Performance of the Contract

• According to Section 31, it is the duty of the seller to deliver the goods under the
contract of sale of goods.
• Delivery of goods, according to Section 2(2), means voluntary transfer of
possession of goods from one person to another.
• Delivery of the goods sold may be made by doing anything which the parties
agree shall be treated as delivery or which has the effect of putting the goods in
the possession of the buyer or his agent as per Section 33 of the Act.
• It means that the delivery may either be actual or symbolic or constructive.
Performance of the Contract

Actual Delivery:
When the goods which constitute the subject-matter of the contract, are handed over
by the seller to the buyer, there is the actual delivery of the goods. The goods
don’t need to be delivered immediately.
• Symbolic Delivery:
In symbolic delivery, there is no actual transfer of the goods from one hand to
another but some symbols representing those goods are transferred from one person
to another so that the transferee can have control over the goods. In this case, the
goods may remain where they are but the control over them shifts from one person
to another. For example, the key of the warehouse is transferred by which a
transferee has control over the goods.
Performance of the Contract

Constructive Delivery:
when without any change in physical or actual custody of the goods, there takes
place a change in the legal character of the goods, the delivery is said to be
constructive.
Example – where the seller agrees to hold the goods for the buyer.
Part Delivery u/s 34

• Section 34 of the Sale of Goods Act, 1930, deals with the "Effect of Part
Delivery," stating that a partial delivery, while in the course of delivering the
whole, has the same effect as a full delivery for the purpose of transferring
ownership, unless the part delivery is intended to sever it from the whole.
• A delivery of part of goods, in progress of the delivery of the whole, has the same
effect, for the purpose of passing the property in such goods, as a delivery of the
whole; but a delivery of part of the goods, with an intention of severing it from the
whole, does not operate as a delivery of the remainder
Rule as to Delivery u/s 36

• Whether it is for the buyer to take possession of the goods or for the seller to send
them to the buyer is a question depending in each case on the contract, express or
implied, between the parties.
• Apart from any such contract, goods sold are to be delivered at the place at which
they are at the time of the sale, and goods agreed to be sold are to be delivered at
the place at which they are at the time of the agreement to sell, or, if not then in
existence, at the place at which they are manufactured or produced.
Delivery of wrong quantity u/s 37

• Where the seller delivers to the buyer a quantity of goods less than he contracted
to sell, the buyer may reject them, but it the buyer accepts the goods so delivered
he shall pay for them at the contract rate.
Effects of Delivery of Wrong Quantity

• 1. Short Delivery
• 2. Excess Delivery
• 3. Delivery of Mixed Goods
• Instalment Deliveries
• Delivery to carrier or wharfinger
• Sea Transit
Short Delivery

• Where the seller delivers to the buyer a quantity of goods less than, he contracted
to sell, the buyer may reject them.
• In Behrend & Co. v. produce Broker Co. (1920) – the ship which brought cotton
seed delivered only a part of it and then left for other ports. It returned three weeks
afterwards to deliver the rest. The buyer was held entitled to reject.
• Similarly where sewing cotton was purchased and the buyer discovered some 13
months after delivery that it was short in quantity he recovered damages for short
delivery. The buyer can however accept short delivery.
Excess Delivery

• Where the seller delivers a quantity larger than he contracted to sell, the buyer,
may accept the goods included in the contract and reject the rest, or he may reject
the whole.
• He is not bound to accept the contract quantity and reject only the excess.
Delivery of Mixed Goods
• Where the seller delivers the goods mixed with goods of a different description
not included in the contract, the buyer may accept the goods which are in
accordance with the contract and reject the rest or may reject the whole.
Instalment Deliveries u/s 38

• (1) Unless otherwise agreed, the buyer of goods is not bound to accept delivery
thereof by instalments.
• (2) Where there is a contract for the sale of goods to be delivered by stated
instalments which are to be separately paid for, and the seller makes no delivery
or defective delivery in respect of one or more instalments, or the buyer neglects
or refuses to take delivery of or pay for one or more instalments, it is a question in
each case depending on the terms of the contract and the circumstances of the
case, whether the breach of contract is a repudiation of the whole contract, or
whether it is a severable breach giving rise to a claim for compensation, but not to
a right to treat the whole contract as repudiated.
Delivery to Carrier or Wharfinger u/s 39

• (1) Where, in pursuance of a contract of sale, the seller is authorised or required to

send the goods to the buyer, delivery of the goods to a carrier, whether named by
the buyer or not, for the purpose of transmission to the buyer, or delivery of the
goods to a wharfinger for safe custody, is prima facie deemed to be a delivery of
the goods to the buyer.
• (2) Unless otherwise authorised by the buyer, the seller shall make such contract
with the carrier or wharfinger on behalf of the buyer as may be reasonable having
regard to the nature of the goods and the other circumstances of the case. If the
seller omits so to do, and the goods are lost or damaged in course of transit or
whilst in the custody of the wharfinger, the buyer may decline to treat the delivery
to the carrier or wharfinger as a delivery to himself, or may hold the seller
responsible in damages.
Delivery to Carrier or Wharfinger u/s 39

• (3) Unless otherwise agreed, where goods are sent by the seller to the buyer by a
route involving sea transit, in circumstances in which it is usual to insure, the
seller shall give such notice to the buyer as may enable him to insure them during
their sea transit, and if the seller fails so to do, the goods shall be deemed to be at
his risk during such sea transit.
Sea Transit u/s 39(3)

• where goods are sent by the seller to the buyer by a route involving sea transit, in
curcumstances in which it is usual to insure, the seller shall give such notice to the
buyer as may enable him to insure them during their sea transit, and if the seller
fails so to do, the goods shall be deemed to be at his risk during such sea transit.

• Contracts involving Sea Routes are known as International Sales –

1. Free on Board (F.O.B)
2. Cost, Insurance & Freight (C.I.F)
3. Ex ship
F.O.B contracts

• It means Free on Board.

• The seller has to place the goods on board a ship at his own expense. He has only
to bear the expenses of loading the goods. Thereafter the goods are at the buyer’s
risk and he is responsible for freight, insurance and subsequent expenses.

• Property passes to the buyer as soon as the goods are put on board the ship. This
will be so even if the goods are not specific or ascertained. The buyer gets the
insurance interest and he can protect himself by insurance.
C.I.F Contracts

• It indicates that the price is to include cost, insurance and freight.

• These contracts are widely used for sea borne commerce.
• The seller in the absence of any provisions to the contrary is bound by his contract to do
the following things –
1. To make out an invoice of the goods sold.
2. To ship at the port of shipment goods of the description contained in the contract.
3. To procure a contract of affreightment under which the goods will be delivered at the
destination contemplated by the contract.
4. To arrange insurance
5. Send and tender to the buyer all shipping documents like invoice, bill of delivery,
policy of insurance etc.
C.I.F Contracts

• The property in goods passes to the buyer on the delivery of document.

• Main difference between FOB and CIF contracts is in the former property passes
when the goods are put on a board a ship but latter the property passes when
documents are tendered and the buyer receives them by paying the price.
Ex Ship Contracts

• The seller has to deliver the goods to the buyer at the port of destination.

• Lord Sumner explained the incidence of Ex ship contract in Yangtsze ins

Association v. Lukhmanjee (1918)
• The seller has to cause delivery to be made to the buyer from a ship which has
arrived at the port of delivery and has reached a place therein which is usual for
the delivery of goods of the kind in question.
• The seller has therefore to pay the freight or otherwise release the shipowner’s
lien and to furnish the buyer with an effectual direction to the ship to deliver.
Deterioration during transit u/s 40

• Where the seller of goods agrees to deliver them at his own risk at a place other
than that where they are when sold, the buyer shall, nevertheless, unless otherwise
agreed, take any risk of deterioration in the goods necessarily incident to the
course of transit.
Acceptance u/s 42

• A buyer cannot reject the goods after he had accepted them.

• The buyer is deemed to have accepted the goods

- when he intimates to the seller that he has accepted them, or
- when the goods have been delivered to him and he does any act in relation to them
which is inconsistent with the ownership of the seller, or
- when, after the lapse of a reasonable time, he retains the goods without intimating
to the seller that he has rejected them.
Right of Examination u/s 41

• Buyer’s right of examining the goods—

(1) Where goods are delivered to the buyer which he has not previously examined,
he is not deemed to have accepted them unless and until he has had a reasonable
opportunity of examining them for the purpose of ascertaining whether they are
in conformity with the contract.

(2) Unless otherwise agreed, when the seller tenders delivery of goods to the buyer,
he is bound, on request, to afford the buyer a reasonable opportunity of examining
the goods for the purpose of ascertaining whether they are in conformity with the
contract.
Duty after Rejection u/s 43

• Buyer not bound to return rejected goods

Unless otherwise agreed, where goods are delivered to the buyer and he refuses to
accept them, having the right so to do, he is not bound to return them to the seller,
but it is sufficient if he intimates to the seller that he refuses to accept them.
According to section 42, if the buyer retains the goods beyond reasonable time
without rejecting them he is deemed to have accepted them. Thus, if the buyer
wants to reject he must intimate the seller his intention to reject. But he is bound to
do no more. He is not bound to return the goods to the seller.
The principle applies when the rejection is rightful and there is no agreement to the
contrary.
Liability of Buyer for refusing to receive goods u/s 44

• When the seller is ready and willing to deliver the goods and requests the buyer to
take delivery, and the buyer does not within a reasonable time after such request
take delivery of the goods, he is liable to the seller for any loss occasioned by his
neglect or refusal to take delivery, and also for a reasonable charge for the care
and custody of the goods:
• Provided that nothing in this section shall affect the rights of the seller where the
neglect or refusal of the buyer to take delivery amounts to a repudiation of the
contract.