Rights and duties of buyer under the Sales of Goods Act, 1930

RIGHTS OF THE BUYER

Right to claim damages for the non-delivery of goods.

When the seller breaches a contract of sale, the following remedies may be available to the buyer:

  • The buyer may sue for damages for non-delivery under Section 57of the Sale of Goods Act
  • In case the price has been paid by the buyer, he may recover it in a suit for money

According to Section 61(2)(b), the buyer is also entitled to interest on the amount of the price from the date of payment of the price to the date of the refund of the same. However, if the buyer has not served to seller a notice under Section 55 of the Indian Contracts Act, the buyer cannot claim damages. In the case of non-delivery, damages will be the difference between the contract price and the market price at the time of the breach.

Right to examine the goods

According to Section 41(2) the seller has a duty to give an opportunity to the buyer to examine the goods to ensure that they are in conformity with the contract. However, if there is an agreement to the contrary, the buyer may have to take the delivery of the goods even without examining them depending upon the agreed terms of the contract.

Sometimes the buyer may have taken the delivery of the goods before he had examined them. Taking delivery of the goods by the buyer does not necessarily imply that he has accepted those goods. Section 41(1) of the Act states that the buyer is not deemed to have accepted the goods until, after taking the delivery of the goods; he has had a reasonable opportunity of examining them to ensure that they are in conformity with the contract. After examining the goods, he has a right to reject them if he finds out that they are not in conformity with the contract.

If, after taking delivery, he does not reject the goods within a reasonable time, he is deemed to have accepted the goods. Section 63 of the Act provides that “the question what is a reasonable time is a question of fact”.

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Remedy for breach of warranty

According to Section 59, a breach of warranty does not entitle the buyer to reject the goods. He could sue the seller for damages for breach of warranty. When there is a breach of condition and the buyer intends to treat it as a breach of warranty, he is bound to give a notice to the seller of the same. The amount the buyer has to pay will be the difference between the amount of price payable and the amount of damages recoverable for the breach of warranty. If the however the amount of damages for the breach of warranty is higher than the price payable by the buyer then, he can then sue for the same breach of warranty.

Damages for the breach of warranty are to be determined in accordance with the provisions of Section 73 of the Indian Contract Act. Thus the damages which naturally arise in the usual course of things can be recovered.

Right to sue seller for specific performance

Section 58 entitles the buyer to sue the seller for damages if the latter refuses to deliver the goods. This stipulates that the Court may pass a decree directing the seller to specifically perform the contract, that is, to deliver the goods which were agreed to by both the parties in the Contract of Sale. A suit for specific performance cannot be maintained unless the contract is for the delivery of specific or ascertained goods. This right is available only to the buyer and not to the seller.

To sue the seller the damages for anticipatory breach of contract

Anticipatory breach of contract means breach of contract before the due date of the performance of the contract. The promise in such a situation has two options:

  • He may bring an action even before the due date of the performance has arrived OR
  • He may still treat the contract as subsisting and wait till the due date to perform the same. In such this scenario, the promisor maybe discharged from performing the contract if there is a frustration of contract

DUTIES OF THE BUYER

Duty to accept the goods

According to Section 31 of the Act, the buyer is bound to accept the goods if they are being properly tendered. He is not bound to accept the goods if the quantity of the goods being supplied is less or more than what was agreed between the parties, or when the whole or the part of the goods are not in accordance with the description given in the contract. Section 38 (1) states that unless there is an agreement to the contract, he is not bound to take the delivery of the goods by installments. According to Section 43, if the buyer rejects the goods, he is not bound to return them; he needs to merely intimate the seller that he refuses to accept the goods.

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Section 44 of the Act states that the buyer is liable to the seller for any loss occasioned by his neglect or refusal to take delivery. In Demby Hamilton & Co. v. Barden,[1] the buyer wrongfully refused to take delivery of apple juice. The Court held that the buyer was liable for the deterioration of the same as it was refusal to take in the goods that caused damage to it.

Section 42 of the Act provides that the buyer is deemed to have accepted the goods when

  • the buyer intimates to the seller that he has accepted the goods or
  • the goods have been delivered to the buyer and he does any act in relation to them which is inconsistent with the ownership of the seller or
  • the buyer on receiving the delivery of the goods retains those goods and does not reject them within a reasonable time

An act on the part of the buyer in relation to the goods may lead to the inference that the buyer

has accepted the goods. For example, if the buyer sells the goods or pledges them or starts using them, can be regarded as the buyer having accepted the goods. It was held in Humur v. Groves[2] that when the buyer on receiving the delivery of 25 sacks of flour discovered that the same is not of the contract description but sells one sack and consumes the other two himself, this amounts to the acceptance of the goods by the buyer and he cannot subsequently reject them.

Section 42  is not subject to the provisions of Sec. 41 and therefore even if the buyer did not have a reasonable opportunity to examine the goods, he may be deemed to have accepted them if he does any act inconsistent with the ownership of the seller.

In Kailah Sharma v. Patna Municipal Corpn[3], the petitioner supplied machines to the respondent as per the contract between them. The machines were accepted and accordingly certified by the representative of the Corporation as satisfactory for the purpose. After having used the machine and retained them for a long time, the Corporation wanted to repudiate the sale transaction. The Court held that once the supply was accepted, it did not lie with the Corporation to repudiate the transaction. And the refusal to make the payment by the Corporation was held arbitrary and improper. In terms of Section 42 of the Sale of Goods Act, 1930, once goods are accepted, there is a simultaneous obligation to pay for them.

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Duty to pay the price

The buyer’s duty is to pay the price in accordance with the contract. If the buyer does not pay the price after it has become due, the seller may sue him for the price. If the price remains unpaid, apart from the right to sue the buyer for the price, the seller has also got certain rights against the goods, those rights being – Lien, Stoppage in transit and Re-sale.

It is also necessary that the price should be paid by the buyer in time in accordance with the agreement. In case there is delay in the payment of the price, the seller may either treat the contract as repudiated or sue the buyer for damages, depending on whether the time of payment of the price is a condition or a warranty. Section 61(2)(a) of the Act states that, where there is a delay in payment of price, the court may order interest on the price from the date of tender of goods, if no date for the payment of the price has been decided, or from the date on which the price was payable

In M.K.M. Moosa Bhai Amin v. Rajasthan Textile Mills, [4]  there was delay in payment of price by one year but there was no stipulation for payment of interest in case there was delay in the payment of price. It was held by the Court that in such circumstances interest at the rate of 6% p.a., which is reasonable, should be paid by the buyer.

[1] (1949) 1 All E.R. 435

[2] (1835) 15 CB.667

[3] A.I.R. 2009 Pat. 10

[4] A.I.R. 1974 Raj 194

 

REFERENCES

https://www.coursehero.com/file/p73te9m/The-court-would-then-have-the-ability-to-enable-title-to-the-person-who-in-eyes/

http://rizvilaw.blogspot.com/2009/01/rights-and-duties-of-buyer-and-seller.html

Author: Aditi Shanmugam,
Chettinad School of Law, 2nd year/ Student

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