Rights and Duties of Seller under Sale of Goods Act, 1881

RIGHTS AND DUTIES OF SELLER UNDER SALE OF GOODS ACT, 1881

INTRODUCTION

Most commercial contracts involve the sale of goods from one person called the seller to another person called the buyer or purchaser. The law regulating the sale of goods is contained in the Sale of Goods Act, 1930.

Section 4 of the Sale of Goods Act, 1930 provides-

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. The term contract of sale includes both a sale and an agreement to sell.

ESSENTIALS OF A CONTRACT OF SALE:

The following are the essential elements to constitute a contract of sale of goods.

  1. A Contract:

A contract of sale is a special type of contract. All the essentials of a valid contract must be present in a contract of sale. As per Sec. 10 of the Indian Contract Act, a contract of sale must also have free consent, the capacity of parties, lawful considerations, lawful object, not declared as void by law, etc.

Thus, if there is no consideration in a contract of sale, then it is treated as not a contract of sale but as a gift.

  1. Two parties (Bilateral Contract):

The seller and the buyer must be two different persons. This is based on the principle that a person cannot be the buyer of his goods.

There are however certain exceptions to the general rule that a person cannot be the buyer of his goods. A person may buy his goods in the following circumstances.

State of Gujarat Vs. Ramanlal S. and Co.:

On dissolution of a firm, the assets of the firm were divided among the partners. The Court held that it was not a sale as the partners being the joint owners of those assets cannot be both sellers and buyers.[1]

  1. Goods (The subject matter of the contract):

The subject matter of the contract of sale must always be ‘goods’ as defined in section 2(7) of the Act. The goods may either be existing or future goods and must be movable.

  1. Transfer of property in goods:

The transfer of property in goods is, in fact, the essence of a contract of sale. Thus, a mere transfer of goods by an owner from one place to another cannot amount to a sale. The transfer of ‘passing of the property’ is the test to determine whether there was a sale or an agreement to sell between seller and buyer.[2]

  1. Price (in money as promised or consideration):

It is a general rule that an agreement without consideration is void. In a contract of sale, the consideration is in terms of money. This consideration of money in a contract of sale distinguishes it from bailment.

U.P. Co-operative Cane Unions Federations Vs. West U.P. Sugar Mills Association:

The sugar factories in U.P. were compelled to enter into sale agreements for prices fixed by the State Government which was above the minimum prices fixed by the Central Government under Regulation of Quota – U.P. Act, which was not acceptable to them. The Supreme Court held that compulsory sale under a legislative Act does not lose the character of a sale.[3]

Following are the rights and duties of the Seller:

Rights of the seller-

  • The seller has the right to check that the buyer properly handles the goods as per the conditions and warranties.
  • The seller can demand the price for the goods sold to the buyer.
  • In case, the seller makes excess delivery and if the buyer accepts it, then the seller can demand a price for such excess delivery of goods as per the need price.
  • In case of wrongful neglect or refusal of acceptance of goods by the buyer, the seller can make the buyer liable for such neglect or refusal.
  • If the contract is for installment delivery, then the seller can get it accepted by the buyer.
  • An unpaid seller has the right to remedies like Riga ht of lien, right of stoppage in transit, right of re-sale.
  • The seller can ask price in advance even before the delivery of goods.
  • The seller can instruct the carrier/bailee as his agent and thus can reserve his right of disposal over the goods while in the custody of the carrier/bailee.
  • The seller has the right to get the app and location/requisition (for the ply of goods) from the buyer.

Duties of Seller:

  • The seller cannot make installment delivery unless agreed in the contract of sale.
  • The seller has to follow all the rules as to delivery as per law.
  • In an auction sale, the seller cannot bid by himself or through his agent.
  • The seller must accept unconditional appropriation of goods when the buyer has consented to the same.
  • The seller must deliver the goods immediately on payment of the price by the buyer.
  • The seller must deliver the goods to the buyer as per the stipulated time.
  • The seller must make the supply of goods as per the condition that:
    • The bulk of the goods correspond with the sample or
    • The goods correspond to the description or
    • Both
  • The seller must also give the buyer a reasonable opportunity to cross-check the goods with the sample.
  • The seller must make the goods deliverable and inform the buyer. He must also bear the expenses for the delivery.
  • After-sale the sale, if the seller has the possession of goods, then he must act as a bailee of the goods till the delivery of the goods to the buyer.
  • If the seller delivers the goods to a carrier or wharfinger, then he must give notice of insurance of the goods both fire and marine transit.
  • If the seller delivers the goods from a different place and at his own risk, then he must bear the risk of deterioration of goods.
  • The seller must permit the buyer to examine the goods before sale.
  • The seller cannot claim compensation from the buyer for the goods rightfully rejected by the buyer.[4]

CONCLUSION:

The Sale of Goods Act, 1930 furnishes numerous features correlated to the moving of property in a contract for the sale of goods or property. There are many rules provided under sections 18 to 25 of the Act through which liabilities, as well as rights of the buyer and seller, can be ascertained. The passing of property in the goods marks the transfer of ownership in the goods which is a distinct conception from the possession of goods as possession only includes delivery or confinement of goods.

BIBLIOGRAPHY:

  • For Example, In the case of the State of Gujarat vs Ramanlal S Co A business partnership | Course Hero Coursehero.com, https://www.coursehero.com/file/pjenvr4/For-Example-In-the-case-State-of-Gujarat-vs-Ramanlal-S-Co-A-business-partnership/ (last visited Jun 17, 2022)
  • Six essential characteristics of a contract of sale of goods World’s Largest Collection of Essays! Published by Experts, https://www.shareyouressays.com/english-essays/six-essential-characteristics-of-a-contract-of-sale-of-goods/92195 (last visited Jun 17, 2022)
  • P. Co-operative Cane Unions Federations Vs. West U.P. Sugar Mills Association case casemine.com, https://www.casemine.com/judgement/in/5609adede4b014971141290c (last visited Jun 17, 2022)
  • Rights and Duties of Buyer and Seller under Sale of Goods Act,1930 MyMbaNotes.Com, https://www.mymbanotes.com/2016/04/rights-and-duties-of-buyer-and-seller.html (last visited Jun 17, 2022)

[1] For Example, In the case of State of Gujarat vs Ramanlal S Co A business partnership | Course Hero Coursehero.com, https://www.coursehero.com/file/pjenvr4/For-Example-In-the-case-State-of-Gujarat-vs-Ramanlal-S-Co-A-business-partnership/ (last visited Jun 17, 2022)

[2] Six essential characteristics of a contract of sale of goods World’s Largest Collection of Essays! Published by Experts, https://www.shareyouressays.com/english-essays/six-essential-characteristics-of-a-contract-of-sale-of-goods/92195 (last visited Jun 17, 2022)

[3] U.P. Co-operative Cane Unions Federations Vs. West U.P. Sugar Mills Association case casemine.com, https://www.casemine.com/judgement/in/5609adede4b014971141290c (last visited Jun 17, 2022)

[4] Rights and Duties of Buyer and Seller under Sale of Goods Act,1930 MyMbaNotes.Com, https://www.mymbanotes.com/2016/04/rights-and-duties-of-buyer-and-seller.html (last visited Jun 17, 2022)

Author: Adithya Narayanan
5YR BBA-LLB,
SDM Law college, Mangalore, Karnataka

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