a right to treat the whole contract as repudiated.

Delivery to carrier or wharfinger (Section 39)

(1) Where, in pursuance of a contract of sale, the seller is authorised or required to send the goods to the buyer, delivery of the goods to a carrier, whether named by the buyer or not, for the purpose of transmission to the buyer, or delivery of the goods to a wharfinger for safe custody, is prima facie deemed to be a delivery of the goods to the buyer.

(2) Unless otherwise authorised by the buyer, the seller shall make such contract with the carrier or wharfinger on behalf of the buyer as may be reasonable having regard to the nature of the goods and the other circumstances of the case. If the seller omits so to do, and the goods are lost or damaged in course of transit or whilst in the custody of the wharfinger, the buyer may decline to treat the delivery to the carrier or wharfinger as a delivery to himself, or may hold the seller responsible in damages.

(3) Unless otherwise agreed, where goods are sent by the seller to the buyer by a route involving sea transit, in curcumstances in which it is usual to insure, the seller shall give such notice to the buyer as may enable him to insure them during their sea transit, and if the seller fails so to do, the goods shall be deemed to be at his risk during such sea transit.

Risk where goods are delivered at distant place (Section 40)

Where the seller of goods agrees to deliver them at his own risk at a place other than that where they are when sold, the buyer shall, nevertheless, unless otherwise agreed, take any risk of deterioration in the goods necessarily incident to the course of transit.

Buyer’s right of examining the goods (Section 41)

(1) Where goods are delivered to the buyer which he has not previously examined, he is not deemed to have accepted them unless and until he has had a reasonable opportunity of examining them for the purpose of ascertaining whether they are in conformity with the contract.

(2) Unless otherwise agreed, when the seller tenders delivery of goods to the buyer, he is bound, on request, to afford the buyer a reasonable opportunity of examining the goods for the purpose of ascertaining whether they are in conformity with the contract.

Acceptance (Section 42)

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 he does any act in relation to them which is inconsistent with the ownership of the seller, or when, after the lapse of a reasonable time, he retains the goods without intimating to the seller that he has rejected them.

Buyer not bound to return rejected goods (Section 43)

Unless otherwise agreed, where goods are delivered to the buyer and he refuses to accept them, having the right so to do, he is not bound to return them to the seller, but it is sufficient if he intimates to the seller that he refuses to accept them.

Liability of buyer for neglecting or refusing delivery of goods (Section 44)

When the seller is ready and willing to deliver the goods and requests the buyer to take delivery, and the buyer does not within a reasonable time after such request take delivery of the goods, he is liable to the seller for any loss occasioned by his neglect or refusal to take delivery, and also for a reasonable charge for the care and custody of the goods: Provided that nothing in this section shall affect the rights of the seller where the neglect or refusal of the buyer to take delivery amounts to a repudiation of the contract.

Q9) Discuss the remedies available to buyer under the sale of goods act, 1930.  8

A9) The suits which will be instituted by the seller against the buyer under the Act are often roughly divided into two types

1. Suit for Price

2. Damages for non-acceptance

i. Suit for Price

Section 55

(1) Where under a contract of sale the property within the goods has passed to the buyer and therefore the buyer wrongfully neglects or refuses to buy the goods consistent with the terms of the contract, the vendor may sue him for the worth of the goods.

(2) Where under a contract of sale the worth is payable on each day certain regardless of delivery and therefore the buyer wrongfully neglects or refuses to pay such price, the seller may sue him for the worth although the property within the goods has not passed and therefore the goods haven't been appropriated to the contract.

From the above section, it are often seen that except as provided by sub-section (2), the vendor can only sue for the payment when the property has passed to the buyer. The passing of the property depends upon certain conditions, and if these conditions aren't fulfilled, he cannot sue for the payment under this section.

Where goods are sold for a specific amount and therefore the payment has got to be made partly in cash and partly in a similar way, the default if made in a similar way entitles the vendor to sue for the rest of the worth.

Ii. Damages for non-acceptance

Section 56

Where the buyer wrongfully neglects or refuses to simply accept and buy the goods, the vendor may sue him for damages for non-acceptance.

The damages are assessed on the idea of the principles contained in sections 73 and 74 of the Indian Contract Act, 1872. Consistent with section 73 of the Indian Contract Act, when a contract has been broken, the party who suffers by the breach is entitled to receive, from the party who has broken the contract, compensation for any loss caused to him thereby, which naturally arose, within the usual course of things from such a breach, or which the parties knew once they entered into the contract, to be likely to result from the breach of it.

Furthermore, in estimating the loss or damage caused by a breach of contract, the means which existed of remedying the inconvenience caused by the non-performance of the contract must be taken under consideration.

The date at which the market value is to be ascertained is that the day on which the contract need to are performed by delivery and acceptance as fixed by the contract or, where no time is fixed, at the time of the refusal to perform.

By virtue of the provisions of sections 55 and 63 of the Indian Contract Act, where the time for the performance is fixed by the contract but it's extended and another date substituted for it by agreement between the parties, the substituted date must be taken because the date for ascertaining the measure of damages.

Where the products are deliverable by installments and therefore the buyer has got to accept one or the opposite or all the installments, the difference in prices is to be reckoned with on the day that a specific installment was to be delivered.

Where the military authorities refused to simply accept further supplies of cots in breach of their contract, the J&K high court allowed Rs. 4 per cot because the damages to the supplies because the profit which the supplier would have earned under his contract of supply.

It has been seen that the vendor has various remedies against both the goods and therefore the buyer personally, and in many cases where those remedies exist he still has the choice of availing himself of the remedy declared by this section ; but where the property has not passed and there's nothing within the contract which enables him to resell the products and charge the customer with the difference between the contract price, and therefore the price realized on the resale, or to sue for the price regardless of delivery, or the passing of the property, the remedy provided by this section is that the only remedy by which he can recover pecuniary compensation for the buyer’s breach of contract.

B. Buyer’s remedies against the seller

The suits which will be instituted by the customer against the seller are often roughly divided into three types

1. Damages for Non- Delivery (Section 57)

Where the seller wrongfully neglects or refuses to deliver the goods to the buyer, the buyer may sue the seller for damages for non-delivery. When the property within the goods has passed, the buyer, as long as he's entitled to the immediate possession, has all the remedies of an owner against people who affect the goods during a manner inconsistent together with his rights. If, therefore, the seller wrongfully re-sells them, he may sue the vendor in trover, and also against the second buyer, though as against him the rights could also be hamper by the provisions in sections 30 and 54. In the case of non-delivery, truth measure of damages are going to be the difference between the contract price and therefore the market value at the time of the breach. The market price of the goods means “the value within the market, independently of any circumstances peculiar to the plaintiff (the buyer)”

Where he, the seller, is guilty of breach of an agreement to sell, the subsequent remedies could also be available to the buyer:

(i) the customer may sue for damages for non-delivery under section 57 of the Sale of goods Act

(ii) just in case the worth has been paid by the buyer, he may recover it during a suit for money had and received for a consideration which has totally failed.

Where however the buyer has did not prove the alleged damages caused thanks to short supply of goods by seller and has also not served to seller a notice under Section 55 of the Indian Contracts Act, the buyer cannot claim damages.

In the case of pre-payment, the date for ascertaining the measure of damages must be the date of the breach, though it'd be said in such a case, the customer has not got the cash in his hands and can't therefore enter the market and buy; and in conformity with this concept it's been ruled at nisi prius that the date of the trial could also be taken. However a more rational view is that even during this case the date of breach should be taken to calculate the difference between the contract price and therefore the sale price, and therefore the buyer can recover this amount, alongside an interest.

2. Remedy for Breach of Warranty (Section 59)

(i) Where there's a breach of warranty by the seller, or where the buyer elects or is compelled to treat any breach of a condition on the a part of the seller as a breach of warranty, the customer isn't by reason only of such breach of warranty entitled to reject the goods; but he may-

(a) found out against the seller the Brach of warranty in diminution or extinction of the price; or

(b) Sue the seller for damages for breach of warranty.

(ii) The very fact that a buyer has found out a breach of warranty in diminution or extinction of the worth doesn't prevent him from suing for an equivalent breach of warranty if he has suffered further damage. A breach of warranty doesn't entitle the customer to reject the goods and his only remedy would be those provided in s. 59 namely, to set up against the vendor the breach of warranty in diminution or extinction of the value or to sue the vendor for damages for breach of warranty. From the definition of warranty given in s. 12(3) it's clear that a breach of it gives rise to a claim for damages only on the part of the buyer. It's also laid down by s. 13 that, even within the case of a breach of condition, if the buyer has accepted the goods, or, within the case of entire contracts, a part of them, either voluntarily, or by acting in such how on preclude himself from exercising his right to reject them, he must fall back upon his claim for damages as if the breach of the condition was a breach of warranty.

This section declares the methods by which a buyer who features a claim for damages, in either case, may avail himself of it. It doesn't affect the cases of fraudulent misrepresentation, which can enable the client to line aside the contract nor with cases where by the express terms of the contract the client may return the goods just in case of a breach of warranty. Also, in cases where the client has lawfully rejected the goods, he must proceed not under this section, but under s. 57, and if necessary under s. 61, to recover the acquisition price and interest.

It must be noted here that in such cases, damages are assessed in accordance with the provisions contained in section 73 of Indian Contract Act, 1872. This was also observed by a division bench of the Bombay high court in City And Industrial Development Corporation of Maharashtra ltd., Bombay v Nagpur steel and alloys, Nagpur;

“Remedies under Section 59 aren't absolute and can't be resorted to at any point or strategically point suitable to the customer. He’s duty sure to give notice of his intention. Its proper time, form and manner will, of course, depend on the facts and circumstances of every case. To carry otherwise, would amount to placing the vendor in a clumsy and indefinite position — not warranted either by law or by equity.”

In the case of a guaranty of quality, the presumption is that the measure of damages is that the difference between what the goods are worth at the time of delivery, and what they might are worth consistent with the contract which this must be ascertained by regard to the market value at the time.

In a majority of cases it's found that the warranty in question isn't a warranty as defined in s 12(2), but a condition which falls under s 13(2) to be treated as a warranty. Fairly often it's the condition that the goods should correspond with the outline by which they were sold, or should be fit a specific purpose.

It is necessary that the customer should believe the warranty, and act reasonably, that's to mention, he should take reasonable steps to minimize the damages. Where there's a breach of the warranty that the goods should be fit a specific purpose, the rule again is that the damages should be such, as may naturally be due the breach. This was seen during a case where the plaintiff’s wife died from the consequences of eating tinned salmon which the plaintiff bought from the defendant, the plaintiff was held entitled to recover, as damages for the breach of the warranty, that the salmon would be fit human consumption. Compensation was awarded for medical expenses, funeral costs, and therefore the loss of her life.

There can also be breaches of other conditions which may be treated as breaches of warranty, like the warranty of title. In such a case also, the customer could also be involved in difficulties with sub-buyers, as an example , he may buy a motor car from one who has no right to sell it and should resell it to a 3rd person, from whom truth owner may recover it, or its value.

3. Performance  (Section 58)

Subject to the provisions of the precise Relief Act, 1877, in any suit for breach of contract to deliver specific or ascertained goods, the court, may, if it deems fit, on the appliance of the plaintiff, by its decree direct that the contract shall be performed specifically, without giving the defendant the choice of retaining the goods on the payment of damages. The decree could also be unconditional, or upon such terms and conditions on damages, payment of the worth, or otherwise, because the Court may deem just, and therefore the application of the plaintiff could also be made at any time before the decree. The section provides a remedy to the customer and provides no correlative right to the vendor. It's therefore only on application of the customer when suing as plaintiff, that the contract of sale are often enforced specifically and therefore the section only applies when the contract is to deliver specific or ascertained goods. It’s been held that a seller isn't entitled to enforce performance of the contract under s. 58 because it deals with the case of a buyer of specific goods in respect of a contract to deliver specific or ascertained goods. ‘Specific’ here has the meaning which is given in section 2(14) while ‘ascertained’ means ‘identified in accordance with the agreement after a contract of sale is made’. Section 58, as noted above, reproduces with some suitable changes s. 52 of English Act. Before passing of the Sale of goods Act, 1930, there existed Specific Relief Act 1877, Chapter II of which addressed performance of an existing contract. This is often also why Section 58 of the Sale of products Act, 1930 begins with the words “subject to the provisions of Chapter II of the precise Relief Act, 1877”. The court has wide discretion to impose conditions. In one case, performance of agreement to transfer shares was granted subject to a lien to guard the transferor against non-payment of the worth of the shares. In another case, the House of Lords while ordering the precise performance of a contract to sell shares put a condition that the customer should pay interest on the acquisition price which he had been entitled to retain pending the order.

Q10) Discuss about the remedies available to buyer and seller under the sale of goods act.                     5

A10) The suits which will be instituted by either the customer or the vendor are of two types

Suit for repudiation of contract before date or constructive breach

Interest by way of damages and special damages

i. Suit for repudiation of contract before date or constructive breach

Section 60

Where either party to a contract of sale repudiates the contract before the date of delivery, the opposite may either treat the contract as subsisting or wait till the date of delivery, or he may treat the contract as rescinded and use for damages for the breach.

This section, doesn't appear within the English act, and deals with constructive breach of a contract, that's to mention, a manifested intention, by either party, to not be bound by the promise to perform that a part of the contract when the time of performance arrives. Whether or not there has, in fact, been repudiation depends on the facts of every particular case.

The measure of damages isn't fixed by date of the defaulting party’s repudiation. It’s decided, just in case of goods that there's a market, in accordance with the difference between the contract price of the goods and market value thereon day. This is often wiped out order to bring the plaintiff as almost the position as he would are in, had the contract not been repudiated. In cases of contracts where no date is fixed, and a party refuses to perform the contract the principle of reasonable time is applied. During this case the date of repudiation is treated because the date on which the contract is broken and damages are calculated on the idea of this date.

If the party not in default declines to simply accept the opposite party’s repudiation, he keeps the contract alive for all purposes, as are often seen from Frost v Knight. Hence it follows that if, when the time for performance arrives, he himself is unable to perform or doesn't perform his contract, the position are going to be an equivalent because it would are if there had been no anticipatory repudiation by the other party and therefore the latter could also be discharged, and may also sue for damages.

If therefore, the vendor after refusing to simply accept the buyer’s anticipatory repudiation, when the time for performance arrives, tenders goods which aren't of the contract description, or tenders documents under a CIF contract which the customer isn't sure to accept, the customer may lawfully reject the goods or the documents and therefore the seller are going to be without remedy; or the customer may accept the goods tendered and treat the breach of condition as a breach of warranty and recover damages accordingly.

Ii. Interest by way of damages and special damages

Section 61

(1) Nothing during this Act shall affect the proper of the vendor or the customer to recover interest or special damages in any case whereby law interest or special damages could also be recoverable or to recover the cash paid where the consideration for the payment of it's failed.

(2) Within the absence of a contract to the contrary, the Court may award interest at such rate a it think fit one the quantity of the price-

(a) To the vendor during a suit by him for the quantity of the worth.- from the date of the tender of the goods or from the date on which the worth was payable.

(b) To the customer during a suit by him for the refund of the worth during a case of a breach of the contract on the part of the seller- from the date on which the payment was made.

This section preserves the proper of a party to a contract of sale to recover special damages, that's to mention , compensation for any loss or damage caused to him by either party’s breach ‘which the parties knew once they made the contract to be likely to result from the breach of it’.

These damages are contrasted with those which ‘naturally arose within the usual course of things’ from the breach. Generally speaking, the latter alone are recoverable by the plaintiff. However, his rule is subject to limitations where the breach has occasioned a special loss, which was actually in contemplation of the parties at the time of getting into the contract, that special loss happening subsequently to the breach must be taken under consideration.

Act 32 of 1839 provided for the payment of interest by way of damages in certain cases. Under the Act, the court could allow interest on debts or certain sums payable by an instrument in writing, from the time when the quantity became payable where a time was fixed for payment, or when no time was fixed, from the date on which the demand was made for payment in writing giving notice to the debtor that interest would be claimed.

It will be observed that the vendor can only recover interest when he's during a position to recover the worth. When he can only sue for damages for breach of contract, he's not entitled to interest under the provisions of this sub-section.

Similarly, the customer can also only recover interest when he's entitled to recover the acquisition price, that's to mention, when he can sue for the worth prepaid as money and received, by reason of total failure, for consideration. He cannot recover interest when his only remedy is to sue for damages, as an example for a breach of warranty, albeit those damages could also be sufficient to extinguish the worth. Moreover, he's only entitled to interest within the case of a breach of contract, presumably by the vendor. This limitation therefore, excludes cases arising under sections 7 and 8 and presumably other cases where the contract depends upon some condition inserted for the advantage of the vendor, and isn't performed due to the non- fulfillment of that condition, or the contract is frustrated by circumstances over which the vendor has no control, in order that in law he wouldn't be susceptible to an action.