Introduction
The modern age has entered the age of trade, commerce, and the sale and purchase of goods. All these are inseparable and a core element of trade and commerce. In a diverse country like India, there must be a requirement to set up rules and regulations governed by different types of contracts, including the sale of goods.
A crucial bargain between seller and buyer is considered a sale with laws relating to the types of contracts governed under the Sale of Goods Act 1930. The Act came to be active on 1st July 1930. The issues concerned with the sale of goods were governed under the Indian Contract Act 1872 in sections 76 – 123, but these were not sufficient to cover all the aspects. Later, the constituent assembly changed & separated these sections and processed a whole new act in 1930 under the system named ‘The Sale of Goods Act 1930.
According to the definition under section 4(1), a contract of sales of goods is a contract under which the seller transfers or agrees to transfer certain goods instead of some consideration, especially money. Under consideration of Blackstone, when ownership of goods likes to transfer in exchange for money, a sale is made. This contract comes to be absolute or under condition. However, when a person buys some goods on a trial basis or with approval, it is considered a conditional contract.
Essential Items for Sale Bilateral
According to the opinion of some eminent persons, a sale should be consensual, commutative, and bilateral. A property sale contract has to be passed from one to another as a person cannot buy his property. The Supreme Court held the rule in the case of Gujrat Vs Ramanlal And Sakalchand, where the dissolution of a partnership firm with its surplus assets and goods was divided among partners among species. The sales tax officers had the wish to tax this, but the court said that no money would be considered or paid by any partner to the firm as consideration of goods. Even they cannot be from buyer or seller.
Money
Money is one of the essential things that can separate a sale from merely an exchange, gift, or donation: the Price of goods. No sale can take place without Price. Here, Price means consideration in terms of money. When goods are sold at some price, they will be considered a sale but not barter.
For example, in the case of Aldridge vs. Johnson, fifty-two bullocks at $6 each were sold instead of 100 quarters of barley at $2$ per quarter. The difference had to be paid in cash and treated as a contract of sale.
In another case, Cit vs Motor And General Store, an old car was to be returned to the dealer in exchange for a new car. The difference was paid in cash, and a court of law considered it a sale.
Price
Barter, gift, or donation can separate sales, but no sale can occur without Price. Price comes in a variety of ways, including money. There must be three essential elements of Price;
- It should be in terms of money.
- It is definite.
- It should come in a realistic
Ensure that all these are essential; the Price should be ascertained. According to sections 9 and 10 of the Sales of Goods under Act 1930, the Price is processed in many ways.
Contract
One of the primary methods of ascertaining Price that directly comes to the matter related to the sale of goods. Reasonability of Price comes to a matter in the court of law. The point between seller and buyer reaches the end with Price.
A course of mutual dealing
It is essential to know that no method is enough to set the Price in the contract. A deal between the parties can be set based on a mutual understanding.
To fix a reasonable price
According to the law of the land, if no price is set in the sales contract of goods, the buyer must pay the Price during the contract’s execution. The Price is entirely subjective and depends upon the circumstances of the case.
To fix the Price in the agreed manner
Price can also be set in any manner fully agreed upon in the contract.
Fixing by the third party
In section 10, the buyer and seller agree to include the third party in setting the Price of goods, but when the third party fails to do so, the contract becomes completely void. If there has been any transfer of goods, the buyer has to pay a reasonable price.
Goods
Under section 2(7) of the Sale of Goods Act, goods can be defined as moveable property but not actionable claims and money. An actionable claim is something a person cannot use or enjoy, but the person can recover that through a suit or action under the law of court.
Example – A debt due to a person from others. Stocks, growing crops, or shares (Separated) – Mp v Orient Paper Mll – The Court ordered that standing timber becomes a movable property if any contract exists. It has to be severed, but the severance should come when timber still vests to contracting parties; trademarks, goodwill, patents, rare coins, and copyrights come as goods except for immovable property. St Albans City District Council V International Comp Ltd, the appellant was the Defendant Company, and it supplied the computer in this case.
But whatever, the contract rules for the sale of goods come differently as goods are of many types.
Types of Goods
Section 2(7) of the Sale of Goods Act of 1930 states that each moveable property is another money actionable property. Go through the details of different types of goods.
Existing Goods – When making a contract, the procession of the goods comes under the seller’s authority. After completing the contract’s obligations, the seller will have all legal rights to transfer the ownership of those goods to the buyer. Here, the goods are known as existing goods under section 6 in the Sale of Goods Act. Here, you can go through the classification of existing goods.
Ascertained Goods—Certain goods named by specific goods must be required when making a contract. Out of unascertained goods, when a particular quantity is scheduled after preparing the sales contract, it will be named as ascertained goods.
Example—A agrees with B to sell a car when A has 5 similar cars, and B specifically chooses a vehicle out of 5 unascertained cars. Here, the selected car is called ascertained goods.
Unascertained Goods – The goods not explicitly identified but indicated by samples or descriptions from many goods are known as unascertained goods.
Example: A agrees with B to sell a car where A has 5 same cars. If B does not specifically like to choose a car without description or color, then it will be called an unascertained car.
Future Goods—Future goods are produced on the buyer’s demand and do not exist during the contract’s making. These goods do not belong to a contract of sale but are called a sale agreement. The reason behind that is that the condition of goods is not completed here.
Contingent Goods—Contingent goods are future goods. Here, the acquisition is under which the seller is entirely dependent on a contingent event that may or may not happen. Also, the contract is not a sale but an agreement to sell.
Example: When A proposes to sell his car to B in a condition if B and only if A’s brother returns from England and returns his vehicle.
Conclusion
When you create an agreement of sale, you need to know the contract’s requirements, as sales are subject to specific scheduled rules. If the laws and regulations are correctly maintained, the contract will make a sale.
Reference
(2) Gujrat Vs Ramanlal And Sakalchand.
(3) Aldridge Vs Johnson.
(4) Cit Vs Motor And General Store.
