The sale of goods constitutes one of the most important kinds of law-abiding contracts in India. India is one of the biggest economies and also a great nation, with adequate safeguards and measures to ensure the stability and development of its industries and trade. We will clarify here The Sale of Goods Act, 1930 on Selling of Goods, which specifies and lays down requirements relating to trade and sale of goods.

The Indian Sale of Goods Act, 1930 is a mercantile Law. The Indian Sale of Goods Act of 1930 was a market law which came into being on 1 July 1930 in the British Raj. It shall lay down contracts where the seller transfers the right (ownership) of the goods or agrees to move them to the buyer. This applies to the whole of India. The Act includes the selling of merchandise from owner to customer at a certain price and for a certain time span. The term 'Indian' was also withdrawn with effect from 22 September 1963. This Act is now known as the 'The Sale of Goods Act, 1930.'

The Indian Contract Act, 1872 directed contracts in connection with the selling and purchasing of commodities until 1930. Sections 76 to 123 of the Indian Contract Act of 1872 were repealed in 1930 and the Indian Sale of Goods Act of 1930 was passed. The sale of the goods is a contract whereby the seller transfers the goods to the buyer or agrees to transfer the goods to the buyer for a price.

The Sale of Goods Act, 1979 is a United Kingdom Parliament Act that governs English contract law and UK consumer law with regard to goods sold and purchased. The Act consolidated the original Sale of goods Law 1893 and the succeeding statutes, which in essence codified and reinforced the law. Many small constitutional amendments and additions to the 1979 Act have been made since 1979. It was repealed by the Consumer Protection Act 2015, on 1 October 2015, for certain aspects of consumer contracts but still forms the primary regulation underpinning transactions covering the sale or purchasing of products from company to firm.

The Act applies to contracts where property in 'goods' are transferred or agreed to be transferred for a monetary consideration, in other words: where property (ownership) in personal chattels is sold.

English Sale Of Goods Act

This act is applicable to the contract of sale of goods made on or after 1st January 1894. Its territorial extent is to United Kingdom.

Sale Of Goods Act

It came into force in 1st July 1930, it defines various aspects of the act like goods, buyer, insolvency, price, property, seller etc. its territorial extent is to whole if India.

Formation Of Contract

English Sale Of Goods Act

A contract of sale of goods is a contract by which the Contract seller transfers or agrees to transfer the property in goods to the of sale. buyer for a money consideration, called the price. Difference between sales and agreement to sale. Sale is a contract where the ownership in the goods is transferred by seller to the buyer immediately at the conclusion contract. Agreement to sale is a contract of sale where the transfer of property in goods is to take place at a future date or subject to some condition thereafter to be fulfilled.

Section 3(2) provides that if goods are sold and delivered to minors or those mentally incapacitated the minor will be liable to pay a reasonable price if the goods are necessaries. Under sections 6 and 7, concerning specific goods that perish, a contract is void where they perish before and avoided where they perish after contract formation. Section 12 incorporates into the contract a term that the seller either has legal title to the property to be sold or that he will have title at the time when property is to pass.

Section 13(1) provides that where the buyer is sold goods by description, the goods must correspond with this description. Section 14 states that terms are implicitly about quality and title and are only relevant where the seller is acting in the course of a business.

Rowland v. Divall (1923)[1]

The complainant, a car dealer, purchased a car for £334 from the defendant. He painted the car and displayed it and sold it for £ 400 to a customer. The police impounded the car two months later as it was stolen. It was then returned to the original owner. The complainant as well as the defendant did not know the car was stolen. The complainant gave the consumer back the £ 400 and filed a lawsuit under the Sale of Goods Act against the defendant.

The defendant did not have the right to sell the goods as he did not obtain good title from the thief. Ownership remained with the original owner. The defendant was using the car for 2 months and was not obliged to pay for it and the plaintiff was not entitled to compensation for his work and money spent on the car.

Beale v. Taylor (1967)[2]

The defendant announced a 1961 Triumph Herald 1200 car for sale which he believed to be real. The plaintiff tested the car and saw a metal disc in the back of the car written "1200′′ and bought the car. The car was subsequently found to consist of a rear 1961 Herald Triumph 1200 sold to the front of a former Triumph Herald 948 model. It was held to be a breach of Section 13 despite the fact that claimant had inspected the car as he relied on the description in the advertisement and the metal disc at the rear of the car.

Sale Of Goods Act

5 essentials of a valid contract:

• Two parties: A sale has to be bilateral because the goods have to pass from one person to another
• Subject matter to be goods: The term 'goods' is defined in Section 2(7). It states that 'goods' means every kind of movable property other than actionable claims and currency.
• Transfer of ownership of Goods: There must be transfer of ownership or an agreement to transfer the ownership of goods from the seller to the buyer
• Consideration is Price: The consideration in a contract of sale has to be price i.e., money. If goods are offered as the consideration for goods, it will not amount to sale.
• Essential elements of a valid contract: All the essentials of a valid contract must be present. viz., competent parties, free consent, legal object and so on.

Section 4 provides that if the property in goods is transferred from the seller to the buyer under a contract, the contract is called a sale. Where the transfer of the property in the goods will take place at a future time or is subject to some condition which has to be fulfilled, the contract is called an agreement to sell. Section 9 lays down how the price may be fixed in a contract of sale. Section 10 makes it clear that if the third party appointed under the agreement to fix the price cannot or does not make such valuation, then the agreement to sell goods will become void.

H. Anraj v. Government of Tamil Nadu[3] it was held that lottery tickets were goods and not actionable claims. Thus, sale of lottery tickets is sale of goods.

In the case of Commissioner of Sales Tax v. Madhya Pradesh Electricity Board[4], the Supreme Court observed that the electricity can be transmitted, transferred, delivered, stored, possessed, etc., in the same way as any other movable property. If there can be sale and purchase of electric energy like any other movable object, we see no difficulty in holding that electric energy was intended to be covered by the definition of goods.

Performance Of The Contract

English Sale Of Goods Act

Section 27 to 39 concerns the performance of the contract. Under section 29, concerning the place of transfer, where location is not stipulated, the buyer must collect the goods at the sellers' place of business. The seller must be prepared to deliver them to the entrance of his place of business.

It is the duty of the seller to deliver the goods, and of the buyer to accept and pay for them, in accordance with the terms of the contract of sale. Unless otherwise agreed, the buyer of goods is not bound to accept delivery of them by instalments. 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 must nevertheless (unless otherwise agreed) take any risk of deterioration in the goods necessarily incident to the course transit.

When the seller delivers the goods in less or more quantity, he may accept the goods and pay for it or in case of larger goods, he may keep the required quantity and return the rest. When the buyer has the burden to take the delivery, any loss incurred beyond reasonable time he is liable to pay the seller for any losses.

J & H Ritchie Ltd v. Lloyd Ltd (2007)[5]

Mr Ritchie bought an all in one seed drill and harrow from Lloyd Ltd. It did not work. Lloyd Ltd agreed to take it back, investigate, and repair it. Lloyd Ltd returned it, and just said it had been repaired to factory gate standard. Mr Ritchie found out a serious defect. He would be using this in the next summer and till that time manufacturers guarantee would be affected. So, Mr Ritchie rejected the machine. Under sec 35. The House of Lords all agreed that Mr Ritchie was entitled to reject the equipment, even though it had in fact been repaired.

Sale Of Goods Act

It is the duty of the seller to deliver the goods and the buyer to pay for them and accept them, as per the terms of the contract and the law on sale. The delivery of goods can be made either by putting the goods in the possession of the buyer or any person authorized by him to hold them on his behalf or by doing anything else that the parties agree to. Consider a contract of sale where the seller agrees to send the goods to the buyer, but not time of delivery is specified. In such cases, the seller is expected to deliver the goods within a reasonable time.

When the seller delivers the goods in less or more quantity, he may accept the goods and pay for it or in case of larger goods, he may keep the required quantity and return the rest. If the goods are to be delivered at a distant place, then the liability of deterioration incidental to the course of the transit lies with the buyer even though the seller agrees to deliver at his own risk. S. 41, If the buyer did not get a chance to examine the goods, then he is entitled to a reasonable opportunity of examining them.

If the seller is willing to deliver the goods and requests the buyer to take delivery, but the buyer fails to do so within a reasonable time after receiving the request, then he is liable to the seller for any loss occasioned by his refusal to take delivery.

Nagan Das Mathura Das v. N.V. Valmamohomed (1930)[6] AIR 1930 Bombay 249
If a buyer orders goods of a certain description, and the seller delivers goods of a different description, it is open to the buyer to reject them. But if he does not reject them but keeps the goods, even if he does so in ignorance of the fact that they are of a description different from that provided for by the contract he is debarred from rejecting the goods thereafter, and can only fall back upon a claim for damages, as upon a breach of warranty.

Actions For Breach Of The Contract

English Sale Of Goods Act

Sections 49 to 54 concern actions for breach of contract. Where, under a contract of sale, the property in the goods has passed to the buyer and he wrongfully neglects or refuses to pay for the goods according to the terms of the contract, the seller may maintain an action against him for the price of the goods. The measure of damages is the estimated loss directly and naturally resulting, in the ordinary course of events, from the buyer's breach of contract.

Where the seller wrongfully neglects or refuses to deliver the goods to the buyer, the buyer may maintain an action against the seller for damages for non-delivery. Remedy for specific performance of a contract and also for the breach of warranty. In the case of breach of warranty of quality such loss is prima facie the difference between the value of the goods at the time of delivery to the buyer and the value they would have had if they had fulfilled the warranty.

Hadley v Baxendale (1854)[7]
It provides that Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either as arising naturally, i.e. according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it

Sale Of Goods Act

The seller 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 are not fulfilled, he cannot sue for the payment under this section. 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 into account.

When the property in the goods has passed, the buyer, provided that he is entitled to the immediate possession, has all the remedies of an owner against those that deal with the goods in a manner inconsistent with his rights. A breach of warranty does not entitle the buyer to reject the goods and his only remedy would be those provided in s. 59 namely, to set up against the seller the breach of warranty in diminution or extinction of the price or to sue the seller for damages for breach of warranty.

This section, does not appear in the English act, and deals with anticipatory breach of a contract, that is to say, a manifested intention, by either party, to not be bound by the promise to perform that part of the contract when the time of performance arrives.

Suresh Kumar Rajendra Kumar v K Assan Koya & sons (1990)[8]
The plaintiff sold, through the commission agents, the goods and claimed compensation from the buyer who had rejected them. While doing so the plaintiff had taken all the measures necessary to sell the goods urgently in the ordinary course of business. In the absence of any records to show that the sale was conducted in an improper manner, it was held by the court that the plaintiff was entitled to claim the difference between the price at which the rice was supposed to be sold to the defendants, and the price at which it was finally sold.

Conclusion
The Act has also been recently subjected to a reduction in its scope. The Consumer Rights Act 2015 (the 2015 Act), which came into force in October 2015, repealed a significant portion of the Act. Importantly, the 2015 Act has enshrined consumer protections relating to digital content.

To a degree therefore, the 1979 Act has been superseded. However, the Act still provides important concepts: the 2015 Act has principles of quality and fitness for purpose that are very similar to the 1979 Act. Therefore, the Act continues to be relevant. It is submitted the Act has been part of, and has helped to develop, consumer protection. It has been part of an effort to boost competition by giving consumers certain assurances about their rights when purchasing from businesses.

Both English and Indian sale of goods act is more or less the same because when Indian sale of goods act was adopted, India was a British colony so most of the sections are the same with some changes which were necessary to amend for the Indian society.

End-Notes:

1. Rowland v Divall [1923] 2 KB 500
2. Beale v Taylor [1967] 1 WLR 1193
3. H. Anraj vs. Government of Tamil Nadu AIR (1986) SC 63
4. Commissioner of Sales Tax vs. Madhya Pradesh Electricity Board AIR (1970) SC 732
5. J&H Ritchie Ltd v Lloyd Ltd [2007] UKHL 9
6. Nagan Das Mathura Das v. N.V. Valmamohomed AIR (1930) Bombay 249
7. Hadley v Baxendale [1854] EWHC J70
8. Suresh Kumar Rajendra Kumar vs K. Assan Koya & Sons AIR (1990) Ker 20