group 2 - sale of goods act

8/2/2019 Group 2 - Sale of Goods Act

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Submitted by:

Vikram Datta (2502)

Namrata Sethi (2532)

Prachi Ahuja (2553)

- Transfer of Property- Performance of Contract of Sale- Rights of Unpaid Seller

MFC (1st Semester)

Department of Financial StudiesUniversity of Delhi


2/78

Sale means the primary transfer of property in goods by the seller to thebuyer.

Transfer of propertyin goods means the transfer of ownership of goods

'Property in goods is different from possession of goods. Possessionrefers to the custody.

So the property in goods may pass from the seller to the buyer but thegoods may be in possession of the seller either as unpaid seller or as abailee for the buyer.


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Risk 'prima-facie' passes with the property (Sec. 26)

Suit for prices

Insolvency of the seller or the buyer

Action against the third party.


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Unless otherwise agreed, the goods remain at the seller's risk until theproperty therein is transferred to the buyer, but when the property therein istransferred to buyer, the goods are at the buyer's risk whether delivery hasbeen made or not"


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Thus, if after the contract the goods are destroyed or damaged the question

who is to bear the loss is to be decided not on the basis of possession ofthe goods but on the basis of ownership of goods. The owner must bear theloss.

A buys goods from B and the property has passed to him, but the goodsremain in the warehouse of B. before the delivery of the goods there is afire in the warehouse and all goods are destroyed. A must bear the loss and

pay the price of goods to B, if he has not paid so far.

An exception:

It provides that where delivery of the goods has been delayed through thefault of either the buyer or the seller, the goods are at the risk of the party infault as regards any loss which might not have occurred but for such fault.


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A contracted to purchase 30 tons of apple juice from B. B crushed the

apples and filled 30 tons of juice in casks and kept them ready for delivery.After a few casks had been delivered A refused to take further delivery. The

juice became putrid and had to be thrown away. Held, although the goodwas still with B, yet the loss had to be borne by A


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Transfer of

property

Specified or

Ascertained goods

At the time of

making the

contract

When the good is

paid for

When the goodsare delivered

Unascertained orFuture goods


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Where there is an unconditional contract for the sale of specific goods in adeliverable state, the property in the goods passes to the buyer when thecontract is made, and it is immaterial whether the time of payment of theprice or the time of delivery of the goods, or both, is postponed.

Where there is a contract for the sale of specific goods and the seller isbound to do something to the goods for the purpose of putting them into adeliverable state, the property does not pass until such thing is done andthe buyer has notice thereof.


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A agrees to sell to B the whole of turpentine oil lying in a cistern. It is furtheragreed that the oil is to be put into casks by A and then Bis to take them away.Some of the casks are filled in the presence of B, but before any are removedor the remainder filled, the whole lot is destroyed by fire.

Held that, Bmust bear the loss of oil which had been put into cask because theproperty has passed to him but the remainder of the oil not put into casksremained to be the sellers property, at whose risk they continued.


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Where there is a contract for the sale of specific goods in a deliverable

state, but the seller is bound to weigh, measure, test or do some other actor thing with reference to the goods for the purpose of ascertaining theprice, the property does not pass until such act or thing is done and thebuyer has notice thereof.


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A sold to B289 bales of goat skins, each bale containing five dozens, andthe price was for certain sum per dozen skins. It was the duty of A to countthe goatskins in each bale. Before A could do the same, the bales weredestroyed by fire. Held, that the property in the goods had not passed to thebuyer (i.e. ,B) as something still remained to be done by the seller (i.e.,A)for ascertaining the price, and as such the loss caused by fire had to be

borne by the seller (i.e., A).


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Property in

goods passes

to the buyer

Approval or

acceptance

No

approval/acceptance

but no notice of

rejection over

reasonable period of

time


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A delivered a horse to Bon the terms of sale of return, within 8 days. Thehorse died on the third day without any fault on the part of B. Held, A was tobear the loss as the horse was still his property when it perished.

A delivered a horse to B on trial for 8 days. B continued to retain the horseeven after the expiry of 8 days without giving notice of rejection to A. B hadautomatically become the owner of the horse on the expiry of 8 days.


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The rules pertaining to transfer of property inunascertained and future goods is contained

in Section 18 and 23.

Essentials of valid

appropriation for

unascertained/

future goods

Appropriation

of goods

(i) Quality

(ii) Quantity

Intention not

accident

Assent of both

parties

Unconditional


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Goods are unconditionallyappropriated to the contract

delivers the

goods to the

buyer or to a

carrier or

other bailee

does not

reserve the

right of

disposal

for the purpose

of transmission

to the buyer


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The seller may by contract or appropriation reserve the right of disposal ofgoods until certain conditions are fulfilled.

Property in the goods does not pass to the buyer until conditions imposedare fulfilled irrespective of delivery of goods.


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The seller cannot transfer to the buyer of goods a better title than hehimself has.

If a thief disposes stolen property, the buyer acquires no title though he mayhave purchased the goods bonafidefor the value, and the real owner of thegoods is entitled to recover the possession of goods without paying

anything to the buyer.

Thus a buyer will not get a good title to the goods unless he purchasesgoods from a person who is the owner thereof or who sells them under theauthority or consent of the buyer.


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An unauthorized sale by a mercantile agent

Transfer of title by estoppel

Sale by a joint owner

Sale by a person in possession under voidable contract

Sale by a seller in possession after sale

Sale by buyer in possession after agreement to buy

Resale by an unpaid seller


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Unauthorized

sale by a

mercantile

agent

When acting in

ordinary

course of

business

The buyer actsin good faith at

the time of the

contract

Should be in

possession of

goods or

documents of

title


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Estoppel means that a person who by his conduct or words leadsanother to believe that certain state of affair existed, would not beestopped from denying later on that such a state of affairs did not exist.

When the true owner of the goods by his conduct or words or by anyact or omission leads the buyer to believe that the seller is the owner ofthe goods or has the authority to sell them, he cannot afterwards denythe sellers authority to sell. In such a situation the buyer gets a titlebetter than the seller.


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Estoppel may arise in any of the following ways: The owner standing by, when the sale is effected, or

Still more, by assisting the sale, or

By permitting goods to go into the possession of another with all insignia ofpossession thereof and apparent title, or

If he has otherwise acted or made representations so as to induce thebuyer to alter his position to his prejudice


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Illustration:

M, the owner of a wagon allowed one of his employees K, to have his namepainted on it. Mdid so for the purpose of inducing the public to believe thatthe wagon belonged to K. Cpurchased the wagon from K in good faith. Cacquired a good title as Mis estopped from denying Ksauthority to sell.


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

Illustration:

A,B and C

joint owners

A entrusted

to look after

the cow

A sells the

cow to D

D gets a

goods title

for bona

fidepurchase


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Possession of goods obtained under a voidable contract

Goods further sold before the contract is rescinded.

Buyer acquires good title if he acts in good faith

Illustration

A, by misrepresentation induces Bto sell and deliver to him a cow. A sellsthe cow to Cbefore Bhas rescinded the contract. Cpurchases the title ofthe cow in good faith and without notice of the sellers defective title. C

acquires a good title


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Seller in possession of goods or of the documents of title to them after saleof goods

Seller pledges or again sells either himself or through a mercantile agent

He will convey a good title to the buyer or pledgee provided the buyer orpledgee acts in good faith without notice of previous sale.


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Buyer has agreed to buy goods and obtains possession of the same or thedocuments of title with sellers consent

Resells or pledges himself or by mercantile agent

He will convey a good title to the buyer or pledgee provided the buyer orpledgee acts in good faith without notice of any lien or other right of theoriginal seller in respect to those goods.


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Illustration:

A buys some furniture and agrees to pay for that in two monthlyinstallments, the ownership to pass to him on payment of the secondinstallment. Having obtained possession of the furniture, A sells the

furniture to B before paying the second installment. B buys the furniturebona fide. Subsequently, A does not pay the second installment. Thefurniture dealer cannot take back furniture from B, who obtains a good titleto the same. The dealer can, of course, sue A for breach of the contract.


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When an unpaid seller, who has exercised his right of lien or stoppage intransit, resells the goods (of which ownership has passed to the buyer), thesubsequent buyer acquires a good title thereto as against the original buyer,even though the resale may not be justified in the circumstances, i.e., nonotice of resale has been given to the buyer.


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Sale by finder of lost goods under certain circumstances (Sec. 169, TheIndian Contract Act).

Sale by pawnee or pledgee under certain circumstances (Sec. 176, TheIndian Contract Act).

Sale by official receiver or assignee in case of insolvency of an individualand liquidators of companies.

Under negotiable instruments act, a holder in due course gets a better titlewhat his endorser had. In other words, a person who takes a negotiableinstrument in good faith and for value becomes the true owner even if hetakes it from a thief or a finder.


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The parties are free to provide any terms they like in their contract about thetime, place and manner of delivery of goods, acceptance thereof and paymentof the price.

But if the parties are silent and do not provide any thing regarding these

matters in the contract then the rules contained in the Sale of Goods Act areapplicable.

Performance ofcontract of sale

Delivery of goods bythe seller

Acceptance of thedelivery of goods andpayment for them by

the buyer


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Delivery of goods means voluntary transfer of possession of goods from oneperson to another [Sec. 2(2)].

If transfer of possession of goods is not voluntary, i.e, possession is obtained underpistol point or theft, there is no delivery.


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Actual Delivery Symbolic Delivery Constructive Delivery or

Delivery by Attornment

Where the goods arephysically handed over bythe seller (or his authorizedagent) to the buyer (or hisauthorized agent) , the

delivery is said to be actual.

Here the goods remainwhere they are (probablybecause they are bulky), butthe means of obtainingpossession of goods is

delivered.

Such a delivery takes placewhen the person inpossession of the goods ofthe seller acknowledges, inaccordance with the sellers

order, that he holds thegoods on behalf of the buyerand the buyer has assentedto it.


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1. Delivery may be either actual or symbolic or constructive (Sec. 33)

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

2. Delivery and payment are concurrent conditions (Sec .32)

Unless otherwise agreed, delivery of the goods and payment of the price areconcurrent conditions, that is, the seller should be ready and willing to deliver thegoods to the buyer in exchange for the price and the buyer should be ready andwilling to pay the price in exchange for possession of the goods simultaneously, just

like in a cash sale over a shop counter.


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3. Effect of part delivery, when property in goods is to pass on delivery (Sec. 34)

A delivery of part of the goods, in progress of the delivery of the whole, has the sameeffect, for the purpose of passing the property in such goods, as a delivery of thewhole.


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4.Buyer to apply for delivery (Sec. 35) - Although it is the duty of the seller to deliverthe goods according to the contract, yet he is not bound to deliver them until thebuyer applies for delivery.

It is the duty of the buyer to demand delivery, and if he fails to do so, he cannotblame the seller for the non-delivery. The parties may however, agree otherwise.

5. Time of delivery [Sec. 36(2) and (4)] - Where under the contract of sale the seller isbound to send the goods to the buyer, but no time for sending them is fixed, the selleris bound to send them within a reasonable time.

Demand of delivery by the buyer or the tender of delivery by the seller should be

made at a reasonable hour.


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6. Place of Delivery [Sec. 36(1)] - The place of delivery may be stated in the contractof sale, and where it is so stated, the goods must be delivered at the named placeduring business hours on a working day.

But, where no place is mentioned in the contract, the following rules must befollowed:

(i) In the case of sale, the goods are to be delivered at the place at which they are atthe time of the sale.

(ii) In an agreement to sell, the goods are to be delivered at the place where theyare at the time of the agreement to sell.

(iii) In the case of future goods, the goods are to be delivered at the place at whichthey are manufactured or produced.


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7. Delivery of goods where they are in possession of a third party [Sec. 36(3)]

Where the goods at the time of sale are in the possession of a third person, there isno delivery by the seller to the buyer unless and until such third personacknowledges to the buyer that he holds the goods on his behalf.

Such a delivery is known as constructive delivery or delivery by attornmentand requires the consent of all the three parties, the seller, the buyer and the personhaving possession of the goods.

Where the seller hands over the delivery order to the buyer, there is no deliveryunless the sellers agent holding the goods has assented thereto.


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But, where the goods have been sold by the transfer of the document title to goods,e.g., railway receipt or bill of lading, the buyer is deemed to be in possession ofthe goods represented by such document, and the assent of the third party is notrequired.

8. Expenses of delivery [Sec. 36(5)] - Unless otherwise agreed, the expenses of and

incidental to putting the goods into a deliverable state must be borne by the seller.


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9. Delivery of wrong quantity or different quality (Sec. 37)

A seller is duty bound to deliver the goods to the buyer strictly in accordance with theterms of the contract.

A defective delivery, i.e .,delivery of a quantity less or more than that contracted foror delivery of goods mixed with the goods of a different description not included in thecontract, entitles the buyer:

(i) to reject the whole, or

(ii) to accept the whole, or

(iii) to accept the quantity and quality he ordered and reject the rest of the goods sodelivered.


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In case of rejection of goods because of defective delivery the buyer is not bound toreturn them to the seller, but it is sufficient if he intimates to the seller that he refusesto accept them (Sec. 43).

The right to reject the goods is not equivalent to right to cancel the contract.

If the buyer rejects the goods, the seller has a right to tender again goods of contractquality and quantity subject to the terms and conditions of the contract and buyer isbound to accept the same. (Vilas Udyog Limited vs Prag Vanaspati)


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Where the buyer accepts the goods, he must pay for what he has actually acceptedat the contract rate.

Short Delivery: Entitlement to claim damages from the seller.

Deficiency / Small Excess: Buyer must accept the goods.

(Based on the maxim that The law does not take trivial deviations intoaccount)

Above provisions are subject to any usage of trade, special agreement or course ofdealing between the parties. [Sec.37(4)].


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10. Installment Deliveries (Sec.38) - Unless otherwise agreed the buyer of goods isnot bound to accept delivery thereof by installments.

If the parties so agree only the delivery of the goods may be made by installments.

When the parties agree that the delivery is to be made by installments and each

installment is to be separately paid for, and either buyer or seller commits a breachof contract in respect of on or more installments, there arises a question as towhether such a breach amounts to a breach of the whole of contract or abreach of only a part of it?

The answer to this question depends upon the terms of the contract and the

circumstances of the case.


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Unless otherwise agreed the following two factors must be borne in mind in decidingthe whole matter:

(a) The quantitative proportion which the breach bears to the contract as a whole, and

(b) The degree of probability of the repetition of the breach

(Maple Flock co. ltd. v/s Universal Furniture Products Limited)

Illustration

A sold to B 1,500 tons of meat of a specified quality to be shipped 125 tons monthly in equal weeklyinstallments. After about half the meat was delivered and paid for, B discovered that it was not of the

contract quality and could have been rejected, and therefore he refused to take further deliveries.

Held that B was entitled to do so (Robert A. Munroe and Co. Ltd. v/s Meyer) If B might havediscovered the defect just after the 1st installment he would not have been allowed to repudiate the wholecontract but only the damages for the loss in that particular installment delivery would have been allowed.


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11. Delivery to carrier or wharfinger (Sec. 39) - Where the seller is authorized orrequired to send the goods to the buyer, delivery of the goods to a carrier whethernamed by the buyer or not for the purpose of transmission to the buyer, or the deliveryof the goods to a wharfinger for safe custody, is prima faciedeemed to be a delivery ofthe goods to the buyer.

Sellers Duty: Unless the buyer requires to dispatch the goods at owners risk it is theduty of the seller when he delivers the goods to the carrier or wharfinger to enter into areasonable contract on behalf of the buyer for the safety of the goods, if he fails to doso, and the goods are lost or damaged, the buyer may decline to treat the delivery tothe carrier or wharfinger as a delivery to himself or may hold the seller responsible indamages.


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Sea transit: Unless otherwise agreed where goods aresent by the seller to the buyer by a route involving seatransit, where it is usual to insure, the seller must informthe buyer in time to get the goods insured during their seatransit, and if the seller fails to do so the goods shall bedeemed to be at his risk during such sea transit.

12. Liability of the buyer for neglecting or refusing to take delivery of goods(Sec. 44)

When the seller is ready and willing to deliver the goods and request the buyer totake delivery, and the buyer does not within a reasonable time after such requesttake delivery of the goods, he becomes liable to the seller for any loss occasioned byhis neglect or refusal to take delivery, and also for a reasonable charge for the careand custody of the goods.


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According to Section 42 the buyer is deemed to have accepted the goods in either ofthe following circumstances namely:

i) When he intimates to the seller that he has accepted the goods: Beforeintimating about acceptance the buyer has a right, under Sec. 41, to examine and testthe goods in order to be sure as to whether they are in conformity with the contract

regarding quality etc.

ii) When he does any act in relation to any goods which is inconsistent with theownership of the seller e.g. consumer, uses, pledges or resells the goods or puts hismark on them.


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iii) When after the lapse of a reasonable time, he retains the goods withoutintimating the seller that he has rejected them.

If the time for rejection is stipulated, rejection must be within that period .

On rejection of goods because of defective delivery, mere informing the sellers andthe buyer is not bound to return the rejected goods to the seller.

Illustration

Where the buyer having seen that samples drawn from bulk where inferior to the samples originallyshown to him, offered the goods for sale by auction at reduced price and the auction having failed toproduce a purchaser, the buyer purported to reject the goods, it was held that the buyer could not doso as he had in law accepted the goods (Parker v/s Parmer) .


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Definition:

The seller of goods is deemed to be an unpaidseller:

a) When the whole of the price is not been paid or tendered; or

b) Where a bill of exchange or other negotiable instrument has been received as aconditional payment


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This definition emphasizes the following characteristics of an unpaidseller:

i) He must sell goods on cash terms and not on credit, and he must be unpaid.

ii) He must be unpaid either wholly or partly even if only a portion of the price,however small remains unpaid, hes deemed to be an unpaid seller where the price is

paid through a bill of exchange or other negotiable instrument the same must bedishonored.

iii) He must not refuse to accept payments when tendered.

If the price has been tendered by the buyer but the seller wrongfully refuses to take

the same he ceases to be an unpaid seller.

Rights of an


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Rights of anUnpaid Seller

Against thegoods

Against thebuyerpersonally

Where the

property inthe goodshas passed

Where theproperty inthe goodshas notpassed

Lien

Stoppagein transit

Re-sale

Withholding

Delivery

Suit forinterest

Repudiationof contract

Suit fordamages

Suit forprice

Right of


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A lien on the goods for theprice while he is in

possession of them

A right ofre- sale aslimited by this Act.

In case of the

insolvency of thebuyer a right of

stopping the goods in

transit after he has

parted with the

possession of them

unpaidseller: Sec46(1)


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A lien is a right to retain the possession of goods until the

payment of price.

The legal provisions regarding the right of lien of an unpaid seller has been stated fromSections 47 to 49 of the Sale of Goods Act, 1930 which may be enumerated as follows :

According to Section 47(1) the unpaid seller of the goods who is inpossession of them is entitled to retain possession of them until paymentor tender of the price in the following cases namely :

(a) where the goods have been sold without any stipulation as to credit.(b) where the goods have been sold on credit, but the term of credit has

expired; or(c) where the buyer becomes insolvent.

Section46(1)(a)

Right oflien: Sec47(1)


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This right can be exercised by the unpaid seller if the following 2 conditions aresatisfied:

Unpaid seller

must be in actual

possession of

the goods sold.

Unpaid seller can

retain the goods

only for the

payment of the

price of the

goods.

Right of lien



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(a) Where the goods are sold without any stipulations as to credit (i.e. in cash sales),

the unpaid seller may retain the goods if the buyer fails to pay the whole price. Hecannot retain the goods for any other charge e.g. maintenance, charge of storageduring the exercise of lien.

(b) Where the goods are sold on credit, the unpaid seller may retain the goods if thebuyer fails to pay the whole price after the expiry of the credit period.

(c) Where the buyer becomes insolvent, the unpaid seller may retain the possession ofthe goods until the whole price is paid. It is so because, the law does not compel aperson to deliver the goods to an insolvent.



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Sec 48: Where an unpaid seller has delivered a part of the goods, he may exercise

his lien on the remaining part of the goods. But where a part delivery is made underthe circumstances which show an agreement to waive a lien, the seller cannot retainthe goods.

The right of lien is indivisible in nature and the seller cannot be compelled to deliver apart of the goods on payment of the proportionate price of the goods.

Unpaid Seller Right Of Lien Legal ProvisionsRight oflien: Sec48


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The right of lien is linked with the possession of the goods and not with the title of the

goods. Thus, the goods must be in actual possession of the seller.

It is however, not necessary that he should possess the goods as an owner. He canexercise the right of lien, even if he is possessing the goods as an agent or the bailee

for the buyer.



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Termination

or loss of lien

[Sec 49 (1)]

When the buyer or the

agent obtains thepossession of the

goods as buyer. [Sec

49(1)(b)]

By delivery of goods to

carrier or bailee fortransmission without

reserving the right of

disposal of the goods.

[Sec 49(1)(a)] By waiving the right of

lien :

a) Express Waiver

b) Implied waiver

[Sec49(1)(c)]


Right of


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[ Knights v. Wiffen (1870)]

ells but notdelivers

Lends for use

Right of lien notlost

lien: Sec49(1)

Right of


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(c) By the waiver of the lien: The right of lien is for the benefit of the seller. If he likes hemay waive his rights and by the waiver the lien is lost. The waiver may be expressed

or implied:

lien: Sec49(1)

When the contract of sale provides in express

terms that the seller shall not retain

possession of the goods even if the price hasnot been paid.Express Waiver

When the seller sells the goods on credit or

grants a fresh term of credit on the expiry of

the original term of credit, lien is waived until

the expiry of the term of credit.Implied Waiver


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Sec 50 - Subject to the provisions of this Act, when the buyer of goods becomesinsolvent, the unpaid seller who has parted with the possession of the goods has theright of stopping them in transit, that is to say, he may resume possession of thegoods as long as they are in the course of transit, and may retain them until paymentor tender of the price.

Seller Buyer

Parted withthepossession ofthe goods

Insolvent

Retain the possession ifstill in transit till price

received.


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Ram sells 200 bales of cloth to Shyam andsends 100 bales by lorry and 100 bales byRailway. Shyam receives delivery of 100bales sent by lorry, but before he receivesthe delivery of the bales sent by railway, hebecomes bankrupt. Ram being still unpaid,stops the goods in transit.


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Goods are deemed to be in course of transit from the time when they are delivered to acarrier or other bailee for the purpose of transmission to the buyer, until the buyer or hisagent in that behalf takes delivery of them from such carrier or other bailee.

The carrier may hold goods as:

1. Sellers agent2. Buyers agent

3. Independent capacity

Right ofstoppage: Sec 51


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If the goods are rejected by the buyer and the carrier or other bailee continues inpossession of them, the transit is not deemed to be at an end, even if the seller hasrefused to receive them back. [ Sec 51 (4)]

Where part delivery of the goods has been made to the buyer or his agent in thatbehalf, the remainder of the goods may be stopped in transit, unless such partdelivery has been given in such circumstances as to show an agreement to give uppossession of the whole of the goods. In such a case goods cannot be stopped intransit. [ Sec 51 (7)]

Right ofstoppage: Sec 51

Right of


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Sec 51 (2)

Interception by the buyer: If the buyer or his agent in that behalf obtains delivery of the

goods before their arrival at the appointed destination, the transit is at an end.

Sec 51 (3)

Carriers acknowledgement to the buyer: If, after the arrival of the goods at the

appointed destination, the carrier or other bailee acknowledges to the buyer or his agent

that he holds the goods on his behalf and continues in possession of them as bailee for

the buyer or his agent, the transit is at an end.

Sec 51 (6)

Carriers wrongful refusal to deliver the goods to the buyer: Where the carrier or other

bailee wrongfully refuses to deliver the goods to the buyer or his agent in that behalf,

the transit is deemed to be at an end.

Eg: If the carrier refuses to deliver the goods because of non payment of freight charges,

the refusal is not wrongful.

stoppage: Sec 51

Right of


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Seller expresslyreserves the rightof resale in casethe buyer makesa default.

Seller gives notice ofintention to resellproviding reasonabletime to pay the price.

Goods are ofperishable nature

Resale :Sec 54

Right of


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Right of ResaleResale :Sec 54(2)Loss: Can claim from the

buyer as damages forbreach of contract.

Profit: He is not bound tohand it over to buyer.

In case notice is not given the unpaid seller is not entitled to:1. To recover any loss on resale of goods.2. To retain any surplus arising on resale of goods.

Right of


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WithholdingDelivery :Sec 46(2)

Ownership of goods nottransferred to buyer. Buyer failing to pay theprice.

Right ofwithholding

delivery.

Right of


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Case: Mohiuddin vs. Ajay

Right of Withholding DeliveryWithholdingDelivery :Sec 46(2)Full paymentor no goods.


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Suit for Price [Sec 55] :a) Where the property has passed. [Sec 55(1)].

b) Where the property has not passed. [Sec

55(2)].

Suit for damages for non-acceptance [Sec 56]:- Measures of damages, Sec 73 of the IndianContract Act, 1872 applies.

Repudiation of contract before duedate [Sec 60]:a) Treating contract as subsisting.

b) Rule of anticipatory breach of

contract.

Suit for interest [Sec 61(2)(a)]:a) Where specific agreement withregard to interest exists.

b) Where no specific agreement with

regard to interest exists.

Rights inPersonam


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Suraj sold his car to Sohan for Rs. 75,000. After inspection andsatisfaction, Sohan paid Rs. 25,000 and took possession of the car andpromised to pay the remaining amount within a month. Later on Sohanrefuses to give the remaining amount on the ground that the car was not ina good condition. Advise Suraj as to what remedy is available to himagainst Sohan.


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A sale by auction is a public sale where different intending buyers try to outbid eachother. The goods are ultimately sold to the highestbidder.


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Proposed auction is duly

advertised & a printed

catalogue of the goods

together with terms of sale is

circulated.

On the appointed day the

auctioneer puts different lots

to auction & invites bid from

the intended buyers. Every bidis an offer.

The auction goes in favor of

the highest bidder. The fall of

hammer or other customary

announcement constitutes the

acceptance of the offer by the

auctioneer.


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Goods put up for sale in lots. [Sec 64(1)]

Completion of sale. [Sec 64(2)]

Right of seller to bid. [Sec 64(3)]

Sale not notified subject to a right to bid. [Sec 64(4)]

Reserve price. [Sec 64(5)]

Use of pretended bidding. [Sec 64(6)]

Knock out or agreement not to bid against each other. [Sec 64(7)]


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At an auction sale, C made the highest bid for an article of P. State the legal positionsin the following cases:

a) If C withdrew the bid before the fall of the hammer though he knew that one of thecondition of sale was bid once made cannot be withdrawn.

Ans: Payne vs Cave, Section 64(2).

b) If P refuses to accept the highest bid. The sale was not notified subject to a reserveprice.

Ans: Fenwick vs Macdonald.

c) If P appointed 2 persons A & B to bid on his behalf. The sale was notified subject toright to bid.

Ans: Thornett vs Haines,.


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d) If C was allowed to take it away on (i) giving a cheque for the price (ii) signing anagreement that the ownership should not pass to him until the cheque was cleared.The cheque was dishonored but in the meantime C sold the article to Z.

Ans: Dennant vs Skinner

e) If the sale was notified subject to a reserve price and the auctioneer by mistake

accepted the Cs highest bid (which was lower than the reserve price) by striking thehammer. Later the auctioneer refused to deliver the goods.

Ans: Manas vs Fortesque


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group 2 - sale of goods act

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