Performance of the Contract | Law of Contracts - CLAT PG PDF Download

Contract of Sale under the Sales of Goods Act 1930 

The performance of a contract of sale, as outlined in Chapter IV of the Sales of Goods Act 1930, involves the voluntary transfer of goods from one person to another.

Key Parties Involved 

•  Seller:  The individual or entity selling the goods.
•  Buyer:  The individual or entity purchasing the goods.

In this context, the seller is responsible for delivering the goods, while the buyer is responsible for payment and taking possession of the goods.

Who is a Seller? 

The term "seller" is defined in Section 2(13) of the Sale of Goods Act, 1930, as a person who agrees to sell goods.

Rights of the Seller (Section 31) 

• The seller has the right to retain ownership of the goods until payment is made.
• The seller can assume whether the buyer has accepted the goods or not.
• Delivery of goods by the seller occurs only when the buyer requests it.
• The seller can deliver goods in installments if agreed upon by the buyer.
• The seller can keep possession of the goods until payment is received.
• The seller can stop the delivery of goods and regain possession until payment is made.
• Under certain conditions, the seller has the right to resell the goods.
• If the goods are not delivered to the buyer, the seller can retrieve them.
• The seller can take legal action against the buyer for non-payment as per the contract.

Duties of the Seller 

• The seller must arrange for the transfer of property to the buyer.
• It is the seller's responsibility to ensure that the goods are delivered properly.
• The seller should provide a proper title to the goods being passed to the buyer.
• Goods must be delivered according to the terms of the agreement.
• The seller should ensure that the goods comply with implied conditions and warranties.
• Goods should be kept in a deliverable state and delivered upon the buyer's request.
• Delivery of goods should occur within the time frame specified in the contract.
• The seller is responsible for bearing all expenses related to the delivery of goods.
• Goods should be delivered in the agreed quantity as specified by the buyer in the contract.
• Delivery in installments is only required if requested by the buyer.
• Arrangements for goods in the custody of the carrier should be made by the seller.

Who is a Buyer?

A buyer is defined in Section 2(1) of the Sale of Goods Act, 1930, as a person who purchases goods from a seller.

Rights of the Buyer (Section 31)

• The buyer is entitled to receive delivery of goods as per the contract.
• The buyer has the right to reject goods if their quality and quantity do not match the contract specifications.
• The buyer can refuse the contract if goods are delivered in installments without prior agreement.
• The seller must inform the buyer about goods being shipped by sea, allowing the buyer to arrange insurance.
• The buyer has the right to examine goods to ensure they conform to the contract.
• If the buyer has already paid, they can sue the seller for recovery of the price if goods are not delivered.
• The buyer can also sue for damages due to the seller's negligence or refusal to deliver goods.
• The buyer can claim damages for breach of warranty or condition.
• The buyer can sue for damages due to breach of contract.

Duties of the Buyer 

• The buyer must accept delivery of goods when the seller is ready to deliver as per the contract.
• The buyer should pay the price for goods as per the contract to gain possession.
• The buyer should request delivery of goods.
• The buyer can specify a particular time for delivery of goods.
• The buyer should accept delivery of goods in installments and pay accordingly.
• The buyer bears the risk of non-delivery if the delivery point is distant.
• The buyer must pay the price upon transfer of possession of goods as per the contract.
• The buyer is liable to pay for not accepting the goods.

Delivery

Definition of Delivery 

• According to Section 2 (2) of the Sale of Goods Act, 1930, delivery refers to the voluntary transfer of possession of goods from one person to another.
• If possession is obtained through unfair means, it does not constitute delivery.

Basic Elements of Delivery 

• Involves two parties.
• One party must have possession of the goods.
• Possession is transferred from one party to another voluntarily.

Modes of Delivery 

•  Physical or Actual Delivery:  Transfer of possession of goods to the buyer or an authorized person on behalf of the buyer.
•  Symbolic Delivery:  Transfer of control over the goods without actual delivery.
•  Constructive Delivery:  Recognizing that goods are held for the benefit of the buyer. Also known as attornment.
• Constructive delivery can occur when the seller agrees to hold goods as a bailee for the buyer, when the buyer holds goods as his own after sale, or when a third party holds goods as a bailee for the seller but acknowledges holding them for the buyer.

Rules Regarding Delivery 

• Delivery and payment of price are concurrent conditions unless otherwise agreed.
• Valid delivery occurs when goods are intentionally delivered in parts.
• Part-delivery with the intention of severing from the whole does not operate as delivery of the remainder.
• Buyer must pay for delivery unless otherwise stipulated in the contract.
• If no delivery place is specified, goods are delivered at the location of the seller and buyer at the time of sale.
• Delivery expenses are typically borne by the seller unless agreed otherwise.
• In case of wrong quantity delivered, the buyer has rights to reject or accept goods based on contract terms.
• The buyer has the right to inspect and examine goods before acceptance.
• Acceptance of goods by the buyer waives the right to reject them.
• Delivery involving a third party requires notification to the buyer for effective transfer.

Law on Sales in Depth 

Understanding the legal aspects of sales is crucial for buyers and sellers to ensure smooth transactions and avoid disputes. Key concepts include the duties of both parties, rules about delivery, and what happens in case of issues like wrong quantities or rejected goods.

1. The Duty of the Buyer and Seller (Section 31) 

• The seller is responsible for delivering the goods, while the buyer must pay for and accept them according to the contract terms and sales law.

2. Concurrency of Payment and Delivery (Section 32) 

• Payment and delivery are simultaneous conditions unless agreed otherwise.
• The seller must be ready to give possession of the goods in exchange for the price, while the buyer must be ready to pay the price in exchange for the goods.

Rules Pertaining to the Delivery of Goods in Depth

a. Delivery (Section 33) 

• Delivery of goods can be done by giving possession to the buyer or an authorized person or through any agreed method.

• Part-delivery during the delivery of the whole has the same effect as delivering the whole.
• However, part-delivery intended to separate from the whole does not count as delivery of the remainder.

• A seller is not obligated to deliver goods until the buyer requests delivery, unless otherwise agreed in the contract.

• Delivery terms may be agreed upon in the sale contract. If not specified, goods are delivered at the location where they are at the time of sale or agreement to sell.
• If the goods are not in existence at that time, they are delivered to the place of manufacture or production.

• If the seller agrees to send goods to the buyer without specifying a time of delivery, the seller is expected to deliver within a reasonable time.

• If goods are in the possession of a third party at the time of sale, delivery does not occur unless the third party acknowledges holding the goods on behalf of the buyer.

• Tender of delivery must be made at a reasonable hour, as the reasonable hour varies by case.

• The seller is responsible for all expenses related to making the goods deliverable unless the parties agree otherwise in the contract.

• If the seller delivers less than the contracted quantity, the buyer can reject the delivery or accept it and pay for the delivered quantity at the contracted rate.
• If the seller delivers more than the contracted quantity, the buyer can accept the contracted quantity and reject the rest, reject the entire delivery, or accept the excess and pay at the contract rate.
• If the seller delivers a mix of goods, the buyer can accept the goods that match the contract and reject the rest or reject the entire delivery.
• The provisions are subject to trade usage, special agreements, or course of dealing between parties.

• The buyer is not obligated to accept delivery in installments unless agreed in the contract. If such an agreement exists, the parties must determine their rights, liabilities, and payments.

• Delivery of goods to a carrier for transmission to the buyer is considered delivery to the buyer unless the contract states otherwise.

• If goods are to be delivered at a distant location, the buyer is responsible for any deterioration occurring during transit, even if the seller agrees to deliver at his own risk.

• If the buyer did not have the opportunity to examine the goods, he is entitled to a reasonable chance to do so. The buyer has the right to verify that the delivered goods conform to the contract. The seller must honor the buyer's request for a reasonable opportunity to examine the goods unless the contract specifies otherwise.

Acceptance of Delivery of Goods (Section 42) 

• A buyer is considered to have accepted the delivery of goods when:
• He informs the seller of his acceptance.
• He does something to the goods that is inconsistent with the seller's ownership.
• He keeps the goods for longer than a reasonable time without notifying the seller of his rejection.

Return of Rejected Goods (Section 43) 

• If a buyer rightfully refuses to accept the delivery of goods, he is not obligated to return the rejected goods to the seller. However, he must inform the seller of his refusal unless the contract specifies otherwise.

Refusing Delivery of Goods (Section 44) 

• If the seller is ready to deliver the goods and asks the buyer to take delivery, but the buyer fails to do so within a reasonable time after the request, the buyer is liable to the seller for any losses caused by the refusal to take delivery. The buyer is also responsible for paying a reasonable fee for the care and custody of the goods.