Chapter1

Definitions

APPLICATION

law relatingto the sale of movablc goods is contained in the Sale of Gnds Act (Act Ili of
The
The Act came into force on Ist July, 1930. It closely follcws the English Act on
thesbject
1930).

GOODs
BUYER, SELLER AND
Buyer : Buyer
means a person who buys or agrees to buy goods-Sec. 21).
Seller :Seller means aperson who sells or agrees to sell [Link]. 20 13).
encept (i) actionabie claims
Coods : The term Goods" includes every kind of movabie property
and (ii) money. Sec. 2(7).
which a person may have against
An actionable claim means a debt or.a ciaim for money
another and which he may recover by suit. (See p. 78) Money means legai tender money.
two types of movable property are not included in the definition of the term goods as
These
the Sale of Goods Act. All other types of movable property are "goods" under the Act.
used in and debentures are goods. Things
Movable articles like furniture, clothing etc. and sharesgrass, which can be easily separated
crops and
attached to the earth are not movable. But growing from trees, are inciuded within the
can be servered
from the earth before sale, and fruits whích
definítion of movable goods.
be classified into three types : Existing Goods. Future Goods and Contingent
Goods may
Goods.

Existing Goods
are goods which are already in existence and which are physically present in some
Existing goods
person's possession and ownership.--Sec. 6(1). Ascertained or (ii)Generic and Unascertained.
Existing goods may be either (i) Specific and
which can be clearly identified and recognised as separate things e.g..
) Specific Goods are goods with distinctive features: goods identified and agreed upon at
particular picture by a painter; a ring
contract of sale etc. The term Ascertained Goods is uscd in the same sense as
e time of the
Specific Goods. Goods are goods indicated by description and not
() Generic Goods or Unascertained buyer,
If amerchant agrees to supply one bag of wheat from his godown to asoon as
parately identified. because it is not known which bag will be delivered. As
a sale of unascertained goods identified for delivery it becomes specific goods.
*Particular bag is separated out and markedor
Future Goods manufactured or produced or acquired by the seller after the
Future Goods are goods which will be
making of the contract of sale. -Sec. 26).

145
 THE LAW RELATING
146 TO SALE
OF
Example:
GOODS
his
P agrees to sell to Qall the mangoes which will be produced in garden next
This is an agreement for the sale of future goods. year.
ContingentGoods
There may be a contract for the sale of goods the acquisition of which by th seller
contingency which may or may not happen. [Sec. 6(2)] In such cases the goods depends upon a
sold
Contingent Goods. Contingent goods come within the class of future goods. are called
Example :
Xagrees to sell to Y a certain ring provided he is able to purchase it
owner. This is an agreement for the sale of contingent goods. from itS present
SALE AND AGREEMENT TO SELL
Sale
Acontract for the sale of goods may be either a sale or an agreement to sell (Sec. 4). Where und.
a contract of sale the property in the goods (i.e., the ownership) is transferred from the seller to the
buyer the contract is called a sale. The transaction is a sale even though the price is payable at a
later date or delivery is to be given in the future, provided the ownership of the goods is transferred
from the seller to the buyer.

Agreement to Sell
When the transfer of ownership is to take place at a future time or subject to some condition to be
fulfilled later, the contract is called an agreement to sell.
When an agreement to sell becomes a sale? An agreement to sell becomes a sale when the
prescribed time elapses or the conditions, subject to which the property in the goods is to be
transferred, are fulfilled.
Where by a contract of sale the seller purports to effect a present sale of future goods, he
contract operates as an agreement to sell the goods.
Examples :
(i) Pagrees to buy from Ba haystack on B's land, with liberty to come on B's land to take
it away. This is a sale because the property in the
(ii) goods has
Pagrees to buy a quantity of soda to arrive by a certain ship. passed
This is to
an the buyet. tosell
agreement
because the property in the goods will pass to the buyer when the goods come andthe
agreement is naturally subject to the condition that the ship arrives in port w
goods.

pIFFERENCES BETWEEN A SALE AND AN AGREEMENT TO SELL

1. Transfer of Ownership
In an agreement to sell, the property in the goods remains with the seller until the agreement
to sell becomes a sale by the expiry of the agreed time or conditions.
Til this happens the goods can be resold by the seller or attached in execution
the fulfilment of the agreed
of a decree aggainst
him. In case of a sale the property execution
passes to the buyer and the goods seized in
of a decree against the seller. cannot be
DEPINITTON 147

TransferofRisk
1 and he has to bear the
Where thetransactionamounts to a sale, the goods belong to the buyer
lssifthe goods are subsequently damaged or destroyed. Sec. 26.
Remedial Measures
of a sale. the unpaid seller has certain reliefs available. e.g.. lien. stoppage in
Inthe case
transit,resale etc. In case of an agreement to sell, the seller's remedy for breach
of contract by the
suitfor damages.
huyers,is a
Nature of Contract
Sale' is an 'executed contract' because in a sale, consideration moves simultaneous withbuyerthe
transferred to the
promisesof both parties. Also, in a sale the property of specific goods is
the consideration is to
immediately. But an agreement to sell' is an 'executory contract' because buyer later. (See. ch. 2
future date. Also the property of specific goods pass to the
move at a
Transfer of Ownership').

THE ESSENTIAL ELEMENTS

are enumerated below :
The essential elements of a contract for the sale of goods
deals only with movable goods, excepting
1. Movable Goods: The Sale of Goods Act
not apply to immovable properties.
actionable claims and money.-Sec. 2(7). This Act doescontract for the exchange of movable goods
be a
2. Movable Goodsfor Money: There must money-consideration. (See 'Price', p. 148) An
must be
for money. Therefore in a sale there But it has been held that if an exchange is made partly
exchange of goods for goods is not a sale. one of sale. Aldridge v. Johnson. follows that the
partly for money, the contract is
for goods and it
sale involves achange of ownership, cannot buy from
3. Two Parties : Since a contract of man
persons. A sale is a bilateral contract. A
buyer and the seller must be different is one exception provided for in section 4(1)of the Sale
rule there
or sellgoods to [Link] this goods to another part-owner. Theretfore a partner
may sell
part-owner can sell
of Goods Act. A
goods to a partner. Re Maclaren.
goods to his firm and the firm may sell

Examples : owners of a certain stock of movable goods. P can sell his

(i) P& O are each of them l/4 becomes owner of 1/2 share.
rights to 0. After the sale Q members. Any member taking it has to pay ils cost to the
(i) A club supplies food to the club pays to the members jointly (i.e., to the club). This
club. Thus a member of the interestof the oher members of the club. "Members of a
transaction is a release of joint Therefore it is
voluntary society are undivided joint owners, not part-owners."
club or
not a sale. Graff v. Evans.
sale :A contract of sale is made by an offer to buy or sell
4. Formation of the contract of
acceptance of such offer. The contract may provide for the immediate
goods for a price and the payment of the price or both, or for the-Sec.
delivery and payment
delivery the
of goods orimmediate postponcd. S).
or that the delivery or payment or both shall be
by instalments,

3. (1882) 8 Q. B. D. 373
1. (I857) 7E&B 885 2. (1879) 1|Ch. Div. 68
 148 THE LAW RELATING TO
SALE (OF
5. Method of forming the contract : Suhbject to the provision of any law for
GOODS
the time being in
force, a contract of sale may be in wriring, or by word of mouth, or may be implied
conduct of the parties. Sec. 5(2).
6. The terms of contract : The parties may agree upon any term concerning the
from the
and mode of delivery. The terms may be of two types : essential and non-cssential, time, place,
are callcd Conditions, non-essential ternms are called Warranties. The Sale of
Goods Essential
Act terms
that in the absence of acontract to the contrary. certain conditions and warranties are to be provi
in all contracts of sale.
ime des
7. Orher essential elements:A contract for the sale of goods must satisfy all the
elements necessary for the formation of a valid contract, e.g., the parties must be essential
contract, there must be free consent, there must be consideration, the object must be competent to
lawful etc.
(Scc. p. 12)

PRICE
Definition
"Price" means the money consideration for a sale of goods.--Sec. 2(10).
Ascertaining of price
The pricein a contract of sale may be fixed by the contract of sale or may be left to be fixed
in a manner agreed between the parties. It may also be determined by the course of dealing
between the parties. Where there is no provision made in the contract regarding price, the buyer
must pay a reasonable price. What is a reasonable price is a question of fact depending upon the
circumstances of the [Link]. 9.
Goods may be sold on a condition that the valuation is to be made by a third party. In such
cases if the third party cannot or does not make the valuation, the agreement to sellbecomes void.
But if the goods or any part thereof had been delivered to and appropriated by the buyer, he shall
pay a reasonable price therefor. -Sec. 10(1).
Where such third party is prevented from making the valuation by the fault of the seller or
buyer, the party not in fault is entitled to damages. -Sec. 10(2).

DESTRUCTION OF GOODS
Goods perishing before making a 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." Sec. 7.
Example:
There was a sale of cargo of corn. Without the knowledge of the seller, the cargo hu
sold. The
before the sale become heated and was therefore landed at another port and
sale is void. Coutrier v. Hastie.4

Goods perishing before sale but alfter agreement to scll without any
"Where there is an agreement to sell specific goods, and subsequently the goods their
answer to
fault on the part of the seller of buyer perish or become so damaged as no longer to
4. (1856) 5 H. L. C. 673
 149
DEFINITION

thereby
description in the agrcement before the risk passes to the buycr, the agreement is
avoided."Scc.8.

Example: would use it for eight days 1Or

There was a contract for the sale of a horse. The buyer
before the delivery of the
Irial and it was not suitable, it would be returned. Three days was avoided. Elphick V.
contract
horse, it died, without any fault on the either party. The
Barnes.5

EARNEST MONEY
earnest money to mark the formation of an agreement for sale is a long
The payment of if the
custom in India as well as in England. There is usually an understanding thatwhereas
ctanding
retain the earnest money as compensation;money is
contract is broken by the buyer, the seller is to
credited to the purchase price payable. Earnest
if the contract is fulfilled the amount is provision for the forfeiture of earnest money
is not
security for the fultilment of agreement. A
74.
consideration to be penalty clause. Sec. v. Tata Aircraft Ltd.ó, the purchaser deposited
Cotton Mills and Anr.
In Shree Hanuman of the value of goods. He agreed that the full
money, being the 25 percent seller was
Rs. 2,50,000 as earnest taking delivery but he failed to pay it. Held, the
value of goods will be paid, before
entitled to forfeit the earnest money. money: Money may be paid by the buyer
to
Sale-amount paid whether advance or earnest stipulated
of the formation of an agreement of sale. If usually expressly
the seller at the time
an 'carnest money'. In the absence of any stipulation, the
whether the money is an 'advance' or paid is a
advance if it is a large part of the contract price. If the money
Gounder v.
payment is interpreted as interpreted as earnest money. Marimuthu
contract price, it can be
Small part of the
Ramaswamy Gounder and others.

HIRE-PURCHASE AGREEMENTS
Definition
under which a person takes delivery of goods promising lo
A hire-purchase agreement is one pay hire
and, until full payment is made, to
instalments
Pay the price by acertain number of definition it can be said that a hire-purchase agreement is a
Charges for using the goods. From this
worded ambiguously and it was difficult
sell.
bailment plus an agreement toagreements were frequently
Formerly, hire purchase was a sale or a hire-purchase agreement.
The law
particular transaction
o determine whether a
codified by the Parliament in 1972, viz., the Hire-Purchase Act(No.
garding this subject has been
25 of 1972), but the Act has not been applied yet.

Summary
The main provisions of the Hire-Purchase
Act are summarised on the next pages :
agreement under which goods are let on hire
and
Agreement means an
I. Hire-Purchase them in accordance with the terms of the
under which the hirer has an option to purchase
which,
agreement annod includes a agreement under
(Supreme Couut) 7. AIR (1979) Mad. 189
5. (1880) 5
C.P.D. 321 6. (1970)2 S.G.A 482
Law (WP-22
 150 THE LAW RELATING TO SALE OF G
() possession of goods is delivered by the owner thereof to a person on condition
GOODS
person pays the agreed amount in periodical instalments, and
(ii) the property in the goods is to pass to such person on the payment of the
that such
instalment, and last of such
(iii) such person has a right to terminate the agreement at any time before
[Link]. 2(e). the property so
2. Hire-Purchase agreement must be in writing and signed by parties. A surety, if an.
sign the hire-purchase agreements.
The agreement shall be void if the above requirements have not been complied
3. Contents of hire-purchase agreement must include the [Link]. 4:
(i) the hire-purchase price of the goods to which the
agreement relates;
with.-Sec.3.
(ii) the cash price of the goods i.e., the price at which the
hirer for cash; goods may be purchased hu.
(ii) the date on which the agreement shall be deemed to have
(iv) the number of instalments by which the commenced;
each of those instalments and the date, orhire-purchase price is to be paid, the amount of
the mode of determining the date, upon
it is payable, and the person to whom and the
place where it is payable: which
(v) the goods to which the
(vi) where any part of the agreement relates, in amanner sufficient to identify them:
hire-purchase price is, or is to be, paid otherwise than in cash or
by cheque, the hire-purchase
hire-purchase price; and agreement shall contain, adescription of that part of the
(vii) where any of the above
asuit for getting the requirements has not been compliedwith, the hirer may institute
satisfied that the failurehire-purchase agreement
to comply with any suchrescinded; and the court may, if it is
rescind the
fit in the agreement
on such terms as it thinks requirement has prejudiced the hiret.
just., or pass such other order as it
4. The purchaser circumstances of the case. thinks
has the option of paying the
purchaser is entitled to get a full price before it was
5. In every [Link]. 9, 10. due. In that case the
[Link]. 7. instalment the full price, it includes the hire of the
of
6. The seller can goods and the purchas1ing
instalment [Link]. recover17. the possession of the goods, if the purchaser fails to pay o
7. The Act any u
provides that there will be certain
hire-purchase
Goods Act.-Sec. agreement.
6. The words and
expressions
warranties and
are defined inconditions to be impliedn u;
8. The Act
shall not apply in
Contract Act and the Sale o
commencement of this Act.-Sec. 31. relation to any
hire-purchase agreement made before the

SALE AND OTHER

Sale and Hire-purchase
CONTRACTS
In a sale, the
property is
the transferee of the transferred to the buyer; he can
purchase
agreement, the purchaser doesgetsnot a good title even if the deal is with the property ashire-purchase
he likes and
transferee from a person become owner price unpaid. But in a
In a Bombay case it who has not till the
paid the full price, full price is paid and therefore, the
has
the agreement by returning thebeen laid down that (i) if gets no title.
goods, the the
transaction purchasernot
is asale and of terminating
has no option agreement and
DEFINITTON 151

transactionis hire-purchase agreement only if the buyer has the option of returning the
i)theBhimji v. Bombay Trust Corporation.8
goods.

Hire-purchase and Instalment Sale

There are differences between a hire-purchase agreement and an instalment
sale. In the former,
concluded after the total price and the hire charges are paid. The purchaser is
is completely latter.,
a sale
entitled tò transfer the goods until the terms of the agreement are fully carried out. In
the
the total
(instalment sale) the purchaser becomes the owner of specific goods immediately, aalthough
not

priceisto be
paid in a number of instalments.
Sale and Bailment
Bailment does not change ownership of the goods. A sale involves whattransfer of ownership.
back he has delivered. In a
In a bailment, the party delivering the goods is entitled to get goods.
returning of
sale the seller gets the price and there is no question of
Labour
Sale and Contract for Work and a contract for work and labour. A contract of
sale may be distinguished from
Acontract of for
contemplates the delivery of movable goods: but if in substance the contract is one
sale of goods
for work and labour.
the exercise of skill, it is a contract object is the transfer of the property in and
the
of sale is a contract whose main
"Acontract of work
the possession of, a chattel as a chattel to the buyer. Where the main object is one
delivery of the contract
the transfer of a chattel qua chattel,
undertaken by the payee of the price is not India MachineryManufacturing Co. Lid,
and
labour:" Union of India v. The Central
for work and
others,9 England but not in
distinction between the two types of contracts is of importance in
The
India, except for taxation purposes.
customer. Held, it is
Examples:
agreed to make a set of artificial teeth to fit the mouth of a
(i) A dentist v. Griffin. 10
contract for the sale of goods. Lee supplied the canvas and paint. Held,
it is a
artist to paint a portrait and Graves. l1
(i) Gengaged an labour and not one for the sale of goods. Robinson v.
contract for work and Railway for construction of railway
coaches
into three contracts with Western by V.
(iüi) ventered
supplied by the Railway. Labour and materials were supplied
contracts and
on the under-frames Sales Tax Act of 1953, the contracts were works
Held, under the Bombay
v. M/s Variety Body Builders. 12
not a sale. State of Gujarat into a contract with a company for the
manufacture and sale
Board entered taken
(iv) The Railway
Union of India by the company. Even though some advance was
of wagons to the belonged to the
material used in the constructionwas
Railway Board, the bulk of the not one for
from the product for a price. Held, the contract
end
v. The Central India Machinory
manufacturer who sold the
one for sale. Union of India
work and labour but in the above para)
Manufacturing Co. Lid. and others. (See

8. 32 Bom. L.R. 64. 10. (1861) 30L.J.K.B. 252 12. AIR (1976) Supreme Court, 2108
I1. (1935) 1 K.B. 579
9. AIR (1977)Supreme Court, 1537
152 THE LAW RELATING TO SALE OF
GOODS
CONDITIONS AND WARRANTIES
contract of
Section 12 of the Sale of Goods Act states that a stipulation (or term) in a sale with
reterence to goods may be a condition or a warranty.
Condition
breach of t.
A condition is a stipulation essential to the main purpose of contract, the
gives rise to a right to treat the contract as repudiated.-Sec. 12(2).
Warranty breach of u4:
A warranty is a stipulation collateral to the main purpose of the contract, the
gives rise to a claim for damages but not a right to reject the goods and treat the contract a.
repudiated.--Sec. 12(3).
Whether a stipulation in acontract of sale is a condition or a warranty depends in cach caee
on the construction of the contract. A stipulation may be a condition, though called a warranty in
the contract.-Sec. 12(4).
Conditions and Warranties may be expressly stated in a written ocument or may be implicd
from the circumstances under which the contract was entered into.
If is for the court to find out whèther a particular term was intended by the parties to be a
conditionor whether it was intended to be a warranty only. The intention of the parties is always to
be given effect to.

Stipulation as to Time
Unless a different intention appears from the terms of the contract, stipulations as to time of
payment are not deened 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. Sec. I1. (See
p. 185).
Example:
There was a contract for sale of goods, c.i.f. Antwerp. Delivery was to be given on
October. Owing to a strike in the port of loading the goods werc not shipped until
November. Held, buyer were entitled to reject. J. Aron & Co. v. Comptoir Wegimont.
Reasonable time aquestion 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.-Sec. 63.

When a Condition can be trcated as a Warranty

I. Voluntary waiver of aCondition : The buyer may elect to treat a breach of condition as d
breach of warranty, i.e. instead of repudiating the contract he may accept performance and sue lu
damages, if he has suffered [Link]. 13(1).
Where a contract of sale is subject to a condition to be fulfilled by the seller, the buyer may
waive the condition.
buyer
is not severable and the
2. Compulsory waiver of a condition : Where a contract of salecontract
has accepted the goods or apart thereof, he cannot repudiate the but can only sue unless
treated as a breach of warranty
damages. In such a case, the breach of condition can only be
13(2).
there is a contract to the contrary.-Sec. the
condition
If a buyer prevents the fulfilment of a condition contained in the contract,
becomes invalid.
K.B. 435
13. (1921) 3
 153
DEFINITION

Euample: essence of
Certain goods were promised to be delivered on Ist June, time being made the
the contract. The goods were delivered on the 2nd June. The buyer may accept he
goods.

Distinctionbetween Condition and Warranty the contract. Warranty is only

is a term which is essential to the main purpose of
1. ConditionIt is subsidiaryto the main purpose of the contract.
collateralterm. aggrieved party a right It also
to repudiate the [Link]
2 Breach of a condition gives the
to get damages. Breach of warranty entitles the aggrieved party to claim
right
creates a
only. may under certain circumstances, be treated as a warranty. But a
3 A breach of condition
condition.
warranty cannot become a
Conditions
Consequences of Breach of arises, a right to treat the contract repudiated.-Sec. 12(2).
there sale
1. If acondition is broken date : Where either party to a contract of as
before due contract
2. Repudiation of Contract date of delivery, the other may either treat the sue for
repudiates the contract before the delivery, or he may treat the contract as rescinded and
subsisting and wait till the date of
-Sec. 60.
damages for the breach.
reject the
Consequences of Breach of Warranty rise to a claim for damages but not to a right to
gives
1. A breach of warranty repudiated. Sec. 12(3). 13(1) and
goods and treat the contract
as
'condition' is to be treated as.'warranty'.Sec.
circumstances a
2. Under certain fulfilment of
13(2).-See pg 152. the case of any condition or warranty
13 shall affect saves the
3. Nothing in Section impossibility or otherwise. -Sec. 13(3). "It merelyhimself, if
which is excused by law by reason of the impossibility as an excuse to
appropriate cases, to rely upon
ights of the seller, in
sued by the buyer:."14 there is a breach of warranty by the seller, or
of warranty :(1) Where
4. Remedy for breach compelled breach of a conditiion on the part of the seller as
to treat any reject
where the buyer elects or is reason only of such breach of warranty entitled to
buyer is not by
abreach of warranty, the
the goods, but he may breach of warranty in diminution or extinction of the price;
seller the
(a) set up against the
warranty.
damages for breach of or extinction of the
or

(b) sue the seller for warranty in diminution

has set up a breach of if he has suffered further
(2) The fact that a buyer
from suing for the same breach of warranty
price does not prevent himn
damages. -Sec. 59.
Implied condition and warranties sale of goods may be express or implied. Express
terms
contract of
Astipulation (or term) in a are those which
upon by the parties. Implied termscontain
expressly agreed Act a list of
are those which have been Act. Sectións 14 to l7 of the
of Goods unless the
nàve been enacted in the Sale are implied in a çontract Tor the sale of goods,
Conditions and warranties which
of Goods Act.
14. Pollock and Mulla. Jndian Sale
 THE LAW RELA7/NG TO SALE OF
154
circumstances of the contract are such as to show a differentintention. The implied conditions and
GOODS
warrants are stated below.

IMPLIED CONDITIONS
1. Condition as to title of a sale he hes.
There is an implied condition on the part of the seller that, in the case
to sall
right to sell the goods, and in the case of an agreement to sell, he will have the right
goods at the time when the property is to pass.-Sec. 14(a).

Examples :
(i) R bought a motor car from D and used it for four months. D had no title to the car p
was forced to return the car to the true owner. Held, there is a breach of the
condition as to title and R is entitled to get back the purchase moneyimplied
Daid
notwithstanding the fact that he had used the car for 4 months. Rowland v. Divel/ is
(ii) If the goods delivered can be sold only by infringing a trade mark, the implied condition
of title is violated and the buyer can recover damages. Niblett Lid. v.
Materials Co. l6 Confectioner's
(iii) In a contract for the sale of shares there is an implied
condition that there is no
encumbrance of charge on the shares in favour of a third party.
Ramprotap.17 Kissenchand v.
2. Sale by description
Where there is a contract for the sale of goods by
that the goods shall correspond with the description, there is an implied condition
Goods are to be sold by descriptiondescription.---Sec.
when the
15.e
be supplied. Such description may be in contract contains a description of the goods to
terms of the physical
brand or label undercharacteristics
simply mention the trade mark, trade name, of the goods or may
of 50 boxes of X brand soap or of 10tons of Y brand which they are usually sold. A sale
In such cases the goods mustard oil,
supplied must be the same as the goods is a sale of goods by description.
Example :
described.
(i) A certain quantity of copra cake was sold not
cake was
adulterated with castor beans to such anwarranted
copra cake. Held, there was
free from defect." The copra
extent that it could not be described as
awarded damages. Pinnock Bros.a violation of the implied
v. Lewis & Peat Ltd. 18 condition and the buyer was
(i) Msold to L, 3000 cases of
cases, but about half canned fruits, each case to
24 tin cases were the cases contained 24 tins contain 30 tins. Mdelivered 3000
reiect the goods. Re Moore & 30 tin cases, it each.
the same as the Although the market value of the
Co., and was held that the buyer was entitledto
3. Sale by sample
Landauer& Co 19
When goods are to be
are implied.-Sec. 17. supplied according to asample
agreed upon, the following conditions
15. (1923) 2 K. B. 500
17. 44
16. (1921) 3. K. B. 387 C.W.N.
18. (1923) I K.
505
B. 690 19. (1921) 2 K. B. 519
DEFINITION
155
(a)The bulk shall
shall
correspond with the sample in
(b) The buyer shall
have areasonable
be opportunity quality.
of
goods
(c) The on free from any defect
rendering comparing the goods withwhich
them
the sample.
apparent reasonable examination of the sample. If the unmerchantable, would not
be
inspectionand the buyer takes delivery after inspection, he has no defect is easily discoverable on

Merchantable
remedy.
This term was defined as follows: The article in such quality and in such condition that a
reasonable man, acting reasonably, would after a full examination accept it under the circumstances
of the casein performance of his offer to buy that article, whether he buys for his own use or to sell
again." Bristol Tramways Co. v. Fiat Motors Ltd,20

Example :
Some mixed worsted coatings were sold by sample. It was found that
owing to a hidden
defect of the cloth which could not be detected on reasonable examination, coats made
out of it could not stand ordinary wear and were therefore unsalable. The buyer was held
to be entitled to damage. James Drummond and Sons v. E. H. Van Ingen & Co.

4Sale by sample as wellas by description

When goods are sold by sample as well as by description, the goods shall correspond both
with the sample and with the description.-Sec. 15.

Example :
N agreed to sell to Gsome oildescribed as "foreign refined rape on warranted only equal
to sample." The samples contained an admixture of hemp oil and the oil delivered was
adulterated in the same way. Held, the oil supplied [Link] rape oil and therefore the
buyer was entitled to reject the goods. Nicholv. Godts.22
5. Condition as to Fitness or Quality (Sec. 16)
There is an implied condition as to quality or fitness for the purpose of the buyer under the
following circumstances only : the particular
A. Where the buyer, expressly or by implication, makes known to the seller
on the seller's skill, or
Purpose for which the goods are required, so as to show that the buyer reliesthe seller's business to
Juagment, and the goods are of a description which it is in the course of
Supply (whether he is the manufacturer or not).

Examples:
() Wsupplied J with tinned salmon which was
poisonous. J fell ill and his wife died as a
because the
implied condition of fitness
result of eating the salmon. Held, there was an being purchased for consumption. The
was
seller obviously knew that the salmon damages were recoverable. Jackson v, Watson
condition was violated by the grocer and
& Sons.23
milk dealer supplied F with milk which was consumed by F and his family. The
() M, a F's wife was infected and died. Held, there was a
milk contained germs of typhoid.

20 . (1910) 2 K. B. 831. 191

C.A. 22. (1854) 10 Ex
193
21. (1887) 12 A. C. 23. (1909) 2 K. B.
284
 THE AW RELATING TO
I56 SALE OF
an implied condition of fitness and M was liable to pay damages.
breach of
Aylesbury Dairy Co. Ltd. 24 500 tons of coal for the S.s. frost
(iii) There was a contract to
supply "Manchester
Lines
for this ship. It was held
coal suppliedwas found to be unfit v. Rea Ld. ?5 In this casethat
to get damages. Manchester when he makes known to him
relies on the skill of the seller that
it
the buyer
was held
the purpose for ImhalpwasorteaernbieutlyeeAr
goods arc required and the
circumstances are such
it that his judgment is being relicd upon.
any reasonable
seller woulwhidch talkhee
had no special knowledge of hot water
(iv) The plaintiff who was a draper andwater
to a chemist and asked for a "hot bottle". Held, that the bottle suppliedbotmust
les, wen
for use as a hot water bottle.
Preist v. Last, 26 be fit
B. An implied condition of fitness may be annexed to a contract of sale by usage of trade or
custom of the locality.
deals in goods of
C. When goods are bought by description from a seller who
(whether he is the manufacturer or producer or not) there is an implied condition thatthatthe goods are descripion
of merchantable quality, that is, fit to sell.
There is one exception to rule C. -If the buyer has examined the goods, there shall be no
implied condition as regards defects which that examination ought to have revealed.

Examples of rule C:
(i) Some motor-horns were tobe delivered by instalments. The first instalment was accentd
but the second contained a substantial quantity of horns which were damaged owing io
bad packing. Held, the buyer was entitled to reject the whole instalment as the gots
were not saleable quality. Jackson v. Rotax Motor etc.27
(ii) M asked for a bottle of Stone's ginger wine in a restaurant. When he was drawing the
cork the bottle broke and M was injured. Held, the sale was one by description and sinc
the bottle -was unmerchantable. M was entitled to recover damages. Morelli v. Ficn
Gibbons. 28
(iüi) Bwanted to purchase some glue. The seller showed him the glue which was stored ns
warehouse in casks. B did not have the casks opened., which he could have done esiy
but merely looked at the outside of the casks. The glue was found to have detecIS W
would have been found out if Bhad inspected the contents of the casks. Held, there was
no implied condition as to merchantable quality. Thornett & Fehr v. Beer & Sons

THE D0CTRINE OF CAVEAT EMPTOR

Definition caveal
of
Caveat Emptor is a Latin expression which means, "buyers beware". The doctrinequalityand
emptor means that, ordinarily, a buyer must buy goods after satisfying himself of their him."The
fitness. If he makes a bad choice he cannot blame the seller or recover damages from thebuye
rule probably originated at a time when goods were mostly sold in Overt, and
fitnessfori
market their
therefore had every opportunity to satisfy himself as to the quality of the goods or examineth
COuld
particular purpose, and at common law it was presumed that where the buyer
goods even though he did not, he relied upon his own skill and iudement 30 GoodsAt.
608 27. (19I0) 2 K. B. 937
24. (1905) I K. B. 30. Pollock & Mulla, ndianSales of
74
25. (1922)2 A.C. 148 28. (1928) I K.B. 636
29. (1919) 1 K.B. 436
26. (1903) 2 K. B.
 157

DEFINITION

Exceptions to India. Section 16 of the

certain exceptions, the doctrine of caveat emptor applies implied
SubjecttoAct lays down that in a contract for the sale of goods there shall be no mentioned
Goods under the circumstances
Saleof asto quality or fitness tor particular purpose except
condition
section. The exception are as follows : seller. (See examples
given
underthat the skill and judgment of the
Where the buyer relies upon B
(a) p. 155) of sale. (Rule
rule Aabove annexcd to a contract
under
by custom an implied condition of fitness is
(b) Where
abovep. I56)
an implicd condition that the goods
there is a sale of goods by description, there is
Where
(c)
sale. (See examples under rule Cabove p. 156) of sale of goods must satisfy all the
arefitfor Where the seller is guilty of fraud. A
contract obtained by fraud, the
(d) elements of a contract and therefore if the consent of the buyer was
essential
protected
empto.
by the doctrine of caveatexceptions the seller is not liable to any
noted above,
seller is not
falling under any of the four the purposes he had in mind.
In cases not be unfit by the buyer for
ifthe goods purchásed are found to
penalty
for
patented Articles provides that in the case of a contract
The case of Section 16(1) of the Sale of Goods Act there is no implied condition as
Para 2 of trade name, cleaning
specified article under its patent or other machine is patented as a "cotton
the sale of a particular purpose." Thus if a implied undertaking by the seller that the
to its fitness for any such in the market there
is no
"send me one of your
patented
machine" and is sold as buyer writes to a manufacturer, machine useless. But if
the
clean cotton. If a he finds the judgment
machine would claim damages if he relies on thedamages.
cleaning machines", he cannot which will clean cotton,
cotton
the manufacturer to supply a machine found to be unsuitable, he can claim
buyer asks supplied is
manufacturer and if the machine
of the
purposes. The
comfortable car for touring car was
a
Example :
motor car dealer that he wanted sold under the trade name of X. The relied
B told a being B had
recommended acar which was dealer for damages. Itwas held that Baldry v.
dealer
to be unsuitable and B sued the and was entitled to get damages.
found judgment of the dealer
on the skill and
Marshall,31

IMPLIED WARRANTIES following warranties are implied in every

the
agreement to the contrary,
In the absence of an have and enjoy quiet possessionthe of
contract of sale : buyer shall where
quiet possession : The possession is likely to arise only
I. The buyer must get
Since disturbance to quiet this clause may be regarded as an'extension
the goods. [Sec. 14(b)].
right to transferthe goods, 14(a),32
vendor does not Possess the
title provided for by SectionThere is an implied warranty that the goods
of the implied condition of encumbrance: known to
be free from favour fa
of third party not declared or
2. The goods must encumbrance in |4(c).
shall be free from any charge orwhen the contract is made. Sec.
the buyer before or at the time
Goods Act
of
Pollock & Mulla, Indian Sale
32.
S1.(192s) K.B. 260
 THE LAW
158
RELATING TO SALE
buyer pays off the charoe or OF
charge
encumbrance, GO U,
this cause is that if the
The effect of
from the selle. he wll
entitled to recover the money purpose, may be warranted by
for a
[Link] of goods, required may be annexed to a contract
ntract of
usage of trade
particular purpose sale by a cus .A war aty
as to fitness for a custom
trade. -Sec. 16(3).
Conditions
Exclusion of impliedTermns and under a contract of sale by
liability would arise
Where any
negatived
right,
or
duty
varied
or
by express agreement or by the cou implication
of dealing between of law
may be
usage is such as to bind both parties to the contract. Sec 62 the paries.
or by usage, if the
Comment : Section 62 of the Act provides that the liability for implied warranties under a
contract of sale, can be excluded (i.e., negatived) by three methods, namely : (i) express contrac.
and (iii)by usage.
(ii) by the course of dealing between the parties,
CONTRACT OF SALE
LIABILITIES OF THE SELLER APART FROM THE
liabilities of the seller. But
The Sale of Goods Act deals only with the contractual
if he causes injury by a wrongful a
may also be liable to pay damages under the law of torts i.e., one with whom the seller
Such damages may sometimes be recovered by a third party,
below.
ered into any contract. Some examples are given

Examples :
(i) N sold to C a tin of disinfectant powder knowing that it would be dangerous to open i
danger, opened the tin, whereu
tin without special care. C without knowledge of the sued for damages. Held, Nshould
Snv
the powder flew into her eyes and injured them. C do So, was liableto pa'
have warned Cof the possible danger and having failed to beer
damages. Clarke v. Army NavyCo-operative Society ud.3 a bottle of ginger
wis
The plaintiff went to a restaurant with a friend and ordered
remainder
(ii) When the resulting
manufactured by the defendant. She drank a part of the bottle. liquid. Formanufacturers
the
poured into the glass a decomposed snail appeared with theagainst the goodsintende
mental and bodily shock, she filed a suit for damages manufacturer of are free
tom

Damages were granted. The House of Lords held that a goods

for consumption, is under a duty to take reasonable care that the 34
Donoghue v. Stevenson.
defects which render them noxious or dangerous.

pnces
cAN
EXERCISES