Sale
of Goods Act, 1930[1]
(Amended Upto 2019)
[Act 3 of 1930 as amended up to Act 34 of 2019]
[15th March, 1930]
An
Act to define and amend the law relating to the sale of goods
Whereas
it is expedient to define and amend the law relating to the sale of goods; it
is hereby enacted as follows.
Statement
of Objects and Reasons. The Bill is sufficiently explained in the Report of the
Special Committee printed below.
SIMLA B.L.
MITTER
The
17th July, 1929
Report
of the Special Committee
To
HIS
EXCELLENCY THE GOVERNOR-GENERAL IN COUNCIL
In
accordance with the Legislative Department Resolution, No. 47-1/29-C and G,
dated the 28th March, 1929 (Appendix A), we the members of the Committee
appointed by the Government of India to examine the provisions of the Indian
Sale of Goods Bill, have the honour to submit the following report.
1.
The constitution
of the Committee was as follows.
Chairman
The
Honourable Sir Brojendra Lal Mitter, Kt., Bar-at-Law Member of the Council of
the Governor General.
Members
(1)
Mr. D. F. Mulla,
C.I.E., M.A. LL.B., Officiating Advocate-General, Bombay.
(2)
Mr. M. R. Jayakar.
M.A., LL.B., Bar-at-Law, M.L.A.
(3)
Mr. Alladi
Krishnaswamy Ayyar, Advocate-General, Madras.
Mr.
W.T.N. Wright. C.I.E., I.C.S. Joint Secretary and Draftsman to the Government
of India, Legislative Department attended the meetings of the Committee, and
Mr. J. R. Dhurandhar, LL.B. Assistant Secretary to the Government of Bombay,
Legal Department, acted as Secretary to the Committee.
2.
The Committee
assembled at Simla on the 29th April, 1929, when its first meeting was held and
continued its deliberations daily until the 9th May, 1929. A Bill to amend and
define the law relating to the Sale of Goods, with the notes setting forth the
reasons for the proposed amendment which had already been prepared in the
Legislative Department of the Government of India was placed before us, and
formed the basis of our discussions.
3.
Before the passing
of the Indian Contract Act, 1872, Chapter VII of which contains the law
relating to the sale of goods or movables, the law on this subject was not only
not uniform throughout British India but was also outside the limits of the
original jurisdiction of the High Courts, extremely uncertain in its
application. Within the limits of the Presidency-towns the rules of English
law, including those in the Statute of Frauds, were applied, whilst in the
mofussil it was doubtful whether the Statute of Frauds was applicable and as
observed by the Indian Law Commissioners in their Second Report, the Judge was
to a great extent without the guidance of any positive law beyond the rule that
his decision should be such as he deemed to be in accordance with ?justice,
equity and good conscience?. To remedy this unsatisfactory state of affairs,
the Indian Law Commissioners framed in their Second Report, dated the 28th
July, 1866, a set of rules relating to the general law of contracts including
therein provisions relating to the sale of movables. The draft of the Law
Commissioners underwent several changes at the hands of the then Law Members,
Sir Henry Maine and Sir James Stephen, and also in the Select Committee of the
Indian Legislature. But, as stated by Sir James Stephen himself while
presenting the report of the Select Committee on the Indian Contract Bill, the
chapter on the sale of goods, except in regard to the rule as to market overt
represented generally the English law on the subject as it then stood.
4.
The rules of
English law relating to the sale of goods had grown up mainly out of judicial
decisions. Along with the general law of contract, they were the product of
many generations and were adapted to the circumstances and exigencies of the
times and the dealings of the people. They were, however, largely dominated by
the provisions of the Statute of Frauds which was passed in the reign of
Charles the Second. The Law Commissioners, as well as those who were ultimately
responsible for framing the Indian Contract Act, at once realised that the
provisions of the Statute of Frauds, although followed in the Presidency-towns,
were not suitable to the conditions prevailing in this country, and that ?any
law relating to this important subject must at any rate be free from the
inexpressible confusion and intricacy which is thrown over every part of the
Statute in consequence of its vague language.?
5.
In 1870, various
branches of law were being codified in British India. The main object in view
was, in the words of Sir James Stephen, ?that of providing a body of law to the
Government of the country so expressed that it might be readily understood both
by English and Native Government servants without extrinsic help from the
English law libraries?. What was urgently needed was a guide for the judge or
magistrate who had but little legal training, derived little or no assistance
from the bar and worked at a distance from any law library.
6.
Whatever merit the
simple and elementary rules embodied in the Indian Contract Act may have had
and however sufficient and suitable they may have been for the needs which they
were intended to meet in 1872, the passage of time has revealed defects the
removal of which has become necessary in order to keep the law abreast of the
developments of modern business relations. The law relating to the sale of
goods appertains mainly to mercantile transactions. There can be no doubt that
during the last half-century conditions in this country relating to trade and
business have undergone material changes. Methods of business, have largely
altered and new relations have arisen between man and man. In dealing with these
relations, it has been necessary to give recognition to new principles and the
Indian Courts have found that a law enacted more than fifty years ago is
entirely inadequate to enable them to deal with these new regulations or give
effect to the new principles. The result has been that on various occasions the
Courts have had to hold that Chapter VII of the Indian Contract Act is not
exhaustive, and to import therein analogies from the decisions of the English
Courts.
7.
The English law
relating to the sale of goods which was admittedly the basis of Chapter VII of
the Indian Contract Act has itself since 1872 undergone drastic changes and was
finally codified in 1893 by the present Sale of Goods Act (56 and 57 Vict., C.
71), which discards many of the old common law rules upon which Chapter VII of
the Indian Act was based in favour of provisions more suited to modern
conditions or more convenient in actual practice.
8.
By the Bill
referred for our consideration, the law relating particularly to the sale of
goods is embodied in a separate enactment, although many of the general
principles contained in the Indian Contract Act will continue to be applicable
thereto. When Sir James Stephen moved the Indian Contract Bill, he admitted
that it was not and could not pretend to be, a complete code upon the branch of
law to which it related. He, however, expressed a hope that in later years it
would be easy to enact supplementary chapters relating to the several branches
of the law of contract which the Bill did not touch. This hope has never been
fulfilled. In later years it was found more convenient to have separate
enactments for the several branches of the law of contract, e.g., the Transfer
of Property Act, the Negotiable Instruments Act, and the Merchant Shipping Act.
In our opinion in view of the complexity of modern conditions, the time has now
come when this process should be accelerated by embodying the different
branches of law relating to contract in separate self-contained enactments; and
we hope that the Bill which we attach to our report may be passed into law at
an early date and may be but the first of the series required to complete the
task which we have outlined above.
9.
The Bill referred
to us was mainly based on the English Sale of Goods Act, 1893. This Act has
stood the test of nearly thirty five years of practical application, and in the
words of Lord Parker in Re Parchim, (1918) AC 157 at pages
160-61, ?is a very successful and correct codification of this branch of the
mercantile law?. As is shown in Appendix B to our report, most of the Colonies
and Overseas Dominions have adopted and re-enacted the Act with only such small
variations as have been found necessary to adopt its provisions to local
circumstances. It is also remarkable, that the Uniform Sales Act, passed in
1906 in the United States of America and adopted in twenty out of fifty-three
States and territories is based very largely on the English Act. These facts
constitute striking evidence of the completeness and the universal suitablity
of its provisions.
10.
In mercantile
transactions a conflict of laws should, as far as possible, be avoided.
Uniformity of law in various countries, particularly in those which have
business or trade dealings with one another, is highly convenient and
desirable. We, therefore, approve of the proposal to adopt the provisions of
the English Sale of Goods Act so far as they are suitable to Indian conditions
as the basis for the present Bill, and thus to make the Indian Law relating to
the sale of goods as nearly as possible uniform with the law in force in other
parts of the British Empire.
11.
The provisions of
the English Act are far more elaborate and comprehensive than those of Chapter
VII of the Indian Contract Act, and in their arrangement the English Act is
more logical and methodical. As we have already observed, it has revised and
brought up to the date rules of the English Common Law. Moreover, the adoption
of the English Act as the basis of present Bill will enable Indian Courts to
interpret its provisions in the light of the decisions of the English Courts.
12.
In adopting the
provisions of the English Act, we have not been unmindful of the needs and
exigencies of this country. Wherever it has been found that a rule obtaining in
England, such as that relating to market overt is not suitable to Indian
conditions, the rule has been rejected. We, have, moreover, carefully
scrutinised the provisions of the English Act in the light of the decisions of
English Courts since 1893, and where those decisions have shown the provisions
of the English Act to be defective or ambiguous, we have attempted to improve
upon them. We have also retained several of the provisions of the Indian
Contract Act which we consider necessary or useful to meet special conditions
existing in India. The Bill as revised by us on the above lines is attached to
our report.
13.
A detailed
explanation of the various clauses of the Bill is set out in our notes in
Appendix C. But we think it desirable to draw attention to the following few
points of importance:
(a)
The present Bill
embodies the principles that the question whether a contract for the sale of
goods does or does not pass the property in the goods from the buyer to the
seller must in all cases be determined by the intention of the parties to the
contract. The provisions of Chapter VII of the Indian Contract Act are vague
and conflicting on this point. The Bill codifies the rules by which that
intention may be ascertained, but the operation of these rules will be
displaced by any terms of the contract defining the intention or by any
attendant circumstances, including the conduct of the parties, rendering it
ascertainable. In following this principle we have borne in mind that in
mercantile matters the certainty of the rule is often of more importance than
the substance. If the parties know before hand what their legal position is,
they can provide for their particular wants by express stipulation sale, after
all, is a consensual contract, and the Bill does not prevent the parties from
making any bargain they please. Its object is to lay down clear rules for the
cases where the parties have either framed no intention or failed to express
it.
(b)
The distinction
between a sale and an agreement to sell which was not clear in Chapter VII of
the Indian Contract Act, has been clearly brought out. This distinction is very
necessary to determine the rights and liabilities of the parties to the
contract.
(c)
It is made clear
that a contract of sale can be made by mere offer and acceptance. Neither
payment nor delivery is necessary for the purpose.
(d)
Before 1893 the
law in England relating to warranties and conditions was in a very confused
state. In the Indian Contract Act the word ?warranty? has been used in a very
vague sense. In some provisions it denotes a condition which would enable a
party aggrieved by its breach to repudiate the contract while in others it
enables him to claim damages only. In the Bill this ambiguity has been removed.
(e)
There is much
conflict of decisions in India regarding the meaning of Section 108 of the
Indian Contract Act which relates to sales by ostensible owners. This is to a
certain extent due to the obscure phraseology of the section itself. We have
tried to remove this obscurity in Clauses 27 to 30 of the Bill to simplify the
law on the subject.
(f)
We have elaborated
the rules relating to delivery to carriers, stoppage in transit and auction
sales.
(g)
We have anxiously
considered the question of the retention of the illustrations appearing in
Chapter VII of the Indian Contract Act and of the insertion of illustrations to
new provisions. Our decision is that the better policy is to forego all
illustrations, leaving the Courts to construe the sections as they stand.
14.
In conclusion, we
desire to place on record our high sense of obligation to Mr. W. T. M. Wright and
Mr. J. R. Dhurandhar, who attended the meetings of the Committee and took part
in its deliberations. Mr. Wrights rendered us great assistance in drafting the
clauses of the Bill and in preparing this report. Mr. Dhurandhar who acted as
Secretary brought to bear upon the work great industry in collecting references
and otherwise assisting us in the preparation of our notes.
Chapter I PRELIMINARY
Section - 1. Short title, extent and commencement.
(1)
This Act may be
called the [2][* * *]
Sale of Goods Act, 1930.
(2)
[3][It
extends to the whole of India [4][*
* *].]
(3)
It shall come into
force on the first day of July, 1930.
Section - 2. Definitions.
In
this Act, unless there is anything repugnant in the subject or context,
(1)
?buyer? means a
person who buys or agrees to buy goods;
(2)
?delivery? means
voluntary transfer of possession from one person to another;
(3)
goods are said to
be in a ?deliverable state? when they are in such state the buyer would under
the contract be bound to take delivery of them;
(4)
?Document of title
goods? includes a bill of lading, dock warrant, warehouse-keeper's certificate,
wharfingers? certificate, railway receipt, [5][multimodal
transport document,] warrant of order for the delivery of goods and any other
document used in the ordinary course of business as proof of the possession or
control of goods, or authorising or purporting to authorise, either by
endorsement or by delivery, the possessor of the document to transfer or
receive goods thereby represented;
(5)
?fault? means
wrongful act or default;
(6)
?Future good?
means goods to be manufactured or produced or acquired by the seller after the
making of the contract of sale;
(7)
?goods? means
every kind of movable property other than actionable claims and money; and
includes stock and shares, growing crops, grass and things attached to or
forming part of the land which are agreed to be severed before sale or under
the contract of sale;
(8)
a person is said
to be ?insolvent? who has ceased to pay his debts in the ordinary course of
business, or cannot pay his debts as they become due, whether he has committed
an act of insolvency or not;
(9)
?Mercantile agent?
means a mercantile agent having in the customary course of business as such
agent authority either to sell goods, or to consign goods for the purposes of
sale, or to buy goods, or to raise money on the security of goods;
(10)
?price? means the
money consideration for a sale of goods;
(11)
?property? means
the general property in goods, and not merely a special property;
(12)
?Quality of goods?
includes their state or condition;
(13)
?seller? means a
person who sells or agrees to sell goods;
(14)
?Specific goods?
means goods identified and agreed upon at the time a contract of sale is made;
and
(15)
expressions used
but not defined in this Act and defined in the Indian Contract Act, 1872 (IX of
1872) have meaning assigned to them in that Act.
Section - 3. Application of provisions of Act IX of 1872.
The
unrepealed provisions of the Indian Contract Act, 1872, save in so far as they
are inconsistent with the express provisions of this Act, shall continue to
apply to contracts for the sale of goods.
Chapter II FORMATION
OF THE CONTRACT
Contract of Sale
Section - 4. Sale and agreement to sell.
(1)
A contract of sale
of goods is a contract whereby the seller transfers or agrees to transfer the
property in goods to the buyer for a price. There may by a contract of sale
between one part-owner and another.
(2)
A contract of sale
may be absolute or conditional.
(3)
Where under a
contract of sale the property in the goods is transferred from the seller to
the buyer, the contract is called a sale, but where the transfer of the
property in the goods is to take place at a future time or subject to some
condition thereafter to be fulfilled, the contract is called an agreement to
sell.
(4)
An agreement to
sell becomes a sale when the time elapses or the conditions are fulfilled
subject to which the property in the goods is to be transferred.
Formalities of the Contract
Section - 5. Contract of sale how made.
(1)
A contract of sale
is made by an offer to buy or sell goods for a price and the acceptance of such
offer. The contract may provide for the immediate delivery of the goods or
immediate payment of the price or both, or for the delivery or payment by
instalments, or that the delivery or payment or both shall be postponed.
(2)
Subject to the
provisions of any law for the time being in force, a contract of sale may be
made in writing or by word of mouth, or partly in writing and partly by word of
mouth or may be implied from the conduct of the parties.
Subject-matter of Contract
Section - 6. Existing or future goods.
(1)
The goods which
form the subject of a contract of sale may be either existing goods, owned or
possessed by the seller, or future goods.
(2)
There may be a
contract for the sale of goods the acquisition of which by the seller depends
upon a contingency which may or may not happen.
(3)
Where by a contract
of sale the seller purports to effect a present sale of future goods, the
contract operates as an agreement to sell the goods.
Section - 7. Goods perishing before making of contract.
Where
there is a contract for the sale of specific goods, the contract is void if the
goods without the knowledge of the seller have, at the time when the contract
was made perished or become so damaged as no longer to answer to their
description in the contract.
Section - 8. Goods perishing before sale but after agreement to sell.
Where
there is an agreement to sell specific goods and subsequently the goods without
any fault on the part of the seller or buyer perish or become so damaged as no
longer to answer to their description in the agreement before the risk passes
to the buyer, the agreement is thereby avoided.
The Price
Section - 9. Ascertainment of price.
(1)
The price in a
contract of sale may be fixed by the contract or may be left to be fixed in
manner thereby agreed or may be determined by the course of dealing between the
parties.
(2)
Where the price is
not determined in accordance with the foregoing provisions, the buyer shall pay
the seller a reasonable price. What is a reasonable price is a question of fact
dependent on the circumstances of each particular case.
Section - 10. Agreement to sell at valuation.
(1)
Where there is an
agreement to sell goods on the terms that the price is to be fixed by the
valuation of a third party and such third party cannot or does not make such
valuation the agreement is thereby avoided:
Provided
that, if the goods or any part thereof have been delivered to and appropriated
by, the buyer, he shall pay a reasonable price therefor.
(2)
Where such third
party is prevented from making the valuation by the fault of the seller or
buyer, the party not in fault may maintain a suit for damages against the party
in fault.
Conditions and Warranties
Section - 11. Stipulation as to time.
Unless
a different intention appears from the terms of the contract, stipulations as
to time of payment are not deemed to be of the essence of a contract of sale.
Whether any other stipulation as to time is of the essence of the contract or
not depends on the terms of the contract.
Section - 12. Condition and warranty.
(1)
A stipulation in a
contract of sale with reference to goods which are the subject thereof may be a
condition or a warranty.
(2)
A condition is a
stipulation essential to the main purpose of the contract, the breach of which
gives rise to a right to treat the contract as repudiated.
(3)
A warranty is a
stipulation collateral to the main purpose of the contract, the breach of which
give rise to a claim for damages but not to a right to reject the goods and
treat the contract as repudiated.
(4)
Whether a
stipulation in a contract of sale is a condition or a warranty depends in each
case on the construction of the contract. A stipulation may be a condition,
though called a warranty in the contract.
Section - 13. When condition to be treated as warranty.
(1)
Where a contract
of sale is subject to any condition to be fulfilled by the seller, the buyer
may waive the condition or elect to treat the breach of the condition as a
breach of warranty and not as a ground for treating the contract as repudiated.
(2)
Where a contract
of sale is not severable and the buyer has accepted the goods are part
thereof, [6][* * *]
the breach of any condition to be fulfilled by the seller can only be treated
as a breach of warranty and not as a ground for rejecting the goods and
treating the contract as repudiated, unless there is a term of the contract, express
or implied, to that effect.
(3)
Nothing in this
section shall affect the case of any condition or warranty fulfilment of which
is excused by law by reason of impossibility or otherwise.
Section - 14. Implied undertaking as to title, etc.
In
a contract of sale, unless the circumstances of the contract are such as to
show a different intention there is.
(a)
an implied
condition on the part of the seller that, in the case of a sale, he has a right
to sell the goods and that, in the case of an agreement to sell, he will have a
right to sell the goods at the time when the property is to pass;
(b)
an implied
warranty that the buyer shall have and enjoy quiet possession of the goods;
(c)
an implied
warranty that the goods shall be free from any charge or encumbrance in favour
of any third party not declared or known to the buyer before or at the time
when the contract is made.
Section - 15. Sale by description.
Where
there is a contract for the sale of goods by description, there is an implied
condition that the goods shall correspond with the description; and, if the
sale is by sample as well as by description, it is not sufficient that the bulk
of the goods corresponds with the sample if the goods do not also correspond
with the description.
Section - 16. Implied conditions as to quality or fitness.
Subject
to the provisions of this Act and of any other law for the time being in force,
there is no implied warranty or condition as to the quality or fitness for any
particular purpose of goods supplied under a contract of sale, except as
follows:
(1)
Where the buyer,
expressly or by implication, makes known to the seller the particular purpose
for which the goods are required, so as to show that the buyer relies on the
seller's skill or judgment, and the goods are of a description which it is in
the course of the seller's business to supply (whether he is the manufacturer
or producer or not), there is an implied condition that the goods shall be
reasonably fit for such purpose:
Provided
that, in the case of a contract for the sale of a specified article under its
patent or other trade name, there is no implied condition as to its fitness for
any particular purpose.
(2)
Where goods are
bought by description from a seller who deals in goods of that description
(whether he is the manufacturer or producer or not), there is an implied
condition that the goods shall be of merchantable quality:
Provided
that, if the buyer has examined the goods, there shall be no implied condition
as regards defects which such examination ought to have revealed.
(3)
An implied
warranty or condition as to quality or fitness for a particular purpose may be
annexed by the usage of trade.
(4)
An express
warranty or condition does not negative a warranty or condition implied by this
Act unless inconsistent therewith.
Section - 17. Sale by sample.
(1)
A contract of sale
is a contract for sale by sample where there is a term in the contract, express
or implied, to that effect.
(2)
In the case of a
contract for sale by sample there is an implied condition.
(a)
that the bulk shall
correspond with the sample in quality;
(b)
that the buyer
shall have a reasonable opportunity of comparing the bulk with the sample;
(c)
that the goods
shall be free from any defect, rendering them unmerchantable, which would not
be apparent on reasonable examination of the sample.
Chapter III EFFECTS
OF THE CONTRACT
Transfer
of Property as between Seller and Buyer
Section - 18. Goods must be ascertained.
Where
there is a contract for the sale of unascertained goods, no property in the
goods is transferred to the buyer unless and until the goods are ascertained.
Section - 19. Property passes when intended to pass.
(1)
Where there is a
contract for the sale of specific or ascertained goods the property in them is
transferred to the buyer at such time as the parties to the contract intend it
to be transferred.
(2)
For the purpose of
ascertaining the intention of the parties regard shall be had to the terms of
the contract, the conduct of the parties and the circumstances of the case.
(3)
Unless a different
intention appears, the rules contained in Sections 20 to 24 are rules for
ascertaining the intention of the parties as to the time at which the property
in the goods is to pass to the buyer.
Section - 20. Specific goods in a deliverable state.
Where
there is an unconditional contract for the sale of specific goods in a
deliverable state, the property in the goods passes to the buyer when the
contract is made and it is immaterial whether the time of payment of the price
or the time of delivery of goods, or both, is postponed.
Section - 21. Specific goods to be put into a deliverable state.
Where
there is a contract for the sale of specific goods and the seller is bound to
do something to the goods for the purpose of putting them into a deliverable
state, the property does not pass until such thing is done and the buyer has
notice thereof.
Section - 22. Specific goods in a deliverable state, when the seller has to do anything thereto in order to ascertain price.
Where
there is a contract for the sale of specific goods in a deliverable state, but
the seller is bound to weigh, measure, test, or do some other act or thing with
reference to the goods for the purpose of ascertaining the price, the property
does not pass until such act or thing is done and the buyer has notice thereof.
Section - 23. Sale of unascertained goods and appropriation.
(1)
Where there is a
contract for the sale of unascertained or future goods by description and goods
of that description and in a deliverable state are unconditionally appropriated
to the contract, either by the seller with the assent of the buyer or by the
buyer with the assent of the seller, the property in the goods thereupon passes
to the buyer. Such assent may be express or implied, and may be given either
before or after the appropriation is made.
(2)
Delivery to
carrier. Where, in pursuance of the contract, the seller delivers the goods to
the buyer or to a carrier or other bailee (whether named by the buyer or not)
for the purpose of transmission to the buyer, and does not reserve the right of
disposal, he is deemed to have unconditionally appropriated the goods to the
contract.
Section - 24. Goods sent on approval or ?on sale or return?.
When
goods are delivered to the buyer on approval or ?on sale or return? or other
similar terms, the property therein passes to the buyer.
(a)
when he signifies
his approval or acceptance to the seller or does any other act adopting the
transaction;
(b)
if he does not
signify his approval or acceptance to the seller but retains the goods without
giving notice of rejection, then, if a time has been fixed for the return of
the goods on the expiration of such time, and, if no time has been fixed, on
the expiration of a reasonable time.
Section - 25. Reservation of right of disposal.
(1)
Where there is a
contract for the sale of specific goods or where goods are subsequently
appropriated to the contract, the seller may, by the terms of the contract or
appropriation, reserve the right of disposal of the goods until certain
conditions are fulfilled. In such a case, notwithstanding the delivery of the
goods to a buyer, or to a carrier or other bailee for the purpose of
transmission, to the buyer, the property in the goods does not pass to the
buyer until the conditions imposed by the seller are fulfilled.
(2)
[7][Where
goods are shipped or delivered to a railway administration for carriage by
railway and by the bill of lading or railway receipts, as the case may be, the
goods are deliverable to the order of the seller or his agent, the seller is
prima facie deemed to reserve the right of disposal.]
(3)
Where the seller
of goods draws on the buyer for the price and transmits to the buyer the bill
of exchange together with the bill of lading or, as the case may be, the
railway receipt, to secure acceptance or payment of the bill of exchange, the
buyer is bound to return the bill of lading or the railway receipt if he does
not honour the bill of exchange; and if he wrongfully retains the bill of
lading or the railway receipt, the property in the goods does not pass to him.
Explanation.
In this section, the expressions, ?railway? and ?railway administration? shall
have the meanings respectively assigned to them under the Indian Railways Act,
1890 (9 of 1890)[8].
Section - 26. Risk prima facie passes with property.
Unless
otherwise agreed, the goods remain at the seller's risk until the property
therein is transferred to the buyer, but when the property therein is
transferred to the buyer, the goods are at the buyer's risk whether delivery
has been made or not:
Provided
that, where delivery has been delayed through the fault of either buyer or
seller, the goods are at the risk of the party in fault as regards any loss
which might not have occurred but for such fault:
Provided
also that nothing in this section shall affect the duties or liabilities of
either seller or buyer as a bailee of the goods of the other party.
Transfer of title
Section - 27. Sale by person not the owner.
Subject
to the provisions of this Act and of any other law for the time being in force,
where goods are sold by a person who is not the owner thereof and who does not
sell them under the authority or with the consent of the owner, the buyer
acquires no better title to the goods than the seller had, unless the owner of
the goods is by his conduct precluded from denying the seller's authority to
sell:
Provided
that, where a mercantile agent is, with the consent of the owner, in possession
of the goods or of a document of title to the goods, any sale made by him, when
acting in the ordinary course of business of a mercantile agent, shall be as
valid as if he were expressly authorised by the owner of the goods to make the
same; provided that the buyer acts in good faith and has not at the time of the
contract of sale notice that the seller has no authority to sell.
Section - 28. Sale by one of joint owners.
If
one of several joint owners of goods has the sole possession of them by
permission of the co-owners, the property in the goods is transferred to any
person who buys them of such joint owner in good faith and has not at the time
of the contract of sale notice that the seller has no authority to sell.
Section - 29. Sale by person in possession under voidable contract.
When
the seller of goods has obtained possession thereof under a contract voidable
under Section 19 or Section 19-A of the Indian Contract Act, 1872, but the
contract has not been rescinded at the time of the sale, the buyer acquires a
good title to the goods, provided he buys them in good faith and without notice
of the seller's defect of title.
Section - 30. Seller or buyer in possession after sale.
(1)
Where a person,
having sold goods, continues or is in possession of the goods or of the
documents of title to the goods, the delivery or transfer by that person or by
a mercantile agent acting for him, of the goods or documents of title under any
sale, pledge or other disposition thereof to any person receiving the same in
good faith and without notice of the previous sale shall have the same effect
as if the person making the delivery or transfer were expressly authorised by
the owner of the goods to make the same.
(2)
Where a person
having bought or agreed to buy goods, obtains, with the consent of the seller,
possession of the goods or the documents of title to the goods, the delivery or
transfer by that person or by a mercantile agent acting for him, of the goods
or documents of title under any sale, pledge or other disposition thereof to
any person receiving the same in good faith and without notice of any lien or
other right of the original seller in respect of the goods shall have effect as
if such lien or right did not exist.
Chapter IV PERFORMANCE
OF THE CONTRACT
Section - 31. Duties of seller and buyer.
It
is the duty of the seller to deliver the goods and of the buyer to accept and
pay for them, in accordance with the terms of the contract of sale.
Section - 32. Payment and delivery are concurrent conditions.
Unless
otherwise agreed, delivery of the goods and payment of the price are concurrent
conditions, that is to say, the seller shall be ready, and willing to give
possession of the goods to the buyer in exchange for the price and the buyer
shall be ready and willing to pay the price in exchange for possession of the
goods.
Section - 33. Delivery.
Delivery
of goods sold may be made by doing anything which the parties agree shall be
treated as delivery or which has the effect of putting the goods in the
possession of the buyer or of any person authorised to hold them on his behalf.
Section - 34. Effect of part delivery.
A
delivery of part of goods, in progress of the delivery of the whole, has the
same effect, for the purpose of passing the property in such goods, as a
delivery of the whole; but a delivery of part of the goods, with an intention
of severing it from the whole, does not operate as a delivery of the remainder.
Section - 35. Buyer to apply for delivery.
Apart
from any express contract, the seller of goods is not bound to deliver them
until the buyer applies for delivery.
Section - 36. Rules as to delivery.
(1)
Where it is for
the buyer to take possession of the goods or for the seller to send them to the
buyer is a question depending in each case on the contract, express or implied,
between the parties. Apart from any such contract, goods sold are to be
delivered at the place at which they are at the time of the sale, and goods
agreed to be sold are to be delivered at the place at which they are at the
time of the agreement to sell, or, if not then in existence, at the place at
which they are manufactured or produced.
(2)
Where under the
contract of sale the seller is bound to send the goods to the buyer, but no
time for sending them is fixed, the seller is bound to send them within a
reasonable time.
(3)
Where the goods at
the time of sale are in the possession of a third person, there is no delivery
by seller to buyer unless and until such third person acknowledges to the buyer
that he holds the goods on his behalf:
Provided
that nothing in this section shall affect the operation of the issue or
transfer of any document of title to goods.
(4)
Demand or tender
of delivery may be treated as ineffectual unless made at a reasonable hour.
What is a reasonable hour is a question of fact.
(5)
Unless otherwise
agreed, the expenses of and incidental to putting the goods into a deliverable
state shall be borne by the seller.
Section - 37. Delivery of wrong quantity.
(1)
Where the seller
delivers to the buyer a quantity of goods less than he contracted to sell, the
buyer may reject them, but if the buyer accepts the goods so delivered he shall
pay for them at the contract rate.
(2)
Where the seller
delivers to the buyer a quantity of goods larger than he contracted to sell,
the buyer may accept the goods included in the contract and reject the rest, or
he may reject the whole. If the buyer accepts the whole of the goods so
delivered, he shall pay for them at the contract rate.
(3)
Where the seller
delivers to the buyer the goods he contracted to sell mixed with goods of a
different description not included in the contract, the buyer may accept the
goods which are in accordance with the contract and reject the rest, or may
reject the whole.
(4)
The provisions of
this section are subject to any usage of trade, special agreement or course of
dealing between the parties.
Section - 38. Instalment deliveries.
(1)
Unless otherwise
agreed, the buyer of goods is not bound to accept delivery thereof by
instalments.
(2)
Where there is a
contract for the sale of goods to be delivered by stated instalments which are
to be separately paid for, and the seller makes no delivery or defective
delivery in respect of one or more instalments, or the buyer neglects or
refuses to take delivery of or pay for one or more instalments, it is a
question in each case, depending on the terms of the contract and the
circumstances of the case, whether the breach of contract is a repudiation of
the whole contract, or whether it is a severable breach giving rise to a claim
for compensation, but not to a right to treat the whole contract as repudiated.
Section - 39. Delivery to carrier or wharfinger.
(1)
Where, in pursuance
of a contract of sale, the seller is authorised or required to send the goods
to the buyer, delivery of the goods to a carrier, whether named by the buyer or
not, for the purpose of transmission to the buyer, or delivery of the goods to
a wharfinger for safe custody, is prima facie deemed to be a delivery of the
goods to buyer.
(2)
Unless otherwise
authorised by the buyer, the seller shall make such contract with the carrier
or wharfinger on behalf of the buyer as may be reasonable having regard to the
nature of the goods and the other circumstances of the case. If the seller
omits so to do, and the goods are lost or damaged in course of transit or
whilst in the custody of the wharfinger the buyer may decline to treat the
delivery to the carrier or wharfinger, as a delivery to himself, or may hold
the seller responsible for damages.
(3)
Unless otherwise
agreed, where goods are sent by the seller to the buyer by a route involving
sea transit, in circumstances in which it is usual to insure the seller shall
give such notice to the buyer as may enable him to insure them during their sea
transit, and if the seller fails so to do, the goods shall be deemed to be at
his risk during such sea transit.
Section - 40. Risk where goods are delivered at distant place.
Where
the seller of goods agrees to deliver them at his own risk at a place other
than that where they are when sold, the buyer shall, nevertheless, unless
otherwise agreed, take any risk of deterioration in the goods necessary
incident to the course of transit.
Section - 41. Buyer's right of examining the goods.
(1)
Where goods are
delivered to the buyer which he has not previously examined, he is not deemed
to have accepted them unless and until he has had a reasonable opportunity of
examining them for the purpose of ascertaining whether they are in conformity
with the contract.
(2)
Unless otherwise
agreed, when the seller tenders delivery of goods to the buyer, he is bound, on
request, to afford the buyer a reasonable opportunity of examining the goods
for the purpose of ascertaining whether they are in conformity with the
contract.
Section - 42. Acceptance.
The
buyer is deemed to have accepted the goods when he intimates to the seller that
he has accepted them, or when the goods have been delivered to him and he does
any act in relation to them which is inconsistent with the ownership of the
seller, or when, after the lapse of a reasonable time, he retains the goods
without intimating to the seller that he has rejected them.
Section - 43. Buyer not bound to return rejected goods.
Unless
otherwise agreed, where goods are delivered to the buyer and he refuses to
accept them, having the right so to do, he is not bound to return them to the
seller, but it is sufficient if he intimates to the seller that he refuses to
accept them.
Section - 44. Liability of buyer for neglecting delivery of goods.
When
the seller is ready and willing to deliver the goods and requests the buyer to
take delivery, and the buyer does not within a reasonable time after such
request take delivery of the goods, he is liable to the seller for any loss
occasioned by his neglect or refusal to take delivery, and also for a
reasonable charge for the care and custody of the goods:
Provided
that nothing in this section shall affect the rights of the seller where the
neglect or refusal of the buyer to take delivery amounts to a repudiation of
the contract.
Chapter V RIGHTS
OF UNPAID SELLER AGAINST THE GOODS
Section - 45. ?Unpaid seller? defined.
(1)
The seller of
goods is deemed to be an ?unpaid? seller within the meaning of this Act.
(a)
when the whole of
the price has not been paid or tendered;
(b)
when a bill of
exchange or other negotiable instrument has been received as conditional
payment, and the condition on which it was received has not been fulfilled by
reason of the dishonour of the instrument or otherwise.
(2)
In this Chapter,
the term ?seller? includes any person who is in the position of a seller, as,
for instance, an agent of the seller to whom the bill of lading has been
endorsed, or a consignor or agent who has himself paid, is or directly
responsible for, the price.
Section - 46. Unpaid seller's rights.
(1)
Subject to the
provisions of this Act and of any law for the time being in force,
notwithstanding that the property in the goods may have passed to the buyer,
the unpaid seller of goods, as such, has by implication of law.
(a)
a lien on the
goods for the price while he is in possession of them;
(b)
in case of the
insolvency of the buyer a right of stopping the goods in transit after he has
parted with the possession of them;
(c)
a right of resale
as limited by this Act.
(2)
Where the property
in goods has not passed to the buyer, the unpaid seller has, in addition to his
other remedies, a right of withholding delivery similar to and co-extensive
with his rights of lien and stoppage in transit where the property has passed
to the buyer.
Unpaid seller's lien
Section - 47. Seller's lien.
(1)
Subject to the
provisions of this Act, the unpaid seller of goods who is in possession of them
is entitled to retain possession of them until payment or tender of the price
in the following cases, namely:
(a)
where the goods
have been sold without any stipulation as to credit;
(b)
where the goods
have been sold on credit, but term of credit has expired;
(c)
where the buyer
becomes insolvent.
(2)
The seller may
exercise his right of lien notwithstanding that he is in possession of the
goods as agent or bailee for the buyer.
Section - 48. Part delivery.
Where
an unpaid seller has made part delivery of the goods, he may exercise his right
of lien on the remainder, unless such part delivery has been made under such
circumstances as to show an agreement to waive the lien.
Section - 49. Termination of lien.
(1)
The unpaid seller
of goods loses his lien thereon.
(a)
when he delivers
the goods to a carrier or other bailee for the purpose of transmission to the
buyer without reserving the right of disposal of the goods;
(b)
when the buyer or
his agent lawfully obtains possession of the goods;
(c)
by waiver thereof.
(2)
The unpaid seller
of goods, having a lien thereon, does not lose his lien by reason only that he
has obtained a decree for the price of the goods.
Stoppage in Transit
Section - 50. Right of stoppage in transit.
Subject
to the provisions of this Act, when the buyer of goods becomes insolvent, the
unpaid seller who has parted with the possession of the goods has the right of
stopping them in transit, that is to say, he may resume possession of the goods
as long as they are in the course of transit, and may retain them until payment
or tender of the price.
Section - 51. Duration of transit.
(1)
Goods are deemed
to be in course of transit from the time when they are delivered to a carrier
or other bailee for the purpose of transmission to the buyer until the buyer or
his agent in that behalf takes delivery of them from such carrier or other
bailee.
(2)
If the buyer or
his agent in that behalf obtains delivery of the goods before their arrival at
the appointed destination, the transit is at an end.
(3)
If, after the
arrival of the goods at the appointed destination, the carrier or other bailee
acknowledges to the buyer or his agent that he holds the goods on his behalf
and continues in possession of them as bailee for the buyer or his agent, the
transit is at an end and it is immaterial that a further destination for the
goods may have been indicated by the buyer.
(4)
If the goods are
rejected by the buyer and the carrier or other bailee continues in possession
of them, the transit is not deemed to be at an end, even if the seller has
refused to receive them back.
(5)
Where goods are
delivered to a ship chartered by the buyer, it is a question depending on the
circumstances of the particular case, whether they are in the possession of the
master as a carrier or as agent of the buyer.
(6)
Where the carrier
or other bailee wrongfully refuses to deliver the goods to the buyer or his
agent in that behalf, that transit is deemed to be at an end.
(7)
Where part
delivery of the goods has been made to the buyer or his agent in that behalf,
remainder of the goods may be stopped in transit, unless such part delivery has
been given in such circumstances as to show an agreement to give up possession
of the whole of the goods.
Section - 52. How stoppage in transit is effected.
(1)
The unpaid seller
may exercise his right of stoppage in transit either by taking actual
possession of the goods, or by giving notice of his claim to the carrier or
other bailee in whose possession the goods are. Such notice may be given either
to the person in actual possession of the goods or to his principal. In the
latter case the notice, to be effectual, shall be given at such time and in
such circumstances that the principal, by the exercise of reasonable diligence,
may communicate it to his servant or agent in time to prevent a delivery to the
buyer.
(2)
When notice of
stoppage is given by the seller to carrier or other bailee in possession of the
goods, he shall redeliver the goods to, or according to the directions of, the
seller. The expenses of such redelivery shall be borne by the seller.
Section - 53. Effect of sub-sale or pledge by buyer.
(1)
Subject to the
provisions of this Act, the unpaid seller's right of lien or stoppage in transit
is not affected by any sale or other disposition of the goods which the buyer
may have made, unless the seller has assented thereto:
Provided
that where a document of title to goods has been issued, or lawfully
transferred to any person as buyer or owner of the goods, and that person
transfers the document to a person who takes the document in good faith and for
consideration, then, if such last mentioned transfer was by way of sale, the
unpaid seller's right of lien or stoppage in transit is defeated and, if such
last mentioned transfer was by way of pledge or other disposition for value,
the unpaid seller's right of lien or stoppage in transit can only be exercised
subject to the rights of the transferee.
(2)
Where the transfer
is by way of pledge, the unpaid seller may require the pledgee to have the
amount secured by the pledge satisfied in the first instance, as far as
possible, out of any other goods or securities of the buyer in the hands of the
pledgee and available against the buyer.
Section - 54. Sale not generally rescinded by lien or stoppage in transit.
(1)
Subject to the
provisions of this section, a contract of sale is not rescinded by the mere
exercise by an unpaid seller of his right of line or stoppage in transit.
(2)
Where the goods
are of a perishable nature, or where the unpaid seller who has exercised his
right of lien or stoppage in transit gives notice to the buyer of his intention
to resell, the unpaid seller may, if the buyer does not within a reasonable
time pay or tender the price, resell the goods within a reasonable time and
recover from the original buyer damages for any loss occasioned by his breach
of contract, but the buyer shall not be entitled to any profit which may occur
on the resale. If such notice is not given, the unpaid seller shall not be
entitled to recover such damages and the buyer shall be entitled to the profit,
if any, on the resale.
(3)
Where an unpaid
seller who has exercised his right of lien or stoppage in transit resells the
goods, the buyer acquires a good title thereto as against the original buyer,
notwithstanding that no notice of the resale has been given to the original
buyer.
(4)
Where the seller
expressly reserves a right of resale in case the buyer should make default,
and, on the buyer making default, resells the goods, to original contract of
sale is thereby rescinded, but without prejudice to any claim which the seller
may have for damages.
Chapter VI SUITS
FOR BREACH OF THE CONTRACT
Section - 55. Suit for price.
(1)
Where under a
contract of sale the property in the goods has passed to the buyer and the
buyer wrongfully neglects or refuses to pay for the goods according to the
terms of the contract, the seller may sue him for the price of the goods.
(2)
Where under a
contract of sale the price is payable on a certain day irrespective of delivery
and the buyer wrongfully neglects or refuses to pay such price, the seller may
sue him for the price although the property in the goods has not passed and the
goods have not been appropriated to the contract.
Section - 56. Damages for non-acceptance.
Where
the buyer wrongfully neglects or refuses to accept and pay for the goods, the
seller may sue him for damages for non-acceptance.
Section - 57. Damages for non-delivery.
Where
the seller wrongfully neglects or refuses to deliver the goods to the buyer,
the buyer may sue the seller for damages for non-delivery.
Section - 58. Specific performance.
Subject
to the provisions of Chapter II of the Specific Relief Act, 1877, in any suit
for breach of contract to deliver specific or ascertained goods, the Court may,
if it thinks fit, on the application of the plaintiff, by its decree direct
that the contract shall be performed specifically, without given the defendant
the option of retaining the goods on payment of damages. The decree may be
unconditional, or upon such terms and condition as to damages, payment of the
price, or otherwise, as the court may deem just, and the application of the
plaintiff may be made at any time before the decree.
Section - 59. Remedy for breach of warranty.
(1)
Where there is a
breach of warranty by seller, or where the buyer elects or is compelled to
treat any breach of a condition on the part of the seller as a breach of
warranty, the buyer is not by reason only of such breach of warranty entitled
to reject the goods; but he may.
(a)
set up against the
seller the breach of warranty in diminution or extinction of the price; or
(b)
sue the seller for
damages for breach of warranty.
(2)
The fact that a
buyer has set up a breach of warranty in diminution or extinction of the price
does not prevent him from suing for the same breach of warranty if he has
suffered further damage.
Section - 60. Repudiation of contract before due date.
Where
either party to a contract of sale repudiates the contract before the date of
delivery, the other may either treat the contract as subsisting and wait till
the date of delivery, or he may treat the contract as rescinded and sue for
damages for the breach.
Section - 61. Interest by way of damages and special damages.
(1)
Nothing in this
Act shall affect the right of the seller or the buyer to recover interest or
special damages in any case where by law interest or special damages may be
recoverable, or to recover the money paid where the consideration for the
payment of it has failed.
(2)
In the absence of
a contract to the contrary, the court may award interest at such rate as it
thinks fit on the amount of the price.
(a)
to the seller in a
suit by him for the amount of the price from the date of the tender of the
goods or from the date on which the price was payable;
(b)
to the buyer in a
suit by him for the refund of the price in a case of a breach of the contract
on the part of the seller?from the date on which the payment was made.
Chapter VII MISCELLANEOUS
Section - 62. Exclusion of implied terms and conditions.
Where
any right, duty or liability would arise under a contract of sale by
implication of law, it may be negatived or varied by express agreement or by
the course of dealing between the parties, or by usage, if the usage is such as
to bind both parties to the contract.
Section - 63. Reasonable time a question of fact.
Where
in this Act any reference is made to a reasonable time, the question what is a
reasonable time is a question of fact.
Section - 64. Auction sale.
In
the case of a sale by auction.
(1)
where goods are
put up for sale in lots, each lot is prima facie deemed to be the subject of a
separate contract of sale;
(2)
the sale is
complete when the auctioneer announces its completion by the fall of hammer or
in other customary manner; and, until such announcement is made, any bidder may
retract his bid;
(3)
a right to bid may
be reserved expressly by or on behalf of the seller and, where such right is
expressly so reserved, but not otherwise, the seller or any one person on his
behalf may, subject to the provisions hereinafter contained bid at the auction;
(4)
where the sale is
not notified to be subject to a right to bid on behalf of the seller, it shall
not be lawful for the seller to bid himself or to employ any person to bid at
such sale, or for the auctioneer knowingly to take any bid from the seller or
any such person; and any sale contravening this rule may be treated as
fraudulent by the buyer;
(5)
the sale may be
notified to be subject to a reserved or upset price;
(6)
if the seller
makes use of pretended bidding to raise the price, the sale is voidable at the
option of the buyer.
Section - [9][64-A. In contracts of sale, amount of increased or decreased taxes to be added or deducted.
(1)
Unless different
intention appears from the terms of the contract in the event of any tax of the
nature described in sub-section (2) being imposed, increased, decreased or
remitted in respect of any goods after the making of any contract for the sale
or purchase of such goods without stipulation as to the payment of tax where
tax was not chargeable at the time of the making of the contract, or for the
sale or purchase of such goods tax paid where tax was chargeable at that time,
(a)
if such imposition
or increase so takes effect that the tax or increased tax, as the case may be,
or any part of such tax is paid or is payable, the seller may add so much to
the contract price as will be equivalent to the amount paid or payable in
respect of such tax or increase of tax, and he shall be entitled to be paid and
to sue for and recover such addition; and
(b)
if such decrease
or remission so takes effect that the decreased tax only, or no tax, as the
case may be, is paid or is payable, the buyer may deduct so much from the
contract price as will be equivalent to the decrease of tax or remitted tax,
and he shall not be liable to pay, or be sued for, or in respect of, such
deduction.
(2)
The provisions of
sub-section (1) apply to the following taxes, namely:
(a)
any duty of
customs or excise on goods;
(b)
any tax on the
sale or purchase of goods.]
Section - 65. Repeal.
Chapter
VII of the Indian Contract Act, 1872, is hereby repealed.
Section - 66. Savings.
(1)
Nothing in this
Act or in any repeal effected thereby shall affect or be deemed to affect.
(a)
any right, title,
interest, obligation or liability already acquired, accrued or incurred before
the commencement of this Act, or
(b)
any legal
proceedings or remedy in respect of any such right, title, interest, obligation
or liability, or
(c)
anything done or
suffered before the commencement of this Act, or
(d)
any enactment
relating to the sale of goods which is not expressly repealed by this Act, or
(e)
any rule of law
not inconsistent with this Act.
(2)
The rules of
insolvency relating to contracts for the sale of goods shall continue to apply
thereto, notwithstanding anything contained in this Act.
(3)
The provisions of
this Act relating to contracts of sale do not apply to any transaction in the
form of a contract of sale which is intended to operate by way of mortgage,
pledge, charge, or other security.
[1] Received the assent of the Governor-General on 15th March, 1930.
[2] The word ?Indian? omitted by Act 33 of 1963, S. 2.
[3] Subs. by the A.O. 1950.
[4] The words ?except the State of Jammu and Kashmir? omitted by Act 34
of 2019, Ss. 95, 96 & Sch. V (w.e.f. 31-10-2019).
[5] Ins. by Act 28 of 1993, S. 31 & Sch. (w.r.e.f. 16-10-1992).
[6] The words ?or where the contract is for specific goods the property
in which has passed to the buyer? omitted by Act 33 of 1963, S. 3.
[7] Subs. by Act 33 of 1963, S. 4.
[8] See now Railways Act, 1989 (24 of 1989).
[9] Subs. by Act 33 of 1963, S. 5.