Sale of Goods Act, 1930 | UGC NET Commerce Preparation Course PDF Download

Sale of Goods Act, 1930

Definition of Contract of Sale

• An offer to either buy goods for a price or sell goods for a price.
• Acceptance of the offer.

Key Elements of a Contract of Sale

• Offer: The initial proposal to buy or sell goods for a specific price.
• Acceptance: Agreement to the terms of the offer, forming a contract.

Important Terms in the Sale of Goods Act, 1930

• Buyer: Defined in section 2(1) as an individual who purchases or agrees to purchase goods. The buyer is a pivotal party in the sales contract.
• Seller - Described in section 2(13), a seller is someone who either sells or agrees to sell certain goods. Similar to the buyer, the seller is a vital party in the contract of sale.
  It's important to note that being labeled as a buyer or seller doesn't always necessitate the physical transfer of goods. Merely agreeing or promising to buy and sell products is adequate to assume these roles within the contractual framework.
• Goods - Referring to any form of merchandise or possession, goods play a central role in the contract of sale. Section 2(7) of the contract outlines the significance of goods in these agreements.
  1. It constitutes movable property, excluding money and actionable claims.
  2. Examples of goods include stocks, shares, growing crops, grass, and standing timber.
  3. Additionally, goods may involve items attached to land, provided they are intended for separation before a sale occurs.

Types of Goods Under Sale of Goods Act 1930

• Specific Goods: These goods, as per section 2(14), are clearly identified and agreed upon to be transferred at the time of contract formation. For instance, if A intends to sell a specific model and year of manufacture of a bike, and B agrees to purchase it, the bike in question qualifies as a specific good.
• Ascertained Goods: This category of goods is determined through judicial interpretation rather than explicit legal definition. Any item where either the whole or a portion of it is identified and set aside for sale when the contract is made falls under ascertained goods. These goods are earmarked for the transaction.
• Unsanctioned or Unascertained Goods: Goods falling under this classification are not distinctly specified for sale at the time of contract formation. For example, if there is a bulk of 1000 quinols of wheat and the agreement is to sell 500 quinols from it without specifying which ones, these goods are considered unsanctioned or unascertained.

Future Goods:

• Future goods, as defined in section 2(6), are those that do not exist at the contract's time but are intended to be produced, acquired, or made by the seller. For example, if A sells chairs and B requests 300 chairs of a specific design to be manufactured in the future, these chairs are considered future goods.

Contingent Goods:

• Contingent goods, explained in section 6(2) of the Sale of Goods Act, are a type of future goods dependent on specific conditions. For example, if X agrees to sell 100 mangoes from his farm to Y in the future, the sale relies on whether the trees in X's farm yield 100 mangoes by the contract date.

Delivery in Business Transactions

Section 2(2) outlines the concept of delivery of goods, which involves the transfer of possession from one individual to another. This transfer can be made to the buyer directly or to someone else who has been authorized by the buyer to accept the goods. The following are various forms of delivery that are recognized under this section:

• Actual Delivery: Actual delivery occurs when the seller physically hands over the goods to the buyer or an authorized person. This is the most straightforward form of delivery in business transactions.
  For example, when you order a product online and it is directly handed to you upon delivery, that is considered actual delivery.
• Constructive Delivery: Constructive delivery involves the transfer of goods without a change in possession. In this scenario, the seller may retain possession as a bailee for the buyer.
  Imagine you sell a car to someone but continue to store it in your garage until the buyer is ready to take possession. This is an example of constructive delivery.
• Symbolic Delivery: Symbolic delivery does not involve physically handing over the goods. Instead, a symbolic method is used to indicate possession.
  For instance, if a warehouse key is given to the buyer to access the stored goods without physically moving them, it represents symbolic delivery. This method is often used for bulky or heavy items.