THE SALE OF GOODS ACT, 1930

 

THE SALE OF GOODS ACT, 1930

ARRANGMENT OF SECTIONS

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CHAPTER I

PRELIMINARY

SECTIONS

1. Short title, extent and commencement.

2. Definitions.

3. Application of provisions of Act 9 of 1872.

CHAPTER II

FORMATION OF THE CONTRACT

Contract of Sale

4. Sale and agreement to sell.

Formalities of the Contract

5. Contract of sale how made.

Subject-matter of contract

6. Existing or future goods.

7. Goods perishing before making of contract.

8. Goods perishing before sale but after agreement to sell.

The price

9. Ascertainment of price.

10. Agreement to sell at valuation.

Conditions and warranties

11. Stipulations as to time.

12. Condition and warranty.

13. When condition to be treated as warranty.

14. Implied undertaking as to title, etc.

15. Sale by description.

16. Implied conditions as to quality or fitness.

17. Sale by sample.

CHAPTER III

EFFECTS OF THE CONTRACT

Transfer of property as between seller and buyer

18. Goods must be ascertained.

19. Property passes when intended to pass.

20. Specific goods in a deliverable state.

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SECTIONS

21. Specific goods to be put into a deliverable state.

22. Specific goods in a deliverable state, when the seller has to do anything thereto in order to

ascertain price.

23. Sale of unascertained goods and appropriation.

Delivery to carrier.

24. Goods sent on approval or “on sale or return”.

25. Reservation of right of disposal.

26. Risk prima facie passes with property.

Transfer of title

27. Sale by person not the owner.

28. Sale by one of joint owners.

29. Sale by person in possession under voidable contract.

30. Seller or buyer in possession after sale.

CHAPTER IV

PERFORMANCE OF THE CONTRACT

31. Duties of seller and buyer.

32. Payment and delivery are concurrent conditions.

33. Delivery.

34. Effect of part delivery.

35. Buyer to apply for delivery.

36. Rules as to delivery.

37. Delivery of wrong quantity.

38. Instalment deliveries.

39. Delivery to carrier or wharfinger.

40. Risk where goods are delivered at distant place.

41. Buyer’s right of examining the goods.

42. Acceptance.

43. Buyer not bound to return rejected goods.

44. Liability of buyer for neglecting or refusing delivery of goods.

CHAPTER V

RIGHTS OF UNPAID SELLER AGAINST THE GOODS

45. “Unpaid seller” defined.

46. Unpaid seller’s rights.

Unpaid seller’s lien

47. Seller’s lien.

48. Part delivery.

49. Termination of lien.

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SECTIONS

Stoppage in transit

50. Right of stoppage in transit.

51. Duration of transit.

52. How stoppage in transit is effected.

Transfer by buyer and seller

53. Effect of sub-sale or pledge by buyer.

54. Sale not generally rescinded by lien or stoppage in transit.

CHAPTER VI

SUITS FOR BREACH OF THE CONTRACT

55. Suit for price.

56. Damages for non-acceptance.

57. Damages for non-delivery.

58. Specific performance.

59. Remedy for breach of warranty.

60. Repudiation of contract before due date.

61. Interest by way of damages and special damages.

CHAPTER VII

MISCELLANEOUS

62. Exclusion of implied terms and conditions.

63. Reasonable time a question of fact.

64. Auction sale.

64A. In contracts of sale, amount of increased or decreased taxes to be added or deducted.

65. [Repealed.].

66. Savings.

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THE SALE OF GOODS ACT, 1930

ACT NO. 3 OF 19301

[15th March, 1930.]

An Act to define and amend the law relating to the sale of goods.

WHEREAS it is expedient to define and amend the law relating to the sale of goods; It is hereby

enacted as follows:—

CHAPTER I

PRELIMINARY

1. Short title, extent and commencement.—(1) This Act may be called the 2

*** Sale of Goods Act,

1930.

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[(2) It extends to the whole of India 4

***.]

(3) It shall come into force on the 1st day of July, 1930.

2. Definitions.—In this Act, unless there is anything repugnant in the subject or context,—

(1) “buyer” means a person who buys or agrees to buy goods;

(2) “delivery” means voluntary transfer of possession from one person to another;

(3) goods are said to be in a “deliverable state” when they are in such state that the buyer would

under the contract be bound to take delivery of them;

(4) “document of title to goods” includes a bill of lading, dockwarrant, warehouse keeper’s

certificate, wharfingers’ certificate, railway receipt, 5

[multimodal transport document,] warrant or

order for the delivery of goods and any other document used in the ordinary course of business as

proof of the possession or control of goods, or authorising or purporting to authorise, either by

endorsement or by delivery, the possessor of the document to transfer or receive goods thereby

represented;

(5) “fault” means wrongful act or default;

(6) “future goods” means goods to be manufactured or produced or acquired by the seller after the

making of the contract of sale;

(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;

(8) a person is said to be “insolvent” who has ceased to pay his debts in the ordinary course of

business, or cannot pay his debts as they become due, whether he has committed an act of insolvency

or not;

(9) “mercantile agent” means a mercantile 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;

(10) “price” means the money consideration for a sale of goods;

 

1. The Act has been extended to Berar by Act 4 of 1941, to Dadra and Nagar Haveli by Reg. 6 of 1963, s. 2 and the First

Schedule (w.e.f. 1-7-1965); to Goa, Daman and Diu by Reg. 11 of 1963, s. 3 and the Schedule; to Pondicherry by the

Pondicherry (Extension of Laws) Act, 1968, s. 3 and Schedule; to Lakshadweep by Reg. 8 of 1965, s. 3 and the Schedule

(w.e f. 1-10-1967); and to Sikkim on 1-91984 vide Notification No. S.O. 645 (E), dated 24-8-1984, Gazette of India,

Extraordinary, Pt. II, Sec. 3(11).

2. The word “Indian” omitted by Act 33 of 1963, s. 2 (w.e.f. 22-9-1963).

3. Subs. by the A.O. 1950, for sub-section (2).

4. The words “except the State of Jammu and Kashmir” omitted by Act 34 of 2019, s. 95 and the Fifth Schedule

(w.e.f. 31-10-2019)..

5. Ins. by Act 28 of 1993, s. 31 and the Schedule, Part III.

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(11) “property” means the general property in goods, and not merely a special property;

(12) “quality of goods” includes their state or condition;

(13) “seller” means a person who sells or agrees to sell goods;

(14) “specific goods” means goods identified and agreed upon at the time a contract of sale is

made; and

(15) expressions used but not defined in this Act and defined in the Indian Contract Act, 1872

(9 of 1872), have the meaning assigned to them in that Act.

3. Application of provisions of Act 9 of 1872.—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.

CHAPTER II

FORMATION OF THE CONTRACT

Contract of sale

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.

Formalities of the contract

5. Contract of sale how made.—(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.

Subject-matter of contract

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.

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The price

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.

Conditions and waranties

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.

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.

13. When condition to be treated as warranty.— (1) Where a contract of sale is subject to any

condition to be fulfilled by the seller, the buyer may waive the condition or elect to treat

the breach of the condition as a breach of warranty and not as a ground for treating the contract as

repudiated.

(2) Where a contract of sale is not severable and the buyer has accepted the goods or part thereof,

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*** the breach of any condition to be fulfilled by the seller can only be treated as a breach of warranty

and not as a ground for rejecting the goods and treating the contract as .repudiated, unless there is a term

of the contract, express or implied, to that effect.

(3) Nothing in this section shall affect the case of any condition or warranty fulfilment of which is

excused by law by reason of impossibility or otherwise.

14. Implied undertaking as to title, etc.—In a contract of sale, unless the circumstances of the

contract are such as to show a different intention, there is—

(a) an implied condition on the part of the seller that, in the case of a sale, he has a right to sell the

goods and that, in the case of an agreement to sell, he will have a right to sell the goods at the time

when the property is to pass;

(b) an implied warranty that the buyer shall have and enjoy quiet possession of the goods;

 

1. The words “or where the contract is for specific goods the property in which has passed to the buyer,” omitted by Act 33 of

1963, s. 3 (w.e.f. 22-9-1963).

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(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.

15. Sale by description.—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; and, if the sale is by sample as

well as by description, it is not sufficient that the bulk of the goods corresponds with the sample if the

goods do not also correspond with the description.

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.

17. Sale by sample.— (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.

CHAPTER III

EFFECTS OF THE CONTRACT

Transfer of property as between seller and buyer

18. Goods must be ascertained.— Where there is 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.

19. Property passes when intended to pass.— (1) Where there is a contract for the sale of specific

or ascertained goods the property in them is transferred to the buyer at such time as the parties to the

contract intend it to he transferred.

(2) For the purpose of ascertaining the intention of the parties regard shall be had to the terms of the

contract, the conduct of the parties and the circumstances of the case.

(3) Unless a different intention appears, the rules contained in sections 20 to 24 are rules for

ascertaining the intention of the parties as to the time at which the property in the goods is to pass to the

buyer.

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20. Specific goods in a deliverable state.— Where there is an unconditional contract for the sale of

specific goods in a deliverable state, the property in the goods passes to the buyer when the contract is

made, and it is immaterial whether the time of payment of the price or the time of delivery of the goods,

or both, is postponed.

21. Specific goods to be put into a deliverable state.—Where there is a contract for the sale of

specific goods and the seller is bound to do something to the goods for the purpose of putting them into a

deliverable state, the property does not pass until such thing is done and the buyer has notice thereof.

22. Specific goods in a deliverable state, when the seller has to do anything thereto in order to

ascertain price.—Where there is a contract for the 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, the property does not pass until such act or thing is done and the buyer

has notice thereof.

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 by given either before or after the appropriation is made

Delivery to carrier.—(2) Where, in pursuance of the contract, the seller delivers the goods to the

buyer or to a carrier or other bailee (whether named by the buyer or not) for the purpose of transmission

to the buyer, and does not reserve the right of disposal, he is deemed to have unconditionally appropriated

the goods to the contract.

24. Goods sent on approval or “on sale or return”.—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 he 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.

25. Reservation of right of disposal.—(1) Where there is a contract for the sale of specific goods or

where goods are subsequently appropriated to the contract, the seller may, by the terms of the contract or

appropriation, reserve the right of disposal of the goods until certain conditions are fulfilled. In such case,

notwithstanding the delivery of the goods to a buyer or to a carrier or other bailee for the purpose of

transmission to the buyer, the property in the goods does not pass to the buyer until the conditions

imposed by the seller are fulfilled.

1

[(2) Where goods are shipped or delivered to a railway administration for carriage by railway and by

the bill of lading or railway receipt, as the case may be, the goods are deliverable to the order of the seller

or his agent, the seller is prima facie deemed to reserve the right of disposal.

(3) Where the seller of goods draws on the buyer for the price and transmits to the buyer the bill of

exchange together with the bill of lading or, as the case may be, the railway receipt, to secure acceptance

or payment of the bill of exchange, the buyer is bound to return the bill of lading or the railway receipt if

he does not honour the bill of exchange; and, if he wrongfully retains the bill of lading or the railway

receipt, the property in the goods does not pass to him.

Explanation. —In this section, the expressions “railway” and “railway administration” shall have the

meanings respectively assigned to them under the Indian Railways Act, 1890 (9 of 1890).]

26. Risk prima facie passes with property.—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 the buyer’s risk whether delivery has been made or not:

 

1. Subs by Act 33 of 1963, s. 4, for sub-sections (2) and (3) (w.e.f. 22-9-1963).

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Provided that, where delivery has been delayed through the fault of either buyer or seller, the goods

are at the risk of the party in fault as regards any loss which might not have occurred but for such fault:

Provided also that nothing in this section shall affect the duties or liabilities of either seller or buyer as

a bailee of the goods of the other party.

Transfer of title

27. 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, unless the owner of the goods is by his conduct precluded from denying the seller’s

authority to sell:

Provided that, where a mercantile agent is, with the consent of the owner, in possession of the goods

or of a document of title to the goods, any sale made by him, when acting in the ordinary course of

business of a mercantile agent, shall be as valid as if he were expressly authorised by the owner of the

goods to make the same; provided that the buyer acts in good faith and has not at the time of the contract

of sale notice that the seller has not authority to sell.

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.

29. Sale by person in possession under voidable contract.—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.

30. Seller or buyer in possession after sale.—(1) Where a person, having sold goods, continues or is

in possession of the goods or of the documents of title to the goods, the delivery or transfer by that person

or by a mercantile agent acting for him, of the goods or documents of title under any sale, pledge or other

disposition thereof to any person receiving the same in good faith and without notice of the previous sale

shall have the same effect as if the person making the delivery or transfer were expressly authorised by

the owner of the goods to make the same.

(2) Where a person, having bought or agreed to buy goods, obtains, with the consent of the seller,

possession of the goods or the documents of title to the goods, the delivery or transfer by that person or by

a mercantile agent acting for him, of the goods or documents of title under any sale, pledge or other

disposition thereof to any person receiving the same in good faith and without notice of any lien or other

right of the original seller in respect of the goods shall have effect as if such lien or right did not exist.

CHAPTER IV

PERFORMANCE OF THE CONTRACT

31. Duties, of seller and buyer.— It is the duty to the seller to deliver the goods and of the buyer to

accept and pay for them, in accordance with the terms of the contract of sale.

32. Payment and delivery are concurrent conditions.—Unless otherwise agreed, delivery of the

goods and payment of the price are concurrent conditions, that is to say, the seller shall be ready and

willing to give possession of the goods to the buyer in exchange for the price, and the buyer shall be ready

and willing to pay the price in exchange for possession of the goods.

33. Delivery.—Delivery of goods sold may be made by doing anything which the parties agree shall

be treated as delivery or which has the effect of putting the goods in the possession of the buyer or of any

person authorised to hold them on his behalf.

34. Effect of part delivery.—A delivery of part of goods, in progress of the delivery of the whole,

has the same effect, for the purpose of passing the property in such goods, as a delivery of the whole; but

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a delivery of part of the goods, with an intention of severing it from the whole, does not operate as a

delivery of the remainder.

35. Buyer to apply for delivery.— Apart from any express contract, the seller of goods is not bound

to delivery them until the buyer applies for delivery.

36. Rules as to delivery.— (1) Whether it is for the buyer to take possession of the goods or for the

seller to send them to the buyer is a question depending in each case on the contract, express or implied,

between the parties. Apart from any such contract, goods sold are to be delivered at the place at which

they are at the time of the sale, and goods agreed to be sold are to be delivered at the place at which they

are at the time of the agreement to sell, or, if not then in existence, at the place at which they are

manufactured or produced.

(2) Where under the contract of sale the seller is bound to send the goods to the buyer, but no time

for sending them is fixed, the seller is bound to send them within a reasonable time.

(3) Where the goods at the time of sale are in the possession of a third person, there is no delivery by

seller to buyer unless and until such third person acknowledges to the buyer that he holds the goods on his

behalf:

Provided that nothing in this section shall affect the operation of the issue or transfer of any document

of title to goods.

(4) Demand or tender of delivery may be treated as ineffectual unless made at a reasonable hour.

What is a reasonable hour is a question of fact.

(5) Unless otherwise agreed, the expenses of and incidental to putting the goods into a deliverable

state shall be borne by the seller.

37. Delivery of wrong quantity.—(1) Where the seller delivers to the buyer a quantity of goods less

than he contracted to sell, the buyer may reject them, but it the buyer accepts the goods so delivered he

shall pay for them at the contract rate.

(2) Where the seller delivers to the buyer a quantity of goods larger than he contracted to sell, the

buyer may accept the goods included in the contract and reject the rest, or he may reject the whole. If the

buyer accepts the whole of the goods so delivered, he shall pay for them at the contract rate.

(3) Where the seller delivers to the buyer the goods he contracted to sell mixed with goods of a

different description not included in the contract, the buyer may accept the goods which are in accordance

with the contract and reject the rest, or may reject the whole.

(4) The provisions of this section are subject to any usage of trade, special agreement or course of

dealing between the parties.

38. Instalment deliveries.—(1) Unless otherwise agreed, the buyer of goods is not bound to accept

delivery thereof by instalments.

(2) Where there is a contract for the sale of goods to be delivered by stated instalments which are to

be separately paid for, and the seller makes no delivery or defective delivery in respect of one or more

instalments, or the buyer neglects or refuses to take delivery of or pay for one or more instalments, it is a

question in each case depending on the terms of the contract and the circumstances of the case, whether

the breach of contract is a repudiation of the whole contract, or whether it is a severable breach giving rise

to a claim for compensation, but not to a right to treat the whole contract as repudiated.

39. Delivery to carrier or wharfinger.—(1) Where, in pursuance of a contract of sale, the seller is

authorised or required to send the goods to the buyer, delivery of the goods to a carrier, whether named by

the buyer or not, for the purpose of transmission to the buyer, or delivery of the goods to a wharfinger for

safe custody, is prima facie deemed to be a delivery of the goods to the buyer.

(2) Unless otherwise authorised by the buyer, the seller shall make such contract with the carrier or

wharfinger on behalf of the buyer as may be reasonable having regard to the nature of the goods and the

other circumstances of the case. If the seller omits so to do, and the goods are lost or damaged in course

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of transit or whilst in the custody of the wharfinger, the buyer may decline to treat the delivery to the

carrier or wharfinger as a delivery to himself, or may hold the seller responsible in damages.

(3) Unless otherwise agreed, where goods are sent by the seller to the buyer by a route involving sea

transit, in curcumstances in which it is usual to insure, the seller shall give such notice to the buyer as

may enable him to insure them during their sea transit, and if the seller fails so to do, the goods shall be

deemed to be at his risk during such sea transit.

40. Risk where goods are delivered at distant place.—Where the seller of goods agrees to deliver

them at his own risk at a place other than that where they are when sold, the buyer shall, nevertheless,

unless otherwise agreed, take any risk of deterioration in the goods necessarily incident to the course of

transit.

41. Buyer’s right of examining the goods.—(1) Where goods are delivered to the buyer which he

has not previously examined, he is not deemed to have accepted them unless and until he has had a

reasonable opportunity of examining them for the purpose of ascertaining whether they are in conformity

with the contract.

(2) Unless otherwise agreed, when the seller tenders delivery of goods to the buyer, he is bound, on

request, to afford the buyer a reasonable opportunity of examining the goods for the purpose of

ascertaining whether they are in conformity with the contract.

42. Acceptance.—The buyer is deemed to have accepted the goods when he intimates to the seller

that he has accepted them, or when the goods have been delivered to him and he does any act in relation

to them which is inconsistent with the ownership of the seller, or when, after the lapse of a reasonable

time, he retains the goods without intimating to the seller that he has rejected them.

43. Buyer not bound to return rejected goods.—Unless otherwise agreed, where goods are

delivered to the buyer and he refuses to accept them, having the right so to do, he is not bound to return

them to the seller, but it is sufficient if he intimates to the seller that he refuses to accept them.

44. Liability of buyer for neglecting or refusing delivery of goods.—When the seller is ready and

willing to deliver the goods and requests the buyer to take delivery, and the buyer does not within a

reasonable time after such request take delivery of the goods, he is liable to the seller for any loss

occasioned by his neglect or refusal to take delivery, and also for a reasonable charge for the care and

custody of the goods:

Provided that nothing in this section shall affect the rights of the seller where the neglect or refusal of

the buyer to take delivery amounts to a repudiation of the contract.

CHAPTER V

RIGHTS OF UNPAID SELLER AGAINST THE GOODS

45. “Unpaid seller” defined.—(1) The seller of goods is deemed to be an “unpaid seller” within the

meaning of this Act—

(a) when the whole of the price has not been paid or tendered;

(b) when a bill of exchange or other negotiable instrument has been received as conditional

payment, and the condition on which it was received has not been fulfilled by reason of the dishonour

of the instrument or otherwise.

(2) In this Chapter, the term “seller” includes any person who is in the position of a seller, as, for

instance, an agent of the seller to whom the bill of lading has been endorsed, or a consignor or agent who

has himself paid, or is directly responsible for, the price.

46. Unpaid seller’s sights.—(1) Subject to the provisions of this Act and of any law for the time

being in force, 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;

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(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.

(2) 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.

Unpaid seller’s lien

47. Seller’s lien.—(1) Subject to the provisions of this Act, 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.

(2) The seller may exercise his right of lien notwithstanding that he is in possession of the goods as

agent or bailee for the buyer.

48. Part delivery.—Where an unpaid seller has made part delivery of the goods, he may exercise his

right of lien on the remainder, unless such part delivery has been made under such circumstances as to

show an agreement to waive the lien.

49. Termination of lien.—(1) The unpaid seller of goods loses his lien thereon—

(a) 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;

(b) when the buyer or his agent lawfully obtains possession of the goods;

(c) by waiver thereof.

(2) The unpaid seller of goods, having a lien thereon, does not lose his lien by reason only that he has

obtained a decree for the price of the goods.

Stoppage in transit

50. Right of stoppage in transit.—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 payment or tender of the price.

51. Duration of transit.—(1) Goods are deemed to be in course of transit from the time when they

are delivered to a carrier or other bailee for the purpose of transmission to the buyer, until the buyer or his

agent in that behalf takes delivery of them from such carrier or other bailee.

(2) If the buyer or his agent in that behalf obtains delivery of the goods before their arrival at the

appointed destination, the transit is at an end.

(3) If, after the arrival of the goods at the appointed destination, the carrier or other bailee

acknowledges to the buyer or his agent that he holds the goods on his behalf and continues in possession

of them as bailee for the buyer or his agent, the transit is at an end and it is immaterial that a further

destination for the goods may have been indicated by the buyer.

(4) If the goods are rejected by the buyer and the carrier or other bailee continues in possession of

them, the transit is not deemed to be at an end, even if the seller has refused to receive them back.

(5) When goods are delivered to a ship chartered by the buyer, it is a question depending on the

circumstances of the particular case, whether they are in the possession of the master as a carrier or as

agent of the buyer.

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(6) Where the carrier or other bailee wrongfully refuses to deliver the goods to the buyer or his agent

in that behalf, the transit is deemed to be at an end.

(7) Where part delivery of the goods has been made to the buyer or his agent in that behalf, the

remainder of the goods may be stopped in transit, unless such part delivery has been given in such

circumstances as to show an agreement to give up possession of the whole of the goods.

52. How stoppage in transit is effected.—(1) The unpaid sellermay exercise his right of stoppage in

transit either by taking actual possession of the goods, or by giving notice of his claim to the carrier or

other bailee in whose possession the goods are. Such notice may be given either to the person in actual

possession of the goods or to his principal. In the latter case the notice, to be effectual, shall be given at

such time and in such circumstances that the principal, by the exercise of reasonable diligence, may

communicate it to his servant or agent in time to prevent a delivery to the buyer.

(2) When notice of stoppage in transit is given by the seller to the carrier or other bailee in possession

of the goods, he shall re-deliver the goods to, or according to the directions of, the seller. The expenses of

such re-delivery shall be borne by the seller.

Transfer by buyer and seller

53. Effect of sub-sale or pledge by buyer.—(1) Subject to the provisions of this Act, the unpaid

seller’s right of lien or stoppage in transit is not affected by any sale or other disposition of the goods

which the buyer may have made, unless the seller has assented thereto:

Provided that where a document of title to goods has been issued or lawfully transferred to any person

as buyer or owner of the goods, and that person transfers the document to a person who takes the

document in good faith and for consideration, then, if such last mentioned transfer was by way a sale, the

unpaid seller’s right of lien or stoppage in transit is defeated, and, if such last mentioned transfer was by

way of pledge or other disposition for value, the unpaid seller’s right of lien or stoppage is transit can

only be exercised subject to the rights of the transferee.

(2) Where the transfer is by way of pledge, the unpaid seller may require the pledgee to have the

amount secured by the pledge satisfied in the first instance, as far as possible, out of any other goods or

securities of the buyer in the hands of the pledgee and available against the buyer

54. Sale not generally rescinded by lien or stoppage in transit.—(1) Subject to the provisions of

this section, a contract of sale is not rescinded by the mere exercise by an unpaid seller of his right of lien

or stoppage in transit.

(2) Where the goods are of a perishable nature, or where the unpaid seller who has exercised his right

of lien or stoppage in transit gives notice to the buyer of his intention to re-sell, the unpaid seller may, if

the buyer does not within a reasonable time pay or tender the price, re-sell the goods within a reasonable

time and recover from the original buyer damages for any loss occasioned by his breach of contract, but

the buyer shall not be entitled to any profit which may occur on the re-sale. If such notice is not given, the

unpaid seller shall not be entitled to recover such damages and the buyer shall be entitled to the profit, if

any, on the re-sale.

(3) Where an unpaid seller who has exercised his right of lien or stoppage in transit re-sells the goods,

the buyer acquires a good title thereto as against the original buyer, notwithstanding that no notice of the

re-sale has been given to the original buyer.

(4) Where the seller expressly reserves a right of re-sale in case the buyer should make default, and,

on the buyer making default, re-sells the goods, the original contract of sale is thereby rescinded, but

without prejudice to any claim which the seller may have for damages.

CHAPTER VI

SUITS FOR BREACH OF THE CONTRACT

55. Suit for price.—(1) 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.

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(2) Where under a contract of sale the price is payable on a day certain irrespective of delivery and

the buyer wrongfully neglects or refuses to pay such pirce, 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.

56. Damages for non-acceptance.—Where the buyer wrongfully neglects or refuses to accept and

pay for the goods, the seller may sue him for damages for non-acceptance.

57. Damages for non-delivery.—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.

58. Specific performance.—Subject to the provisions of Chapter II of the Specific Relief Act, 1877

(1 of 1877), in any suit for breach of contract to deliver specific or ascertained goods, the Court may, if it

thinks fit, on the application of the plaintiff, by its decree direct that the contract shall be performed

specifically, without giving the defendant the option of retaining the goods on payment of damages. The

decree may be unconditional, or upon such terms and conditions as to damages, payment of the price or

otherwise, as the Court may deem just, and the application of the plaintiff may be made at any time before

the decree.

59. Remedy for breach of warranty.—(1) Where there is a breach of warranty by file seller, or

where the buyer elects or is compelled to treat any breach of a condition on the part of the seller as a

breach of warranty, the buyer is not by reason only of such breach of warranty entitled to reject the goods;

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.

(2) The fact that a buyer has set up a breach of warranty in diminution or extinction of the price does

not prevent him from suing for the same breach of warranty if he has suffered further damage.

60. Repudiation of contract before due date.—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.

61. Interest by way of damages and special damages.—(1) 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.

(2) 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—

(a) to the seller in a suit by him for the amount of the price— from the date of the tender of the

goods or from the date on which the price was payable;

(b) 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.

CHAPTER VII

MISCELLANEOUS

62. Exclusion of implied terms and conditions.—Where any right, duty or liability would arise

under a contract of sale by implication of law, it may be negatived or varied by express agreement or by

the course of dealing between the parties, or by usage, if the usage is such as to bind both parties to the

contract.

63. Reasonable time a question of fact.—Where in this Act any reference is made to a reasonable

time, the question what is a reasonable time is a question of fact.

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64. Auction sale. —In the case of a sale by auction—

(1) Where goods are put up for sale in lots, each lot is prima facie deemed to be the subject of a

separate contract of sale;

(2) the sale is complete when the auctioneer announces its completion by the fall of the hammer

or in other customary manner; and, until such announcement is made, any bidder may retract his bid;

(3) a right to bid may be reserved expressely by or on behalf of the seller and, where such right is

expressly so reserved, but not otherwise, the seller or any one person on his behalf may, subject to the

provisions hereinafter contained, bid at the auction;

(4) 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;

(5) the sale may be notified to be subject to a reserved or upset, price;

(6) if the seller makes use of pretended bidding to raise the price, the sale is voidable at the option

of the buyer.

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[64A. In contracts of sale, amount of increased or decreased taxes to be added or deducted.—

(1) Unless a different intention appears from the terms of the contract, in the event of any tax of the nature

described in sub-section (2) being imposed, increased, decreased or remitted in respect of any goods after

the making of any contract for the sale or purchase of such goods without stipulation as to the payment of

tax where tax was not chargeable at the time of the making of the contract, or for the sale or purchase of

such goods tax-paid where tax was chargeable at that time,—

(a) if such imposition or increase so takes effect that the tax or increased tax, as the case may be,

or any part of such tax is paid or is payable, the seller may add so much to the contract price as will

be equivalent to the amount paid or payable in respect of such tax or increase of tax, and he shall be

entitled to be paid and to sue for and recover such addition; and

(b) if such decrease or remission so takes effect that the decreased tax only, or no tax, as the case

may be, is paid or is payable, the buyer may deduct so much from the contract price as will be

equivalent to the decrease of tax or remitted tax, and he shall not be liable to pay, or be sued for, or in

respect of, such deduction.

(2) The provisions of sub-section (1) apply to the following taxes, namely:—

(a) any duty of customs or excise on goods;

(b) any tax on the sale or purchase of goods.]

65. [Repeal.] Rep. by the Repealing Act, 1938 (1 of 1938), s. 2 and Sch.

66. Savings.—(1) Nothing in this Act or in any repeal effected thereby shall affect or be deemed to

affect—

(a) any right, title, interest, obligation or liability already acquired, accrued or incurred before the

commencement of this Act, or

(b) any legal proceedings or remedy in respect of any such right, title, interest, obligation or

liability, or

(c) anything done or suffered before the commencement of this Act, or

(d) any enactment relating to the sale of goods which is not expressly repealed by this Act, or

(e) any rule of law not inconsistent with this Act.

 

1. Subs. by Act 33 of 1963, s. 5, for section 64A (w.e.f. 22-9-1963). Earlier it was inserted by Act 41 of 1940, s 2.

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(2) The rules of insolvency relating to contracts for the sale of goods shall continue to apply thereto,

notwithstanding anything contained in this Act.

(3) The provisions of this Act relating to contracts of sale do not apply to any transaction in the form

of a contract of sale which is intended to operate by way of mortgage, pledge, charge or other security.

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