Contract of Sales of Goods

In a contract of sale of goods, the seller transfers his property to the buyer in exchange for a fixed sum of money. Price is essential to this agreement. Gifting is the act of transferring commodities to another person without charging them anything. In contrast, a gift occurs when ownership of a good is given from one person to another without payment, hence it is not a sale. Consequently, the transfer of commodities from the seller to the buyer for a specific price is referred to as a contract of sale of goods.

The sale of goods is defined under the Indian Transaction Act as "a contract whereby the seller transfers or agrees to transfer the property or products to the buyer for a consideration."

A contract of sale means a contract where the seller transfers or agrees to transfer the property and goods to the buyer for prices'. Some of the features of contract of sales of goods are given below:

• Two parties: Since a person cannot purchase his or her own products, a buyer and a seller must be two separate parties to the sales contract.
• Property: Another crucial component of a contract for the sale of commodities is the transfer of property. A sale cannot be defined as the simple transfer of possession of the goods. Here, "property" refers to "ownership."
• Goods: A "goods" contract of sale is required. Goods comprise stock and shares, growing crops, grass, and anything linked to or constituting part of the land which are agreed to be served before sale or under the contract of sale. Goods do not include money or actionable claims.
• Price: A contract of sale must include a monetary consideration known as the price as part of the consideration.
• Terms and condition: A sale of products might be made under a conditional or unconditional contract. Both parties must agree to all of the terms and conditions, including the warranty and condition, if the contract has any.

Difference between sales and agreement to sell

The following are the main points of differences between a sale and agreement to sell.

• Transfer of property: The ownership of the products immediately transfers from the vendor to the buyer. Thus, the seller no longer owns the products that were sold. It is a legally binding contract. While in a sale agreement, the goods' ownership will be transferred either at a later date or upon the fulfillment of specified requirements. This agreement is executory.
• Types of goods: Only existing and particular goods are eligible for sales. In contrast, a sale agreement is typically used for contingent and future commodities (associated or dependent). even though it can apply to ambiguous current things.
• Consequences of breach: Even if the items are still in the seller's possession, the seller may file a lawsuit to recover the amount if the buyer willfully neglects or refuses to pay it. On the other hand, even though the products are in the buyer's control, in a sale agreement, if the buyer defaults, the seller can only pursue damages rather than the price.
• Right to re-sell:The vendor cannot resell the items after a sale. In contrast, a buyer who accepts the items for payment without being aware of the earlier arrangement receives a good title under a sale agreement. Only the initial purchaser may bring a claim against the seller.

Types of goods

The term "goods" as used in this chapter refers to any kind of mobile or immovable property except from cash in circulation, securities, and actionable claims. Three categories of items are identified in a contract for the sale of goods:

• Existing goods: At the time of sale and purchase, the commodities were already there. Existing goods include things like furniture, land, buildings, etc. In addition, it is separated into two classes:
  • Specific or ascertained goods: Recognize and define a distinct object. Furniture, a computer, and more examples
  • Generic or unascertained goods: Unascertained goods are those that are simply specified by description and not a separate identification. Ownership of the items does not shift from the vendor to the consumer in cases of uncertain goods. Example: One kilogram of sugar from a bag containing ten kilos of sugar. In this illustration, one kilogram of sugar is unascertained unless it is removed from the bag, and it is ascertained if it is.
• Future goods: Future goods are products that will be made in the future. In a contract for the sale of goods, the buyer will eventually receive the goods. Example: Rojina and Sandhya agreed that Sandhya would buy a future-produced double bed from her.
• Contingent goods: The seller's ability to buy the items is contingent. For instance, in exchange for receiving another scooter from Shristi, Akriti consents to sell her scooter to Bidhya.

Implied condition and warranty

The following implied conditions are incorporated by law into a contract for the sale of goods:

• Right to sell: Every sale contract includes this right as one of the implied conditions. It is assumed that he has the legal authority to enter into the sale agreement and sell the products.
• Sale by description: In this scenario, it is assumed that the goods will match the description.
• Sale by sample: In this situation, the agreed-upon sample condition must be followed when supplying the items.
• A need for merchandiseable quality: The commodities must be marketable in the sense that products of that type are bought and sold in the market. Any defects must be disclosed to the buyer by the seller. It is an unstated requirement.
• Conditions ranging from quality to fitness: The customer may occasionally let the supplier know that he plans to use the items for a certain purpose. It entails the requirement that the items suit the needs of the buyer.

A contract of sale of goods - following implies warranty:

• Possession of goods: A buyer may sue the seller for damages if the seller violates the implied assurance that the buyer will have tranquil possession of the things that were sold to him.
• It is necessary to disclose any danger: The seller must inform the buyer of any dangers associated with the product being purchased. Any kind of loss incurred by the customer will be made up by the seller if he fails to disclose.
• Expense of property: Before being sold, products must be free from all debts and encumbrances to third parties.

Caveat Emptor:

Let the buyer beware is what it means. It is the responsibility of the buyer to use caution when selecting the goods that best suit his needs, and the seller is not required to disclose every flaw in the items of which he may be aware in the absence of a customer enquiry.

Example:

Y sells some pigs to X. Although Y is aware that the pigs have swine flu, he fails to disclose this fault to X when selling the pigs. All the pigs but one pass away from swine disease, and X sues Y for compensation. Since X in this case loses money as a result of his own carelessness, he is not entitled to sue Y for damages. [ ward v.Hobbs (1878) 4 A.C 13]

Transfer of ownership:

The process of transferring ownership is how a piece of property passes from one person to another. This covers the acquisition of real estate, taking on mortgage debt, exchanging the possession of real estate, and using any other land trust mechanisms.

Example:

A stolen bike is sold by X to Y. Y pays for the bike and purchases it in good faith. Later, Z, who is actually the bike's owner, discovers it and takes it from Y. Since X has no claim to the price, y is not permitted to recover it from Z in this situation.

Transfer of title by non-owner:

The following exceptions to the aforementioned general rule about title apply when the buyer obtains a greater title to the items than what the seller himself owns.

• An unauthorized sale by a mercantile agent:
  • It refers to a representative who, in the normal course of business, is authorized to sell products, consign things for sale, purchase goods, or obtain funds using the security of goods. A commercial agent with the authority to sell commodities typically transfers a good title to the purchaser.
• Transfer of title by estoppel:
  • A person who, through their actions or words, causes another to believe that a certain state of circumstances existed would be prevented from later claiming that such a state of affairs did not exist.
• Sale by person in possession under voidable contract:
  • The buyer of such goods gains a good title to them as long as they are purchased in good faith and without knowledge of the seller's title defect when a person who has taken possession of the goods via a voidable contract sells those things before the contract has been voided.

Rights and Duties of unpaid seller:

It gives the underpaid goods seller three rights:

• A right of lien: It is legal to keep possession of goods and refuse to give them to the buyer until the money owed for them is paid or presented. This is known as a right of lien.
• A right of stoppage: A right of stoppage in transit is the ability to halt the further movement of goods while they are being transported by a carrier with the intention of transmitting them to the buyer, regaining control of them, and holding onto them up to payment or tender of the price.
• A right of resale: A very valuable privilege is the right of resale, which is granted to an underpaid seller.

Some duties of unpaid seller are given below:

• To make the necessary arrangements for the buyer to receive ownership of the goods.
• Provide the item in the predetermined amount.

Reference

• Shrestha, R. P. (2007). Business Law. Kathmandu: M.K.Books.
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• Collins Dictionary of Law © W.J. Stewart, 2006
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