Sale of Goods Act, 1930 | CMA Inter Syllabus

Table of Content

1. Essential Conditions of a Contract of Sale
2. Transfer of Ownership
3. Conditions and Warranties
4. Performance of the Contract of Sale
5. Rights of Unpaid Seller
6. Auction Sales 
7. EXERCISE

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3. Contract Costing
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1. Essential Conditions of a Contract of Sale

The Sale of Goods Act, 1930 provides provisions that regulate the contracts entered into between entities for the transfer of goods or the agreement to transfer goods for a certain consideration. This transfer essentially relates to the transfer of title in the goods thereby effecting a sale. Therefore, through this transfer, the ownership of goods is transferred from one person to the next. Additionally such a transfer should be accompanied by a definite price and be done at a given period of time. Sale of goods is undertaken in specialized kinds of contract itself. This piece of legislation helps mostly in business and commerce. 

The economy of the country is immensely benefitted with such laws that regulate the transfer of goods by sale. This Act deals with the essential definitions, lays down provisions as to how sale can be made, the kinds of goods that make the subject matter of the contract, conditions and warranties relating to the goods and effect of such contracts. The Act additionally talks about rights and obligations of the parties to such contracts, performance of contract, provisions relation to lien, and remedies in case there is a breach in the contract.

Essential Conditions of a Sale and agreement to sell

Chapter II of the Sale of Goods Act, 1930 talks about formation of contract. In this section, the legislation lays down the provisions relating to contract of sale. 

Section 4 of the Act contemplates Sale and agreement to sell:

1. 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.
2. A contract of sale may be absolute or conditional.
3.  Where under a contract of sale the property in the goods is transferred from the seller to the buyer, the contract is called a sale, but where the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell.
4. An agreement to, sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred.

Diffrence between Contact of Sale and Agreement to Sell

Basis	Contract of sale	Agreement to sell
Transfer of property	The property of the goods passes from the buyer to the seller.	The transfer of property takes place at a future time or subject to certain conditions to be fulfilled.
Type of contract	It is an executed contract.	It is an executory contract.
Type of goods	Sales takes place only for existing and specific goods.	Future and contingent goods.
Risk of loss	If the goods are destroyed, the loss falls on the buyer despite the goods are in the possession of the seller.	If the goods are destroyed, the loss falls on the seller despite the goods are in the possession of the buyer.
Breach of contract	The seller can sue the buyer for price and for damages in case of breach by the buyer	The seller can sue for damages only in case of breach by the buyer.
General and particular property	It gives buyer to enjoy the goods as against the world at large including the seller.	It gives a right to the buyer against the seller to sue for damages.
Insolvency of the buyer	In the absence of lien over the goods the seller is to return the goods to the Official receiver or assignee. He is entitled to get the dividend declared by the Official receiver which will be at the reduced rate.	The seller is not bound to part with the goods until the price is paid to him.
Insolvency of the seller	The buyer, becoming the owner, is entitled to recover the same from the Official receiver or assignee.	The buyer cannot claim the goods but the dividend declared by the Official receiver or assignee.

 

Example: Mr. A entered into a contract to sell his car to Mr. B. The contract was set for discharge on a specific date and for a certain specified amount. However, if the certain amount was not given on the specified date, the sale would not take place. 
Whereas, Section 5 of the Act talks about the way in which a contract of sale is made: 

1.  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.
2. 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.

For the purposes of this Act, various terms have been defined under Section 2. For instance, for every contract of sale to take place, there must exist a buyer and the corresponding seller. A buyer as has been defined by the Act means a person who buys goods and a seller is one who sells or agrees to sell the goods. These goods may be specific goods, which means those goods that are identified and agreed upon at the time a contract of sale is made or future goods, which means those goods that are to be manufactured or produced or acquired by the seller after the making of the contract of sale. 

Through such contracts what is intended to be transferred is the “document of title to goods” which includes a bill of lading, dock warrant, warehouse keeper’s certificate, wharfingers’ certificate, railway receipt according to the Act. Additionally, the said contract needs to contain certain specifics as to the “price” which means the money consideration for a sale of goods; and as to the quality of goods which includes the state or condition of the goods to be transferred through the contract of sale. 

Essentials Conditions of a Contract of Sale

• One of the pre-requisites of a contract of sale is that it must involve two parties. For a contract of sale to fructify, the goods need to transfer from one entity to the next. The goods cannot be bought from one’s own self and be called a contract. 
• The other essential component is that the transfer must involve the transfer of title to the goods or the transfer of ownership of the goods in question, without which the contract of sale cannot be effected.
• A contract of sale is not complete unless there is a certain subject matter which is to be transferred in lieu of a specific amount of consideration. Section 2 (7) of the Act suggests what the meaning of “goods” is. It means every kind of moveable property other than actionable claims and money; and includes stock andshares, 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;
• Finally, the condition that needs to be present in such contracts of sale is the component of consideration. The consideration in such contracts needs to be a designated amount payable in money and not in exchange of other goods of similar value or otherwise.

Section 4(3) of the Sale of Goods Act specifically states that where the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell. Moreover, an agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred.

Whereas, Section 5 mandates that a contract of sale is made by an offer and its corresponding acceptance to deliver goods immediately in lieu of payment or at a later point of time. Such contracts could be in writing, by word of mouth or be implied from conduct of the parties.

Example: Ms. Anne asked her class of 60 students that whoever wanted to buy her books may keep ` 100 on her desk by 3PM with their name slip. This act of students of keeping the money on Ms. Anne’s desk with their name slips was an implied acceptance of Ms. Anne’s offer resulting in a binding contract.

However, the subject matter of the contract is a crucial component. The subject matter of the contracts are the goods which can be either existing or future goods. Such goods can additionally be goods perishing before making contract or goods perishing before sale but after agreement to sell.

Section 6 of the Act states that:

1. The goods which form the subject of a contract of sale may be either existing goods, owned or possessed by the seller, or future goods.
2. There may be a contract for the sale of goods the acquisition of which by the seller depends upon a contingency which may or may not happen.
3. Where by a contract of sale the seller purports to effect a present sale of future goods, the contract operates as an agreement to sell the goods.

The aforementioned section is about existing or future goods which may be sold through contracts of sale, that may be based on a contingent event, among other things.

Example: Ramcharan, a merchant, contracted with Bholu, a potato farmer, in January, to buy potatoes in June out of his fresh harvest. Ramcharan also determined a specific price at which he would be buying the specified quantity, irrespective of the market price of potatoes in June. These potatoes are the future goods.

However, Section 7 of the Act states that:

Where there is a contract for the sale of specific goods, the contract is void if the goods without the knowledge of the seller have, at the time when the contract was made, perished or become so damaged as no longer to answer to their description in the contract.

The aforementioned provision states in case of goods perishing before making of contract, such contracts would be void. This is because the subject matter ceases to exist even before the contract has been made.

Example: Mahesh asked his friend Rakesh to deliver 40 kilograms of mangoes for manufacturing mango jam. This delivery was supposed to be made to Mahesh in the next two months. However due to bad climatic conditions, the mangoes that were ripe and ready to be plucked, got spoilt and were no longer in a state to be delivered for manufacturing jam. Such a contract is now void.

Section 8 of the Act provides that

Where there is an agreement to sell specific goods, and subsequently the goods without any fault on the part of the seller or buyer perish or become so damaged as no longer to answer to their description in the agreement before the risk passes to the buyer, the agreement is thereby avoided.

Fixing of a definite price in the contract of sale is a sine qua non, of every such contract. Therefore, Section 9 of the Act talks about ascertainment of price, which states that the price in the contract of sale has to be fixed by the contract itself or be fixed in a manner agreed between the parties or determined by their course of dealing. However, the same provision suggests a solution to those situations where the price has not been fixed. In such cases, the buyer shall pay the seller a reasonable price which would be determined based on the relevant circumstances of each particular case. 

Example: A and B have a contract between them to perform their respective promises. A promised to sell to B his car, in return B promised to pay A ` 1 Lakh for the same. This is a contract of sale that is accompanied by a definite price. 

However, there may arise a situation where there is an agreement to sell at valuation. In such cases the Act stipulates under Section 10:

1. Where there is an agreement to sell goods on the terms that the price is to be fixed by the valuation of a third party and such third party cannot or does not make such valuation, the agreement is thereby avoided: Provided that, if the goods or any part thereof have been delivered to, and appropriated by, the buyer, he shall pay a reasonable price therefor. 
2. Where such third party is prevented from making the valuation by the fault of the seller or buyer, the party not in fault may maintain a suit for damages against the party in fault.

Also, the Act suggests provisions relating to the time of payment, which may not be so crucial unless mentioned within the contract. Section 11 states, unless a different intention appears from the terms of the contract, stipulations as to time of payment are not deemed to be of the essence of a contract of sale. Whether any other stipulation as to time is of the essence of the contract or not depends on the terms of the contract.

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2. Transfer of Ownership

The Sections 18 to 26 of the Sale of Goods Act, determine when the property passes from the seller to the buyer and other provisions relating to transfer of ownership. 

2.1 Rules for Ascertaining Passing of Property

1. Goods must be ascertained [Section 18]: As per section 18 in a contract for sale of unascertained goods, the property in the goods does not pass to the buyer unless and until the goods are ascertained. 
2. Intention of the parties for such transfer [Section 19]: As per section 19(1), in a contract for the sale of specific or ascertained goods, the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred. Section 19(2) provides that the intention of the parties is ascertained from the terms of the contract, the conduct of the parties and the circumstances of the case.

When intention of the parties cannot be ascertained, rules contained in Sections 20 to 24 are required to be applied for ascertaining the time of transfer of property and the same are discussed hereunder:

1. Specific goods [Sections 20 to 22]
   1. Specific goods in a deliverable state [Section 20]
       In an unconditional contract for the sale of specific goods in a deliverable state, the property in the goods passes to the buyer when the contract is made, and it is immaterial whether the time of payment of the price or the time of delivery of the goods, or both, is postponed. Goods are said to be in deliverable state when they are in such a state that the buyer would under the contract is bound to take delivery thereof.
   2. Specific goods to be put into a deliverable state [Section 21]
       Where there is a contract for the sale of specific goods and the seller is bound to do something to the goods for the purpose of putting them into a deliverable state, the property does not pass until such thing is done and the buyer has notice thereof.
   3. Specific goods in a deliverable state, when the seller has to do anything thereto in order to ascertain price [Section 22]
       If there is a contract for the sale of specific goods in a deliverable state, but the seller is bound to weigh, measure, test or do some other act or thing with reference to the goods for the purpose of ascertaining the price, the property does not pass until such act or thing is done and the buyer has notice thereof.
2. Unascertained goods [Section 23]
   1. Where there is a contract for the sale of unascertained or future goods by description and goods of that description and in a deliverable state are unconditionally appropriated to the contract, either by the seller with the assent of the buyer or by the buyer with the assent of the seller, the property in the goods thereupon passes to the buyer. Such assent may be expressed or implied, and may be given either before or after the appropriation is made.
   2. Delivery to carrier: Where, in pursuance of the contract, the seller delivers the goods to the buyer or to a carrier or other bailee for the purpose of transmission to the buyer and does not reserve the right of disposal, he is deemed to have unconditionally appropriated the goods for the purpose of the contract.
3. Goods on approval or ‘on sale or return’ [Section 24]
    In order to push up the sales generally there is a practice of sending goods to the customer with the clear cut understanding that he has option to approve or return the goods within a given period. This type of sales is known as “approval or sale or return”. In such cases, the transaction does not culminate into sale until the goods are approved by the customer and the property in goods still remains with the seller.

When goods are delivered to the buyer on approval or on sale or return or other similar terms, the property therein passes to the buyer:

1. When he signifies his approval or acceptance to the seller
2. When he does any other act adopting the transaction.
3. If he does not signify his approval or acceptance to the seller but retains the goods without giving notice of rejection, then, if a time has been fixed for the return of the goods, on the expiration of such time, and, if no time has been fixed, on the expiration of a reasonable time.

2.2 Reservation of Right of Disposal [Section 25]

Section 25(1) – Where there is a contract for the sale of specific goods or where goods are subsequently appropriated to the contract, the seller may, by the terms of the contract or appropriation, reserve the right of disposal of the goods until certain conditions are fulfilled. In such case, notwithstanding the delivery of the goods to a buyer, or to a carrier or other bailee for the purpose of transmission to the buyer, the property in the goods does not pass to the buyer until the conditions imposed by the seller are fulfilled.

Section 25(2) – Where goods are shipped or delivered to a railway administration for carriage by railway and by the bill of landing or railway receipt, as the case may be, the goods are deliverable to the order of the seller or his agent, the seller is prima facie deemed to reserve the right of disposal.

Section 25(3) – Where the seller of goods draws on the buyer for the price and transmits to the buyer the bill of exchange together with the bill of lading or, as the case may be, the railway receipt, to secure acceptance to payment of the bill of exchange, the buyer is bound to return the bill of lading or the railway receipt if he does not honour the bill of exchange, and, if he wrongfully retains the bill of lading or the railway receipt, the property in the goods does not pass to him.

Example: Magic Co. Ltd., based in England, shipped 50 tons of wool to Mr. Norton, based in Spain. Mr. Norton was supposed to claim the shipment through the bill of lading he received from Magic Co. Ltd. However, when the shipment arrived, Mr. Norton was not present in person at the dock. The wharfinger therefore took the shipment to his cloak room for safekeeping. Thereupon upon producing the bill of lading, the wharfinger will then deliver the same goods to the buyer. 

2.3 Effect of Destruction of Goods

As per section 26 of the Act, unless otherwise agreed, the goods remains at the seller’s risk until the property therein is transferred to the buyer, but when the property in goods is transferred to the buyer, the goods are at the risk of the buyer whether delivery of the goods has been made or not. Thus, risk prima facie passes with property unless otherwise is agreed by the parties. In other word, the parties may in the contract have different stipulation as to time of passing of risk irrespective of what is provided in section 26 of the Act.

2.4 Risk Prima Facie Passes with Property: Exceptions

The rule regarding risk passes with the property enshrined in section 26 is subject to the following exceptions:

1. This rule of 26 will apply only if there is no agreement to the contrary. It is permissible for the parties to provide in the agreement that although the property does not pass, the risk passes and they may fix the point of time when it is to pass.
2. Where delivery has been delayed through the fault of either party the buyer or the seller, the goods are at the risk of the party at fault as regards any loss which might not have been occurred but for such fault. The goods are at the risk of the party who is at fault in delay of delivery.
3. If there is a custom in that particular trade that the risk does not pass with property, in such a case the risk will pass as per the custom.
4. Risk and property may be separated by agreement between the parties. Section 40 of the Act also provides that where the seller agrees to deliver the goods at his own risk at a distant place from where they are, the buyer shall unless otherwise agreed, not take any risk of deterioration in the goods incidental to the transit. This will be discussed subsequently in the paragraph dealing with delivery of goods.

2.5 Transfer of Title by Non-Owners of Goods

As per section 27 of the Sale of Goods Act, where goods are sold by a person who is not the owner thereof and who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by conduct precluded from denying the seller’s authority to sell.

A buyer cannot get good title to the goods unless he purchased the goods from a person who is the owner thereof and sell them under the authority or with the consent of real owner.
“Nemo dat quod non habet” means that no one can give what he himself does not have. It means a non-owner cannot make valid transfer of property in goods. If the title of the seller is defective, the buyer’s title will also be subject to same defect. If the seller has no title, the buyer does not acquire any title although he might have acted honestly and might have acquired the goods after due payment. This rule is to protect the real owner of the goods. Though this doctrine seeks to protect the interest of real owners, but in the interest of the trade and commerce, there must be some safeguard available to a person who acquired such goods in good faith for value. 

Accordingly, the Act provides the following exceptions to this doctrine which seek to protect the interest of bona fide buyers:

1. Sale by a mercantile agent: If a mercantile agent is authorized by the owner of the goods to sell on his behalf, then such sale shall be valid. In such cases, the buyer can acquire a good title of the goods. This exception will be implemented subject to fulfilment of the following conditions:-
   • The person must be in possession of goods or documents of title to the goods in his capacity as a 
     mercantile agent and with the consent of his owner
        
   • The person must sell the goods while acting in the ordinary course of business.
   • The buyer must act in good faith without having any notice, at the time of contract that the mercantile agent has no authority to sell the goods.
2. Transfer of title by Estoppels: This exception is based on the principle of personal estoppels. Sometime, the real owner may lead the buyers by virtue of his conduct or words or by act to believe that the seller is the owner of the goods or has the authority to sell them. In such case, he may not thereafter deny the seller’s authority to sell.
3. Sale by a joint owner: As per Section 28, it there are several joint owners of goods, one of them if has sole possession of the goods by permission of the co-owners, then the property in goods is transferred to any person who buys them from such joint owner. In order to apply this exception, following conditions must be fulfilled:
   •  One of the several owners must be in sole possession of the goods.
   • The joint owner must have permission of co-owners.
   • The buyer must purchase goods in good faith.
   • The buyer should not have notice regarding the matter that the seller has no authority to sell.
4. Sale by person in possession under voidable contract: According to the Section 29 a person in possession of goods under a voidable contract which is not rescinded, can transfer a good title to the buyer. The buyer should purchase the goods in good faith and without notice of the seller’s defective title.
5. Sale by seller in possession after sale: Under Section 30(1) it is laid down that where a person has sold goods but he continues in possession of goods or of the documents of title to the goods, he may sell them to a third person and if such person obtains delivery thereof in good faith and without notice of the previous sale, the person can get a good title to them. In order to apply this exception, the seller must be in possession after sale of goods and there must be delivery or transfer of the goods or documents of title by the seller.
6. Sale by buyer in possession after sale: Under Section 30(2), it is laid down that where a buyer having bought or having agreed to buy goods, obtain with the consent of the seller the possession of the goods or documents of title to the goods, he can resell the goods to a bona fide transfer. If at the time of this sale, buyer was not in possession, then this exception will not apply.
7. Sale by an unpaid seller: If the unpaid seller has exercised right of lien or stoppage in transit, resells the goods, then the buyer acquires a good title as against the original buyer, even though the resale is not justified in the circumstances
8. Exception under other Acts: According to some Acts, a person although he is not the owner of the goods may sell the goods and pass a better title than he himself has. As for example-
   1. Under Section 169 of the Indian Contract Act, a finder of the goods has the right to sell.
   2. Under Section 176 of the Indian Contract Act, a pawnee of goods has the right to sell the
   3. goods pawned subject to satisfying some conditions.
   4. In certain cases, a special right of sale is given to officers of court, liquidators of the companies, receivers of insolvents estate, custom officers for dues and duties remaining unpaid etc.
   5. A person who takes a negotiable instrument in good faith and for value becomes the true owner even if he takes it from a thief or finder.

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3. Conditions and Warranties

Section 12(1) provides that a stipulation in a contract of sale with reference to goods which are the subject thereof may be a condition or a warranty.

3.1 Condition [Section 12(2)]

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. A condition in a contract of sale of goods is of fundamental nature for breach of which the buyer can repudiate the contract.

Example: Ramesh is the landlord who rents out his house to tenants. He put it down in the rent agreement that all tenants have to pay the rent upfront in cash and not in cheques or bank transfers and so on. This was because Ramesh thought the cheques and other instruments were subject to clearing, and he needed the money upfront on the first day on every month. With this mandatory condition, Ramesh added, that any diversion from this method of payment would lead to repudiation of the contract. If Mahesh is Ramesh’ tenant, and does not pay the money upfront in cash when the rent was due, then Ramesh is well within his rights to repudiate the contract. 

3.2 Warranty [Section 12(3)]

A warranty is a stipulation collateral to the main purpose of the contract, the breach of which gives rise to a claim for damages but not to a right to reject the goods and treat the contract as repudiated.

Whether a stipulation in a contract of sale is a condition or a warranty depends in each case on the construction of the contract. A stipulation may be a condition, though called a warranty in the contract.

Example: Standard Oil Company entered into a contract with XYZ Petrol Pump for supply of 1000 Litres of Petrol over a one year period. Therefore, Standard Oil decided to continuously sell the petrol in instalments over the one year. However at the end of the year it was found only 800 Litres were supplied and the remaining 200 Litres of petrol was denied by the petrol pump as there was no sale. Standard oil can now claim damages from petrol pump, as they had reserved the same for the petrol pump. 

3.3 Difference between Condition and Warranty

Sl. No.	Condition	Warranty
1	A condition is a stipulation which is essential to the main purpose of the contract.	A Warranty is a stipulation which is collateral to the main purpose of the contract.
2	The aggrieved party can repudiate the contract of sale in case there is a breach of a condition.	The aggrieved party can claim damages only in case of breach of a warranty.
3	A breach of condition may be treated as a breach of a warranty. This would happen where the aggrieved party is contended with damages only.	A breach of a warranty, can not be treated as a breach of a condition.

3.4 When condition to be treated as warranty?

Section 13 provides that where a contract of sale is-

• subject to any condition to be fulfilled by the seller, the buyer may waive the condition or elect to treat the breach of the condition as a breach of warranty and not as a ground for treating the contract as repudiated;
• not severable and the buyer has accepted the goods or part thereof, the breach of any condition to be fulfilled by the seller can only be treated as a breach of warranty and not as a ground for rejecting the goods and treating the contract as repudiated, unless there is a term of the contract, express or implied, to that effect.

Nothing in this section shall affect the case of any condition or warranty fulfilment of which is excused by law by reason of impossibility or otherwise.

3.5 Remedies Available to the Buyer for Breach of Conditions

1. Affected party may claim refund of price and reject the goods;
2. Elect to treat breach of condition as breach of warranty and claim damages or compensation; 
3. When the affected party treat, breach of condition as breach of warranty he cannot repudiate the contract but claim damages only;
4. No remedy is available when the fulfilment of condition is excused by law by means of impossibility or otherwise 13(3).

3.6 Consequences of Breach of Warranty

1. The breach of warranty gives right to a claim for damages but not to reject the goods and treat the contract as repudiated.
2. Buyer may sue for damages.
3. No remedy is available if the fulfilment of warranty becomes impossible by law.

3.7 Implied conditions are of the following types

1. Condition as to title [Section 14(a)]: In a contract of sale, unless the circumstances of the contract are such as to show a different intention, there is an implied condition on the part of the seller that, in the case of a sale, he has a right to sell the goods and that, in the case of an agreement to sell, he will have a right to sell the goods at the time when the property is to pass.
2. Sale by description [Section 15]: Where there is a contract for the sale of goods by description, there is an implied condition that the goods shall correspond with the description, and, if the sale is by sample as well as by description, it is not sufficient that the bulk of the goods corresponds with the sample if the goods do not also correspond with the description. Goods are sold by description when they are described in the contract, and the buyer contracted relying on such description of goods by the seller.
3. Condition as to quality or fitness [Section 16]: As per Sec 16 of the Sale of Goods Act, the buyer is supposed to satisfy himself about the quality of goods he purchased and is also charged with the responsibility of seeing that the goods suit the purpose for which they were purchased by him. Later on if the goods does not turn out to be as per his purpose, the seller cannot be asked to compensate him. This is based on the famous doctrine of Caveat Emptor which means ‘let the buyer beware’. 
4. ) Sale by sample [Section 17]: A contract of sale is a contract for sale by sample where there is a term in the contract, express or implied, to that effect.
   In the case of a contract for sale by sample there is an implied condition -
      
   • That the bulk shall correspond with the sample in quality.
   • That the buyer shall have a reasonable opportunity of comparing the bulk with the sample.
   • That the goods shall be free from any defect, rendering them un-merchantable, which would not be apparent on reasonable examination of the sample.

Example: David sold Indian variant of sunflower seeds at his shop and sold it in bulk for who ever wanted to buy the same. Tatiana tested the sample of the seeds at David’s shop and decided to order it in bulk. However when David sent the seeds in bulk, Tatiana decided to sow the seeds. Months later Tatiana discovered that the seeds were of Swedish variant and not the Indian variant that she has requested for. Tatian now wanted full refund for the seeds that were delivered to her by David. David is now bound to either reimburse her the whole amount or give her the quantity of Swedish variant that she requested for. 

In case of eatables and provisions, in addition to the implied condition as to merchantability, there is another implied condition that the goods shall be wholesome.

3.8 Implied warranties are of following types

• Warranty of quiet possession [Section 14 (b)]: If the buyer in any way is disturbed from enjoying the quiet possession of goods purchased because of seller’s defective title, the buyer can claim damages from seller. It is a warranty that neither the seller shall nor shall anybody claiming under a superior title or under his authority interfere with the quite enjoyment of the superior title or under his authority interfere with the quite enjoyment of buyer.
• Warranty of freedom from encumbrances [Section 14(c)]: The buyer is also entitled to additional warranty that the goods are free from any charge or right of any third party, not declared or known to the buyer. It is presumed that the goods are free of third parties charges, if it is otherwise the buyer is entitled to claim damages from the seller.
• Warranty as to quality or fitness by usage of trade: An implied warranty as to quality or fitness for a particular purpose may be annexed by usage of trade
• Warranty to disclose dangerous nature of goods: Where a person sells goods knowing that the goods are inherently dangerous or they are likely to be dangerous to the buyer and the buyer is ignorant of the danger, he must warn the buyer of the probable danger, otherwise he will be liable in damages

3.9 Doctrine of Caveat Emptor

The term “caveat emptor” is a Latin word which means “let the buyer beware”. This principle states that it is for the buyer to satisfy himself that the goods which he is purchasing are of the quality which he requires. If he buys goods for a particular purpose, he must satisfy himself that they are fit for that purpose. The doctrine of caveat emptor is embodied in Section 16 of the Act which states that “subject to the provisions of this Act and of any other law for the time being in force, there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale”. It is not the seller’s duty to give to the buyer the goods which are fit for a suitable purpose of the buyer. If he makes a wrong selection, he cannot blame the seller if the goods turn out to be defective or do not serve his purpose. 

The principle was applied in the case of Ward v. Hobbs, (1878), where certain pigs were sold by auction and no warranty was given by seller in respect of any fault or error of description. The buyer paid the price for healthy pigs. But they were ill and all but one died of typhoid fever. They also infected some of the buyer’s own pigs. It was held that there was no implied condition or warranty that the pigs were of good health. It was the buyer’s duty to satisfy himself regarding the health of the pigs.

Example: Sharon went to buy a second-hand car. Aaron was the owner of the second-hand car which clearly had a door broken. Sharon did not say anything but after buying the car she complained against Aaron for selling her a car with a broken door. Aaron is not bound to compensate for the damage that the car had which was easily discoverable or seen by Sharon. Neither is Sharon eligible to revoke the contract of sale on the same grounds. 

However, there are some exceptions to Section 16 which are as under:

1.  Where the buyer, expressly or by implication, makes it known to the seller the particular purpose for which the goods are required, so as to show that the buyer relies on the seller’s skill or judgment, and the goods are of a description which it is in the course of the seller’s business to supply (whether he is the manufacturer or producer or not), there is an implied condition that the goods shall be reasonably be fit for such purpose. However, in the case of a contract for the sale of a specified article under its patent or other trade name, there are no implied conditions as to its fitness for any particular purpose.
2. Where goods are bought by description from a seller who deals in goods of that description (whether he is the manufacturer or producer or not), there is an implied condition that the goods shall be of merchantable quality. However, if the buyer has examined the goods, there shall be no implied conditions as regards defects which such examination ought to have revealed.

 In order to apply the implied condition as to merchantability the following requirements must be satisfied: 

1. the seller should be dealer in goods of that description;
2. the buyer must have not opportunity to examine the goods or there must be some latent defect in the goods which would not be apparent on reasonable examination of the same.

Note: The term merchantability has not been defined in the Act. As per English Sale of Goods Act, goods of any kind are merchantable quality if they are as fit for the purpose or purposes for which goods of that kind are commonly brought as it is reasonable to expect having regard to any description applied to them, the price and all other relevant circumstances.

        c. An implied warranty or condition as to quality or fitness for a particular purpose may be annexed by the usage of trade. In some cases the purpose for which the goods are required may be ascertained from the acts and conducts of the parties to the sale or from the nature of the description of the article purchased. For example if a hot water bottle is purchased, the purpose for which it is purchased is implied in the thing itself. In such a case the buyer need not tell the seller the purpose for which the bottle is purchased. Similarly if a thermometer is purchased in common usage, the purpose of thermometer is well known, the buyer need not tell the seller.

        d. An express warranty or condition does not negative a warranty or condition implied by this Act unless inconsistent therewith.

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4. Performance of the Contract of Sale

Chapter IV of the Act describes the procedure for performance of the contract of sales. Section 31 provides that it is the duty of the seller to deliver the goods and the buyer to accept and pay for them, in accordance with the terms of the contract. The performance of contract involves the following-

• Payment and delivery are concurrent conditions
• Delivery
• Buyer’s right of examining the goods
• Acceptance of goods
• Buyer’s liability

Example: Mr. X sells his land mower to Mr. Y for ` 5,000. Mr. X and Mr. Y enter into a contract to that effect enlisting alongside the defects of the land mower. Mr. Y pays ` 5,000 to Mr. X and Mr. X delivers the land mower to his home. Mr. Y accepts it. This concludes a contract of sale.

Payment and delivery are concurrent conditions. Section 32 provides that the delivery of the goods and payment of the price are concurrent conditions unless otherwise agreed.

• The seller shall be ready and willing to give the possession of the goods to the buyer in exchange for the price.
• The buyer shall be ready and willing to pay the price in exchange for the possession of the goods.

Delivery

Section 33 provides that the delivery of goods sold may be made-

• by doing anything which the parties agree; or
• which has the effect of putting the goods in the possession of the buyer or of any person authorized to hold them on his behalf;

Section 35 provides that the seller of goods is not bound to deliver them until the buyer applies for the delivery apart from any express contract. 

Part delivery

Section 34 deals with the effect of part delivery. A delivery of part of goods, in progress of the delivery of the whole, has the same effect as a delivery of the whole for the purpose of passing the property in such goods. If a delivery of part of the goods is done with an intention of severing it from the whole, then it does not operate as a delivery of the reminder.

Rules as to delivery

Section 36 provides rules for the delivery as detailed below:

• Apart from any 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;
• Where under the contract of sale the seller is bound to send the goods to the buyer, but no time for
• sending them is fixed, the seller is bound to send them within a reasonable time;
• Where the goods at the time of sale are in the possession of a third person, there is no delivery by seller to buyer unless until such third person acknowledges to the buyer that he holds the goods on his behalf;
• This shall not affect the operation of the issue or transfer of any document of title to the goods;
• Demand or tender of delivery may be treated as ineffectual unless made at reasonable hour;
• Unless otherwise agreed, the expenses of and incidental to putting the goods into a deliverable state shall be borne by the seller.

Delivery of wrong quantity

The transfer of goods, in a sale, is expected to be delivered as agreed to in the contract. If there is a variation in the quantity of goods delivered, the following action may be taken by the buyer:

• Section 37(1) provides that where the sellers delivers to the buyer a quantity of goods less than he contracted to sell, the buyer may reject them. If the buyer accepts the goods so delivered he shall pay for them at the contract rate
• Section 37(2) provides that where the seller delivers to the buyer a quantity of goods larger than he contracted to sell, the buyer may accept the goods included in the contract and the reject the rest. Or he may reject the whole. If the buyer accepts the whole of the goods so delivered, he shall pay for them at the contract rate;
• Section 37(3) provides that where the seller delivers to the buyer the goods he contracted to sell 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 reject or may reject the whole;
• Section 37(4) provides that the provisions of this section are subject to any usage of trade, special agreement or course of dealing between the parties.

Instalment deliveries

Section 38(1) provides that the buyer of the goods is not bound to accept the delivery of goods by instalments unless otherwise agreed to between both the parties.

Section 38(2) provides that 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

However, it is a question in each case, depending on the terms of the contract and circumstances of the case as to whether the breach of contract is:  

• a repudiation of the whole contract; or
• whether it is severable breach giving rise to a claim for compensation but not to treat the whole contract as repudiated.

Delivery to carrier or wharfinger

Section 39(1) provides that if the seller is authorized or required to send the goods to the buyer, through a carrier whether it is named by the buyer or not or delivery of the goods to a wharfinger for safe custody, the delivery of goods to such a carrier or wharfinger shall be deemed to be a delivery of the goods to the buyer.

Section 39(2) provides that the seller shall make contract with the carrier or wharfinger on behalf of the buyer as may be reasonable having regard to the nature of the goods and other circumstances of the case. If the seller omits so to do and the goods are lost or damaged in the course of transit or whilst in the custody of the wharfinger, the buyer:

• may decline to the treat the delivery to the carrier or wharfinger as a delivery to himself; or
• may hold the seller responsible for damages.

Section 39(3) provides that 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. If the seller fails so to do, the goods shall be deemed to be at his risk during such sea transit.

Delivery of goods at a distant place

Section 40 provides that 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.

Buyer’s right of examining the goods

According to Section 41, the buyer is having right to examine the goods, which have not been examined by him previously before acceptance. The examination of the goods by the buyer is for the purpose of ascertaining whether they are in conformity with the contract. The seller is also bound to afford an opportunity to the buyer for examining the goods for the purpose of ascertaining whether they are in conformity with the contract.

Acceptance

Section 42 provides that 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.

Examples:

 a) Ram sold his car to Shyam for ` 1 Lakh. Shyam paid the same in advance and Ram delivered the car after two days of the payment. Shyam immediately rented the car out to a company ABC Ltd. for an amount for six months. However, Shyam realized that Ram had sold the car with a scratch on its body which was clearly visible even at the time of delivery. Shyam now refuses to accept the car after one month and seeks full refund of the car. However, Shyam will not succeed in the same, because he had accepted it at the time of delivery thereby discharging the contract.

Return of rejected goods

Section 43 provides that where goods are delivered to the buyer and he refuses to accept them, the buyer is not bound to return them to the seller. It is sufficient if he intimates to the seller that he refuses to accept them.

Liability of the buyer

Section 44 provides that where 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 take delivery of the goods he is liable to the seller 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. The rights of the seller shall not be affected by this section where the neglect or refusal of the buyer to take delivery amounts to a repudiation of the contract.

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5. Rights of Unpaid Seller

According to Section 45(1), the seller of the goods is deemed to be ‘unpaid seller’ within the meaning of this Act-   

• when the whole of the price has not been paid or tendered;
• when a bill of exchange or other negotiable instrument has been received as conditional payment, and the condition on which it was received has not been fulfilled by reason of the dishonour of the instrument or otherwise;

Section 45(2) defines the term ‘seller’ as including any person who is in the position of a seller as for instance an agent of the seller to whom the bill of lading has been endorsed or a consignor or agent who has himself paid, or is directly responsible for the price.

5.1 Rights of an Unpaid Seller against the Goods

According to Section 46, an unpaid seller’s right against the goods are: 

1. A lien or right of retention
2. The right of stoppage in transit. 
3. The right of resale.
4. The right to withhold delivery

Right of Lien [Sections 47-49 and 54]: An unpaid seller who is in possession of goods sold, may exercise his lien on the goods, i.e., keep the goods in his possession and refuse to deliver them to the buyer until the payment or tender of the price in cases where:

•  the goods have been sold without any stipulation as to credit; or
• the goods have been sold on credit, but the term of credit has expired; or
• the buyer becomes insolvent.

The lien depends on physical possession. The seller’s lien is possessory lien, so that it can be exercised only so long as the seller is in possession of the goods. It can only be exercised for the non-payment of the price and not for any other charges.

Examples: 

1. Rajnish sold his car to Manish under a contract. However, Manish gave Rajnish a cheque for the amount due. However, Manish became insolvent and filed for bankruptcy. Since the cheques would not get encashed anymore, Rajnish withheld the car by exercising his right of lien until the payment under the contract of sale was made for the same.
2.   XYZ Co. Ltd. manages the Haldia Port. They have constructed a godown on their wharf to store goods. Diana Ship came to the wharf and alighted their goods. Mr. Prem Bhageria had to claim the goods from the wharf. However, Mr. Bhageria did not turn up on the day the ship arrived. Therefore, XYZ Co. Ltd. kept the consignment of goods in their store room. After 3 months, Mr. Bhageria came to claim the goods, however, XYZ Co. Ltd. asked Mr. Bhageria to pay ` 20 Lakhs in rent for the store room facility utilized by the goods. Mr. Bhageria refused to pay the same. XYZ Co. Ltd. then refused to release the goods to Mr. Bhageria by exercising their right of lien over the goods. 
   

A lien is lost – 

1. When the seller delivers the goods to a carrier or other bailee for the purpose of transmission to the buyer, without reserving the right of disposal of the goods;
2. When the buyer or his agent lawfully obtains possession of the goods;
3. By waiver of his lien by the unpaid seller

Stoppage in transit [Sections 50-52]: The right of stoppage in transit is a right of stopping the goods while they are in transit, resuming possession of them and retaining possession until payment or tender of the price.The right to stop goods is available to an unpaid seller:

• when the buyer becomes insolvent; and
• the goods are in transit.

The buyer is insolvent if he has ceased to pay his debts in the ordinary course of business, or cannot pay his debts as they become due. It is not necessary that he has actually been declared insolvent by the court.

The goods are in transit from the time they are delivered to a carrier or other bailee like a wharfinger or warehouse keeper for the purpose of transmission to the buyer and until the buyer takes delivery of them.

The transit comes to an end in the following cases:

1. If the buyer obtains delivery before the arrival of the goods at their destination;
2. If, after the arrival of the goods at their destination, the carrier acknowledges to the buyer that he holds the 
   goods on his behalf, even if further destination of the goods is indicated by the buyer;
3. If the carrier wrongfully refuses to deliver the goods to the buyer.

If the goods are rejected by the buyer and the carrier or other bailee holds them, the transit will be deemed to continue even if the seller has refused to receive them back.

The right to stop in transit may be exercised by the unpaid seller either by taking actual possession of the goods or by giving notice of the seller’s claim to the carrier or other person having control of the goods. On notice being given to the carrier, he must redeliver the goods to the seller who must pay the expenses of the re-delivery.

The seller’s right of lien or stoppage in transit is not affected by any sale on the part of the buyer unless the seller has assented to it. A transfer, however, of the bill of lading or other document of seller to a bona fide purchaser for value is valid against the seller’s right.

Right of re-sale [Section 54]:

The unpaid seller may re-sell:

• where the goods are perishable;
• where the right is expressly reserved in the contract;
• where in exercise of right of lien or stoppage in transit, the seller gives notice to the buyer of his intention to re-sell, and the buyer, does not pay or tender the price within a reasonable time.

If on a re-sale, there is a deficiency between the price due and amount realised, he is entitled to recover it from the buyer. If there is a surplus, he can keep it. He will not have these rights if he has not given any notice and he will have to pay the buyer profit, if any, on the resale.

Example: Ram contracted with Shyam to buy 50 litres of Milk from Shyam on 16th March, 2020 for ` 100 per litre. However, Ram failed to claim the consignment on the said date. Shyam runs the risk of getting the milk spoiled. Ram failed to claim the consignment until 20th March, 2020 and Shyam had to sell the same to Dham. Shyam is justified in doing so even though he had a valid contract with Ram with respect to the same milk. 

Rights to withhold Delivery

If the property in the goods has passed, the unpaid seller has right as described above. If, however, the property has not passed, the unpaid seller has a right of withholding delivery similar to and co-extensive with his rights of lien and stoppage in transit.

5.2 Rights of an unpaid seller against the buyer

An unpaid seller in addition to his rights against the goods has the following rights against the buyer personally. 

1. Suit for price [Section 55]: Where the property in goods has passed to the buyer, and the buyer wrongfully neglects or refuses to pay the price, the seller can sue the buyer for price.
2. Suit for damages for non-acceptance [Section 56]: Where the buyer wrongfully neglects or refuses to accept and pay for the goods, the seller can sue him for damages for non-acceptance of the goods.
3. Suit for repudiation: Where the buyer repudiates the contract before the date of delivery, the seller may wait till the date of delivery or may treat the contract as cancelled and sue for damages for breach.
4. Suit for interest [Section 61]: Where there is specific agreement between the seller and the buyer regarding interest on the price of goods, the seller may claim it from the date when payment becomes due. If there is no specific agreement, the interest is payable from the date notified by the seller to the buyer.

Buyer’s Remedies against Seller for Breach of Contract

A buyer also has certain remedies against the seller who commits a breach. These are:

1. Suit for Damages for Non-Delivery [Section 57]: When the seller wrongfully neglects or refuses to deliver the goods to the buyer, the buyer may sue the seller for damages for non-delivery. This is in addition to the buyer’s right to recover the price, if already paid, in case of non-delivery.
2. Suit for price: Where the buyer has paid the price and the goods are not delivered to him, he can recover the amount paid.
3. Suit for specific performance [Section 58]: When the goods are specific or ascertained, a buyer may sue the seller for specific performance of the contract and compel him to deliver the same goods. The court orders for specific performance only when the goods are specific or ascertained and an order for damages would not be an adequate remedy. Specific performance is generally allowed where the goods are of special significance or value e.g. a rare paining, a unique piece of jewellery, etc
4. Suit for Breach of Warranty [Section 59]: Where there is a breach of warranty by the seller, or where the buyer elects or is compelled to treat the breach of condition as breach of warranty; the buyer cannot reject the goods. The buyer may:
   
   • set up the breach of warranty in extinction or diminution of the price payable by him, or
   • sue the seller for damages for breach of warranty.
5. Repudiation of contract before the due date [Section 60]: Section 60 provides that where either party to a contract of sale repudiates the contract before the date of delivery, the other may either treat the contract as subsisting or wait till the date of delivery, or he may treat the contract as rescinded and sue for damages for the breach.
6. Suit for interest: The buyer may recover such interest or special damages, as may be recoverable by law. He may also recover the money paid where the consideration for the payment of it has failed. In the absence of a contract to the contrary, the court may award interest, to the buyer, in a suit by him for the refund of the price in a case of a breach on the part of the seller, at such rate as it thinks fit on the amount of the price from the date on which the payment was made.

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6. Auction Sales 

Section 64 provides that in the case of a sale by auction-    

• where goods are put up for sale in lots, each lot is prima facie deemed to be the subject of a separate contract of sale;
• the sale is complete when the auctioneer announces its completion by the fall of the hammer or in other customary manner; and until such announcement is made, any bidder may retract his bid;
• a right to bid may be reserved expressly by or on behalf of the seller and, where such right is expressly so reserved, but not otherwise, the seller or any one person on his behalf may, subject to the provisions hereinafter contained, bit at the auction;
• where the sale is not notified to be subject to a right to bid on behalf of the seller, it shall not be lawful for the seller to bid himself or to employ any person to bid at such sale, or for the auctioneer knowingly to take any bid from the seller or any such person; and any sale contravening this rule may be treated as fraudulent by the buyer;
• the sale may be notified to be subject to a reserved or set up price;
• if the seller makes use of pretended bidding to raise the price, the sale is voidable at the option of the buyer.

Section 64 does not deal with the question of passing of the property at auction sale but merely deals with completion of the contract of sale which takes place at the fall of the hammer or at the announcement of the close of the sale in other customary manner by the auctioneer. In other words, all that happens at the fall of the hammer or at the announcement of the closure of the sale in other customary manner is that a contract of sale comes into existence and parties get into the relationship of a promisor and a promisee in an executory contract.

Effect of Tax [Section 64A]

In the event of any tax being imposed, increased, decreased or remitted in respect of any goods after the making of any contract for the sale or purchase of such goods without stipulations as to the payment of tax where tax was not chargeable at the time of the making of the contract, or for the sale or purchase of such good tax- paid where tax was chargeable at that time.

1. if such imposition or increase so takes effect that the tax or increased tax, as the case may be, or any part of such tax is paid or is payable, the seller may add so much to the contract price as will be equivalent to theamount paid or payable in respect of such tax or increase of tax, and he shall be entitled to be paid and to sue for and recover such addition, and
2. if such decrease or remission so takes effect that the decreased tax only, or no tax, as the case may be, is paid or is payable, the buyer made deduct so much from the contract price as will be equivalent to the decrease of tax or remitted tax, and he shall not be liable to pay, or be sued for, or in respect of, such deduction.

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EXERCISE

• Multiple Choice Question:

 1. A sale is complete when the following is transferred from one.

1. Money
2. Ownership
3. Usage
4. None of the above

Answer: b. Ownership

 2. The Consideration in contract of sale must be:

1. Immovable
2. Movable 
3. Price
4. None of the above

Answer: c. Price

3. The subject matter of the contract must be: 

1. Sale
2. Product
3. Service
4. None of the above

Answer: a. Sale

4. On which date was the Sale of Goods enforced?

1. 1948
2. 1930
3. 1932
4. 1951

Answer: b. 1930

5. As per Sale of Goods Act, this is not included:

1. Growing crop
2. Money
3. Table
4. Goodwill

Answer: b. Money

• State TRUE or FALSE

1. Condition is a stipulation which is essential to the main purpose of the contract. True
2. The sale of goods Act only deals only with goods that are immovable in nature. False
3. Warranty is a stipulation which is collateral to the purpose of the contract. True
4. Caveat Emptor is the concept of “let the buyer beware”. True
5. The subject matter of the contract under Sale of Goods Act must be goods. True
6. Sale under Sale of Goods Act is an executory contract. False

• Fill in the blanks

1. The goods which form the subject of a contract of sale may be either existing goods, owned or possessed by the seller, or Future good
2. The Price in a contract of sale may be fixed by the contract or may be left to be fixed in manner thereby agreed or may be determined by the course of dealing between the parties.
3. A contract of sale is made by an offer to buy or sell goods for a price and the Acceptance of such offer.
4. 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
5. A contract of sale may be Absolute or conditional.
   

• Short Essay Type Questions

1.What are the rights of unpaid seller against goods?

Answer :

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2. Discuss the provisions on the re-selling of goods.

Answer :

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3. Write short notes on-
(a) Auction Sale
(b) Doctrine of Caveat Emptor
(c) Agreement to Sell

Answer :

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• Essay Type Questions

1. Discuss the difference between condition and warranty.

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2. Explain the concept of Caveat Emptor

Answer :

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 3. What are the rights and duties of a seller?

Answer :

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4. What are the rights and duties of a buyer? 

Answer :

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5. What are the implied conditions in a contract of sale by sample?

Answer :

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6. What is a contract of sale?

Answer: 

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 7. What is an agreement to sell?

Answer:

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 8. Distinguish between a sale and an agreement to sell?

• Unsolved Cases

 1. Ram agreed to send a consignment to Shyam via a ship. This was done on the basis of an agreement where Shyam would have to pay ` 1,000 for the consignment upon delivery. However, Shyam became insolvent and Ram got to know about it before he despatched the goods for delivery to Shyam. Can Ramexercise his right of lien over goods as an unpaid seller against goods? 

Answer :

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 2. Sita asked for 100 Litres of mustard oil from Gita. However when Gita delivered the same through her agent to Sita, Sita refused saying that it was palm oil and was not what she had contracted for. Gita’s mustard oil therefore was not sold and she suffered damages. What can Gita do in this case where there is no default on her part and Sita wrongfully refused to take delivery of the goods within reasonable time?

Answer :

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