Contract of Sale of Goods-Writing Technically-Lecture Slides, Slides of Technical Writing

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Contract of Sale of Goods

Contract of Sale of Goods is a contract in which the seller transfers of agrees to transfer the property in goods to the buyer for a price.

Essentials of Contract of Goods

Transfer of Property:

• Property means ownership not mere transfer of possession.
• Subject matter of the contract must be goods.
• Goods means every kind of moveable property other than actionable claims and money.
• The consideration in a sale contract must be money. When goods are sold or exchanged for other goods, it is not a contract of sale the transaction is a barter.

Kinds of Goods

1.Existing Goods Goods owned or possessed by the seller at the time of contract of sale. (a)Specific Goods The goods identified and agreed upon at the time of contract of sale are calledspecific goods. (b)Unascertained Goods that are not identified and agreed upon at the time of sale. The ownershipof goods is not transferred to the buyer until the goods are indentified.

2. Future Goods Goods which are not possessed by the seller at the time of sale but will bemanufactured, produced or acquired by the seller after making the contract. The seller can only make an agreement to sell the future goods. 3. Contingent Goods Goods which are not in existence at the time of sale, but will come into existenceon happening of a certain event. A contract of sale of contingent goods is enforceable when the contingency happens on which the performance ofcontingent contract depends. I f the event does not happen, the contract become void.

Destruction of Goods

The goods are said to be destroyed in the following circumstances:

(a) The goods have lost their commercial value as a result of damage.

(b) Loss of goods by theft.

(c) When goods are lawfully confiscated by the Govt.

Condition

• Condition is a stipulation that forms the very basis of contact of sale. It is essential for the main purpose of the contract and its non- fulfillment results into a irreparable loss to the aggrieved party. In case of violation of a condition the aggrieved has right to cancel the contract.

Warranty

• Warranty is a stipulation collateral to the main purpose of contract of sale, breach of which give rise to a claim for damages but not the right to reject the goods and treat the contract of sale of goods as cancelled.

Implied Conditions

Following are the implied conditions in a contract of sale:

1. Condition of Title: The seller has a right to sell the goods. 2.Sale by Description: The goods must correspond with the description. 3. Sale by Sample: The goods mist be supplied according to the sample agreed. Bulk of goods must correspond with the sample. Buyer has a reasonable opportunity to inspect goods. Goods must be free from defects apparently.

Cont……

4 Sale by Sample and Description: Bulk of goods must correspond with sample and description.

5. Condition of Fitness and Quality: Where the buyer informs the seller about the particular purpose for which goods are required, the goods must be reasonably fit for such purpose. 6. Condition of Merchantability: Goods must be fit for the purposes for which they are generally used. The goods must be free from hidden defects.

Implied Warranties

1. Quiet Possession: The buyer shall have the possession and enjoyment of goods without disturbance from the seller. 2. Freedom from Encumbrances: Freedom from encumbrances in favor of any third party. **3. Usage of Trade:

4. Disclosure of Dangerous Goods:** It is an implied warranty on the part of seller to warn the ignorant buyer about the probable danger in case the goods are of dangerous nature.

Doctrine of Caveat Emptor

Let the buyer beware.

• It is the duty of the buyer to be careful while purchasing goods.
• Buyer should ensure that the goods are suitable for his purposes.
• The seller must inform the buyer about the defects in goods that are not obvious.
• If the defects are obvious, the seller is not bound to inform the buyer.

Transfer of Property

Transfer of property means that the buyer becomes the owner of goods.

Rules Regarding Transfer of Property:

1. Unascertained Goods:

When there is contract of sale of unascertained or future goods, the buyer does not become the owner unless the goods are ascertained.

Cont…..

2. Intention of Parties: In case of sale of specific goods the buyer becomes the owner as per the terms of contract visa at the time of contract, or when goods are delivered, or when the payment is made. 3. Goods in Deliverable State: When there is an unconditional sale of specific goods, the buyer becomes the owner as soon as the goods are in a deliverable state.

Cont……

6. Unconditional Appropriation: W hen there is a contract of sale of unascertained or future goods by description, the ownership passes to the buyer when such goods of that description are put in a deliverable state by the seller and are unconditionally appropriated to the contract. 7.Delivered to the Carrier: Delivery of goods to the carrier is considered as delivery to the buyer.

Cont…….

8. Goods delivered on Approva l:

When goods are delivered to the buyer on approval or ‘on sale or return’ or other similar terms, the ownership passes to the buyer: When he gives acceptance to the seller When he retains the goods without giving a notice of rejection