THE SALE OF GOODS ACT, 1930

Classification of Provisions of SOGA

Sale of Goods Act, 1930

Introduction Contract of Sale Miscellaneous

Chapter -1 Chapter- 2 to 6 Chapter -7
Sec. 1 to 3 Sec. 4 to 61 Sec. 62-66

Formation Effects Performance Rights of Breach &

Ch- 2 Ch-3 Ch-4 unpaid seller Remedies
Sec. 4-17 Sec. 18-30 Sec. 31-44 Ch-5 Ch-6
Sec. 45-55 Sec. 55-61
 INTROUCTION
Sec. 1
The Sale of Goods Act (SOGA) came into force
on 1st July, 1930.
Prior to this Act, the law relating to contract of
sale of goods was embodied in Sections 76 to
123 of the Indian Contract Act, 1872. The said
provisions were repealed by SOGA, 1930
Sec. 3.
The unrepealed provisions of the Indian Contract
Act, 1872, save in so far as they are inconsistent
with the express provisions of this Act, shall
continue to apply to contracts for the sale of
goods.

Sec. 2 Definition clause

 Goods
Goods –Definition- Sec. 2(7)

“goods” means every kind of moveable property

other than actionable claims and money; and
includes stock and shares, growing crops,
grass, and things attached to or forming part
of the land which are agreed to be severed
before sale or under the contract of sale
 Goods
1. Means- every kind of moveable property
2. Includes-
- stock and shares,
- growing crops,
- grass,
- and things attached to or forming part of the land which
are agreed to be severed before sale or under the
contract of sale;
3. Excludes-
-actionable claims and
-money
Movable property- is defined under Sec. 3(36) of the
General Clauses Act, 1897 as – property of every
description, except immovable property.

Immovable property-
Sec. 3(26) of the General Clauses Act, 1897 - “immovable
property” shall include land, benefits to arise out of
land, and things attached to the earth, or permanently
fastened to anything attached to the earth;
The Transfer of Property Act, 1882, sec.3- immoveable
property” does not include standing timber, growing
crops or grass;
 Included as “goods”
1. Shares & stocks
2. Growing crops,
3. grass,
4. things attached to or forming part of the land
which are agreed to be severed before sale or
under the contract of sale eg. handpumps, any
machinery attached to the earth

Eg. Standing timber on land agreed to be severed

from the land before the sale is “goods”.
 Not considered as “Goods”
1. Money- Current money or money being used as
currency or as a legal tender is not “good”.
Old and rare currencies which have ceased to be current
money or legal tender may become “goods”
2. Actionable claim- defined u/s 3 of Transfer of Property
Act, 1882. The expression used in English law is ‘chose
in action’ or ‘thing in action’. It means where a
person does not have enjoyment of the thing but
merely a right to recover it by suit or action.
Eg. money due from a party is an actionable claim. It is
not a “good” which could be delivered by one person
to another
Sec. 3 – TOPA- “actionable claim”
It is an unsecured debt which can be enforced
through court.
It does not include a debt secured by mortgage/
hypothecation/ pledge.
It doe not include a beneficial interest in movable
property not in the possession of claimant but
recognized by courts as affording grounds for
relief. Eg. Lottery amount, claims of rent, amount
due under a litigation etc.
Gas & electricity are not goods- Rash Behari v
Emperor (1936) 41 C.W.N. 225
Electricity is goods- Associated Power Co. v Ram
Ratan (1970) A. Cal. 75.
TYPES OF GOODS
Existing Goods- Owned or possessed by the seller at the time of
contract of sale
Eg. A has 10 cars in his possession and he wants to sell them
Existing goods can be of the following types-
1) Specific goods - identified and agreement upon at the time of
contract of sale eg. Sale of laptop of XYZ model of ABC company
2) Ascertained goods- Goods which are identified in accordance with
the agreement between after the contract of sale is made eg.
3) Unascertained goods- not specifically identified or ascertained at
the time of contract of sale

eg. Sale of 5 kg of apples. These are unascertained goods at the time

of contract of sale. When 5 Kg of apples would be identified from
the bulk after the contract of sale, these will become ascertained
goods.
Future Goods- Which are to be manufactured/
produced/ acquired by the seller after making
agreement to sale.
A says to X “After purchasing goods from B, I will
sell the goods to you.”
Future goods do not exist with the seller at the
time of agreement to sell.
They come into existence at a future date.
Contingent goods-
Acquisition of goods depends on happening/non-
happening of the contingency.
Eg. A agrees to sell 100 units of goods in a particular
ship to B, provided the ship arrives safely.
Contingent goods may be existing at the time of
agreement to sell, but, they would be acquired by
the buyer on the happening of the given
contingency.
 Subject-matter of contract
Sec. 6-7
6. Existing or future goods.—(1) The goods which form the subject of a contract of sale may be
either existing goods, owned or possessed by the seller, or future goods.
(2) There may be a contract for the sale of goods the acquisition of which by the seller depends upon
a contingency which may or may not happen.
(3) Where by a contract of sale the seller purports to effect a present sale of future goods, the contract
operates as an agreement to sell the goods.
7. Goods perishing before making of contract. — Where there is a contract for the sale of specific
goods, the contract is void if the goods without the knowledge of the seller have, at the time when the
contract was made, perished or become so damaged as no longer to answer to their description in the
contract.
8. Goods perishing before sale but after agreement to sell.—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.
 PRICE
Sec. 2 (10) “price” means the money consideration for a sale of goods;

9. Ascertainment of price.—(1) The price in a contract of sale may be fixed by the contract or may
be left to be fixed in manner thereby agreed or may be determined by the course of dealing between
the parties.
(2) Where the price is not determined in accordance with the foregoing provisions, the buyer shall
pay the seller a reasonable price. What is a reasonable price is a question of fact dependent on the
circumstances of each particular case.
10. Agreement to sell at valuation.—(1) Where there is an agreement to sell goods on the terms that
the price is to be fixed by the valuation of a third party and such third party cannot or does not make
such valuation, the agreement is thereby avoided:
Provided that, if the goods or any part thereof have been delivered to, and appropriated by, the buyer,
he shall pay a reasonable price therefor.
(2) Where such third party is prevented from making the valuation by the fault of the seller or buyer,
the party not in fault may maintain a suit for damages against the party in fault.
CONTRACT OF SALE
Parties- Seller & Buyer
“seller” means a person who sells or agrees to
sell goods; Sec. 2 (13)

“buyer” means a person who buys or agrees to

buy goods; Sec. 2(1)
 Sec. 4 , SOGA

4. Sale and agreement to sell.—(1) 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. There may be a contract
of sale between one part-owner and another.
(2) A contract of sale may be absolute or conditional.
(3) 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.
(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 “contract of sale” can be of 2 types-
1. Sale; or
2. Agreement to sell
Sale Agreement to sell

It is an executed transaction. It is an executory transaction.

Property/ ownership in goods is transferred from seller to buyer. Property/ ownership in goods gets transferred ar a future time or
subject to the fulfilment of some condition.
It is a contract and conveyance of property in goods. It is only a contract. No conveyance of property takes place.

Buyer acquires a right in rem. Buyer has right in personum- right only against the selelr.

Sale always refers to existing goods. Agreement to sell refers to future or contingent goods.

Goods are at buyer’s risk. Goods remain with the seller until the agreement to sell is converted
into sale.
Unpaid seller has remedy to sue the buyer for price. If goods are in the Seller can only sue the buyer for breach of contract.
possession of seller, he can exercise right such as right to lien; right to
stoppage in transit; right to re-sell the goods
Sale cannot get converted into an agreement to sell. It gets converted into sale after fulfilment of the condition or lapse of
stipulated time.
If seller refuses to deliver goods, buyer can sue him for recovery of Buyer can sue only for damages but he cannot sue for recovery of
goods. goods.
If seller sells goods to a third person, buyer can recover them, subject to Original buyer cannot recover goods from new buyer.
conditions.
 Firm Bhagwandas V. State of MP
AIR 1966 MP 95
Contract of sale between plaintiff and State for
sale of tender leaves for five years.
Consideration was payable at the beginning of
each year.
Held-When goods are not specific and
ascertained at the time of making the
contract, it is only an agreement to sell.
 Ram Narain Mahato V. State of MP
[1970] 1 SCC 25
Sale of timber logs to be cut from trees.

Held- Not sale.

It is an agreement to sell. Property in the goods
will pass to the buyer on the severance of the
goods from the land and not before that.
 How is Contract of Sale made?
Sec. 5-
(1) A contract of sale is made by an offer to buy or sell
goods for a price and the acceptance of such offer. The
contract may provide for the immediate delivery of
the goods or immediate payment of the price or both,
or for the delivery or payment by instalments, or that
the delivery or payment or both shall be postponed.
(2) Subject to the provisions of any law for the time being
in force, a contract of sale may be made in writing or
by word of mouth, or partly in writing and partly by
word of mouth or may be implied from the conduct of
the parties.
AGREEMENT TO SELL & HIRE- PURCHASE
AGREEMENT
Hire-Purchase Agreement-
Owner of goods lets out his goods on hire and
undertakes to sell them to the hirer if the hirer
makes a certain number of payments. Until
the hirer has paid the last instalment, he holds
the goods in the capacity of a bailee. When
the last instalment is paid, hirer becomes the
owner.
In a HP agreement-
• Buyer has the option to purchase.
• Ownership in goods is passed when intending
buyer exercises his option to purchase.
• Option to either purchase the goods or to
terminate the contract anytime before the last
instalment is paid.
• On termination of contract, owner takes back
the possession of goods.
Agreement to sell Hire- Purchase Agreement
Delivery of possession is not required. Possession of goods is delivered (through
bailment) on rent.
Buyer has no option to make the sell Bailee has the option to purchase the
effective. Both parties are bound to fulfill goods or not
their promise to make the sale effective
It can be verbal or written or implied. Terms and conditions must be written.
A buyer acquiring possession can transfer Until the buyer has purchased the goods,
the title to other by way of contingent he has no right to pass the property in
contract. goods.
 Lee V Butler 1893
Owner agreed by a hire purchase agreement to let
furniture on hire to the hirer. Hirer agreed to pay
certain sum of rent immediately and a further
amount in three months. Agreement provided
that property in furniture would automatically
pass to hirer on his paying the agreed price in full.
Held-It is a agreement of sale because hirer has
bound herself to pay the total price of furniture.
 Helby V. Mathew 1895
Agreement was for hire of a piano for a certain
period of time. The hirer was permitted to return
the piano to the owner at any time subject to the
payment of all instalments due to the date of
return. If the hirer kept the goods or the full
period of hire and paid all the due amount, the
goods would become the property of hirer.
Held- it is not an agreement to sell. It is a hire
purchase agreement because here the buyer has
the option to buy or not to buy the goods.
SALE OF GOODS & CONTRACT FOR WORK &
LABOUR
 State of Madras V Gannon Dunkerly & Co.
1958 AIR 560

Contract to construct a building was entered into

between the parties.
What kind of contract it is?
Held- In a contract of constructing a building, there is no
sale of goods because in such a contract agreement
between the parties is that the contractor should
construct the building according to the specifications
contained in the agreement and in consideration
receive a payment as agreed. There is neither a
contract to sell the material used in the construction
nor that the property which passes is movable.
In contract of work and labour, goods are not
sold.
The agreement is for rendering some work or
labour.
Substance of contract is that the skill and labour
is exercised.

Eg. Asking a goldsmith to prepare ornaments for

a price
CONDITIONS & WARRANTIES
 Conditions & Warranties
Sec.11- Sec.17

Definitions Sec. 12

Implied (Sec. 14-17) When condition is to be treated Doctrine

as warranty of
Sec. 13 Caveat Emptor
Sec. 16

Implied conditions Implied Warranties

Sec. 14(a), 15, 16, 17 Sec. 14(b) & (c), 11
 Sec. 12 - Definition
12. Condition and warranty.—
(1) A stipulation in a contract of sale with reference to goods which
are the subject thereof may be a condition or a warranty.
(2) A condition is a stipulation essential to the main purpose of the
contract, the breach of which gives rise to a right to treat the
contract as repudiated.
(3) A warranty is a stipulation collateral to the main purpose of the
contract, the breach of which gives rise to a claim for damages but
not to a right to reject the goods and treat the contract as
repudiated.
(4) Whether a stipulation in a contract of sale is a condition or a
warranty depends in each case on the construction of the contract.
A stipulation may be a condition, though called a warranty in the
contract.
Condition – These are terms and stipulations
which are so basic to the contract that their
breach may seem to be a breach of contract as
a whole. Their breach entitles the innocent
party to repudiate the contract.

Warranty- A term which is not of such vital

importance. Its breach does not lead to
repudiation, but only to damages for breach.
The terminology used by the parties is
irrelevant. Court may assess the relative
importance of the stipulation in dispute in the
light of all the circumstances including the
intention of the parties.
Stipulation means- a requirement which is specified.
Examples-
1) A wants to purchase a horse for horse race. Seller informs A that
the horse can run upto a speed of 50 Km/h. This stipulation forms
the very basis of contract of sell. It is called a condition.
2) Seller says – the horse is quiet and calm. But after purchase, it
turns out that the horse is vicious. This is breach of warranty.

3) A asks to B sell his watch. B says – I assure that the watch is in

excellent condition. This requirement is called warranty. It is a
stipulation which is collateral or additional and subordinate to the
main objective of sale.
 Baldry v. Marshall (1925)
A car is purchased specially for purpose of tours
for longer distances. Car turns out to be unfit
for touring.
Held- suitability of car for touring purposes was
a condition.
 Harrison v. Foster (1917)
P purchased two small ships from D. D said each
had capacity of 460 tonnes. But P later found
it had lesser capacity. Held- it was a breach of
warranty & not a breach of condition.
IMPLIED CONDITIONS- Sec. 14(a), 15, 16 & 17
Sec. 14(a)- In sale, seller has a right to sell the
goods.
In agreement to sell, the seller will have right to
sell the goods when property is to be passed.
Sec. 15- Sale by description
- Goods should correspond to the description
- Bulk should correspond with the sample &
description
Sale by description
- When goods are described eg. Kashmiri
apples, Nagpur oranges
- Goods should correspond to the description
- Bulk should correspond with the sample &
description
Sale by sample- Sec.17-
(1) 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.
(2) In the case of a contract for sale by sample there is an implied
condition—
(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.
*Merchantable quality means- goods are fit for the purpose for which
they have been purchased.
Mody v Gregson 1868
Sale of brandy by sample. Brandy was coloured
with a dye.
Though bulk corresponded with sample, buyer
can reject the goods.
 Implied warranties
• Sec. 14 (b)- an implied warranty that the buyer shall have and enjoy quiet
possession of the goods;
• Sec. 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 when the contract is made.
Eg. A pledges his car with C for a loan of 2 Lakh and promises to give its
possession next day. A, sells them to B, who purchases them in good faith.
B may ask A to either clear the loan or he himself may pay the money and
then file a suit against A for recovery of money with interest.
Sec. 11- Stipulations as to time.—Unless a different intention appears from
the terms of the contract, stipulations as to time of payment arc not
deemed to be of the essence of a contract of sale. Whether any other
Stipulation as to time is of the essence of the contract or not depends on
the terms of the contract.
When condition is treated as warranty
Sec. 13- Buyer has the option to treat condition as
warranty-
- When condition is breached- buyer may waive it
or can treat the breach of condition as a breach
of warranty and elect to repudiate the contract.
- If buyer has accepted the goods, breach of
condition will be treated as breach of warranty
and gods can’t be rejected and contract can’t be
repudiated.
- Conditions and warranties not fulfilled by reason
of impossibility will not get affected.
 DOCTRINE OF CAVEAT EMPTOR
Sec. -16
Meaning- Let the buyer beware
- It is for the buyer to satisfy himself that the goods which he is
purchasing are of the quality which he requires, or if he is
buying them for a specific purpose, that they fit for that
purpose. It is based on the presumption that the buyer is
relying on his own skill and judgment, when he purchases
something.
- Rule under Sec. 16 SOGA- There is no implied warranty or
condition as to the quality or fitness for any particular
purpose of goods supplied under a contract of sale.
- Means seller is not bound by law to supply goods which are fit
for any particular purpose or possess any particular quality
- When goods are in existence at the time of
contract and buyer has the opportunity of
inspecting them, it is presumed he is acting on
his own judgment and could not afterwards
hold the seller responsible if the article turned
out to be unfit for his article turned out to be
unfit for his purpose or not of merchantable
quality.
 Common law exceptions to Caveat
Emptor
1. When buyer trusts the judgment or skill of
manufacturer/ dealer that goods will be reasonably fit
for the purpose. Here buyer trusts upon seller’s
judgment and not upon his own.
2. Where manufacturer supplied goods, buyer doesn’t
have the opportunity of inspecting it, it is implied that
seller will supply a merchantable good. Here, even if
the defect is latent, seller’s duty is absolute. It does
not depend upon any question of negligence, nor is it
limited to making good such defects as are discovered
by care and skill.
 Wallice V Russell 1902
Plaintiff went to purchase crabs. He had all
opportunities to examine them. Seller
believed that crabs were fresh. Plaintiff
purchased and consumed them and fell sick.

Held- Seller is not liable. It is upto the buyer to

check the fitness and quality of goods.
 16. Implied conditions as to quality or fitness.—
Subject to the provisions of this Act and of any
other law for the time being in force, there is no implied warranty or
condition as to the quality or fitness for any particular purpose of goods
supplied under a contract of sale, except as follows:—

(1) Where the buyer, expressly or by implication, makes known to the seller
the particular purpose for which the goods are required, so as to show
that the buyer relies on the seller’s skill or judgment, and the goods are of
a description which it is in the course of the seller’s business to supply
(whether he is the manufacturer or producer or not), there is an implied
condition that the goods shall be reasonably fit for such purpose:

Provided that, in the case of a contract for the sale of a specified article under
its patent or other trade name, there is no implied condition as to its
fitness for any particular purpose.
2) 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:
Provided that, if the buyer has examined the goods, there shall be no
implied condition as regards defects which such examination ought
to have revealed.

(3) An implied warranty or condition as to quality or fitness for a

particular purpose may be annexed by the usage of trade.

(4) An express warranty or condition does not negative a warranty or

condition implied by this Act unless inconsistent therewith.
 Exceptions to Caveat Emptor U/s. 16
1. When buyer makes known to the seller the
particular purpose for which gods are
required such that buyer relies on seller’s skill
or judgment and goods are of a description
which it is in seller’s business to supply.
There is an implied condition that goods shall be
reasonably fit for such purpose.
Exception- Contract for sale of specific article
under its patent/trademark
 Grant V Australian Knitting Mills Ltd.
1936
A retail dealer in woollen goods who sells pants
must know they are required for the particular
purpose of being worn next to the skin.
Held- buyer was dependent on seller’s and
wisdom
2. Goods bought by description from seller who
deals in goods of that description-
There is implied condition that goods shall be of
merchantable quality, that is, commercially
saleable whose quality meets the purpose for
which goods have been purchased.
- Not applicable when buyer has examined the
goods and defect is apparent upon such
examination
3. Usage of trade- an implied warranty or condition
as to quality or fitness for a particular purpose
may be annexed by usage of trade.

Intention of parties must b be in the light of existing

circumstances. If hte transaction is connected
with a particular trade, custom adn usage of that
trade must be considered as a part of the
backgrund against which parties contracted.
 Jones v Bowden 1813
• Sale of drugs by auction. It was a trade usage
to disclose any sea damage in such cases
• Held- This had the effect of creating a
warranty that drugs so sold without any such
declaration were free from sea damage
4. Express terms do not necessarily displace
implied terms-
Biggie v Parkinson 1862
A warranty that provisions sold should pass the
inspection of East India Co. was held to not
exclude the implied warranty of
merchantableness.
TRANSFER OF TITLE

Sec. 27-Sec. 30, SOGA

 Situation -1
A (Owner & seller of goods)

B (Buyer)

After sale, buyer gets the title/ property/

ownership in goods.
 Situation -2
A (Seller but he is not the owner of goods)
A sells the goods to B.

After sale, whether B will have

title/property/ownership in goods?
 Nemo dat quod non habet
• Meaning- no one can give what he has not got
• The rule means the buyer’s title will not be
superior to that of the seller.
• If one deals with the goods of another without
authority, the transaction is nugatory in law,
unless it falls under any of the exceptions.
• Sec. 27, para one –
Sale by person not the owner.—Subject to the
provisions of this Act and of any other law for
the time being in force, where goods are sold
by a person who is not the owner thereof and
who does not sell them under the authority or
with the consent of the owner, the buyer
acquires no better title to the goods than the
seller had.
 Illustrations
• A steals the goods and sells them to B. As per
the nemo dat rule, A himself does not have
title to ownership of the goods and thus, he
cannot pass the ownership to B.
 Cundy v. Lindsay 1878
P received an order of handkerchiefs from a
person named Blenkarn. He signed in a
manner resembling “Blenkiron & Co.”, a
reputed firm. P gave address of the same
street. Goods were sent and no payment was
made. P sold the goods to another person-D.
P argued he sold the goods to Blenkarn under
mistake.
Held-There was mistake of identity. No valid
contract. No valid transfer can be conveyed to
the buyer. A third person purchasing these
goods has no title applying nemo dat.

Note- Strict application of nemo dat rule may

lead to injustice that’s why exceptions have
been included to the nemo dat rule.
Exceptions to the nemo dat rule under
SOGA
• Estoppel- Sec. 27 para one
• Sale by merchantile agent- Sec 27 Proviso
• Sale by joint owner- Sec. 28
• When goods have been obtained under a
voidable contract- Sec. 29
• Resale by seller- Sec. 30(1)
• Resale by buyer- Sec. 30(2)
 Transfer of title by estoppel-
Sec. 27-para one - unless the owner of the
goods is by his conduct precluded from
denying the seller’s authority to sell.
Owner leads the buyer to believe that seller is
the owner of goods, later on he can’t deny
seller’s authority and buyer will acquire a
good title.
 Eastern Distributors Ltd. V Goldring
1957
M= Owner of a car
G= Motor vehicle dealer
E= Finance Co.
M& G go to E and inform that the car is owned by G
and M wishes to acquire it on hire purchase. On
this basis, a hire purchase agreement was
entered into. Later M failed to pay the
instalments & M sold car to Mr. X & G sold it to
the Finance Co.
Issue- who has title/ ownership of the car?
First in time, first in right-
M is the actual owner. So applying nemo dat
rule, ownership should have passed to anyone
he transfers to. But in the agreement with
Finance Co. he represented himself to not to
be the owner. Thus, M lost his title by
estoppel.
 Sale by merchantile agent
Sec. 27-
Agent must be a merchantile agent
Definition-
- He is in possession of goods or documents of title
to the goods with the consent of owner
- Sale is made by him in ordinary course of
business
- Buyer acted in good faith and had no notice at
the time of sale, that the seller (agent) had no
authority to sell
 Pearson v Rose & Young Ltd.
A car was left with a merchantile agent and he
was authorised only to receive offers and not
sell. Agent obtained the registration book of
the car without consent of the owner and sold
to the defendants.
Held-sale without authorisation. Registration
book was obtained without consent of the
owner. Thus, buyer will not acquire good title.
 Sale by one of the joint owners
Sec. 28. Sale by one of joint owners.— 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 not authority to sell.
 Sale by person in possession under
voidable contract
Sec. 29.—When the seller of goods has obtained
possession thereof under a contract voidable
under section 19 or section 19A of the Indian
Contract Act, 1872 (9 of 1872), but the
contract has not been rescinded at the time of
the sale, the buyer acquires a good title to the
goods, provided he buys them in good faith
and without notice of the seller’s defect of
title.
 Phillips v Brooks
Fraudster enters a shop and says- I am George
Bullough. P heard his name for the first time
ever. He delivers the fraudster a ring. Fake
cheque was given by the fraudster. Before the
fraud could be discovered, he had pledged the
ring to X and absconded.
Held-Shopkeeper cannot obtain the ring from X
because X received the ring in good faith
before the contract was rescinded .
 Car Universal Finance Co. v Caldwell
1963
Owner gave possession of his car to a buyer for a cheque, which
turned out to be worthless. P wanted to give notice to the buyer of
his intention to avoid the contract and to take back his car but could
not trace him. He informs the police and automobile association to
trace his car. Later the buyer sold the car to P and the owner sues P
to recover the car.
Issue- How do you communicate the fraudster that you want to avoid
the contract?
Held-When seller of goods has a right to avoid the contract for fraud,
he should have taken reasonable steps to discover the fraud or all
possible step to regain the goods, even though he can’t find the
fraudster. Here, the owner contacted the police, asking it to get the
car back. On this day, contract of sale to the fraudster was avoided
and he become the owner of the car. Therefore, the later sale is
invalid. P can’t acquire a good title over the goods.
Seller or buyer in possession after sale
Sec. 30-
1) Seller-After selling the goods, the seller continues to be in possession of
goods or their title deeds, and he disposes them by sale, pledge etc to a
buyer receiving them in good faith without notice. He will have a good
title and its effect is as if he was expressly authorised by the owner of
goods to make the same.
2) Buyer- Buyer has obtained possession of goods or possession of title
deeds and not yet paid the price, and then he sells, pledges etc., then
the purchaser acting in good faith without notice of seller’s right to lien/
any other right, will acquire a good title to the goods.
 Central National Bank Ltd. V. United
Industrial Bank Ltd. 1954
A agreed to sell certain shares to B and sent the share
certificates and blank transfer deeds to defendants
through his agent. Agent allows B to examine them and
says – you pay the price and take them. B leaves the
office and takes these documents saying he was- going
out to bring money but he disappears and
subsequently pledges them with P.
Issue- Who should have title over the goods?
Held- B obtained possession of shares without consent.
Thus, P did not acquire any title against A.
 EFFECTS OF CONTRACT OF SALE-
Transfer of property between seller and buyer

Sec. 18-26, SOGA

 Transfer of Property in Goods
• It is the most important step in the process of sale of
goods. It serves the main purpose of the contract of
sale.
• Meaning- Passing of property in goods means passing
of absolute legal ownership of the goods under a
contract of sale from the seller to the buyer for a price.
On passing the property, the goods cease to be the
property of the seller and vest in the buyer.
• Ownership of property in goods may pass with o
without transfer of possession.
• Also called transfer of ownership of goods from seller
to the buyer.
 Importance of Transfer of Property in
Goods
1. Risk follows ownership-
Risk prima facie passes with property.
Sec. 26 - 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 the buyer’s risk whether delivery has been
made or not.

Except when-
• By express agreement, parties stipulate that risk in goods will pass some
time after or before the ownership has passed.
• Default by the party- When delivery of goods is delayed due to fault of
either seller or buyer, defaulting party will bear the risk of loss.
• Customs of trade- Goods shall be at the risk of the party on whom
custom of the trade imposes the risk.
• When seller is bailee-Goods shall be at the risk of the bailor.
2. Action against third parties-General rule is
owner alone can exercise proprietary rights.
3. Suit for price- A seller is entitled to sue for the
price of goods sold against the buyer only when
property in the goods has passed to the buyer.
4. Insolvency of seller or buyer- Time of transfer of
property decides the right of Official Assignee/
Receiver to claim the possession of the goods.
RULES RELATING TO TRANSFER
OF PROPERTY
I. Transfer of property in the
specific or ascertained
goods
Property in the goods is transferred to the buyer only when
goods are ascertained.
(Sec. 18)
The general rule is that property in the specific or ascertained
goods is transferred to the buyer at such time as the parties
intend it to be transferred. (Sec. 19(1))
For the purpose of ascertaining intention of parties regard
shall be had to the-
(i) Terms of the contract
(ii) Conduct of the parties
(iii) Circumstances of the case
(Sec. 19(2))
 Rules for Ascertaining Intention
Unless different intention appears, the following rules
determine the intention of parties as to the time at which
the property in the goods s to pass to the buyer.
1. Where specific goods are in deliverable state-
• Where there is an unconditional contract for sale of specific
goods in a deliverable state, the property in the goods
passes to the buyer when the contract is made. It is
immaterial whether the time of payment of the price or the
time of delivery of the goods or both, is postponed (Sec.
20)
• Goods are said to be in deliverable state when they are in
such state that the buyer would under the contract of sale
be bound to take delivery of them. (Sec. 2(3))
Ganganagar Sugar Mills v. Rameshwar
Das Tarachand AIR (1992) Raj 14
• A sold by auction certain bags of sugar to B.
Held, the property in the sugar was passed to
B immediately after the acceptance of the bid.
 2. Where specific goods are to be put
into deliverable state
• Where there is a contract for sale of specific
goods, but the goods are not in deliverable
state at the time of contract of sale, the
property in such goods passes when the goods
are brought to a deliverable state and buyer
has a notice of it.
• Eg. A sells a dining set to B. As per the terms
of contract, it is to be polished by A before
delivery. Thus, the set is not a deliverable
state but A is to put in in a deliverable state.
When the set has been polished, it comes into
deliverable state. But transfer of property is
the dining set takes place only when B
receives a notice of it.
 3. When something is to be done for
ascertaining the price-
Sec. 22- When there is a contract for sale of
specific goods in a deliverable state, but the
seller is bound to weigh, measure, test or do
some other act or thing with reference to the
goods for the purpose of ascertaining the
price. In such a case, the property does not
pass until such act or thing is done and the
buyer has notice thereof.
• Eg. A sold B whole of his wheat lying in
godown at a certain price . The property in the
wheat will pass when the wheat is weighed by
A and notice of it is given to B.
II. Transfer of Property in Sale of
Unascertained Goods or
Future Goods
Sec. 23. Sale of unascertained goods and
appropriation.—
(1) Where there is a 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, and may be given either before or
after the appropriation is made.
Eg. Seller has agreed to sell 500 bales of Fair Bengal Cotton
out of 5,000 bale of cotton of different descriptions lying in
his godown. When seller selects 500 bales of Fair Bengal
Cotton, it is not sufficient for passing the property in the
bales. Seller gives notice to the buyer that bales are ready
for delivery and the buyer assents that he will take delivery
thereof. At this point of time, the goods are ascertained
and unconditionally appropriated by the seller to the
contract with the assent of the buyer. At this point of time,
property in goods is transferred to the buyer and buyer
becomes the owner. Now, the seller cannot deliver the
same goods to another person because he is no longer the
owner of goods.
 Deemed appropriation of goods
Sec. 23(2)- Where the seller delivers the goods to
any of the following for the purpose of
transmission to the buyer without reserving the
right of disposal he is deemed to have
unconditionally appropriated the goods to the
contract:
1) To the buyer
2) To a carrier
3) To a bailee
It is immaterial whether the carrier or bailee is
named by the buyer or not.
III. Transfer of Property in the
Goods sent on approval
When the goods are sent on approval or on sale or return or on other similar
terms, the property in the goods passes to the buyer if any of the following
situations emerges:
1) When buyer signifies approval- Sec. 24 (a)
When buyer signifies his approval or acceptance to the seller, the property in the
goods passes to the buyer at the time of approval. [Sec. 24(a)]
Eg. A takes a CD player from B on approval for 3 days. The property in the CD
player passes to A if he conveys his approval within 3 days.
2) When buyer adopts the goods- When a buyer having goods on approval,
adopts the goods by his acts, the property in the goods passes to the buyer
when he adopts.
Kirkhams v. Attenborough (1897) 1 QB
A takes some jewellery from B on sale or return basis for a period of 7 days. A
pledges the jewellery with S without paying price or informing his intention
to B. Held, A had adopted the goods by his action and passed the goods title
to S. Therefore, B was entitled to claim the price from A.
3) When buyer retains the goods without signifying approval-
Sometimes the buyer does not signify his approval to the seller but retains
the goods without having notice of rejection. In such a case, if a time has
been fixed for return of goods, the property in the goods passes to the
buyer on expiration of such time. If no time has been fixed, on the
expiration of reasonable time.
Municipal Corporation of Hoogly V. Spencer Ltd. AIR (1987) Cal 49
A bought a tractor from B with an option to reject it if not found to be new. A
used the tractor for an unreasonable period and wanted to reject the
tractor. Held, the property in the tractor had already passed to A.
4. When the buyer makes the return of goods impossible-
When the buyer makes the return of goods impossible by
his act or default, the property in the goods passes
when he does the act or makes the default.
Genn v. Winkel (1912) 17 Comp 323 CA
A gave some diamonds to B on sale or return basis. B
passed on the diamonds to C on sale or return basis. C
gave them to D, who lost them. Held, property in the
diamonds had passed to B by his act which made the
return of goods impossible.
IV. Transfer of Property when Right
of Disposal is reserved
If the seller reserves a right of disposal of the
goods appropriated, the property in the goods
does not pass to the buyer until the conditions
imposed by the seller are fulfilled. The seller’s
right will not be adversely affected even if the
goods have been delivered to the buyer, or to
a carrier or to other bailee for the purpose of
transmission to the buyer. [Sec. 25(1)]