Introduction:
The Sale of Goods Act, 1930 can be viewed against the backdrop of Indian Contract Act, 1872 and Transfer of Property Act, 1882 and it lays down special rules of law in regard to the sale of goods. The Sale of Goods Act does not repeal some clauses of the Indian Contract Act, which relates to the sale of goods transactions under the Indian Contract Act, 1872 and is not repealed where a code of law is not compliant with this act. Price ascertainment is a very necessary aspect of any sales deal. The availability of cash value is an important factor when formulating a purchasing agreement. The deal is a barter and not a trade because the value is not money but some other important factor, which makes price determination necessary at the time of completing a trade.
Sale Contract
A sale contract is a contract under Section 4 of the Sale of Goods Act of 1930, where the seller transfers or agrees to transfer the goods to the buyer for a price. It is a structured contract consisting of an arrangement to sell, transfer of title, procurement of goods and reimbursement of shipping rates, costs and charges.
Ascertainment of Price
There are two sections of the Sale of Goods Act, 1930, that address the determination of a price. Price ascertainment requires determining the price of a commodity without a doubt. There are two sections of the Act that fix this: Sec 9 and Sec 10.
The following is mentioned in Sec. 9 of the Act:
The price in the purchase contract may be set in compliance with the contract, or it may be left to be decided in the manner agreed by the contract, or it may be calculated by the course of trade between the contracting parties. Where the price is not calculated in compliance with such provisions, a fair price shall be paid by the buyer to the seller. Fair pricing may depend on the case or position of the customer.
Price is specified by Section 2(10) of the Act as the numerical consideration or value agreed upon for the selling of goods. We, therefore, see that a transaction needs to come into being for a price to come into being.
It is necessary for a contract to be a sales contract that it should allow for the payment of cash consideration for products. Section 9(1) specifies that the price in the sales contract may be set in three ways: firstly, by the contract itself; secondly, the price may be calculated in the manner negotiated between the seller and the purchaser; and, finally, it may be decided by the course of business between the parties.
- Any currency may be selected by the parties as to the price of products. It is not necessary, however, for the contract to define the amount; the parties may leave the price to be decided by a mechanism at their discretion and, if so decided, the situation is the same as if it had been set by the contract itself. Pursuant to Section 9 of the sale of goods Act, the parties can, at the time of transition, set the price or leave it to be decided at a later date.
- It is not necessary for the price to be decided at the time the sales contract is drawn up. Under Section 29 of the Indian Contract Act, 1872, potential price-fixing is also applicable. Such a deal is not invalid unless the offer has not been set because of ambiguity.
Price of a Contract
Section 9 (1) that the price can be calculated or implied in the sales contract by:
- The contract, that is the amount, is directly related to or agreed within the sales contract itself or within the sales contract itself.
- There is a clause in the arrangement that has or determines the jurisdiction that will ultimately decide the price. For example, for the sake of price calculation, the contract calls for a value to be commissioned.
- The price can also be calculated by the nature of transactions. For instance, if the two parties have a long history of dealing with each other, then the price can be ascertained from the previous history of dealings and prices if not explicitly defined. Clearly, this component of the segment is only valid if the parties have identical deals in their custom or past.
Similarly, Sec 9(2) specifies that the buyer would have to pay the seller a fair price if the price is not decided by any of the criteria discussed in Sec 9(1). In compliance with market demand, this price will be calculated.
Illustration: If the government of your state has bought its electricity at a specified price from a neighbouring state. If they enter into a new deal, then each of the rates are:
- The contract specifically states it.
- Set on each other by the two sides without due notice.
- Or, the price would be the same as the two parties have historically agreed.
The Price to be Arranged by the Parties Subsequently
Section 9 also specifies that ‘the amount can be left to be set by future agreement,’ such that it will be a legal contract if it is a transaction at an amount to be eventually negotiated upon by the parties; just like there is a legal insurance plan ‘at a rate to be concluded’ even which no deal is made, a fair fee is payable. If the provision is that the goods are offered at a price to be eventually settled upon, it would seem that no deal has been reached for such a transaction, even, therefore, there is a consequence of expressly removing an obligation to pay an acceptable price and the price is not defined to be an integral aspect of the deal. Presumably, though, the buyer would have to pay a fair price if the items were eventually shipped and accepted under such a system.
Sale Arrangement at Valuation
Section 9 of the Act has since clarified what we may call the direct methods of deciding the amount. There are, however, other price determination modes that we will describe in sec (10). Let us state the chapter and then we will move on to clarity and summary.
- Where an arrangement for the sale of goods has been reached on the grounds that the price is to be determined by the valuation of a third party and that third party is unable or unable to make such a value, the arrangement is therefore avoided; Given that, whether the goods or any portion thereof have been shipped to and appropriated by the purchaser, the purchaser shall then pay a fair amount.
- Where such a third party is prohibited from making a valuation for the fault of the seller or purchaser, the non-faulting party may retain a claim for damages for the fault of the party.
A third party is the method of determination or method of deciding the price here. This comes into effect because all sides have agreed to the provision that the third party will decide the price. However, if the other party is unable to make a proper appraisal of the goods to be bought or attempts to do so, then the deal would be invalid.
In certain situations, the default of one of the parties may be obstructed by the third party. In such a case, the party at fault shall be liable for paying the other party sufficient costs in lieu of damages, provided that the other party is not at fault. If the items have been appropriated and received, the purchaser is responsible for paying their price.
Conclusion
When there is a transition of property from seller to buyer for a sum of money or commitment for the same, a sale is concluded. Money sum is necessary for selling. The price of a deal can be decided in conjunction with the contract itself, left to be set in a negotiated way, or calculated in the course of an agreement between the parties. Section 9 of the Selling of Goods Act provided that the price must be determined by the parties in a manner decided by the two parties. The buyer shall pay the vendor a fair price for the product in the absence of a defined formula for deciding the price. If all parties consent to it, the price can also be set by a third party by valuation. The price in the sales contract may be fixed in accordance with the contract or may be fixed in the manner agreed upon or may be determined by the course of trade between the parties. The price shall not be determined in accordance with the above provisions and the buyer shall pay a reasonable price to the seller. What is a reasonable price is a matter of fact which depends on the circumstances of each specific case.
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