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The contacts for sale of goods are subject to the general principles of the law relating to contracts i.e. the Indian Contact Act. A contract for sale of goods has, however, certain peculiar features such as, transfer of ownership of the goods, delivery of goods rights and duties of the buyer and seller, remedies for breach of contract, conditions and warranties implied under a contract for sale of goods, etc. These peculiarities are the subject matter of the provisions of the Sale of Goods Act, 1930.
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. It thus includes both an actual ‘sale’ and an ‘agreement to sell’, which has been distinguished later.
‘Goods’ means every kind of movable property other than actionable claims and money; and includes stocks and shares, growing crops, grass and things attached to or forming part of the land, which are agreed to be served from land before sale, or under for contract of sale.
A ‘sale’ must be distinguished from an ‘agreement to sell’ since the legal implications of the two terms are vastly different. A contract wherein, the property in the goods is transferred from the seller to the buyer, the contract is called a sale, but where the transfer of property in the goods is to take place at a future time, or subject to some conditions, thereafter to be fulfilled, it is called an agreement to sell. 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.
There are various kinds of goods and the parties have various options to agree about the delivery of the goods. What shall be the fate of a contract if the goods are perished or destroyed?
‘Perishing of goods’ includes not only complete destruction of the goods when the seller has been irretrievably deprived by the goods or when the goods have been stolen or have in some other way been lost and are untraceable, but also when the goods become un merchantable i.e. when the goods has lost their commercial value.
If the title to be goods has already passed to the buyer, he must pay for the goods though the same cannot be delivered.
A document of title to goods is one, which entitles and enables its rightful holder to deal with the goods represented by it, as if he were the owner. It is used in the ordinary course of business as proof of the ownership, possession or control of goods. It authorizes the possessor to receive the goods. It also confers a right on the possessor to transfer the goods to another person, by mere delivery or by proper endorsement the delivery.
Cash memo, bill of lading, dock warrant, warehouse keeper’s or wharfinger’s certificate, lorry receipt (L/R), railway receipt (R/R) and delivery order are some of the instances of document of title to goods.
The property in the goods is said, to be transferred from the seller to the buyer when the latter acquires the proprietary rights over the goods and the obligations linked thereto. ‘Property in Goods’ which means the ownership of goods, is different from ‘ possession of goods’ which means the physical custody or control of the goods.
The transfer of property in the goods from the seller to the buyer is the essence of a contract of sale. Therefore the moment when the property in goods passes from the seller to the buyer is significant for following reasons:
“Conveyance” includes a conveyance on sale and every instrument by which property, whether movable or immovable, is transferred inter vivos and which is not otherwise specifically provided for by Schedule I.
“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 will be considered goods”
It is a contract, whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. There can be contract of sale between one part owner and another.
As per section 61 of the sale of goods act the term goods includes all personal property but does not include any services money or intangible property right such as the right to sue. Products of the soil are usually considered goods because they are sold with a view to severance.
A contract of sale is an example of executed contract. Where the agreement to sale is an example of executoree contract. In case of the sale, the right to sale the goods is in the hands of buyer conversely in agreement to sale the seller has the right to sale the goods.
The consumer right Act, 2015 sets out rules relating to the supply of goods to consumers. A single set of rules applies to all contracts, where goods are supplied whether by way of sale, higher, higher purchase of work or material contract. The act also govern the supply of services and digital content.