The Sale of Goods Act, 1930

The Indian Sale of Goods Act came into existence on 2 July 1930. It was amended on 23 September 1963 and was renamed as The Sale of Goods Act, 1930.

The act constitutes of:

1. Contract of Sale
2. Conditions and Warranties
3. Effects of Contract- Passing of Property and Transfer of Title
4. Performance of Contract

Section 4(1) defines the contract of sale of the act and consists of various essentials:

1. Contract between the seller and the buyer i.e. the sale has to be bilateral.
2. Goods which are the subject matter of contract.
3. Transfer of Property in the goods.
4. Price which is the consideration of sale.

Section 12(1) and section 12(3) defines condition and warranty respectively. There are certain terms and conditions involved in a contract of sale of goods. If such stipulation is essential to the main purpose of contract, it is a condition. If such stipulation is collateral to the main purpose of contract, it is a warranty.

Example- A agrees to supply suit to B by 15^th December. B wants to wear the suit on the day of his marriage i.e. 16^th December. Here the time of delivery of suit is a condition. Whereas, if B requires the suit for normal wearing purpose, the time of delivery will be a warranty.

In Section 16 of the Act defines The Rule of Caveat Emptor. According to this act, the buyer himself is careful while purchasing the goods and ascertain himself whether the goods fulfills his purpose or not. He cannot blame the buyer if the goods are unsuitable. There are two exceptions to this rule:

1. Implied condition as to quality of fitness -first exception given in Section 16(1)
2. Implied condition of Merchantile Quality-second exception given in Section 16(2)

Transfer of Property in the goods from the seller to the buyer is the essence of contract of sale. Sometimes property transfer takes place at the making of the contract and sometimes at a later time. There are many rules and obligations in link with the passing of the property. First is Risk passes with property i.e the goods are at risk of the party with whom the property is. Secondly, buyer can exercise his rights over the goods once the property is passes to him, i.e. he can sue the seller for the delivery. Thirdly, the seller cannot sue for the price unless the goods have become the property of the buyer.

The goods are divisible into two classes:

1. Specific goods (Sections 19,20,21,22 and 24)
2. Future goods (Sections 18,23 and 25)

Transfer of Title is explainable via a rule which Section 27 of the Act gives i.e. Nemo dat quod non habet (nobody can give what he himself has not got) which tries to protect the interest of the true owner. According to this rule,  the seller cannot convey a better title than that of his own. There are various exceptions to this rule:

1. Sale under the implied authority of the owner.
2. Sale by a mercantile agent.

Performance of contract:

The parties to any contract are bound to perform their obligations under the contract. The parties are free to provide in their contract as to how the performance of contract is to be made eg: delivery by installments.