Reading Material

UNIT 3: Topic Sales of Goods Act 1930

Formation of sale of goods acts 1930:

The Sale of Goods Act, 1930, was enacted during British colonial rule in India. It was
modeled after the Sale of Goods Act, 1893, of the United Kingdom, which had already
established a comprehensive legal framework for regulating the sale of goods in England and
Wales.
Till 1930, the law relating to sale and purchase of goods were regulated by the Indian
contract act, 1872. In 1930, sections 76 to 123 of the Indian contract act, 1872 were repealed
and separate act called ‘The Indian sale of goods act, 1930 was passed. It came into force on
1st July 1930.

Meaning of Sales of Goods Act 1930

The Sale of Goods Act, 1930 is an Indian law that governs contracts related to the sale and
purchase of goods. It provides the legal framework for the transfer of ownership of goods
from a seller to a buyer, outlining the rights, duties, and liabilities of both parties. The Act
defines essential concepts like what constitutes a contract of sale, goods, price, and the
transfer of property or ownership.
Under the Sale of Goods Act, 1930:
 A contract of sale involves the transfer of ownership of goods from the seller to the
buyer in exchange for money (price).
 It covers both sale (where ownership is transferred immediately) and agreement to
sell (where ownership will be transferred at a future date).
The Act ensures that transactions are carried out fairly, with provisions for dealing with
issues like breach of contract, remedies for buyers and sellers, the distinction between
conditions and warranties, and rules governing delivery, risk, and payment.

Nature of contract of sale:

Meaning:
As per Section 4(i) of the Sale of Goods Act, 1930, Contract of sale of Goods is a contract
whereby the seller transfers or agrees to transfer the property in goods to the buyer for a
price.
Contract of Sales- (i) Sale (ii) Agreement to sales
(i) Sale- Ownership of good transferred by the seller to the buyer immediately at
time of contract.
(ii) Agreement to sales- Ownership of goods will be transfer at a future time subject
to fulfilment of some condition which is agreed at the time of contract.

Essential of contract of sale

1. Two Parties
 A contract of sale involves two distinct parties: the seller and the buyer. The seller
agrees to transfer the ownership of goods to the buyer in exchange for a price.
 The parties must be legally capable of entering into a contract, meaning they should
be competent as per the Indian Contract Act, 1872.
 The seller and buyer must be different entities. One cannot sell goods to oneself.
Reading Material
Example: A person cannot be both the buyer and the seller of the same goods in a
transaction.

2. Goods
 The subject matter of the contract must be goods. As per the Sale of Goods Act,
"goods" refer to all movable property, excluding money and actionable claims (e.g.,
debt or legal claims).
 Goods can be further categorized as:
o Existing Goods: Goods that are already owned or possessed by the seller.
o Future Goods: Goods that will be manufactured or acquired by the seller after
the contract of sale is made.
o Contingent Goods: Goods that may be acquired based on the occurrence of
an uncertain future event.
Example: Sale of a car, furniture, or electronic items. Selling land or building does not fall
under this Act as they are immovable properties.

3. Transfer of Ownership
 A transfer of ownership or property from the seller to the buyer is a fundamental
aspect of a sale. In a contract of sale, ownership passes from the seller to the buyer,
distinguishing a sale from other forms of contracts, like hiring or leasing.
 The transfer of ownership is what legally makes the buyer the owner of the goods.
The risk associated with the goods, such as damage or loss, is also transferred along
with ownership.
Example: If a seller sells a television to a buyer and delivers the TV, the buyer now owns the
TV and bears the risk if it gets damaged.

4. Price
 A valid contract of sale must involve a price as consideration. The price refers to the
money paid or promised to be paid for the goods. It can be paid fully or partially at
the time of the contract or in installments.
 If the consideration involves anything other than money, it will not be classified as
a contract of sale. Instead, it may be classified as barter or exchange.
 The price can be fixed by the contract itself, agreed upon by the parties later, or
determined based on market conditions.
Example: If a seller transfers a car to a buyer for ₹5,00,000, the payment of ₹5,00,000
constitutes the price.

5. Essential Elements of a Valid Contract

 Since a contract of sale is a contract, it must satisfy the essential elements of a valid
contract as laid down in the Indian Contract Act, 1872:
1. Offer and Acceptance: There must be an offer to sell by the seller and an
acceptance by the buyer.
2. Capacity of Parties: The parties involved (buyer and seller) must be
competent to contract. They should be of sound mind, of legal age, and not
disqualified by law.
3. Free Consent: The consent of the parties must be free and not obtained by
coercion, fraud, undue influence, mistake, or misrepresentation.
Reading Material
4. Lawful Consideration: The consideration (price) paid in exchange for goods
must be lawful.
5. Lawful Object: The objective of the contract must be legal and not contrary
to public policy.
6. Certainty: The terms of the contract, especially relating to goods and price,
must be clear and certain.
7. Possibility of Performance: The contract should be capable of being
performed. It must not involve the sale of something impossible to deliver.
Example: A valid contract for selling a vehicle must involve an offer to sell, acceptance by
the buyer, clear terms about the price and condition of the vehicle, and legal capacity and
consent of both parties.

Objectives of Sales of Goods Acts 1930

1. To Define a Contract of Sale

The primary objective of the Act is to provide a clear legal definition of a contract of sale. It
defines the elements that constitute a contract of sale, including:
 Buyer and Seller: The person who buys or agrees to buy goods and the person who
sells or agrees to sell goods.
 Goods: Movable property that is the subject of the contract.
 Price: Consideration paid or agreed to be paid for the transfer of ownership of goods.
This clarity helps in distinguishing contracts of sale from other types of agreements, such as
barter or service contracts.
2. To Regulate the Sale and Purchase of Goods
The Act provides a framework for the smooth regulation of transactions involving the sale
of goods. It specifies the process through which a contract of sale is formed, executed, and
completed. The Act outlines essential conditions, such as the transfer of ownership,
delivery of goods, and payment of price, ensuring that the process is legally sound.
3. To Establish Rights and Obligations of Buyers and Sellers
The Act defines the rights and duties of both the buyer and the seller in a contract of sale:
 Seller’s Obligations: The seller must deliver the goods, ensure that the goods
conform to the contract, and transfer ownership.
 Buyer’s Obligations: The buyer must accept the goods delivered and pay the agreed
price.
These provisions ensure transparency in transactions and protect the interests of both parties.
4. To Distinguish Between Conditions and Warranties
The Act distinguishes between conditions and warranties in a contract of sale, which are
terms that affect the buyer’s rights:
 Conditions: Fundamental terms that go to the heart of the contract, breach of which
allows the buyer to repudiate the contract and claim damages.
 Warranties: Minor terms that do not entitle the buyer to reject the goods but allow
them to claim compensation for damages caused by the breach.
This distinction helps in determining the buyer's remedies in case the goods do not meet the
contractual terms.
5. To Lay Down Provisions for Transfer of Ownership and Property
Reading Material
A key objective of the Act is to provide rules for the transfer of ownership and property in
goods. The Act lays down when and how ownership of the goods passes from the seller to the
buyer, based on the contract's terms:
 The ownership usually transfers when the goods are delivered, or as per the agreed
terms in the contract.
 The risk associated with the goods (like damage or loss) also passes with ownership.
This clarity is essential for determining liability in case of damage or loss of goods during the
transaction.
6. To Provide Remedies for Breach of Contract
The Act offers remedies to both buyers and sellers in case of breach of contract. It allows
the injured party to seek compensation or cancellation of the contract:
 Remedies for the Buyer: If the seller fails to deliver, delivers defective goods, or
breaches other conditions, the buyer can sue for damages, demand specific
performance, or cancel the contract.
 Remedies for the Seller: If the buyer fails to pay, refuses to accept the goods, or
otherwise breaches the contract, the seller can sue for the price, claim damages, or
cancel the contract.
These provisions help ensure that both parties are fairly compensated in the event of a breach.
7. To Ensure Good Faith and Fair Dealing
The Act emphasizes good faith in sales transactions. Both parties are expected to act in an
honest and fair manner. For instance:
 The seller is obligated to deliver goods that match the contract description and are of
merchantable quality.
 The buyer must ensure payment and not engage in fraudulent activities.
This promotes fairness and trust in business dealings.
8. To Regulate the Sale by Auction
The Sale of Goods Act, 1930, contains provisions to regulate sales by auction. It sets rules
for how auctions should be conducted, including:
 The manner in which goods are offered and accepted during an auction.
 The rights of the buyer in an auction.
This ensures transparency and fairness in auction sales, protecting both buyers and sellers.
9. To Define Unpaid Seller and Rights of an Unpaid Seller
The Act provides a legal framework for the rights of an unpaid seller. It ensures that if the
buyer fails to pay for the goods, the seller retains certain rights, such as:
 Right of Lien: The right to retain possession of the goods until payment is made.
 Right of Stoppage in Transit: The right to stop the goods from being delivered if
they are in transit and the buyer becomes insolvent.
 Right of Resale: The right to resell the goods if the buyer fails to make the payment.
These rights protect the seller in case of non-payment or insolvency of the buyer.
10. To Regulate Delivery of Goods
The Act defines rules for the delivery of goods, including:
 Time and place of delivery: Unless otherwise agreed, the goods must be delivered
within a reasonable time and place.
 Partial and whole delivery: Rules for cases when the delivery is partial or complete.
 Acceptance of goods: The buyer's responsibility to accept the goods once they
conform to the contract.
These provisions ensure clarity in how the goods are transferred from the seller to the buyer.
Reading Material
Conditions & Warranties:
Under the Sale of Goods Act, 1930, conditions and warranties are essential elements that
determine the rights and obligations of the parties involved in a sale transaction.

Conditions
 Definition: Conditions are fundamental terms of a contract that are essential to its
nature. They go to the very heart of the agreement, and their breach allows the
aggrieved party to repudiate (terminate) the contract and claim damages.
 Legal Position: The buyer can reject the goods and claim damages if the seller fails to
fulfill a condition.
Warranties
 Definition: Warranties are secondary terms that are not fundamental to the contract.
They are collateral to the main purpose of the contract. Breach of a warranty does not
entitle the aggrieved party to reject the goods but allows them to claim damages.
 Legal Position: The buyer must accept the goods and can only claim damages for the
breach of warranty.

Types of Conditions

1. Express Conditions: An express condition is a specific term or provision that is

explicitly stated in a contract, outlining a requirement that must be fulfilled for the
contract to remain valid or for one party to be bound by its obligations. Express
conditions are clearly articulated and agreed upon by the parties involved, leaving no
ambiguity about what is expected. For example, "The goods must be delivered by a
specific date."
2. Implied Conditions An implied condition refers to a term or requirement that is not
explicitly stated in a contract but is assumed to exist based on the nature of the
agreement, the intentions of the parties, or legal provisions. Implied conditions are
recognized by law and are considered essential for the contract's execution, even if
they are not expressly mentioned.Not explicitly stated but understood to be part of the
contract, such as:
o Condition of Title: The seller must have the right to sell the goods.
o Condition of Quality: Goods must be of satisfactory quality.
o Condition of Fitness for Purpose: Goods should be fit for the purpose
specified by the buyer.
Types of Warranties
1. Express Warranties: Clearly articulated in the contract. For example, "The product
is guaranteed to be free from defects for one year."
2. Implied Warranties: Not stated in the contract but assumed to exist, such as:
o Warranty of Quality: Goods are of merchantable quality.
o Warranty of Fitness for Purpose: Goods are suitable for the buyer's intended
purpose.

Differences Between Conditions and Warranties

Criteria Conditions Warranties
Fundamental terms essential to Secondary terms collateral to
Definition
the contract. the contract.
Reading Material
Criteria Conditions Warranties
Effect of Breach allows for contract Breach allows for damages
Breach repudiation and damages. only; contract remains valid.
Acceptance of Buyer can reject goods for Buyer must accept goods
Goods breach. despite breach.
Vital for the main purpose of the Not vital; more of an ancillary
Importance
contract. term.
Delivery date, title of goods, Quality assurance, guarantee
Examples
fitness for purpose. period.
Aggrieved party can rescind the Aggrieved party can claim
Legal Remedies
contract and sue for damages. damages but cannot rescind.

Transfer of Property in Goods/ Passing of Property: (Section18 to 20)

The Sale of Goods Act, 1930 provides guidelines regarding the transfer of property or

ownership of goods from the seller to the buyer. Sections 18 to 20 of the Act specifically

address the conditions under which the property in goods passes.

Section 18: Goods Must Be Ascertained

 Meaning: Property in goods can only pass when the goods are ascertained. This

means that the specific goods being sold must be identified or agreed upon.

 Implication: If the contract involves unascertained goods (e.g., a quantity of goods

that have not yet been determined), the property in those goods does not pass to the

buyer until they are ascertained. For example, if a buyer orders 100 bags of wheat, the

specific bags must be identified for ownership to transfer.

Section 19: Property Passes When Intended to Pass

 Meaning: The property in goods passes from the seller to the buyer at the time the

parties intend it to pass.

 Tests for Intention: The intention to pass property can be determined by:

1. The terms of the contract.

2. The conduct of the parties.

3. The circumstances of the case.

 Example: If a buyer pays for goods at the time of delivery, and the seller hands over

the goods, it indicates an intention for the property to pass.

Reading Material
Section 20: Rules for Transfer of Property

This section outlines specific rules regarding the transfer of property in goods based on the

nature of the contract. It includes:

1. In a Sale:
o Property passes to the buyer upon payment of the price unless the contract

states otherwise.
o If the buyer is to take possession of the goods, ownership transfers at that

moment.

2. In an Agreement to Sell:
o In an agreement to sell (where ownership will transfer at a future date), the

property does not pass until the conditions for the sale are met.
o For instance, if goods are to be manufactured or acquired, property passes only

upon their creation or acquisition.

3. Specific Goods:
o When specific goods are sold, property passes to the buyer at the time the

contract is made, provided the goods are in a deliverable state.

o If the seller is unable to deliver the specific goods for any reason, property

does not pass.

4. Unascertained Goods:
o For unascertained goods, property does not pass until they are ascertained and

identified. The goods must be marked, set aside, or otherwise identified to

transfer ownership.

Thus the transfer of property in goods under Sections 18 to 20 of the Sale of Goods Act, 1930

emphasizes the importance of identifying goods, determining parties' intentions, and

understanding the specific circumstances under which ownership passes. These sections

provide a framework for understanding how and when ownership transfers in sale

transactions, ensuring clarity and protection for both buyers and sellers.
Reading Material
Unpaid Seller and his rights
An unpaid seller is a term used in the Sale of Goods Act, 1930 to refer to a seller who has
not received the full payment for the goods sold. The Act outlines the rights and remedies
available to an unpaid seller, providing them with certain protections in the event of non-
payment by the buyer.

Unpaid seller define under section 45

According to section 45 – An unpaid seller is one:
 Who has not been paid the price of the goods he has supplied or has been
partially paid for the goods.
 Who has been given a negotiable instrument ( it is a a signed document
that promises a payment to a specified person or A transferable, signed
document that promises to pay the bearer a sum of money at a future date
or on-demand) like a cheque, promisory notes, money order etc. that has
been dishonoured. It is immaterial whether the seller is directly involved
in the transaction or he is acting through his agent.
Rights of an Unpaid Seller (Under sec 46)
The unpaid seller has the following rights-
1. Rights against the goods
2. Rights against the buyer

1. Rights against the goods- this is further divide into two parts (a) when
property (ownership) in goods transferred to the buyer [ when the buyer
has not paid the full or partial price of goods supplied to him , then the
seller who has transferred the ownership of goods to the buyer has the
following rights with regards to the goods]
 Right of lien (liyen)
 Right of stoppage of goods in transit
 Right of Re-sale
Right of lien- (sec 47-49)
Lien is the right to retain possession of goods until payment in respect of
them is paid .According to Section 47, if seller of goods has not been paid,
and the ownership of the goods has been transferred to the buyer but the
goods are in the possession of the seller, the seller has the right to retain the
goods till he receives the price of goods from the buyer.
The seller has the right in the following circumstances:
(i) When the goods have not been sold on credit.
(ii) When the payment has not been made on the promised date, if the goods were
sold on credit or when the goods have been sold on credit, but the credit period
is expired.
(iii) When the buyer has become an insolvent.
Reading Material
Termination of Lien
According to sec 49 the lien of an unpaid seller terminates in following circumstances
i. When the seller delivers the goods to a carrier (a company that transports people
or goods) for the purpose of transmission (dedena/handover/transfer) to the buyer.
ii. When the buyer or his agent lawfully obtains the possession of goods.
iii. When the seller has waived his lien on the goods.

Right of stoppage of goods in transit (sec50-52)

According to sec 50 when the seller has delivered the goods to a carrier for transmission to
the buyer and the goods are in transit, if he (seller) receive information that the buyer has
become insolvent, the seller has the right to stop the goods in transit and retain the possession
till such time as he is not paid the price of goods.
The seller has the right of stoppage of goods in transit in the following circumstances:
i. The seller must be unpaid
ii. When the buyer become insolvent before paying the goods
iii. When the goods are in transit
iv. The property must have passed from the seller to the buyer.

Duration of transit
According to sec 51 when the seller has delivered the goods to the carrier for transmission to
the buyer until the goods are received by the buyer or his agent is the duration of transit.

The transit comes to end in the following cases (Loss of right of stoppage)
i. If the buyer or his agent obtains delivery of the goods before their arrival at the
appointed destination.
ii. 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 them on his behalf.

Right of Re-Sale (Section-54)

An unpaid seller has the right to re-sell the goods.
According to sec 54 defines the general rules for the re-sale of goods by an unpaid seller, the
major rules are as under
Reading Material
i. The unpaid seller may re-sell the goods if the goods are perishable. When the
unpaid seller has acquired the possession of goods by virtue of lien or stoppage in
transit, and has given notice to the buyer of his intention to re-sell the goods, and
if the buyer does not pay for the goods, the unpaid seller can re-sell the goods. The
seller is also entitled to claim from the buyer any loss that he may suffer in
reselling the goods. If the unpaid seller makes a profit by reselling the goods, the
defaulting buyer has no claim on such profit.
ii. When the seller has expressly reserved a right of re-sale, in case the buyer makes
default.
iii. When an unpaid seller plans to re-sell the goods, he is obliged by law to give one
last opportunity to the buyer by informing him of his intention to do so
iv. If the unpaid seller does not inform the buyer of his intention to re-sell the goods
and is put to a loss in the re-sale the goods and is put to a loss in the re-sale, he
cannot later claim such loss from the defaulting buyer.

2. Rights against the buyer-

An unpaid seller has the following rights against the buyer-
a) Suit for price
b) Suit for damages
c) Repudiation of contract before due date
d) Suit for interest

a) Suit for price-

According to sec 55 if the seller has delivered all his goals/ ownership to the buyer, and the
buyer refuses to pay the amount then he can make use of his right and file a case against the
buyer by suing for price. The sales of goods act clearly to explain that the seller has to receive
the payment from the buyer after delivering the goods.
B) Suit for damages- According to sec 56
This right is beneficial to the seller when the buyer refuses to take the goods, and it causes
certain damage to the goods then the seller can file against the buyer for the damage of goods
because of his non-acceptance. For instance, food products, dairy products will get damaged
if the buyer refuses to take them, once the order has been placed.
C) Repudiation of contract/ Rejection of contract – According to sec 60 If the buyer
refuses to continue the contract or if he rejects the contract in the middle itself without any
prior notice and genuine reason, the seller has the right to sue for the contradiction of the
contract before the due date. It is also available in the Indian contract act due to the name of
anticipatory breach of contract. Breach of contract means quitting either of the parties from
the contract without any reason or any information.
D) Suit for interest- According to sec 61
Generally, the buyer and seller will make a contract or agreement to provide goods at one
particular time, and the payment will be made after being sure. Of time with interest rate.
This contract is made with the acceptance of both parties. But if the buyer refuses to pay
interest or less rate of interest during the time of payment, then the seller has a right to sue for
the interest for goods that he has delivered earlier.

Rights of Buyers
Under the Sale of Goods Act, 1930, buyers have specific rights that protect their interests in
a sales transaction. These rights ensure that buyers receive goods that meet the agreed-upon
terms and conditions.
Reading Material
1. Right to Receive Goods
 Description: The buyer has the right to receive the goods as per the terms of the
contract.
 Implication: If the seller fails to deliver the goods, the buyer can demand
performance and, if necessary, seek legal remedies for non-delivery.
2. Right to Quality and Fitness
 Description: Buyers have the right to receive goods that are of satisfactory quality
and fit for the purpose specified at the time of the sale.
 Implication: If the goods are defective or not suitable for the intended purpose, the
buyer can claim damages or reject the goods.
3. Right to a Title
 Description: The buyer has the right to receive goods free from any encumbrances or
claims by third parties. This means the seller must have the legal right to sell the
goods.
 Implication: If the seller does not hold the title to the goods, the buyer can seek
compensation for any loss incurred.
4. Right to Examine Goods
 Description: Buyers have the right to inspect and examine the goods before accepting
them.
 Implication: This right allows the buyer to ensure that the goods meet the contract
specifications. If the goods do not conform, the buyer can refuse to accept them.
5. Right to Claim Damages
 Description: In the event of a breach of contract by the seller, the buyer has the right
to claim damages for any loss suffered.
 Implication: This includes losses incurred due to non-delivery, defective goods, or
any other breach of the terms of the sale.
6. Right to Reject Goods
 Description: Buyers can reject goods that do not meet the specified conditions or
quality outlined in the contract.
 Implication: If the goods are found to be non-conforming, the buyer can reject them
and seek a refund or a replacement.
7. Right to Specific Performance
 Description: If the seller refuses to perform their contractual obligations, the buyer
may seek specific performance, compelling the seller to fulfill the terms of the
contract.
 Implication: This right is particularly relevant in cases where the goods are unique or
scarce, making monetary damages insufficient.
8. Right to Claim for Damages due to Delay
 Description: If the seller fails to deliver the goods within the agreed timeframe, the
buyer can claim damages for the delay.
 Implication: This right ensures that the buyer is compensated for any losses incurred
due to the seller's delay in fulfilling their obligations.
9. Right to Sue for Breach of Contract
 Description: Buyers have the right to take legal action against the seller for breach of
contract if the seller fails to meet their obligations.
 Implication: This right allows buyers to seek remedies, including damages, specific
performance, or rescission of the contract.

Performance of the Contract of Sale,

Reading Material
Remedies for Breach
The performance of a contract of sale and the remedies for breach are crucial concepts
under the Sale of Goods Act, 1930.
Performance of the Contract of Sale
Performance refers to the fulfillment of obligations as stipulated in the contract. In the
context of a sale of goods, performance encompasses the actions required by both the seller
and the buyer to complete the transaction.
1. Obligations of the Seller:
 Delivery of Goods: The seller must deliver the goods as per the contract terms. This
includes:
o Delivering the correct quantity.
o Delivering goods that conform to the description and quality specified in the
contract.
 Transfer of Ownership: The seller must ensure that the ownership of the goods is
transferred to the buyer upon payment.
2. Obligations of the Buyer:
 Payment of Price: The buyer must pay the price agreed upon in the contract, either at
the time of delivery or as per the terms specified.
 Acceptance of Goods: The buyer must accept the goods when delivered, provided
they conform to the contract.
3. Delivery Methods:
 Actual Delivery: The physical transfer of goods from the seller to the buyer.
 Symbolic Delivery: Delivery of possession through symbols, such as keys to a
warehouse.
 Constructive Delivery: When the goods are made available to the buyer without
physical transfer, such as when the buyer takes possession of goods from a location.
Remedies for Breach of Contract
When either party fails to fulfill their contractual obligations, it constitutes a breach of
contract. The Sale of Goods Act, 1930 provides several remedies for such breaches.
1. Remedies for the Seller:
 Right to Sue for Price: If the buyer refuses to pay for goods that have been delivered,
the seller can sue for the price of the goods.
 Right of Lien: The seller can retain possession of the goods until payment is
received.
 Right to Resell: If the buyer fails to pay, the seller has the right to resell the goods
after giving notice to the buyer.
 Right to Damages: The seller can claim damages for any loss incurred due to the
buyer’s breach, including costs related to storage or resale.
2. Remedies for the Buyer:
 Right to Reject Goods: If the goods do not conform to the contract (e.g., defective or
the wrong type), the buyer has the right to reject them.
 Right to Damages: The buyer can claim damages for any loss suffered due to the
seller’s breach of contract.
 Right to Specific Performance: In certain cases, the buyer can seek a court order
compelling the seller to fulfill their contractual obligations, especially if the goods are
unique.
 Right to Claim for Non-Delivery: If the seller fails to deliver the goods, the buyer
can sue for damages resulting from the non-delivery.
3. General Remedies:
Reading Material
 Rescission: The contract can be rescinded, meaning it is treated as though it never
existed. This allows the injured party to be restored to their original position.
 Injunction: In some cases, a court may issue an injunction to prevent a party from
acting in a way that breaches the contract.
The performance of a contract of sale involves fulfilling the obligations of both the seller and
the buyer as stipulated in the agreement. In cases of breach, the Sale of Goods Act, 1930,
provides various remedies to protect the rights of both parties. Understanding these aspects
helps ensure that parties involved in the sale of goods can navigate their rights and
obligations effectively and seek appropriate remedies in the event of a breach.

Sale by Auction
Sale by auction is a method of selling goods or property where potential buyers bid against
one another, with the item going to the highest bidder. This process is governed by specific
rules and principles, and it is commonly used for a variety of items, including antiques, real
estate, vehicles, and collectibles. Here's a detailed explanation:
Key Features of Sale by Auction
1. Bidding Process:
o In an auction, interested buyers place competitive bids on the item for sale.
The bidding may start at a specified minimum price or an opening bid, and
participants can raise their bids until no further bids are made.
2. Auctioneer:
o An auction is typically conducted by an auctioneer, who facilitates the bidding
process, manages the flow of the auction, and has the authority to accept or
reject bids. The auctioneer also has the right to set the rules and conditions of
the auction.
3. Reserve Price:
o A reserve price is the minimum price that the seller is willing to accept for the
item. If bidding does not reach this price, the seller is not obligated to sell the
item.
4. Types of Auctions:
o English Auction: Bids are made in ascending order, and the highest bidder
wins the item.
o Dutch Auction: The auctioneer starts with a high price and gradually lowers it
until a buyer accepts the current price.
o Sealed Bid Auction: Bidders submit confidential bids without knowing
others' bids, and the highest bid wins.
o Absolute Auction: The item is sold to the highest bidder regardless of the
price, with no reserve.
5. Final Bid Acceptance:
o The highest bid is accepted by the auctioneer, and a contract of sale is formed
between the seller and the highest bidder at the conclusion of the auction. The
winning bidder is then obligated to purchase the item at the final bid price.
6. Payment and Transfer:
o The buyer typically must pay a deposit immediately after winning the bid,
with the balance due shortly thereafter. Ownership and possession of the item
are transferred upon payment.
Legal Framework
Reading Material
In many jurisdictions, the sale by auction is governed by specific laws and regulations that
outline the rights and obligations of both sellers and buyers. Key aspects include:
 Acceptance of Bids: The auctioneer's acceptance of the highest bid constitutes a
binding contract.
 Duties of the Auctioneer: The auctioneer must conduct the auction fairly and
transparently.
 Liability: Sellers may retain certain rights, such as the right to set a reserve price or
withdraw the item from sale before the auction concludes.
Advantages of Sale by Auction
1. Market Value Determination: Auctions can help determine the fair market value of
unique or rare items based on buyer interest.
2. Competitive Bidding: The competitive nature of bidding can drive prices higher than
they might reach in a traditional sale.
3. Quick Sale: Auctions can facilitate the rapid sale of goods, making them an attractive
option for sellers looking to dispose of items quickly.
Thus a sale by auction is a dynamic and competitive method of selling goods or property. It
involves potential buyers placing bids, with the item going to the highest bidder, and is
governed by specific rules to ensure fairness and transparency. Auctions can be advantageous
for both sellers and buyers, making them a popular choice in various markets.