Business Law 1 Unit IV

Law of Sale of Goods

1.
Contract of sale?
Ans: contract of sale is a contract by which the ownership of goods is transferred from the seller
to the buyer.
Sec 4 (1) of the Indian sale of goods Act,1930 defines a contract of

Thus contract of sale includes both a sale as well as an agreement to sell.

Essentials for a valid Contract of Sale:
The following are the essential elements of a contract of sale.
1.Legal Requirements:
The contract of sale must fulfill all the requirements of a valid contract such as free
consent, consideration, lawful object etc.
2.Two Parties:
There must be two parties one the seller and the other buyer. The seller and the buyer
must be two different persons i.e. a person cannot be seller as well as a buyer as a person cannot
buy his own goods.
3.Goods must be the subject matter:
The subject matter of the contract of sale must be the goods, the property in which is
to be transferred from the seller to the buyer. Goods of any kind except immovable goods may be
transferred.
4.Transfer of Property:
The term in the goods means the ownership of the goods. In every contract of sale the
ownership of the goods must be transferred by the seller to the buyer or there should be an
agreement by the seller to transfer the ownership to the buyer. However the physical delivery of
the goods is not essential.
5.Price:
There must be a price, here price means the money consideration for a sale of goods,

consideration may be partly in money and partly in goods because the law does not prohibit as
such.
VVImp
2.
two?
Ans:
Contract of sale Introduction.

Sale or Absolute sale:

property in the goods is immediately transferred from the seller to the buyer, the contract is

Thus the sale has the immediate effects of transferring the ownership of goods.
st
E.g.:
price after one week. It is a sale.
Business Law 2 Unit IV

Agreement to sell or conditional sale:

According to sec4 (3) of the sale o
(legal ownership of goods) is transferred to the buyer at some future date or on the fulfillment of

st
E.g.: Jan, agrees to s
to pay for the goods on delivery. It is an agreement to sale.
An agreement to sell becomes a sale when the time lapses or the conditions in the
agreement are fulfilled.

Distinction between Sale and Agreement to Sell

Sale Agreement to Sell

1.Transfer of Ownership:
Transfer of ownership of goods takes The owner ship of the goods is transferred
place immediately. to the buyer at some future date.

2.Nature of contract:
It is an executed contract because nothing It is an executory contract because
remains to be done. something remains to be done.
3.Risk of Loss:
The buyer is responsible for any loss or The seller is responsible for any loss or
destruction of the goods even if the goods destruction of goods even if the goods are
are in the possession of the seller. in the possession of the buyer.

4.Breach of seller:
If the seller refuses to deliver the goods the If the seller refuses to deliver the goods the
buyer may recover the goods from the buyer cannot recover the goods from the
seller by filing a suit in the court of law. seller but he can claim damages from the
seller.
5.Breach of Buyer:
If the buyer refuses to pay the price the If the buyer refuses to pay the price the
seller may recover it by filing a suit in the seller cannot recover it. He can claim only
court of law. damages from the buyer by filing a suit.
6.Right of resale:
The seller cannot resale the goods. If after If after agreement to sell, the seller
the sale, the seller disposes the goods, the disposes the goods, the buyer can sue only
buyer has double remedy suit for damages for damages. The goods are still the
against the seller and recovery of goods property of the seller and he can dispose
from the third party. them of as he likes.
7.Insolvency of buyer:
if the buyer becomes insolvent, the seller is When the buyer becomes insolvent before
bound to deliver the goods to the official he pays for the goods, the seller need not
receiver or assignee in the absence of a lien deliver the goods to the official receiver or
over the goods. The seller is entitled ratable assignee.
dividend for the price of the goods.
8.Insolvency of seller:
If the seller becomes insolvent the buyer If the seller becomes insolvent and buyer
Business Law 3 Unit IV

will be entitled to recover the goods from has paid the price, he can claim only
the official receiver. This is because the proportionate dividend from the official
buyer is the owner of the goods. receiver. This is because the buyer is not
owner of goods.
9.Rights:
It gives right to the buyer to enjoy the It gives rights to the buyer and seller
goods as against the world at large against each other.
including the seller.
10.Liability for sales tax:
Sale is liable for sales tax. Agreement to sell is not liable for sales tax
until it actually become as a sale.

Differences between Sale and Bailment

Sale Bailment
1.Ownership Rights:
The property in the goods is transferred Only transfer of possession of goods takes
from the seller to the buyer. place from the bailer to the bailee.
2.Return of goods:
Goods once sold normally cannot be The bailee must return the goods to the
returned unless there is a break of bailer or the fulfillment of the purpose for
condition. which the bailment was made.
3.Consideration:
Presence of consideration is required for Presence of consideration need not be
sale. required for bailment.
4.Act to be applied:
It is governed by sale of goods Act, 1930. It is governed by the Indian Contract Act,
1872.

Differences between Sale and Gift

Sale Gift
1.Consideration:
The presence of consideration is must for Consideration is not required to transfer the
sale to transfer the ownership rights. ownership rights.
2.Act to be applied:
It is governed by the sale of Goods Act, It is governed by the transfer of Property
1930. Act, 1882.

3.State the differences between Sale and Hire Purchase Agreements?

Ans. Sale: Introduction

Hire-purchase:
Business Law 4 Unit IV

It is an agreement under which the owner delivers his goods on hire basis to a person called
hire purchase for his use. And the hirer has the option to purchase the goods by paying the agreed
amount in specified instalments. A hire purchase agreement gives the hirer the possession of goods
only. Till the payment of the last instalment, the instalments are treated as hire charges for goods
and it is only on payment of the last instalment that the property in goods passes to the buyer. Up to
last installment paid the property in goods remains with the seller. If the hire purchaser makes
default in paying any instalment the seller can recover the goods and the instalment already paid will
be treated as hire charges, and not recoverable from the seller by buyer.

E.g.:

recover any thing from

Sale Hire purchase agreement

1.Oral/Written:
It may be made either orally or in written. It must be in written.
2.Ownership rights:
The properly in the goods is transferred The properly in the goods is transferred
immediately from the seller to the buyer. from seller to the buyer only after the
payment of last instalment.
3.Termination of the Contract:
The buyer in this case cannot terminate the The hirer has an option to terminate the
contract and as such is bound to pay the agreement at any time. He may or may not
price of the goods. buy the goods.

4.Right of Resale:
The buyer has a right of resale the goods. The hirer has no such right because; he
becomes the owner only when all the
instalments are paid.
5.Treatment of Instalment
amount:
In case of payment of price in instalments, The instalment is treated as hire charges for
each instalment is treated as payment of the the use of goods, if the hirer defaulted in
price. payment any instalment.
6.Act to be applied:
It is governed by the sale of Goods Act, It is governed by the hire purchase Act,
1930 1972.
7.Implied conditions and
warranties:
The benefits of implied conditions and Such benefits are not available.
warranties are available.
8.Possession of goods:
Possession need not necessarily be Possession of goods is necessarily
Business Law 5 Unit IV

transferred immediately. transferred immediately.

4.
between specific, ascertained and unascertained goods?

Ans.
claims and money, and includes stock and shares, growing crops, grass and things attached to or
forming

In other words goods means every kind of movable property and it includes.
a. Stock and shares.
b. Growing crops, grass
c. The things attached to or forming a part of the land, which can be served from the land.
E.g.: Stock, shares, debentures, patents, trademarks, copyrights, water, gas etc.

Classification of goods: -
The goods forming subject matter of the contract of sale may be 1. Existing goods 2. Future
goods. 3. Contingent goods.

1.Existing goods:-
Goods which are in actual existence at the time of contract of sale, are called existing goods
only existing goods can be the subject matter of sale. Generally, the seller is the owner of such
goods.

The existing goods may be of the following three types.

a. Specific goods b. unascertained goods. c Ascertained goods.

a. Specific goods: -
The goods which have been actually identified and agreed by the parties at the time of contact
of sale are called specific goods.
E.g.:
to purchase the same car. In this case the specified first car is the specific good.

b. Unascertained goods: -
The goods which are not specifically identified at the time of contract of sale are called
unascertained goods. They are defined by description only and may form part of a lot.

c. Ascertained goods: -
The goods which are identified only after the formation of the contract of sale are called
ascertained goods.
E.g.: If there is a sale of 25 chairs for an office out of a lot of 100 such chairs of the same
design and quality, the goods are unascertained till 25 particular chairs are selected. When
the required 25 chairs are selected out of the lot, the goods are said be to ascertained goods
for the contract of sale.

2. Future Goods: -
Business Law 6 Unit IV

The goods, which are not in existence at the time of contract of sale, are called future goods.
The seller acquires such goods after the making of the contract of sale. i.e., goods which are to be
acquired or produced by the seller after the contract of sale is made. It only operates as an agreement
to sell and not sale.

E.g.: - per fan.

agreed to purchase the fans. The fans are yet to be manufactured. This is an agreement to sell
and not sale.

3.Contingent goods: -
Goods, the acquisition of which by the seller depends upon an uncertain contingency, which may or
may not happen, are cal
enforceable only when the event on the happening of which the performance of the contract depends
has happened. If the event does not happen, the contract becomes void. Contigent goods come
within the class of future goods.
E.g.:
the availability of goods depends upon a contingency. So this goods are called contingent goods.

5. Define conditions and write about types of conditions (or) Explain and
illustrate the implied conditions in a contract of sale as provided in the sale of
Goods Act?

Ans:
A condition is a stipulation essential to the main purpose of the Contract, the breach of which
gives rise to a right to treat the contract as repudiated.
In other words, a condition is an important representation by the seller, which is essential to
the main purpose of the contract, and if it proves to be false, the buyer has the
right to terminate the contract and to claim the amount of price paid by him.

Types of Condition: -
Conditions are two types: (A) Express Conditions (B) Implied Conditions.
(A) Express Conditions: -
It is a condition, which has been expressly agreed to upon by both the parties at the time of the
contract of sale.
(B) Implied Conditions: -
Conditions, which the law incorporates into a Contract of sale unless a contrary intention appears
from the terms of the contract. Both the parties are bound by the implied conditions unless they are
excluded by the express agreement of the parties.
Following are the implied conditions, which are contained in the sale of goods act.
1.Condition as to title (sec14):
According to this condition, it is presumed that the seller has a valid title to the goods i.e., he has to
right to sell the goods. If later on, the buyer comes to know that the seller had no valid right to sell
the goods, then he may reject the goods and claim the refund of the price.
Case law: Rowland Vs Divall:

held that A could recover the full price from B. In this case, these were a breach of condition as to
Business Law 7 Unit IV

2.Condition in sale by description (Sec.15): -

Where the goods are sold by description, then there is an implied condition that the goods shall
correspond with the description. The main idea is that the goods supplied must be same as were
described by the seller. Sale of goods by description includes many stipulations as under.
(a) Where the buyer has never seen the goods and buys them only on the basis of description given
by the seller.
Case Law Varley Vs Whipp:
X bought a reaping machine from Y who described it to be one year old and used only to cut 50 to 60
acres but X found that the machine extremely old. X was entitled to reject the machine because
machine did not correspond with the description given by the seller.
(b) Where the buyer has seen the goods but he buys them only on the basis of description given by
the seller.
Case Law Nicholson and Venn Vs Smith Marriott:
The buyer bought after seeing certain goods, which were described by the seller as dating from 17th
century, but he found them of 18th Century. The buyer was entitled to reject the goods because
goods did not correspond with the description given by the seller.
(c) Where the method of packing has been described.
Case Law Moore & Co., Vs London & Co.:
X purchased from Y 5000 tins of canned fruit to be packed in cases each containing 50 tins but Y
supplied cases containing 25 tins. X was entitled to reject the goods because the goods were not
pocked according to the description.
3. Condition as to sample (Sec.17): -
Where the seller sells the goods by showing samples of goods to the buyer and the buyer
buys basing on that sample, then there is an implied condition that the goods shall correspond with
the sample in quality. The following are the three implied conditions.
(a) The goods must correspond with the sample in quality.
(b) The buyer must have a reasonable opportunity of comparing the bulk with the sample.
(c) The goods must be free from latent defect, which renders them unmerchantable.
Case law: James Drummond & Sons Vs E.H. Vaningen & Co:
There was a sale by sample of worsted coating (cloth which issued to make coats) to be equal in
quality and weight to the samples. Owing to a latent defect the goods would not stand ordinary wear
when made up into coats and were therefore unmerchantable. The same defect appeared in the
samples but could not be detected on a reasonable examination. The buyer could recover damages.
4. Condition as to sample as well as to description (Sec.15): -
If the sale is by sample as well as by description, the goods must correspond with the sample as well
as the description.
Case law: Nichol Vs Godts:

held G could refuse to accept it.

5. Condition as to quality or fitness for buyers purpose (Sec.16): -
There is no implied condition as to the quality or fitness or any particular purpose of goods supplied
under a contact of sale. In other words, the buyer must satisfy himself about the quality as well as the
suitability of the goods.

But in certain circumstances, the seller is required to supply the goods, which will be fit for
Business Law 8 Unit IV

the buyers specific purpose subject to the fulfillment of following conditions.

a. The buyer requires, the goods for a particular purpose.
b. The buyer should make known to the seller about that particular purpose.
c. The buyer should rely on the sellers skill or judgment.
d. The sellers business is to supply such goods whether he is the manufacturer or producer or
not.
Case law; Barelto Vs T.R. Pruce:

the set of teeth and clai

purpose for which he wanted the set of teeth was not fulfilled.

6.Condition as to merchantability sec16 (2):

Where the goods are bought by description from a seller, who deals in goods of that
description, there is an implied condition that the goods shall be of merchantable quality. The
following requirements must be satisfied for merchantability of goods.

a. If the goods are purchased for resale, then they should be immediately resalable in the market
under their description.
E.g.: The cement turned into stone by water is not merchantable.

b. If the goods are purchased for self-use then they should be reasonably fit for the purpose for
which they are generally used.
E.g.: A watch that will not keep proper time, a pen that will not right are not merchantable.
7. Condition as to whole someness:
In case of eatable or provisions or foodstuffs, there is an implied condition as to wholesome
ness. Condition as to wholesomeness means that the goods shall be fit for human consumptions.

6. What does warranty mean? Write about types of warranty?

Ans: warranty is a representation made by the seller, which is not of that important as condition. It
is only collateral to the main purpose of
the contract but he can claim only damages from the seller.

Types of warranties:
The warranties may be express or implied.
a. Express warranties:
It is a warranty, which has been expressly agreed upon by both the parties
at the time of contract of sale. It may be noted that it is open to both the parties to
include in their contract any number of express warranties.

b. Implied warranties:
Implied warranties are those, which the law presumes to have been
incorporated in the contract of sale inspite of the fact that the parties have not expressly
included them in a contract of sale subject to the contract to the contrary. The following are
the implied warranties in a contract of sale.

1.Warranty as to quiet possession sec 14(b):

Business Law 9 Unit IV

According to this warranty it is presumed that the buyer shall have and enjoy the quiet
possession of the goods. This means that where the buyer has obtained the possession of goods, he
has a right to enjoy them in a way he likes that is, no one should interfear with the quiet enjoyment of

to the goods, then buyer can recover damages from seller through court of law.
Case Law: Mason vs Burmingham:

and cost of repair.

2.Warranty as to free from encumbrance sec 14(c):

According to this warranty it is presumed that the goods shall be free from any charge
or encumbrance infavour of any third person. If the possession of the buyer is disturbed due to such
charge infavour of third party he can claim damages from the seller.
E.g.:

possession is distributed by having a charge.

3.Warranty to disclose dangerous nature of goods:

In case of goods of dangerous nature the seller must disclose or warn the buyer of the
probable danger. If the seller fails to do so the buyer may make him liable for breach of implied
warranty.

4.Implied warranty annexed by usage of trade:

A warranty as to fitness for a particular purpose may be annexed to a contract of sale
by a custom or usage of trade.
7.Distinguish between condition and warranties under what circumstances can a
breach of condition be treated as a breach of warranty. Or
Under what circumstances can a condition be treated as warranty?

Ans: Introduction about condition and warranty,

Differences between condition and warranty: -

Condition Warranties
1.Importance: -
It is a stipulation which is essential to the It is a stipulation which is collateral
main purpose of the contract. (additional) to the main purpose of the
contract.
2.Breach: -
In case of breach of condition, the buyer In case of breach of warranty, the buyer
can terminate the contract. cannot terminate the contract, but he can
claim damages only.
3.Conversion: -
A breach of condition may be treated as a A breach of warranty cannot be treated as a
breach of warranty. breach of condition.

When condition to be treated as warranty: -

Business Law 10 Unit IV

A buyer can treat the breach of condition as a breach of warranty. This option has been given
to him under sec 13(1) of the sale of goods Act. According to this section, a breach of condition
would be treated as a breach of warranty in the following circumstances.
a. Voluntary circumstances: -
The express or implied conditions are for the benefit of the buyer. He may at his option treat
them as warranties. The buyer may exercise his option in either of the following two ways.
1.Waiver of condition:-
The buyer waive off the condition i.e., if certain condition is not fulfilled the buyer may give
up the condition and accept the goods. The waiver may be express or implied.
2.Option to treat the condition as a warranty: -
The buyer may also at his option treat the breach of condition as a breach of warranty. Thus
if certain condition is not fulfilled, the buyer may not cancel the contract by rejecting the goods. He
may accept the goods and recover damages from the seller for breach of warranty.
b. Compulsory circumstances: -
Sometimes the buyer is bound to treat the breach of condition as breach of warranty. If the
contract is not divisible and buyer accepts all the goods or their part, than he cannot reject the
goods on the ground that certain condition is not fulfilled. In such cases he can only claim
damages from the seller.

e circumstances where the doctrine

does not apply?

Ans:
and the seller is not bound to supply the goods, which shall be fit for any particular purpose of the
buyer. If the buyer makes a wrong choice of the goods, he cannot blame the seller if the goods are
not useful for his (buyer) purpose.

Exceptions to the doctrine of caveat emptor:

These exceptions may be discussed under the following heads.
1.Implied condition as quality or fitness.
2.condition as to merchantability.
3.condition as to wholesomeness.
4.Consent by fraud:
Where the consent of the buyer is obtained by fraud by the seller or where the seller
knowingly conceals a defect so that it could not be discovered on a reasonable examination (there is
a latent defects) the doctrine of caveat emptor does not apply.

s the rules regarding

transfer of property or ownership from seller to buyer?
Or
State the legal rules relating to passing of property in case of
a. Sale of specific goods.
b. Sale of unascertain goods and
c. Sale on approval or on sale or return basis.

Ans: There are three stages in the performance of a contract of sale.

a. The transfer of property in goods.
Business Law 11 Unit IV

b. The transfer of possession of goods.

c. Passing of the risk.
Transfer of Property:

Incase of sale of goods ownership in goods may be transferred with or without possession.

Legal rules for the transfer of property (ownership) sec 18-24:

These rules determine the time at which the ownership of the goods is transferred from the

itself. In such cases their intention is ascertained in accordance with the rules laid down in section 18
to 24 of sale of goods act. These rules may be discussed under the following heads.

A. Incase of sale of specific or ascertained goods.

B. Incase of sale of unascertained or general goods.
C. Incase of sale on approval

A. Sale of specific goods (sec 20 22):

These rules may be discussed under the following subheads.

1. Passing of property at the time of contract:

The analysis of this section reveals that the ownership is transferred at the time of the contract
only if all the following conditions are fulfilled.

a. The sale must be of specific goods:

Specific goods means goods identified and agreed upon at the time of sale.
This means their identity must have been established at the time of sale.
b. Goods must be in a deliverable state:
Goods are said to be in a deliverable state when they are acceptable to the buyer to
take its delivery immediately.
c. The contract of sale must be unconditional:
It means the contract in which no condition is imposed regarding the transfer of
ownership of the goods.
On the fulfillment of all the above three conditions the ownership of the goods is
transferred from the seller to the buyer.
E.g.: tated day

property as soon as the offer is accepted.

2. The ownership may also be transferred at some other time:

It can be discussed under the following sub-heads.

a. Where the goods are to be put in a deliverable state by the seller:

Sometimes the goods are not in a deliverable state at the time of contract and the
seller has to do some act to put them in a deliverable state. In such cases the owner ship is
transferred as soon as the seller has put the goods in a deliverable state and the buyer comes
to know this act of the seller.
The seller may be required to do certain acts to put the goods into a deliverable state.
E.g.: packing, filling the goods in containers etc.
Business Law 12 Unit IV

b. Where the goods are to be weighted or measured by the seller to ascertain the Price:
Sometimes the seller has to do some act (E.g.: to measure the weight of the goods) for
the purpose of ascertaining their price. In such cases the ownership is transferred to the buyer
as soon as the seller has done such act and the buyer comes to know about this act of the
seller.
B. Sale of unascertained goods:
Unascertained goods are the goods, which are not specifically identified at the time of
making the contract of sale. Incase of sale of unascertained goods, the ownership is transferred to the
buyer as soon as the goods are identified and set apart for the purpose of delivering to the buyer.
Sec 18 and 23:
The analysis of these two sections reveals that of the ownership is transferred to the buyer on
the fulfillment of the following conditions.
2. When the goods are ascertained.
3. When the goods are appropriated to the contract.
4. Delivery to carries.
1. Ascertainment of goods:
The term ascertainment may be defined as the process by which the goods to be delivered
under the contract are identified and set apart. It is a unilateral act of the seller alone to identify
and set apart the goods. It may be noted that the ownership is not transferred merely by the
ascertainment of the goods. After ascertaining the goods these must also be appropriated to the
contract.
2. Appropriation of goods to the contract:
It is the process by which the goods to be delivered under the contract are identified and set
apart with the mutual consent of the seller as well as buyer. It is a bilateral act of the seller and the
buyer to identify and set apart the goods. Once the goods are appropriated with the mutual consent of
the parties, they become the property of the buyer.
3. Delivery to carrier:
When the seller delivers the goods to a carrier for being taken to the buyer, there is
unconditional appropriation on his part and the property passes to the buyer.

C. Sale of goods on approval (sec 24):

A sale on approval is one in which the buyer may return the goods within a reasonable time if
they do not serve his purpose. This sale is a conditional sale.
The property in goods under a contract of sale of goods on approval passes to the buyer.
1. When the buyer signifies his approval or acceptance to the seller or
2. When the buyer does any other act adopting the transaction or (resale or pledges to
goods etc).
3. When the buyer retains the goods, without giving notice of rejection beyond the time
fixed for the return of goods, or if no time is fixed, beyond a reasonable time.
E.g.:

Kirk ham vs Atten borough

Business Law 13 Unit IV

Or
-
Ans: The general rule in the contract of sale is that the risk prima-facie passes with the
ownership i.e. the risk and the ownership of the goods always go together. In other words the goods
are at the risk of the party who has ownership of the goods. This means that in case of loss of the
goods, the loss shall be borne by the party who has the ownership of the goods at the time of loss.
Thus the actual delivery of goods is immaterial for the passing of the risk. It is only the ownership,
which is relevant for this purpose. The analysis of this section reveals the following two rules.
1.The goods are at the risk of the seller, the ownership has not transferred to the buyer. If any loss
arises the seller has to bear.
2. The goods are at the risk of the buyer if the ownership has been transferred to the buyer. Incase of
loss of the goods he shall bear the loss.

Exceptions:
1.Agreement between the parties:
The risk and the ownership may be separated by an agreement between the seller and the
buyer i.e. the terms of the agreement between the parties may provide as to when the ownership shall
be transferred and who shall suffer the loss.
Case Law: Consolidation coffee ltd vs Coffee board
One of the terms adopted by the coffee board for auction if coffee was that property in the coffee
knocked down to a bidder would not pass until the payment of price and, in the mean time the goods
would remain with the seller but at the risk of the buyer. In cases risk and property passed on at
different stages.
2. Delay in delivery:
Where delivery of goods has been delayed by the fault of either buyer or seller, the party at
fault has to bear the risk of loss. Thus the goods are at the risk of the party who is responsible for
delay in delivery.
Case Law: Demby Hamilton & co vs Braden
livery was to be made in weekly truck

As a result, juice deteriorated. It was held that loss was to be borne by buyer.
3. Custom in a particular trade:
If there is a custom in a particular trade that risk does pass with property; the risk will pass as
per the custom.
Case Law: Bevington vs Dale

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 in this case although property had not passed to
him.

-discuss
their rule and paid out the exception to it?
Or

rule. (Or)

their rule of law and point out the exceptions to the rule? (Or)
Business Law 14 Unit IV

What are the circumstances in which a non-owner of goods can convey a good
title to the goods?

Ans:
that no one can transfer a better title what he has. Thus the buyer cannot get a better title than that of

E.g.: where a thief sells the goods the buyer from such a thief gets no title to the goods i.e. the sale
by a non-owner does not make the buyer an absolute owner of the goods.
Case Law: Leo vs Byes

Exceptions to the general rule:

1.Title by Estoppel:
Under certain circumstances the true owner may be prevented by his conduct from denying
or conduct causes the buyer to

induced him to buy them in that belief, afterwards he cannot deny the truth of that fact.
E.g.:

preven
2. Sale by a Mercantile Agent:
Where a mercantile agent sells goods in the ordinary course of his business, the buyer gets a
valid title to the goods even if he (mercantile agent) is not the owner of goods. However the
buyer get a valid title only in the following conditions are satisfied.
a. The agent must be in possession of the goods of documents of title to the goods.
b. He must obtain the possession of the goods with the consent of the owner.
c. He must sell the goods in his capacity as such agent.
d. He must sell the goods while acting in the ordinary course of business of such an agent.
e. The buyer must act in good faith.
3. Sale by a joint owner:
Joint owners are persons who owns the goods jointly. Sale by one of several joint-owners is
valid if

a. He has sole possession of the goods with the permission of his co-owners.
b. The buyer should purchase the goods for value and in good faith.
c. The buyer has no notice at the time of the contract of sale that the seller has no authority to
sell.
4. Sale by a person in possession under a voidable contract:
Sometimes a person obtains the possession of the goods by co-ercion, undue influence, fraud.
In such cases the contract is a voidable at the option of the true owner. It provides that a person in
possession of goods under a voidable contract can transfer a good title to the buyer who buys the
goods in good faith. However the following conditions are to be satisfied.
a. The goods must be in possession of the buyer.
b. The seller must be in possession of the goods under a voidable contract.
c. The contract must not have been rescinded at the time of sale by the true owner.
d.
E.g.:
Business Law 15 Unit IV

5. Sale by a seller in possession after sale:

Where a person has sold but continues in possession of them, he may sell them to a third
person and if such person obtains delivery there of in good faith and without notice of the previous
sale, he gets a good title to them. However the following conditions to be satisfied.
a. The seller should be in possession after sale.
b. The second buyer must act in good faith.
E.g.:

acquired a good title.

6. Sale by buyer in possession after sale:
In some cases, the buyer obtains possession of the goods before the property in them has
passed to him under an agreement to sale. Such buyer can sell, pledge or otherwise dispose of the
goods to a third person. If such person takes the delivery in good faith and without notice of any lien
or other right of the original seller in respect of the goods he will get a good title to them. However
the following conditions to be satisfied.
a. The first buyer must have the possession of the goods or documents with the consent of the
seller.
b. The second buyer must act in good faith without notice of any lien or other right of the
original seller.
Case Law: Lee vs Butler
-purchase system, the ownership of the furniture was to pass to

obtained a good title to the furniture even though the hirer has no title.
7.Sale by an unpaid seller:
An unpaid seller of goods under certain circumstances resells the goods. The purchaser of
such goods gets a valid title to the goods.
8. Sale by a finder of goods:
If a finder cannot trace the owner, or if owner refuses to pay the lawful charges of the finder,
or when the thing (goods) is perishable or when his lawful charges for finding the owner amounted
to 2/3rds of value of goods, the finder of goods can sell them and at that time the buyer can get valid
title.
9. Sale by a Pawnee or Pledgee:
If the pawner or pledger makes default in the payment of the amount of loan borrowed from
the pawnee or pledgee, then the pawnee may sell the goods after giving a reasonable notice to the
pawner. The buyer gets a valid title to the goods from such pawnee or pledgee.
10. Sale by official receiver or assignee:
In case of insolvency of an individual his official receiver is empowered to take the
possession of the goods and sell the same though he is not the owner of the goods, if any person buys
these goods from such a person he gets a valid title.
11. Sale in market overt:

merchant. In India these markets are dealing in second hand goods. Any goods bought from the
markets are considered to convey title to the buyer, irrespective of the facts that such goods might
have been stolen goods.

les relating to delivery in the sale of

goods act. Or
Discuss different kinds of delivery of goods?
Ans: - Delivery of goods:-
Business Law 16 Unit IV

essence of delivery is voluntary transfer

Kinds or Modes of delivery: -

Delivery of goods may be mode in any of the following ways.
1.Physical or Actual delivery: -
When seller physically hands over the goods to the buyer or his agent, it is called
actual delivery or physical delivery. This is the most common mode of delivery.
Eg: - es on the
scooter. It will be actual delivery of goods.
2.Symbolic delivery: -
A delivery is said to be symbolic where some symbol of real possession or control
over the goods is handed over to buyer.
Eg: - Delivery of the keys of the godown in which goods are lying, the transfer of documents of title
to the goods like railway receipts, carries receipt etc are the instances of symbolic delivery. Such
type of delivery is made when the goods are bulky or incapable of actual delivery.
3. Constructive delivery: -
A delivery is said to be construction where a person who is in possession of the
goods, acknowledges to hold the goods on behalf of the buyer.
Eg: -

his books.
Rules regarding delivery of goods: -
Sections 31 to 44 provide certain rules with regard to delivery of goods. They are as
follows.
1.Mode of delivery (Sec 33): -
The delivery of the goods may be either actual, symbolic or constructive. The delivery
of the goods should be such that which enables the buyer to exercise his controls over the goods.
2.Delivery and payment are concurrent conditions: -
Delivery of goods and payment of the price must be according to the terms of the
contract. Unless otherwise agreed, the delivery of goods and payment of price are concurrent
conditions. In other words, delivery of goods and payments of price must take place simultaneously.
Eg: -

r them on payment.
3.Effect of part delivery: -
Some times during the process of delivering the whole lot of goods, the seller makes a
part of the delivery. This generally done when a huge (large) quantity of goods is to be delivered. In
such cases the part delivery is treated as a delivery of the whole lot.
4.Buyer to apply for delivery: -
In the absence of an express contract, the seller is under no obligation to delivery the
goods unless the buyer applies for delivery. It is the duty of the buyer to demand delivery. As such, if
no demand is made by the buyer, he cannot hold the seller liable in damages for his failure to
deliver.
5. Place of delivery:
Generally it depends upon the intention of the parties. But where nothing is said about it in
the contract, the rule laid down is sec 36 (1) is
a. That the goods sold are to be delivered at the place at which they are at the time of the sale
and
Business Law 17 Unit IV

b. Goods agreed to be sold are to be delivered at the place at which they are at the time of the
agreement to sell or
c. If the goods are not in existence at the time of the agreement to sell i.e. future goods, they are
to be delivered at the place at which they are to be manufactured or produced.
6. Time of delivery:
Where under a contract of sale the seller is bound to send the goods to the buyer, but no time
for sending them is fixed, the seller is bound to send them with in a reasonable time. If the time is
fixed seller is bound to deliver the goods in time. If the contract states that goods shall be delivered
as
7. Goods in Possession of a third party:
Sometimes, at the time of sale, the goods are in the possession of a third person. In such cases
the effective delivery takes place when such a person acknowledge to the buyer, that he holds the
goods on his (buyer) behalf.
8. Expenses of delivery:
Unless otherwise agreed, the expenses of putting the goods into a deliverable state are borne
by the seller and the expenses of receiving the goods are borne by the buyer.
9. Installment deliveries:
In the absence of an agreement to the contrary, the buyer is not bound to accept delivery by
installments. The performance of an entire contract cannot be split up without mutual consent.
Case Law: Reuter vs Salc
There was a sale of 25 tons of paper to be shipped in November. The seller shipped 20 tons in
November and 5 tons in December. The buyer was entitled to reject the whole 25 tons.
10. Delivery to carrier:
Delivery of goods to a carrier for the purpose of transmission to the buyer is prima-facie
deemed to be a delivery of goods to the buyer.
11. Goods delivered at a distance place:
If the seller agrees to deliver the goods at the place prescribed by the buyer at his own cost of
delivery, the buyer should bear the cost of deterioration of goods in such transit.
12. Examining the goods on delivery:
The buyer should be given a reasonable opportunity to examine the goods before accepting
delivery. If the buyer is not provided with such opportunity, he cannot be deemed to have accepted
the delivery of goods.
13. Delivery of wrong quantity:
The term wrong quantity may include short delivery or excess delivery of goods than the
agreed quantify. It also includes the delivery of agreed quality goods mixed with another quality. It
can be discussed under the following heads.
a. Short delivery:
When the seller delivered to the buyer a quantity less than he contract to sell, the buyer may
reject them.
b. Excess delivery:
Where the seller delivers a large quantity of goods than he contracted to sell the buyer may
accept or reject the whole quantity. In case of the excess delivery the buyer is free to exercise any of
the following options.
1. He may accept the contracted quantity and reject the excess.
2. He may accept the whole of the goods. If he does so then he shall have to pay for all
goods at the contracted rate.
3. He may reject the whole quantity of goods.
c. Mixed delivery:
Where the seller delivers to the buyer the goods he contracted to sell mixed with the goods of
a different description not include in the contract, the buyer may either
Business Law 18 Unit IV

1 Accept the goods, which are in accordance with the contract and reject the rest.
2 Reject the whole.
14. Liability of buyer for refusing delivery:
If the buyer neglects or refuses to take delivery within a reasonable time, he is liable to the
seller for loss and charges for the care and custody of the goods.
Business Law 19 Unit IV

3. nst the goods and the buyer (or) who is

unpaid seller of goods and what are his rights against the goods? Has he a remedy against the
buyer personally?
Ans: Unpaid Seller:
Seller means a person who sells or agrees to sell the goods. When the buyer does not
pay the entire price of the goods, the seller is deemed to be unpaid. According to sec 45 of the sale of
goods Act the seller of goods is deemed to be an unpaid seller.
a. When the whole of the price has not been paid.
b. When a bill of exchange or other negotiable instrument has been received as conditional
payment and the some has been dishonoured.
Rights of a unpaid seller: The sale of goods act has expressly given two kinds of right to an
unpaid seller. They are I. Rights against the goods. II. Rights against the buyer.
I. Right against the goods:
These can be further divided under two heads.
a. Rights when ownership is transferred. B.Rights when ownership is not transferred.
a. Rights when ownership is transferred:
An unpaid seller has the following rights even if the property in goods has
been transferred to the buyer.
1.Right of Lien:

price. The unpaid seller has the right to retain the possession of goods until he receives their price.
An unpaid seller can exercise lien only in the following cases
a. Where the goods have been sold without any stipulation as to credit.
b. Where the goods have been sold on credit, but the period or time of credit has expired.
c. Where the buyer becomes insolvent.
Conditions for the exercise of lien:
The following are the conditions to be satisfied to the exercise of lien.
a. The ownership in goods must have passed to the buyer.
b. The goods must be in the possession of the seller.
c. The entire or part of the price must remain unpaid.
It is a personal lien and can be expressed either by him or by his agent. It is indivisible in
nature. So, the buyer is not entitled to claim delivery of a portion of the goods on payment of a
proportionate price. The right of lien is available only for the price of goods and not other charges
like warehouse charges.
Termination of lien:
Lien depends on physical possession of goods. Once the possession is lost, the lien is also
lost. Unpaid seller loses his right of lien in the following cases.
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.
b. When the buyer or his agent lawfully obtains possession of the goods.
c. When the seller expressly or by implication waives his right of lien.
2. Right of stoppage in transit:
The right of stopping the goods while they are in the possession of a carrier and resuming
ransit does not mean that the goods
should be actually moving. Right of stoppage of goods in transit is just an extension of the right
of lien. It arises when the seller has lost the opportunity of exercising the right of lien. The right
of stoppage in transit can be exercised under the following cases.
a. The seller must be unpaid. B.The buyer must be insolvent.
c.The seller must have parted with the possession of goods. D.The goods must be in transit.
e.The buyer must have not acquired the goods. Goods should be in transit.
Business Law 20 Unit IV

The unpaid seller or vendor may exercise the right of stoppage in transit either.
i. By taking actual possession of the goods or
ii. By giving notice of his claim to the carrier in whose possession the goods are
The carrier on receipt of notice must redeliver the goods to the seller. The expenses of such
redelivery are to be borne by the seller.
When transit comes to an end:
In the following circumstances the transit comes to an end and the seller loses the right to
stop the goods in transit.
a. When goods are delivered to the buyer or his agent.
b. When the carrier holds the goods as the agent of the buyer.
c. When the carrier wrongfully refuses to deliver the goods to the buyer or his agent.
3. Right of re-sale:
A 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 goods by paying price.
But the seller cannot be expected to wait indefinitely. He has, therefore, been given a limited right to
resell the goods. The unpaid seller can resell the goods.
a. Where the goods are of a perishable nature. (Or)
b. Where the seller expressly reserves the right of resale incase the buyer makes a default in the
payment of price or
c. Where the unpaid seller has exercised the right of lien or stoppage in transit and gives notice
to the buyer or his intention to sell the goods.
The seller is bound to give reasonable notice to the buyer stating that he is going to resell the
goods. If the buyer fails to pay the price of goods within reasonable time after receiving the
notice, the seller may resell the goods. If on resale, there is loss, the seller can recover from the
buyer. If there is profit on resale, the seller is not bound to pay it to the buyer. Resale of
perishable goods, however, do not require any such notice.
b. Rights when ownership is not transferred:
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 property. The seller has a right to with hold delivery of
the goods until the price is paid even though the sale was on credit. This right is similar to and
co-extensive with his right of lien and stoppage in transit where the property has passed to the
buyer.
II Rights against the buyer: An unpaid seller in addition to the rights, which he has against the

ersonally.
1. Suit for price: When the property in the goods has passed to the buyer, and the buyer
wrongfully neglects or refuses to pay for the goods, the seller can sue the buyer for the price of the
goods. Where under a contract of sale, the price is payable on a certain day irrespective of
delivery and the buyer wrongfully neglects or refuses to pay such price, the seller may sue him for
such price, although the property in the goods has not passed.
2. Suit for damages for non-acceptance of the goods:
Where the buyer wrongfully neglects or refuses to accept the goods and pay for them, the
seller may sue him for damages for non-acceptance.
3.Suit for damages for repudiation of contract before due date:
Where the buyer repudiates the contract before the due date of delivery of goods, the seller
may treat the contract as cancelled and sue for damages.
4. Suit for interest and special damages:
The seller may recover interest or special damages in any case where by law, interest or
special damages may be recoverable.
Business Law 21 Unit IV

14. What are the remedies available to the seller in case of a contract of sale by
the buyer?
Ans:
(In the above question)
Rights against the buyer:
i. Suit for price
ii. Suit for damages etc

15. What are the remedies available to the buyer incase of breach of a contract of
sale by the seller?
Ans.
has the following remedies against the seller.
1. Suit for damages for non-delivery of goods:
Where the seller wrongfully neglects or refuses to deliver the goods to the buyer, the buyer
may sue the seller for damages for non-delivery. The wrongful neglect or refusal to deliver the
goods may arise in the following cases.
a. Where the buyer has prepaid the price partly or wholly and the goods are not delivered or
b. Where the seller has unreasonably delayed the delivery of goods.
2. Suit for special performance:
Where there is a contract for the sale of specific or ascertained goods and seller refuses to
deliver them, the buyer may file a suit for the specific performance of the contract. But this remedy
is allowed by the court subject to certain conditions. Specific performance may be ordered by the
court where damages would not be an adequate remedy.
3. Suit for breach of warranty:
Incase of breach of warranty, the buyer has the following remedies.
a. If the price has not been paid by the buyer, he may deduct from the price, the loss suffered by
him and pay the balance or
b. If the loss suffered is more than the price, the buyer may file a suit for damages.
4. Repudiation of the contract before the due date:
Where the seller repudiates the contract before the date of delivery, the buyer can
a. Treat the contract as rescinded and bring an action for damages or
b. Wait till the actual date of delivery.
If the buyer chooses the first remedy, damages shall be assessed on the basic of price prevailing on
that date and contract price. Incase of second alternative, the contract remain open for the benefit of
both the parties
5. Suit for interest:
If the buyer has already paid the price, but the seller fails to deliver the goods, then the buyer
may file a suit for the refund of the price as well as interest.

16. State the rules regarding Auction sales?

Ans. Auction sale means a public sale. Normally in an auction sale, the goods are sold on behalf
of the owner by an auctioneer. The auctioneer gives wide publicity for the sale of goods by an
auction and fixes the time and place for it. The intending buyers, known as bidders can inspect the
goods during time fixed by an auctioneer before or at the time of sale. In an auction, sale the goods
are sold to the highest bidder. It may be noted that an advertisement to sell the goods by auction is
simply an invitation to the public to make offers and not an offer to sell. That is why the intending
buyers have no right to sue the auctioneer if auctioneer cancels or postpones the sale by auction.
Business Law 22 Unit IV

Legal rules:
The following are the legal rules with regards to the auction sale.
1. Completion of auction sale:
The sale by auction is complete as soon as the auctioneer announces its completion by the
fall of the hammer or in any other customary manners.
Eg: By shouting one, two, three.
2. Goods put up for sale in lots:
Where goods are put up for sale in lots, each lot is prima facie deemed to be the subject of a
separate contract of sale.
3. Retraction of bid:
Before the sale is completed by the fall of the hammer, any bidder may withdraw his bid i.e.,
he has to say that he is not ready and willing to purchase the goods. This is based on the principle
that a bid is an offer and it can be revoked before it is accepted by the fall of the hammer.
4. Transfer of ownership:
On the completion of the sale by the fall of the hammer, the ownership of the goods is
immediately transferred to the buyer (highest bidder). Thus once the hammer falls, the bidder
becomes the owner of the goods and he can deal with the goods in a way he likes.
5. Right of the seller to bid:

expressly reserved. It may however be noted that the seller can appoint only one bidder to bid on his
behalf.
6. Fraudulent sale:
bid at the auction is not notified, the buyer may treat the sale as
fraudulent if the seller or any person on his behalf bids at the auction. The buyer may refuses to take
the goods sold to him. In such cases the sale is also fraudulent if the auctioneer knowingly takes any
bid from the seller or any person on his behalf.

Reserve price means the minimum price below which the auctioneer will not sell the goods
put up for auction sale. Normally the reserve price is fixed by the seller to protect himself from
knockout agreement, unless the bid reaches the minimum price, the auctioneer could cancel or
postpone the auction sale or the bid below the reserve price may be conditionally accepted subject to
confirmation by the seller.

2 Marks Questions:

1. Knockout agreement:
It is an agreement between the bidders not to bid against each other at an auction sale. Such
agreements are made by the bidders with a view to prevent competition among themselves. Such
agreements are perfectly valid and not illegal.
2. Puffers:

has no intention to purchase the goods. Such persons are also known as or
duck .
3. Damping:
It is an unlawful act by which an intending purchaser is prevented from bidding or raising the
price at an auction sale. It is illegal and the auctioneer can withdraw the goods from the auction.
 ESSENTIAL COMMODITIES ACT-1995

1.Define the term essential commodities and explain the objects of essential commodities
Act-1995?

Ans:Inroduction: -
The essential commodities Act was passed by the parliament in 1955. It came into force on
1st April 1955. The Act extended to the whole of India including the state of Jammu & Kashmir. It
was amended in 1987 and 1992.
Definition of essential commodity Sec2 (A): -
An inclusive definition is given under section2 (A) of the Act. But secretly speaking
cannot call it as definition but it can call it as list of commodities recognized by section 2(A)
as essential commodities. The list was as under:
1.Cattle fodder, including oil and other concentrate.
2.Coal including coke and other derivatives.
3.Component parts and accessories of automobiles.
4.Cotton and woolen textiles.
5.Drugs.
6.Foodstuff including edible oil seeds.
7.Iron and steel including manufacturing products of Iron and steel.
8.Paper including news, paperboard and straw board.
9.Petroleum and its products.
10.Raw cotton and cottonseeds.
11.Raw jute.
12.cement-added in 1992.
13.Any other class of commodities, which the central Govt. may notify order declared to be
an essential commodity for the purpose of this Act.
Object of the Act:-
The main objective of this act to ensure the common man set the supply of essential
commodities without any abstraction. The Act seeks to achieve the following objectives.
a) To control the production, supply and distribution of essential commodities.
b) To check the inflationary trends in prices.
c) To ensure equitable distribution of essential commodities.

2. What are the various powers of central Govt. under essential commodities Act?

Ans: Power of central Govt. under Sec 3 to Sec 6 of the essential commodities Act:-

Power to issue order.

Power to fixing prices.
Power to appoint authorized controllers.
Power to receive certain amounts as arrears of land revenue Sec 7(A).

Power to issue order:

Under Sec 3(1) of ECA the central Govt. can issue orders for regulating or
prohibiting the production, supply and distribution of any essential commodity and trade and
commerce there in. It can issue these orders in the following circumstances.
 a) For maintaining or increasing the supply of any essential commodities.
b) For securing the equitable distribution and availability at fair prices.
c) For securing any essential commodities for the defence of India or for the
efficient conduct of military operation.

The order may contain issues like regulation of license and permit,
bringing the waste land into cultivation, controlling the prices of EC, prohibition of hoarding
collection of information and statistics, inspection of books and accounts of a trader dealing
in EC, entry into the premises of confess.

Power of fixing price:

The Govt. is given the power for the fixes of prices of EC by the act. It can exercise
the power in the following way.

a) Fixing the prices of EC being sold to Govt. Sec 3(3): -

Govt. means the central Govt., state Govt. or the agent or any person according
to sec 3(3) of the act. The price to be paid to seller of EC fixed by the Govt. as
fallows.
Agreed price, if it is in consistent with the controlled price.
Controlled price if no agreement is reached or necessary.
If there is no agreed price or controlled price, market price is fixed.

b) Fixing the price of EC for the sale to the general public according to sec3 (3(A)):

Where in a particular location the prices of any food stuffs raising sharply due to
holding and artificial scarcity. The Govt. may fix the average price for this purpose.
The central Govt. appoints an officer fixation average price is final.

c) Fixing prices of food grains and edible oils sec3(3(B):-

Where a person is require to sell food grains and edible oil to central Govt. or to
state Govt. or any agent acting for Govt. he must be paid a fixed price as
procurement price. It is fixed by taking the following consideration.

Controlled price of that particular item.

General crop prospectus.
The head of vulnerable section of consumers.
Recommendation of agriculture commission.

d) Fixation of fair price of sugars for the producers: -

The price of the sugar to be paid to producers or sellers when he sells it to the
central Govt. or to the agent. It is determined according to the provision of
Sec3 (3(C)) of the act.
Power to appoint authorized controllers: -

The central Govt. has power to appoint any personal controller. He may be
appointed to make any investigation into a business engaged in production, supply and
distribution of EC. He shall exercise his function in accordance with insertion given by Govt.
and submit the investigation report to the Govt.

Power to recover certain amounts as arrears of land revenue sec7 (A): -

Sec 7(A) was inserted in the act in the year 1984. By this section the central Govt.
has the power to recover certain amount as arrears of land revenue. The recovery will be as
under.
a) If any person is liable to pay the amount in pursuance of any order issue under
sec3 of the act.
b) If any person is liable to deposit any amount under section3.
c) If default is made by a person in above two cases the Govt. may charge the
interest @ 15% per annum from the date of default.

3. What is confiscation? Explain the steps involved in confiscation of EC?

Ans: -
The term confiscation literally means appropriation of seized goods. If any person
acts in contravention of order issued by Govt. under sec3 of the act. The authorized person
may seize that EC which he possesses. After seizure such authorized person report the same
to the district collector. The collector on the receipt of report may at his discretion, required
seized commodities before him for inspection. If he satisfies he may order for confiscation of
goods. So the process of seizure and appropriation of EC is called confiscation sec6-A,B,C of
the act deal with confiscation of goods.

Procedure or Steps: -

Issue of show-cause notice: -

Section 6(B) lays down procedure to adopt by the collector before passing the order
of confiscation. This procedure detailed as under.

a) He has to give a notice in writing to the owner of EC in question how they are seized.
Informing to him of the grounds on which it is proposed to confiscate.
b) The owner of commodities or the person from whom they are seized is given an
opportunity of making representation in writing against the grounds of confiscation.
c) The owner of commodity or the person from they are seized is given an opportunity
of being heard in the matter.
d) After observing the above three steps if the collector satisfies that there has been
contravention of any order made under sec3 of act, he may order for confiscation of
EC so seized.
Appeal against confiscation under sec6(C): -

Any person agreed by an order of confiscation with in one month from the date of
confiscation order, appeal to any judicial authority appointed by the Govt. The judicial
authority shall give an opportunity to the applicant to be heard, pass such orders as it may
think fit to confirming, modifying or annulling the order applied against.

Where the confiscation order has been annulled or modified in an appeal or the
person has been acquitted, the seized commodity may be returned. If it is not possible to
return the commodity the concerned person shall be paid the price therefore as it the
commodity has been sold to the Govt. along with reasonable interest from the date of seizure.