What Is the Contract of Sale? State the Essential Characteristics?

UNIT- II

1. What is the contract of sale? State the essential characteristics?

Ans. According to Section 4 of the Sale of Goods Act, "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" (Section 4). A Contract of sale may be absolute or conditional according to the desire of the contracting parties. The term 'contract of sale' is a generic term and, therefore, broader than 'sale'.

Examples:- (a) A enters into a contract with B to buy 100 quintals of potatoes, from B's cold storage for 8s. 2,000. It shall amount to a sale if the seller authorizes A to come to his cold storage and take away the potatoes whenever A desires.

(b) A agrees to sell his scooter to B after ten days for Rs. 5,000. B agrees to buy it after ten days, for 8s. 5,000. It is an 'agreement to sell' and it will become sale after ten-days. The specific points of distinction between 'sale: and 'agreement to sell shall be discussed a little later in this unit.

Formalities of a Contract of Sale (Section 5)

As per Section 5 of the Sale of Goods Act, a contract of sale may be made in any of the following modes:

1. There may be immediate delivery of the goods;

1. There may be imrnediate payment of the price but the delivery to be made at some future date;
2. There may be immediate delivery of goods and also immediate payment of price;

1. It may be agreed that the delivery or payment or both are to be made in installment; or

1. The delivery or payment or both may be made at some future date.

Essentials of a Valid contract of Sale

1. There must be two parties: There must be two parties, one seller and the other buyer. A person cannot be a seller as well as a buyer. A person cannot buy his own goods. For example, X is the owner of certain goods, but he is not aware of this fact. A pretends to be the owner of the goods and sells them to X. There is no sale, for X cannot buy goods which are already his own. (Bell v. Lever Bros.Ltd.)

1. Subject matter of sale must be 'goods': The subject matter of a contract of sale must be goods and the goods must be movable. Sale and purchase of immovable property is not covered by this Act, but is regulated by the Transfer of Property Act.
2. Transfer of Property in the goods: In every contract of sale, it is the ownership that is transferred and in an agreement to sell the ownership is agreed to be transferred as in case of pledge.
3. Consideration in Price:- Consideration in a contract of sale has necessarily to be money. Thus, if for instance, goods arc offered as consideration for goods, it will not amount to sale, but it will be called’barter’.

1. Define the term „goods‟. What are the different types of goods? Ans.  Any movable property except money is called goods.

The Different types of goods are following.

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1. Existing goods: Which are owner or possessed by the seller at the time of sales.

• Ascertained goods: Goods which become a ascertained subsequent to the formation of sale.
• Unascertained goods: Which are not identify and agreed upon at the time of the contract of sale.

1. Future good: Goods which is a seller does not possess at the time of contract of sale but goods will be manufactured or acquired by the seller after the making of the sale.
2. Contingent Goods: These are goods the acquisition of which by the seller depends upon contingency.

1. Distinguish between:

1. Sale & Agreement to sell.