THE SALE OF GOODS ACT, 1930

INTRODUCTION :

It came into force on the 1st of July, 1930.

The Law relating to this was contained in the Chapter VII of the Indian Contract Act, 1872.

Where the Sale of Goods Act is silent on any point, the general principles of the law of contract apply.

DEFINITIONS

1. The term ‘contract of sale’ is defined in Section 4 (1)  as under :

“A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in the goods to the buyer for a price."

2. Buyer : “Buyer means a person who buys or agrees to buy goods.” [Sec. 2(1)]

3. Seller : “Seller means a person who sells or agrees to sell goods.” [Sec. 2(13)]

4. Goods : “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 the severed before the sale or under the contract of sale. [Sec. 2 (7)]

->An actionable claim is a claim to any debt. For example a money debt

->Money here means legal tender of money, i.e. the recognized circulation in the country; but not old rare coins.

->Things attached to the earth is not movables, but trees, growing crops which can be easily severed from the earth before the sale. Fruits, vegetables, and flowers which can be separated from the trees, are included in ‘goods’.

->Livestock i.e. cows, buffaloes, cats, etc are ‘goods’.

-> Patents, copyrights, goodwill, trade-marks, are all considered goods which can be the the subject matter of a contract.

->A ship has also been considered to come within the definition of the word “goods”. Similarly water, gas and electricity are included in the definition, though some writers doubt if they can be classed among “goods”.

Price: “Price’ means the money consideration for a sale of goods.” [Sec. 2 (10)].  

No sale can take place without a price.

Therefore,

a. Exchange of goods for goods will not be considered as sale

b. Gift of goods will not be considered as sale

c. Exchange of goods for goods along with price will be considered as sale

Property:

Sale Of Goods Act, ‘property’ means the general property in goods and not merely a special property.

Example: A who owns the goods pledges them to B, then A has the general property in the goods, while B has a special property or interest in them.

 

ESSENTIAL ELEMENTS OF A VALID CONTRACT OF SALE

Following are the essential elements of a valid contract of sale:

 1. All the requirements of a valid contract must be fulfilled:

A contract of sale must fulfill all the requirements of a valid contract, e.g., free consent, consideration, competency of the parties, lawful object and consideration. If any of the essential elements of a valid contract is missing then the contract of sale will not be valid.

2. There must be two parties to the contract of sale:

There must be two parties, one seller, and the other buyer. The reason for the same is that in a contract of sale, the ownership of the goods has to pass from one person to another.

3. There must be some goods as a subject-matter:

The ‘goods’ as defined in Section 2 (7) of the Sale of Goods Act

4. The property in the goods must be transferred to the buyer:

The term ‘property’ in the goods mean the ownership of the goods. In every contract of sale, the ownership of the goods must be transferred by the seller to the buyer, or there should be an agreement by the seller to transfer the ownership to the buyer. The term ‘property’ here means the general property, i.e., all ownership rights of the goods, and not merely a special property, i.e., limited rights such as right of a Pawnee.

5. There must be some price for the goods:

The goods must be sold for some price. The term ‘price’ is defined in Section 2 (10)

6. A contract of sale can be absolute or conditional [Section 4(2)].

Further Reading

Difference between Sale and Agreement to Sell