CHAPTER II
FORMATION OF THE CONTRACT
Contract of Sale
4.
Sale and agreement to sell.---(1) A contract of sale of goods is a
contract whereby the seller transfers or agrees to transfer the
property in goods to the buyer for a price. There may be a contract of
sale between one part-owner and another.
(2)
A contract of sale may be absolute or conditional
(3)
Where under a contract of sale the property in the goods is transferred
from the seller to the buyer, the contract is called a sale, but
where the transfer of the property in the goods is to take place
at a future time or subject to some condition thereafter to be
fulfilled, the contract is called in agreement to sell.
(4)
An agreement to sell becomes a sale when the time elapses or the
conditions are fulfilled subject to which the property in the goods
is to be transferred.
Formalities
of the Contract
5.
Contract of sale how made.---(1) A contract of sale is made by an
offer to buy or sell goods for a price and the acceptance of such
offer. The contract may provide for the immediate delivery of the
goods or immediate payment of the price or both, or for the delivery
or payment by instalments, or that the delivery or payment or both
shall be postponed.
(2)
Subject to the provisions of any law for the time being in force a
contract of sale may be made in writing or by word of mouth, or partly
in writing and party by word of mouth or may be implied from the
conduct of the parties.
Subject-matter of Contract
6.
Existing or future goods.---(1) The goods which form
the subject of a contract of sale may be either existing
goods, owned or possessed by the seller, or future goods.
(2)
There may be a contract for the sale of goods the acquisition of
which by the seller depends upon a contingency which may or may not
happen.
(3)
Where by a contract of sale the seller purports to effect a present
sale of future goods, the contract operates as an agreement to
sell the goods.
7
Goods perishing before making of contract.---Where there is a
contract for the sale of specific goods, the contract is void if the
goods without the knowledge of the seller have, at the time when the
contract was made, perished or become so damaged as no longer to
answer to their description in the contract.
8.
Goods perishing before sale but after agreement to sell.---Where
there is an agreement to sell specific goods, and subsequently the
goods without any fault on the part of the seller or buyer perish or
become so damaged as no longer to answer to their description in the
agreement before the risk passes to the buyer, the agreement is thereby
avoided.
The
Price
9.
Ascertainment of price.---(1) The price in a contract of
sale may be fixed by the contract or may be left to be fixed in
manner thereby agreed or may be determined by the course of dealing
between the parties.
(2)
Where the price is not determined in accordance with the foregoing
provisions, the buyer shall pay the seller a reasonable price. What
is a reasonable price is a question of fact dependent on the
circumstances of each particular case.
10.
Agreement to sell at valuation.---(1) Where there is an agreement
to sell goods on the terms that the price is to be fixed by the
valuation of a third party and such third party cannot or does not
make such valuation, the agreement is thereby avoided:
Provided
that, if the goods or any part thereof have been delivered to
and appropriated by the buyer, he shall pay a reasonable price
thereof.
(2)
Where such third party is prevented from making the valuation by
the fault of the seller or buyer, the party not in fault may maintain
a suit for damages against the party in fault.
Conditions
and Warranties
11.
Stipulation as to time.--- Unless a different intention appears
from the terms of the contract, stipulations as to time of payment are
not deemed to be of the essence of a contract of sale. Whether any other
stipulation as to time is of the essence of the contract or not depends
on the terms of the contract.
12.
Condition and warranty.---(1) A stipulation in a contract of
sale with reference to goods which are the subject thereof may be a
condition of a warranty.
(2)
A condition is a stipulation essential to the main purpose of the contract,
the breach of which gives rise to a right to treat the contact as repudiated.
(3)
A warranty is a stipulation collateral to the main purpose of the contract,
the breach of which gives rise to claim for damages but not to a right
to reject the goods and treat the contract as repudiated.
(4)
Whether a stipulation in contract of sale is a condition or a warranty
depends in each cease on the construction of the contract. A stipulation
may be a condition, though called a warranty in the contract.
13.
When condition to be treated as warranty,---(1) Where a contract
of sale is subject to any condition to be fulfilled by the seller, the
buyer may waive the condition or elect to treat the breach of the condition
as a breach of warranty and not as a ground for treating the contract
as repudiated.
(2)
Where a contract of sale is not severable and the buyer has accepted
the goods are part thereof 5*** the breach of any condition to be fulfilled
by the seller can only be treated as a breach of warranty and not
as a ground for rejecting the goods and treating the contract as repudiated,
unless there is a term of the contract, express or implied, to that
effect.
(3)
Nothing in this section shall affect the case of any condition or warranty
fulfilment of which is excused by law by reason of impossibility or
otherwise.
14.
Implied undertaking, as to title, etc.--- In a contract of sale,
unless the circumstances of the contract are such as to show a different
intention there is---
(a)
an implied condition on the part of the seller that, in the case of
sale, he has a right to sell the goods and that, in the case of an agreement
to sell, he will have a right to sell the goods at the time when the
property is to pass;
5. The words and comma "or where the contract is for specific goods
the property in which has passed to the buyer," omitted by the
Sale of Goods (Amendment) Ordinance, 1962 (47 of 1962), S.3 (with effect
from the 7th June, 1962).
(b)
an implied warranty that the buyer shall have and enjoy quiet possession
of the goods;
(c)
an implied warranty that the goods shall be free from any charge or
encumbrance in favour of any third party not declared or known to the
buyer before or at the time when the contract is made.
15.
Sale by description.---Where there is a contract for the
sale of goods by description there is an implied condition that the
goods shall correspond with the description; and, if the sale is by
sample as well as by description, it is not sufficient that the bulk
of the goods corresponds with the sample if the goods do not also correspond
with the description.
16.
Implied conditions as to quality or fitness.--- Subject to the provisions
of this Act and of any other law for the time being in force, thee is
no implied warranty or condition as to the quality or fitness for
any particular purpose of goods supplied under a contract of sale, except
as follows:-
(1)
Where the buyer, expressly or by implication, makes known to the seller
the particular purpose for which the goods are required, so as to show
that the buyer relies on the seller's skill or judgment, and the goods
are of a description which it is in the course of the seller's business
to supply (whether he is the manufacturer or products or not), there
is an implied condition that the goods shall be reasonably fit for such
purposes:
Provided
that, in the case of a contract for the sale of a specified article
under its patent or other trade name, there is no implied condition
as to its fitness for any particular purpose
(2)
Where goods are bought by description from a seller who deals in goods
of that description (whether he is the manufacturer or producer or not),
there is an implied condition that the goods shall be of merchantable
quality:
Provided
that, if the buyer has examined the goods, there shall be no implied
condition as regards defects which such examination ought to have revealed.
(3)
An implied warranty or condition as to quality or fitness for a particular
purpose may be annexed by the usage of trade.
(4)
An express warranty or condition does not negative a warranty or condition
implied by this Act unless inconsistent therewith.
[16-A.
Seller to inform buyer to defect in goods sold. - Notwithstanding anything
contained in section 16, and save where the parties have entered into
a agreement to the contrary, the seller shall be under an obligation
to inform the buyer of any defect in the goods sold at the time of the
contract, except in a case where the defect the defect is obviously
known to the buyer.]
17.
Sale by sample.---(1) A contract of sale is a contract for sale
by sample where there is a term in the contract, express or implied,
to that effect.
(2)
In the case of a contract for sale by sample there is an implied condition---
(a)
That the bulk shall correspond with the sample in quality;
(b)
that the buyer shall have a reasonable opportunity of comparing the
bulk with the sample;
(c)
that the goods shall be free from any defect, rendering them unmerchantable,
which would not be apparent on reasonable examination of the sample.
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