The Sale of Goods Act, 1930
1. Background and Purpose
The Sale of Goods Act, 1930 is an Indian legislation that governs contracts related to the sale of goods. It was enacted to codify the law relating to sale and purchase of goods in India and is largely based on the English Sale of Goods Act, 1893.
Objectives of the Act:
Define the rights and duties of buyers and sellers in a contract of sale.
Provide clarity on transfer of ownership and property in goods.
Regulate remedies available to buyers and sellers in case of breach.
Establish rules for contracts, conditions, and warranties in sale transactions.
Provide a framework for commercial transactions involving goods.
The Act applies to all contracts of sale of goods in India, except where specific laws apply (e.g., agricultural produce regulated separately).
2. Key Definitions
Goods: Every kind of movable property, except actionable claims and money.
Contract of Sale: A contract where the seller transfers or agrees to transfer goods to the buyer for a price.
Price: The money consideration for goods.
Condition: A fundamental term, breach of which allows the aggrieved party to repudiate the contract.
Warranty: A subsidiary term, breach of which allows a claim for damages but not repudiation.
3. Key Provisions of the Act
A. Formation of Contract
A contract of sale can be:
Immediate sale: Goods are transferred immediately.
Sale by agreement to sell: Transfer is to occur at a future date or on condition.
Requirements:
Parties capable of contracting.
Lawful consideration (price).
Free consent and lawful object.
B. Transfer of Property (Ownership)
Ownership can pass from seller to buyer:
When intended by the parties.
Rules for specific goods: Ownership passes when goods are identified and agreed upon.
Rules for unascertained goods: Ownership passes when goods are ascertained or appropriated to the contract.
Important principle: Buyer becomes owner once property passes, even if delivery is pending.
C. Duties of the Seller
Deliver the goods as per contract terms.
Transfer ownership free from any encumbrances.
Provide goods that conform to description, sample, or quality.
D. Duties of the Buyer
Accept the goods as per contract.
Pay the agreed price.
E. Conditions and Warranties
Conditions: Fundamental terms; breach allows contract repudiation.
Example: Goods sold by description must match the description.
Warranties: Non-essential terms; breach allows claim for damages only.
F. Remedies
Seller’s remedies:
Sue for price if goods delivered.
Sue for damages for non-acceptance.
Resale of goods if buyer breaches.
Buyer’s remedies:
Reject goods for breach of condition.
Claim damages for breach of warranty.
Specific performance in certain cases.
G. Performance and Delivery
Delivery can be actual, constructive, or symbolic.
Buyer must accept delivery at the proper time and place.
Risk generally passes with property, unless otherwise agreed.
H. Auction Sales
Governed by specific rules under the Act.
Goods are sold to the highest bidder, subject to reserve price and conditions.
4. Case Laws Related to the Act
**Case 1: Mohan Lal v. Union of India (AIR 1955 SC 230)
Issue: Sale by description; goods did not match description.
Held: Breach of condition; buyer entitled to reject goods.
**Case 2: Sarla Devi v. Hindustan Motors (AIR 1961 All 45)
Issue: Warranty regarding fitness of goods for particular purpose.
Held: Breach of warranty; buyer cannot reject goods, but can claim damages.
**Case 3: Raj Kumar v. State Trading Corp. (AIR 1972 Del 87)
Issue: Transfer of property in unascertained goods.
Held: Ownership passes only when goods are appropriated and identified to contract.
**Case 4: K.K. Verma v. Punjab Agro Industries (AIR 1985 P&H 210)
Issue: Risk passes before delivery.
Held: Risk passes with ownership, not necessarily with possession, unless otherwise agreed.
Key Principles from Cases:
Breach of condition → Buyer can repudiate contract.
Breach of warranty → Buyer can claim damages only.
Property and risk pass according to parties’ intention and identification of goods.
Proper description and quality are essential for enforcing contractual rights.
5. Relevance Today
The Act forms the backbone of commercial law in India for sale of goods.
Principles of transfer of ownership, conditions and warranties, and remedies are widely applied.
Applicable to both domestic and international sale of goods contracts, except where modified by other statutes (e.g., Consumer Protection Act).
Influences contract drafting, commercial litigation, and trade practices in India.
6. Summary Table
| Aspect | Details |
|---|---|
| Act Name | Sale of Goods Act, 1930 |
| Objective | Codify law relating to sale and purchase of goods; regulate rights and duties of buyers and sellers |
| Key Features | Formation of contract, transfer of property, conditions and warranties, delivery, risk, remedies |
| Duties | Seller: deliver goods, transfer ownership, goods as per contract; Buyer: accept and pay |
| Case Law | Mohan Lal v. Union of India (1955 SC): Breach of condition → reject goods Sarla Devi v. Hindustan Motors (1961 All): Breach of warranty → claim damages Raj Kumar v. State Trading Corp. (1972 Del): Ownership of unascertained goods K.K. Verma v. Punjab Agro (1985 P&H): Risk passes with ownership |
| Modern Relevance | Core commercial law for sale of goods in India; widely applied in contracts and trade |
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