SOGA

SOGA

PAHUJA LAW ACADEMY

INTRODUCTION

MAINS QUESTIONS

 

 

  1. Discuss briefly the history of ‘Sales of Goods Act’ and important changes brought about in the law of Sales of Goods Act.

 

  1. Write short note on following:-

 

  • Contract of Sales of Goods
  • Goods
  • Price

 

  1. Distinguish ‘Sale’ from (a) bailment, (b) barter, and (c) gift

 

  1. Distinguish between ‘sale’ and an agreement to sell.’ When an ‘agreement to sell’ does becomes as ‘sale’? 

 

Introduction

Definitions—

(1) “buyer”

(2) “delivery

(3) goods are said to be in a “deliverable state”

(4) “document of title to goods”

Document of Title

Railway receipt

(5) “fault”

(6) “future good”

(7) “goods”

(8) a person is said to be “insolvent”

(9) “mercantile agent

(10) “price”

(11) “property”

(12) “quality of goods

(13) “seller”

(14) “specific goods

What is the test to determine the goods?

What do you mean by the property in goods?

What is Charge?

Difference between Hypothecation, Pledge and Mortgage.

Difference between Sale and Agreement to Sale?

What are the formalities of Contract of Sale?

Destruction of the Goods.

PAHUJA LAW ACADEMY

PRELIMINARY QUESTIONS

 

  1. The Sale of Goods Act, 1930 applies to the whole of India except

 

(a) Jammu & Kashmir

(b) Dadra and Nagar Haveli

(c) Goa, Daman & Diu

(d) all the above.

 

  1. The Sale of Goods Act, 1930 came into force on.

 

(a) 1st April, 1930

(b) 1st July, 1930

(c) 1st December, 1930

(d) 31st January, 1931.

 

  1. The Sale of Goods Act, 1930 is based on

 

(a) the English Bills of Exchange Act, 1882

(b) the Transfer of Property Act, 1882

(c) the English Sale of Goods Act, 1893

(d) the Indian Contract Act, 1872.

 

  1. The Sale of Goods Act, 1930 in its operation is

 

(a) prospective

(b) retrospective

(c) prospective in certain respects and retrospective in certain other respects

(d) only (c) and not (a) or (b).

 

  1. In Sale of Goods Act several provisions of the Indian Contract Act have been retained

 

  • to meet the need of the buyers
  • to meet the need of the sellers
  • to meet the need of both the buyers and sellers

(d) to meet special conditions existing in India regarding sale of goods.

 

PAHUJA LAW ACADEMY (PLA)

Formation of the Contract

Mains Questions

 

  1. Distinguish ‘Sale’ from (a) bailment, (b) barter, and (c) gift
  1. Distinguish between ‘sale’ and an agreement to sell.’ When an ‘agreement to sell’ does become as ‘sale’?
  1. The Central India Machinery Manufacturing Co. Ltd. agreed to manufacture and supply wagons to the Union Government. The agreement was made between the company and the Railway Board which acted on behalf of the Union Government. Is it a contract of sale of goods or contract for work and labour?

FORMATION OF THE CONTRACT

 

  1. Sale and agreement to sell

DEFINITION AND ESSENTIALS or SALE [s.4]

  1. Bilateral Contract

In Graff v Evans:

A sale is said to be consensual because it is necessary that the parties should agree with their free consent. A forced purchase or procurement is an acquisition and not a sale. Where the control order leaves some scope for “consent” it may be a sale. Thus, where a sugar manufacturer is told to sell only at stated prices and to stated customers, it is a sale, because the buyers to whom this privilege is given are still free to buy or not. “In Benjamin’s SALE or Goons“the position is thus elucidated:

  1. Money Consideration
  2. Sale and Contract for Work and Material
  3. Goods

PAHUJA LAW ACADEMY (PLA)

Preliminary Questions

  1. The term ‘buyer’, under the Sale of Goods Act, 1930, has

 

(a) Been defined under section 2(1)

(b) been defined under section 2(2)

(c) been defined under section 2(3)

(d) not been defined.

 

  1. The term “goods” in the sale of goods means

 

(a) specific goods only

(b) ascertained goods only

(c) ownership

(d) subject matter.

 

  1. The term ‘delivery’ has been defined, in the Sale of Goods Act, 1930 under

 

(a) section 2(3)

(b) section 2(2)

(c) section 2(1)

(d) section 2(4).

 

  1. Under section 2(2) of the Sale of Goods Act, 1930, ‘delivery’ means

 

(a) gratuitous transfer of possession from one person to another

(b) involuntary transfer of possession from one person to another

(c) voluntary transfer of possession from one person to another

(d) transfer of possession irrespective of whether it is gratuitous, involuntary or voluntary, from one person to another.

 

PAHUJA LAW ACADEMY

SALE OF GOODS ACT

MAINS QUESTIONS

 

  1. Contract for the sale of a horse is entered into on the condition that the buyer should have it for eight days for trial and be at liberty to return it at the expiration of that period if he did not find it suitable. The horse dies without any fault on the part of either party, three days after it was delivered to the buyer for trial. Whether contract can be enforced?
  2. Is time an essence of a contract for the sale or goods? Discuss the rule about stipulations as to time in such contracts.
  3. The plaintiff, a butcher bought a carcass of a goat from the defendant, who was a meat shopkeeper in a meat market. The plaintiff in ignorance of the fact that it was ex-posed to tuberculosis, offered it for sale. It was seized by a Food Inspector, who adjudged the same as unfit for consumption, and condemned it to be destroyed. The plaintiff was also fined. Thereafter, the plaintiff filed a suit against the defendant to recover the amount of fine and damages for breach of warranty under the Sale of Goods Act. The defendant pleaded that by usage of trade such an implied warranty was excluded. Decide by referring to the provisions of the Sale of Goods Act and decided cases.
  4. Distinguish between condition and warranty and give two illustrations of each
  5. What conditions and warranties are implied in a contract of sale of goods?
  6. Explain with the help of appropriate examples the doctrine of “Caveat Emptor”.
  7. ‘A’ purchases a hot water bottle from a chemist mentioning the specific purpose for which he requires it. The bottle while being used by A’s wife burst and A’s wife is injured. What are the remedies of ‘A’ against the chemist?
  8. A manufacturer of woollen cloths sold woollen cloth to a tailor on the basis of particular purpose but he had not told the seller about the same, Owing to latent defect in the cloth as well as in the sample the cloth turned out to be unfit for the purpose for which the tailor had purchased though the same was fit for other purposes. Tailor filed suit for damages. Decide.

TOPIC – 3

CONDITIONS AND WARRANTIES

 

What is STIPULATIONS AS TO TIME?

Sec.11 : Stipulations as to time:

 

 

  1. Condition and warranty.—

CONDITIONS AND WARRANTIES

Section 12

 

Defining a warranty, the section says:

Baldry v Marshall”.

An illustration of a warranty is Harrison v Knowles and Foster“.

 When condition to be treated as warranty.

Condition Reduced to Warranty [S. 13]

Waiver by buyer

Acceptance of goods by buyer

“Acceptance” is defined in Section 42 .

  1. Acceptance –

Hardy  C0 v Hillerns and Fowler“.

Condition converted into warranty only for remedial purposes

House of Lords in Wallis, Son & Wells v Pratt & Haymes.

 

What are IMPLIED CONDITIONS?

 Implied undertaking as to title, etc.

Condition as to Title [S. 14]

[Rowland v Divall (1923) 2 KB 500 CA]. ‘

Implied warranties

Remedies of the buyer

  1. Sale by description

Sale by Description [S. 15]

Section15

Lord WRIGHT  pointed out in Grant v Australian Knitting Mills“:

Buyer purchasing on the basis of description

Varley v Whipp”.

Packing as description

Moore & Co Ltd & Landauer C0, re“:

Time and place of arrival of ship as description

Shipment to be in good condition

Reliance on description to be in contemplation of parties

Harlingdon & Leinster Enterprises Ltdv Christopher Hull Fine Art Ltd”.

Correspondence with description

Arcos Ltd v E .A. Ronaasen &Son”:

Sale by Description as well as by Sample [S. 15]

Conditions Implied by way of Exceptions to Rule of Caveat Emptor [S. 16]

  1. Implied conditions as to quality or fitness
  2. Fitness for Buyer’s Purpose [S. 16(1)]

Grant v Australian Knitting Mills”.

Sale under trade name [Proviso to S. 16(1)]

Merchantable Quality [S. 16(2)]

Meaning of merchantable quality

, Jones v Just.

A firm of Liverpool merchants contracted to buy from a London merchant a number of bales of Manila hemp to arrive from Singapore. The hemp arrived wetted by sea water and it was so much damaged that it would not pass in the market as Manila hemp. Consequently it had to be sold at about 5 per cent of its original price.

lt was held that the goods were not of merchantable quality and that the seller was bound to make good the loss caused by selling at the reduced price.

Marketability

General observation about sale of pictures

Emphasis upon physical quality rather than saleability

Goods should not violate applicable statutes

Reasonable fitness for general purposes

Packing

Partly defective

Test of merebantable quality

Statutory definition of merchantability

Satisfactory quality

Examination by the buyer

Thornett and Fehr v Beers& Sons.

Henry Kendall & Sons v William Lillico & Sons Ltd.

  

Conditions Implied by Trade Usage [S. 16(3)]

Jones v Bowden.

Express Terms

Sale in the course of seller’: business

sale ‘in the course of a business’

Sale by Sample [S. 17]

Miscellaneous or Innominate Terms

Buyer’s State of Knowledge About Goods

What are IMPLIED WARRANTIES ?

 

  1. Quiet Possession [S. 14(b)]

Rowland v Divallmz

 

 Free from Encurnbrance [S. 14(c)]

.

Exclusion of implied terms [S. 62]

Duration of implied terms

Crowther v Shannon Motor Co.

Conclusive Remarks:

PAHUJA LAW ACADEMY

SALE OF GOODS ACT

PRELIMINARY QUESTIONS

 

  1. 1. There is a breach of implied warranty, of freedom from encumbrances provided under section 14 of the Sale of Goods Act, 1930, when

(a) there is a mere existence of the encumbrances

(b) the buyer has to discharge the encumbrances

(c) either (a) or (b)

(d) only (b) and not (a).

  1. 2. Section 15 of the Sale of Goods Act, 1930 provides for

(a) implied conditions in case of the sale of goods by description

(b) implied conditions in case of the sale of goods under a trade or brand name

(c) implied warranty in case of the sale of goods by description

(d) implied warranty in case of sale of goods under a trade or brand name.

  1. 3. In case of sale of goods by description under section 15 of the Sale of Goods Act, 1930, the implied condition is that

(a) the goods shall correspond with the sample the goods shall correspond with the description

(c) the goods shall correspond with either the sample or the description

(d) the goods shall correspond with both the sample and the description.

  1. 4. In case of sale of goods by sample as well as by description under section 15 of the Sale of Goods Act, 1930,

(a) it shall suffice if the bulk of the goods correspond with the sample

(b) it shall suffice if the bulk of the goods correspond with the sample even though the goods do no correspond with the description

(c) it shall not suffice that the bulk of the goods correspond with the sample if the goods do not also correspond with the description

(d) it shall not suffice that the bulk of the goods do not correspond with the sample.

  1. 5. The implied condition as regards the goods sold, under section 15 of the Sale of Goods Act, 1930, applies where

(a) the vendee is able to inspect the goods

(b) the vendee is not able to inspect the goods

(c) the vendee is able to inspect the goods or not

(d) the vendee has actually inspected the goods.

  1. 6. Under section 15 of the Sale of Goods Act, 1930, if the goods are not in accordance with the description of goods in the contract, the buyer is

(a) entitled to reject the goods if the property in goods has not passed to the buyer

(b) not entitled to reject the goods if the property in goods has passed to the buyer

(c) entitled to reject the goods if the property in goods has passed to the buyer

(d) entitled to reject the goods irrespective of whether the property in goods has passed to the buyer or not.

  1. Section 15 of the Sale of Goods Act, 1930, usually applies to

(a) a contract for the sale of unascertained goods

(b) a contract for the sale of specific goods

(c) both (a) and (b)

(d) either (a) or (b).

  1. ln a sale of goods by description, under section 15 of the Sale of Goods Act, 1930

(a) it is sufficient that the goods are merchantable though not conforming to description

(b) it is sufficient that the goods are fit for the purpose for which they were required though not conforming to the description

(c) either (a) or (b)

(d) neither (a) nor (b).

 

Implied Conditions(S-14-17)

Those conditions which are forced upon the seller by the law, they are not expressed amongst themselves by the buyer and seller. They are as follows:

 

  1. Condition as to title.
  2. Sale by Sample.
  3. Sale by Description.
  4. Sale by both Sample as well as description.
  5. Condition as to Merchantable Quality.
  6. Condition as to Wholesomeness.
  7. Condition as to quality or Fitness for particular purpose.

 

Condition as to Title (S-14)

e

Future Goods-will have a right to sell

Existing Goods-                                                                                                                          Have a Right to Sell

Remedies-Return goods and recover price

Sale by Sample (S-17)

  1. Bulk as per the sample, bulk should correspond to sample.
  2. Buyer should get opportunity to compare.
  3. No latent defect:-Free from defects which makes product unsalable such defects could not be discovered by ordinary examination.

 

 

Sale by Description(S-15)

  1. Should be as per description.
  2. Goods should correspond to description.

 

Sale by Sample and Description (S-15 & S-17)

  • Should be as per Sample and description.
  • Goods should correspond to Sample and description.

There are following situations:

  1. Goods correspond only to Sample but not to description= Contract is void.
  2. Goods corresponds only to description but not to Sample = Contact is Void.
  3. Goods corresponds to both sample and description = Contract is valid.

 

 

Implied Condition as to Merchantable Quality

Quality and condition of goods –Man of ordinary prudence

 

Conditions

  1. That the goods are free from latent defects.(Godley v. Perry(1960)
  2. That the foods are marketable at their full value.
  3. That the goods can be used for the purpose for which they are bought by prudent persons.

Eg:-Clock late by 5 mins every hour.

 

 

Wholesomeness

Fit for human consumption

Eg: Spilt Milk, Contaminated water, overripe oranges, etc.

 

Quality or Fitness of purpose (S-16)

Particular purpose “Fit for purpose”

Implied conditions if :

  1. Buyer has informed the specific purpose.
  2. Seller has been dealing in that specific goods.
  3. Buyer has relied upon seller.

 

Implied Warranty

Those warranties which are forced upon the seller by the law, they are not expressed amongst themselves by the buyer and seller.

  1. Warranty as to undisturbed (quit) possession (S-14(b)).
  2. Warranty as to non-existence of encumbrance (S-14 C ).
  3. Disclosure of Dangerous nature of goods.
  4. Warranty as to Quality or Fitness by usage of Trade-Ripe.

Remedy-Suit for Damages.

 

Caveat Emptor (S-16)

 

 

The Doctrine                                                                            Exceptions

 

 

 

Fitness for buyer’s purpose(S-16(1)        Merchantable quality (S-16(2)              

 

 condition implied by the trade usage

Exception to Caveat emptor (in comprehensive manner)

Conclusive Remarks:

  1. Buyer relies on seller judgment
  2. Sale as per Sample
  3. Sale as per description.
  4. Sale by both Sample as well as by description.
  5. Quality or Fitness by usage of Trade.
  6. Sale of Branded products.
  7. Sale by Fraud or Misrepresentation.

 

PAHUJA LAW ACADEMY

SALE OF GOODS ACT

MAINS QUESTIONS

  

  1. What are the rules regarding the transfer of property in goods as per the Sale of Goods Act?

  

  1. A purchased rice from B being the contents of a godown. A had paid earnest money and had taken delivery of a part of rice. Before the rest could be taken away, it was destroyed by fire. Who will bear the loss?

 

 WHAT ARE THE EFFECTS OF THE CONTRACT?

TRANSFER OF PROPERTY AS BETWEEN SELLER AND BUYER

S.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.

Meaning of Ascertained Goods

The Supreme Court said in a case:

It is true that trees which are agreed to be severed before sale or under the contract of sale are ‘goods’ for the purposes of the Sale of Goods Act. But before they cease to be ‘proprietary’ right or interest in proprietary rights within the meaning of Sections 3 and 4(a) of the Act they must be felled under the contract. It will be noticed that under clause  1 of the contract the plaintiff was entitled to cut teak trees of more than 12 inches girth. It has to be ascertained which trees fell within that description. Till this was ascertained, they were not ‘ascertained goods’ within Section 19 of the Sale of Goods Act. Clause 5 of the contract contemplated that stumps of trees after cutting had 2 inches high.

Unascertained goods are not defined by the Sale of Goods Act but they fall into three main categories.

First, goods to be manufactured or grown by the seller which are necessarily future goods.

Second, generic goods, for example, 100 tonnes of sugarcane or the like which must also be future goods where the seller does not own sufficient goods of the description in question to appropriate to the contract.

The third category is an unidentified part of a specific whole, for example 1000 tonnes of sugarcane out of a particular lot of 5000 tons of sugarcane.

Significance of Passing of Property

The essence of sale being the transfer of property in the goods from the seller to the buyer, it often becomes necessary to determine the time at which the seller ceases to be the owner and the buyer acquires ownership. Property in the goods is said to pass to the buyer when he acquires proprietary rights over them. Many rights and obligations of the parties are linked with passing of property. One of the most important effects is that “risk” prima facie passes with property, that is to say, that the goods are at the risk of the party in whom the property is  Secondly, when property has passed to the buyer  he can  exercise  proprietary rights over the goods.

  1. l9] 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 be 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.

Property Passes When Intended to Pass [S. 19]

Cl. (1) – Where there is a contract for sale of specific goods, the property in them is transferred to buyer at such time as the patties to the contract intend it to be transferred.

Cl. (2) – For the purpose of ascertaining the intention of-parties, regard shall be had to the terms of contract, conduct of parties and circumstances of case.

  1. (3) — Unless a different intention appears, the rules contained in Ss. 20-24 are rules for ascertaining the intention of parties as to the time at which the property in goods is to pass to the buyer.

Thus passing of property, though one of the natural results of a sale, is not the inevitable result. The Act leaves the whole question of passing of property upon the intention of the parties. In Sacks v Tilley (1915) 32 TLR 148, certain diamonds were sent to the buyers by post of a foreign firm. A bill for the price was sent along with them and it was a condition of the contract that property would pass on the bill being accepted. The invoice was marked “settled by acceptance”. The bill was never accepted. In such cases property passes when the documents are forwarded, but that rule was held to have been ousted by the express declaration of the parties’ intention, that acceptance was necessary for the property to pass.

 

 [II] Specific goods in a deliverable state (Sec.20)

“Where there is an unconditional contract for the sale of specific goods in a deliverable state, the property in goods passes to the buyer when the contract is made, and it is immaterial whether the time of payment if price or the time of delivery of goods, or both, is postponed”.

A contract which is not subject to any condition precedent or sequent is unconditional. Deliverable state, according to S.2(3), means such state of things that the buyer under the contract be bound to take  ‘very. Thus, where a table has to be polished by seller before delivery, table is not in a deliverable state, and will become so when polished.

 

 [III] Specific goods not in a deliverable state (Sec.21)

“Where there is a contract for sale of specific goods, and seller is bound to do something to the goods for purpose of putting them in deliverable state, the property does not pass until such thing is done, the buyer has notice thereof’.

 [IV] Specific goods to be weighed, etc. by the seller (Sec.22)

“Where there is a contract for the sale of specific goods in a deliverable late, but the seller is bound to weigh, 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’.

 

Sale of Unascertained Goods and Appropriation [S. 23]

Section 23 deals with sale of unascertained goods and their appropriation to the contract. These two requirements, namely ascertainment and appropriation bring about change of ownership from seller to buyer. This aspect of passing of property is also linked with the provisions of Section 25. Therefore, this section has been taken up after Section 24 keeping together the provisions of Sections 18, 23 and 25.

SALE ON APPROVAL [S. 24]

Section 24 lays down the rules as to passing of property when goods are delivered on approval or ”on sale or return”, or on other similar terms.

  1. 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.

The essence of the rule is that the property passes either by acceptance or by failure to return within a fixed or reasonable time. The context of Section 24 shows that the Word “buyer” is not used there in the sense of the definition of that word in Section 2(1). The person there called the buyer is in law a bailee in possession of goods with an option to purchase.“

1.By Acceptance [S 24(1)]

In the first place, the property acceptance or approval or otherwise adopts the transaction. The acceptance may be express or implied from conduct. An implied adoption take place when the buyer deprives  himself of the power to return the takes place when the buyer deprive published by quite a few authorities, the leading among goods. This is establish by a quite a few authorities, the leading among them being, Kzrkham v Attenborough.

  1. By Failure to Return [S. 24(b)]

The second circumstance in which the property passes to the buyer is when the latter fails to return the goods or to give notice of rejection within reasonable time or if a time has been fixed on the expiration of that time. Till the expiry of such time the goods remain the property of the seller. Elphick v Barnes

SALE OF UNASCERTAINED GOODS [S. 18 AND 23]

The provisions relating to passing of property on sale of unascertained goods are split into two sections. Section 18 is the first relevant provision.

  1. 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.

The other provision is in Section 23.

  1. 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.

(2) Delivery to carrier.—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.

Separation from bulk

The effect of the declaration in the section is that no property can pass as long the goods to be delivered under a contract of sale have not been separated from a bulk of which they are a part. As observed by BAYLEY,j in Gillett v Hill“:

Ascertainment and Appropriation

”Ascertainment” is the process by which the identity of the goods to be delivered under the contract is established. But “a mere setting apart or selection by the seller of the goods which he expects to use in performance of the contract is not enough” They must also be appropriated to the contract.

The distinction between “ascertainment” and “appropriation” is that ascertainment can be a unilateral act, that is, the seller alone may set apart the goods. But “appropriation” involves “the element of common intention”. “To constitute an appropriation of the goods to the contract, the parties must have had, or be reasonably supposed to have had, an intention to attach the contract irrevocably tothose goods, so that those goods and no others are the subject of the sale and become the property of the buyer.” It has been said of this word that it is a term of legal art with a certain definite meaning. But in its application to different cases it means different things. Pointing to the different senses in which the word can be used PARKE B said in Wait v Baker”:

Property does not pass till appropriation

The act of appropriation has usually to be done by the seller. Where the seller has done nothing to sort out the goods, the question of the property in them passing to the buyer does not arise. Thus where there was a contract for the sale of a quantity of liquor out of a cask containing the much larger quantity, no part having been separated or bottled, property did not pass

Appropriation with mutual assent

Once “appropriation” with mutual assent has taken place, the goods the property of the buyer and if they have not been delivered, In in the custody of the seller as a bailee. Aldridge v Johnson“ is the leading  authority.

Appropriation without buyer’s assent

An appropriation without the buyer’s assent is ineffective. For example, in Ienner v Smith:

The plaintiff at a fair orally contracted to sell to the defendants two pockets of hops which were on the spot and also two other pockets which were lying in a warehouse in London. The defendant paid for and took away the first two, but the last two were to be forwarded to him at a future time. On his return to London, the plaintiff went to the warehouse and selected two out of the three pockets which he had there, and directed the warehouse-keeper to mark them ‘to wait the buyer’s order’.

Buyer assent may be express or implied

The buyer’s assent to the appropriation may be either express or implied from his conduct. Thus where the buyer was informed that the goods were available for collection at the seller’s warehouse and he was asked to take them, he made no reply for two months and before he ultimately sent his man the goods were stolen without the seller’s fault, it was held that the seller had appropriated the goods; that the buyer’s assent was implied from his failure to reply and that the goods were the buyer’s property at the time of theft and the seller was not liable for non-delivery“

Appropriation should be unconditional and of goods of contract quality

It is one of the conditions of an effective appropriation that the must be of contract quality. Again, appropriation must be al. It should be the last act to be performed by the seller. Thus in Carlos Federspiel &, S.A. v Charles Twigg & C0 Ltd”, the seller had to patch cycles and tricycles “f. o. b. UK Port”. They had the goods and marked with the port of destination. But before they were the sellers went into liquidation. The buyers claimed the goods the liquidator on the ground that the goods, having been unconditionally appropriated, became their property. But the court held that parties’ intention was that property should pass on shipment and the mere preparation for shipment did not amount to an “appropriation”.

Intention of parties

Thus the intention of the parties reigns supreme. All the rules are subject to an agreement, express or implied, to the contrary. Depending on the parties’ intention, the property may pass even when the seller has still to do something. An illustration of this is Young v Mathews“.

Delivery to Carrier [S. 23(2)]

One mode of appropriation is recognised by the Act itself, and that is delivery to a carrier or other bailee. Sub-section (2) of Section 23 reads.

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 buyeror 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.

“[T]he moment the goods which have been selected in pursuance to the delivered to the carrier, the carrier becomes the agent the contract are delivered to the carrier, the carrier becomes the agent of the vendee and such a delivery amounts to a delivery to the vendee; then there is binding contract between the vendor and the vendee then there is no doubt that the property passes by such delivery to the carrier. It is necessary, of course, that the goods should agree with the Contract. Further, it is also necessary that delivery to the carrier show to which particular buyer the goods are appropriated ,For otherwise the property does not pass.

Acknowledgement by bailee

Where the goods are already in the possession of a bailee and he acknowledges to hold them on the seller’s behalf, that amounts to an “unconditional appropriation”. An illustration in point is Wardar’s (Import and Export) Co Ltd v W. Norwood £5″ Sons Ltd.

Goods already in transit

Where the goods are already in transit and the whole lot is sold that amount to an appropriation. Thus, for example, in Shanker Das joti Prasad v Bhanna Ram:

On 6 may 1918, the defendants entered into a contract for the sale of 1814 tins of kerosene, then on route to the defendants. The defendants had received the railway receipt which they endorsed in favour of the buyer. Six days the goods were destroyed by fire while still in transit.

lt was held that the loss fell upon the buyer as the property had passed to him on the date of the sale.

 

Delivery to post office

Delivery to the post office may have the same effect as delivery to a carrier. There is no decision on the point except that of the House of Lords in Anilin and Soda Fabrik v Basle Chemical Works. “where it appears to have been held that the posting of ordered goods vested the property in the buyer”

Sec. 25 –  Reservation  of right of disposal‘ (Jus disponendi)

(1) In a contract for sale of specific goods, or when goods: are subsequently appropriated to contract, the seller may, by the terms of contract or appropriation, reserve the right of disposal of goods. In such case, notwithstanding delivery of goods to a buyer or a carrier or other bailee for purpose of transmission -to buyer, the property in goods does not pass to buyer until conditions imposed by sellers fulfilled.

(2) Where goods are shipped or delivered to railways for carriage, and by the bill of lading or railway receipt the goods are deliverable to the order of seller, the seller is prima facie deemed to reserve the right of disposal.

(3) Where the seller draws on the buyer for the price and transmits to buyer the bill of exchange together with bill of lading or the railway receipt, the buyer is bound to return the bill of lading or rail receipt if he does not honour the bill of exchange‘, and if he wrongfully retains bill of lading or rail receipt, the property in goods does not pass to him.

TRANSFER OF RISK  [s. 26]

Risk and Property Go Together

In the words of BLACKBURN, J: ”As a general rule, res per it domino, the old civil law maxim, is a maxim of our law, and when you can show that the property passed the risk of the loss prima facie is on the person in whom the property is. This is the principle enshrined in Section 26 ‘ The basic principles relating to transfer of risk are given in Section 26 of the Act.

The basic principals relating to transfer of risk are given in section 26. The heading of the section is: “Risk prima facie passes with property.” In other words, the goods are at the risk of the party in whom the property is. The section reads:

  1. 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:

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 Part)’-

Thus “risk” and “property” go together. In the words of BLACKBURN, J “… When you can show that the property passed the risk of loss prima facie is in the person in whom the property is …” For example, in Stems Ltd v Vickers Ltd:

Separation of Risk from Property

Thus, though “risk” and “property” generally go together, ”the two are not inseparable”. Sometimes “risk” may be in one party and property ” in another. The expression “unless otherwise agree in that Section 26 is subject to a contract to the contrary. The section itself recognises one instance of a case of this kind.

Delay in delivery of goods

In second paragraph Section 26 says:

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.

Pothier illustrates the rule thus:

If I sell you a horse, and make default in delivery, and it is struck by lightening in my stables, the loss falls on me, because the accident would not have happened if I had duly delivered the horse. But if the horse dies from a disease which would have killed him in any case, I am not liable.

Trade customs

Secondly, ”risk” and “property” may be separated by a trade custom.

This happened in Bevington v Dalem:

Certain furs were delivered to a buyer ‘on approval’. By a custom of the fur trade the goods were at the risk of the person ordering them on approval. They were stolen before the time of approval expired. The loss fell upon the buyer although the property had not yet passed to him.

 Express agreement

Thirdly, “risk” and “property” may be separated by the agreement of the parties. Section 40 also provides that where the seller agrees to deliver the goods at his own risk at a distant place from where they are, the buyer has, unless otherwise agreed, to take any risk of deterioration incident to the transit. “In those cases in which it has been held that the risk without the property has passed to the buyer it has been because the buyer rather than the seller was seen to have an immediate and practical interest in the goods, as for instance when he has an immediate right under the shopkeeper’s delivery warrant to the delivery of an undivided bulk of in store or to an immediate right under several contracts.” When the property in goods along with risk in goods has been transferred to the buyer by the seller as soon as the goods were loaded in the railway wagon at seller’s station as per the terms of delivery it was held that the seller was not responsible for subsequent loss of goods in transit and entitled to full payment of agreed price without any deduction!“

Terms of contract Lastly, risk and property may be separated by a term of the contract“ An example is to be found in the decision of the Supreme Cour tin Consolidated Coffee Ltd v Coffee Board”. One of the terms adopted by the Coffee Board for the auction of coffee was that the property in the coffee knocked down to a bidder would not pass the payment of full price and, in the meantime, the goods would Remain with the seller but at the risk and responsibility of the buyer. The clause was regarded as valid and effective.

Benefit to Goods

In the case of some increment to the goods the period of their transmission from the seller to the buyer, , BLACK BuRN, J said in Sweeting v Turner“: ”Any calamity befalling the goods after the sale is completed must be borne by the purchaser and by a parity of reasoning, any benefit to them is his benefit and not that of the vendor.”  This is obviously the position where the risk has passed to the buyer. But even in a hire purchase transaction, where the property in the goods remains that of the owner till the last instalment is paid, it has been held that if during the period of the hire the goods increase in count etc. the increment would belong to the hirer and not the owner. Subject, however, to such marginal variations, the general norm is that benefit to the goods must belong to the owner.

PAHUJA LAW ACADEMY

SALE OF GOODS ACT

PRELIMINARY QUESTIONS

  1. Section 18 of the Sale of Goods Act, 1930provides for passing of property in goods, in contracts of

(a) sale of ascertained goods

(b) sale of unascertained goods

(c) sale of specific goods

(d) all the above.

  1. In case of sale of unascertained goods, under section 18 of the Sale of Goods Act, 1930 the property in goods passes

(a) when the goods are ascertained

(b) when the contract is made

(c) when the contract provides that the property in goods shall pass

(d) either (a) or (b) or (c).

  1. Under section 18 of the Sale of Goods Act, 1930, the property, in case of sale of unascertained goods, passes when

(a) the goods are so far ascertained that the parties have agreed that they shall be taken from some specific larger stock

(b) the transfer is made in the books of the warehouse man

(c) the pucca delivery order is entered

(d) the protection is identified and appropriated to the contract.

  1. Section 19 of the Sale of Goods Act, 1930 applies to

(a) future goods

(b) unascertained goods

(c) specific or ascertained goods

(d) all the above.

  1. Under section 19 of the Sale of Goods Act, 1930, the property in goods in a contract for

sale of specific or ascertained goods, passes to the buyer

(a) when the contract is made (a) and

(b) when the parties intend the property in goods to pass

(c) when the goods are delivered

(d) when the price is paid.

  1. Ascertained goods for the purposes of Sale of Goods Act, 1930, means

(a) goods identified and agreed upon at the time a contract of sale is made

(b) goods identified in accordance with the agreement after the contract of sale is made

(c) goods identified before the contract of sale is made

(d) either (a) or (b) or (c).

  1. Section 20 of the Sale of Goods Act, 1930 provides for, passing of property in goods where

(a) there is an unconditional contract for the sale of specific goods in a deliverable state

(b) there is an unconditional contract for the sale of generic goods

(c) there is a conditional contract for the sale of specific goods in a deliverable state

(d) there is an unconditional contract for the sale of specific goods but not in a deliverable state.

  1. Where there is an unconditional contract for the sale of specific goods in a deliverable state, under section 20 of the Sale of Goods Act, 1930, the property in goods passes to the buyer, when

(a) the goods are delivered

(b) the price is paid

(c) the contract is made

(d) the parties intend.

  1. The rule as to passing of property as enumerated in section 20 of the Sale of Goods Act, 1930 shall apply when

(a) the time of payment of price is postponed

(b) the time of delivery of the goods is postponed

(c) even the time of payment of price and the time of delivery of the goods both postponed

(d) neither the time of payment of price nor the time of delivery of the goods is postponed.

  1. The rule governing the passing of property in goods in cases of sale of specific goods to be put in a deliverable state, is contained in

(a) section 20 of the Sale of Goods Act, 1930

(b) section 21 of the Sale of Goods Act, 1930

(c) section 22 of the Sale of Goods Act, 1930

(d) section 23 of the Sale of Goods Act, 1930.

  1. Under section 21 of the Sale of Goods Act, 1930, in a contract of sale of specific goods to be put in deliverable state, the property in goods passes to the buyer

(a) when the goods are put in a deliverable state

(b) when the goods are delivered to the buyer

(c) when the goods are put in a deliverable state and the buyer has notice thereof

(d) either (a) or (b) or (c) depending on the facts & circumstances.

  1. For the application of section 21 of the Sale of Goods Act, 1930, the act to be done by the seller shall not be

(a) For the purpose of putting the goods in a deliverable state

(b) For some other collateral purposes

(c) Either (a) or (b)

(d) Both (a) and (b).

  1. Section 22 of the Sale of Goods Act, 1930 deals with cases

(a) Where though the goods are ascertained and a deliverable state, something has to be done by the seller for ascertaining the price

(b) where though the goods are ascertained and in a deliverable state and something is to be done by the buyer for the ascertaining of price

(c) where though the goods are ascertained but something is to be done by the seller to put them in a deliverable state

(d) both (a) and (b).

  1. Section 22 of the Sale of Goods Act, 1930 does not apply where

(a) the weighing or measuring of the goods is to be done for the satisfaction of the buyer

(b) the weighing or measuring of the goods is to be done for ascertaining the price

(c) both (a) and (b)

(d) neither (a) nor (b).

  1. Under section 22 of the Sale of Goods Act, 1930, the property in specific goods in deliverable state passes to the buyer

(a) when the seller does everything for the purposes of ascertaining the price

(b) when the seller does everything for the purposes of ascertaining the price and the buyer has notice thereof

(c) when the seller does everything for the purposes of ascertaining the price, the buyer has notice thereof and pays the price

(d) when the seller does everything for the purposes of ascertaining the price, the buyer has notice thereof and the goods are actually delivered to the buyer.

  1. Section 23 of the Sale of Goods Act, 1930 applies to

(a) ascertained goods

(b) specific goods

(c) unascertained goods

(d) all the above.

  1. for passing of property in goods under section 23 of the Sale of Goods Act, 1930, the goods

(a) Must be in a deliverable state

(b) The seller is to do something to put the goods in a deliverable state

(c) The buyer is to do something for ascertaining the price

(d) the seller is to do something for ascertaining the price.

  1. Section 23 of the Sale of Goods Act, 1930, applies to a contract for sale of unascertained goods

(a) by sample

(b) by patent or other trade name

(c) by description

(d) by sample as well as by description.

  1. Under section 23 of the Sale of Goods Act, 1930, the property in goods changes to the buyer when there is

(a) an unconditional appropriation of the goods to the contract by the seller without the assent of the seller

(b) an unconditional appropriation of the goods to the contract by the buyer without the assent of the seller

(c) conditional appropriation of the goods to the contract by the seller with the assent of the buyer or by the buyer with the assent of the seller

(d) an unconditional appropriation of the goods to the contract by the seller with the asset of the buyer or by the buyer with the assent of the seller.

  1. Assent to the appropriation of goods to the contract of sale of goods, under section 23 of the Sale of Goods Act, 1930, can be given

(a) before the appropriation

(b) after the appropriation

(c) either before or after the appropriation

(d) only before and not after the appropriation.

  1. Unconditional appropriation within the meaning of section 23 of the Sale of Goods Act, 1930, means

(a) there is a reservation of the jus disponendi

(b) there is no reservation of the jus disponendi

(c) there may be a reservation of the jus disponendi

(d) there may not be a reservation of the jus disponendi

  1. Under section 23(2) of the Sale of Goods Act, 1930, delivery of the goods to the carrier would not pass the property in the goods to the buyer

(a) where the seller  reserves the jus disponendi

(b) where the seller does not reserve the jus disponendi

(c) irrespective of whether the seller has reserved the jus disponendi or not, until the goods are actually handed over to the buyer

(d) until the goods reach the destination irrespective of whether the seller has reserved the jus disponendi or not. ,

  1. In ship building contracts, if the ship is to be paid for by installments, property in the ship passes

(a) On payment of the last installment

(b) On payment of the half of the installments

(c) On payment of the first installment

(d) On making of the contract.

  1. Where the goods are to be delivered in future and the seller becomes insolvent before any appropriation is made

(a) the property in goods passes to the buyer and the buyer acquires interest in the goods

(b) the property in goods does not pass to the buyer and the buyer acquires no interest in the goods

(c) the property in goods passes but the buyer does not acquire any interest in the goods

(d) the property in goods does not pass but the buyer acquires interest in the goods.

  1. Section 24 of the Sale of Goods Act, 1930, deals with passing of property in goods where

(a) the goods are sent on approval

(b) the goods are sent ’on sale or return basis

(c) both (a) and (b)

(d) either (a) or (b).

  1. ‘Buyer’ in section 24 of the Sale of Goods Act, 1930 signifies

(a) one who necessarily falls within the definition of buyer under section 2(1) of the Act

(b) a bailee in possession with option to purchase the goods

(c) a pledgee of the goods

(d) either (a) or (b) or (c).

  1. Under section 24 of the Sale of Goods Act, 1930, in cases of goods sent ‘on approval’ or ‘on sale or return’ basis, the property in goods does not pass

(a) until the approval is signified by the buyer

(b) until the goods are kept beyond the prescribed period where the period is fixed

(c) until the goods are kept beyond a reasonable period where the period is not fixed

(d) either (a) or (b) or (c).

  1. In cases of goods sent on approval or ‘on sale or return’ basis under section 24 of the Sale of Goods Act, 1930, the goods are at

(a) the original owner’s risk if perish by inevitable accident

(b) the risk of the person in whose possession the goods are at the time when they perished by inevitable accident

(c) the risk of the person to whom the goods are so sent if they person by inevitable accident

(d) either (b) or (c).

  1. Section 25 of the Sale of Goods Act, 1930, deals with

(a) unconditional appropriation of the goods to the contract of sale

(b) conditional appropriation of the goods to the contract of sale

(c) both (a) and (b)

(d) neither (a) nor (b).

  1. Section 25 of the Sale of Goods Act, 1930 provides that

(a) in conditional appropriation of goods to the contract, the property in goods passes to the buyer when the goods are delivered to him .

(b) in conditional appropriation of goods to the contract, the property in goods does not pass to the buyer although the goods are delivered to him even if the condition imposed by the seller is filled

(c) in conditional appropriation of goods to the contract, the property in goods does not pass to the buyer although the goods are delivered to whim until the condition imposed by the seller is fulfilled

(d) in conditional appropriation of goods to the contract, the property in goods passes immediately on appropriation.

  1. Where the seller ships the goods but takes the bill of lading in his own name at buyer’s place, under section 25 of the Sale of Goods Act, 1930, in such a situation, the seller

(a) has reserved jus disponendi

(b) has not reserved jus disponendi

(c) has the option to reserve jus disponendi

(d) may or may not have reserved jus disponendi.

  1. Where the terms of a contract of sale of goods such that by reserving the right of disposal, the seller commits breach of the contract and the goods are appropriated to the contract,

(a) causes the property in goods to pass

(b) does not cause the property in goods to pass

(c) may cause the property in goods to pass

(d) either (b) or (c).

  1. Where the seller appropriates the goods on shipment, yet deals with the bill of lading in such a way as to prevent the buyer obtaining possession of the goods without payment of the price, the property in goods shall

(a) pass to the buyer absolutely

(b) not pass to the buyer at all

(c) pass to the buyer subject to seller’s lien for the price

(d) either (b) or (c).

  1. In which of the following cases there is no reservation of jus disponendi by the seller

(a) where a railway receipt is taken in the name of the consignee and the receipt, invoice and bill of exchange for the price are sent to the bank to be given to be buyer after he met the bill

(b) where the parties agree that payment allowed to be made in instalments was to be deemed as payment in full at the time of delivery of the goods sold ‘

(c) both (a) and (b)

(d) neither (a) nor (b).

  1. Section 26 of the Sale of Goods Act, 1930 lays down the rule

(a) risk follows the property

(b) risk follows the delivery

(c) risk follows the defaulter

(d) all the above.

  1. By an agreement between the parties

(a) risk cannot be separated from ownership

(b) risk can be separated from ownership in particular

(c) either (a) or (b)

(d) only (a) and not (b).

  1. ln a contract of sale of goods, if the parties agree that the seller should send the goods to the buyer at owner’ s risk, the delivery to the carrier will

(a) tantamount to delivery to the buyer but the risk will not pass

(b) neither tantamount to delivery to the buyer nor the risk will pass

(c) not tantamount to delivery to the buyer but risk will pass

(d) tantamount to delivery to the buyer and the risk will also pass.

  1. The consent in section 27 contemplates

(a) consent in fact

(b) consent of goods

(c) consent of price

(d) none of above.

  1. ln a situation where the loss in respect of goods has occurred through the default of a party, the goods are,

(a) at the risk of the seller if the property in goods has not passed

(b) at the risk of the buyer if the property in goods has passed

(c) at the risk of the defaulting party irrespective of whether the property in goods has passed or not

(d) either (a) or (b).

 

PAHUJA LAW ACADEMY

SALE OF GOODS ACT

MAINS QUESTIONS

 

 

  1. Discuss the rights of an unpaid seller.

[OR]

Explain the provisions relating to unpaid seller’s lien and stoppage in transit?

 

  1. In what cases has an unpaid seller a lien over the goods? Would his lien he destroyed if he makes part delivery of the goods? When does the lien come to an end.

RIGHTS OF UNPAID SELLER AGAINST THE GOOD

Who is an Unpaid Seller [S. 45]

  1. “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, is or directly responsible for, the price.

A seller who has only received a part of the price is also an unpaid seller. Where the seller has received a negotiable instrument, like a bill of exchange, promissory note or cheque, for the price, he is not an unpaid seller. But if, before he has delivered the goods, the negotiable instrument is dishonoured, then he becomes an unpaid seller and may exercise his rights. This is so because a negotiable instrument is always presumed to have been received as a conditional payment and the condition is not fulfilled when it is dishonoured.  The position is briefly summed up by MELLISH, LJ.

If the bill is dishonoured before delivery has been made, then the vendor’s lien revives; or if the purchaser becomes openly insolvent before the delivery actually takes place, then the law does not compel the vendor to deliver to an insolvent purchaser.

The protections afforded by the Act to an unpaid seller are also extended to 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. But this provision does not operate so as to convert a buyer into a seller

 WHAT ARE THE RIGHTS OF UNPAID SELLER

  1. Unpaid seller’s rights.-(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;

(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 resale 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.

Section 46 seeks to protect the interest of an unpaid seller by conferring upon him the following rights against the goods, notwithstanding the fact that the property in the goods has passed to the buyer—-

(1) a lien on the goods for price while he is in possession of them;

(2) in case of the insolvency of the buyer a right of stoppage of the goods in transit after he has parted with the possession of them;

(3) a right of resale as limited by the Act.

These rights of an unpaid seller do not depend upon any agreement, express or implied, between the parties. They arise by implication of law. They are some of the incidents attached by law to a contract of sale.

In the words of BAYLEY, J:

The buyer has no right to have possession of the goods till he pays the price. The seller’s right in respect of the price is not a mere lien which he will forfeit if he parts with the possession, but grows out of his original ownership and dominion, and payment or a tender of the price is a condition precedent on the buyer’s part and until he makes such payment or tender, he has no right to the possession.

These rights generally presuppose that the property in the goods has passed to the buyer, and, in order to assure the same rights and protections to the seller where the property has not passed, Section 46(2) specially declares that where the property in the goods has not passed to the buyer, the seller would have the same rights of lien and stoppage in transit which he would have had as if the property had passed.

UNPAID SELLER’S LIEN [S. 47]

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

“Lien” is the right to retain possession of goods until certain charges due in respect of them are paid. The unpaid seller has the right to retain the goods until he receives their price. Section 47 provides that the unpaid seller of goods who is in possession of them is entitled to retain his possession until payment or tender of the price in the following cases, namely—

(1) where the goods have been sold without any stipulation as to credit;

(2) where the goods have been sold on credit; but the term o credit has expired;

(3) where the buyer becomes insolvent.

Where the goods are sold on credit, the right of lien is suspended during the term of credit. But on the expiry of that term, if the goods are still in the possession of the seller, his lien revives.

The right of lien is linked with possession and not with title. Thus where the seller has transferred to the buyer the documents of title to the goods, his lien is not defeated as long as he remains in possession. Even where the seller issued to the buyer delivery orders thereby converting himself from an owner into a bailee for the buyer, his lien was not defeated. For Section 47(2) clearly declares that  “the seller may exercise his right of lien notwithstanding that he is in possession of the goods as agent or bailee for the buyer”.

The right of lien exists only for the price of the goods.“ The seller is not entitled to lien for any other charges i.e., charges for storage or the like. It has been held by the House of Lords in Somes v British Empire Shipping C0” that where the price has been tendered, the seller cannot claim to retain the goods further for the expenses incurred by him on storage during the period that he was holding the goods in the exercise of his lien.

Part Delivery [S. 48]

  1. 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.

Where an unpaid seller has delivered a part of the goods, he may exercise his lien on the remainder. In Grice v Richardson, the sellers had delivered a part of the three parcels of tea comprised in the sale, and they had not been paid for the part which remained with them. They were allowed to keep it till payment of the price. Where, however, a part of the goods are delivered under circumstances which show an agreement to waive the lien, the seller cannot then retain the remainder. In other words, where delivery of a part is intended as a delivery of the whole, the lien is lost. “If both parties intend it as a delivery of the whole, then it is a delivery of the whole; but if either of the parties does not intend it as a delivery of the whole, if either of them dissents, then it is not a delivery of the whole”. The party, who alleges that part delivery was intended to operate as delivery of the whole, has to prove that fact.

Where the contract envisages delivery of goods by instalments, the buyer’s default in paying for one instalment does not entitle the seller to stop delivery of the rest of the instalments unless: (a) the buyer has become insolvent or (b) the buyer’s default amounts to repudiation of the whole contract.

Where the goods are at the time of sale in the custody of a third person, they are considered to be in the seller’s possession for the purposes of his lien until the third person attorns to the buyer and thereby becomes a bailee for the buyer.

When the lien is said to be terminated?

  1. 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.

Lien is linked with possession and is lost when possession is lost. Section 47 accordingly provides that the unpaid seller of goods loses his lien in the following cases-

(1) 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;

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

(3) by waiver of the lien.

Sub-section (2), however, provides that the unpaid seller does not lose his lien by reason only that he has obtained a decree for the price of the goods.

By delivery to carrier

Delivery of the goods to a carrier for the purpose of transmission to the buyer operates as a delivery to the buyer himself, and, therefore, the right of lien is thereby lost. Delivery to a carrier puts an end to lien, but the seller still has the right of stoppage in transit. If the seller regains possession of the goods from the carrier by exercising his right of stoppage in transit, his lien revives. But if he takes back the goods from the carrier for any other purpose, the lien does not revive. Thus in Valpy v Gibson:

The goods sold were delivered to the buyer ’s shipping agents, who had put them on board a ship. But the goods were returned to sellers for repacking. While they were still with the sellers on this mission the buyer became insolvent and the sellers, being still unpaid, claimed to retain the goods in the exercise of their lien.

It was held that, having lost their lien by delivery to the shipping agents, their refusal to deliver was wrongful.

where the seller has reserved the right of disposal of the goods his lien continues till the end of the transit.

By delivery to buyer

The right of lien is also lost when the goods are delivered to the buyer or his agent. The effect of delivery to the buyer is thus stated by Blackburn:

When the vendor has given the buyer possession under the contract of sale, all his rights in the goods are completely gone; he must recover the price exactly as he would recover any other debt and has no longer any claims on the goods sold superior to those of any other creditor. The delivery and acceptance of possession complete the sale, and give the buyer absolute, unqualified and indefeasible right of property and possession in the things sold, though the price be unpaid and the buyer be insolvent.

Where the goods are delivered back to the seller for specific purpose, such as repair of a machine sold, that does not revive the seller ’s lien.

The seller’s lien is, however, not defeated where the buyer has obtained possession without the consent of the seller, e.g., by some wrongful act or for a temporary purpose, such as trial. The buyer has to obtain possession lawfully and under the contract. Where possession is obtained by consent, but the consent itself is managed by tricks or frauds, the effect is thus stated by P.S. Atiyah:

Although it may be a little odd to say that a possession obtained in circumstances amounting to larceny may be ‘lawfully’ obtained, it is submitted that this is more consonant with the rest of the Act, and this construction would probably be adopted. But if the buyer obtains possession of the goods without the consent of the seller, the lien is not lost, and even if the property has passed to the buyer it appears that he cannot pass a good title free from the lien to a third party.

By waiver

The right of lien is attached by implication of law to every contract of sale for the benefit of the seller. The seller may, therefore, if he so likes, waive his right. Waiver may be express or implied from the conduct of the seller. An implied waiver takes place when the seller is guilty of some wrongful act in reference to the goods, “such as dealing with the goods in a manner inconsistent with the mere right to have possession of them, as by wrongfully reselling or consuming them, or by claiming to keep them on some ground other than his right to lien”. Thus where the seller cut up and used the stack of hay which he had sold and part of which had been taken away by the buyer, he was held liable in damages to the buyer for his failure to deliver. If the seller, having originally refused to sell on credit, were later to agree to the buyer taking possession before payment, this would presumably amount to a waiver of his lien, and the seller would not be able to change his mind again and insist on the lien after all.

 

By tender of price

When the buyer tenders price for the goods, the seller ceases to be an unpaid seller, and, therefore cannot, by his voluntary refusal to accept the price, convert himself into an unpaid seller and claim lien.

STOPPAGE IN TRANSIT

Where the goods have been delivered to a carrier or other bailee for the purpose of transmission to the buyer, who has become insolvent, the seller may stop the goods as long as they are in transitu This is one of the methods of protecting the unpaid seller against the risk of his goods going to the possession of an insolvent. As Lord READING said:

It is a right founded upon the plain reason that one man’s goods shall not be applied to the payment of another man’s debts.”The courts look with great favour on the right of stoppage in transit on account of its intrinsic justice.

Lien and Stoppage in Transit Distinguished

Both the rights are designed for the protection of the unpaid seller. The effect of their exercise is also the same, because when the seller stops the goods in transit he resumes possession and the goods once again fall into the spell of his lien until the price is paid. Yet, “it is important to keep them distinct, because, though the rights are analogous, they are in certain respects governed by different considerations”.

Following are the points of difference:

(1) “The seller’s lien attaches when the buyer is in default, whether he be solvent or insolvent. The right of stoppage in transit only arises when the buyer is insolvent”

(2) Lien is exercisable as long as the seller is in possession, stoppage in transit as long as the goods “are passing through channels of communication for the purpose of reaching the hands of the vendee”.

(3) Lien ends where the right of stoppage commences. When the seller hands over possession to the carrier, his lien ends and the right of stoppage in transit commences.

“The courts look with great favour on the right of stoppage in transitu on account of its intrinsic justice. This is also borne out by judicial pronouncements. ”It is a right founded upon the plain reason that one man’s goods shall not be applied to the payment of another man’ debt.” “The right of stoppage in transitu is founded upon mercantile rules, and is borrowed from the custom of merchants; from their custom it has been engrafted upon the law of England. The doctrine was at variance with the principle of civil law, which laid down that, although the goods had been sold upon credit, and although the goods were in the possession of the vendee, there might be recaption by the vendor, if the vendee became insolvent. But, according to the rules as to stoppage in tranistu, the goods can be stopped only whilst they are passing through channels of communication for the purpose of reaching the hands of the vendee. The doctrine was adopted by the court of chancery and after- wards by the Courts of Common Law.”

Requirements of Stoppage in Transit

Section 50 confers this right upon the unpaid seller. It says:

  1. 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.

The first requirement is that the seller should be unpaid; second, that the buyer should have become insolvent; third, that the property should have passed to the buyer, for, if the seller reserves the right of disposal, the goods remain his property, and, therefore, under his lien; and last, the goods should be in the course of transit. The first three requirements are questions of fact which can be easily ascertained. The last requirement is also a question of fact, but this fact, namely, whether the goods are in transit, is sometimes difficult to ascertain. The goods may be in the custody of a carrier and yet they may not be in transit. Contrarily, they may not be with a carrier and yet they may be in transit. Much depends upon the capacity in which the middleman holds the goods. If he holds the goods as an agent for the seller, there is no transit because the goods are under the seller’s lien. If he holds them as an agent for the buyer, there is no transit because the buyer has acquired possession, which puts an end to the seller’s rights against the goods. It is only when he holds the goods as an independent contractor, that is, in his own right as a carrier or bailee, that there is transit in law and that there is question of stoppage in transit. It is not necessary that the goods should be actually moving.

The essential feature of a stoppage in transitu is that the goods should be in the possession of a middleman, or some person intervening between the vendor who has parted with and the purchaser who has not yet received them.

Commencement and End of Transit

Section 51 tries to solve the difficulty by laying down basic propositions which govern the commencement and end of transit.

  1. 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) Where 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.

(6) Where the carrier or other bailee wrongfully refuses to deliver the goods to the buyer or his agent in that behalf, that 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, 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.

Delivery to the buyer [S. 51(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 takes delivery of them. Thus  transit ends when the goods are delivered to the buyer or his agent.

Interception by the buyer [S. 51(2)]

The transit ends when the buyer or his agent takes delivery of the goods from the carrier before their arrival at the appointed destination. It may be wrongful for the carrier to deliver the goods to the buyer before their arrival at the appointed destination and the carrier may be held liable in damages for depriving the seller of his opportunity, but transit ends with that. The mere fact that the buyer takes his seat as a passenger in the ship which is carrying the goods does not amount to delivery to the buyer before their arrival at the appointed destination. This kind of arrangement was found to exist in Lyons v Honffnung.

The buyer was at Sydney. He instructed the seller to send the goods to Sydney from where they would be going to Kimberley and that he would go by the same ship and would take the goods with him.

It was not known as a fact whether the buyer sailed in the ship, but he became insolvent and the seller gave notice to stop. lt was held that the notice was effective. It was not the buyer who was carrying the goods. The carrier was carrying both, the goods and the buyer, and the transit had not ended by the buyer’s entry into the ship.

Acknowledgement to the buyer [S. 51(3)]

When the goods have arrived at their appointed destination and the carrier acknowledges to the buyer or his agent that he is now holding the goods on his behalf, the transit is at an end, and it is immaterial that the goods are still with the carrier or that the buyer has indicated a further destination. It requires a very clear acknowledgement to put an end to the original contract of carriage.

Rejection by buyer [S. 51(4)]

If the goods are rejected by the buyer and the carrier or other bailee continues in possession of them, the transit is not at an end. This will be so even if the seller himself has refused to take back the goods.

Delivery to ship chartered by buyer [S. 51(5)]

Where the goods are delivered to a ship chartered by the buyer, it is a question of fact in each case whether the carrier is acting independently or as agent of the buyer. If the circumstances show that the carrier is acting as agent of the buyer, then the transit is at an end as soon as the goods are loaded on board the ship. Thus where the goods were delivered on board a ship belonging to the buyer, and by the bills of lading also the goods were deliverable to the buyer, the transit ended as soon as the goods were put on the board. But the mere fact that the ship is chartered by the buyer and he has given no indication of the destination of the goods does not mean that the carrier has become the agent of the buyer.

Wrongful refiesal to deliver [S. 51(6)]

Where the carrier wrongfully refuses to deliver the goods to the buyer or his agent, the transit is at an end. It is obvious that the goods should have arrived at their destination, because otherwise the carrier has the  right to refuse to deliver them. Bird v Brown, shows when refusal to deliver is wrongful.

The goods had arrived at their destination. The buyer being insolvent, a merchant, acting for the seller but without his authority, gave stop notice to the carrier. Subsequently to that the trustee of the bankrupt buyer demanded the goods. The carrier refused to deliver the goods and handed them to the merchant. Subsequently to this the seller ratified the unauthorised stop notice.

The court said: “There could be no valid stoppage in transitu after the formal demand of the goods by Bird (Trustee). The goods had then arrived at Liverpool, the master was bound to deliver the goods to Bird and he could not by his wrongful detainer of them prolong the transit and so extend the time during which stoppage might be made.”

Part delivery [S. 51(7)]

Where the goods have been delivered in part, the seller may stop the remainder of the goods, unless the part delivery shows an agreement to give up the possession of the whole. Following illustration will suffice:

A sells to B 100 bales of cotton; 60 bales having come into B’s possession and 40 being still in transit, B becomes insolvent, and A, being  still unpaid, stops the 40 bales in transit. A is entitled to hold the 40 bales until the price of the 100 bales is paid.

 

How Stoppage is Effected [S. 52]

  1. How stoppage in transit is effected.—(1) The unpaid seller may 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 o 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 tim 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 is given by the seller to carrier or other bailee in possession of the goods, he shall redeliver the goods to, or according to the directions of, the seller. The expenses of such redelivery shall be borne by the seller.

A notice is given to the carrier to stop the goods and redeliver them to the seller or according to his directions. Notice may be given to the person in actual possession or to his principal, in which case there should be sufficient margin of time to enable the principal to communicate with his agent. The seller has to bear the expenses of redelivery and also to pay the freight under the original contract of carriage.

Carrier’s lien for freeight

A carrier of goods, whether by land or sea, has a lien on the goods for their freight, but this right, which arises from the common law is confined to the carrier’s charges payable on the carriage of the particular goods. Such a lien prevails against the rights of the vendors as well as those of the consignee. On the other hand, a general lien, that is, a right to retain the goods for other freights due upon other transactions can only arise by express contract or from general usage, and such a lien, apart from contract, cannot affected the rights of the consignor. The unpaid seller who stops the goods in transit is under a duty to instruct the carrier as to what he is supposed to do with the goods. Where the seller failed to do so and the carrier ultimately landed the goods at their original destination, he was allowed to recover from the seller his freight as well as unloading charges.

  1. 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 of 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 tight of lien or stoppage in 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.

Effect of Sub-sale on Seller’s Rights

The unpaid seller’s right of lien or stoppage in transit is not affecte by any sale or other disposition of the goods by the buyer. Thus, for example, in Mordaunt Bros v British Oil and Cake Mills Ltd:

An oil merchant sold a quantity of oil to B, without appropriating any particular oil to the contract. B sold some of it to C and gave him a delivery order. C lodged the delivery order with the merchant requesting him ‘to await his orders’. Meanwhile B failed to pay the merchant, who, therefore, became an unpaid seller.

It was held that the merchant’s lien on the goods for the price was not defeated by B’s sale to C and he could retain the goods till the price was paid.

But there are two cases in which the buyer’s dealings with the goods defeat the seller’s rights against the goods. They are as follows:

When Seller’s Rights Defeated

Seller consent [S. 53(1)]

Where the buyer sells or makes other disposition of the goods with the consent of the seller, that is binding on the seller. The assent contemplated by the sub-section must be such an assent as in the circumstances shows that the seller intends to renounce his rights against the goods. It is not enough to show that the fact of a sub-contract has been brought to his notice, and that he has assented to it merely in the sense of acknowledging the receipt of the information.

Transfer of documents of title [S. 52 (proviso)]

When the seller has issued to the buyer documents of title to the goods and he has sold or pledged the goods by transferring the documents of title, then in the case of sale, the seller’s rights of lien and stoppage in transit are defeated and, in case of pledge, his rights become subject to the pledge. It is necessary that the transferee should act in good faith and should have given value for the goods. He should not at the time have notice of the fact that the original seller is still unpaid and has rights against the goods. In a contract for sale of copper, goods were shipped to the buyer. The bill of lading was sent to him along with a draft for the price for acceptance. The buyer was insolvent. He did not accept the bill but transferred the bill of lading to a buyer of copper from him. This buyer did not know that the original seller was still unpaid and that, for that reason, he had the right to stop the goods in transit. It was held that the second buyer acquired a good title to the goods and the rights of the unpaid seller were thereby defeated.

“Documents of title”, of course, include “bills of lading”. But they also, for this purpose, include “delivery orders”. This is shown by Ant Jurgens Margarinefabriekes v Louis Drefus  Co. Ltd.

The defendants sold 2640 bags of mowva seed to one F & Co and gave them delivery orders. F 8 C0 sent a cheque for the price. F & Co sold the goods to the plaintiffs by endorsing to them the delivery orders. F & Co’s cheque was dishonoured. Consequently, the defendants became unpaid sellers and claimed lien on the goods.

It was held that their lien was lost when the delivery orders issued by them were transferred to bona fide purchasers for value. The court thus equated delivery orders issued by the seller with a bill of lading which is issued by the captain of a ship.

A conditional delivery order will not have that effect. In a case before the Supreme Court, in a contract of sale between certain parties, the goods were to be delivered by a mill. The orders issued by the mill required the transferee of the delivery orders to be registered with the mill and required them to make a contract with the mill. Such conditional delivery orders were held to be not a document of title within the meaning of the Sale of Goods Act.

Thus resale by the buyer by transfer of the documents of title completely defeats the seller’s rights against the goods. But a pledge does not completely defeat the seller’s rights. It only makes his rights subject to the pledge. The effect is that the seller may still exercise his rights by paying off the pledgee. If the pledgee has in his hands other securities against the pledger, the unpaid seller can require the pledgee to satisfy his claim, as far as possible, out of other securities. If the pledgee disposes of the goods, he has to hand over the surplus sale proceeds, if any, to the unpaid seller. This was recognised by the House of Lords in Kemp v Falk.

But can the unpaid seller ask the sub-buyer to hand over the price to him, if he has not yet paid it, instead of paying it to the insolvent

RIGHT or RESALE [s. 54]

  1. 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 resell, the unpaid seller may, if the buyer does not within a reasonable time pay or tender the price, resell 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 resale. 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 resale.

(3) Where an unpaid seller who has exercised his right of lien or stop- page in transit resells the goods, the buyer acquires a good title thereto as against the original buyer, notwithstanding that no notice of the resale  has been given to the original buyer.

(4) Where the seller expressly reserves a right of resale in case the buyer should make default, and, on the buyer making default, resells the goods, to original contract of sale is thereby rescinded, but without prejudice to any claim which the seller may have for damages.

The contract of sale is not rescinded when the seller exercises his right of lien or stoppage in transit. The contract still remains in force and the buyer can claim delivery of the goods on tendering the price.

The property having passed to the buyer, it is not revested in the seller. But obviously the law cannot allow the things to stand in that condition indefinitely. The seller is, therefore, given a limited right to resell the goods.

In the first place, he may resell the goods without reference to the defaulting buyer if the goods are of perishable nature. Secondly, in other cases, the seller should give a notice to the defaulting buyer of his intention to resell. If the buyer does not pay the price within a reasonable time after receiving the notice, the seller may resell the goods. He can recover from the defaulting buyer any loss occasioned by his breach of contract. He can also keep any profit which may occur on the resale. But if the unpaid seller results the goods without serving upon the buyer a reasonable notice, the seller cannot recover damages for the breach and he has also to hand over any profit to the buyer made on the resale.

What is reasonable period for the purposes of Section 54(2) is a question of fact in each case. A buyer failed in taking away the quantity of tobacco purchased by him. Extension of time was granted to him on his application but even so he failed. Resale was conducted after the expiry of the last extended period. The court observed that it could not be said that the resale was conducted without waiting for a reasonable period.

The seller may expressly reserve the right of resale in case the buyer makes a default. In such a case no notice of resale is necessary. The contract is automatically rescinded when the seller resells the goods.

He does not resell as an unpaid seller, but as an original owner of the goods. “Some of the incidents of this have been worked out in RV. Ward Ltd v Bignall”.

There was the contract for a sale of two cars, a Vanguard and a Zodiac, for £850. The buyer deposited £25, but afterwards did not pay the price, despite a reasonable notice. The seller then tried to resell, but could find a customer only for the Vanguard and sold it for £359. He then claimed damages of £475 representing the balance price and £22-10-0 as advertising expenses.

The court held that when the seller resells the goods the contract is rescinded and the goods once again become his property. Consequently the Zodiac became his property. He could not recover its price. But he could recover the shortfall in the price of Vanguard which was £25 and the advertising expenses.

Where the buyer pays a deposit he is entitled to refund of it when the seller resells the goods, but subject to the seller’s claim for damages. Where the seller does not offer evidence of the difference between the contract price and resale price on the date of breach, he is not entitled to any compensation.

In all the above cases where the seller resells the goods whether with or without notice, the buyer from him gets a good title even if he had notice of the previous sale.

This position prevails as long as the contract of sale remains unrescinded and the seller (unpaid) is reselling not his but defaulting buyer’s property. His accountability to the defaulting buyer is, therefore, quite natural. Where, however, what has happened on the part of the buyer is not merely a default in payment of the price but a repudiation of the contract itself, then the seller once again becomes the owner of the goods. He then resells his own property. There is no accountability towards anybody for a profit earned on resale. The unpaid seller loses the right to recover the price. His right is to sue the defaulting buyer for damages for breach of contract. It has been held that the defaulting buyer who repudiates the contract forfeits any right to recover profit  and also any part payment made by him.”

PAHUJA LAW ACADEMY

SALE OF GOODS ACT

PRE QUESTIONS

  1. Rights of an unpaid seller against the goods, under the Sale of Goods Act, 1930, have been prescribed in A

(a) Chapter V

(b) Chapter VI

(c) Chapter VII

(d) Chapter IV.

  1. Chapter V of the Sale of Goods Act, 1930 provides for

(a) rights of unpaid seller against the buyer

(b) rights of unpaid seller against the goods

(c) rights of unpaid seller against the carrier

(d) all the above.

  1. ‘Unpaid seller’ of goods has been defined under

(a) section 45 of the Sale of Goods Act, 1930

(b) section 44 of the Sale of Goods Act, 1930

(c) section 47 of the Sale of Goods Act, 1930

(d) section 46 of the Sale of Goods Act, 1930.

  1. Under section 45 of the Sale of Goods Act, 1930, a seller of goods is an ‘unpaid seller’ when

(a) part of the price has not been paid

(b) substantial portion of the price has not been paid

(c) the whole of the price has not been paid

(d) either (a) or (b) or (c).

  1. In case of conditional payment through a negotiable instrument, under section 45 of the Sale of Goods Act, 1930, the seller is unpaid

(a) if the buyer fails to meet the bills at maturity

(b) if the buyer becomes insolvent during the currency of the bill

(c) either (a) or (b)

(d) only (a) and not (b).

  1. Where there is a conditional payment through a negotiable instrument, during the currency of the bills

(a) the vendor’s lien over the goods shall remain in force

(b) the vendor’s lien over the goods shall remain suspended

(c) the vendor’s lien over the goods extinguishes for all times

(d) the vendor’s lien over the goods shall never be suspended and remains in force.

  1. During the currency of the bill of exchange, the vendor’ s lien over the goods, shall remain suspended where the instrument operates as

(a) conditional payment

(b) absolute discharge

(c) either (a) or (b)

(d) neither (a) nor (b)

  1. Section 46 of the Sale of Goods Act, 1930 declares

(a) what is meant by unpaid seller

(b) what rights the unpaid seller has against the goods

(c) what rights the unpaid seller has against the buyer

(d) both (b) and (c).

  1. Section 46 of the Sale of Goods Act, 1930 prescribes, the rights of the unpaid seller against the goods where

(a) the property in goods has passed to the buyer

(b) the property in goods has not passed to the buyer

(c) both (a) and (b)

(d) only (a) and not (b).

  1. After the passing of property in goods to the buyer, under section 46 of the Sale of Goods Act, 1930, the unpaid seller has a right of

(a) lien over the goods

(b) stoppage of goods in transit

(c) re-selling the goods

(d) all the above.

  1. Section 47 of the Sale of Goods Act, 1930 prescribes the circumstances in which

(a) the right of lien over the goods is available to the unpaid seller

(b) the right of stoppage in transit is available to the unpaid seller

(c) the right to re-sale the goods is available to the unpaid seller

(d) all the above.

  1. The unpaid seller, under section 47 of the Sale of Goods Act, 1930 can exercise his right of

(a) when he has parted with the possession of the goods

(b) when he is in possession of the goods

(c) when he has parted with the possession as well as when he is in possession of the goods

(d) and it is immaterial whether he is in possession of the goods or not but the goods must not be in possession of the buyer.

  1. The right of lien, under section 47 of the Sale of Goods Act, 1930, can be exercised by the unpaid seller on failure of the buyer in paying the price

(a) during his solvency

(b) on account of his insolvency

(c) either (a) or (b)

(d) only (b) and not (a).

  1. The right of lien is available to the unpaid seller, under section 47 of the Sale of Goods Act, 1930, when he is in possession of goods

(a) in his own right

(b) as an agent of the buyer

(c) as a bailee for the buyer

(d) either (a) or (b) or (c).

  1. Under section 47 of the Sale of Goods Act, 1930, right of lien is available to the unpaid seller in possession of goods, where

(a) the buyer has become insolvent

(b) the goods were sold without any stipulation as to credit

(c) the term of credit has expired for goods sold on credit

(d) either (a) or (b) or (c).

  1. The right of lien, under section 47 of the Sale of Goods Act, 1930, is available to the unpaid seller against

(a) the payment of price of goods

(b) the payment of other charges incurred by the seller

(c) both (a) and (b)

(d) either (a) or (b).

  1. Where an unpaid seller has made part delivery of the goods, section 48 of the Sale of Goods Act, 1930 provides that the right of lien can be exercised in respect of

(a) the goods delivered

(b) the remainder goods

(c) the entire goods including the remainder

(d) neither the goods delivered nor the remainder

  1. In case of a contract of delivery of goods in installments and price payable on complete delivery, the right of lien is not available

(a) from the very beginning and the buyer can claim delivery of all the installments

(b) on buyer becoming insolvent before the delivery of all installments

(c) both (a) and (b)

(d) neither (a) nor (b)

  1. The right of lien is lost by the unpaid seller, under the circumstances stated in

(a) section 47 of the Sale of Goods Act, 1930

(b) section 48 of the Sale of Goods Act, 1930

(c) section 49 of the Sale of Goods Act, 1930

(d) section 50 of the Sale of Goods Act, 1930.

  1. Under section 49 of the Sale of Goods Act, 1930, the, unpaid seller loses his right to lien over the goods

(a) on delivery of goods to the carrier for transmission to the buyer reserving jus-disponendi

(b) on delivery of goods to the carrier for transmission to the buyer without reserving jus-dispanendi

(c) on delivery of goods to the carrier for transmission to the buyer irrespective of whether jus-disponendi has been reserved or not

(d) either (b) or (c).

  1. Under section 49 of the Sale of Goods Act, 1930, the right of lien of the unpaid seller is lost

(a) where the buyer lawfully obtains the possession of the goods

(b) where the buyer obtains the possession of the goods by a criminal act

(c) where the buyer obtains the possession of the goods by a tortuous act

(d) either (a) or (b) or (c).

  1. In which of the following cases the right of lien is lost by the unpaid seller,

(a) where the seller’s agent in possession of goods attorns to the buyer

(b) where the buyer is in possession of goods as seller’s bailee and the sale is completed

(c). where the buyer obtains the possession of the goods in his own right

(d) all the above.

  1. The unpaid seller of goods can waive his right to lien

(a) expressly

(b) impliedly

(c) either expressly or impliedly

(d) only expressly and not impliedly.

  1. The unpaid seller does not lose his right of lien,

(a) by assenting to a resale by the buyer

(b) by obtaining a decree for the price of goods

(c) by wrongfully re-selling the goods

(d) either (a) or (b) or (c).

  1. Right of the unpaid seller, as to stoppage in transit against the goods has been provided under

(a) section 52 of the Sale of Goods Act, 1930

(b) section 51 of the Sale of Goods Act, 1930

(c) section 50 of the Sale of Goods Act, 1930

(d) section 49 of the Sale of Goods Act, 1930.

  1. Right of lien of the unpaid seller against the goods, under section 47 of the Sale of Goods Act, 1930, is subject to

(a) the other provision of the Sale of Goods Act, 1930

(b) any other law for the time being in force

(c) the contract between the parties

(d) all the above.

  1. Unpaid sellers right to stoppage in transit comes into existence, as provided under section 50 of the Sale of Goods Act, 1930

(a) when the seller is in possession of the goods

(b) when the seller has parted with the possession of the goods but the buyer has not Jet obtained the possession of the goods

(c) when the seller has parted with the possession of the goods and the buyer has obtained the possession thereof.

(d) all the above.

  1. Unpaid seller’s right of stoppage in transit is

(a) wider in scope than the right to lien _

(b) same in scope as the right to lien

(c) similar in scope as the right to lien

(d) not similar in scope than the right to lien.

  1. Under section 50 of the Sale of Goods Act, 1930, right of stoppage in transit is available to the unpaid seller

(a) during the solvency of the buyer

(b) where the buyer has become insolvent

(c) during the solvency of the buyer as well as when the buyer becomes insolvent

(d) neither during the solvency of the buyer nor when the buyer has become insolvent.

  1. The right of stoppage in transit is available to the unpaid seller in cases of

(a) carriage by land

(b) carriage by sea

(c) carriage by air

(d) all the above.

 

  1. Duration of transit of goods has been provided under

(a) section 51 of the Sale of Goods Act, 1930

(b) section 52 of the Sale of Goods Act, 1930

(c) section 49 of the Sale of Goods Act, 1930

(d) section 50 of the Sale of Goods Act, 1930.

  1. Under section 51 of the Sale of Goods Act, 1930, the goods are deemed to be in transit

(a) from the time when they leave the premises of the seller for delivery to the carrier for transmission to the buyer, until they are delivered to the carrier

(b) from the time when they are delivered to the carrier for transmission to the buyer, until they reach the appointed destination

(c) from the time when they are delivered to the carrier for transmission to the buyer, until the buyer takes delivery from such carrier

(d) either (b) or (c).

  1. The transit of goods under section 51 of the Sale of Goods Act, 1930, comes to an end on

(a) the delivery of goods to the carrier for transmission to the buyer

(b) the arrival of goods at the appointed destination

(c) the buyer taking delivery of the goods from the carrier

(d) neither (a) nor (b) nor (c).

  1. Under section 51 of the Sale of Goods Act, 1930, the goods are in transit so long as they are in

(a) possession of the carrier qua buyer

(b) possession of the carrier qua carrier

(c) possession of the carrier appointed by the buyer qua the buyer

(d) either (a) or (b) or (c).

  1. In which of the following cases, the right of stoppage in transit of the unpaid seller has not come to an end

(a) where the goods in possession of the carrier were destroyed by the fire in mid way before reaching the destination and kept in the godown of the carrier

(a) where the endorsee of a railway receipt from the buyer paid the freight and loaded the goods in his vehicle but has not left the station yard

(c) where the carrier on reaching the destination enters into an agreement with the buyer to hold the goods as agent of the consignee

(d) all the above.

  1. After notice to stop in transit to the carrier, the right of the unpaid seller as to stoppage in transit shall

(a) be defeated by mistaken delivery of goods by the carrier to the buyer

(b) be defeated by a wrongful delivery of goods by the carrier to the buyer

(c) be defeated by either mistaken or wrongful delivery of goods by the carrier to the buyer

(d) neither be defeated by mistaken nor by wrongful delivery of goods by the carrier to the buyer.

  1. Under section 51 of the Sale of Goods Act, 1930, the transit of goods comes to an end “

(a) where the buyer obtains delivery of goods from the carrier at the appointed destination

(b) where the buyer obtains delivery of goods from the carrier before reaching the appointed destination

(c) where the buyer obtains delivery of goods from the carrier either before the goods reach the appointed destination or at the appointed destination

(d) where the buyer obtains the delivery of goods from the carrier at the appointed destination only and not before reaching the appointed destination.

  1. The transit of goods for the purposes of the right of the unpaid seller as to stoppage in transit, under section 51 of the Sale of Goods Act, 1930, shall come to an end

(a) where the carrier attorns to the buyer at the point of delivery of goods by the vendor for transmission to the vendee

(b) where the carrier attorns to the buyer after the goods have arrived at the appointed destination

(c) where the carrier attoms to the buyer after leaving the place of start but before the goods reach the appointed destination

(d) either (a) or (b) or (c).

  1. The attorment by the carrier, to the buyer which has the effect of putting an end to the transit for the purposes of unpaid seller’s right to stoppage in transit, against the goods

(a) has to be absolute

(b) may be subject to unpaid seller’s lien against the goods

(c) may be subject to the lien of the carrier for his freight charges

(d) only (a) and not (b) or (c).

  1. Where after the arrival of goods at the appointed destination, the carrier attoms to the buyer and the buyer indicates a further destination for the goods, under section 51 of the Sale of Goods Act, 1930

(a) the transit for the purposes of the unpaid seller’s right to stoppage in transit comes to an end and does not stand prolonged

(b) the transit for the purposes of the unpaid seller’s right to stop age in transit stands prolonged till the further destination as indicated by the buyer is not undertaken

(c) the transit for the purposes of the unpaid seller’s right to stoppage in transit stands prolonged till the goods reach the new appointed destination indicated by the buyer

(d) the transit for the purposes of the unpaid seller’s right to stoppage in transit has come to an end or not shall depend on the facts and circumstances of the case.

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