The Sales of Goods Act, 1930

MTP 1 Dec 21:

1. Write any four exceptions to the doctrine of Caveat Emptor as per the Sale of Goods Act, 1930.
(4 Marks)
[May’22 MTP, ]
Answer:
Caveat Emptor: In case of sale of goods, the doctrine ‘Caveat Emptor’ means ‘let the buyer beware’.
When sellers display their goods in the open market, it is for the buyers to make a proper selection or
choice of the goods. If the goods turn out to be defective, he cannot hold the seller liable. The seller is in no
way responsible for the bad selection of the buyer. The seller is not bound to disclose the defects in the
goods which he is selling.
The doctrine of Caveat Emptor is subject to the following exceptions:
1. Fitness as to quality or use: Where the buyer makes known to the seller the particular purpose for
which the goods are required, so as to show that he relies on the seller’s skill or judgment and the
goods are of a description which is in the course of seller’s business to supply, it is the duty of the
seller to supply such goods as are reasonably fit for that purpose [Section 16 (1) of the Sale of
goods Act, 1930].
2. Goods purchased under patent or brand name: In case where the goods are purchased under
its patent name or brand name, there is no implied condition that the goods shall be fit for any
particular purpose [Section 16(1)].
3. Goods sold by description: Where the goods are sold by description there is an implied condition
that the goods shall correspond with the description [Section 15]. If it is not so, then seller is
responsible.
4. Goods of Merchantable Quality: Where the goods are bought by description from a seller who
deals in goods of that description there is an implied condition that the goods shall be of
merchantable quality. The rule of Caveat Emptor is not applicable. But where the buyer has
examined the goods, this rule shall apply if the defects were such which ought to have not been
revealed by ordinary examination [Section 16(2)].
5. Sale by sample: Where the goods are bought by sample, this rule of Caveat Emptor does not apply
if the bulk does not correspond with the sample [Section 17].
6. Goods by sample as well as description: Where the goods are bought by sample as well as
description, the rule of Caveat Emptor is not applicable in case the goods do not correspond with
both the sample and description or either of the condition [Section 15].
7. Trade Usage: An implied warranty or condition as to quality or fitness for a particular purpose may
be annexed by the usage of trade and if the seller deviates from that, this rule of Caveat Emptor is
not applicable [Section 16(3)].
8. Seller actively conceals a defect or is guilty of fraud: Where the seller sells the goods by making some
misrepresentation or fraud and the buyer relies on it or when the seller actively conceals some defect in the
goods so that the same could not be discovered by the buyer on a reasonable examination, then the rule of
Caveat Emptor will not apply. In such a case the buyer has a right to avoid the contract and claim damages.

2. Explain any six circumstances in detail in which a non-owner can convey better title to the bona fide purchaser of goods for
value under the Sale of Goods Act, 1930.
OR
“Nemo Dat Quod Non Habet” – “None can give or transfer goods what he does not himself own.”
Explain the rule and state the cases in which the rule does not apply under the provisions of the Sale
of Goods Act, 1930

(6 Marks)
[Dec’21 MTP, RTP Nov’21 ]
Answer:
In the following cases, a non-owner can convey better title to the bona fide purchaser of goods for value.
 1. Sale by a Mercantile Agent: A sale made by a mercantile agent of the goods for document of title
to goods would pass a good title to the buyer in the following circumstances; namely;
a. If he was in possession of the goods or documents with the consent of the owner;
b. If the sale was made by him when acting in the ordinary course of business as a mercantile
agent; and
c. If the buyer had acted in good faith and has at the time of the contract of sale, no notice of the
fact that the seller had no authority to sell (Proviso to Section 27).
Mercantile Agent means an agent having in the customary course of business as such agent
authority either to sell goods, or to consign goods for the purposes of sale, or to buy goods, or
to raise money on the security of goods [Section 2(9)].
2. Sale by one of the joint owners (Section 28): If one of several joint owners of goods has the sole
possession of them by permission of the co-owners, the property in the goods is transferred to any
person who buys them from such joint owner in good faith and has not at the time of the contract of
sale notice that the seller has no authority to sell.
3. Sale by a person in possession under voidable contract: A buyer would acquire a good title to
the goods sold to him by a seller who had obtained possession of the goods under a contract
voidable on the ground of coercion, fraud, misrepresentation or undue influence provided that the
contract had not been rescinded until the time of the sale (Section 29).
4. Sale by one who has already sold the goods but continues in possession thereof: If a person
has sold goods but continues to be in possession of them or of the documents of title to them, he
may sell them to a third person, and if such person obtains the delivery thereof in good faith and
without notice of the previous sale, he would have good title to them, although the property in the
goods had passed to the first buyer earlier. A pledge or other disposition of the goods or documents
of title by the seller in possession are equally valid [Section 30(1)].
5. Sale by buyer obtaining possession before the property in the goods has vested in him:
Where a buyer with the consent of the seller obtains possession of the goods before the property in
them has passed to him, he may sell, pledge or otherwise dispose of the goods to a third person,
and if such person obtains delivery of the goods in good faith and without notice of the lien or other
right of the original seller in respect of the goods, he would get a good title to them [Section 30(2)].
However, a person in possession of goods under a ‘hire-purchase’ agreement which gives him only
an option to buy is not covered within the section unless it amounts to a sale.
6. Effect of Estoppel: Where the owner is estopped by the conduct from denying the seller’s
authority to sell, the transferee will get a good title as against the true owner. But before a good title
by estoppel can be made, it must be shown that the true owner had actively suffered or held out the
other person in question as the true owner or as a person authorized to sell the goods.
7. Sale by an unpaid seller: Where an unpaid seller who had exercised his right of lien or stoppage in
transit resells the goods, the buyer acquires a good title to the goods as against the original buyer
[Section 54 (3)].
8. Sale under the provisions of other Acts:
I. Sale by an Official Receiver or Liquidator of the Company will give the purchaser a valid title.
II. Purchase of goods from a finder of goods will get a valid title under circumstances [Section
169 of the Indian Contract Act, 1872]
III. A sale by pawnee can convey a good title to the buyer [Section 176 of the Indian Contract Act, 1872]

3. Mr. P was running a shop selling good quality washing machines. Mr. Q came to his shop and asked for washing machine
which is suitable for washing woollen clothes. Mr. P showed him a particular machine which Mr. Q liked and paid for it. Later
on, when the machine was delivered at Mr. Q’s house, it was found that it was wrong machine and also unfit for washing
woollen clothes. He immediately informed Mr. P about the delivery of wrong machine. Mr. P refused to exchange the same,
saying that the contract was complete after the delivery of washing machine and payment of price. With reference to the
provisions of Sale of Goods Act, 1930, discuss whether Mr. P is right in refusing to exchange the washing machine?
(6 Marks)

Answer:
According to Section 15 of the Sale of Goods Act, 1930, whenever the goods are sold as per sample as
well as by description, the implied condition is that the goods must correspond to both sample as well as
description. In case the goods do not correspond to sample or description, the buyer has the right to
repudiate the contract.
Further under Sale of Goods Act, 1930 when the buyer makes known to the seller the particular purpose for
which the goods are required and he relies on his judgment and skill of the seller, it is the duty of the seller
to supply such goods which are fit for that purpose.
In the given case, Mr. Q has informed to Mr. P that he wanted the washing machine for washing woollen
clothes. However, the machine which was delivered by Mr. P was unfit for the purpose for which Mr. Q
wanted the machine.
Based on the above provision and facts of case, we understand that there is breach of implied condition as to sample
as well as description, therefore Mr. Q can either repudiate the contract or claim the refund of the price paid by him
or he may require Mr. P to replace the washing machine with desired one.

MTP 2 Dec 21:

4. When can an unpaid seller of goods exercise his right of lien over the goods under the Sale of Goods Act? Can
he exercise his right of lien even if the property in goods has passed to the buyer? When such a right is
terminated? Can he exercise his right even after he has obtained a decree for the price of goods from the
court?
(6 Marks)

Answer:
A lien is a right to retain possession of goods until the payment of the price. It is available to the unpaid seller of the
goods who is in possession of them where-
(i) the goods have been sold without any stipulation as to credit;
(ii) the goods have been sold on credit, but the term of credit has expired;
(iii) the buyer becomes insolvent.
The unpaid seller can exercise ‘his right of lien even if the property in goods has passed on to the buyer. He can
exercise his right even if he is in possession of the goods as agent or bailee for the buyer.
Termination of lien: An unpaid seller losses his right of lien thereon-
(i) When he delivers the goods to a carrier or other bailee for the purpose of transmission to the buyer without
reserving the right of disposal of the goods;
(ii) When the buyer or his agent lawfully obtains possession of the goods;
Yes, he can exercise his right of lien even after he has obtained a decree for the price of goods from the court.

5. Avyukt purchased 100 Kgs of wheat from Bhaskar at Rs. 30 per kg. Bhaskar says that wheat is in his warehouse
in the custody of Kishore, the warehouse keeper. Kishore confirmed Avyukt that he can take the delivery of
wheat from him and till then he is holding wheat on Avyukt’s behalf. Before Avyukt picks the goods from
warehouse, the whole wheat in the warehouse has flowed in flood. Now Avyukt wants his price on the
contention that no delivery has been done by seller. Whether Avyukt is right with his views under the Sale of
Goods Act, 1930.
(6 Marks)

Answer:

As per the provisions of the Sale of Goods Act, 1930 there are three modes of delivery, i) Actual delivery, ii)
Constructive delivery and iii) Symbolic delivery. When delivery is affected without any change in the custody or
actual possession of the things, it is called constructive delivery or delivery by acknowledgement. Constructive
delivery takes place when a person in possession of goods belonging to seller acknowledges to the buyer that he is
holding the goods on buyer’s behalf.
In the instant case, Kishore acknowledges Avyukt that he is holding wheat on Avyukt’s behalf. Before picking the
wheat from warehouse by Avyukt, whole wheat was flowed in flood.

On the basis of above provisions and facts, it is clear that possession of the wheat has been transferred through
constructive delivery. Hence, Avyukt is not right. He cannot claim the price back.

MTP 1 May 22:

6. "A breach of condition can be treated as a breach of warranty". Explain this statement as per relevant
provisions of the Sale of Goods Act, 1930.
(4 Marks)
 [PYQ July’21, PYQ Dec’21]

Answer:

Section 13 of the Sale of Goods Act, 1930 specifies cases where a breach of condition be treated as a
breach of warranty. As a result of which the buyer loses his right to rescind the contract and can claim
damages only.
In the following cases, a contract is not avoided even on account of a breach of a condition:
(i) Where the buyer altogether waives the performance of the condition. A party may for his own
benefit, waive a stipulation. It should be a voluntary waiver by buyer.
(ii) Where the buyer elects to treat the breach of the conditions, as one of a warranty. That is to say,
he may claim only damages instead of repudiating the contract. Here, the buyer has not waived
the condition but decided to treat it as a warranty.
(iii) Where the contract is non-severable and the buyer has accepted either the whole goods or any
part thereof. Acceptance means acceptance as envisaged in Section 72 of the Indian Contract
Act, 1872.
(iv) Where the fulfilment of any condition or warranty is excused by law by reason of impossibility or
otherwise.

7. Discuss the rights of an unpaid seller against the buyer under the Sales of Goods Act, 1930.
(6 Marks)
Answer:
The right against the buyer are as follows:
1. Suit for price (Section 55 of the Sale of Goods Act, 1930)
(a) Where under a contract of sale, the property in the goods has passed to the buyer and the buyer
wrongfully neglects or refuses to pay for the goods according to the terms of the contract, the seller
may sue him for the price of the goods. [Section 55(1)]
(b) Where under a contract of sale, the price is payable on a certain day irrespective of delivery and the
buyer wrongfully neglects or refuses to pay such price, the seller may sue him for the price although
the property in the goods has not passed and the goods have not been appropriated to the contract.
[Section 55(2)].
2. Suit for damages for non-acceptance (Section 56): Where the buyer wrongfully neglects or
refuses to accept and pay for the goods, the seller may sue him for damages for non-acceptance.
3. Repudiation of contract before due date (Section 60): Where the buyer repudiates the contract
before the date of delivery, the seller may treat the contract as rescinded and sue damages for the
breach. This is known as the ‘rule of anticipatory breach of contract’.
4. Suit for interest [Section 61]: Where there is specific agreement between the seller and the buyer
as to interest on the price of the goods from the date on which payment becomes due, the seller
may recover interest from the buyer. If, however, there is no specific agreement to this effect, the
seller may charge interest on the price when it becomes due from such day as he may notify to the
buyer.
In the absence of a contract to the contrary, the Court may award interest to the seller in a suit by him at
such rate as it thinks fit on the amount of the price from the date of the tender of the goods or from the date
on which the price was payable.

8. Sohan is a trader in selling of wheat. Binod comes to his shop and ask Sohan to show him some
good quality wheat. Binod is satisfied with the quality of wheat. Sohan agrees to sell 100 bags of
wheat to Binod on 10th June 2021. The delivery of wheat and the payment was to be made in next
three months i.e. by 10th September 2021 by Binod. Before the goods are delivered to Binod, Sohan
gets another customer Vikram in his shop who is ready to pay higher price for the wheat. Sohan sells
the goods of Binod (which were already lying in his possession even after sale) to Vikram. Vikram has
no knowledge that Sohan is not the owner of goods. With reference to Sale of Goods Act,1930,
discuss if such a sale made by Sohan to Vikram is a valid sale?
(6 Marks)
Answer:

The given question deals with the rule related to transfer of title of goods. Section 27 of the Sale of Goods
Act ,1930 specify the general rule " No man can sell the goods and give a good title unless he is the owner
of the goods". The latin maxim " NEMO DET QUOD NON HABET". However, there are certain exceptions
to this rule. One of the exceptions is given in Section 30 (1) of Sale of Goods Act,1930 wherein the sale by
seller in possession of goods even after sale is made, is held to be valid. If the following conditions are
satisfied, then it amounts to a valid sale although the seller is no more the owner of goods after sale.
(i) A seller has possession of goods after sale
(ii) with the consent of the other party (i.e. buyer)
(iii) the seller sells goods (already sold) to a new buyer
(iv) the new buyer acts in good faith
(v) The new buyer has no knowledge that the seller has no authority to sell.

In the given question, the seller Sohan has agreed to sell the goods to Binod, but delivery of the goods is
still pending. Hence Sohan is in possession of the goods and this is with the consent of buyer i.e. Binod.
Now Sohan sell those goods to Vikram, the new buyer. Vikram is buying the goods in good faith and also
has no knowledge that Sohan is no longer the owner of goods.

Since all the above conditions given under Section 30 (1) of Sale of Goods Act, 1930 are satisfied,
therefore the sale made by Sohan to Vikram is a valid sale even if Sohan is no longer the owner of goods.

MTP 2 May 22:

9. When can an unpaid seller of goods exercise his right of lien over the goods under the Sale of Goods
Act, 1930? Can he exercise his right of lien even if the property in goods has passed to the buyer?
When such a right is terminated? Can he exercise his right even after he has obtained a decree for
the price of goods from the court?
(6 Marks)
Answer:
A lien is a right to retain possession of goods until the payment of the price. It is available to the unpaid
seller of the goods who is in possession of them where-
(i) the goods have been sold without any stipulation as to credit;
(ii) the goods have been sold on credit, but the term of credit has expired;
(iii) the buyer becomes insolvent.
The unpaid seller can exercise ‘his right of lien even if the property in goods has passed on to the buyer.
He can exercise his right even if he is in possession of the goods as agent or bailee for the buyer.
Termination of lien: An unpaid seller losses his right of lien thereon-
(i) When he delivers the goods to a carrier or other bailee for the purpose of transmission to the
buyer without reserving the right of disposal of the goods;
(ii) When the buyer or his agent lawfully obtains possession of the goods;
Yes, he can exercise his right of lien even after he has obtained a decree for the price of goods from the
court.

10. Avyukt purchased 100 Kgs of wheat from Bhaskar at Rs. 30 per kg. Bhaskar says that wheat is in his warehouse
in the custody of Kishore, the warehouse keeper. Kishore confirmed Avyukt that he can take the delivery of
wheat from him and till then he is holding wheat on Avyukt’s behalf. Before Avyukt picks the goods from
warehouse, the whole wheat in the warehouse has flowed in flood. Now Avyukt wants his price on the
contention that no delivery has been done by seller. Whether Avyukt is right with his views under the Sale of
Goods Act, 1930.
(6 Marks)
Answer:
As per the provisions of the Sale of Goods Act, 1930 there are three modes of delivery,
i) Actual delivery,
ii) Constructive delivery and
iii) Symbolic delivery
When delivery is affected without any change in the custody or actual possession of the things, it is called
constructive delivery or delivery by acknowledgement. Constructive delivery takes place when a person in
possession of goods belonging to seller acknowledges to the buyer that he is holding the goods on buyer’s
behalf.
In the instant case, Kishore acknowledges Avyukt that he is holding wheat on Avyukt’s behalf. Before
picking the wheat from warehouse by Avyukt, whole wheat was flowed in flood.
On the basis of above provisions and facts, it is clear that possession of the wheat has been transferred
through constructive delivery. Hence, Avyukt is not right. He cannot claim the price back.

RTP May’20:
11. State briefly the essential element of a contract of sale under the Sale of Goods Act, 1930.
[RTP May’21]

Answer:
Essentials of Contract of Sale
The following elements must co-exist so as to constitute a contract of sale of goods under the Sale of
Goods Act, 1930.
(i) There must be at least two parties
(ii) The subject matter of the contract must necessarily be goods
(iii) A price in money (not in kind) should be paid or promised.
(iv) A transfer of property in goods from seller to the buyer must take place.
(v) A contract of sale must be absolute or conditional [section 4(2)].
(vi) All other essential elements of a valid contract must be present in the contract of sale.

12. What is an Implied Warranty and state the various types of Implied Warranties.

Answer:

Implied Warranties: It is a warranty which the law implies into the contract of sale. In other words, it is the
stipulation which has not been included in the contract of sale in express words. But the law presumes that
the parties have incorporated it into their contract. It will be interesting to know that implied warranties are
read into every contract of sale unless they are expressly excluded by the express agreement of the
parties.

These may also be excluded by the course of dealings between the parties or by usage of trade (Section
62).

The examination of Sections 14 and 16 of the Sale of Goods Act, 1930 discloses the following implied
warranties:
1. Warranty as to undisturbed possession [Section 14(b)]: An implied warranty that the
buyer shall have and enjoy quiet possession of the goods. That is to say, if the buyer having
got possession of the goods, is later on disturbed in his possession, he is entitled to sue the
seller for the breach of the warranty.
2. Warranty as to non-existence of encumbrances [Section 14(c)]: An implied warranty that
the goods shall be free from any charge or encumbrance in favour of any third party not
declared or known to the buyer before or at the time the contract is entered into.
3. Warranty as to quality or fitness by usage of trade [Section 16(3)]: An implied warranty
as to quality or fitness for a particular purpose may be annexed or attached by the usage of
trade. Regarding implied condition or warranty as to the quality or fitness for any particular
purpose of goods supplied, the rule is ‘let the buyer beware’ i.e., the seller is under no duty
to reveal unflattering truths about the goods sold, but this rule has certain exceptions.
4. Disclosure of dangerous nature of goods: Where the goods are dangerous in nature and
the buyer is ignorant of the danger, the seller must warn the buyer of the probable danger. If
there is a breach of warranty, the seller may be liable in damages.

13. What are the rights of buyer against the seller, if the seller commits a breach of contract under the
Sale of Goods Act, 1930?

Answer:
Irightsd f the seller commits a breach of contract, the buyer gets the following rights against the seller:
1. Damages for non-delivery [Section 57]: Where the seller wrongfully neglects or refuses to deliver
the goods to the buyer, the buyer may sue the seller for damages for non-delivery.
 2. Suit for specific performance (Section 58): Where the seller commits of breach of the contract of
sale, the buyer can appeal to the court for specific performance. The court can order for specific
performance only when the goods are ascertained or specific.
3. Suit for breach of warranty (section 59): Where there is breach of warranty on the part of the
seller, or where the buyer elects to treat breach of condition as breach of warranty, the buyer is not
entitled to reject the goods only on the basis of such breach of warranty. But he may –
a. set up against the seller the breach of warranty in diminution or extinction of the price; or
b. sue the seller for damages for breach of warranty.
4. Repudiation of contract before due date (Section 60): Where either party to a contract of sale
repudiates the contract before the date of delivery, the other may either treat the contract as
subsisting and wait till the date of delivery, or he may treat the contract as rescinded and sue for
damages for the breach.
5. Suit for interest: Nothing in this Act shall affect the right of the seller or the buyer to recover
interest or special damages, in any case where by law interest or special damages may be
recoverable, or to recover the money paid where the consideration for the payment of it has failed.
6. In the absence of a contract to the contrary, the court may award interest at such rate as it thinks fit
on the amount of the price to the buyer in a suit by him for the refund of the price in a case of a
breach of the contract on the part of the seller from the date on which the payment was made.

14. Mr. S agreed to purchase 100 bales of cotton from V, out of his large stock and sent his men to take
delivery of the goods. They could pack only 60 bales. Later on, there was an accidental fire and the
entire stock was destroyed including 60 bales that were already packed. Referring to the provisions of
the Sale of Goods Act, 1930 explain as to who will bear the loss and to what extent?

Answer:
Section 26 of the Sale of Goods Act, 1930 provides that unless otherwise agreed, the goods remain at the
seller’s risk until the property therein is transferred to the buyer, but when the property therein is transferred
to the buyer, the goods are at buyer’s risk whether delivery has been made or not. Further Section 18 read
with Section 23 of the Act provide that in a contract for the sale of unascertained goods, no property in the
goods is transferred to the buyer, unless and until the goods are ascertained and where there is contract for
the sale of unascertained or future goods by description, and goods of that description and in a deliverable
state are unconditionally appropriated to the contract, either by the seller with the assent of the buyer or by
the buyer with the assent of the seller, the property in the goods thereupon passes to the buyer. Such
assent may be express or implied.
Applying the aforesaid law to the facts of the case in hand, it is clear that Mr. S has the right to select the
good out of the bulk and he has sent his men for same purpose.
Hence the problem can be answered based on the following two assumptions and the answer will vary
accordingly.
(i) Where the bales have been selected with the consent of the buyer’s representatives: In
this case the 60 bales has been transferred to the buyer and goods have been appropriated to
the contract. Thus, loss arising due to fire in case of 60 bales would be borne by Mr. S. As
regards 40 bales, the loss would be borne by Mr. V, since the goods have not been identified
and appropriated.
(ii) Where the bales have not been selected with the consent of buyer’s representatives: In
this case, the goods has not been transferred at all and hence the loss of 100 bales would be
borne by Mr. V completely.

15. Mr. Amit was shopping in a self-service Super market. He picked up a bottle of cold drink
from a shelf. While he was examining the bottle, it exploded in his hand and injured him. He
files a suit for damages against the owner of the market on the ground of breach of condition.
Decide under the Sale of Goods Act, 1930, whether Mr. Amit would succeed in his claim?

Answer:
Essentials of Sale: The problem as given in the question is based on Section 16(2) of the Sale of Goods
Act, 1930, which states that where goods are bought by description from a seller who deals in goods of that
description (whether he is the manufacturer or producer or not), there is an implied condition that the goods
shall be of merchantable quality. Though the term ‘merchantable quality’ is not defined in the Act, it means
that in the present case, the bottle must be properly sealed. In other words, if the goods are purchased for
self-use, they should be reasonably fit for the purpose for which it is being used.
In the instant case, on an examination of the bottle of cold drink, it exploded and injured the buyer. Applying
the provision of Section 16(2), Mr. Amit would succeed in claim for damages from the owner of the shop.

RTP Nov’20:

16. J the owner of a Fiat car wants to sell his car. For this purpose he hand over the car to P, a
mercantile agent for sale at a price not less than ` 50, 000. The agent sells the car for ` 40, 000 to A,
who buys the car in good faith and without notice of any fraud. P misappropriated the money also. J
sues A to recover the Car. Decide given reasons whether J would succeed.

Answer:
The problem in this case is based on the provisions of the Sale of Goods Act, 1930 contained in the proviso
to Section 27. The proviso provides that a mercantile agent is one who in the customary course of his
business, has, as such agent, authority either to sell goods, or to consign goods, for the purpose of sale, or
to buy goods, or to raise money on the security of goods [Section 2(9)]. The buyer of goods from a
mercantile agent, who has no authority from the principal to sell, gets a good title to the goods if the
following conditions are satisfied:
(1) The agent should be in possession of the goods or documents of title to the goods with the consent
of the owner.
(2) The agent should sell the goods while acting in the ordinary course of business of a mercantile
agent.
(3) The buyer should act in good faith.
(4) The buyer should not have at the time of the contract of sale notice that the agent has no authority
to sell.
In the instant case, P, the agent, was in the possession of the car with J’s consent for the purpose of sale. A, the
buyer, therefore obtained a good title to the car. Hence, J in this case, cannot recover the car from A.

17. Suraj sold his car to Sohan for ` 75,000. After inspection and satisfaction, Sohan paid `
25,000 and took possession of the car and promised to pay the remaining amount within a
month. Later on, Sohan refuses to give the remaining amount on the ground that the car was
not in a good condition. Advise Suraj as to what remedy is available to him against Sohan.

Answer:
As per the section 55 of the Sale of Goods Act, 1930 an unpaid seller has a right to institute a suit for price
against the buyer personally. The said Section lays down that
(i) Where under a contract of sale the property in the goods has passed to buyer and the buyer
wrongfully neglects or refuses to pay for the goods, the seller may sue him for the price of the
goods [Section 55(1)].
(ii) Where under a contract of sale the price is payable on a certain day irrespective of delivery and
the buyer wrongfully neglects or refuses to pay such price, the seller may sue him for the price.
It makes no difference even if the property in the goods has not passed and the goods have not
been appropriated to the contract [Section 55(2)].
This problem is based on above provisions. Hence, Suraj will succeed against Sohan for recovery of
the remaining amount. Apart from this, Suraj is also entitled to:-
1. Interest on the remaining amount
2. Interest during the pendency of the suit.
3. Costs of the proceedings.

18. What are the consequences of “destruction of goods” under the Sale of Goods Act, 1930, where the
goods have been destroyed after the agreement to sell but before the sale is affected.

Answer:
Destruction of Goods-Consequences:
(i) In accordance with the provisions of the Sale of Goods Act, 1930 as contained in Section 7, a
contract for the sale of specific goods is void if at the time when the contract was made; the
 goods without the knowledge of the seller, perished or become so damaged as no longer to
answer to their description in the contract, then the contract is void ab initio. This section is
based on the rule that where both the parties to a contract are under a mistake as to a matter of
fact essential to a contract, the contract is void.
(ii) In a similar way Section 8 provides that an agreement to sell specific goods becomes void if
subsequently the goods, without any fault on the part of the seller or buyer, perish or become so
damaged as no longer to answer to their description in agreement before the risk passes to the
buyer.
It may, however, be noted that section 7 & 8 apply only to specific goods and not to unascertained goods. If the
agreement is to sell a certain quantity of unascertained goods, the perishing of even the whole quantity of such
goods in the possession of the seller will not relieve him of his obligation to deliver the goods.

19. Distinguish between a ‘Condition’ and a ‘Warranty’ in a contract of sale. When shall a ‘breach of
condition’ be treated as ‘breach of warranty’ under the provisions of the Sale of Goods Act, 1930?
Explain

Answer:

Difference between Condition and Warranty

(i) A condition is a stipulation essential to the main purpose of the contract whereas a warranty is a
stipulation collateral to the main purpose of the contract.
(ii) Breach of condition gives rise to a right to treat the contract as repudiated whereas in case of
breach of warranty, the aggrieved party can claim damage only.
(iii) Breach of condition may be treated as breach of warranty whereas a breach of warranty cannot
be treated as breach of condition.
(iv) According to Section 13 of the Sale of Goods Act, 1930 a breach of condition may be treated as
breach of warranty in following circumstances:
(v) Where a contract of sale is subject to any condition to be fulfilled by the seller, the buyer may
waive the condition.
(vi) Where the buyer elects to treat the breach of condition as breach of a warranty.
(vii) Where the contract of sale is non-severable and the buyer has accepted the whole goods or any
part thereof.
(viii) Where the fulfilment of any condition or warranty is excused by law by reason of impossibility or
otherwise.

RTP May’21:

20. Mrs. G bought a tweed coat from P. When she used the coat, she got rashes on her skin as
her skin was abnormally sensitive. But she did not make this fact known to the seller i.e., P.
Mrs. G filled a case against the seller to recover damages. Can she recover damages under
the Sale of Goods Act, 1930?

Answer:

According to Section 16(1) of Sales of Goods Act, 1930, normally in a contract of sale there is no implied
condition or warranty as to quality or fitness for any particular purpose of goods supplied. The general rule
is that of “Caveat Emptor” that is “let the buyer beware”. But where the buyer expressly or impliedly makes
known to the seller the particular purpose for which the goods are required and also relies on the seller’s
skill and judgement and that this is the business of the seller to sell such goods in the ordinary course of his
business, the buyer can make the seller responsible.
In the given case, Mrs. G purchased the tweed coat without informing the seller i.e. P about the sensitive
nature of her skin. Therefore, she cannot make the seller responsible on the ground that the tweed coat
was not suitable for her skin. Mrs. G cannot treat it as a breach of implied condition as to fitness and quality
and has no right to recover damages from the seller.

21. What are the differences between a ‘Condition’ and ‘Warranty’ in a contract of sale? Also explain,
when shall a ‘breach of condition’ be treated as ‘breach of warranty’ under the provisions of the Sale
of Goods Act, 1930?
Answer:

Difference between conditions and warranties:

The following are important differences between conditions and warranties.
Basis Condition Warranty
Meaning A condition is essential to the main purpose It is only collateral to the main purpose of
of the contract. the contract.
Right in case The aggrieved party can repudiate the The aggrieved party can claim only
of breach contract or claim damages or both in the case damages in case of breach of warranty.
of breach of condition.
Conversion of A breach of condition may be treated as a A breach of warranty cannot be treated
stipulations breach of warranty. as a breach of condition.

Breach of condition be treated as a breach of warranty

Section 13 of the Sales of Goods Act, 1930, specifies cases where a breach of condition be treated as a
breach of warranty. As a result of which the buyer loses his right to rescind the contract and can claim for
damages only.
In the following cases, a contract is not avoided even on account of a breach of a condition:
(i) Where the buyer altogether waives the performance of the condition. A party may for his own
benefit, waive a stipulation.
(ii) Where the buyer elects to treat the breach of the conditions, as one of a warranty. That is to
say, he may claim only damages instead of repudiating the contract.
(iii) Where the contract is non-severable and the buyer has accepted either the whole goods or any
part thereof.
(iv) Where the fulfilment of any condition or warranty is excused by law by reason of impossibility or
otherwise.

22. Ms. R owns a two-Wheeler which she handed over to her friend Ms. K on sale or return basis. Even
after a week, Ms. K neither returned the vehicle nor made payment for it. She instead pledged the
vehicle to Mr. A to obtain a loan. Ms. R now wants to claim the two-Wheeler from Mr. A. Will she
succeed?
i. Examine with reference to the provisions of the Sale of Goods Act, 1930, what recourse is
available to Ms. R?
ii. Would your answer be different if it had been expressly provided that the vehicle would
remain the property of Ms. R until the price has been paid?

Answer:

As per the provisions of Section 24 of the Sale of Goods Act, 1930, when goods are delivered to the buyer
on approval or “on sale or return" or other similar terms, the property therein passes to the buyer-
a. when the buyer signifies his approval or acceptance to the seller or does any other act
adopting the transaction;
b. if he does not signify his approval or acceptance to the seller but retains the goods without
giving notice of rejection, then, if a time has been fixed for the return of the goods, on the
expiration of such time, and, if no time has been fixed, on the expiration of a reasonable time;
or
c. he does something to the good which is equivalent to accepting the goods e.g., he pledges or
sells the goods.
Referring to the above provisions, we can analyse the situation given in the question:
(i) In the instant case, Ms. K, who had taken delivery of the two-wheeler on Sale or Return basis
pledged the two-wheeler to Mr. A, has attracted the third condition that she has done something to
the good which is equivalent to accepting the goods e.g., she pledges or sells the goods.
Therefore, the property therein (two-wheeler) passes to Mr. A. Now in this situation, Ms. R cannot
claim back her two-wheeler from Mr. A, but she can claim the price of the two-wheeler from Ms. K
only.
(ii) It may be noted that where the goods have been delivered by a person on “sale or return” on the
terms that the goods were to remain the property of the seller till they are paid for, the property
therein does not pass to the buyer until the terms are complied with, i.e., price is paid for.
Hence, in this case, it is held that at the time of pledge, the ownership was not transferred to Ms. K. Thus,
the pledge was not valid and Ms. R could recover the two-wheeler from Mr. A.

23. Mr. T was a retailer trader of fans of various kinds. Mr. M came to his shop and asked for an exhaust
fan for kitchen. Mr. T showed him different brands and Mr. M approved of a particular brand and paid
for it. Fan was delivered at Mr. M’s house; at the time of opening the packet he found that it was a
table fan. He informed Mr. T about the delivery of the wrong fan. Mr. T refused to exchange the same,
saying that the contract was complete after the delivery of the fan and payment of price.
i. Discuss whether Mr. T is right in refusing to exchange as per provisions of the Sale of Goods
Act, 1930?
ii. What is the remedy available to Mr. M?

Answer:

According to Section 15 of the Sale of Goods Act, 1930, where the goods are sold by sample as well as by
description, the implied condition is that the goods supplied shall correspond to both with the sample and
the description. In case, the goods do not correspond with the sample or with description or vice versa or
both, the buyer can repudiate the contract.
Further, as per Section 16(1) of the Sales of Goods Act, 1930, when the buyer makes known to
the seller the particular purpose for which the goods are required and he relies on the judgment or
skill of the seller, it is the duty of the seller to supply such goods as are reasonably fit for that purpose.
(i) In the given case, Mr. M had revealed Mr. T that he wanted the exhaust fan for the kitchen. Since
the table fan delivered by Mr. T was unfit for the purpose for which Mr. M wanted the fan,
therefore, T cannot refuse to exchange the fan.
(ii) When one party does not fulfill his obligation according to the agreed terms, the other party may
treat the contract as repudiated or can insist for performance as per the original contract.
Accordingly, the remedy available to Mr. M is that he can either rescind the contract or claim
refund of the price paid by him or he may require Mr. T to replace it with the fan he wanted.

RTP Nov’21:
24. Archika went to a jewellery shop and asked the shopkeeper to show the gold bangles with white
polish. The shopkeeper informed that he has gold bangles with lots of designs but not in white polish
rather if Archika select gold bangles in his shop, he will arrange white polish on those gold bangles
without any extra cost. Archika select a set of designer bangles and pay for that. The shopkeeper
requested Archika to come after two days for delivery of those bangles so that white polish can be
done on those bangles. When Archika comes after two days to take delivery of bangles, she noticed
that due to white polishing, the design of bangles has been disturbed. Now, she wants to avoid the
contract and asked the shopkeeper to give her money back but shopkeeper has denied for the same.
a. State with reasons whether Archika can recover the amount under the Sale of Goods Act,
1930.
b. What would be your answer if shopkeeper says that he can repair those bangles but he will
charge extra cost for same?

Answer:

As per Section 4(3) of the Sale of Goods Act, 1930, where under a contract of sale, the property in the
goods is transferred from the seller to the buyer, the contract is called a sale, but where the transfer of the
property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled,
the contract is called an agreement to sell and as per Section 4(4), an agreement to sell becomes a sale
when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be
transferred.
(a) On the basis of above provisions and facts given in the question, it can be said that there is an
agreement to sell between Archika and shopkeeper and not a sale. Even the payment was made by
Archika, the property in goods can be transferred only after the fulfilment of conditions fixed
between buyer and seller. As the white polish was done but original design is disturbed due to
polishing, bangles are not in original position. Hence, Archika has right to avoid the agreement to
sell and can recover the price paid.
 (b) On the other hand, if shopkeeper offers to bring the bangles in original position by repairing, he cannot
charge extra cost from Archika. Even he has to bear some expenses for repair; he cannot charge it from
Archika.

25. Prashant reaches a sweet shop and ask for 1 Kg of ‘Burfi’ if the sweets are fresh. Seller replies’ “Sir,
my all sweets are fresh and of good quality.” Prashant agrees to buy on the condition that first he
tastes one piece of ‘Burfi’ to check the quality. Seller gives him one piece to taste. Prashant, on
finding the quality is good, ask the seller to pack. On reaching the house, Prashant finds that ‘Burfi’ is
stale not fresh while the piece tasted was fresh. Now, Prashant wants to avoid the contract and return
the ‘Burfi’ to seller.
a. State with reason whether Prashant can avoid the contract under the Sale of Goods Act,
1930?
b. Will your answer be different if Prashant does not taste the sweet?

Answer:

By virtue of provisions of Section 17 of the Sale of Goods Act, 1930, in the case of a contract for sale by
sample there is an implied condition that the bulk shall correspond with the sample in quality and the buyer
shall have a reasonable opportunity of comparing the bulk with the sample. According to Section 15, where
there is a contract for the sale of goods by description, there is an implied condition that the goods shall
correspond with the description. If the goods do not correspond with implied condition, the buyer can avoid
the contract and reject the goods purchased.
(a) In the instant case, the sale of sweet is sale by sample and the quality of bulk does not correspond with
quality of sample. Hence, Prashant can return the sweet and avoid the contract.
(b) In the other case, the sale of sweet is the case of sale by description and the quality of goods does
not correspond with description made by seller. Hence, answer will be same. Prashant can return
the sweet and avoid the contract.

26. Akansh purchased a Television set from Jethalal, the owner of Gada Electronics on the condition that
first three days he will check its quality and if satisfied he will pay for that otherwise he will return the
Television set. On the second day, the Television set was spoiled due to an earthquake. Jethalal
demands the price of Television set from Akansh. Whether Akansh is liable to pay the price under the
Sale of Goods Act,1930? If not, who will ultimately bear the loss?

Answer:

According to Section 24 of the Sale of Goods Act, 1930, "When the goods are delivered to the buyer on
approval or on sale or return or other similar terms the property passes to the buyer:
(i) when he signifies his approval or acceptance to the seller,
(ii) when he does any other act adopting the transaction, and
(iii) if he does not signify his approval or acceptance to the seller but retains goods beyond a
reasonable time".
Further, as per Section 8, where there is an agreement to sell specific goods, and subsequently the goods
without any fault on the part of the seller or buyer perish or become so damaged as no longer to answer to
their description in the agreement before the risk passes to the buyer, the agreement is thereby avoided.
According to above provisions and fact, the property is not passes to Akansh i.e. buyer as no condition of Section 24
is satisfied. Hence, risk has not passed to buyer and the agreement is thereby avoided. Akansh is not liable to pay the
price. The loss finally should be borne by Seller, Mr. Jethalal.

27. Rachit arranges an auction to sale an antic wall clock. Megha, being one of the bidders, gives highest
bid. For announcing the completion of sale, the auctioneer fall the hammer on table but suddenly
hammer brakes and damages the watch. Megha wants to avoid the contract. Can she do so under
the provisions of the Sale of Goods Act, 1930?

Answer:

By virtue of provisions of Section 64 of the Sale of Goods Act, 1930, in case of auction sale, the sale is
complete when the auctioneer announces its completion by the fall of the hammer or in some other
customary manner.
In the instant case, Megha gives the highest bid in the auction for the sale of antic wall clock arranged by
Rachit. While announcing the completion of sale by fall of hammer on the table, hammer brakes and
damages the clock.
On the basis of above provisions, it can be concluded that the sale by auction cannot be completed until hammer
comes in its normal position after falling on table. Hence, in the given problem, sale is not completed. Megha will not
be liable for loss and can avoid the contract.

28. X contracted to sell his car to Y. They did not discuss the price of the car at all. X later refused to sell
his car to Y on the ground that the agreement was void being uncertain about price. Can Y demand
the car under the Sale of Goods Act, 1930?

Answer:

Payment of the price by the buyer is an important ingredient of a contract of sale. If the parties totally ignore
the question of price while making the contract, it would not become an uncertain and invalid agreement. It
will rather be a valid contract and the buyer shall pay a reasonable price. (Section 9 of the Sale of Goods
Act, 1930)
In the give case, X and Y have entered into a contract for sale of car but they did not fix the price of the car. X refused
to sell the car to Y on this ground. Y can legally demand the car from X and X can recover a reasonable price of the
car from Y.

RTP May’22:

29. AB Cloth House, a firm dealing with the wholesale and retail buying and selling of various kinds of
clothes, customized as per the requirement of the customers. They dealt with Silk, Organdie, cotton,
khadi, chiffon and many other different varieties of cloth.
Mrs. Reema, a customer came to the shop and asked for specific type of cloth suitable for making
a saree for her daughter’s wedding. She specifically mentioned that she required cotton silk cloth
which is best suited for the purpose.
The Shop owner agreed and arranged the cloth pieces cut into as per the buyers’ requirements.
When Reema went to the tailor for getting the saree stitched, she found that seller has supplied
her cotton organdie material, cloth was not suitable for the said purpose. It has heavily starched
and not suitable for making the saree that Reema desired for. The Tailor asked Reema to return
the cotton organdie cloth as it would not meet his requirements.
The Shop owner refused to return the cloth on the plea that it was cut to specific requirements of
Mrs. Reema and hence could not be resold.
With reference to the doctrine of "Caveat Emptor' explain the duty of the buyer as well as the
seller. Also explain whether Mrs. Reema would be able to get the money back or the right kind of
cloth as per the requirement?

Answer:

1. Duty of the buyer according to the doctrine of “Caveat Emptor”: In case of sale of goods, the
doctrine ‘Caveat Emptor’ means ‘let the buyer beware’. When sellers display their goods in the
open market, it is for the buyers to make a proper selection or choice of the goods. If the goods turn
out to be defective, he cannot hold the seller liable. The seller is in no way responsible for the bad
selection of the buyer. The seller is not bound to disclose the defects in the goods which he is
selling.
2. Duty of the seller according to the doctrine of “Caveat Emptor”: The following
exceptions to the Caveat Emptor are the duties of the seller:

(a) Fitness as to quality or use

(b) Goods purchased under patent or brand name
(c) Goods sold by description
(d) Goods of Merchantable Quality
(e) Sale by sample
(f) Goods by sample as well as description
(g) Trade usage
(h) Seller actively conceals a defect or is guilty of fraud

Based on the above provision and facts given in the question, it can be concluded that Mrs. Reema
is entitled to get the money back or the right kind of cloth as required serving her purpose. It is the
duty of the seller to supply such goods as are reasonably fit for the purpose mentioned by buyer.
[Section 16(1) of the Sale of Goods Act, 1930].

30. A went to B’s shop and selected some jewellery. He falsely represented himself to be a man of credit
and thereby persuaded B to take the payment by cheque. He further requested him to hand over the
particular type of ring immediately. On the due date, when the seller, B presented the cheque for
payment, the cheque was found to be dishonoured. Before B could avoid the contract on the ground
of fraud by A, he had sold the ring to C. C had taken the ring in good faith and without any notice of
the fact that the goods with A were under a voidable contract. Discuss if such a sale made by non-
owner is valid or not as per the provisions of Sale of Goods Act, 1930?

Answer:

Section 27 of Sale of Goods Act, 1930 states that no man can sell the goods and give a good title unless
he is the owner of the goods. However, there are certain exceptions to this rule of transfer of title of goods.
One of the exceptions is sale by person in possession under a voidable contract (Section 29 of Sale of
Goods Act, 1930)

(a) If a person has possession of goods under a voidable contract.

(b) The contract has not been rescinded or avoided so far
(c) The person having possession sells it to a buyer
(d) The buyer acts in good faith
(e) The buyer has no knowledge that the seller has no right to sell.

Then, such a sale by a person who has possession of goods under a voidable contract shall amount to a
valid sale and the buyer gets the better title.
Based on the provisions, Mr. A is in possession of the ring under a voidable contract as per provisions of
Indian Contract Act, 1872. Also, B has not rescinded or avoided the contract, Mr. A is in possession of the
ring and he sells it new buyer Mr. C who acts in good faith and has no knowledge that A is not the real
owner. Since all the conditions of Section 29 of Sale of Goods Act, 1930 are fulfilled, therefore sale of ring
made by Mr. A to Mr. C is a valid sale.

31. Classify the following transactions according to the types of goods they are:
a. A wholesaler of cotton has 100 bales in his go down. He agrees to sell 50 bales and these
bales were selected and set aside.
b. A agrees to sell to B one packet of sugar out of the lot of one hundred packets lying in his
shop.
c. T agrees to sell to S all the apples which will be produced in his garden this year.

Answer:

(ii) A wholesaler of cotton has 100 bales in his godown. So, the goods are existing goods. He agrees to
sell 50 bales and these bales were selected and set aside. On selection, the goods become
ascertained. In this case, the contract is for the sale of ascertained goods, as the cotton bales to be
sold are identified and agreed after the formation of the contract.
(iii) If A agrees to sell to B one packet of sugar out of the lot of one hundred packets lying in his shop, it
is a sale of existing but unascertained goods because it is not known which packet is to be delivered.
(iv) T agrees to sell to S all the apples which will be produced in his garden this year. It is contract of sale
of future goods, amounting to 'an agreement to sell.'
 32. Certain goods were sold by sample by A to B, who in turn sold the same goods by sample to C and C
by sample sold the goods to D. The goods were not according to the sample. Therefore, D who found
the deviation of the goods from the sample rejected the goods and gave a notice to C. C sued B and
B sued A. Advise B and C under the Sale of Goods Act, 1930.

Answer:

In the instant case, D who noticed the deviation of goods from the sample can reject the goods and treat it
as a breach of implied condition as to sample which provides that when the goods are sold by sample the
goods must correspond to the sample in quality and the buyer should be given reasonable time and
opportunity of comparing the bulk with the sample. Whereas C can recover only damages from B and B
can recover damages from A. For C and B it will not be treated as a breach of implied condition as to
sample as they have accepted and sold the goods according to Section 13(2) of the Sales of Goods Act,
1930.

Past Year Papers:

Nov’19:

33. State the various essential elements involved in the sale of unascertained goods and its appropriation as per the
Sale of Goods Act, 1930.
(4 Marks)
Answer:

Sale of unascertained goods and Appropriation (Section 23 of the Sale of Goods Act, 1930): Appropriation of
goods involves selection of goods with the intention of using them in performance of the contract and with the mutual
consent of the seller and the buyer.
The essentials are:
(a) There is a contract for the sale of unascertained or future goods.
(b) The goods should conform to the description and quality stated in the contract.
(c) The goods must be in a deliverable state.
(d) The goods must be unconditionally appropriated to the contract either by delivery to the buyer or his agent or the
carrier.
(e) The appropriation must be made by:
(i) the seller with the assent of the buyer; or
(ii) the buyer with the assent of the seller.
(f) The assent may be express or implied.
(g) The assent may be given either before or after appropriation.

34. What are the rights of an unpaid seller against goods under the Sale of Goods Act, 1930?
(6 Marks)
Answer:
Rights of an unpaid seller against the goods: As per the provisions of Section 46 of the Sale of Goods Act, 1930,
notwithstanding that the property in the goods may have passed to the buyer, the unpaid seller of goods, as such, has
by implication of law-
(a) a lien on the goods for the price while he is in possession of them;
(b) in case of the insolvency of the buyer, a right of stopping the goods in transit after he has parted with the
possession of them;
(c) a right of re-sale as limited by this Act. [Sub-section (1)]
Where the property in goods has not passed to the buyer, the unpaid seller has, in addition to his other remedies, a
right of withholding delivery similar to and co-extensive with his rights of lien and stoppage in transit where the
property has passed to the buyer. [Sub-section (2)]
These rights can be exercised by the unpaid seller in the following circumstances:
i. Right of lien (Section 47): According to sub-section (1), the unpaid seller of goods who is in possession of
them is entitled to retain possession of them until payment or tender of the price in the following cases,
namely: -
(a) where the goods have been sold without any stipulation as to credit;
(b) where the goods have been sold on credit, but the term of credit has expired;
(c) where the buyer becomes insolvent.
 ii. Right of stoppage in transit (Section 50): When the buyer of goods becomes insolvent, the unpaid seller
who has parted with the possession of the goods has the right of stopping them in transit, that is to say, he
may resume possession of the goods as long as they are in the course of transit, and may retain them until
paid or tendered price of the goods.
iii. Right to re-sell the goods (Section 54): The unpaid seller can exercise the right to re-sell the goods under
the following conditions:
1. Where the goods are of a perishable nature
2. Where he gives notice to the buyer of his intention to re-sell the goods
3. Where an unpaid seller who has exercised his right of lien or stoppage in transit resells the goods
4. A re-sale by the seller where a right of re-sale is expressly reserved in a contract of sale
5. Where the property in goods has not passed to the buyer

35. Mrs. Geeta went to the local rice and wheat wholesale shop and asked for 100 kgs of Basmati rice. The
Shopkeeper quoted the price of the same as ` 125 per kg to which she agreed. Mrs. Geeta insisted that she
would like to see the sample of what will be provided to her by the shopkeeper before she agreed upon such
purchase.
The shopkeeper showed her a bowl of rice as sample. The sample exactly corresponded to the entire lot.
The buyer examined the sample casually without noticing the fact that even though the sample was that of
Basmati Rice but it contained a mix of long and short grains.
The cook on opening the bags complained that the dish if prepared with the rice would not taste the same as the
quality of rice was not as per requirement of the dish.
Now Mrs. Geeta wants to file a suit of fraud against the seller alleging him of selling mix of good and cheap
quality rice. Will she be successful?
Explain the basic law on sale by sample under Sale of Goods Act 1930?
Decide the fate of the case and options open to the buyer for grievance redressal as per the provisions of Sale of
Goods Act 1930?
What would be your answer in case Mrs. Geeta specified her exact requirement as to length of rice?
(6 Marks)
Answer:

(i) As per the provisions of Sub-Section (2) of Section 17 of the Sale of Goods Act, 1930, in a contract of sale by
sample, there is an implied condition that:
(a) the bulk shall correspond with the sample in quality;
(b) the buyer shall have a reasonable opportunity of comparing the bulk with the sample.
In the instant case, in the light of the provisions of Sub-Clause (b) of Sub-Section (2) of
Section 17 of the Act, Mrs. Geeta will not be successful as she casually examined the sample
of rice (which exactly corresponded to the entire lot) without noticing the fact that even
though the sample was that of Basmati Rice but it contained a mix of long and short grains.
(iii) Sale by Sample: (Section 17 of the Sale of Goods Act, 1930): As per the provisions of Sub-Section (1) of
section 17 of the Sale of Goods Act, 1930, a contract of sale is a contract for sale by sample where there is a
term in the contract, express or implied, to that effect.
As per the provisions of Sub-Section (2) of section 17 of the Sale of Goods Act, 1930, in a contract of sale
by sample, there is an implied condition that:
(a) that the bulk shall correspond with the sample in quality;
(b) that the buyer shall have a reasonable opportunity of comparing the bulk with the sample.
(c) that the goods shall be free from any defect, rendering them unmerchantable, which would not be
apparent on reasonable examination of the sample.
(iv) In the instant case, the buyer does not have any option available to him for grievance redressal.
(v) In case Mrs. Geeta specified her exact requirement as to length of rice, then there is an implied condition
that the goods shall correspond with the description. If it is not so, the seller will be held liable.

Nov’20

36. Write any four exceptions to the doctrine of Caveat Emptor as per the Sale of Goods Act, 1930.
(4 Marks)
Answer:
The doctrine of Caveat Emptor given under the Sale of Goods Act, 1930 is subject to the following
exceptions:
 1. Fitness as to quality or use: Where the buyer makes known to the seller the particular purpose
for which the goods are required, it is the duty of the seller to supply such goods as are
reasonably fit for that purpose [Section 16 (1)].
2. Goods purchased under patent or brand name: In case where the goods are purchased under
its patent name or brand name, there is no implied condition that the goods shall be fit for any
particular purpose [Section 16(1)].
3. Goods sold by description: Where the goods are sold by description there is an implied
condition that the goods shall correspond with the description [Section 15]. If it is not so, then
seller is responsible.
4. Goods of Merchantable Quality: Where the goods are bought by description from a seller who
deals in goods of that description there is an implied condition that the goods shall be of
merchantable quality. The rule of Caveat Emptor is not applicable. [Section 16(2)].
5. Sale by sample: Where the goods are bought by sample, this rule of Caveat Emptor does not
apply if the bulk does not correspond with the sample [Section 17].
6. Goods by sample as well as description: Where the goods are bought by sample as well as
description, the rule of Caveat Emptor is not applicable in case the goods do not correspond with
both the sample and description or either of the condition [Section 15].
7. Trade Usage: An implied warranty or condition as to quality or fitness for a particular purpose
may be annexed by the usage of trade and if the seller deviates from that, this rule of Caveat
Emptor is not applicable [Section 16(3)].
8. Seller actively conceals a defect or is guilty of fraud: Where the seller sells the goods by
making some misrepresentation or fraud and the buyer relies on it or when the seller actively
conceals some defect in the goods so that the same could not be discovered by the buyer on a
reasonable examination, then the rule of Caveat Emptor will not apply.

37. Explain any six circumstances in detail in which non-owner can convey better title to Bona fide
purchaser of goods for value as per the Sale of Goods Act, 1930.
(6 Marks)
Answer:
In the following cases, a non-owner can convey better title to the bona fide purchaser of goods for value.
(1) Sale by a Mercantile Agent: A sale made by a mercantile agent of the goods for document of title to
goods would pass a good title to the buyer in the following circumstances; namely;
(a) If he was in possession of the goods or documents with the consent of the owner;
(b) If the sale was made by him when acting in the ordinary course of business as a mercantile
agent; and
(c) If the buyer had acted in good faith and has at the time of the contract of sale, no notice of
the fact that the seller had no authority to sell (Proviso to Section 27 of the Sale of Goods
Act, 1930).
(2) Sale by one of the joint owners (Section 28): If one of several joint owners of goods has the sole
possession of them by permission of the co-owners, the property in the goods is transferred to any
person who buys them of such joint owner in good faith and has not at the time of the contract of sale
notice that the seller has no authority to sell.
(3) Sale by a person in possession under voidable contract: A buyer would acquire a good title to the
goods sold to him by a seller who had obtained possession of the goods under a contract voidable on
the ground of coercion, fraud, misrepresentation or undue influence provided that the contract had not
been rescinded until the time of the sale (Section 29).
(4) Sale by one who has already sold the goods but continues in possession thereof: If a person
has sold goods but continues to be in possession of them or of the documents of title to them, he may
sell them to a third person, and if such person obtains the delivery thereof in good faith and without
notice of the previous sale, he would have good title to them, although the property in the goods had
passed to the first buyer earlier. A pledge or other disposition of the goods or documents of title by the
seller in possession are equally valid [Section 30(1)].
(5) Sale by buyer obtaining possession before the property in the goods has vested in him: Where
a buyer with the consent of the seller obtains possession of the goods before the property in them has
passed to him, he may sell, pledge or otherwise dispose of the goods to a third person, and if such
person obtains delivery of the goods in good faith and without notice of the lien or other right of the
original seller in respect of the goods, he would get a good title to them [Section 30(2)].
However, a person in possession of goods under a ‘hire-purchase’ agreement which gives him only an
option to buy is not covered within the section unless it amounts to a sale.
 (6) Effect of Estoppel: Where the owner is estopped by the conduct from denying the seller’s authority to
sell, the transferee will get a good title as against the true owner. But before a good title by estoppel
can be made, it must be shown that the true owner had actively suffered or held out the other person
in question as the true owner or as a person authorized to sell the goods.
(7) Sale by an unpaid seller: Where an unpaid seller who had exercised his right of lien or stoppage in
transit resells the goods, the buyer acquires a good title to the goods as against the original buyer
[Section 54 (3)].
(8) Sale under the provisions of other Acts:
(i) Sale by an Official Receiver or Liquidator of the Company will give the purchaser a valid
title.
(ii) Purchase of goods from a finder of goods will get a valid title under circumstances
[Section 169 of the Indian Contract Act, 1872]
(iii) A sale by pawnee can convey a good title to the buyer [Section 176 of the Indian
Contract Act, 1872]

38. Ms. R owns a Two Wheeler which she handed over to her friend Ms. K on sale or return basis. Even
after a week, Ms. K neither returned the vehicle nor made payment for it. She instead pledged the
vehicle to Mr. A to obtain a loan. Ms. R now wants to claim the Two Wheeler from Mr. A. Will she
succeed?
i. Examine with reference to the provisions of the Sale of Goods Act, 1930, what recourse is
available to Ms. R?
ii. Would your answer be different if it had been expressly provided that the vehicle would remain the
property of Ms. R until the price has been paid?
(6 Marks)
Answer:
As per the provisions of Section 24 of the Sale of Goods Act, 1930, when goods are delivered to the buyer
on approval or “on sale or return" or other similar terms, the property therein passes to the buyer-
(a) when the buyer signifies his approval or acceptance to the seller or does any other act adopting the
transaction;
(b) if he does not signify his approval or acceptance to the seller but retains the goods without giving
notice of rejection, then, if a time has been fixed for the return of the goods, on the expiration of
such time, and, if no time has been fixed, on the expiration of a reasonable time; or
(c) he does something to the good which is equivalent to accepting the goods e.g. he pledges or sells
the goods.
Referring to the above provisions, we can analyse the situation given in the question.
i. In the instant case, Ms. K, who had taken delivery of the two wheeler on Sale or Return basis
pledged the two wheeler to Mr. A, has attracted the third condition that she has done
something to the good which is equivalent to accepting the goods e.g. she pledges or sells the
goods. Therefore, the property therein (Two wheeler) passes to Mr. A. Now in this situation,
Ms. R cannot claim back her two wheeler from Mr. A, but she can claim the price of the two
wheeler from Ms. K only.
ii. It may be noted that where the goods have been delivered by a person on “sale or return” on
the terms that the goods were to remain the property of the seller till they are paid for, the
property therein does not pass to the buyer until the terms are complied with, i.e., price is paid
for.
Hence, in this case, it is held that at the time of pledge, the ownership was not transferred to Ms. K. Thus,
the pledge was not valid and Ms. R could recover the two wheeler from Mr. A.

Jan’21

39. What are the rules which regulate the Sale by Auction under the Sale of Goods Act, 1930?
(4 Marks)
Answer:

Rules of Auction sale: Section 64 of the Sale of Goods Act, 1930 provides following rules to regulate the sale by auction:
(i) Where goods are sold in lots: Where goods are put up for sale in lots, each lot is prima facie deemed to be subject of a separate
contract of sale.
(ii) Completion of the contract of sale: The sale is complete when the auctioneer announces its completion by the fall of hammer or
in any other customary manner and until such announcement is made, any bidder may retract from his bid.
(iii) Right to bid may be reserved: Right to bid may be reserved expressly by or on behalf of the seller and where such a right is
expressly reserved, but not otherwise, the seller or any one person on his behalf may bid at the auction.
(iv) Where the sale is not notified by the seller: Where the sale is not notified to be subject to a right to bid on behalf of the seller, it
shall not be lawful for the seller to bid himself or to employ any person to bid at such sale, or for the auctioneer knowingly to take
any bid from the seller or any such person; and any sale contravening this rule may be treated as fraudulent by the buyer.
(v) Reserved price: The reserved price is the lowest price at which a seller is willing to sell an item. The auction sale may be
notified to be subject to a reserve or upset price; and
(vi) Pretended bidding: If the seller makes use of pretended bidding to raise the price, the sale is voidable at the option of the
buyer.

40. What are the differences between a 'Condition' and 'Warranty' in a contract of sale? Also explain, when shall a 'breach of
condition' be treated as 'breach of warranty' under provisions of the Sale of Goods Act, 1930?
(6 Marks)
Answer:

Difference between conditions and warranties:

The following are important differences between conditions and warranties.

Breach of condition be treated as a breach of warranty

Section 13 of the Sales of Goods Act, 1930, specifies cases where a breach of condition be treated as a breach of warranty. As a
result of which the buyer loses his right to rescind the contract and can claim for damages only. In the following cases, a contract is
not avoided even on account of a breach of a
condition:
(i) Where the buyer altogether waives the performance of the condition. A party may for his own benefit, waive a stipulation.
(ii) Where the buyer elects to treat the breach of the conditions, as one of a warranty. That is to say, he may claim only damages
instead of repudiating the contract.
(iii) Where the contract is non-severable and the buyer has accepted either the whole goods or any part thereof.
(iv) Where the fulfilment of any condition or warranty is excused by law by reason of impossibility or otherwise.

41. Mr. T was a retail trader of fans of various kinds. Mr. M came to his shop and asked for an exhaust fan for kitchen. Mr. T
showed him different brands and Mr. M approved of a particular brand and paid for it. Fan was delivered at Mr. M's house;
at the time of opening the packet he found that it was a table fan. He informed Mr. T about the delivery of the wrong fan. Mr.
T refused to exchange the same, saying that the contract was complete after the delivery of the fan and payment of price.
i. Discuss whether Mr. T is right in refusing to exchange as per provisions of Sale of Goods Act, 1930?
ii. What is the remedy available to Mr. M?
(6 Marks)
Answer:

(i) According to Section 15 of the Sale of Goods Act, 1930, where the goods are sold by sample as well as by description, the
implied condition is that the goods supplied shall correspond to both with the sample and the description. In case, the goods do not
correspond with the sample or with description or vice versa or both, the buyer can repudiate the contract.
Further, as per Section 16(l) of the Sales of Goods Act, 1930, when the buyer makes known to the seller the particular purpose for
which the goods are required and he relies on the judgment or skill of the seller, it is the duty of the seller to supply such goods as
are reasonably fit for that purpose. In the given case, Mr. M had revealed Mr. T that he wanted the exhaust fan for the kitchen.
Since the table fan delivered by Mr. T was unfit for the purpose for which Mr. M wanted the fan, therefore, T cannot refuse to
exchange the fan.
(ii) When one party does not fulfill his obligation according to the agreed terms, the other party may treat the contract as repudiated
or can insist for performance as per the original contract. Accordingly, the remedy available to Mr. M is that he can either rescind
the contract or claim refund of the price paid by him or he may require Mr. T to replace it with the fan he wanted.

July’21

Discuss the rights of an unpaid seller against the buyer under the Sales of Goods Act, 1930.
(6 Marks)
Answer:

The right against the buyer are as follows:

1. Suit for price (Section 55 of the Sale of Goods Act, 1930)
(a) Where under a contract of sale, the property in the goods has passed to the buyer and the
buyer wrongfully neglects or refuses to pay for the goods according to the terms of the
contract, the seller may sue him for the price of the goods. [Section 55(1)]
(b) Where under a contract of sale, the price is payable on a certain day irrespective of delivery
and the buyer wrongfully neglects or refuses to pay such price, the seller may sue him for the
price although the property in the goods has not passed and the goods have not been
appropriated to the contract. [Section 55(2)].
2. Suit for damages for non-acceptance (Section 56): Where the buyer wrongfully neglects or
refuses to accept and pay for the goods, the seller may sue him for damages for non-acceptance.
3. Repudiation of contract before due date (Section 60): Where the buyer repudiates the contract
before the date of delivery, the seller may treat the contract as rescinded and sue damages for the
breach. This is known as the ‘rule of anticipatory breach of contract’.
4. Suit for interest [Section 61]: Where there is specific agreement between the seller and the buyer
as to interest on the price of the goods from the date on which payment becomes due, the seller may
recover interest from the buyer. If, however, there is no specific agreement to this effect, the seller
may charge interest on the price when it becomes due from such day as he may notify to the buyer.
In the absence of a contract to the contrary, the Court may award interest to the seller in a
suit by him at such rate as it thinks fit on the amount of the price from the date of the tender
of the goods or from the date on which the price was payable.

Mr. Das, a general store owner went to purchase 200 kg of Basmati Rice of specific length from a whole
seller. He saw the samples of rice and agreed to buy the one for which the price was quoted as ` 150 per
kg. While examining the sample Mr. Das failed to notice that the rice contained a mix of long and short
grain of rice.
The whole seller supplied the required quantity exactly the same as shown in the sample. However, when
Mr. Das sold the rice to one of his regular customers she complained that the rice contained two different
qualities of rice and returned the rice.
With reference to the provisions of the Sales of Goods Act, 1930, discuss the options open to Mr. Das for grievance
redressal. What would be your answer in case Mr. Das specified his exact requirement as to length of rice?
(6 Marks)
Answer:

As per the provisions of Sub-Section (2) of Section 17 of the Sale of Goods Act, 1930, in a contract of sale
by sample, there is an implied condition that:
(a) the bulk shall correspond with the sample in quality;
(b) the buyer shall have a reasonable opportunity of comparing the bulk with the sample.
In the instant case, Mr. Das on examination of the sample on which he agreed to buy, failed to notice that it
contained a mix of long and short grain of rice.
In the light of the provisions of Sub-Clause (b) of Sub-Section (2) of Section 17 of the Act, Mr. Das will not
be successful as he examined the sample of Basmati rice (which exactly corresponded to the entire lot)
without noticing the fact that even though the sample was that of Basmati Rice but it contained a mix of
long and short grains. It could have been discovered by Mr. Das, by an ordinary examination of the goods
that it contained a mix of long and short grains. This reflects lack of due diligence on part of Mr. Das.
Therefore, Mr. Das, the buyer does not have any option available to him for grievance redressal.
In case Mr. Das specified his exact requirement as to length of rice, then there is an implied condition that the goods
shall correspond with the description. If it is not so, then in such case, seller will be held liable.

Dec’21

Distinguish between 'Sale' and 'Hire Purchase' under the Sale of Goods Act, 1930.
(6 Marks)
Answer:

The main points of distinction between the 'Sale' and 'Hire-Purchase' are as follows:

TK ordered timber of 1 inch thickness for being made into drums. The seller agreed to supply the required
timber of 1 inch. However, the timber supplied by the seller varies in thickness from 1 inch to 1.4 inches.
The timber is commercially fit for the purpose for which it was ordered. TK rejects the timber. Explain with
relevant provisions of the Sale of Goods Act, 1930 whether TK can reject the timber.
(3 Marks)

Answer:

Condition as to quality or fitness [Section 16(1) of the Sale of Goods Act, 1930]:
 The condition as to the reasonable fitness of goods for a particular purpose may be implied if the
buyer had made known to the seller the purpose of his purchase and relied upon the skill and
judgment of the seller to select the best goods and the seller has ordinarily been dealing in those
goods.
There is implied condition on the part of the seller that the goods supplied shall be reasonably fit for
the purpose for which the buyer wants them, provided the following conditions are fulfilled:
i. The buyer should have made known to the seller the particular purpose for which goods are
required.
ii. The buyer should rely on the skill and judgement of the seller.
iii. The goods must be of a description dealt in by the seller, whether he be a manufacturer or
not.
In the instant case, as the timber supplied by the seller is commercially fit for the purposes for which it was
ordered, it means the implied condition on the part of the seller is fulfilled.
Hence, TK cannot reject the timber.
Alternatively, the above answer can also be provided as under:
According to Section 15 of the Sale of Goods Act, 1930 where there is a contract for the sale of goods by
description, there is an implied condition that the goods shall correspond with the description. The buyer is
not bound to accept and pay for the goods which are not in accordance with the description of goods.
Thus, it has to be determined whether the buyer has undertaken to purchase the goods by their description,
i.e., whether the description was essential for identifying the goods where the buyer had agreed to
purchase. If that is required and the goods tendered do not correspond with the description, it would be
breach of condition entitling the buyer to reject the goods.
In the instant case, as the timber supplied by seller varies in thickness from 1 inch to 1.4 inches, it does not
correspond with the description ordered by TK i.e. of 1 inch, TK may reject the timber.

AB sold 500 bags of wheat to CD. Each bag contains 50 Kilograms of wheat. AB sent 450 bags by road transport and
CD himself took remaining 50 bags. Before CD receives delivery of 450 bags sent by road transport, he becomes
bankrupt. AB being still unpaid, stops the bags in transit. The official receiver, on CD's insolvency claims the bags.
Decide the case with reference to the provisions of the Sale of Goods Act, 1930.
(3 Marks)
Answer:

Right of stoppage in transit (Section 50 of the Sale of Goods Act, 1930):

Subject to the provisions of this Act, when the buyer of goods becomes insolvent, the unpaid seller who has parted
with the possession of the goods has the right of stopping them in transit, that is to say, he may resume possession
of the goods as long as they are in the course of transit and may retain them until paid or tendered price of the
goods.
When the unpaid seller has parted with the goods to a carrier and the buyer has become insolvent, he can
exercise this right of asking the carrier to return the goods back, or not to deliver the goods to the buyer.
In the instant case, CD, the buyer becomes insolvent, and 450 bags are in transit. AB, the seller, can stop the goods in
transit by giving a notice of it to CD. The official receiver, on CD’s insolvency cannot claim the bags.