Commercial Law

Term paper

Topic- Case study on Sale

of Goods Act

Submitted by:
Zonunmawii
R/No.-22
Section- S1013
Regn No. - 11003689

Acknowledgement
My deepest thanks to my lecturer Rashneet
Kaur for the guidance and supports in
preparing my term paper.

I would also like to thank my institution and

faculty members who have taken troubles to
prepare the term paper topic which helps us
a lot in understanding the topics more clearly
by giving us an opportunity to do a case
study on different topics, without them this
project would have been a distant reality.

INTRODUCTION
The sale of goods is the most common of all commercial
contracts. Knowledge of its main principles is of the
utmost importance to all classes of community. The law
relating to it is contained in the Sale of Goods Act, 1930.
Prior to this Act, the law of sale of goods was contained in
Chapter VII of the Indian Contract Act, 1872.

Sale of Goods Act is one of very old mercantile law. Sale of

Goods is one of the special types of Contract. Initially, this
was part of Indian Contract Act itself in chapter VII
(sections 76 to 123). Later these sections in Contract Act
were deleted, and separate Sale of Goods Act was passed
in 1930.

The Sale of Goods Act is complimentary to Contract Act.

Basic provisions of Contract Act apply to contract of Sale
of Goods also. Basic requirements of contract i.e. offer and
acceptance, legally enforceable agreement, mutual
consent, parties competent to contract; free consent,
lawful object, consideration etc. apply to contract of Sale
of Goods also.

Contract of Sale - A contract of sale of goods is a

contract whereby the seller transfers or agrees to transfer
the property in goods to the buyer for a price. There may
be a contract of sale between one part-owner and another.
[Section 4(1)]. A contract of sale may be absolute or
conditional. [Section 4(2)].
Thus, following are essentials of contract of sale –
• It is contract, i.e. all requirements of ‘contract’ must
be fulfilled
• It is of ‘goods’
• Transfer of property is required
• Contract is between buyer and seller
• Sale should be for ‘price’
• A part owner can sale his part to another part-owner
* Contract may be absolute or conditional.

How Contract of sale is made - A contract of sale is

made by an offer to buy or sell goods for a price and the
acceptance of such offer. The contract may provide for the
immediate delivery of the goods or immediate payment of
the price or both, or for the delivery or payment by
instalments, or that the delivery or payment or both shall
be postponed. [section 5(1)]. Subject to the provisions of
any law for the time being in force, a contract of sale may
be made in writing or by word of mouth, or partly in
writing and partly by word of mouth or may be implied
from the conduct of the parties. [section 5(2)]. Thus, credit
sale is also a ‘sale’. - - A verbal contract or contract by
conduct of parties is valid. e.g. putting goods in basket in
super market or taking food in a hotel.

Two parties to contract - Two parties are required for

contract. - - “Buyer” means a person who buys or agrees
to buy goods. [section 2(1)]. “Seller” means a person who
sells or agrees to sell goods. [section 2(13)]. A part owner
can sale his part to another part-owner. However, if joint
owners distribute property among themselves as per
mutual agreement, it is not ‘sale’ as there are no two
parties.

Case 1
Rajendra Brothers - vs Shri
Mota Ankadia Seva ... on 26
October, 2010
Whether in the facts and circumstances of the case, Civil
Court had jurisdiction to deal with or decide the suit filed
by the appellant having regard to the provisions contained
in sub-section [1] of Section 96 of the Gujarat Cooperative
Societies Act???

Learned counsel for the appellant submits that the

appellant-M/s. Rajendra Brothers is neither a member of
the respondent Cooperative Society nor is a person who
had taken any loan from the said society, but it happens
to be a creditor of the said society who had supplied
certain cloths worth Rs. 13,550/- to the
defendant/respondent-society on 8.12.79. According to
the appellant-plaintiff, despite request and reminders, as
the money was not paid, it was required to file the suit. In
the suit, the plaintiff claimed Rs. 13550/-, the principal
amount and sum of Rs.1755/- as interest at the rate of
18% from the date of the sale up to the date of the suit, in
all, a sum of Rs. 15305/- was claimed. The defendant
society appeared before the learned trial court and
submitted that the suit was not maintainable, transaction
was sham and bogus and they would not be required to
pay anything. The learned trial court, after hearing the
parties held that the plaintiff was successful in proving
that it had supplied the goods on credit. Holding that the
Civil Court had jurisdiction, it decreed the suit. The
respondent society, being aggrieved by the said order,
took up the matter in Regular Civil Appeal.
Learned first appellate court, held that the plaintiff had
supplied the goods on credit, credit money was not paid. It
further held that the Civil Court had no jurisdiction to
entertain the suit; therefore, the plaintiff is before this
Court. Despite service, none appeared for the respondent
society, therefore, I requested Mr. A.Y.Kogje, learned
counsel, ordinarily appearing for the State, to assist the
Court as Amicus Curiae.

Shri J.R. Nanavati, learned counsel for the appellant

submits that, in view of the Division Bench judgment of
this Court in the matter of Rasiklal Patel & ors. v.
Kailashgauri Ramanlal Mehta & ors, reported in 1971 [12]
G.L.R. 355 and yet another Single Bench judgment of this
Court in the matter of Mahavir Cotton Co. vs. Saurashtra
Cooperative Spinning Mills Ltd.,reported in 1995 [2] Vol.
36 [2] G.L.R. 1394, the learned first appellate court was
unjustified in holding that the Civil Court had no
jurisdiction to decide the matter.

Mr. A.Y. Kogje, learned counsel, referring to the case in the

matter of Deccan Merchants Cooperative Bank Ltd. v. M/s.
Dalichand Jugraj Jain and Others, reported in AIR 1969 SC
1320, submits that in a case like present, the words ?
Stouching the business of the society?? and the words ?Sa
person claiming through a member?? would assume
importance and in the present case, as the dispute is in
relation to the business of the society, it must be held that
the Civil Court had no jurisdiction.
From the judgment of the Supreme Court in the matter of
Deccan Merchants Cooperative Bank Ltd.[supra], it
appears that the Supreme Court was of the opinion that
the dispute must be between the following:-
? S91. Not withstanding anything contained in any other
law for the time being in force, any dispute touching the
constitution, elections of the office bearers, conduct of
general meetings, management or business of a society
shall be referred by any of the parties to the dispute, or by
a federal society to which the society is affiliated, or by a
creditor of the society, to the Registrar, if both the parties
thereto are one or other of the following:
[a] a Society, its committee, any past committee, any past
or present officer, any past or present agent, any past or
present servant or nominee, heir or legal representative or
any deceased officer, deceased agent or deceased servant
of the society, or the liquidator of the society;
[b] a member, past member or a person claiming through
a member, past member or a deceased member of a
society, or a society which is a member of the society;
[c] a person, other than a member of the society, who has
been granted a loan by the society, or with whom the
society has or had transactions under the provisions of
Section 45, and any person claiming through such a
person;
[d] a surety of a member, past member or a deceased
member, or a person other than a member who has been
granted a loan by the society under Section 45, whether
such a surety is or is not a member of the society;
[e] any other society, or the Liquidator of such a society.??

The Supreme Court was also of the opinion that if the

dispute touches the business of the society within the
meaning of Section 91, it is not a dispute between a
society and a member or a person claiming through a
member. The Supreme Court further observed that before
a person can be said to claiming through a member, the
claim should arise through a transaction or dealing which
the member entered into with the society as a member.
The Supreme Court was very candid in observing that the
if a person entered into a transaction with the society not
as a member, but as a stranger, then, he must be
covered, if at all, by the provisions of Section 91 [1][a] or
[c]. But once, it is held that the original transaction was
entered into by the member with the society as a
member, then, any person who claims right or title
through that member must come within the provisions of
Section 91[1][b]. Not only that, the Supreme Court,
disapproving the findings recorded by the Nagpur Bench
and also disapproving the findings also recorded by the
High Court of Madhya Pradesh, observed that the view
expressed by Madras, Bombay and Kerala High Court
would be preferable. From the judgment of the Supreme
Court, it would clearly appear that the Supreme Court was
of the opinion that a dispute concerning the property
purchased by the society from one of its member would
not be a dispute touching the business of the society. If
that be so, then, the dispute between the parties cannot
be said to be a dispute touching the business of the
society entered into between the society and the member
of the society. It was a straight transaction between a
creditor and purchaser on credit. A comparative study of
Sec.91 of Maharashtra Cooperative Societies Act and
Sec.96 of the Gujarat Cooperative Societies Act would
show that the provisions are almost pari-materia. The
judgment in the matter of Rasiklal [supra] and Mahavir
Cotton would really hold the field.

The first appellate court, in the opinion of this Court was

not justified in holding that the suit was not recognizable
by the Civil Court. That part of the finding recorded by the
first appellate court is set aside.

In view of the concurrent findings recorded by the two

courts below, I must hold that the plaintiff had been
successful in proving its claim. The decree passed by the
learned first appellate court is set aside and the decree
granted by the learned trial court is restored. No costs as
the respondent is not represented despite service.

Let a decree be framed accordingly.

Case 2
Sale of Goods Law- different
cases collected in the year
2007
The case under consideration today concerns Susan, who
is a self-employed painter and decorator and a painting
firm known as “Paintplus”. Susan had bought a cottage in
a coastal area and had sought help from an assistant at
the Paintplus store in recommending a heavy duty
masonry paint that would withstand the harsh climate
changes evident on a coastal area; and a brand of wipe-
clean paint that would be suitable for interior use in a wet
area (the bathroom). The assistant at Paintplus
recommended their own brand of masonry paint (Everlast)
because it was the cheapest available. Susan checked the
description on the tin and agreed that the paint appeared
to be suited to her requirements.
When asked about the bathroom paint the sales assistant
told Susan that internal paints were not his speciality, but
he had heard other customers comment favourably about
a product known as “Cleaneasy”. The store had some tins
of Cleaneasy going at half price because the written
description about the product had become detached from
the tins some time previously so the tins were being sold
without this documentation. Susan did ask the sales
assistant if there was anything that she should know about
the paint that might have been written on the leaflet and
the sales assistant said, [quote] “its standard paint so just
slap it on”.
Over time Susan had problems with both paint types she
had purchased from Paintplus. The masonry paint was
easy to apply and withstood the harsh climate of winter,
but over the summer months the temperatures were
“unprecedented” and the paint started peel from the
walls. The render under the paint was damaged through
this and Susan had to employ a building professional to
knock of the remaining render and paint, and then
rerender and repaint the entire outside of the cottage.
Susan did not have much luck with the Cleaneasy
paint either. While she was applying the paint some of it
dropped on her skin and she suffered an allergic reaction
to the paint. She needed medical treatment and was off
work for three weeks because of this reaction. She also
lost a major decorating contract because of her illness.
Later investigations about the description that should
have been on the tin when she bought it declared that if
[quote] “any person suffering from skin complaints or
sensitivities should refrain from using this product”.
The first question considered in this paper is whether
or not Susan could claim a breach of contract against
Paintplus, and if so, on what grounds. Briefly a contract
can be said to occur when an offer is made to one party,
by another, and that offer is accepted. Having goods for
sale in a shop is not considered an offer as such, but
rather an invitation to treat1 although a bilateral contract
1
can be said to occur in that the buyer agrees to pay a
certain price for goods, which the seller promises to
deliver. The essential parts of a contract include the offer
and acceptance, the consideration elements of the
contract (seller gets the money, buyer gets the paint)2, the
acceptance that the contract concerned a business rather
than social or domestic matter3, capacity (both parties had
to be able to enter a contractual agreement), and the
contract has to be based on a legal transaction (legality).
In the case between Susan and Paintplus there is no
dispute that a contract was entered into because she
visited the shop of her own volition, discussed different
paint types with the sales assistant, and then based on the
advice she had asked for and was given, purchased both
the masonry and bathroom paint. She apparently paid for
the goods and took them from the store, thereby
completing the basic elements of the contract.
The case for a breach of contract in this situation
relates to the Sale of Goods Act 1979 which applies to the
concept of sales made in the course of a business and
where goods are sold by a merchant that relate to the
nature of the merchant’s business4. In particular s14(2)
makes the distinction between goods that can be
considered a private sale and those that are made in the
course of doing business. It could be considered that in

2
3

4
one respect Susan was purchasing the paint for a personal
project, despite the nature of her occupation, because it
was for a house that she had purchased. However s14(2)
relates to the sellers business, not the buyers.
From there it is necessary to consider if the Susan
was entitled to claim a breach of contract under the Sale
of Goods Act 1979 or related legislation such as the Unfair
Contract Terms Act 1977, s12. Section s12(1) states; “A
party to a contract ‘deals as consumer’ in relation to
another party if (a) he neither makes the contract in the
course of a business nor holds himself out as doing so; and
(b) the other party does make the contract in the course
of a business”. The case of R&B Customs Brokers v
United Dominion Trust5 applies here because although
Susan was herself a painter and decorator she bought the
goods from Paintplus as a consumer, not as part of her
business. It can be argued that this is the case because
firstly Susan was buying the goods as a consumer to do
work on her own property. Even though she may plan to
rent the property out at a later stage, renting property
cannot be considered her normal occupation and therefore
Susan’s future plans for the property are negliable in this
case. The second indicator of Susan’s position as a
consumer stems from her asking advice from the sales
assistant at Paintplus because she herself was not
knowledgeable about paints that were suitable for
masonry at a coastal area, nor interior paints that were
suitable for a wet room such as a bathroom.
5
 MacDonald6 noted that there have been other cases
since R&B Customs Brokers and a precedent case
Stevenson v Rogers that provide more latitude in the
definition of “consumer sales” and “in the course of a
business” especially when s14(2) of the Sale of Goods Act
1979 is considered alongside s12 of the Unfair Contract
Terms Act 1977. She notes that there is a difference is
phraseology that shows a subtle distinction between the
phrase “in the course of a business” and the phrase “in
the course of business” and cites Kidner7 as holding that
the second phrase “suggests things done by and for a
business”.
A final consideration in the first part of this paper
concerns Susan’s inspection of the goods while she was at
the paint store. Firstly in relation to the masonry paint,
Susan did read the description of the product listed on the
tin, and therefore would reasonably expect the products
she bought to adhere to the description provided.
Likewise it can be assumed that the tin’s description did
include enough information about the paint’s use under
different weather conditions for Susan to have purchased
the paint without further questioning of the sales
assistant. It can be argued therefore that in the case of
the masonry paint, the paint did not meet the reasonable
expectations of the purchaser8 and therefore Susan could
claim breach of contract in connection with the masonry
paint.
6
7
8
 In the second instance, regarding the illness Susan
sustained when using the bathroom paint, initially the
description of the product was not present on the can
although Susan did ask the sales assistant about any
information about the paint that she should know before
using it. The sales assistant said that there was nothing
she need to be worried about, although a later
investigation showed that the description that should have
been on the can did mention that “any person suffering
from skin complaints or sensitivities should refrain from
using this product.” The case study notes do not indicate
if Susan had prior experience with being allergic to certain
paints, and we can assume that she didn’t because she
was an experienced painter and decorator and would think
to ask the sales assistant specifically about this matter if
she had experienced problems before.
Whether or not Susan could claim breach of contract
in the case of the bathroom paint would depend on
whether the sales assistant could be considered liable
because he did not mention that the paint had a health
warning notice, but as s14(2) of the Sales of Goods Act
1979 states that goods do not need to be examined at the
point of sale (by the buyer) and that a protection against
faulty goods is allowable even if Susan had read the
description of the paint used in the bathroom before she
bought it. Therefore it can be argued that in both the
masonry paint and the bathroom paint that Susan can
claim breach of contract. In the case of the masonry paint
the case would be based on the “reasonable expectation”
Susan had that the paint would do what she required of it
and in the case of the bathroom paint Susan can claim
damages because the terms of the sale between buyer
and seller could not be considered equitable in light of the
illness she suffered as a result of the transaction and the
money she lost for the jobs she could not do for three
weeks while she was recovering from her allergic reaction.
The second part of this paper deals with whether or
not Paintplus can argue any of the statements made on
the back of their receipts or on the door of their building
as defence in a breach of contract case. These
statements are made as follows:
1. Paintplus agree to refund the purchase price of any
products that fail to meet satisfactory standards of
quality or fail to comply with any written description
applied to the goods.
2. Subject to clause 1 above, Paintplus undertake no
liability for damage however caused by any product
that fails to meet satisfactory standards of quality or
fail to comply with any written description applied to
the goods.
3. Paintplus undertake no liability as to fitness for any
specified purpose of the goods sold.
4. Paintplus undertakes no liability for advice given by
Paintplus employees.
Items one and two of this terms of business
agreement indicate that the company is prepared to
refund the cost of the goods bought if they have proven to
be defective in some way, or that they do not meet the
standards described on the tin. However, they disclaim
liability for any damage caused through the use of the
goods. The Sale of Goods Act 1979 s15 indicate that a
buyer is entitled to discharge a contract regardless of how
slight the damage, or sellers breach may be9 but the same
act does not consider liability in such clear cut terms.
Undoubtedly if the clauses described in Paintplus’s terms
of business are contrary to legislation in the Sale of Goods
Act 1979, then the courts will take the side of the
applicable legislation as opposed to Paintplus’s own efforts
to disclaim liability, but whether this extends to forcing the
company to pay out on damages as well as simple refund
of costs incurred through the original purchase will be
examined later in this paper. There is a precedent that
relates to clauses in a contract that states if a clause in a
contract (such as those outlined by Paintplus on their
receipt and on the door of their premises) is ambiguous or
vague then the courts will find for the innocent party10 and
indeed some legislation does set a precedent for the
insistence on the payment of damages in some cases11.
Item 3 concerns the fitness of a product for a specific
purpose. In one case, Griffiths v Conway Ltd., 193912 a
coat purchased from the claimant that caused dermatitis
to be suffered by the buyer, the case was voided because

9
10
11
12
the claimant had not told the seller about a known skin
condition. This harks back to whether or not Susan had
experienced allergies before when using certain types of
paint. If she had done so then under law the onus would
have been on her to disclose this to the sales assistant so
that this issue could be resolved before the contract was
completed. In regards to the masonry paint if the goods
are specific, the risk for use is passed on to the buyer, but
the buyer can still claim breach under the Unfair Contract
Terms Act 1977.
Finally under item 4 of Paintplus’s terms of business
agreement the company attempts to refuse liability for the
actions of a staff member. It can be argued in the case of
the masonry paint that as the staff member had made the
recommendation of the type of paint based on his own
expertise on that topic (which can be implied by the sales
assistant disclaiming expertise over the internal paint) and
that he was employed specifically to sell products for
which a limited amount of knowledge at least would be
required; combined with the concept that the terms of
business agreement made by Paintplus itself is binding on
the staff, that they would not be able to dismiss liability
for the masonry paint at least. The defendant could argue
however in the case of the bathroom interior paint that
because the sales assistant did specify that he was not an
expert on that type of paint, that Susan did have the
opportunity to ask to be directed to another sales person
who was better qualified to make the sale of interior paint.
Likewise she could have asked to see the written
description of the product that she did buy, even if it was
not included as part of the sale. However, from Susan’s
point of view she could argue that there was a reasonable
expectation that the sales assistant knew his job and
would have referred Susan to another sales person if he
was not comfortable in recommending products that may
or may not have met with Susan’s expectations of the
product or her needs related to the product.
Definitely it can be assumed that Susan had a
reasonable expectation that the salesperson she dealt
with was trained on paint types and was able to offer
applicable advice and recommendations based on client
needs because she did visit a specialist paint shop. This
same argument might not be applicable if she had visited
a non-specialist shop for her paint such as a second hand
vendor.
The final part of this paper deals with the possible
remedies available to Susan if her breach of contract claim
was successful. Section 55(1) of the Sale of Goods Act
allows for the negating or variance of a “right duty or
liability” that is applicable to Susan in that she can claim a
remedy regardless of the fact that the contract was
completed. Under general terms however such remedy is
often limited to a rejection of the goods (which is not
strictly applicable in this case but could support any claim
for a refund of price paid); or a claim for damages that is
often limited simply to the difference between the price of
goods that could have met the buyers expectations and
the actual goods that were purchased.
There is provision under the Sale of Goods Act 1979
to award “specific performance”, but this is a discretionary
element and not often awarded by the courts13. For
example s52(1) limits specific performance to “specific” or
“ascertained” goods, but again this is determined at the
courts discretion relating to the specific case and
elements thereof. There is no guarantee even if the buyer
was harmed or went through significant hardship because
of the goods purchased that any claim for damages
beyond the refund price of the goods could be claimed. A
second concern related to the laws surrounding remedies
is that there is a dissention as to whether or not the Sale
of Goods Act 1979 can be considered a codification of
common law regarding sales law, or if the Sale of Goods
Act could be applied in addition to those remedies
considered under common law14.
One final point needs to be made in this case and it is
in respect to the bathroom paint that Susan purchased
from Paintplus. Under section 53 if a buyer has accepted
a lower price for goods (the bathroom paint was at half
price because the labels had been removed) this can be
considered a remedy of a breach of contract and therefore
negate any future claim on other losses suffered by the
buyer (such as her painting and decorating contract). In
this case then it is fair to surmise that Susan would not be

13
14
able to claim any damages in relation to the bathroom
paint.
The question of damages in relation to the masonry
paint (the rerendering and repainting of the building)
Susan could attempt to claim damages from Paintplus but
unless the Courts decided that the goods used were both
“specific” or “ascertained” and therefore damages could
be claimed, the amount awarded (if any) will be solely at
the courts discretion.

Bibliography
www.google.com
www.indiankanoon.com