performance of contract of sale
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This article is written by Sangeet Kumar Khamari, KIIT School Of Law, Odisha. This article talks about what relationship a seller and buyer should have when a contract is made for the sale of a good. And also talks about the rights of an unpaid seller.

Introduction

The Sale of Goods Act 1930, was a part of the Indian Contract Act 1872 and got separated from it on 1 July 1930. This was applicable for the whole of India except the state of Jammu and Kashmir, but now it is also applicable on Jammu and Kashmir after it was declared as Indian territory in 2019. Earlier in the period of 1930, The Sale of Goods Act was “The Indian Sale of Goods Act” later in 1963 on 23 September the act was amended and named as “The Sale of Goods Act 1930”. It is still applicable in India after being amended in 1963.

According to the Sales of Goods Act 1930, the performance of the contract of sale comes under chapter IV from Section 31 to Section 44 it is described how the goods are being displaced and how their possession are being transferred from one person to another voluntarily. There are basically two parties for the agreement, one is the seller and the other one is the buyer. The seller sells the goods and the buyer buys the goods. There are some criteria on the basis of selling and buying which takes place, which we are going to discuss in this article.

Who is a seller

The definition of the seller is given in Section 2(13) of the Sale of Goods Act, 1930. The seller can be defined as a person who agrees to sell goods.

Rights of the Seller (Section 31)

  • He can reserve the rights of the goods until and unless payment of goods is done. 
  • He can assume that the buyer has accepted the goods or not.
  • He will only deliver the goods when the buyer would apply for the delivery.
  • He can make the goods delivered in instalments when so agreed by the buyer.
  • He can have the possession of the goods until the buyer hasn’t paid for the goods. 
  • He can stop the delivery of goods and resume possession of the goods unless and until the payment is done for the goods.
  • He can resell the goods under certain conditions.
  • He can bring the goods back if it is not delivered to the buyer.
  • He can sue the buyer if the buyer fails to make the payment on a certain day, in terms of the contract.

Duties of seller

  • He should make an arrangement for the transfer of property to the buyer.
  • He should check whether the goods are delivered properly or not.
  • He should give a proper title to the goods which he has to pass to the buyer.
  • He should deliver the goods according to the terms of the agreement.
  • He should ensure that the goods supplied should be agreed to the implied condition and warranties.
  • He should keep the goods in a deliverable state and deliver the goods when the buyer asks for it.
  • He should deliver the goods within a specific time fixed in the contract.
  • He should bear all the expenses for which the good should be delivered.
  • He should deliver the goods as said by the buyer in the contract in an agreed quantity. 
  • To deliver the goods in instalments only when the buyer wants.
  • He should make arrangements for the goods while they are in the custody of the carrier.

Who is a buyer?

The definition of the buyer is given in Section 2(1) of the Sale of Goods Act, 1930. The buyer can be defined as a person who buys goods from the seller.

Rights of the Buyer (Section 31)

  • He should get the delivery of the goods as per contract.
  • He can reject the goods if the quality and quantity are not as specified in the contract.
  • To deny the contract when goods are delivered in instalments without any agreement to the effects.
  • The seller should inform him when the goods are to be sent by sea route, so that the buyer may arrange for their insurance.
  • He can examine the goods for checking whether they are in the agreement with the contract.
  • If he has already paid he can sue the seller for recovery of the price if the seller fails to deliver the goods.
  • He can also sue the seller for damages or the seller’s wrongful neglect or the seller refuses to deliver the goods to the buyer.
  • He can sue the seller for damages for breach of a warranty or for breach of a condition.
  • He can sue the seller for the damages of breach of contract.

Duties of the Buyer

  • He should accept the delivery of goods when the seller is prepared to make the delivery as per the contract.
  • To have possession on it he should pay the price for the goods as per the contract.
  • He should apply for the delivery of the goods.
  • He can ask to deliver the goods at a particular time.
  • He should accept delivery of the goods in instalments and pay for it according to the contract.
  • He should bear the risk of failure of delivery of goods if the delivery point is a distant place.
  • He should pay the price on the transfer of possession of the goods as given in the term of the contract.
  • He has to pay for not accepting the goods.

Delivery

Section 33 of the Sale of Goods Act, 1930 defines delivery as a voluntary transfer of possession from one person to another. It is also the process of transporting goods from a source location to a predefined destination. Cargo (physical goods) are primarily delivered via roads and railroads on land, shipping lanes on the sea and airline networks in the air.

The basic elements of delivery are:

  • There must be two parties.
  • One party out of those two parties should have the possession of the goods.
  • One party should transfer possession to the other.
  • This should be done voluntarily.

Mode of delivery

  • When the seller transfers the possession of the goods to the buyer or to a person who is authorised on behalf of the buyer its called physical or actual delivery. 
  • If the actual delivery is not done and only the control of the goods is transferred, then it is called symbolic delivery. In this case, neither physical nor symbolic delivery is made.
  •  In constructive delivery, the individual possessing the products recognizes that he holds the merchandise for the benefit of, and at the disposal of the purchaser. Constructive delivery is also called attornment.

Constructive delivery may be effected in the following three ways.

  • Where the seller, after having sold the goods, agrees to hold them as bailee for the buyer
  • Where the buyer, who is already in possession of the goods as bailee of the seller, holds them as his own, after the sale, and
  • Where a third party, for example, a carrier/transporter, who holds the goods, as bailee for the seller, agrees and acknowledges holding them for the buyer.

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Rules regarding delivery

  • The delivery and payment of price are concurrent conditions unless the two parties agree.
  • If the intention of the seller is to deliver the goods in parts then the delivery is called a valid delivery. But if goods are delivered in parts and the seller is not intending to contract fully then there is a breach of contract.
  • If a part-delivery of the goods is made in progress of the delivery of the whole, then it has the same effect for the purpose of passing the property in such goods as the delivery of the whole. However, a part-delivery with the intention of severing it from the whole does not operate as the delivery of the remainder (Section 34). 
  • According to Section 35 of Sale of Goods Act 1930 unless there is a contract to the contrary then the buyer must apply for delivery. But if it is mentioned in the contract that the seller has to deliver the goods then the seller has to deliver without the permission of the buyer.
  • If no place is decided for the delivery of the goods that, they are to be delivered at a place at which the seller and the buyer are in the time of sale.
  • There should be an appropriate time for the delivery.
  • The expenses of delivery are to be carried out by the seller unless there is a contract to the contrary.

If the seller delivers the wrong quantity of goods to the buyer then the following cases may take place:

  • If the quantity of goods is less as per the contract then the buyer can reject the goods.
  • If the quantity of goods is more than that of contract than the buyer can keep the number of goods as per the contract and reject the rest or he may also reject the total.
  • If the goods ordered are mixed with the goods of different descriptions( i.e. goods with a different title or different quality), the buyer may reject the goods or accept the goods. 
  • If there is no contract for the instalment delivery, the seller cannot force the buyer to accept the instalment delivery. 
  • The buyer has the right to check and examine the goods. 
  • If the buyer once accepted the goods then he cannot reject the goods. 
  • If the buyer refuses to take the delivery then he would be responsible for it. 

According to Section 36(3) of the Sale of Goods Act 1930, if at the time of delivery the goods are in possession of a third party then there will be no delivery unless and until the third party tells the buyer that the goods are being held on his behalf. This section would not create any impact on the transfer of title of the goods.

Who is an Unpaid seller?

As defined by Section 45 of Sale of Goods Act, 1930, a person has sold some goods and has not got the whole price and if the transaction is done through negotiable instruments like cheque, bill of exchange and a promissory note, then the person can be said as an unpaid seller.

Illustration- If A is a seller and he delivers the goods to B and transfers the possession, and if B hasn’t paid the sum then A becomes an unpaid seller.

Rights of an unpaid seller

Section 46 of the Sale of Goods Act 1930, discusses the rights of an unpaid seller. This can be of two types:

  • Against the goods – jus in rem ( right against property)
  • Against the buyer – jus in personam (right against the person)

Right against the goods 

  • Right to a lien which means the seller has the right on the possession over the goods.
  • Right to stoppage in transit which means the seller can call up the carrier transporter and tell not to deliver the goods.
  • Right to resale means the seller can again sell the goods as he has the possession of the goods.

And the rights like the right to lien, the right to stoppage in transit and the right to resale are also applicable for the agreement which is made for sale.

Rights against the buyer

  • The seller has the right to sue the buyer for the price if the seller has already sold the goods and the buyer hasn’t paid the sum.
  • The seller has the right to sue for the damages, for e.g. if the seller has sent the carrier for the delivery and the buyer isn’t available to receive the delivery and the goods returned back by the carrier to the seller then he can sue the buyer for damages like the packing of goods, transportation charges and so many.
  • If the buyer hasn’t paid the price of the goods to the seller after the delivery within a stipulated time period as given in the contract, then the seller can sue for the interest on the buyer.

References


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