Understanding the Law Relating to Sale of Goods Act, 1930

The law relating to sale of goods forms the cornerstone of commercial transactions, governing the transfer of ownership and possession of goods. In India, this legal framework is outlined in the Sale of Goods Act, 1930. This article explores key aspects of the law relating to the sale of goods, including important definitions, distinctions between sale and agreement to sell, the subject matter of a contract of sale, the doctrine of caveat emptor, transfer of title by non-owners, suits for breach of contract, and the rights of an unpaid seller against both the goods and the buyer, as well as trading contracts involving rail or sea transit.

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Introduction

Important Definitions

1. Goods : Every kind of movable property other than actionable claims and money, including stocks and shares, growing crops, and things attached to or forming part of the land which are agreed to be severed before sale.
2. Buyer : A person who buys or agrees to buy goods.
3. Seller : A person who sells or agrees to sell goods.
4. Delivery : Voluntary transfer of possession from one person to another.
5. Price : The money consideration for a sale of goods.

Distinction Between Sale and Agreement to Sell

1. Sale :
   • A completed transaction where the ownership of goods is transferred from the seller to the buyer for a price.
   • The buyer immediately obtains ownership and risk of the goods.
2. Agreement to Sell :
   • A future transaction where the transfer of ownership is to take place at a later date or upon the fulfillment of certain conditions.
   • The risk remains with the seller until the sale becomes absolute.

Subject Matter of Contract of Sale of Goods

Doctrine of Caveat Emptor

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Transfer of Title by Person not the Owner

1. Estoppel : When the owner’s conduct prevents them from denying the seller's authority to sell.
2. Sale by a Mercantile Agent : If the agent is in possession of the goods with the owner’s consent.
3. Sale by One of Joint Owners : If the co-owner has sole possession by permission of the others.

Suits for Breach of Contract

1. Damages : Compensation for the loss suffered due to the breach.
2. Specific Performance : A court order requiring the party in breach to fulfill their contractual obligations.
3. Rescission : Cancellation of the contract, restoring the parties to their original positions.
4. Suit for Price : The seller can sue for the price if the property has passed to the buyer and the buyer fails to pay.

Rights of an Unpaid Seller against the Goods

1. Right of Lien : The right to retain possession of the goods until payment is made.
2. Right of Stoppage in Transit : The right to stop the goods in transit if the buyer becomes insolvent.
3. Right of Resale : The right to resell the goods if the buyer defaults, subject to certain conditions.

Rights of an Unpaid Seller against the Buyer

1. Suit for Price : If the buyer fails to pay for the goods.
2. Damages for Non-Acceptance : Compensation if the buyer wrongfully refuses to accept and pay for the goods.

Trading Contracts Involving Rail or Sea Transit

1. Risk and Ownership : The point at which risk and ownership transfer from seller to buyer depends on the terms of the contract, such as FOB (Free on Board) or CIF (Cost, Insurance, and Freight).
2. Delivery and Acceptance : Proper documentation and compliance with regulatory requirements are essential for the smooth delivery and acceptance of goods.
3. Insurance : Ensuring goods are adequately insured against loss or damage during transit is crucial to protect the interests of both parties.

Conclusion