The Sale of Goods Act 1930, Meaning, Objectives, Functions
The Sale of Goods Act 1930 governs contracts or agreements relating to the sale of goods. Learn about Sale of Goods Act 1930, including important terms and types of goods.
Mridula Sharma18 Sept, 2024
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Sale of Goods Act 1930: Commodity trading is an important type of agreement in India. India, as a large economy, has strong rules to protect and support its businesses.
Almost every kind of company requires the buying and selling of items as part of its transaction. People in business often engage in contracts of sale to sell their goods. All of these transactions are controlled under the Sale of Goods Act 1930, which is one of the most significant forms of contracts under Indian law. We've explained The Sale of Goods Act 1930, which defines terms related to buying and selling goods and commodities.Sale of Goods Act 1930
The Sale of Goods Act 1930 governs the sale of goods in India, outlining the rights and obligations of buyers and sellers. It defines a "contract of sale" as an agreement where the seller transfers or agrees to transfer ownership of goods to the buyer for a price. Key provisions include the sale of goods' contract formation, implied conditions and warranties, transfer of property, and the rights of both parties. The Act ensures fair trade practices, protects consumers, and standardizes commercial transactions, providing a legal framework for resolving disputes in the sale of goods.Important Terms in The Sale of Goods Act 1930
The Sale of Goods Act 1930, commonly known as the Goods Act, is the legislation that governs the sale of goods throughout India, except in the state of Jammu & Kashmir. The Act defines crucial terms related to the sale of goods:I. Buyer and Seller:
A buyer according to sub-section (1) of The Sale of Goods Act 1930 is a person who buys or has agreed to purchase products and therefore they are one of the parties in the sales contract. As specified in the Act section 2(13) a seller is the person who sells or intends to sell products.II. Goods:
The Sale of Goods Act 1930, defines "Goods" in section 2(7) as all types of movable property, excluding actionable claims and money. This includes items such as stocks, shares, growing crops, and things attached to or forming part of the land, provided they are agreed to be severed before sale or under the contract of sale.III. Delivery:
The voluntary transfer of ownership from one individual to another is referred to as delivery. A variety of delivery methods consist of:- Actual Delivery: Physical transfer of goods to the buyer.
- Constructive Delivery: Transfer without a change in possession, authorized individuals can hold goods on behalf of the buyer.
- Symbolic Delivery: Involves transferring something (like keys to a warehouse) as a token of transferring other goods.
Types of Goods in The Sale of Goods Act 1930
Goods can be categorized in the Sale of Goods Act 1930 as follows: Existing Goods: Specific Goods: These are goods identified and agreed upon when the sale contract is formed. For example, a specific mobile phone is mentioned in an online advertisement. Ascertained Goods: Specific goods selected from a larger set of goods. For instance, 200 apples were chosen from a group of 500. Unascertained Goods: Goods not specifically identified, allowing the seller to select from a larger group. For example, selling 200 apples from a lot of 500 without specifying which ones. Future Goods: Goods that will be manufactured, produced, or acquired by the seller at the time the contract of sale is made. The agreement pertains to these goods, although the actual sale happens in the future. Contingent Goods: A subset of future goods where the sale is dependent on certain conditions, such as the production of apples from trees. If the conditions are not met, the sale may not occur.Also Check: Vertical Balance Sheet
Difference Between Sale and Agreement to Sale in The Sale of Goods Act 1930
The table highlights the key differences between a sale and an agreement to sale.| Difference Between Sale and Agreement to Sale in The Sale of Goods Act 1930 | ||
| Aspect | Sale | Agreement to Sell |
| Ownership | Passes to the buyer. | Remains with the seller. |
| Contract Type | Executed contract. | Executory contract. |
| Risk of Loss | Falls on the buyer. | Falls on the seller. |
| Reselling | Sellers cannot resell the goods. | Sellers can sell goods to a third party. |
| Good Types | Can be existing and specific goods. | Can be future and unascertained goods. |
| Legal Action | Sellers can sue for the price of goods in case of breach. | Sellers can sue only for damages, not for the price. |
| Insolvency | Seller entitled to a ratable dividend if the buyer becomes insolvent. | Sellers may refuse to sell goods to the buyer without payment if the buyer becomes insolvent. |
Condition and Warranty Meaning in The Sale of Goods Act 1930
Definition of stipulation [Section 12(1)]- A stipulation is a factual assertion that forms part of a contract of sale. Depending on its significance in regard to the contract, the specification may be a condition or a guarantee. Condition meaning [Sec.12(2)]- A condition is a requirement that is crucial to the principal aim of a contract. A violation of condition entitles the aggrieved party to cancel the contract. Warranty definition [Sec.12(3)]- A warranty is a term that is secondary to the primary aim of the contract. A violation of which provides the offended party the right to seek restitution but not the right to reject goods and cancel the contract.When Condition is Considered As Warranty
A condition can be treated as a warranty under certain circumstances as per Section 13 of the law:- If the buyer voluntarily decides not to enforce a condition.
- If the buyer chooses to consider a breach of the condition as a breach of warranty.
The Sale of Goods Act 1930 FAQs
What is meant by The Sale of Goods Act 1930?
The Sale of Goods Act 1930 is a legal framework in India that governs the sale and purchase of goods, defining rights and obligations of buyers and sellers.
Who is called a buyer?
A buyer is an individual or entity that purchases goods or services from a seller.
What are the classifications of goods?
Goods are classified as existing, future, specific, or generic, depending on their nature and availability.
What are the 4 types of goods?
The four types of goods are consumer goods, industrial goods, perishable goods, and non-perishable goods.
What are the 4 types of product?
The four types of products are convenience products, shopping products, specialty products, and unsought products.
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