Commercial Law: Contract of Sale

This assignment delves into the intricacies of contract law within the realm of commerce, specifically focusing on contracts for the sale of goods. It explores fundamental concepts, legal provisions, and case studies related to the formation, validity, and interpretation of such contracts. Students are tasked with analyzing various scenarios and applying relevant legal principles to arrive at informed conclusions.

COMMERCIAL LAW

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK...............................................................................................................................................1
1. History of evaluation of law...............................................................................................1
2. Related laws (sales and goods act 1979 section 16 to section 21).....................................5
3. Related cases......................................................................................................................7
4. Compare and contrast the laws...........................................................................................8
5. Implementation of laws......................................................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Contract of sales of goods has been considered as transfer of property of goods from
seller to customer. For the same purpose, both parties come in contractual relationship with each
other and frame legal written agreement. In transfer of property of goods ascertained and specific
goods must be considering. Sales of Goods Act 1979 is the act which is able to define legal
authority of both seller and buyer. They are bound to fulfil their legal obligation which are
imposed on them. The present report is based on specific and ascertained goods. These types of
goods are easily identified at the time of sale of contract. Buyers are responsible to identify
goods at the time of legal agreement. According to this act, sellers are bound to deliver the best
or better quality of goods and services to buyer in order to attract them and try to keep for long
time. Various types of rules and responsibilities of both consumers and sellers are mentioned
under the act which they have to fulfil in an effective manner1. Sellers are bound to maintain
satisfactory quality of goods. The main purpose of this act is to fulfil the needs of both buyers
and sellers. According to this act, consumers are free to consume goods whatever they want and
sellers are free to deliver those in which they receive better returns and get opportunities to earn
profit. Products must be fit for the purpose of customers. They have to provide proper knowledge
about the actual situation of goods
TASK
1. History of evaluation of law
Sales of Goods Act 1979 is the act of commercial law2. In this, two parties come in
contractual relationship with each other in order to fulfil their legal obligation. For the same
purpose, they file written agreement with each other. In which sellers deliver goods and services
to buyers in order to satisfy their needs and protect their interest as well. Both parties are
1 Whaley DJ, McJohn SM. Problems and materials on commercial law. Wolters Kluwer
Law & Business; 2016 Mar 20.
2 Taylor PJ, Hoyler M, Evans DM, Harrison J. Balancing London? A preliminary
investigation of the “Core Cities” and “Northern Way” spatial policy initiatives using
multi-city corporate and commercial law firms. European Planning Studies. 2010 Aug 1;
18(8):1285-99.
1

responsible to fulfil their legal obligations in order to comply with the law. Only the real owner
is able to transfer better title to another person. So that, they are responsible to transfer title over
goods and services3. According to this act, there are two parties involved in this process called
seller and buyer. Thus, seller is person who wants to sell products and services at specific price
and try to satisfy needs of their customers. On the other side, buyer is the person who wants to
purchase goods and services at reasonable price and buy products according to their taste, nature
and preferences. Sellers are responsible to deliver the best quality of products and services to
people for the purpose of satisfying their needs and demand. There are various types of rights
and duties available for both the parties.
Furthermore, consumer having right to reject the goods and receive amount of
compensation equal to damages caused to buyer. As in that case goods are not able to description
which is provided by customer at the time of placed an order for particular goods and services4.
Also they can file case against seller in the case of non-delivery of goods. According to the rules
of this law sellers are responsible to deliver with in stipulated time period and offer best quality
to them. It is the legal obligation which is imposed on them as per rule of law. At the time of
non-acceptance of goods seller having right to file case against buyer for the purpose of recover
amount equal to damages caused to them. Also the contract of sale is accepting on the basis
credit sale. In the credit system buyers are responsible to made payment in the form of equal
monthly instalments for the specified period. But customers have to provide payment according
to their legal agreement which is based on credit payment5.
If in case, they refuse or failed to made payment then seller having right to lodge
complaint in order to receive amount of instalments. But during such payment title is not
transferred to buyer. After made complete payment the title should be delivered to buyer. Only
the real owner having right to comes in legal agreement with another person and sign written
3 Coyle JF. Rethinking the Commercial Law Treaty. Ga. L. Rev. 2010; 45:343.
4 Mäntysaari P. Organising the firm: theories of commercial law, corporate governance
and corporate law. Springer Science & Business Media; 2011 Sep 18.
5 Saleem MY. Islamic commercial law. John Wiley & Sons; 2012 Nov 9.
2

documents accordingly. Buyers are responsible to frame written description and send the same to
seller in order to receive goods accordingly6.
As per section 61 of this act, it includes goods such as all personal chattels but exclude
services of money related. Section 12 (1) defines that seller having right to sell goods if he
framed legal agreement with buyer. Certain rules, regulation and policies are mentioned under
this law which are imposed on parties and bound them to follow the same in order to maintain
their performance. They have to fulfil their legal obligation which are imposed on them.
Case: Rowland v Divall, 1923, in this case plaintiff brought car from another party called
as defendant. Car has been used for various months. After that, he realised that defendant having
no right over car means he was not a real owner. So that, buyer wants to return back the car to
real owner and lodge complaint against seller in order to receive back the purchase money.
When the ownership has been transfer from seller to buyer then the process is called as
sale. Furthermore, contract of sale is the generic term which is able to involve sale of property in
goods. In this legal process goods are considered as subject matter of legal agreement7. Parties
are bound to form legal agreement with each other and try to follow the same as well. In which
one party made an offer and send it to another person. If such offer accepts by another then it
called as legal agreement but if it is not accepting, then there is no legal agreement create among
them.
Section 4 of Sales of goods act define contract of sale. In which one person agrees to
transfer the property to another person8. The contract of sale has been considered as of two types
such as absolute and conditional. It should be based on needs or demand of parties related to
contract of sale.
Essential of contract of sales
6 Shaw M, Blanning R, Strader T, Whinston A, editors. Handbook on electronic
commerce. Springer Science & Business Media; 2012 Dec 6.
7 Folsom RH, Gordon MW, Spanogle JA, Fitzgerald PL, Van Alstine MP. International
business transactions: a problem-oriented coursebook. ThomsonReuters; 2012.
8 Ellison NB, Boyd DM. Sociality through social network sites. InThe Oxford handbook
of internet studies 2013 Jan 10.
3

Parties- Single person is not able to form legal contract with each other he is not able to
purchase his own goods. So that, two or more parties require to form contract. There are two
parties name called sellers and buyers9. Furthermore, seller is the person who is responsible to
deliver goods and services to buyer according to description which is provided by buyer at the
time of placed an order. On the other side, buyer is the person to whom they deliver products and
services in exchange of price. Both parties are coming in contractual relationship with each other
in order to fulfil their consideration. In which one person made an offer and send the same to
another person. If another person neither accepts nor reject such offer with in stipulated time
period, then it should be considered as reject the offer. But in case it is accepted by another party
which means they comes in legal agreement. After this, legal obligation imposed on them and
they are bound to fulfil the same.
Goods- These are subject matter of every legal agreement. All movable goods are
included in this legal process10. Immovable goods are not included for this purpose. Thus, seller
must be the real owner of that property who is able to transfer in better manner. Only physical
goods are considered under this law. Parties are bound to exchange goods and services for the
price. There must be unconditional contract framed by them which is able to fulfil their duties
and responsibilities. Also sellers are responsible to provide products in deliverable state. Contract
of sale is made in order to fulfil the consideration of each party and try to satisfy their needs as
well. Mainly the goods should be considered as specific or ascertained. Because these products
are available at the time of formation to legal contract. Goods needs to pack in suitable container
in order to protect their quality and separating them from larger quantity.
Transfer of property- Transfer or passing of property is important in order to meet
consideration11. The legal contract has been framed on the basis of property. Seller are bound to
receive written or verbal consent of buyer which is considered as prima facie evidence for them.
9 Ryder N, Griffiths M, Singh L. Commercial law: principles and policy. Cambridge
University Press; 2012 Jun 14.
10 Snyder M, Deaux K. Personality and social psychology. InThe Oxford handbook of
personality and social psychology 2012.
11 White J, Summers R. White and Summers' Uniform Commercial Code, 6th (Hornbook
Series). West Academic; 2010 Jan 20.
4

Consideration- Both parties have to perform their functions in order to fulfil
consideration of each other. In present case property is the consideration for buyer and amount of
property for seller. Parties are responsible to use their collective efforts in order to fulfil their
consideration.
2. Related laws (sales and goods act 1979 section 16 to section 21)
According to the rule of law goods are considered as subject matter of the contract of
sale. Section 2 (7) defines that goods consists all types of movable property but other than
money as well as actionable claim such as it includes stock, shares, growing crops and other
things which are attached to earth. As per the rule of law money and actionable claims are not
able to brought or sold. Goods are categorising with in three types of goods which are as aligned
below- Existing- These are those which are already present at the time of framing in legal agreement
among two or more parties. Also one party is the real owner of such goods as well. These are
classified with in two types are as follows-
 Specific or ascertained goods: These are defined as such goods on which parties are
agreed upon at the time of contract of sale. On the other side, ascertained goods are
considered as same sense of specific goods. Consumers are able to identify goods
which they are going to purchase from seller. As per the rule of law they are
responsible to completely check goods before purchasing. After this, seller is liable
for the same. At the time of contract of sale seller have to show specific goods to
buyer in order to attract their interest and earn money as well.
For example- Anta is the person who wants to purchase painting and which is at present
available for sale. So that, both seller and buyer can form legal agreement for purchase of
painting. Furthermore, painting should be considered as specific or ascertained goods.
 Unascertained goods: Such goods are not present at the time of contract of sale that
should be indicate by description only. Buyer purchase such goods on the basis of
trust only. At the time of contract of sale sellers are not able to present such goods in
front of buyer in order to attract them show the actual position of products. Buyer
have to no idea for which they placed an order and provide money to them. In that
case sellers are responsible to provide same goods for which customer placed an
order to and products which are able to satisfy their needs as well.
5

For example- If seller agree to sell a one beg of wheat from go down to buyer. So that, it
is considered as unascertained because it is not defined that which bag of wheat has been
delivered.
 Future- These types of goods are considered as goods which are seller does not own at the
time of sale of contract. But seller will produce or he will manufacture such goods in order to
fulfil consideration. In which property available to buyer in future time. Contingent- Such goods are only on happing of contingency.
Sales of Goods Act 1979 consists above mentioned types of goods which having their own
existence at the time of formation of legal contract. Different section has been applied on each
and every type of goods. There are various types of rules and responsibilities mentioned under
which have to be follow by both parties12. They are bound to comply with rules and regulation
which are imposed on them. On the basis of such law, intention of parties has to present at the
time they perform function. Once they come in legal agreement then they are bound to fulfil
duties and perform activity in effective manner. Also different rights are available for them in
order to protect their interest and rights. If one-person breach contract due to any reason in that
case another party having rights to file case for the purpose receive amount of compensation and
damages caused to them.
 Section 16- In this section it has been defined that no property has been transferred to
buyer by seller unless the goods are considered as ascertained.
 Section 17- When the contract of sale of ascertained as well as specific goods. So that,
the property should be transferred to buyer at the time when parties are intend goods to be
transferred. On the other side, also the transfer of property is based on conduct of parties
and various circumstances of the case.
 Section 18- On the basis of above mentioned rules it has been clear that property should
only be transfer on the intention of parties. Which means parties wants to perform their
functions when their intention is present. For the same purpose different rules are
mentioned which are as aligned below-
Rule 1- If there is unconditional contract for the sale of specific goods. Which is based
on deliverable state.
12 Zheng-hui LI. Confusion and Reflection of Case Method: Take Commercial Law as
Example [J]. Journal of Higher Education Research. 2010; 2:025.
6

Rule 2- Seller is responsible to do something in order to putting goods and services into
deliverable state. Property will not be pass until such thing done as well as customer has notice
that it should be done.
Rule 3- The contract of sale related to specific goods is available in deliverable state. In
seller is bound to deliver property with in stipulated time period and place.
Rules 4- At the time of delivery buyer must provide his approval on sale of contract.
Goods should be deliver on the acceptance and approval of buyer.
 Section 19- This is the legal rules which is based on reservation of specific rights of
disposal. Seller must ensure that goods are able to fulfil need or demand of customers.
Which means appropriate goods are have to deliver with in stipulated time period. After
this buyer becomes real owner of the property13. Seller is not able to pass the property
until and unless conditions may not fulfilled. Certain terms and conditions mentioned
under law which are imposed on seller and they have to fulfil at the time of transfer of
goods. In case goods transferred by bill of lading. So that, these are deliverable to the
order of seller. In that case seller becomes prima facie in order to reserve the right of
disposal.
 Section 20- In such section the risk related to prima facie has been passes with property.
The goods which are delivered by seller to buyer are based on seller’s risk. This section is
not able to effect duties as well as liabilities of both parties.
 Section 21- Transfer of title is consisting under this rule. In such act goods has been
transfer by person but not the real owner. In which buyer acquires no better title because
better title only delivered by real owner.
3. Related cases
Case: Grant v Australian Knitting Mills Ltd., in this case Grant lodge complaints that
woollen garment that he purchased caused him to get dermatitis. It was found that it was
conducted by external factors. In this the seller delivered goods which are not able to meet
description. So that, seller is responsible to same products which are able to meet description for
13 Appleman JA, Appleman J, Holmes EM. Contract Concerns: Reinsurance Contract
Formation, Validity, and Judicial Construction. Appleman on Insurance Law and
Practice; 2016 Sep 5.
7

which buyer placed an order. But the case is related with specific goods because agreement
which is made among parties is related with ascertained goods.
4. Compare and contrast the laws
Specific and unascertained goods are different from each other. These are consisting under
sales of goods act. Different laws are applicable on them both which are able to specifically
identify them clearly. The difference among specific and unascertained goods are as follows-
Basis Specific goods Unascertained goods
Concept Specific goods are identified at the
time of contract of sale has been form
among two or more parties
These goods are not able to
specifically identify at the time of
contract of sale.
Availability When legal agreement form among
seller and buyer that time such goods
are present.
At the time of formation of legal
contract unascertained goods are not
available.
Identification Buyer can completely identify goods
at the time of formation of contract.
Such goods are identified in the form
of description.
Example A is the person who act as buyer and
wants to purchase cloths after
identification. So that, seller is bound
to deliver same goods which is
already identified by buyer.
Buyer placed an order for 50 pieces
of chairs. On such order seller deliver
equal quantity of chairs for which
buyer placed an order but there is no
description provided that which type
of chairs seller will deliver.
5. Implementation of laws
Sales of Goods Act 1979 consists rules related to conditions and warranties. Such
principals are available under such act when parties form a legal agreement. As they are bound to
fulfil their legal obligation which are imposed on them and mentioned under law. Sellers are
responsible to deliver best quality of goods and services to buyers in order to satisfy their needs
and provide best possible services to them in order to keep them for long time and maintain their
performance as well. Rules and regulation which are mentioned under law needs to be
implement in entire country. Also members of entire are responsible to follow the same. It
8

having impact on the performance of both buyer and seller. Through this transaction of goods
and services maintain smoothly and maintain their performance as well. Sellers are not able to
deliver defected goods to buyer. But if they delivered defected goods then buyers are responsible
to file case against them in order to receive amount of compensation. As per the implied
conditions sellers are bound to deliver best quality with in stipulated time period which is
decided by them with mutual consent. The person who wants to file case against another is
known as plaintiff and person against whom they file case are called as defendant. So that, court
is responsible to provide judgement in favour of one party and in against of another.
The concept of Caveat Emptor is the doctrine which is mentioned under this law. As per
the rules of such doctrine the customer must be aware at the time of purchase because sellers are
not able to identify mistake under goods and services while he is selling the same. This doctrine
clear that buyers are only responsible to purchase goods at their own risk. After such purchase
sellers are not responsible for the same. If any defect found under good, then seller is responsible
to for the same because opportunity of check would be provided to buyer14. As per this rule
buyer is responsible to collect entire information related to quality, price, durability, quantity and
much more about goods. As they having right to complete check product before made payment
or purchase.
Condition is the essential element of contract. Breach in contract is able to provide right
to treat the legal agreement repudiated. In case the condition is fulfil by the parties then buyer
having right to refuse or reject the goods and services offered by seller. On the other side,
Warranty has been considered as stipulation collateral which is necessarily present in contract of
sale. Buyer of product having right to receive claim for damages or can improve their quality.
But it should be provided for particular period. After such period no right has been available for
buyers. Section 13 of Sales of goods act define warranty which is applied on both buyers and
sellers. It has been applied on then when buyer waive the condition, buyer has been treat the
breach of condition in the form of breach of warranty. Section 26 of this act is able to define
consequence related to transfer of property. Only the seller is responsible to bear the risk at the
14 CONTRACT OF SALE OF GOODS. 2017. [Online.] Available through: <
https://sol.du.ac.in/mod/book/view.php?id=1569&chapterid=1559> [Accessed on 5th October,
2017].
9

time property and services passes to customer. Thus, through this it is clear that buyer not
become owner until and unless goods not received by him. But after delivery of goods buyer
become the real owner.
CONCLUSION
On the above project, it is concluded that Sales of Goods Act 1979 is the law which is
able to define legal agreement which is form among seller and buyer. Customers are responsible
to frame written description and send the same to seller. In which they mentioned required
information which are related to goods. Specific as well as ascertained goods are able to identify
at the time of contract of sale. Parties are bound to fulfil their legal obligation which are imposed
on them. Sellers must ensure about quality of products and services which they are delivered to
buyer. Several types of terms and conditions are mentioned under law which have to be fulfilled
by parties in effective manner. Parties are responsible fulfil rules, regulation and [policies which
are mentioned section 16 to section 21 of Sales of Goods Act 1979. They are bound to fulfil
certain policies which are imposed on them. These laws are able to protect rights and interest of
both parties and secure their interest as well.
10

REFERENCES
Books and Journals
Appleman JA, Appleman J, Holmes EM. Contract Concerns: Reinsurance Contract Formation,
Validity, And Judicial Construction. Appleman on Insurance Law and Practice; 2016 Sep
5.
Coyle JF. Rethinking the Commercial Law Treaty. Ga. L. Rev.. 2010;45:343.
Ellison NB, Boyd DM. Sociality through social network sites. InThe Oxford handbook of
internet studies 2013 Jan 10.
Folsom RH, Gordon MW, Spanogle JA, Fitzgerald PL, Van Alstine MP. International business
transactions: a problem-oriented coursebook. ThomsonReuters; 2012.
Mäntysaari P. Organising the firm: theories of commercial law, corporate governance and
corporate law. Springer Science & Business Media; 2011 Sep 18.
Ryder N, Griffiths M, Singh L. Commercial law: principles and policy. Cambridge University
Press; 2012 Jun 14.
Saleem MY. Islamic commercial law. John Wiley & Sons; 2012 Nov 9.
Shaw M, Blanning R, Strader T, Whinston A, editors. Handbook on electronic commerce.
Springer Science & Business Media; 2012 Dec 6.
Snyder M, Deaux K. Personality and social psychology. InThe Oxford handbook of personality
and social psychology 2012.
Taylor PJ, Hoyler M, Evans DM, Harrison J. Balancing London? A preliminary investigation of
the “Core Cities” and “Northern Way” spatial policy initiatives using multi-city corporate
and commercial law firms. European Planning Studies. 2010 Aug 1;18(8):1285-99.
Whaley DJ, McJohn SM. Problems and materials on commercial law. Wolters Kluwer Law &
Business; 2016 Mar 20.
White J, Summers R. White and Summers' Uniform Commercial Code, 6th (Hornbook Series).
West Academic; 2010 Jan 20.
Zheng-hui LI. Confusion and Reflection of Case Method: Take Commercial Law as Example [J].
Journal of Higher Education Research. 2010;2:025.
Online
CONTRACT OF SALE OF GOODS. 2017. [Online.] Available through:
<https://sol.du.ac.in/mod/book/view.php?id=1569&chapterid=1559>. [Accessed on 5th
October, 2017].
11

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