“A condition is a stipulation which goes to the root of the contract, the breach of which gives rise to a right to treat the contract as repudiated under sale of goods act, 1930”.Discuss
Introduction
Sales of Goods Act are all very old mercantile law one. Product sales contract is a special type of one. After this section of the law, the laws of supply and sell different products of complimentary products in 1930.The contract law was passed in sales. The basic provisions of law applicable to the contract of sale made ??to shrink. The use of the word condition seems to have originated in the 17th century. And the sale of goods law of 1930 determines if the term in section 12 (2). According to this definition case can be defined as a condition which is very vital for the performance of this contract complete and accurate by the party and the previous one is something to the other party’s commitment to the performance of his side. Where a particular stipulation in the contract is a condition or warranty depends on the interpretation of the terms of the contract. Just stating “the terms of the contract” in the agreement does not mean that all the conditions listed are “conditions” within the meaning of section 12 (2).
Stipulation
A stipulation is an agreement between opposing parties prior to a pending hearing or trial. For example, certain facts to both parties and the court therefore stipulate that the information may be argued.[1] A condition is a stipulation which is essential to the main purpose of contract, and the breach of which gives the aggrieved party a right to terminate the contract. The word “stipulation” can be used in a variety of legal senses. One sense, it refers to a restriction or condition which is linked to an agreement of understanding that failure to meet the conditions for terminating the contract on the basis of, or access may be denied. In other words, it refers to a case in which a mutually agreed upon decision of the rival attorneys, attorneys or court order actually agree to settle out of time to save a point.
Sale of goods act, 1930
“A contact of sale of goods is a contract whereby the seller transferor agrees to transfer the property in goods to the buyer for a price. There may be a contract of sale between one party – owner, and another” [Sec 4(1)]. It shows that the expression “contract of sale” includes both a sale where the seller transfers the ownership of the goods to the buyer, and an agreement to sell where the ownership of goods is to be transferred at a future time or subject to some conditions to be fulfilled later on.
The following are thus the essentials of a contract of sale of goods:
(i) Bilateral contract:It is a bilateral contract because the property in goods has to pass from one party to another. A person cannot buy the goods himself.
(ii) Transfer of property:The object of a contract of sale must be the transfer of property (meaning ownership) in goods from one person to another.
(iii) Goods:The subject matter must be some goods.
(iv) Price or money consideration:The goods must be sold for some price, where the goods are exchanged for goods it is barter, not sale.
(v) All essential elements of a valid contract must be present in a contract of sale.
Formalities of a contract of sale[2]
a) A contract of sale is made by an offer to buy or sell goods for a price and the acceptance of such price. A contract may provide for the immediate delivery of goods or immediate payment of the price or both, or for the delivery or payment by instalments. Or that the delivery of payments or both shall be postponed
b) Subject to the provisions of any law for the time being enforced, a contract of sale may be in writing or by the word of mouth or may be impliedly or may be implied from the conduct of the parties.
A statement, such as a proposal to create a store display products displayed or advertised price even invited to conduct you in the customer’s acceptance of an offer to buy the shopkeeper is not bound. For example, a proposal to invite the behaviour, which is the obligation of the person making it and no negotiation, will not be accepted without being able to separate from.[3] Where However, the accessibility of a proposal for such a thing to a self service petrol pump to fill the tank of a vehicle or a self service kiosk, select the item or for the sale of the product as an automatic acceptance by the customer’s behaviour can not arise about the vending machine to get the seller’s consent have.
The Price
Ascertainment of price:
(1) 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.
(2) Where the price is not determined in accordance with the foregoing provisions, the buyer shall pay the seller a reasonable price. What is a reasonable price is a question of fact dependent on the circumstances of each particular case.
Agreement to sell at valuation:
(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 therefore.
(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.
Stipulations as to time
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 stipulations as to time are of the essence of the contract or not depend on the terms of the contract.
Condition and Warranty
A stipulation in a contract of sale with reference to goods which are the subject thereof may be a condition or a warranty. 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 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.[4] 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.
· Condition: If the stipulation forms the very basis of the contract or is essential to the main purpose of the contract. it is a condition. The breach of the condition gives the aggrieved party a right to treat the contract as repudiated. Thus, if the seller fails to fulfill a condition, the buyer may treat the contract as repudiated, refuse the goods and. if he has already paid for them, and recover the price. He can also claim damages for the breach of contract.
· Warranties:If the stipulation is collateral to the main purpose of the contract, i.e. is a subsidiary promise, it is a warranty. The effect of a breach of a warranty is that the aggrieved party cannot repudiate the contract but can only claim damages. Thus, if the seller does not fulfill a warranty. The buyer must accept the goods and claim damages for breach of warranty.[5]
Section 11 states that the stipulation as to time of payment are not to be deemed conditions (and hence not to be of the essence of a contract of sale) unless such an intention appears from the contract. Whether any other stipulation as to time (e.g., time of delivery) is the essence of the contract or not depends on the terms of the contract.
When condition to be treated as warranty
In the followingcases, a contract is not avoided even on account of breach of a condition.
(1) 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.
(2) Where a contract of sale is 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.
(3) Nothing in this section shall affect the case of any condition or warranty fulfillment of which is excused by law by reason of impossibility or otherwise.
Implied conditions as to quality
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, except as follows:-
(1) Where the buyer, expressly or by implication, makes 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 fit for such purpose:
Provided that, in the case of a contract for the sale of a specified article under its patent or other trade name, there is no implied condition as 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;
PROVIDED that, if the buyer has examined the goods, there shall be no implied condition as regards defects which such examination ought to have revealed.
(3) An implied warranty or condition as to quality or fitness for a particular purpose may be annexed by the usage of trade.
(4) An express warranty or condition does not negative a warranty or condition implied by this Act unless inconsistent therewith.
Passing of Property or Transfer of Ownership
The sole purpose of a sale is the transfer of ownership of goods from the seller to the buyer.[6] It is important to know the precise moment of time at which the property in the goods passes from the seller to the buyer for the following reasons:
· The general rule is that risk follows the ownership, whether the delivery has been made or not. If the goods are lost or damaged by accident or otherwise, then, subject to certain exceptions, the loss falls on the owner of the goods at the time they are lost or damaged.
· When there is a danger of the goods being damaged by the action of third parties it is generally the owner who can take action.
· The rights of third parties may depend upon the passing of the property if the buyer resells the goods to a third-party, the third-party will only obtain a good title if the property in the goods has passed to the buyer before or at the time of the resale. Similarly, if the seller, in breach of his contract with the buyer, attempts to sell the goods to a third party in the goods, has not passed to the buyer, e.g., where there is only an agreement to sell.
· In case of insolvency of either the seller or the buyer, it is necessary to know whether the goods can be taken over by the official assignee or the official receiver. It will depend upon whether the property in the goods was with the party adjudged insolvent.
Thus in this context, ownership and possession are two distinct concepts and these two can at times remain separately with two different persons.
Performance of the Contract of Sale
This is the duty of the seller and the buyer of the contract is performed. Buyers and sellers of goods and consumption goods duty and sales agreement will be provided to pay for them.
Otherwise agreed, prices and goods and concurrent conditions, that is, the distribution, they both take place at the same time as a cash sale on a shop counter delivery.[7] Delivery is occupied by a voluntary transfer to one person from another. Actual delivery may be constructive or symbolic. Or actual physical delivery takes place where the goods will be handed over to the buyer by the seller or his agent is authorized to take possession of goods. Constructive delivery takes place when a person recognizes that he is in possession of goods and disposal of consumer goods holds. For example, in the sale of goods where the seller, the buyer may keep them as a bailee, constructive distributed. Indication is provided by symbolic delivery or symbol. There is not distributed their own products. The product “in possession” of a warehouse where goods are stored, the container ship goods on arrival of the goods will not be entitled to receive payment of the bill is the key.
Unpaid Seller
The seller of goods is deemed to be unpaid seller when the whole of the price has not been paid or tendered; or when a conditional payment was made by a bill of exchange or other negotiable instrument, and the instrument has been dishonored.
An unpaid seller’s rights against the goods are:
· A lien or right of retention
· The right of stoppage in transit.
· The right of resale.
· The right to withhold delivery.
An unpaid seller may sue the buyer for the price of the goods in case of breach of contract where the property in the goods has passed to the buyer or he has wrongfully refused to pay the price according to the terms of the contract. The seller may sue the buyer even if the property in the goods has not passed where the price is payable on a certain day. The seller may sue the buyer for damages or breach of contract where the buyer wrongfully neglects or refuses to accept and pay for the goods.[8]
Thus an unpaid seller’s rights against the buyer personally are:
· A suit for the price.
· A suit for damages.
Auction Sales
A sale by auction is a public sale where goods are offered to be taken by bidders. It is a proceeding at which people are invited to complete for the purchase of property by successive offer of advancing sums.
Section 64 lays down the rules regulating auction sales. 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. 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. Where such right is expressly so reserved, the seller or any other person on his behalf may bid 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. Any sale in contravention of this rule may be treated as fraudulent by the buyer. The sale may be notified to be subject to a reserved price. Where there is such notification, every bid is a conditional offer subject to its being up to the reserve price. Where an auctioneer inadvertently knocks down to a bidder who has bid less than the reserved price, there is no contract of sale. If the seller makes use of pretended bidding to raise the price, the sale is voidable at the option of the buyer.
Conclusion
Contract of sale of goods is a contract where the seller transfers or agrees the property in the goods to the buyer for a price. Where, however, the transfer of property in goods is to take place at a future date or subject to some conditions to be fulfilled, the contract is called ‘agreement to sell’. Stipulations as to time of delivery are usually of the essence of the contract. While entering into a contract of sale, certain stipulations are put by both the parties for example the buyer and the seller, such as time for payment of price, time for delivery, quality of goods, transfer of title etc. These speculations with reference to good may be condition or warranties depending upon the construction of the contract.[9]
References
· Daniel A. F. & Suzanna, S. (2008). Judgment Calls: Principle and Politics in Constitutional
Law .New York: Oxford University Press, pp. 70-71
· John, C. D. and Cathleen S. (1994). A Practical Guide to Legal Writing & Legal Method, 2nd
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· Mishra, J. & Shree, G. (1993). The legal history of India, 1600-1990. New Delhi: Uppal Pub.
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· Eugen, L. & Maurice, H. (1998). Codification In The British Empire And America. Law book Exchange. pp. 78–92.
· The Sale of Goods Act 1930, section (4).
· The Sale of Goods Act 1930, section (5).
· Stephen , E. & Susan, L. (2005). Legal Research: How to Find & Understand The Law, 14th ed.p.22.
· The Sale of Goods Act 1930, section (9 &10).
· Jain, M.P. (1984). Outlines of Indian Legal History. Bombay: N.M. Tripathi.
· The Sale of Goods Act 1930, section 12 (3).
· Riddick, E. & John A. (2006). The history of British India: a chronology. Westport, Conn.: Praeger.
· Daniel, K. & Amos, T. (1972). Subjective Probability: A Judgment of Representativeness, in Judgment under Uncertainty: Heuristics and Biases 32.
· Christozov et al., (2009). On two types of warranties . . ., APJOR, Vol. 26, No. 3, pp. 399-420
· Derrett, J. Duncan M. (1973). Handbuch der Orientalistik (History of Indian Law (Dharmasastra)). Leiden: Brill
· Martin, E [ed] & Law, J [ed], Oxford Dictionary of Law, ed6 (2006, London:OUP).
· The Sale of Goods Act 1930, section 14 (a).
· The Sale of Goods Act 1930, section (18-24).
· Atiya, H., Adams, J.& MacQueen, H.(1990). Atiyah’s Sale of Goods (12th edn Longman)
· Goode, R. & McKendrick, E. (2002). Goode on Commercial Law (4th ed.),p.128
· Char, S. V. & Desika (1983). Readings in the constitutional history of India, 1757-1947. Delhi: Oxford.
· Bryce, K. & James, Y. (2001). Studies in history and jurisprudence: Volume 1. Adamant Media Corporation. p. 121.
· The Sale of Goods Act 1930, section 45 (a).
· Phillips, J. “Equitable Liens—A search for a unifying principle” in Palmer & McKendrick,Interests in Goods (2nd ed.).
· Edwin, J., Elton, J. G. & Christophe, R. (1996). Survivor Bias and Mutual Fund Performance, 9 Rev. Fin. Stud. 1097
· The Sale of Goods Act 1930, section 64.
[1] John, C. D. and Cathleen S. (1994). A Practical Guide to Legal Writing & Legal Method, 2nd ed., pp. 34-36.
[2] The Sale of Goods Act 1930, section (5).
[3] Stephen , E. & Susan, L. (2005). Legal Research: How to Find & Understand The Law, 14th ed.p.22.
[4] The Sale of Goods Act 1930, section 12 (3).
[5] Christozov et al., (2009). On two types of warranties . . ., APJOR, Vol. 26, No. 3, pp. 399-420
[6] The Sale of Goods Act 1930, section (18-24).
[7] Goode, R. & McKendrick, E. (2002). Goode on Commercial Law (4th ed.),p.128
[8] Simkovic, M. (2009). “Secret Liens and the Financial Crisis of 2008″. Social Science Research Network
[9] Riddick, E. & John A. (2006). The history of British India: a chronology. Westport, Conn.: Praeger.