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2 INTRODUCTION Most common of all the commercial contracts Most common of all the commercial contracts Came into force on 1 st JULY,1930. Came into force on 1 st JULY,1930. Are subject to the general legal principles applicable to all the contracts such as, offer & its acceptance, consideration. Are subject to the general legal principles applicable to all the contracts such as, offer & its acceptance, consideration. Some special features Some special features

3 ESSENTIALS OF VALID SALE CONTRACT Two parties: There must be 2 distinct parties i.e., a buyer and a seller Goods: Goods which form the subject matter of the contract of sale must be movable. Price: The consideration for the contract of sale, called price, must be money Essential elements of a valid contract: A contract is made by an offer to buy or sell goods for a price and the acceptance of such offer.

4 SALE AND AGREEMENT TO SELL Property in the goods is transferred from the seller to the buyer- sale Property in the goods is transferred from the seller to the buyer- sale Transfer of the property in the goods is to be taken place at some future date or after fulfillment of some condition, Transfer of the property in the goods is to be taken place at some future date or after fulfillment of some condition, -AGREEMENT TO SALE

5 SALE AND AGREEMENT TO SELL Sale 1. O wnership is with the buyer 2. E xecuted contract 3. S ue for price, in case of breach 4. G oods lost by accident then loss falls on the buyer. Agreement to sell 1. O wnership is with the seller 2. E xecutory contract 3. S ue for damages only, in case of breach 4. G oods lost by accident then loss falls on the Seller.

6 CONDITION AND WARRANTY Condition 1. I ts is a term in contract which is essential. 2. W hen condition breaches? 3. B reach of condition can be breach of warranty Warranty 1. I ts a term in contract which is collateral. 2. W hen warranty breaches? 3. B reach of warranty cannot be breach of condition.

7 EXPRESS AND IMPLIED CONDITIONS AND WARRANTIES Condition or warranty may be expressed Express condition and warranty are expressly provided in the contract. Implied Condition or warranty are provided by the law.

8 Condition as to title: In a contract of sale, unless the situation of the contract are such as to show a different intention, there is an implied condition on part of the seller that— IIIIn sale, he has right to sell goods. IIIIn agreement to sell, he will have a right to sell at the time when property is to pass.

9 SALE BY DESCRIPTION  In  In sale by description there is an implied condition that the goods shall correspond with description.  This  This means “if you contract to sell peas, you cannot oblige the party to take beans.”  Hence  Hence if the description of the article tendered is different then the buyer may not buy the goods.

10 SALE BY DESCRIPTION AND SAMPLE If the sale is by sample as well as by description, it is not sufficient that the bulk of goods corresponds with the sample, if the goods do not also correspond with the description. This means goods must match with the description and sample.

11 CONDITION AS TO QUALITY OR FITNESS Normally, in a contract of sale there is no implied condition as to quality or fitness for particular purpose. Normally, in a contract of sale there is no implied condition as to quality or fitness for particular purpose. The buyer must test the goods before he buys them in order to satisfy him self that the goods shall be suitable for him. The buyer must test the goods before he buys them in order to satisfy him self that the goods shall be suitable for him.

12 CONDITION OF MERCHANTABILITY Where goods are bought by description from a seller who deals in goods of that description there is an implied condition that the goods are of merchantable quality. Where goods are bought by description from a seller who deals in goods of that description there is an implied condition that the goods are of merchantable quality. This means goods should be such that they are commercially saleable, as per the description by which they are known in the market at their full value. This means goods should be such that they are commercially saleable, as per the description by which they are known in the market at their full value.

13 CONDITION IMPLIED BY CUSTOM An implied condition as to quality or fitness for a particular purpose may be annexed by the usage of trade. This means that the goods which are required may be ascertained from the acts and from the nature of description of that article.

14 SALE BY SAMPLE 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. 1. T hat bulk shall correspond with the sample in quality, 2. T hat the buyer shall have a reasonable opportunity of comparing the bulk with the sample. 3. T hat the goods shall be free from any defects, rendering them unmerchantable.

15 CONDITION AS TO WHOLESOMENESS In the case of eatables and provisions, in addition to the implied condition as to merchantability, there is another implied condition that the goods shall be wholesome.

16 WARRANTY OF QUIET POSSESSION In a contract of sale, unless there is a contrary intention, there is an implied warranty that the buyer shall have and enjoy quite possession of the goods. If the buyer is in any way disturbed in the enjoyment of the goods in consequence of the seller’s defective title to sell, he can claim damages from the seller.

17 WARRANTY OF FREEDOM FROM ENCUMBRANCES In addition to the previous warranty, the buyer is entitled to a further warranty that the goods are not subject to any charge or right in favor of a third party. If the possession is in any way disturbed by reason of the existence of any charge or encumbrances on the goods in favor of any third party, he shall have a right to claim damages for breach of this warranty.

18 WARRANTY AS TO QUALITY OR FITNESS BY USAGE OF TRADE An implied warranty as to quality or fitness for a particular purpose may be annexed by the usage of trade.

19 WARRANTY TO DISCLOSE DANGEROUS NATURE OF GOODS. When a person sells goods knowing that the goods are inherently dangerous or they are likely to be dangerous to the buyer and that the buyer is ignorant of the danger, he must warn the buyer of the probable danger, other wise he will be liable in damages.

20 CAVEAT EMPTOR This means “LET THE BUYER BEWARE” i.e., the seller is under no duty to reveal unflattering truths about the goods sold. Therefore, when a person buys some goods, be must examine them thoroughly. If the goods turn out to be defective or do not suit his purpose or he depends upon his own skills and makes a bad decision, he cannot blame the seller. EXCEPTIONS TO CAVEAT EMPTOR Fitness for buyer’s purpose Sale under a patent or trade name Merchantable quality Usage of trade Consent by fraud

21 WHO IS AN UNPAID SELLER A seller of goods is deemed to be an unpaid seller:- When the whole of the price has not been paid or tendered When any negotiable instrument is dishonoured

22 Rights of unpaid seller Against the goods Where the property in the goods has not passed With holding delivery Stoppage in transit Where the property in the goods has passed Lien Stoppage in transit Re sale Against the seller personally Suit for priceRepudiation of contractSuit for damagesSuit for interest

23 RULES OF DELIVERY Mode Mode of delivery Delivery Delivery and payment con current condition Effects Effects of part delivery Buyer Buyer to apply for delivery Place Place of delivery Time Time of delivery Goods Goods in possession of a third party Cost Cost of delivery Delivery Delivery of wrong quantity Installment Installment deliveries

24 FREE ON BOARD Seller’s duties: To To deliver the goods on board the ship named by the buyer Once Once goods are put on board the ship, they are at the risk of the buyer. The The duty of the seller ends when he delivers the goods to the ship at the port of shipment. BUYER’S BUYER’S DUTY: Arrange Arrange for the contract of affreightment Name Name the ship on which goods are to be delivered. It It becomes the duty of the buyer once the goods are on the ship.

25 COST, INSURANCE, FREIGHT Seller’s Seller’s duty: Make Make out an invoice of the goods sold. Procure Procure a contract of affreightment. To To arrange for an insurance. Buyer’s Buyer’s duty To To pay unloading charges, wharf age charges, etc. pay custom and import duties.

26 AUCTION SALE A sale by auction is a public sale where different intending buyers try to outbid each other. The goods are ultimately sold to the highest bidder. The auctioneer who sells the goods by the auction is an agent of the seller, i.e. the owner.

27 RULES OF AUCTION SALE Completion Completion of sale:- The sale is complete when the auctioneer announces its completion by the fall of the hammer or in some other customary manner like “one two three” or “going going, gone”

28 RIGHT OF SELLER TO BID Aright to bid may be reserved expressly by or on behalf of the seller. Where such right is expressly reserved, the seller or any one person on his behalf may bid at the auction.

29 SALE NOT NOTIFIED SUBJECT TO A RIGHT TO BID It It is not lawful 1. For 1. For the seller to bid himself or to employ any person to bid at such sale. 2. For 2. For the auctioneer knowingly to take any bid from the seller or any such person. 3. Any 3. Any sale against this rule may be treated as fraudulent.

30 RESERVE PRICE It It is the price below which the auctioneer will not sell. Where Where the sale is subject to a reserve price, every bid is accepted conditionally on the reserve price being reached. But But where the sale is without reserve, the goods will be sold to the highest bidder.

31 USE OF PRETENDED BIDDING If If the seller makes use of pretended bidding to raise the price, the sale is void able at the option of the buyer.

32 KNOCK OUT OR AGREEMENT NOT TO BID AGAINST EACH OTHER Where a group of persons form a combination to prevent competition between themselves at an auction and arrange that only one of them will bid and share anything so obtained among themselves. This is called knock out which is legal.

33 PRESENTED BY:  ANITA  DHARAK  NISHIT  POOJA  HIREN  AUSTOSH  MAULI  AVANI  DEEP  NISHIT  ANKIT