SALE OF GOODS ACT, 1930
The Sale of Goods Act, 1930 came into effect from July 1st 1930. It deals with sale of movable property
that means it does not apply to immovable.
Definition
Sec 4 defines “a contract of sale of goods is a contract whereby the sellers transfer or agrees to transfer
the property in goods to the buyer for a price”.
Essential Features
1. Two parties:
There must be at least two parties in a contract of sale. i.e., the buyer and seller.
2. Contract:
It is a contract that fulfils all the essential elements of a valid contract.
3. Movable goods:
The Act deals with the sale and purchase of movable goods only. Sale and purchase of immovable
property are covered under the Transfer of Property Act, 1882.
4. Transfer of property:
It means the transfer of ownership or title of goods. There must be the transfer of property in
goods from the owner to the buyer.
5. Price:
It means money consideration for sale of goods. If there is no money consideration, it is not a
contract of sale.
6. Formalities:
There may be some formalities in the contract like immediate delivery of goods or immediate
payment of the price or payment by instalment etc.
7. Form:
It may be in writing or by word of mouth or may be implied from the conduct of parties.
Subject matter of contract of sale
The goods which form the subject matter of contract of sale and it can be of the following types:
1. Existing goods:
Goods which are owned or possessed by the seller at the time of creation of a contract of sale are
called existing goods. It may be of 3 types:
a. Specific goods:
Goods which are identified and agreed upon at the time of creation of contract.
b. Ascertained goods:
These goods are identified by the parties subsequent to the information of contract of
sale, i.e., identification takes place at a later date.
c. Unascertained goods:
These goods are not identified and agreed at the time when the contract is made. Here
the seller will have a right to supply any goods of the kind or quality contracted for.
2. Future goods:
These are goods to be manufactured or produced by the seller after the contract is made.
, 3. Contingent goods:
These are a type of future goods, the acquisition of which by the seller depends upon a
contingency which may or may not happen.
Sale and Agreement to Sell
A contract, where the transfer of property in goods takes place at a future date or subject to some
conditions, it is called an agreement to sell. Thus in the case of agreement to sell, the transfer of
property in goods does not take place immediately but at a future date.
Difference between Sale and Agreement to Sell
Basis Sale Agreement to Sell
Nature of contract Executed/Present contract Executory/Future contract
Transfer of property Took place immediately after the Take place at a future date
sale
Risk of loss The owner i.e., the buyer has to As ownership is not transferred,
suffer the loss due to destruction risk of loss lies with the seller
of goods
Type of goods Existing/Specific goods Future/Contingent goods
Consequences of breach by Seller gets the right to sue for the Seller may sue for damages only
buyer price or exercise the right of lien, and not for the price
stoppage in transit, etc.
Right of sale Seller can not resell the goods Seller can resell the goods
Sale and Other Similar Transactions
I. Sale and Hire Purchase:
A hire purchase agreement is a contract where the buyer gets the possession of goods
immediately and agrees to pay the total hire purchase price in instalments. Here the ownership is
transferred after the payment of final instalment by the buyer.
Difference between Sale and Hire Purchase
Basis Sale Hire Purchase
Form Can be made orally or in writing It must be an agreement in
writing
Transfer of ownership Transferred as soon as the Transferred only after the
contract is made payment of last instalment
Buyer’s status Buyer is the owner Position of hire purchaser is that
of the bailee
Termination of contract Buyer can not terminate contract Hire purchaser can terminate
and bound to pay the price for and return the goods to the
the goods owner. No need to pay further
instalments
Breach of contract by buyer Seller can sue for price or Seller has the right to get back
exercise lien or stoppage in the goods given on hire and to
transit forfeit the instalments
Right to resale Buyer has a right to resale the Hire purchaser has no right to
goods resale until he pays the last
instalment
The Sale of Goods Act, 1930 came into effect from July 1st 1930. It deals with sale of movable property
that means it does not apply to immovable.
Definition
Sec 4 defines “a contract of sale of goods is a contract whereby the sellers transfer or agrees to transfer
the property in goods to the buyer for a price”.
Essential Features
1. Two parties:
There must be at least two parties in a contract of sale. i.e., the buyer and seller.
2. Contract:
It is a contract that fulfils all the essential elements of a valid contract.
3. Movable goods:
The Act deals with the sale and purchase of movable goods only. Sale and purchase of immovable
property are covered under the Transfer of Property Act, 1882.
4. Transfer of property:
It means the transfer of ownership or title of goods. There must be the transfer of property in
goods from the owner to the buyer.
5. Price:
It means money consideration for sale of goods. If there is no money consideration, it is not a
contract of sale.
6. Formalities:
There may be some formalities in the contract like immediate delivery of goods or immediate
payment of the price or payment by instalment etc.
7. Form:
It may be in writing or by word of mouth or may be implied from the conduct of parties.
Subject matter of contract of sale
The goods which form the subject matter of contract of sale and it can be of the following types:
1. Existing goods:
Goods which are owned or possessed by the seller at the time of creation of a contract of sale are
called existing goods. It may be of 3 types:
a. Specific goods:
Goods which are identified and agreed upon at the time of creation of contract.
b. Ascertained goods:
These goods are identified by the parties subsequent to the information of contract of
sale, i.e., identification takes place at a later date.
c. Unascertained goods:
These goods are not identified and agreed at the time when the contract is made. Here
the seller will have a right to supply any goods of the kind or quality contracted for.
2. Future goods:
These are goods to be manufactured or produced by the seller after the contract is made.
, 3. Contingent goods:
These are a type of future goods, the acquisition of which by the seller depends upon a
contingency which may or may not happen.
Sale and Agreement to Sell
A contract, where the transfer of property in goods takes place at a future date or subject to some
conditions, it is called an agreement to sell. Thus in the case of agreement to sell, the transfer of
property in goods does not take place immediately but at a future date.
Difference between Sale and Agreement to Sell
Basis Sale Agreement to Sell
Nature of contract Executed/Present contract Executory/Future contract
Transfer of property Took place immediately after the Take place at a future date
sale
Risk of loss The owner i.e., the buyer has to As ownership is not transferred,
suffer the loss due to destruction risk of loss lies with the seller
of goods
Type of goods Existing/Specific goods Future/Contingent goods
Consequences of breach by Seller gets the right to sue for the Seller may sue for damages only
buyer price or exercise the right of lien, and not for the price
stoppage in transit, etc.
Right of sale Seller can not resell the goods Seller can resell the goods
Sale and Other Similar Transactions
I. Sale and Hire Purchase:
A hire purchase agreement is a contract where the buyer gets the possession of goods
immediately and agrees to pay the total hire purchase price in instalments. Here the ownership is
transferred after the payment of final instalment by the buyer.
Difference between Sale and Hire Purchase
Basis Sale Hire Purchase
Form Can be made orally or in writing It must be an agreement in
writing
Transfer of ownership Transferred as soon as the Transferred only after the
contract is made payment of last instalment
Buyer’s status Buyer is the owner Position of hire purchaser is that
of the bailee
Termination of contract Buyer can not terminate contract Hire purchaser can terminate
and bound to pay the price for and return the goods to the
the goods owner. No need to pay further
instalments
Breach of contract by buyer Seller can sue for price or Seller has the right to get back
exercise lien or stoppage in the goods given on hire and to
transit forfeit the instalments
Right to resale Buyer has a right to resale the Hire purchaser has no right to
goods resale until he pays the last
instalment
