Suits for Breach of the Contract under Sale of Goods Act, 1930 | Law Optional Notes for UPSC PDF Download

Breach of the Contract

• Suit for price
• Damages for non-acceptance
• Damages for non-delivery
• Specific performance
• Remedy for breach of warranty

Under the Sale of Goods Act, specific scenarios govern legal actions related to breaches of contract. Here are some key points elaborated:

Suit for Price

• If the buyer fails to pay for goods after the property has passed, the seller can sue for the price.
• Payment may be demanded if the price is due on a specific date, regardless of delivery.
• Legal action for payment can only occur after the goods are in the buyer's possession.

For instance, in the case of Colley v. Overseas Exporter, a seller couldn't demand payment as the goods hadn't moved into the buyer's possession.

Damages for Non-Acceptance

• If the buyer refuses to accept goods, the seller can sue for damages.
• Compensation is based on Indian Contract Act sections 73 and 74 principles.
• Market price at the time of breach determines the damages. The means to remedy the non-performance impact the assessment.

In Suresh Kumar Rajendra Kumar v K Assan Koya & Sons, the court awarded compensation for rejected goods based on the difference in selling prices.

Damages for Non-Delivery

• If the seller fails to deliver goods, the buyer can sue for damages.
• The buyer can claim the difference between the contract price and market price at the breach time.

Legal remedies include suing for non-delivery damages and seeking a refund if payment was made. Failure to prove damages or serve notice can affect the buyer's claims.

Specific Performance and Remedy for Breach of Warranty

• Specific performance can be ordered for breach of contract for specific goods.
• Breach of warranty allows the buyer to claim damages or seek price reduction.

Buyers can sue for damages even after claiming a price reduction for breach of warranty.

Remedies for breach of warranty

• When a seller breaches a warranty or the buyer chooses to treat a seller's failure to meet a condition as a breach of warranty, the buyer cannot automatically reject the goods. Instead, the buyer can:
• Assert the breach of warranty to reduce or eliminate the price
• Sue the seller for damages due to the breach of warranty
• If a buyer has already used the breach of warranty to reduce the price, they can still sue for further damages if more harm is suffered.
• A breach of warranty doesn't give the buyer the right to reject the goods. The buyer's options are limited to asserting the breach of warranty to adjust the price or suing for damages as per Section 59.
• Even if there's a breach of condition, if the buyer has accepted the goods without rejecting them, they can only claim damages as if it were a breach of warranty.
• Section 59 outlines how a buyer with a claim for damages can proceed, but it doesn't cover cases of fraudulent misrepresentation that might void the contract or situations where explicit terms allow the buyer to return goods after a warranty breach.

Repudiation of contract before due date

• If one party backs out of a sales contract before the delivery date, the other party can either:
• Consider the contract valid and wait for delivery
• Regard the contract as canceled and sue for damages due to the breach

Interest by way of damages and special damages

• The Act doesn't impact the right of the seller or buyer to claim interest or special damages when these are legally recoverable.
• The court can award interest on the price, depending on the circumstances, to either the seller or buyer in cases of breach of contract.
• Special damages compensate for losses resulting from a breach that the parties anticipated when forming the contract.
• In legal cases like M/s. J. Patel & Co. v. National Federation of Industrial Co-operatives Ltd, specific conditions determine the entitlement to interest for delayed payments or breaches of contract.
• The Interest Act of 1839 allows interest as damages in certain situations, emphasizing that interest claims are tied to the right to recover the price and not just damages.