Sales of Goods Act

Essentials:

1. 2 Parties

2. Subject matter (Movable goods)

3. Price

4. Transfer of ownership

5. Sales or agreement of sales

6. All other valid contract essentials

2 Parties

There must be two parties atleast. ie, buyer and seller.

Transfer of Ownership

The goods must be transferred from one person (seller) to another (buyer)

Subject Matter

Must be movable goods, specific or future/contingent goods such as fishing or harvesting of some agricultural goods.

Perishable goods

Strawberries are left at warehouse,

In case of Sale, buyer bears the loss as it is his property.

In agreement to sale, seller bears the loss.

Consideration

must be in the form of money, or partially money. But not fully in goods.

Price decision

Decided, after delivery, reasonable or 3rd party valuation.

If 3rd party refuses to valuate undelivered goods, void agreement.

If good is delivered, reasonable price.

Sale or agreement to sale

The contract includes both sale (executed) and agreement to sale (future sale).

All other essentials of a valid contract

must be followed such as competent parties, free consent, etc.

How sales is made:

A sale is made when the seller offers to sell his goods in exchange for prices and the buyer accepts.

It is the transfer of goods or property to the buyer. And it will be a sale only when the parties are different, and either oral or written

Immovable property

It can be an oral contract or writing, partially oral or written, but not necessarily in writing unless of immovable property.

Subject matter

Existing, Certain and specific means they are currently present and acquirable at the time of sales.

Future goods are to be manufactured.

Contingent goods depend on the happening of a certain event, ie, i’ll sell u oil when discover from 3rd party.

Sale vs Agreement to Sale

1. Transfer of property

2. Types of goods

3. Nature of rights

4. Risk of loss

5. Rights of Resale

6. Insolvency of Buyer

7. Insolvency of Seller

8. Nature of Contract

1. Transfer of property

Sale is immediate effect and ownership is passed to the buyer.

Agreement is to pass property at some future time, or after some conditions.

2. Types of goods

Sale can be of only existing goods, while the Agreement is usually of future or contingent goods.

In case of perishable goods, depends on sale and agreement to sale (seller responsible.)

3. Nature of rights

If seller refuses to deliver the goods, the buyer may recover them goods by filing a suit.

In agreement, buyer can still sue for breach if seller refuses to deliver the goods BUT not for recovery of goods, only damages.

4. Risk of loss

As ownership is of buyer, he is responsible for perished goods as goods are immediately his property.

In agreement, seller is still at risk as the goods remain his property even if they are with the buyer.

5. Consequences of breach

If buyer refuses to pay the price, the seller may recover whole amount by filing a suit.

If the buyer refuses to pay (backs out), the seller cannot recover it. He can only recover damages.

6. Rights of resale

Seller cannot resale as they are buyer’s property.

Seller is still owner, and he can dispose as he likes.

7. Insolvency of buyer

If buyer is insolvent, seller receives dividened after delivering goods to the buyer’s official receiver.

If buyer is insolvent, seller may refuse to deliver him goods until they are paid for.

Example of insolvency of buyer:

A, wholesaler, sells 100 kg of cement to B. B receives invoice but waits 30 days to pay.

B goes bankrupt. However, A is obligated to deliver the goods to the legal owner, and will only a percentage of the actual price.

In case of agreement, A could refuse to sell.

8. Insolvency of seller

In sale, buyer can recover the goods from the seller’s receiver as they are already paid for.

Buyer cannot take the goods, but receive rateable dividend for any money paid.

Example of insolvency of seller:

A goes to electronics to buy TV, pays for it and receives a receipt. He asks B to keep the TV for a week and that he may come pick it up.

During the week, B goes bankrupt, and court appoints an official receiver to deal with the goods.

A, as legal owner, can recover the TV.

However, if TV was conditional, and the ownership was still with B, A could not recover full amount but a percentage of what he paid.

9. Nature of Contract

Executed as transfer of ownership is complete.

Executory as transfer of ownership has yet to happen.