This article is written by Dhananjai Singh Rana pursuing BBA LLB(H), Amity Law School Noida This article deals with the analysis of the concept of Specific goods and the contract of sale with special emphasis on the relevant provisions under the Indian Contract Act 1872.
Table of Contents
Introduction
Goods may be specific (ascertained) or generic. Specific goods mean goods identified and agreed upon at the time a contract of sale is made, i.e., they are ascertained goods. Radio and T.V. set etc. In a contract of sale of specific goods, the property.
The definition of Goods’ as per Section 2 (7) of the Sale of Goods Act 1930 is, “Every kind of movable property other than actionable claims and money; and includes stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale.”
The article further explains the various kinds of goods and also the process of how a contract of specific goods operates about termination and the various provisions governing the respective concepts mentioned under the act.
Specific Goods and Contract of Sale
The Property passes when the parties intend it to pass. The intention may be inferred from the circumstances and the terms and conditions In a contract of sale of specific goods in a deliverable state, the property passes when the contract is made. The parties may agree for the postponement of the payment of the price or the time of delivery of goods, but this will not affect the passing of property. for example A offers to B his horse for Rs.1,000/- on 1.1.1984. The horse is to be delivered to B on 10.10.1984 and the price is to be paid on 20.10.1984. Property passes as soon as the offer is accepted. In a contract of sale of specific goods, if the seller is bound to do something to the goods to put them into a deliverable state the property passes, as soon as it is done and notice is given to the buyer. A places an order for a ship with B. B is yet to build the vessel.
Specific goods may be defined as goods specifically identified at the time a contract of sale is made, e.g. a shirt made of cotton and with a Mickey Mouse cartoon on it. If the goods are not so identified, the contract is for the sale of unascertained goods. In a contract for the sale of specific goods, the seller is bound to deliver the identified goods.
Type of Goods
There are 4 types of goods as per the Sale of Goods Act 1930:
- Existing Goods: Existing goods are goods that physically exist and belong to the vendor at the time of the contract of sale.
- Specific Goods: These are goods that are specifically pre-arranged between the vendor and buyer at the time of constructing the contract of the sale. As an example, the vendor may conform to sell the client a selected item bearing a particular number. These are sometimes referred to as “ascertained goods.” This distinction becomes important because of the foundations regarding the transfer of property between parties.
- Future goods: These are goods that are pre-arranged to construct the contract of sale but don’t seem to be identified, specifically in the contract. For example, a seller may conform to sell a buyer one out of a variety of things of the identical type (for example bags of sugar) without defining which specific item the client will receive. A good becomes a specific good when it is being prepared for delivery for a certain sum of money.
- Contingent Goods: Although contingent goods are a kind of future goods, as they are used in certain specific conditions only. As an example, a seller may conform to sell a buyer some specific goods that are because of arriving on a specific ship. If, when the ship arrives, it doesn’t contain those goods, the client will still have fulfilled his agreement because the sale was conditional on the ship containing those specific goods.
Contract of Sale
Section 4 of the Indian Contract Act 1872
A contract to sale could be a particular legitimate agreement concerning the trading of items between two gatherings, the merchant and a purchaser. The agreement of offer concerns the exchange of items, property, or administrations from the seller to the customer, in return for an endless supply of money. Agreement of offer is an agreement, whereby the merchant moves or consents to move the property in products to the customer at a cost. There might be an agreement of offer between one proprietor and another.
Essentials elements of a Contract of Sale
The following six features are essential elements of any contract of sale of products as per
- Two Parties: An agreement of offer of items is two-sided wherein property inside the merchandise needs to go from one gathering to an alternate. One can’t get one’s merchandise. For instance, An is the proprietor of a basic food item shop. If he supplies the items (from the stock implied available to be purchased) to his family, it doesn’t add up to a purchasing arrangement and there’s no agreement of offer. This can be so because the merchant and purchaser must be two distinct gatherings, together an individual can not be both a dealer likewise as a purchaser. Be that as it may, there will be an agreement of offer between part proprietors.
Assume A and B together own a TV, A may move his proprietorship inside the blockhead box to B, along these lines making B the main proprietor of the items. inside a similar way, an accomplice may purchase merchandise from the firm inside which he’s an accomplice and the other way around. In any case, there’s a special case against the last standard that not every person can buy his products. Where a pawnee sells the items vowed with him/her on non-installment of his/her cash, the pawnor may get them in the execution of a declaration.
- Merchandise: The point matter of an agreement of offer must be products. A wide range of portable property aside from noteworthy cases and cash is believed to be ‘products’. Agreements alluding to administrations don’t appear to be considered as agreements of the offer. Undaunted property is administered by a different resolution, ‘Transfer of Property Act‘.
- Move of proprietorship: Transfer of property in merchandise is moreover vital to an agreement of offer. The term ‘property in merchandise’ means the responsibility for items. In each agreement of offer, there ought to be an understanding between the customer and in this way the vendor for the move of possession. Here property implies the last property in products and not just a unique property.
Subsequently, it’s the last property, which is moved under an agreement of offer as recognized from the uncommon property, which is moved just if there should be an occurrence of the promise of items, i.e., ownership of items is moved to the pledgee or pawnee while the proprietorship rights stay with the pledger. In this way, in an exceedingly agreement of offer, there must be a flat out of the exchange of the possession. It must be noticed that the physical conveyance of items isn’t basic for moving possession.
- Value: The customer must take care of the products. The term ‘cost’ is ‘the cash thought for a purchasing arrangement of merchandise’. In like manner, though in an exceedingly agreement of offer it has essentially to be in the cash. Where merchandise is offered as thought for merchandise, they’ll not add up to a deal, however, it’ll be called trade or trade, which was pervasive in past days. Similarly, if an individual offers the items to another person discourteously, it adds up to a present or noble cause and not a deal. In express terms, products must be sold for a specific measure of money, called the value. In any case, the thought might be halfway in cash and somewhat in esteemed up products. Moreover, the installment isn’t important at the hour of developing the agreement of offer.
- All basics of a sound agreement: An agreement of offer could be an uncommon style of agreement, along these lines, to be substantial, it must have all the basic components of a sound agreement, viz., free assent, thought, competency of contracting parties, legal item, lawful conventions to be finished, and so on. An agreement of offer is invalid if significant components are absent. For instance, if A consented to offer his vehicle to B since B constrained him to attempt to do so utilizing undue impact, this agreement of offer isn’t legitimate since there’s no free assent concerning the transferor.
- Incorporates both a ‘Deal’ and ‘An Agreement to Sell’: The ‘agreement of offer’ could be a conventional term and incorporates both deal and a consent to sell. The deal is an executed or outright agreement while ‘a consent to sell’ is an executory contract and infers a contingent deal.
An agreement of offer might be made only by a proposition, to look for or sell merchandise at a cost, trailed by an acknowledgment of such a proposition. Strikingly, neither the installment of cost nor the conveyance of items is significant at the hour of developing the agreement of offer except if in any case concurred upon. Subject to the arrangements of the law for these days viable, an agreement of offer is additionally made either orally or recorded as a hard copy, or incompletely orally and somewhat recorded as a hard copy, or may even be suggested by the director of the gatherings.
A revocation under the Law
In simplest terminology, in the simplest terms means withdrawal. It can cause cancellation of the contract. The notice of revocation should reach the opposite party since it cannot happen merely by showing inconsistent actions. The Indian Contract Act, 1872 (hereinafter “The Act”), provides the method of revocation. The promisee or the promisor can exercise this feature at his/ her own will respectively. Each of those is the pillar on which the contractual relationship stands. If one amongst these would be shaken, the contract would fall. The methods of revocation are elaborated hereunder
A proposal could also be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterward.
An acceptance could also be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterward.
To make the one who makes the revocation liable, the respective revocation should be put in the course of transmission by the one who is revoking it. But, more important is to create the person against whom revocation is being made. to create him or her liable, that person must come to grasp about the revocation.
Revocation of Proposal
Before the acceptance is complete, the offer should be revoked by the offeror or the proposer. There’s no concluded consent in such cases. The acceptance is completed when the communication gets completed. This process of acceptance would be completed when the acceptance is being put into the course of transmission by the one that had to administer the acceptance.
On this ground, the letter of resignation of an employee wasn’t considered to own any impact. It’s because of the case because the secretary offered his letter of resignation to the managing committee for acceptance. But soon after, the letter was withdrawn. Since the managing committee didn’t accept the letter by then, the court considered the secretary competent to revoke the letter of resignation. Similarly, at an auction, when the bidding happens, unless a suggestion is accepted, the offeror can anytime withdraw the offer.
As mentioned there’s no concluded contract, the opposite party isn’t expected likewise as justified to invoke the bank guarantee that was being the subject matter of the contract. Even if a bid is provisionally accepted, the bidder can withdraw the offer. In one case, there was an express stipulation of a confirmation by the authority before the acceptance of the contract. Since the bid wasn’t fully accepted, the court considered the revocation valid. After all, the commonly accepted reasoning is that bidding is simply a suggestion on one side, and it doesn’t fructify until it’s assented to.
Once the revocation has taken effect, the proposer can’t be made liable to accept the offer. Hence, the one that bids, can’t be made liable for any deficiency in commission. The question arises when the person can resile from the offer made earlier. It’s very clear, suppose in the case of a special oath, before the completion of the identical, no revocation is often permitted. Sufficient cause would have to be shown before resiling from the agreement.
Revocation of Acceptance
As the postal rule of the completion of the contract is extremely clear, the contract becomes final once the acceptance has been duly conveyed into the course of transmission. Hence, this sounds contradictory rather confusing that how can thus, a concluded contract be revoked with extra communication of revocation.
In English law, there’s no such authority that may show how such a contract will be rescinded or revoked by an act of communicating the revocation after sending the acceptance. Multiple issues arise from such a situation if allowed. The offeree can simply speculate and take multiple associations before finally agreeing to enter into a contract. Similarly, the offeror also can speculate but at the expense of the offeree. If the retraction of the acceptance would be so openly allowed, the party would become incentivized to mention no to the already accepted transaction if some better consideration was found elsewhere. This might dismantle the very foundation of a contract. Then, a contract wouldn’t exist in any respect. Only in a very rare situation, would the contract be ready to be fructified. The market situation could be all right to be tested, so a choice might be taken on how the contract needs to be treated.
It has been, though, suggested that the offeror or the one that makes the offer, can take such risk of revocation, like several other risks. There are, in business and daily transactions, many such types of risks involved, as the danger of loss and delay, but, the offeror will be allowed to grip the danger of the accident or an unknown circumstance in the future, but this risk shouldn’t be completely dependent upon the action of the offeree.
Instead of revoking the acceptance, the offeree can take the route of canceling the offer made by the offeror only. It can happen at the stage when the acceptance is yet to be conveyed. The most effective example will be that of bidding. The one that receives the tender, can at that time itself cancel the tender notice without accepting any of the tenders submitted and from calling for fresh tenders. Before accepting, the offeree also can consider forfeiting the earnest, if any, so deposited. The sole thing is that this forfeiture shouldn’t be like a penalty, rest the forfeiture is extremely reasonable and maybe exercisable by the party.
An interesting aspect may be an indisputable fact that this provision talks only about the revocation of the proposal. Thus, it might be relevant just for the side of the offeror, who had made the offer. The easy classification of the abovementioned modes is done on the premise of the perusal of those four ways. The primary technique would make up such a situation where the revocation needs to be made before the acceptance. Otherwise, if the revocation isn’t done then, the lapse of your time would be considered to be a revocation.
In the first situation, the communication of the revocation needs to be clear and to the proper address also. In one amongst the cases, the revocation letter was being sent by fax message. Unfortunately, it reached the incorrect address. The court considered it to be of no effect. In the second situation, the question arises that when the revocation is allowed, during a situation where no closing date has been provided. The courts tried to answer this question in the case Manchester Diocesan Council for Education v. Commercial & General Investment Ltd., it was held just in case of no prescription of your time for acceptance being provided, the rule of reasonable time should be followed. At an affordable time, the offeree must reply to the offer sent.
The third condition is additionally very crucial. It is illustrated with the assistance of a practical example. In one of the cases, The Secretary Of State For India vs Bhaskar Krishnaji Samant, the best bidder was allotted the bid, but the acceptance wasn’t sent to the particular bidder for an entire period of six months. Thus, the court held that the bidder is in his/ her full right to revoke the offer since the sine qua non of the contract wasn’t being fulfilled by the opposite party. Many a time, the contract emerges through such offers where the closing date has been provided. Thus, the court does consider that in that point frame should revoke the offer.
The examples are as follows-
In one case, the party offered to sell his house. It was specifically stipulated that the offer was to be leftover by Friday. Thus, here, the court held that the offeree may be revoked before Friday only. But, in the other case, when the defendant offered to shop for a house, a period of six weeks was being given to the vendor to make a decision. Here, the court took an adverse view and said that the defendant could withdraw anytime even at the end of six weeks. The death of the insured party during a contract of insurance, before the revival of the lapsed policy, can result in the re- revival of the policy. But that revival would only be possible when the new terms87and conditions are accepted and complied with. The logic for the identical is that the contract for the consideration of insurance amount reciprocally of a premium to be paid in the future date. Hence, the death of the insured party may lead to the revival but also of the lapsed policy.
Conclusion
The contracts are considered concluded at the top of the postal rule. There’s little question on the putting of the acceptance in the course of transmission and also in the impossibility of contract. That’s the explanation that even when the revocation has been communicated, the contract has not been done away with. This happened in the case of Sadhoo Lal Motilal v. The State of M.P, the tender that was submitted by the party to the respective Government got accepted later. But, a telegram was subsequently sent to the govt withdrawing the acceptance. The court found proof of the conclusion of the contract and did not find any reason to revoke the contract. The explanation is that as soon as the letter of acceptance was posted, the tender contract was concluded. Thus, revocation couldn’t be implemented.
The courts do not intend to dismantle or create any form of right by modifying the contractual term. It’s not for the courts to form the contracts for the parties. It’s just for the parties to form their contract and not for the courts to interfere in such commercial nature of business. But, considering the interpretation of law involved, the courts are commonly asked to delve into the question of the validity of the revocation as is evidenced from the above-mentioned discussion, the revocation may be a statutorily provided right given to either party and it’s having an overriding effect over the accepted principles of the communication of proposal and acceptance.
References
- https://cablogindia.com/sale-of-goods-act-summary-notes/#:~:text=Scope%20of%20the%20Act,as%20an%20agreement%20to%20sell.
- https://kanwarn.wordpress.com/2015/06/20/sale-of-goods-act-1930-part-i-introduction/
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