SOG

CA-
Foundation
Exam
Capsule
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Hakuna Matata -
Ab Koi Fikar nahi
Rishabh Gaur 2 Sales of Goods Act

Quick Revision – Sales of Goods Act

Sales of Goods Act
1) Contract of Sales of Goods is a special contract - It was part of Indian Contract Act itself in Chapter - VII
(Section 76 to 123) - It extends to the whole of India.
2) This act does not deal with the sale of immovable property
3) This act not applicable on Hire purchase agreement (in which hirer has right to terminate the contract), and
contract of skill and labour (where rendering of the service and exercise of skill is the essence of contract even
though there may be delivery of goods)
4) The ownership of the goods is immediately transferred from a seller to a buyer, in case of Sale
5) The ownership of the goods is not immediately transferred from a seller to a buyer. But it transfer at some
future date, this is a case of - Agreement to sell
6) Essential elements of a valid contract of sale *All the requirements of a valid contract must be fulfilled *Two
parties (distribution of goods among partners on account of dissolution of a firm does not amount to a sale of
goods by a firm to partners) *Goods as a subject matter (movable) *General Property in goods must be
transferred to the buyer *Consideration in money (partly in money and partly in goods also acceptable)
7) State of Gujrat v/s Raman Lal – A, B, C were partners in a firm. After sometimes, the firm was dissolved, and on
the dissolution, the surplus assets including some goods were divided among three partners – It was held that
the partners were joint owners of the goods, and they could not be both seller and buyer.
8) Goods does not include - Money and actionable claim
9) The goods which have been actually identified and agreed by the parties at the time of contract of sale is
Specific Goods
10) The goods which are not specifically identified at the time of contract of sale are known as unascertained
goods
11) When the ‘unascertained goods’ are identified and agreed upon by the parties, the goods are called the
ascertained good
12) Sec. 9 – Modes of fixing the price – as per contract – as per manner provided in contract – by course of dealing
– if none of the above “reasonable price”
13) Sec. 10 - The parties may agree to sell and buy goods on the terms that the price shall be fixed by the valuation
of a third party. However, if such third party fails to make the valuation, the contract becomes void. But if the
buyer has received the goods and has appropriated them, he becomes bound to pay reasonable price to the
seller.
14) Sometimes, the third party is influenced or prevented by the buyer or seller from the fixing the price. In such
cases, the innocent party may recover damages from the defaulting party.
15) Hire purchase Agreement – Hire purchaser can not transfer valid title to any other person – Here the hirer has
two options: (i) purchase after paying all installments. (ii) he may return the goods at any time and the
installment already paid are treated as hire charges. However, if no option is given to the hirer, and he is bound
to purchase, then the agreement is not hire-purchase agreements.
16) If the contract is for the sale of ‘unascertained goods’, then the contract shall not become void even if the
entire stock of goods is destroyed. And the parties remain liable to fulfill their obligations.
17) A Condition is a stipulation essential to the main purpose of the contract, the breach of which gives rise to a
right to treat the contract as repudiated
18) A warranty is a stipulation collateral to the main purpose of the contract, the breach of which gives rise to
claim for damages but not a right to reject the goods and treat the contract as repudiated
19) Implied conditions: *Condition as to title *Condition as to description *Condition as to sample or as well as
description *Condition as to fitness or quality *Merchantable *wholesomeness
20) Dr. Baretto v/s T.T. pruce – A bought a set of false teeth from B, a dentist. But the set was not fit for A’s mouth.
A rejected the set of teeth and claimed the refund of price. It was held that A was entitled to do so as the only
purpose for which he eanted the set teeth was not fulfilled.

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Rishabh Gaur 3 Sales of Goods Act

21) Merchantable quality is defied in the English sales of goods act, 1979
22) R.S. Thakur v/s H.G.E. Corp. – A shopkeeper sold a radio to B, but radio dint work properly – hence buyer has
right to reject the radio and to have refund for the price.
23) Frost v/s Aylesbury Dairy Co. - Milk purchased by A has germs of typhoid – hence milk is not wholesomeness
24) In the following situations, the responsibility as to fitness of goods falls upon the seller:
 If the buyer has made known to the seller that goods are required for a particular purpose for which the goods
are required.
 Buyer has informed the seller that he is relying on his skill and judgment.
 Seller is ordinarily dealing in such goods then there is an implied condition that goods are fit for that purpose
(This condition will apply whether the seller is manufacturer or producer or not).
25) Implied Warranties - *Quiet possession *Free from encumbrance(Encumbrance means - To make it difficult for
someone to do something) *Fitness for a particular purpose *Disclosure of dangerous nature of goods
26)Caveat emptor means - Let the buyer beware i.e. seller is not responsible for buyers choice - Exceptions to
Caveat emptor *Fitness as to quality or use (given as implied condition) *sale of goods by description *Trade
usage( for e.g. in readymade garments business, there is implied condition by usage of trade that the garments
shall be reasonably fit on the buyer) *Seller is guilty of fraud *Seller actively conceals a defect *Sale by Sample
27)Right of a buyer against the seller for breach of contract *Suit for non-delivery *Specific performance *Breach
of warranty *Suit for Anticipatory breach *Suit for interest and recovery of price
28)A seller may breach the contract in any of the following ways:
 He fails to deliver the goods at the time or in the manner called for the contract.
 He repudiates the contract.
 He delivers non-conforming goods and the buyer rightfully rejects the goods or properly revokes acceptance.
29) Right of unpaid seller against goods *Right of lien (retain possession) *Right of Stoppage in Transit *Right of
resale
30) Where the carrier or other bailee wrongfully refuses to deliver goods to the buyer transit comes to an end.
31) When the goods are delivered to a ship chartered by the buyer, and ship is acting in independent capacity, the
goods are deemed to be in transit until goods are under the charge of ship.
32) When the goods are delivered to a ship chartered by the buyer, and ship is acting as an agent of buyer, transit
comes to an end when the goods come under the charge of ship.
33) Unpaid seller can resell the goods:
 If the seller expressly reserve the right of resale in case of default by buyer.
 If the goods are of perishable nature, without any notice to the buyer, and
 In other cases after notice to the buyer, calling upon him to pay or tender the price within reasonable time and
upon failure of the buyer to do so.
Note: The seller can recover damages from the original buyer for loss caused due to breach of contract.
Note: The buyer shall not be entitled to any profit which may occur on resale.
Note: However if notice has not been given, the unpaid seller cannot recover damages and buyer is entitled to
profit made on resale.
34) Whether notice of resale has been given or not the new buyer acquires a good title to the goods.
35) Right of lien can be exercised in the following cases:
Goods have been sold without any stipulation of Credit.
Goods have been sold on credit but the term of credit has expired.
On buyer becoming insolvent.
36) The right of stoppage can be exercised subject to the fulfillment of following conditions-
 The seller has parted with the possession of the goods
 Buyer must have become insolvent
 Whole of the price has not been paid
 Goods must be in the course of transit.
37) Unless the auction is notified to be subject to a right to bid on behalf of the seller, it is not lawful – Any
contravention of this rule renders the sale as fraudulent *For the seller to bid himself or to employ any person
to bid at such sale on his behalf and *For the auctioneer to, knowingly take any bid from the seller or any such
person.

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Rishabh Gaur 4 Sales of Goods Act

38) If the seller makes use of pretended bidding to raise the price, the sale is voidable at the option of the buyer.
However, the seller may expressly reserve the right to bid at the auction and in such case, the seller or any one
person on his behalf may bid at the auction.
39) The term ‘sale on approval’ may be defined as the sale in which the buyer may return the goods within a
reasonable time, if the goods do not serve his purpose. This is also known as ‘Sale on return basis’. The
ownership is transferred to the buyer in any of the following three ways *When the buyer accepts the goods
*When the buyer adopts the transactions *Where the buyer fails to return the goods within fixed or reasonable
time
40) “Nemo dat quod non-habet”. This means that ‘no one can transfer a better title than he himself has’.
However, in the following exceptional circumstances a non-owner can transfer a valid title: *Sale by a
Mercantile agent *Sale by a joint owner *Sale by a person in possession under a voidable contract *Sale by a
seller in Possession of goods after their sale *Sale by a buyer in possession of goods after their sale *Sale by a
finder of goods
41) Sale by finder of goods - *The owner cannot be found with reasonable diligence or *Refuses to pay lawful
charges. Or *Goods are of perishable nature or *Lawful charges of the finder in finding the real owner or
preserving the goods amounts to 2/3rd of the value of goods found.
42) In______, goods are physically delivered to the buyer - actual delivery
43) ______ is a Delivery by formal acknowledgement by the person who is in actual physical possession of the
goods. There is no change in the possession of the custody or actual possession of the goods. - Constructive
delivery
44) ____________means doing something which has the effect of putting goods in the possession of buyer
Symbolic delivery
45) In the case of F.O.B contracts, the ownership of the goods is transferred to the buyer, when the goods are
loaded on the ship. In these contracts goods are at the risk of buyer during journey
46) CIF is the contract for sale of goods at a price which includes the cost of goods, insurance and freight charges. In
these contracts ownership of the goods is transferred to the buyer when shipping documents are delivered to
the buyer.
47) The Contract where seller has to deliver the goods to the buyer at the port of destination, the contract is Ex
Ship contract. In these contracts ownership is transferred to the buyer when goods are delivered at the port
of destination. The risk during transit is to be borne by seller.
48) Is Document of title of goods (Bill of lading, dock warrant, warehouse keeper certificate, railway receipt, etc.)
is different from Document showing title (share certificate) – Yes
49) Mate receipt is an acknowledgement receipt
50) The ownership is transferred at the time of making the contract – if is of specific goods, which is in deliverable
state and contract of sale is unconditional
51) Ascertainment is a unilateral act done by seller, Appropriation is a bilateral act done by seller with the consent
of buyer or by buyer with the consent of seller
52) All the expenses incidental to making delivery are born by Seller , and all the expenses incidental to taking
delivery are born by Buyer
53) Delivery to carrier deemed to be delivery to buyer.

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Rishabh Gaur 5 Sales of Goods Act

Practical Q & A
Q Questions Answers
No. (Summarized)
Hire Purchase v/s Sales of goods act
1 Hritik get the delivery of a furniture from Kangana under an a) Kangana cannot recover the
agreement which provides for (a) an immediate down payment furniture from Manikarnika
of INR 300, (b) the balance by way of 12 monthly installments because it was a contract of
of INR 100 each, (c) transfer of ownership on the payment of sale and not hire purchase.
last installment, (d) Kangana’s right to or possess the goods in b) Kangana can recover the
case of non-payment of installments due. Before the 12th furniture from Manikarnika
installment was paid, Hritik sold the furniture to Manikarnika. because it was hire
Can Kangana recover the furniture from Manikarnika? State purchase as Hritik was
your answer in each of the following cases – having an option to return
a) If the agreement does not provide for any other stipulation. and hence, Hritik was not
b) If the agreement also provides that Hritik can return the having any title to it.
goods.
Effect of destruction of goods
2 Pappu sold to Gappu all 700 bag of cement lying in his Delhi’s (i) Void agreement – goods
godown. State the legal position (i) if unknown to Pappu, all have perished before
bags had stolen before the contract was made, (ii) if unknown making of the contract
to Pappu, the cement had becomes stone as a result of heavy (ii) Void contract – goods
rainfall, (iii) if unknown to Pappu, 109 bags stolen at the time of became damaged as no
making the contract. longer to answer to their
description
(iii) Void contract and Gappu
cannot be compelled to
accept 591 bags because
the contract was indivisible.
3 Pappu agree to sell 100 bags of cement out of 700 bags lying in The contract is not void
his godown. The entire cement had become stone. State the because the contract was for
legal position. unascertained goods and not
for specific goods. Hence,
Pappu must deliver 100 bags of
cement or pay damages for the
breach.
4 X agreed to sell 100 bags of wheat to Y out of his stock of 500 a) X shall bear the loss
bags. A fire broke out and the entire quantity of wheat was because the ownership has
destroyed. State who shall bear the loss and why in each of the not transferred to Y as the
following alternative cases? goods were not
a) If no bag had been separated before fire for the purposes of ascertained.
delivery to Y. b) Y shall bar the loss because
b) If 100 bags had been separated before fire with Y’s consent. the ownership has
transferred to Y as the
goods were ascertained.
4A X agreed to sell to Y 10 tons of potatoes to be grown on his Agreement to sell has become

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Rishabh Gaur 6 Sales of Goods Act

land. X sowed sufficient land to grow more than 10 tons of void – Howell v. Coupland
potatoes to be grown on his land. X sowed sufficient land to
grow more than 10 tons of potatoes. But without any fault on
X’s part, a disease attacked the crop and only about eight tons
of potatoes could be grown.
Price fix by third party
5 X agrees to sell 100 bags of cement to Y at a price to be fixed by a) The agreement to sell
Z and to be delivered in 4 equal instalments. Y receives a becomes void. But Y must
delivery of 25 cement bags. State the legal position – (a) if Z pay a reasonable price for
refuses to value the goods and fix the price, (b) if Z is prevented 25 cement bags.
from fixing the price by the fault of X, (c) if Z is prevented for b) The agreement to sell
fixing the price by fault of Y. becomes void. But Y must
pay a reasonable price for
25 cement bags. However,
Y may maintain a suit for
damages against X.
c) The agreement to sell
becomes void. But Y must
pay a reasonable price for
25 cement bags. However,
X may maintain a suit for
damages against Y.
Note – Difference between Earnest money and Advance payment – Earnest money means security for
the due performance of the contract. Advancement payment means the payment of the price of the
goods in advance which is to be adjusted against the ultimate total price of the goods. If the contract is
not or cannot be performed by the fault of the buyer, the seller may forfeit the earnest and not the
advance payment. The party not at fault may maintain a suit for damages against the party in fault.
Sales on approval basis
6 X delivers some goods to Y on “Sales or return” for 7 days. State a) X shall bear the loss
the legal position in each of the following cases – because the ownership has
a) Such goods are destroyed by fire on the third day itself not yet passed to the buyer.
without any fault of Y. b) Y shall bear the loss
b) Y informs X on telephone on the third day itself that he has because the ownership has
accepted the goods and immediately after the receiver is passed to the buyer.
put off, the goods are destroyed by fire. c) X can recover the loss from
c) Such goods are further delivered by Y on the third day itself Y because the ownership
to Z and then by Z to A on similar terms. The goods are passed to Y as Y has
stolen while in the custody of A. adopted the transaction by
d) Y neither returns nor gives notice of rejection even after the delivering the goods to Z. Y
expiry of 7 days. Goods are destroyed by fire on the eighth can recover the loss from Z
day. because the ownership has
e) Y retains the goods but gives the notice of rejection within passed to Z as Z has
the expiry of 7 days. Goods are destroyed by fire on the adopted the transaction by
eighth day. delivering the goods too A.
Z cannot recover the loss
from A because the
ownership has not yet

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Rishabh Gaur 7 Sales of Goods Act

passed.
d) Y shall bear the loss
because the ownership has
passed to the buyer.
e) X shall bear the loss
because the ownership has
not yet passed.
Implied Condition and warranties
6A X purchased a car from Y. After 6 months Z, the true owner of X had to return it to its true
car, demanded it from X. Discuss owner & X was entitled to
recover the full price – Rowland
v. Divall
6B X purchased from Y tins of condensed milk bearing the label ‘N X can sue Y for breach of
Brand’. It is proved that there was an infringement of implied condition – Niblett Ltd.
trademark. X had to remove the labels and sold the tin at a loss. Confectioner’s Materials Co.
Discuss
6C X (a buyer in Chor Bazar) purchased some stolen goods from Y, X is not entitled to sue Y
as thief. Z, the true owner of stolen goods, demanded it from X. because the knowledge of the
X had to return it to its true owner. Discuss buyer has negative the implied
condition as to title
6D Kuldeep purchased a hot water bottle from Ashish, retail The chemist is liable to refund
chemist. Kuldeep asked Ashish if it would stand boiling water. the price and pay damages
The chemist told him that the bottle was meant to hold hot because bottle was unfit for the
water. The bottle burst when water was poured into it and purpose for which it was
injured his wife. Comment. purchased – Priest v Last
6E X bought from a dealer a bottle of wine. While opening its cork X was entitled to claim
in the normal manner, the bottle broke off and injured X’s damages because the bottle
hand. Comment was not of merchantable
quality
Reservation of right of disposal
7 X sold some goods to Y with the terms that the goods shall be a) X will have to bear the loss
sent by railway. The goods were destroyed in the course of because the ownership has
journey. State the legal position (a) if railway receipt is taken in not yet been transferred.
the name of X, (b) if railway receipt is taken in the name of Y b) X will have to bear the loss
but is sent through banks, (c) if railway receipt is taken in the because the ownership has
name of Y and is sent to him. not yet been transferred.
c) Y will have to bear the loss
because the ownership has
already been transferred.
Delivery of goods
8 X agrees to sell 10 tons of ‘Basmati’ rice to Y at INR 40,000 per a) Y has two options – (i) he
ton. State the legal position in each of the following alternative can reject the goods or (ii)
cases – he can accept the goods.
a) If X delivers 8 tons of Basmati rice. b) Y has three options – (i) he
b) If X delivers 12 tons of Basmati rice. can reject the whole or (ii)
c) If X delivers 10 tons of Basmati rice and 2 tons of Dehraduni he can accept the whole or
rice. (iii) he can accept 10 tons

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Rishabh Gaur 8 Sales of Goods Act

d) If X delivers 10 tons of Basmati rice of which 2 tons of and can reject 2 tons. If he
inferior quality. accepted the 12 tons, he
e) If X delivers 8 tons of Basmati rice in April and the must pay for them at the
remaining 2 tons in the first week of May. contract rate.
f) If X delivers 10 tons of Basmati rice at Y’s godown. Y refuses c) Y has two options – (i) he
to accept them and neither returns nor informs the seller can reject the whole or he
that he refused to accept them and neither returns nor can accept the 10 tons of
informs the seller that he refused to accept the goods. basmati rice and reject 2
g) If X delivers 10 tons of Basmati rice at Y’s godown. Y refuses tons of dehraduni rice.
to accept them and inform the seller about his intention but d) Y has two options – (i) he
does not return the goods. can accept the whole or (ii)
h) If X is ready to deliver but Y refuses to take delivery and he can accept 8 tons of
repudiates the contract. basmati rice superior
i) If X delivers 10 tons of Basmati rice and Y resells the rice to quality and can reject 2
Z. When the rice are delivered to Y, he inspected a sample tons of basmati rice of
of it and sends it to Z. Z rejects it as not having according to inferior quality. It may be
sample. Y rejects the goods. noted that Y can not reject
j) If X delivers 10 tons 1 kg of Basmati rice does not charge the the whole because mixing
buyer with excess quantity. of goods with inferior
quality does not amount to
mixing of goods of different
description.
e) Y can reject the whole lot of
10 tons because he is not
bound to accept delivery in
installments.
f) Y is deemed to have
accepted the goods after a
lapse of reasonable time.
g) Y is not deemed to have
accepted the goods after a
lapse of reasonable time.
h) X can sue Y for price and for
damages.
i) Y’s act in inspecting the
sample and then sending
the rice to Z was an
acceptance and he could
not afterwards reject it.
j) Y is not entitled to reject
the whole quantity of what
because the excess delivery
of 1 kg was so trivial (little
important) as to be wholly
insignificant.
Unpaid Seller
9 State whether the seller is an unpaid seller or not in each of the a) X is unpaid seller
following alternative cases – b) X is unpaid seller because

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Rishabh Gaur 9 Sales of Goods Act

a) X sold some goods to Y for INR 10,000. Y paid 9,900 but the cheque received as
failed to pay the balance. conditional payment has
b) X sold some goods to Y for INR 10,000 and received a been dishonoured.
cheque for the full price as conditional payment. On c) X is not an unpaid seller
presentment, the cheque was dishonoured by the bank. because the credit period
c) X sold some goods to Y for INR 10,000 on a credit of one has not yet expired and the
month. One month has not yet expired. buyer has not become
d) X sold some goods to Y for INR 10,000 on a credit of one insolvent.
month and one month has expired and the price remains d) X is an unpaid seller
unpaid. because the price remains
e) X sold some goods to Y for INR 10,000 on a credit of one unpaid even after the
month. Y became insolvent during the period of credit. expiry of credit period.
e) X is an unpaid seller
because the buyer has
become insolvent.
Right of lien
10 State whether a right of lien can be exercised in each of the a) Yes, because the price has
following alternative cases – been paid.
a) X sold goods to Y for INR 10,000 without any stipulation as b) Yes, because the term of
to credit and the price remains unpaid. credit has expired and the
b) X sold goods to Y for INR 10,000 on a credit of 1 month and price remains unpaid.
the period of credit has expired c) Yes, because the buyer has
c) X sold goods to Y for INR 10,000 on a credit of 1 month and become insolvent.
Y became insolvent during the period of credit. d) No, because the delivery to
d) X of Delhi, sold goods to Y of Mumbai for INR 10,000 and the carrier prima facie
delivered the same to the railway for the purpose of amounts to the delivery to
transmission to the buyer. The railway receipt was taken in the buyer himself and the
the name of Y and sent to Y. right of disposal of the
e) X sold goods to Y for INR 10,000 and Y’s agent lawfully took goods has not been
the delivery of goods. reserved as the railway
f) X sold goods to Y for INR 10,000 and expressly waived his receipt has been sent to
right of lien. buyer.
g) X sold 10 tons of wheat to Y for INR 1,00,000 and Y resold 8 e) No, because buyer’s agent
tons of wheat out of 10 tons to Z. Y instructed X to deliver 8 has lawfully taken the
tons of wheat to Z. Y then became insolvent. delivery of the goods
h) X of Delhi sold some good to Y of Mumbai and took the f) No, because seller has
railway receipt in his own name and sent the railway receipt waived his right of lien.
to his agent. g) X can exercise his right of
i) X of Delhi sold some goods to Y of Mumbai and took the lien only against 2 tons of
railway receipt in the name of Y and it was sent by X to his wheat and not against 8
agent. tons of wheat.
h) Yes, because the seller is
deemed to have reserved
the right of disposal of the
goods by sending the
railway receipt to his own
agent.
i) Yes, because the seller is

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Rishabh Gaur 10 Sales of Goods Act

deemed to have reserved

the right of disposal by
sending the railway receipt
to this own agent.
Right of Unpaid seller
11 X of Delhi sold some goods to Y of Mumbai and took the railway a) Yes, because the good are
receipt in the name of Y and sent to Y. State whether a right of still in transit.
stoppage in transit can be exercised in each of the following b) No, because the transit
alternative cases – came to an end when
a) Before the goods reach Mumbai, Y became insolvent. asked the railways to carry
b) When the goods reached Mumbai, Y asked the railways to the goods to Calcutta.
carry them to calcutta. In the meantime Y became c) NO, because the transit
insolvent. came to end when the
c) When the goods reached Mumbai, the railway officials railway official informed Y
inform Y that the goods are lying at the station at Y’s risk. Y that the goods are lying at
became insolvent in the meantime. Y’s risk.
d) Y handed over railway receipt to Z in return for a loan. Z d) No, because the transfer
took the railway receipt in good faith and for consideration. was by way of sale and Z
Before the goods reach Mumbai, Y became insolvent. took the railway receipt in
e) Before the goods reach Mumbai, Y became insolvent. Y good faith and for valuable
assigned the railway receipt for INR 10,000 to Z who knew consideration and hence, Z
about the Y’s insolvensy. got a good title.
f) Y assigned the railway receipt to Z to borrow INR 10,000 on e) Yes, because Z has not
the security of railway receipt. Before the goods reach acted in good faith and
Mumbai, Y became insolvent. hence, Z did not get a good
title.
f) Yes, but subject to rights of
Z. In other words, X can get
back the railway receipt
after paying INR 10,000 to
Z.
Auction Sale
12 At an auction sale, C made the highest bid for an article of P. a) C’s bid was an offer to buy
State the legal position in each of he following alternative cases and he was etitled to
a) If C withdrew the bid before the fall of the hammer though withdraw his bid before the
he knew that one of the condition of the sale was ‘bid once sale is completed as per
made cannot be withdrawn’. express provision of section
b) If P refused to accept the highest bid. The sale was not 64(2). Such a condition in
notified subject to a reserve price. an auction sale was
c) If P appointed two persons A and B, to bid on his behalf. inoperative because it was
The sale was notified subject to a right to bid. against the provision of the
d) If C was allowed to take it away on (i) giving a cheque for law.
the price (ii) signing an agreement that ownership should b) C’s bid was an offer to buy
not pass to him until the cheque was cleared. The cheque which may or may not be
was dishonoured but in the meantime C sold the article to accepted by the auctioneer.
Z. Hence, P could refuse to
e) If this sale was notified subject to a reserve price and the accept the highest bid.
auctioneer by mistake accepted the C’s highest bid (which c) It amounts to fraud and

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Rishabh Gaur 11 Sales of Goods Act

was lower than the reserve price) by striking the hammer. sale is voidable at the
Later, auctioneer refused to deliver the goods. option of the buyer because
the seller could appoint
only one person to bid on
his behalf. Here intention of
the seller was not to
protect his interest but to
raise the price.
d) Z had a good title because
the property passed to C on
the fall of the hammer. The
ownership of specific goods
in a deliverable state passes
on the completion of
contract of sale.
e) The sale was not valid and C
was not entitled to goods. It
was held that the
auctioneer could not
effectively accept such a bid
because he could not make
a contract so as to bind his
principal to accept less than
the reserve price.
Miss.
13 State whether each of the following transaction is a contract of a) Yes – two distinct parties
sale under the Sale of Goods Act, 1930 b) Yes – two distinct parties
a) A partner agreed to sell his goods to the firm. c) No – a person cannot buy
b) A partner agreed to buy goods from the firm. his own goods
c) X is the owner of some goods, but he is not aware of this d) Yes – part owner may sell
fact. Y pretended to be the owner of these goods and sells to another part owner
them to X. e) No – money is not goods
d) X, Y and Z are joint owners of some furniture and with the f) Yes – goods
consent of Y and Z, the furniture was kept in possession of g) Yes – goods include shares
X. X buys Y’s share from him. h) No – immovable property
e) X agreed to sell a set containing 100 new currency notes of i) Yes – goods include
INR 500 each for INR 50,000 to Y. goodwill
f) X agreed to sell 100 silver coins for INR 10,000 to Y. j) No – price is missing
g) X agreed to sell 100 shares for INR 10,000 to Y. k) No – consideration is not
h) X agreed to sell his building for INR 1,00,000 to Y. money
i) X agreed to sell the goodwill of his proprietorship firm for l) Yes – Sheldon v Cox
INR 1,00,000 to Y. m) No – property includes only
j) X agreed to transfer some jewellery to his prospective wife general property not
Mrs. Kajol on account of love and affection. Special property
k) X agreed to exchange with Y 100 kg of rice (valued at INR 20 n) No – contract of work and
per kg) for 200 kg of wheat (valued at INR 10 per kg). labour
l) X agreed to exchange with Y 100 kg of rice (valued at INR 20 o) Yes – delivery of goods is
per kg) of wheat (valued at INR 12 per kg) and pay the the essence of contract.

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Rishabh Gaur 12 Sales of Goods Act

difference in cash. p) No – rendering of service

m) X agreed to pledge his goods valued at INR 1,00,000 with Y. and exercise of skill is the
n) X engaged an artist to paint a portrait, canvas and other essence of contract and
materials were to be supplied by A to painter. delivery of the goods is
o) X agreed to buy a painting from an artist. merely ancillary to the
p) Supply of wagons or coaches on the under frame supplied contract.
by the Railways. q) No - rendering of service
q) X delivered a manuscript to Y for printing. Y agreed to use and exercise of skill is the
his own ink and paper for printing the book. essence of contract and
r) X supplied a piece of cloth to a tailor to make a suit for him. delivery of the goods is
The tailor agreed to supply the lining material and buttons. merely ancillary to the
s) Supply of food by a hotel company to its resident contract.
customers, where no rebate is allowed if food is not taken r) No - rendering of service
by the customers. and exercise of skill is the
t) X sold a car to Y, on the payment of INR 6,000 per month essence of contract and
for 36 months at the end of which the ownership of the car delivery of the goods is
will be transferred to Y. It was agreed that X can recover the merely ancillary to the
car if Y makes a fault. contract.
s) No – indivisible contract of
multiple services
t) Yes – did not have any
option to return
14 X agreed to sell to Y a parcel of 700 bags of groundnuts lying in Void – Y cannot be compelled
his godown. Unknown to X, 109 bags had been stolen at the to accept 591 bags – as
time of contract. X tendered delivery of 591 bags. Y declined to contract for sale of an
accept. State the legal position. indivisible lot of specific goods
15 X agreed to sell a horse to Y on condition that Y will keep it for Agreement to sell has become
10 days on trial basis and have the option to return on the void and seller could not
expiry of 10 days, if he does not find it suitable. However, the recover the price from the
horse dies on the third day, without any fault of either the seller.
seller or buyer. State the legal position.
16 X entered into on a contract for the sale of 100 bags of wheat X must deliver 100 bags of
out of 1,000 bags lying in his godown. Unknown to X, the entire wheat or pay damages for the
stock was destroyed by fire. X declined to deliver. Comment. breach – unascertained goods

Rishabh Gaur
8527.931.436

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Rishabh Gaur 13 Sales of Goods Act

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