• Unit 3: Law of Sale of Goods:
  • 3.1 Contract of Sale of Goods
  • 3.1.1. Definition and Essentials of Contract of Sale
  • 3.1.2 Difference between (i) Sale and Agreement to Sell (ii) Sale and Hire-purchase (iii) Sale and Contract for work; Kinds of Goods; Effect of Perishing of Goods
  • 3.1.3 The Price; Earnest or Deposit; Stipulations as to Time; Document of Title of Goods
  • 3.2 Conditions and Warranties
  • 3.2.1. Definition of Condition and Warranty; Difference between Condition and Warranty
  • 3.2.2 When Breach of Condition is to be treated as Breach of Warranty; Express and Implied Conditions and Warranties;
  • 3.2.3 Implied Conditions; Implied Warranties; Doctrine of caveat emptor
  • 3.2 Transfer of Property
  • 3.3.1 Importance of Knowing the exact time of Passing of Property; Rules regarding Transfer of Property;
  • 3.3.2 Rule of Transfer of Title on Sale; Transfer of Title by Non-owners.
  • 3.4 Performance of Contract of Sale
  • 3.4.1 Delivery; Modes of Delivery; Rules as to Delivery of Goods; Acceptance of Delivery by Buyer
  • 3.5 Rights of Unpaid Seller
  • 3.5.1 Unpaid Seller defined; Rights of an Unpaid Seller against the goods – Right of Lien; Right of Stoppage in Transit; Right of Resale
  • 3.5.2 Rights of an unpaid seller agains

Unit 3: Law of Sale of Goods

1. The “Plain English” Intro

A Contract of Sale is an agreement where a seller transfers (or agrees to transfer) the ownership of goods to a buyer for a price. It covers everything from buying a loaf of bread to purchasing a fleet of cars, focusing on when exactly the “ownership” passes from one person to another.

2. Day-to-Day Analogy

  • Sale: You go to a shop, pay ₹50, and take a notebook. Ownership is yours instantly.
  • Agreement to Sell: You order a custom-made desk. The shop agrees to deliver it in two weeks after it’s built. You don’t own it until it is finished and ready.
  • Conditions: You buy a car specifically because the seller promises it has an automatic transmission. If it arrives as a manual, the “soul” of the deal is broken, and you can reject the car entirely.

3. The Legal Backbone

Section (Sale of Goods Act)

What it says in Simple Terms

Section 4

Sale vs. Agreement to Sell: A “Sale” happens now; an “Agreement to Sell” happens in the future or upon a condition.

Section 6

Existing or Future Goods: Goods can be physically present now or produced later.

Section 12

Condition & Warranty: A “Condition” is essential to the main purpose; a “Warranty” is just a side-promise.

Section 16

Caveat Emptor: “Let the buyer beware”—the buyer must check the quality unless the seller hides a defect.

Section 27

Title by Non-owners: Generally, you can’t sell what you don’t own, but there are legal exceptions.

Section 45

Unpaid Seller: A seller who hasn’t been paid the full price has special rights against the goods.

4. The “Checklist” (Essentials of a Sale)

To prove a valid sale in court, these five ingredients must exist:

  • Two Parties: A buyer and a seller (you cannot sell to yourself).
  • Goods: Moveable property only (not land or services).
  • Price: Money must be exchanged (if it’s just goods for goods, it’s “Barter”).
  • Transfer of Ownership: The intent to pass the “title” from seller to buyer.
  • All Contract Essentials: Offer, acceptance, and free consent.

5. Landmark Case Laws (The Story Method)

Priest v. Last (1903)

  • The Conflict: A buyer bought a hot water bottle from a chemist. While using it, the bottle burst and injured his wife. The chemist argued he didn’t give a specific warranty.
  • The Verdict: The court held there was an Implied Condition of “Fitness for Purpose.” Since a hot water bottle has only one obvious use, the seller was liable because the goods were not fit for that use.

Baldry v. Marshall (1925)

  • The Conflict: A buyer asked for a car “suitable for touring.” The seller recommended a Bugatti. The car turned out to be uncomfortable for touring. The buyer wanted to return it.
  • The Verdict: The requirement for a “touring car” was a Condition. Since the car didn’t meet that essential requirement, the buyer had the right to reject the contract and get his money back.

6. Comparison Table: Condition vs. Warranty

Feature

Condition

Warranty

Importance

Essential to the main purpose of the contract.

Collateral (secondary) to the main purpose.

Breach Effect

The buyer can cancel the contract and return goods.

The buyer can only claim money (damages).

Treatment

Can be treated as a warranty if the buyer chooses.

Cannot be treated as a condition.

7. Visual Flowchart Description

  1. Seller is Unpaid: The price is due but not paid.
  2. Possession Check: Does the seller still have the goods?
    • If YES → Right of Lien (Keep them until paid).
  3. Transit Check: Are the goods with a carrier (courier)?
    • If YES → Right of Stoppage in Transit (Call the courier and stop delivery).
  4. Final Step: If the buyer still doesn’t pay → Right of Resale (Sell to someone else).

8. Exam “Golden Key”

Latin Maxim: Nemo dat quod non habet (No one can give what they do not have) . Use this for Section 27 to explain that a thief or a non-owner cannot pass a valid legal title to a buyer, even if the buyer pays honestly.

Master Tip: Remember the Doctrine of Caveat Emptor (Buyer Beware). In a law exam, always mention that this doctrine is dying because modern law places more “implied conditions” on the seller to provide quality goods.

 

 

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