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BBS 3rd year business law important Question | Unit 4 (The Law of Contract and Other Liabilities)

 


👉🏻CONTRACT OF SALE OF GOODS

MEANING OF SALE OF GOODS

"A contract relating to the sale of goods shall be deemed to have been concluded in case any seller agrees to transfer ownership in the goods to the buyer immediately or in the future by receiving a price."

👉🏻ESSENTIAL ELEMENTS OF A CONTRACT OF SALE OF GOODS

  1. Two parties
  2. Goods
  3. Transfer of ownership or ownership
  4. Price
  5. Fulfillment of essential elements of a valid contract

👉🏻CONDITION AND WARRANTY

Condition:

A condition is a stipulation representation or promise regarded as so essential that in breach of it, it would be open to the buyer to reject the goods and treat the contract as discharged. It goes to the root of the contract and its non-fulfillment upsets the very basis of the contract. Warranty: A warranty is a stipulation collateral or secondary to the main part and purpose of the contract

The breach gives rise to a claim for damages but not a right to reject the goods and treat the contract as terminated. When the condition transforms into a warranty

  1. Voluntary waiver of condition
  2. Acceptance of goods by buyer
  3. By impossibility or other reason

👉🏻TYPES OF CONDITIONS AND WARRANTIES

In a contract of sale of goods, there are two types of conditions and warranties: Express conditions and warranties and implied conditions and warranties. Implied Conditions

  1. Condition as to title to goods sold
  2. Condition in the sale by sample
  3. Condition in sale by description
  4. Condition in the sale by sample as well as a description
  5. Condition as to quality or fitness 6. Condition as to merchantability
  6. Condition implied by custom or usage of trade
  7. Condition as to wholesomeness of goods sold Implied Warranties
  8. Warranty as to quiet possession
  9. Warranty as to freedom from encumbrances
  10. Warranty as to disclose the dangerous nature of goods
  11. Warranty as to quality or fitness of goods by custom or usage of trade

👉🏻CAVEAT EMPTOR

The term 'caveat emptor' means 'let the buyer beware'. In a contract of sale of goods, it is the duty of the buyer that he should examine the goods thoroughly and be sure that whether or not the goods he is selecting is fit for his particular purpose. This is formulated by the doctrine of caveat emptor. The exception can be stated as under.

  1. Where the buyer makes known, expressly or impliedly, to the seller the specific purpose for which he needs the goods and depends upon the skill and judgment of the seller.
  2. Where the consent of the buyer has been obtained by fraud or coercion or the seller knowingly conceals a defect which could not be discovered on a reasonable examination, i.e., latent defect in the goods.
  3. Where the implied conditions are applied the rule of caveat emptor does not apply.
  4. Where goods are sold by description there is an implied condition that the goods shall be of merchantable quality.
  5. Where the quality or fitness of goods is annexed by custom or usage of trade.
  6. Where the defects in the goods cannot be easily discovered even examined with care and skill

👉🏻RULES REGARDING THE TRANSFER OF OWNERSHIP

Where the goods are unascertained goods, the property in such goods does not transfer until the goods are ascertained. Where the goods are ascertained goods, the property does pass immediately at the time of contract. Contract for ascertained goods without expression as to passing the property a. Passing of property at the time of contract, if the goods are in a deliverable state. b. Passing of property in goods after the date of contract, if the goods are not deliverable state. c. Where the price of goods is to be ascertained by weighing, measuring, printing, etc., the property passes after pricing and communicating the same. Contract for future goods 5. Contract for contingent goods 5. Goods sold on sale or return

👉🏻SALE BY NON-OWNERS

The general rule of law regarding the transfer of ownership is that no one can give that which one has not got. This is expressed in the Latin maxim "Nemo dat quod non-habit". In the following cases, the following persons though they are not the owner of goods can make a valid sale, and the property in goods transfers to the buyer.

  1. Sale by a person having title by estoppel
  2. Sale by a mercantile agent
  3. Sale by one of the several joint owners
  4. Sale by a person in possession of goods under a voidable contract
  5. Sale by seller in possession after sale
  6. Sale by buyer in possession before sale
  7. Sale by an unpaid seller
  8. Sale by the finder of lost goods
  9. Sale by pawnee or pledge
  10. Sale by an official assignee or receiver or liquidator
  11. Sale in the market over

👉🏻PERFORMANCE OF CONTRACT OF SALE OF GOODS

The term performance in relation to the contract of sale of goods refers as regards the seller, the delivery of the goods to the buyer, and as regards the buyer, acceptance of the delivery of the goods and payment for them in accordance with the terms of the contract of sale.

👉🏻DELIVERY OF GOODS

Delivery means voluntary transfer of possession of goods from one person to another or voluntary dispossession in favor of another. Delivery of goods, therefore, maybe

  1. Actual delivery
  2. Symbolic delivery
  3. Constructive delivery

👉🏻RULES REGARDING DELIVERY OF GOODS

  1. Mode of delivery: Actual, Symbolic or Constructive
  2. Delivery and Payment
  3. Part delivery
  4. Demand for delivery
  5. Place of delivery
  6. Time of delivery
  7. Cost of delivery
  8. Delivery of the wrong quantity

👉🏻RIGHTS AND DUTIES OF AN UNPAID SELLER

A seller of goods is called an unpaid seller under the following conditions:

  1. When the whole of the price has not been paid or tendered.
  2. When the price was paid through a negotiable instrument which was dishonored by the concerned person therein.
  3. When the goods are sold on credit, the buyer fails to pay on the due date of payment. Rights of an Unpaid Seller
  4. Right of an unpaid seller against the goods a. Right of lien b. Right of use for price c. Right to stop the goods in transit d. Right of resale
  5. Right of an unpaid seller against the buyer personally a. Right to sue for price b. Rights to sue for damages c: Right to sue for interest d. Right to rescind the contract

Duties of an Unpaid Seller

  1. Duty to keep goods safely
  2. Duty to give notice for the payment of price
  3. Duty not to exercise right of lien or stoppage in transit as against the right of buyer/ transferee
  4. Duty to bear the expenses of redelivery
  5. Duty to keep the goods to the extent of payment of price
  6. Duty to keep the goods in deliverable state and to be delivered at the time of payment.
  7. Duty not to resale the goods without giving notice of resale

👉🏻RIGHTS AND REMEDIES OF BUYER FOR THE BREACH OF CONTRACT

  • Right to cancel the contract.
  • Right to recover the price paid for undelivered goods.
  • Right to get replacement of goods being defective or not.
  • Being in the intended condition as per the contract.
  • Right to recover damages for loss.
  • Right to claim for specific performance for unique goods.
  • Right to claim interest on the money paid by him.

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