Sale of Goods Act, 1930 – CS Foundation Business Law Notes

Introduction:

  1. It is one of the special types of contract.
  2. Initially, it was the part of the Indian Contract Act, 1872
  3. Later it was deleted and a separate sale of Goods Act was passed in 1930.
  4. Basic provisions and requirements of contract equally apply to Sales of Goods Act.
  5. It contains and deals with law relating to sale of goods and not with mortgage or pledge.
  6. It received its-assent on 15th March, 1930.
  7. It came into force on 1st July, 1930.
  8. It extends to whole of India except the State of Jammu & Kashmir.

Definition of Various Terms:

  1. Buyer: Person who buys or agrees to buy the goods.
  2. Seller: Person who sells or agrees to sell the goods.
  3. Goods: As per Sec 2(7), it means every kind of movable property Other than actionable claims and money; and includes stock and shares, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before sale or under the contact of sale.
  4. Money means current money and it includes rare and old coins.
  5. Actionable claim means what a person cannot make a present use of or enjoy, but can recover it by means of a suit or an action.

Relevant Case Law:
Rash Behari V. Emperor
M.B. Electric Supply Co. Ltd. V. State of Rajasthan
Sale of Goods Act, 1930 – CS Foundation Business Law Notes IMG 1

  • Existing Goods: It means such goods which are in existence at the time of the contract of sale i.e. owned or possessed by the seller.
  • Specific Goods: It means goods identified and agreed upon at the time the contract of sale has been made.
  • Ascertained Goods: It means that the goods are identified in accordance with the agreement after the contract of sale has been made.
  • Generic / Unascertained Goods: It means the goods which are not specifically identified but are indicated by description.
  • Future Goods: As per Sec. 2(6), it means goods to be manufactured or produced or acquired by the seller after making the contract of sale.
  • Contingent Goods: It means the goods the acquisition of which by the seller depends upon a contingency which may or may not happen.
  • Agreement to sell can only be there in respect of future or contingent goods.
  • Actual sale can take place only in respect of specific goods.
  • Goods are said to be in a deliverable state, when they are in such a condition that the buyer would, under contract, be bound to take delivery of them.
  • Delivery: It means voluntary transfer of possession by one person to another.
  • Document of Title of Goods: It includes bill of lading, dock-warrant, warehouse keeper’s certificate, what finger’s certificate or any other document used in the ordinary course of business as proof of the possession or control of goods or authorising or purporting to authorise either by endorsement or delivery, the possessor of the document to transfer or receive goods thereby represented.
  • Property: It means the general property and not merely a special property.
  • Insolvent: Person is said to be insolvent when he ceases to pay his debts in the ordinary course of business.

Differences between Existing Goods and Contingent Goods:

Existing Goods Contingent Goods
Goods which are physically in existence and at the time of entering into contract, are owned by the seller. Goods, the acquisition of which depends upon the happening of an uncertain contingency.
They can be a subject matter of sale as well as agreement to sell. They are always a subject matter of an agreement to sell.
They can be classified as specific, ascertained or unascertained. They cannot be classified as such.

Differences between Future Goods and Contingent Goods:

Future Goods Contingent Goods
Goods which are yet to be manufactured or produced or acquired by the seller after making the contract. Goods, the acquisition of which by the seller depends upon a contingency which may or may not happen.
Their procurement does not depends upon any such uncertainty. Their procurement is dependent upon uncertain event.
It is always an agreement to sale. It is a contract of sale, the performance of which depends upon the contingency which may or may not happen.
It does not includes contingent goods. It includes future goods.

Contract of Sale:

  • In this ownership is transferred immediately to buyer even though possession of goods is with seller.
    As per Section 4(1) 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”.

Essential Elements:

  • There must be atleast two parties. (Bilateral Contracts)
  • The subject matter of the contract must be goods.
  • A price in money should be paid or promised.
  • A transfer of property in goods from seller to the buyer must take place.
  • It must be absolute or conditional.
  • All other essentials of a valid contract must be present.

Sale:
As per Section 4(3) of the Act, “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”.

Agreement to Sell:
As per Section 4 (3) of the Act, “Where under a contract of sale the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell”.

Differences between Sale and Agreement of Sell:

Sale Agreement of Sell
It is an executed contract. It is an executory contract.
Property in goods are transferred from seller to buyer when the contract is made. Transfer of property in goods takes place at some future date.
Seller cannot resell the goods as the property is with the buyer. Seller can further resell the goods as the property in good remains with him.
Risks passes to the buyer, as he becomes the owner. Risks is with the seller as he remains the owner.
Performance is absolute without any condition. Performance is conditional and is made in future.
Breach on part of buyer, seller can sue for the price and damages both. Breach on part of buyer, seller can sue for damages only and not for the price.
Breach on part of seller, buyer can compel him to deliver the goods or pay the damages. Breach on part of seller, buyer can sue for damages only and cannot compel him to deliver the goods.
Gives the buyer ‘Just-in-Rem’ i.e. right against the whole world. Gives the buyer “Just-in-Personam” i.e. right against a particular person.
Sale is contract plus conveyance. It is pure and simple agreement.
In this, if goods are destroyed then loss will be of Buyer. In this, if goods are destroyed by accident, loss will fall on seller.

‘Agreement’ to sell becomes sale when the time expires, or the condition, subject to the property in goods is to be transferred, is fulfilled.

Differences between Sale and Bailment:

Sale Bailment
Property in goods is transferred from seller to buyer. There is only transfer of possession of goods from bailor to bailee.
Return of goods is not possible. Bailee must return the goods to bailor on accomplishment of the purpose of bailment.
Consideration is the price in terms of money. Consideration may be gratuitous or non-gratuitous.
Buyer may use the goods in any way he likes. Bailee can use the goods only according to the bailor’s direction.
Any profit accrued in goods sold is the buyer’s property. Any profit accrued on goods bailed is the bailor’s property. This applies only if Goods are Existing Goods.

Differences Between Sale and Contract for Work and Labour:

Sale Contract for Work and Labour
Property in goods is transferred from the seller to the buyer. It is a contract for performing some work and not for transferring the property in goods.
It involves the delivery of goods. It involves exercise of skill and labour in rendering some work. It involves “the uses by means of money consideration”.

Differences Between Sale and Hire Purchase Agreement:

Sale Hire Purchase Agreement
Property in goods is transferred to the buyer immediately at the time of contract. The goods passes to the hirer upon payment of the last installment.
Position of buyer is that of owner of goods. Position of hirer is that of a bailee till he pays the last installment.
Buyer cannot terminate the contract and is bound to pay the price of the goods. Hirer may terminate the contract by returning the goods to owner without any liability to pay the remaining installments.
Seller takes the risk of any loss resulting from the buyer’s insolvency. Owner takes no such risk for if hirer fails to pay the installment, he has the right to take back the goods.
Buyer can pass the goods title to a bonafide purchaser from him. Hirer cannot pass any title even to a bonafide purchaser.
Tax is levied at the time of contract. Tax is not leviable until it eventually turns into sale.

Formalities of Contract of Sale:

  • There may be immediate delivery of goods
  • There may be immediate payment of price, but it may be agreed that the delivery is to be made at some future date.
  • There nay be immediate delivery of the goods and an immediate payment of price.
  • It may be agreed that the delivery or payment or both are to be made in installments.
  • it may be agreed that the delivery or payment or both are to be made at some future date.

Subject Matter of Sale:
As per Sec. 6:

  • Subject matter must always be goods which may be existing or future goods.
  • Contract can also be made with regard to the goods, the acquisition of which by seller depends upon a contingency, which may or may not happen. Such contracts are contingent contracts.
  • When the seller purports by his contract to effect a sale of future goods, the contract will operate only as an agreement to sell the goods and not as sale.

Destruction of Subject Matter of Sale [without the knowledge of seller]
Goods Perishing before Making a Contract (Sec 7):

  • The contract is void ab initio.
  • If seller enters into the contract even on being aware of the destruction, he is estopped from disputing the contract.
  • It also includes the goods that have lost their commercial value.
  • Mutual mistake of the fact essential to the contract renders the contract void.

Goods Perishing after Agreement to Sell (Sec. 8): Without any of the parties fault.

  • Agreement becomes void.
  • Provided the risk has not passed to the buyer.
  • It applies only to sale of specific goods.
  • For Uncertain good sale, the perishing of the whole quantity of such goods in the possession of seller won’t relieve him of his obligation to deliver.

Price:

  • Price means monetary consideration for the sale of goods.
  • It may be money actually paid or promised to be paid.
  • No sale can take place without a price.
  • Only money transactions are valid, no dealing in kind.

Ascertainment of Price
As per Sec. 9 –
1. Price may be:

  • Fixed by a contract.
  • Agreed to be fixed in a manner provided by the contract, or
  • Determined by the course of dealings between the parties.

2. When it cannot be fixed in any of above ways, the buyer is bound to pay a reasonable price to the seller.

3. Generally Market Price would be the Reasonable Price:

As per Sec. 10:

  • Price is to be determined by third party.
  • Where there is an agreement to sell goods on the terms that the price is to be fixed by third party, and he either does not or cannot make such valuation, the agreement will be void.
  • If the third party is prevented by the default of either party from fixing the price, the party at fault will be liable to the damages to the other party who is not at fault.

Stipulation:

  • Before concluding a contract of sale, certain statements are made by the contracting parties.
  • Statement may be stipulation – one by seller on the reliance of which the buyer makes the contract.
  • Statement may not be a stipulation – if it is a mere recommendation by the seller thus, does not give rise to any action.
  • “A stipulation or a representation in a contract of sale with reference to goods which are the subject thereof, may be a condition or a warranty.”

Condition:
“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 and claim damages.”

Warranty:
“A warranty is a stipulation collateral to the main purpose of the contract, i.e. a subsidiary promise the breach of which give rise to a claim for damages but not a right to reject the goods and treat the contract as repudiated.”

As per Sec. 11:
Stipulation as to time of payment are not the condition unless such an intention appears from the contract.

Differences between Condition and Warranty:

Condition Warranty
It is essential to the main purpose of the contract. It is collateral to the main purpose of the contract.
The aggrieved party can repudiate the contract or claim damages or both in case of breach. The aggrieved party can claim only damages in case of breach.
A breach of condition may be treated as breach of warranty. A breach of warranty cannot be treated as a breach of condition.

Circumstances when Condition may be Deemed as Warranty:

  • Where the buyer himself opts to treat the breach of condition as a warranty.
  • Where the contact is indivisible and the buyer has accepted either the whole goods or any part thereof.
  • Where the fulfillment of any condition or warranty is excused by law by reason of impossibility or otherwise.
    Sale of Goods Act, 1930 – CS Foundation Business Law Notes IMG 2

Express Condition:

  • Condition is expressed when the terms of contract expressly states them.
  • They are agreed upon between the parties at the time of contract and are expressly provided in the contract.
  • It does not negative an implied condition.

Implied Condition:

  • Condition is implied, when the terms are not expressly provided for.
  • They are presumed by law to be present in the contract.
  • They may be neglected or waived by an express agreement.

It Includes:

  • Condition as to title.
  • Condition as to sale by description.
  • Condition as to sale by sample as well as description.
  • Condition as to quality and fitness.
  • Condition as to merchantability.
  • Condition as to sale by sample.
  • Condition as to wholesomeness.

Condition as to title [Sec. 14(a)]:

  • It presumes that the seller has a valid title to the goods.
  • Seller has a right to sell the goods in case of sale.
  • In case of agreement to sell, he will have the right to sell the goods at the time when the property is to pass, unless there is a contract to the contrary.
  • If seller’s title turns out to be defective, the buyer may return the goods to the true owner and recover the price from the seller.

Relevant Case Law:
Rowland V. Divall

Condition as to Sale by Description (Sec. 15):

  • Here, the implied condition is that the goods must correspond with the description.
  • The buyer is not bound to accept and pay for the goods which are not in accordance with the description of goods.
  • The buyer relies for his information on the description of the goods given, by the seller.

Relevant Case Law:
Beale V. Taylor

Condition as to Sale by Sample as well as Description (Sec. 15):
Here, the implied condition is that the bulk of goods supplied must correspond both with the samples as well as with the description.

Relevant Case Law:
Nichol V. Godis

Facts:

  • N agreed to sell oil described as “Foreign refined Rape Oil, warranted only equal to sample”.
  • The goods were equal to sample, but contained a mixture of Hemp Oil.

Decision: The buyer could reject the goods

Condition as to Quality and Fitness [Sec. 16(1)]:
1. Here the implied’condition operates on the fulfillment of following conditions:

  • The buyer requires the goods for a particular purpose which he has made known to the seller.
  • The buyer relies on the skill and judgement of the seller.
  • The seller sells such type of goods.

2. If the goods are bought under a patent or trade name, there is no such condition.

Relevant Case Law:
Priest V. Last

Facts:

  • A purchased a hot water bottle from a chemist.
  • The bottle burst and injufed his wife.

Decision:

  • There was a breach of condition as to fitness.
  • Chemist was liable for refund of price and damages.

Grant V. Australian Knitting Mills.

Condition as to Merchantability [Sec. 16 (2)]:

  • It means that when the goods are bought by description from a seller who deals in such goods, it is implied that goods will be of merchantable quality.
  • It is immaterial, whether the seller is manufacturer or producer or not.
  • It does not operates where the buyer examines the goods prior to the sale and examination ought to have revealed the defects.

Condition as to Wholesomeness:
In case of eatables and other provisions, there is an implied condition of wholesomeness i.e. fit for consumption, other than merchantability.

Condition as to Sale by Sample (Sec. 17):
There is an implied condition that:

  • The bulk shall correspond with the sample in quality,
  • The buyer shall have a reasonable opportunity of comparing the bulk with the sample.
  • The goods shall be free from any defect rendering them unmerchantable, which would not be apparent on reasonable examination of the sample.
    Sale of Goods Act, 1930 – CS Foundation Business Law Notes IMG 3

Express Warranty – It is a warranty which has been expressly agreed on by the parties at the time of contract of sale.

Implied Warranty:
1. It is a warranty which the law presumes that the parties have incorporated it into their contract.

2. It may be excluded by the course of dealings between the parties.

3. It Includes:

  • Warranty as to undisturbed possession.
  • Warranty as to non-existence of encumbrances.
  • Warranty as to dangerous nature of goods.
  • Warranty as to quality or fitness by usage of trade.

Warranty as to Undisturbed Possession [Sec. 14 (b)]:

  • An implied warranty is that the buyer shall have and enjoy the quiet possession of the goods.
  • If buyer is later on disturbed in his possession, he is entitled to sue the seller.

Warranty as to Non-Existence of Encumbrances [Sec. 14 (c)]:

  • An implied warranty is 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 of entering into contract.
  • If defects are known to the buyer at the time of entering into contract, he is not entitled to ask for any compensation from the seller for discharging f the encumbrance.

Warranty Implied by the Custom or Usage of Trade: [Sec. 16(3)]:
An implied warranty or condition as to quality of fitness for a particular purpose maybe annexed by the usage of trade.

Warranty as to Dangerous Nature of goods:
If goods are dangerous, and the buyer is not aware of such danger, it is implied warranty that the seller should warn the buyer about it else he will be liable for damages caused to the buyer.

Doctrine of “Caveat Emptor”:

  • It means ‘let the buyer beware’ i.e. buyer purchases the goods at his own risks.
  • When the seller display the goods in open market, it is for the buyers to make a proper selection of goods.
  • If the goods turn out to be defective, he cannot hold the seller liable.
  • As per Sec. 16,
  • “Subject to the provisions of this Act, or any other law for the time being in force, there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale.”

Relevant Case Law:
Ward V. Hobbs.

Facts:

  • Pigs were sold ‘subject to all faults’.
  • These pigs, being infected, caused typhoid to other healthy pigs of the buyer.

Decision: Seller was not bound to disclose that the pigs were unhealthy.

Exceptions to the Doctrine of Caveat Emptor:

  1. Where the buyer makes known to the seller the particular purpose for which goods are required, it is the duty of the seller to supply goods reasonably fit for the purpose.
  2. Where the goods are purchased under its patent name or brand name, there is no implied condition that the goods will be fit for the purpose.
  3. Where the goods are sold by description, there is an implied condition that the goods shall correspond with the description.
  4. Where the goods are bought by description from the seller who deals in those goods, there is an implied condition that the goods shall be of merchantable quality.
  5. Where the goods are bought by same this rule does not apply if the bulk does not correspond with the sample.
  6. Where the goods are bought by sample as well as description, this rule does not apply in case the goods does not corresponds with both.
  7. An implied warranty or condition as to the quality or fitness for a particular purpose may be annexed from trade and if seller deviates from that, this rule doesn’t applies.
  8. Where the seller has made a false representation relating to the goods and the buyer has relied upon it, this rule doesn’t applies.

Passing of Property: [Sec. (18-20)]:
It means passing/transferring of ownership.
If the property has passed to the buyer, the risk in the goods sold is that of buyer and not-of seller, though the goods may still be in the seller’s possession.

Significance of Transfer of Ownership:

  • Risks passes with the ownership.
  • Only owner have proprietary right over the goods. Owner can take action in case of goods being damaged by third party. When there is danger of good by the actions of third party.
  • Seller’s right for price.
  • If buyer/seller is declared insolvent it is necessary to know the party with whom the property in goods is there to know if it can be taken over by official assignee or not.
  • Ownership and possession are two different concepts.

Passing of Property in Specific Goods:
1. It happens as and when the parties intend to pass. The intention must be gathered from the terms of contract of parties and circumstances of the case.
Sale of Goods Act, 1930 – CS Foundation Business Law Notes IMG 4
(i) Where there is a contract for the sale of specific goods not in a deliverable state, i.e. the seller has to do something to the goods to put them in a deliverable state, the property does not pass until that thing is done by seller and buyer has notice of it. (Sec. 21)

(ii) When there is a sale of specific goods in a deliverable state, but seller is bound to weigh, measure, test or do something with reference to the goods for the purpose of ascertaining the price, the property to the goods for the purpose of ascertaining the price does not pass until such act or thing is done and the buyer has notice of it.'(Sec. 22)

Relevant Case Law:
Rugg V. Minett

3. Deliverable state refers to that state in which the buyer would be bound to take the delivery of goods.

4. Fact that the time of delivery or the time of the payment is postponed does not present property from passing at once. (Section 20)

5. If goods are delivered to the buyer “on approval” or “on sale of return” basis:

The property passes to the buyer when:

  • He signifies his approval or acceptance to the seller,
  • He does any other act adopting the transaction,
  • He does not signify his approval or acceptance to the sellen but retains goods beyond a reasonable time.

Rules Relating to Passing of Property in Case of Sale of Unascertained Goods:(Future Goods)

  • The property does not pass until the goods are ascertained.
  • The ascertainment of goods and their unconditional appropriation to the contract are the two pre -conditions for the transfer of property from seller to buyer.
  • Ascertainment of goods is the process by which the goods to be delivered under the contract are identified and set apart.

Sec. 23 : Following conditions must be satisfied –

  • Goods of description mentioned must be produced or obtained.
  • They must be in deliverable state.
  • They must be unconditionally appropriated.

Note: Unconditional Appropriation of Goods is when the seller delivers the goods to the buyer or to a carrier or other bailee for the purpose of transmission to the buyer.

  • The assent of parties may be given either before or after the appropriation.
  • In case of sale of quantity of goods out of a large quantity, property will pass on the appropriation of the specified quantity by one party with assent of the other.
  • The property in goods does not passes if the seller reserves the right of disposal of goods.

The above rule has following two exceptions:

  • If the goods are delivered to a railway administration for carriage by railway, the goods are deliverable to the order of the seller or his agent.
  • If the seller sends bill of exchange along with bill of lading to the buyer for his acceptance, the property in goods does not passes unless he accepts the bill.

Passing of Risks (Sec. 26)
1. The general rule is that “unless otherwise agreed the goods remain at the seller’s risk until the property therein is transferred to the buyer, but when the property therein is transferred to the buyer, the goods are at the buyer’s risk whether delivery has been made or not”.

2. Rule is known as Resperit Demino i.e. the loss falls on the owner.

3. But the parties may agree that risk will pass at the time different from the time when ownership is passed. example – the seller may agree to be responsible for the goods even after the ownership is passed to the buyer or vice versa.

4. Exceptions to the above general rule:

  • If there is agreement between the parties.
  • If the delivery of goods are delayed either due to buyer’s or seller’s default, goods are at risk of party in default.
  • Trade customs.

Relevant Case Laws:
Consolidated Coffee Ltd. V. Coffee Board
Multanmal Champalal V. Shah & Co.

Transfer of Title by Non – Owner
Sec. 27:
The general rule is where goods are sold by a person who is not the owner thereof and who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title to the goods than that the seller had.”

This rule is expressed in the Latin maxim “Nemo dat quod non habet” which means that no one can give what he has not got. i.e. no one can pass a better title than he himself has-

Example : A finds ring of B sell it to C, who purchase it in good faith. So true owner B can have it from C.
Even a bonafide buyer gets no valid title.

Exceptions to the above rule:

  • Effect of estoppel.
  • Sale by a mercantile agent.
  • Sale by joint owner.
  • Sale by person in possession under a voidable contract.
  • Sale by seller in possession after sale.
  • Sale by buyer in possession after sale.
  • Sale by an unpaid seller.
  • Sale by person under other laws.

Sec. 27: Effect of Estoppel – Where the owner is estopped by the conduct from denying the seller’s authority to sell, the transferee will get a good title as against the true owner.

Sec. 27: Sale by a Mercantile Agent – Buyer will get a good title in following cases:

  • If he was in possession of goods or documents with the owner’s consent.
  • If the sale was made by him when acting in the ordinary course of business.
  • If buyer had acted in good faith.
  • At the time of contract, buyer had no notice of the fact that seller has no authority to sell,

Sec. 28: Sale by a Joint Owner (Co-owner) –

  • If one of the several joint owners,
  • Who is in the sole possession of the goods by the permission of other co-owners,
  • Sell the goods,
  • Buyer gets a good title to the goods,
  • If done in good faith.

Sec. 29: Sale by a Person in Possession Under a Voidable Contract –
A buyer acquires a good title if goods are sold to him by seller having possession under a voidable contract, provided it has not been rescinded until the time of sale.

Sec. 30: Sale by seller in possession after sale –

  • If the seller continues to be in possession of goods or document of title,
  • he pay sell it to a third person,
  • If such person obtains the delivery in good faith and without notice of previous sale,
  • He would have good title to them.

Sec. 30: Sale by Buyer in Possession after Sale –

  • Where the buyer with the seller’s consent,
  • Obtains possession of goods before property in them has passed to him,
  • he may sell it to the third party,
  • third party obtains goods in good faith, and without notice of the lien,
  • he would get a good title to them.

Sec. 54(3): Sale by an Unpaid Seller –

  • When an unpaid seller,
  • Who has exercised his right of lien or stoppage in transit,
  • Resells the goods,
  • Buyer acquires a good title as against the original buyer.

Sale by person under other laws:
1. A finder of goods has the power to sell the goods under certain circumstances also called “Quasi Contract”.

2. Sale of goods pledged by pawnee conveys goods title to buyer if:

  • Pawner or pledger makes default
  • Pawnee has given reasonable notice to pawnor.

3. Sale by official receiver, official assignee, receiver or liquidator coveys goods title to buyer.

Delivery: (Section 33-39)

  • It means voluntary transfer of possession from one person to another.
  • It is the duty of seller to deliver the goods.
  • Buyer’s duty is to accept the goods and pay for them in accordance with the contract.
    Sale of Goods Act, 1930 – CS Foundation Business Law Notes IMG 5

Rules Regarding Delivery:
1. It should have the effect of putting the buyer in possession.

2. Effect of Part Delivery: Part Delivery of goods, taking place in the course of whole delivery, has the same effect for the purpose of passing the property in such goods as whole delivery.

3. Buyer to Apply for Delivery: Seller is not bound to deliver the goods until the buyer has applied for it, unless otherwise agreed.

4. Place for Delivery: If there is no contract to the contrary –
(a) Goods must be delivered at place where they are at the time of sale.

(b) Goods agreed to be sold are required to be delivered at the spot at which they were lying at the time of entering into agreement to sell.

(c) If at the time of agreement to sell, goods are not in existence, goods are to be delivered at a place while they would be manufactured or produced.

5. Time of Delivery: When the time of delivery of goods has not been fixed by the parties, the seller must send them within a reasonable time.

6. Goods in Possession of a Third Party: When at the time of sale, the goods are in the possession of third person, the effective delivery takes place when such person acknowledges to the buyer that he has held the goods on buyer’s behalf.

7. Time for.Tender of Delivery: Demand or tender of delivery may be treated as ineffective unless made at a reasonable hour.

8. Expenses for Delivery: Expenses of putting the goods in deliverable state must be borne by seller and expenses of receiving the goods are borne by buyer.

9. Seller must deliver the goods according to contract.

10. If goods are to be delivered at a place other than they are, the risk of deterioration in transit will be borne by buyer.

Delivery of Wrong Quantity:

  • Short Delivery: Buyer may either accept the goods and pay for it at a contract rate or reject it.
  • Excess Delivery: Buyer may accept or reject the delivery. If he accepts the whole of it, he shall pay for them at the contract rate.
  • Mixed Delivery: Buyer may accept the relevant goods and reject the rest or reject the whole.

11. Installment Deliveries: Unless otherwise agreed, buyer is not bound to accept delivery in installments.

12. Suits for Breach of Contract: Where the property in the goods has passed to the buyer, the seller may sue him for the price.

  • Where the price is payable on certain day regardless of delivery. The seller may sue him for price.
  • Where the seller wrongfully neglects or refuses to deliver the goods to the buyer, the buyer, may sue him for damages for non-delivery.

Acceptance of Delivery:
Acceptance is “deemed” to take place when the buyer –

  1. Intimates to the seller that he had accepted the goods.
  2. Does any act to the goods, which is inconsistent with the ownership of seller.
  3. Retains the goods after the lapse of reasonable time, without intimating to seller that he has rejected them.

Breach and Repudiation Anticipatory Breach:
Where either party to a contract of sale repudiates the contract before the date of delivery, the other party may either treat the contract as still subsisting and wait till the date of delivery, or he may treat the contract as rescinded and sue for damages for the breach.

The party who had originally repudiated will not be deprived of:

  • his right of performance on the due date (in spite of his prior repudiation); or
  • his right to set up any defense for non-performance which might have actually arisen after the date of the prior repudiation.

Measure for damages:
The act does not specifically provide for rules as regards the measure of damages except by stating that nothing in the Act shall affect the right of the seller or the buyer to recover interest or special damages in any case were by law, they are entitled to the same [Section 73 of Indian Contract Act will apply].

  • The contract is for delivery of goods in stated installments, which are to be separately paid for.
  • Breach of contract may be committed by either buyer or seller.
  • It depends upon terms of contract and circumstances of each case, whether:
    (i) Breach is a repudiation of the whole contract, or
    (ii) A severable breach only giving rise to a claim for damages.

Unpaid Seller:
As per Sec. 45,
Seller is deemed to be an unpaid seller, when:
(i) Whole of the price has not been paid or tendered and seller had an immediate right of action for the price.

(ii) A bill of exchange or other negotiable instrument was given as payment, but the same has been dishonoured, unless this payment was an absolute and not a conditional payment.

Rights of Unpaid Seller Against Goods:

  • Right of lien or retention.
  • Right of stoppage in transit.
  • Right of resale.
  • Right to withhold delivery.

Right of Lien or Retention (Sec. 47 – 49 & 54)
Sec. 47:
1. It can be exercised on the goods for the price while he is in possession until the payment of price of such goods. It can be exercised in following cases:

  • Where goods have been sold without any stipulation as to credit.
  • Where goods have been sold on credit but the term of credit has expired.
  • Where buyer becomes insolvent.

2. This right depends upon physical possession,

3. It can only be exercised for the non-payment of price.

Sec. 49:
This right is terminated under following circumstances:

  • Where he delivers goods to carrier or bailee for the purpose of transmission to buyer without reserving the disposal right.
  • Where buyer or his agent lawfully obtains possession of goods.
  • Where seller has waived the right of lien.
  • By estoppel.

Right of Stoppage in Transit (Sec. 50 – 52)
1. Sec. 50:

2. It means right to stop the further transit of goods, to resume possession and to hold the same till the price is paid.

3. It can be exercised in following cases:

  • Seller must be unpaid.
  • He must have parted with the possession of goods.
  • Goods are in transit.
  • Buyer has become insolvent.
  • Right is subject to provisions of the Act.

4. Insolvent here means that a person has ceased to pay his debts in the ordinary course of business or cannot pay his debts as they become due.

Sec. 51:
Goods are deemed to be in transit from the time they are delivered to carrier or other bailee for transmission, until buyer or his agent takes delivery of them.

Sec. 51:
This right is lost under following cases:

  • Buyer taking delivery
  • Acknowledgment by carrier
  • Delivery to ship
  • Wrong denial to deliver by carrier
  • Sub sale
  • Goods in possession of ship’s master acting as buyer’s agent.

If buyer rejects he goods and carrier or bailee continues to be in its possession, the transit does not ends, even if seller refuses to receive them back.

Sec. 52(1): It may be exercised by:

  • Taking actual possession of goods, or
  • Giving notice of his claim to carrier/bailee who hold the goods.

Sec. 53: It is not effected by any sale or other disposition of goods made by buyer, unless the seller has assented to it.

Right of Resale (Sec. 54)
1. It can be exercised in following cases:

  • Where the goods are of perishable nature, buyer need not be informed of the intention of resale.
  • Where he gives notice to the buyer of his intention to resell the goods, the buyer does not within a reasonable time pay or tender the price.
  • Where the right is expressly reserved in the contract.

2. If no notice has been given to the buyer of intention to re-sell, unpaid seller cannot claim any damages and buyer will be entitled for all profits.

3. Unpaid seller can recover from buyer the balance amount (if any) on re¬sale.

4. If notice has been given to buyer, then profits origin out of sale of goods won’t be shared with buyer. Only seller will hold the samples.

Rights to Withhold Delivery:

  • It is exercised if the property in goods has not passed to the buyer.
  • It is in additions to above 3 rights.
  • However if the property has not been passed the unpaid seller has a right of with holding delivery similar to and co-extensive with his rights of lien and stoppage in transit.

Rights of Unpaid Seller Against Buyer:

  • Suit for price.
  • Suit for damages for non-acceptance.

Suit for Price (Sec. 55):
Seller may sue –

  • Where the property has passed to the buyer and he wrongfully neglects or refuses to pay for goods.
  • Where the property has not passed and price is payable on a certain day irrespective of delivery and buyer wrongfully neglects or refuses to pay such price.

Suit for Damages for Non-Acceptance (Sec. 56):
The seller may sue the buyer for non-acceptance, where he wrongfully neglects or refuses to accept and pay for the goods.

Auction Sales (Sec. 64):

  • It is a mode of selling property by inviting bids publically and the property is sold to the highest bidder.
  • It is a public sale where goods are offered to be taken by bidders.
  • Auctioneer is only an agent of seller.

Following rules apply –

  1. When goods are put up for sale in lots, each lot is treated to be the subject of a separate contract of sale.
    Sale is complete when the auctioneer announces its completion by fall of hammer or in another customary manner.
  2. Right to bid may be reserved expressly by or on behalf of seller.
  3. If such right is not reserved, it is not lawful for the auctioneer knowingly to take any bid from seller.
  4. Sale may be notified to be subject to a reserve or upset price.
  5. If seller makes use of pretended bidding to raise the price, sale is voidable at the buyer’s option.

Trading Contracts Involving Rail or Sea Transit:

  • These contracts are made when goods are to be shipped by sea.
  • Under this various conditions are attached to the contract by parties, or by custom and practice of merchants.

It includes:

  1. Free On Board (F. O. B.)
  2. Free On Rail (F. O. R.)
  3. Cost Insurance & Freight (C. I. F. or C. F. I.)
  4. Ex-Ship.

Free On Board (F. O. B.):

  • Under this contract, it is the seller’s duty to put the goods on board at his own expense.
  • As soon as they are put on board, the ownership along with the risk, passes to the buyer.
  • Seller must notify the buyer immediately when the goods are put on board.
  • If seller fails to do so, goods will be at seller’s risks. Buyer must get them insured on receipt of notification.

Free on Rail (F. O. R.):
Similar to F. O. B.

Cost Insurance and Freight (C. F. I. or C. I. F.):

  • It refers to a contract of insured goods.
  • Seller bears both the expenses of putting the goods on board as well as the freight and insurance charges.
  • Proper documents have to be transferred.
  • On receiving the documents, buyer has to first pay and then, take delivery.
  • Buyer can reject the goods, if they are not according to the contract.

Ex-Ship:

  • Seller is required to arrange for shipment of goods till such inland destination as the buyer indicates.
    Goods travel at seller’s risks.
  • Seller is not bound to insure them.
  • Buyer is not bound to pay for them unless they are ready for unloading from the ship and all freight charges are paid.

Multiple Choice Questions

Question 1.
The objective of the Sale of Goods Act, 1930 is to define and amend the law relating to ________.
(a) Sale of Immovable Properties
(b) Sale of Goods
(c) Agreements to Sell
(d) All of the above.
Answer:
(b) Sale of Goods

Question 2.
The Sale of Goods Act, 1930 extends to the whole of India, except the state of ________.
(a) Maharashtra
(b) Jammu and Kashmir
(c) Tamilnadu
(d) Uttar Pradesh.
Answer:
(b) Jammu and Kashmir

Question 3.
The Sale of Goods Act, 1930 came into force in ________.
(a) 1st day of July, 1930
(b) 1st day of September, 1930
(c) 1st day of January, 1930
(d) 31st day of December, 1930.
Answer:
(a) 1st day of July, 1930

Question 4.
The unrevealed provisions of the Act shall continue to apply to contracts for the sale of goods, save insofar as they are inconsistent with the express provisions of the Sale of Goods Act.
(a) Transfer of Property Act
(b) Indian Evidence Act
(c) Indian Contract Act
(d) Partnership Act.
Answer:
(c) Indian Contract Act

Question 5.
The term “Goods” is defined in section of the Sale of Goods Act, 1930.
(a) 2(5)
(b) 2(6)
(c) 2(7)
(d) 2(8).
Answer:
(c) 2(7)

Question 6.
Which of the following are not included in the term “Goods” under the Sale of Goods Act ________.
(a) Stock and Shares
(b) Actionable Claims
(c) Growing Crops, Gross etc.
(d) Personal Use of Property.
Answer:
(b) Actionable Claims

Question 7.
Transfer of Actionable claim(s) is governed by the provisions of the Sale of Goods Act ___________.
(a) True
(b) Partly True
(c) False
(d) None of the above.
Answer:
(c) False

Question 8.
“Jubilee Coins” are goods within the meaning of Section 7 of the Sale of Goods Act ___________.
(a) True
(b) Partly True
(c) False
(d) None of the above.
Answer:
(a) True

Question 9.
Under the Sale of Goods Act, “Goods” means goods which are not in existence at the time of making the contract of Sale.
(a) Ascertained Goods
(b) Future Goods
(c) Specific Goods
(d) Perishable Goods
Answer:
(b) Future Goods

Question 10.
To constitute a valid sale, there must be atleast ___________.
(a) One Party
(b) Two Parties
(c) Three Parties
(d) Four Parties.
Answer:
(b) Two Parties

Question 11.
When goods are given by the buyer as consideration for the goods received from the seller it is called ________.
(a) Sale
(b) Agreement to sell
(c) Barter
(d) Bailment.
Answer:
(c) Barter

Question 12.
In an Agreement to sell, the property in goods is transferred in ___________.
(a) Past
(b) Present
(c) Future
(d) There is no transfer to property at all.
Answer:
(c) Future

Question 13.
“Contract of Sale” under section 4 of the Sale of Goods Act, 1930 comprises of ___________.
(a) Both executory and executed contracts of sale
(b) Executory contract of sale
(c) Executed contract of sale
(d) Concluded contract of sale.
Answer:
(a) Both executory and executed contracts of sale

Question 14.
In an agreement to sell, where goods lie with the Seller, the risk of loss of goods remains with ___________.
(a) Either Buyer or Seller
(b) Buyer only
(c) Seller only
(d) Buyer and Seller to the extent of their shares.
Answer:
(c) Seller only

Question 15.
Where goods are not specific and ascertainable at the time of the making of the contract, it shall ___________.
(a) become void
(b) become voidable at the option of the buyer
(c) operate as an agreement to sell
(d) become a valid contract of sale.
Answer:
(a) become void

Question 16.
Section 8 of the Sale of Goods Act, dealing with goods perishing before sale, in its application is ___________.
(a) Confined to contact of sale
(b) Confined to agreement to sell
(c) Either (a) or (b)
(d) Neither (a) nor (b).
Answer:
(a) Confined to contact of sale

Question 17.
Under Sec. 8 of the sale of Goods Act, 1930 a contract of sale of goods can be avoided where the goods have perished / damaged ___________.
(a) Due to the fault neither of the Buyer nor the Seller
(b) Due to the fault of the Buyer
(c) Due to the fault of the Seller
(d) Due to the fault of either the Buyer or the Seiler.
Answer:
(c) Due to the fault of the Seller

Question 18.
In a contract of sale, the price may be ___________.
(a) Fixed by the contract
(b) Agreed to be fixed in a manner thereby agreed
(c) Determined by course of dealings between the parties
(d) All of the above.
Answer:
(d) All of the above.

Question 19.
The prima facie evidence of a “Reasonable Price” u/s 9 of the Sale of Goods Act, is ………………..
(a) Market Price
(b) Current price
(c) Price as determined by the court
(d) Reuse Price.
Answer:
(a) Market Price

Question 20.
Under Section 11 of the Sale of Goods Act, 1930 the time of payment can be of the essence of the contract ___________.
(a) by agreement between the parties
(b) by operation of law
(c) both (a) and (b)
(d) either (a) or (b).
Answer:
(a) by agreement between the parties

Question 21.
Condition or warranty in a contract of sale, constitutes stipulation with reference to ___________.
(a) Time
(b) Price
(c) Goods
(d) Delivery.
Answer:
(c) Goods

Question 22.
A “Warranty” under the Sale of Goods Act, has been defined as a stipulation ___________.
(a) Collateral to the main purpose of the contract
(b) With regard to time
(c) Essential to the main purpose of the contract
(d) All of the above.
Answer:
(a) Collateral to the main purpose of the contract

Question 23.
The breach of a “Condition” in a contract of sale of goods give the right to ___________.
(a) Repudiate the contract
(b) Claim for damages only
(c) Either (a) or (b)
(d) Both (a) and (b).
Answer:
(d) Both (a) and (b).

Question 24.
In cases where there is a breach of condition by the seller, the buyer ___________.
(a) May retain the goods though he has the right to reject them
(b) Has no right to retain the goods but only to reject the goods
(c) Has no right to reject the goods
(d) Has no remedy at all.
Answer:
(a) May retain the goods though he has the right to reject them

Question 25.
The Buyer shall have and enjoy quiet possession of the goods. This is an : u/s 14 of the Act.
(a) Implied Warranty as to Title
(b) Implied Condition as to Title
(c) Implied Warranty as to Possession
(d) Implied Condition as to Possession.
Answer:
(c) Implied Warranty as to Possession

Question 26.
In case of sale by description, there is an implied ………………. that the goods shall correspond to description.
(a) Warranty
(b) Condition
(c) Stipulation
(d) Description
Answer:
(b) Condition

Question 27.
In a sale of goods by description, it is sufficient that the goods are ___________.
(a) Fit for the purpose for which they were wanted though not in accordance to description.
(b) Merchantable though not in accordance to description
(c) Wholesome, even if they do not correspond to description
(d) The same as that of their description
Answer:
(d) The same as that of their description

Question 28.
Implied condition as to quality or fitness does not apply if ___________.
(a) Buyer discloses to the seller, the exact purpose for which goods are required.
(b) Buyer indicates to the seller that he relies on the seller’s skill or judgement
(c) Seller’s business is to sell goods of such description
(d) Buyer reserves the right to examine the goods and check its quality
Answer:
(d) Buyer reserves the right to examine the goods and check its quality

Question 29.
Implied condition as to merchantable quality applies to sale of goods ___________.
(a) Under a patent or other trade name
(b) By description only
(c) Either (a) or (b)
(d) Both (a) and (b)
Answer:
(a) Under a patent or other trade name

Question 30.
The principle of “Caveat Emptor” as found in Sec 16 of the Sale of Goods Act, means that the ___________.
(a) Let the Buyer be aware
(b) Buyer must take a chance
(c) Seller must take care
(d) Seller must take a chance
Answer:
(a) Let the Buyer be aware

Question 31.
In case of goods, property passes to the buyer, only when the goods are ascertained.
(a) Future
(b) Specific
(c) Contingent
(d) Unascertained
Answer:
(d) Unascertained

Question 32.
The process of identifying the goods and setting apart as per the intended quality or description is called ___________.
(a) Identification
(b) Procurement
(c) Ascertainment
(d) Allocation
Answer:
(c) Ascertainment

Question 33.
In a sale of specific or ascertained goods the property there in is transferred to the buyer ___________.
(a) Upon delivery of goods
(b) Upon payment of price
(c) At such time as the parties intend it to be transferred
(d) At such time as decided by the court
Answer:
(c) At such time as the parties intend it to be transferred

Question 34.
For passing of property in respect of specific or ascertained goods, the interaction of the parties can be ascertained from ___________.
(a) Terms of the contract
(b) Conduct of the parties
(c) Circumstances of the case
(d) All of the above
Answer:
(d) All of the above

Question 35.
For passing of property in goods, the goods should be in a ___________.
(a) Deliverable state
(b) Non-deliverable state
(c) Consumable state
(d) Ready state
Answer:
(a) Deliverable state

Question 36.
Where the goods are to be delivered in future and the seller becomes insolvent before any appropriation is made, the property in goods passes to the buyer and the buyer acquires interest in the goods.
(a) True
(b) Partly true
(c) False
(d) None of the above
Answer:
(c) False

Question 37.
Delivery of goods to the carrier for the purpose of transmission to the buyer automatically means that the property in goods vest in the buyer,
(a) True
(b) Partly True
(c) False
(d) None of the above
Answer:
(a) True

Question 38.
In cases of goods sent on approval basis, the goods are at the if they perish in an inevitable accident.
(a) Buyer’s Risk
(b) Seller’s Risk
(c) Combined Risk of Buyer and Seller
(d) Carrier’s Risk
Answer:
(b) Seller’s Risk

Question 39.
Risk prime facie passes with-
(a) Property or ownership
(b) Completed agreement
(c) Verification and delivery
(d) Payment of price
Answer:
(a) Property or ownership

Question 40.
The Latin Maxim “Nemo Dat Quod non Habet” means ___________.
(a) No man can pass a better title than he has
(b) Let the Buyer beware
(c) No consideration – No contract
(d) Ignorance of law is no excuse
Answer:
(a) No man can pass a better title than he has

Question 41.
A finder of goods has the power to sell the goods to give good title to the buyer, if the owner of goods cannot be found with-
(a) Ordinary diligence
(b) Reasonable diligence
(c) Due diligence
(d) Lack of diligence
Answer:
(b) Reasonable diligence

Question 42.
In case of a company under liquidation, and sale is made by the Receiver or Liquidator of the company ___________.
(a) Company retains title in goods
(b) Buyer gets a good title to goods
(c) Receiver/ Liquidator gets a goods title to goods
(d) There is no sale at all
Answer:
(b) Buyer gets a good title to goods

Question 43.
When the seller causes a change in the possession of goods without any change in their actual and visible custody, it is a case of ___________.
(a) Actual Delivery
(b) Constructive Delivery
(c) Symbolical Delivery
(d) Forward Delivery
Answer:
(b) Constructive Delivery

Question 44.
Where the seller is bound to send the goods to the buyer as per the agreement, and there is no specific time limit goods shall be delivered within ___________.
(a) A suitable time
(b) A minimum time
(c) Adequate time
(d) A reasonable time
Answer:
(d) A reasonable time

Question 45.
In case of excess delivery, i.e. more than the contracted quantity, the Buyer can ___________.
(a) Reject in full
(b) Accept the contract quantity and reject the excess
(c) Accept the whole
(d) Either (a) or (b) or (c)
Answer:
(d) Either (a) or (b) or (c)

Question 46.
Where the seller fails to give notice to the buyer u/s 39(3), the risk during sea-transit lies with the ___________.
(a) Buyer
(b) Seller
(c) Carries
(d) Insurer
Answer:
(b) Seller

Question 47.
Unless otherwise agreed, where goods are delivered to buyer and he refuses to accept them (having the right to do so), the buyer is not bound to return them to the seller.
(a) True
(b) Partly True
(c) False
(d) None of the above
Answer:
(a) True

Question 48.
Even if a substantial portion of the price is paid and only a small balance is pending, the seller is still regarded as an unpaid seller.
(a) True
(b) Partly True
(c) False
(d) None of the above
Answer:
(a) True

Question 49.
The right of lien is available to the unpaid seller only when ___________.
(a) he is not in possession of the goods
(b) he is in possession of the goods
(c) he has delivered the goods to the carrier/transport
(d) he has delivered the goods to the buyer
Answer:
(b) he is in possession of the goods

Question 50.
Once possession is lost, right of lien of the unpaid seller is also lost. This statement is ___________.
(a) True
(b) Partly True
(c) False
(d) None of the above
Answer:
(a) True

Question 51.
Right of stoppage in transit can be exercised by the unpaid seller, where the buyer ___________.
(a) Is solvent
(b) Becomes insolvent
(c) Either (a) or (b)
(d) Neither (a) nor (b)
Answer:
(b) Becomes insolvent

Question 52.
Goods – in – transit can be stopped for ___________.
(a) Price
(b) Any other expenses, e.g. Godown charges, Interest, etc.
(c) Both (a) and (b)
(d) Either (a) or (b)
Answer:
(a) Price

Question 53.
If no notice is given to the original buyer of the intention to re-sell, the unpaid seller ___________.
(a) Cannot claim any damages
(b) Has to pay to the original buyer, the profits, if any, on re-sale
(c) Either (a) or (b)
(d) Both (a) and (b)
Answer:
(a) Cannot claim any damages

Question 54.
Generally, where the buyer has paid the price and seller refuses to deliver the goods, buyer can sue the seller for ___________.
(a) Specific performance of the contract
(b) Delayed delivery of goods
(c) Refund of price already paid
(d) Non – acceptance of goods
Answer:
(c) Refund of price already paid

Question 55.
In the case of ……………… the sale may be notified to be subject to a reserve or upset price.
(a) Sale by description
(b) Sale by auction
(c) Sale by sample
(d) Sale by estoppel
Answer:
(b) Sale by auction

Question 56.
The main object of a contract of sale is-
(a) Transfer of possession at goods
(b) Transfer of property in goods from seller to buyer
(c) Delivery of goods
(d) Payment of price Answer:
Answer:
(b) Transfer of property in goods from seller to buyer

Question 57.
Following is not the right of an unpaid seller against the goods:
(a) Lien
(b) Right of resale
(c) Right of stoppage
(d) Claim damages
Answer:
(d) Claim damages

Question 58.
Sales of Goods Act is a to contract act.
(a) Competent
(b) Substitute
(c) Complimentary
(d) All of these
Answer:
(c) Complimentary

Question 59.
Which of the following is/are an essential elements of a valid contract that must be present in a Contract of Sale.
(a) Bilateral Contract
(b) Transfer of Property
(c) Money Consideration
(d) All of the above
Answer:
(d) All of the above

Question 60.
An agreement to sale is a/an contract while a sale is a/an ………………… contract
(a) Valid; legal
(b) Executory; valid
(c) Executory; executed
(d) None of the above
Answer:
(c) Executory; executed

Question 61.
Delivery is the ………………. transfer of possession from one person to another
(a) Property
(b) Voluntary
(c) Goods
(d) Involuntary
Answer:
(b) Voluntary

Question 62.
If the Goods are to be delivered at a place other than where they are, the risk of deterioration in transit will unless otherwise agreed be borne by the ……………….
(a) Buyer
(b) Seller
(c) Transporter
(d) (a) & (b) both
Answer:
(a) Buyer

Question 63.
In the right of lien, the possession is retained by …………………
(a) Paid seller
(b) Unpaid buyer
(c) Unpaid seller
(d) None of the above
Answer:
(c) Unpaid seller

Question 64.
Unenforceable agreements and illegal agreements means one and the same thing.
(a) True
(b) False
(c) Partly True
(d) None of the above
Answer:
(b) False

Question 65.
The relation between a doctor and a patient is fiduciary in nature.
(a) True
(b) False
(c) Partly True
(d) Partly False
Answer:
(a) True

Question 66.
In sale by auction, goods are offered to be taken by ___________.
(a) Buyer
(b) Bidders
(c) Public
(d) Sellers
Answer:
(b) Bidders

Question 67.
Acceptance of the goods by the buyer takes place when the buyer ___________.
(a) Intimates to the seller that he has accepted the goods.
(b) Retains the goods
(c) Does any act on the goods which is inconsistent
(d) All of the above
Answer:
(d) All of the above

Question 68.
A document signed by a carrier and issued to consignor that provides evidence for the receipt of goods for shipment to a specified designation and purpose is known as _____________.
(a) Transporter’s receipt
(b) Bill of loading
(c) Carrier document
(d) None of the above
Answer:
(b) Bill of loading

Question 69.
…………….. takes place when the person takes possession of the goods on behalf of and at the disposal of the buyer.
(a) Physical delivery
(b) Simple delivery
(c) Encumbrance delivery
(d) Constructive delivery
Answer:
(d) Constructive delivery

Question 70.
………….. precludes a person from ascertaining something contrary to what is implied by his or her previous actions or statement or by a previous judicial determination concerning that person.
(a) Voluntary
(b) Estoppel
(c) Both (a) & (b)
(d) None of the above
Answer:
(b) Estoppel

Question 71.
If the stipulation forms the very basis of the contract or is essential to the main purpose of contract, it is ___________.
(a) Guarantee
(b) Warrantee
(c) Encumbrance
(d) Condition
Answer:
(d) Condition

Question 72.
Goods which are either owned or possessed by the seller at the time of contract—
(a) Specific Goods
(b) Contingent Goods
(c) Generic Goods
(d) Existing Goods
Answer:
(d) Existing Goods

Question 73.
Goods to be manufactured or acquired by the seller after making the contract of sale ___________.
(a) Contingent Goods
(b) Future Goods
(c) Existing Goods
(d) None of the above
Answer:
(b) Future Goods

Question 74.
Which of the following is not an implied condition in a contract of sale ___________.
(a) Condition as to title
(b) Condition as to description
(c) Condition as to freedom from encumbrance
(d) Condition as to sample
Answer:
(c) Condition as to freedom from encumbrance

Question 75.
The condition and warranties may be in the form of ___________.
(a) Express
(b) Implied
(c) Either (a) or (b)
(d) None of the above
Answer:
(c) Either (a) or (b)

Question 76.
An unpaid seller is having rights against ___________.
(a) Goods only
(b) The buyer only
(c) Both Goods & buyer
(d) None of the above
Answer:
(c) Both Goods & buyer

Question 77.
The doctrine of Caveat Emptor does not apply when ___________.
(a) The goods are bought by sample
(b) The goods are bought by sample as well as description
(c) The goods are purchased under its brand name
(d) All of the above
Answer:
(d) All of the above

Question 78.
The essence of a right of lien is to ___________.
(a) Deliver the goods
(b) Retain the goods
(c) Regain the possession
(d) None of the above
Answer:
(b) Retain the goods

Question 79.
Seller has right of resale where ___________.
(a) Goods are perishable
(b) Seller has reserved such right
(c) Seller gives notice
(d) All of these
Answer:
(d) All of these

Question 80.
The Goods are at risk of a party who has the ___________.
(a) Ownership of goods
(b) Possession of goods
(c) Custody of goods
(d) Both (b) and (c)
Answer:
(a) Ownership of goods

Question 81.
The position of the hirer is that of a ___________.
(a) Bailor
(b) Bailee
(c) Seller
(d) Buyer
Answer:
(b) Bailee

Question 82.
Under this contract, it is the seller’s duty to put the goods on board at his own expenses ___________.
(a) Free on board
(b) Sales of Goods Act, 1930
(c) Contract Act 1872
(d) Free on ship
Answer:
(a) Free on board

Question 83.
A finder of goods has the power to sell the goods to give good title to the buyer, if the owner of the goods cannot be found with ___________.
(a) Ordinary diligence
(b) Reasonable diligence
(c) Due diligence
(d) Lack of diligence
Answer:
(b) Reasonable diligence

Question 84.
The main object of contract of sale is ___________.
(a) Payment of price
(b) Delivery of goods
(c) Transfer of possession of goods
(d) Transfer of property
Answer:
(c) Transfer of possession of goods

Question 85.
A breach of warranty can be treated as a breach of condition.
(a) True
(b) False
(c) Partly True
(d) Either True or False
Answer:
(b) False

Question 86.
Goods perishing after agreement to sell ___________.
(a) Agreement becomes invoidable
(b) Agreement becomes void
(c) Agreement becomes contract
(d) None of the above
Answer:
(b) Agreement becomes void

Question 87.
In sale, consideration is the price in terms of ___________.
(a) Money
(b) Non-gratuitous
(c) Gratuitous
(d) None of the above
Answer:
(a) Money

Question 88.
When goods are exchanged for goods, it is a ___________.
(a) Sale
(b) Agreement to sale
(c) Barter
(d) Bailment
Answer:
(c) Barter

Question 89.
An agreement to sell is ___________.
(a) Executory contract
(b) Executed contract
(c) Both (a) and (b)
(d) None of the above
Answer:
(a) Executory contract

Question 90.
When the contract of sale is executed, the loss of goods destroyed by fire is to be borne by ___________.
(a) The buyer only when he has the goods in his custody
(b) Seller
(c) Both by the buyer and the seller
(d) The buyer even if he does not have the custody of the goods
Answer:
(d) The buyer even if he does not have the custody of the goods

Question 91.
Which one of the following statement is not true in context to a hire purchase agreement?
(a) The hirer is merely a bailee until the final payment
(b) There is an agreement to buy the goods at the end of the period
(c) The owner can take back the goods if the buyer becomes insolvent
(d) The ownership remains vested with the bailer
Answer:
(b) There is an agreement to buy the goods at the end of the period

Question 92.
Where a contract states that the price is to be fixed by a third party and such party fails to do so, then ___________.
(a) The contract becomes void
(b) The price is determined by both the parties
(c) The contract is voidable at the option of the parties
(d) None of the above
Answer:
(a) The contract becomes void

Question 93.
Mr. A purchased a certain pigs from Mr. B without any warranty. After sometime the pigs died due to fever, then ___________.
(a) Mr. A can claim back his money from Mr. B
(b) Mr. A can ask Mr. B to supply new pigs
(c) Mr. A can sue Mr. B on account of fraud
(d) Mr. B is not liable to Mr. A as per the principle of Caveat Emptor
Answer:
(d) Mr. B is not liable to Mr. A as per the principle of Caveat Emptor

Question 94.
Mr. A finds a ring which belongs to Mr. C and sells it to Mr. B. Later on Mr. C demands the ring from B, then ___________.
(a) B is not liable to return the ring
(b) C can only sue Mr. A for damages and cannot demand the ring from Mr. B
(c) Mr. B shall return the ring to Mr. C even though he is a bona-fide purchaser
(d) None of the above
Answer:
(c) Mr. B shall return the ring to Mr. C even though he is a bona-fide purchaser

Question 95.
Where the seller after selling the goods holds the goods as a bailee, then it is called as ___________.
(a) Symbolic delivery
(b) Bailed delivery
(c) Nominal delivery
(c) Constructive delivery
Answer:
(c) Nominal delivery

Question 96.
Where the seller gives the buyer the bills of lading then, it is called as ___________.
(a) Symbolic delivery
(b) Constructive delivery
(c) Actual delivery
(d) None of the above
Answer:
(a) Symbolic delivery

Question 97.
Which of the following rights is not a right of an unpaid seller?
(a) Right of retention
(b) Right of stoppage
(c) Right of resale
(d) Right to sell the property of the buyer
Answer:
(d) Right to sell the property of the buyer

Question 98.
The term C.I.F. stands for ___________.
(a) Cartage Inwards and Freight
(b) Corporate Identity Form
(c) Cartage Insurance and Freight
(d) Cost Insurance and Freight
Answer:
(d) Cost Insurance and Freight

Question 99.
The contract in which the seller is bound to arrange the shipment of goods is called as ___________.
(a) Ex-ship contract
(b) Cum-ship contract
(c) Pre-shipment contract
(d) Post shipment contract
Answer:
(a) Ex-ship contract

Question 100.
In an auction sale, if the seller makes use of pretended bidding to raise the price, then the ___________.
(a) Sale is voidable at the option of the seller
(b) Sale is void
(c) Sale is voidable at the option of the buyer
(d) The buyer is not required to pay the excess amount charged by the seller
Answer:
(c) Sale is voidable at the option of the buyer

Question 101.
Which of the following is an implied condition under a sale by description?
(a) Goods must correspond with the description
(b) Goods must be of merchantable quality
(c) Condition as to wholesomeness
(d) All of the above
Answer:
(d) All of the above

Question 102.
Which of the following is an implied condition under a sale by sample?
(a) The bulk shall correspond with the sample
(b) Implied condition of merchantability
(c) Both (a) and (b)
(d) Neither (a) nor (b)
Answer:
(c) Both (a) and (b)

Question 103.
Subject to the contract to the contrary, which of the following is NOT an implied warranty as per the Sale of Goods Act, 1930?
(a) Warranty as to resale of the goods
(b) Warranty implied by the custom as usage of trade
(c) Warranty to disclose dangerous nature of goods
(d) Warranty as to freedom from encumbrances
Answer:
(a) Warranty as to resale of the goods

Question 104.
As per Sec. 45 of the Sale of Goods Act, 1930 an unpaid seller is a person, who ___________.
(a) Who has not been paid the whole price
(b) A person who received a bill of exchange which was dishonoured
(c) Both (a) and (b)
(d) Neither (a) nor (b)
Answer:
(c) Both (a) and (b)

Question 105.
The right of an unpaid seller to keep the possession of the goods and refuse to deliver the goods to the buyer is called ___________.
(a) Right of refusal
(b) Right to resale
(c) Right of lien
(d) None of the above
Answer:
(c) Right of lien

Question 106.
The right of lien will not be lost in which of the following cases ___________.
(a) By waiver of lien by the unpaid seller
(b) When the goods are delivered to the carrier and the seller reserves the right of disposal of goods
(c) When the buyer lav/fully obtains the possession of the goods
(d) None of the above
Answer:
(b) When the goods are delivered to the carrier and the seller reserves the right of disposal of goods

Question 107.
In which of the following case, the transit will not come to an end?
(a) When the buyer obtains the delivery before they arrive at the destination
(b) Where the carrier acknowledges that he holds the goods on the behalf of buyer
(c) When the carrier wrongfully refuses to deliver the goods
(d) When the goods are rejected by the buyer and the carrier holds them
Answer:
(d) When the goods are rejected by the buyer and the carrier holds them

Question 108.
The right to stop the goods in transit can be exercised by the unpaid seller by ___________.
(a) Taking actual possession of the goods
(b) Giving notice of the sellers claim to the carrier
(c) Both (a) and (b)
(d) Neither (a) nor (b)
Answer:
(c) Both (a) and (b)

Question 109.
Right to lien can be exercised by the seller ___________.
(a) On non-payment of the sale price
(b) On breach of warranty
(c) On anticipatory breach
(d) All of the above Answer:
Answer:
(a) On non-payment of the sale price

Question 110.
The doctrine of ‘Caveat Emptor’ does not apply when :
(a) The goods are bought by sample
(b) The goods are bought by description from a seller who deals in goods of that description
(c) The goods are purchased under its brand name
(d) All of the above.
Answer:
(d) The doctrine of ‘Caveat Emptor’ means ‘let the buyer beware’.
Following are the cases when doctrine of ‘Caveat Emptor’ does not apply:

  • When the seller makes a false representation.
  • When the goods are purchased under its patent name or brand name.
  • When 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.
  • When the goods are bought by sample.
  • When the goods are sold by description.

Thus, the answer is all of the above.

Question 111.
The actual sale of future goods is:
(a) Never possible
(b) Possible
(c) Illegal
(d) Only a myth.
Answer:
(b) Future goods means goods to be manufactured or produced or acquired by the seller after making the contract of sale. Thus, under the sale of goods Act, a contract of sale of future goods is possible.

Question 112.
Finder of lost goods is in a position of:
(a) Bailor
(b) Owner
(c) Pawner
(d) Bailee.
Answer:
(d) In contract of bailment the bailee must return the goods to the owner or bailor.

Question 113.
The goods which are either owned or possessed by the seller at the time of the contract are known as:
(a) Generic goods
(b) Future goods
(c) Existing goods
(d) Contingent goods.
Answer:
(c) Such goods as are in existence at the time of the contract of sale i.e. those owned or possessed by the seller is known as Existing goods.

Question 114.
A stipulation which is collateral to the main purpose of the contract and provides the buyer only right to claim the damages is known as:
(a) Condition
(b) Guarantee
(c) Warrantee
(d) Agreement to sell.
Answer:
(c) A condition is a stipulation essential to the main purpose of the contract, the breach of which gives right to repudiate the contract and claim damages is known as warrantee.

Question 115.
In case of an agreement to sell, ownership to goods remains with:
(a) The buyer
(b) The seller
(c) Both the buyer and the seller
(d) None of the above.
Answer:
(b) In the sale of goods, the property is transferred from seller to the buyer immediately. But in an agreement to sell the ownership of the goods is not transferred immediately. Thus, an agreement to sell, ownership to goods remains with the seller.

Question 116.
In case of sale of goods, the title of goods remains with:
(a) Seller
(b) Buyer
(c) Hirer
(d) None of the above.
Answer:
(b) In Case of sale of goods, the property is transferred from seller to the buyer. Therefore in case of sale of goods the title of goods remains with buyer.

Question 117.
A contract of sale of goods under Section 4 of the Sale of Goods Act, 1930 comprises of:
(a) Executory contract of sale
(b) Executed contract of sale
(c) Both executory and executed contracts of sale
(d) None of the above.
Answer:
(c) According to Section 4, 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 money consideration called the price.

It shows from the above that “contract of sale” includes both a sale (Executed contract of sale) and an agreement to sell (Executory contract of sale).

Question 118.
An unpaid seller of goods has a right:
(a) Against the buyer only
(b) Against both the buyer and the goods
(c) Against the goods only
(d) None of the above.
Answer:
(b) An unpaid seller of goods has a right against the buyer personally (rights in personam) as well as against the goods (rights in rem).

Question 119.
Which of the following gives a right to claim damages for its breach?
(a) Conditions
(b) Warranties
(c) Both (A) and (B) above
(d) None of the above.
Answer:
(c) “A condition is a stipulation essential to the main purpose of the contract, the breach of which gives a right to treat the contract as repudiated and claim damages.” “A warranty is a stipulation collateral to the-main purpose of the contract, the breach of which gives rise to a claim for damages but not a right to reject the goods and treat the contract as repudiated.” Thus, both condition and warranty gives a right to claim damages for breach.

Question 120.
As per the Sale of Goods Act, 1930, ‘goods include,
I Existing goods
II. Future goods
III. Contingent goods
IV. Actionable claims
Correct option is –
(a) I, II and III
(b) II, III and IV
(c) I, II and IV
(d) I, II, III and IV
Answer:
(a) As per Sec. 2(7) of Sales of Goods Act, goods mean every kind of movable property other than actionable claims and money, and includes stock and shares, growing crops, grass and things attached to contract of sale.

Moreover, goods are of following types –

  • Existing Goods
  • Specific Goods
  • Ascertained Goods
  • Unascertained Goods
  • Future Goods
  • Contingent Goods.

Thus, goods include I, II and III point except actionable claim. So, the answer is I, II and III.

Question 121.
Which of the following maxim means ‘No one can pass a better title than he himself has’?
(a) Caveat emptor
(b) Nemo dat quod non habet
(c) Res integra
(d) Sine die.
Answer:
(b) As per Section 27 of Sales of Goods Act, “ where goods are sold by a person who is not the owner thereof and who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title to the goods than that of the seller.”

This rule is expressed is Latin maxim, “Nemo dat quod non habet” which means that no one can give what he has not got.

Question 122.
The doctrine of “Caveat Emptor” implies ________.
(a) Let the buyer beware
(b) Let the seller beware
(c) Let the buyer be brave
(d) Let the seller be brave
Answer:
(a) The doctrine of “caveat emptor” means ‘let the buyer beware’ i.e. buyer purchases the goods at his own risks.

Hence, the doctrine of “caveat emptor” means let the buyer beware.

Question 123.
When does a seller becomes an unpaid seller?
(a) When half of the price has not been paid.
(b) When the full amount has not been paid.
(c) When 25% amount has not been paid.
(d) When 75% amount has not been paid.
Answer:
(b) As per Section 45 of Sale of Goods Act, seller is deemed to be an unpaid seller when:

  • Whole of the price has not been paid or tendered and seller had an immediate right of action for the price.
  • A bill of exchange or any other negotiable instrument was given as payment but the same has been dishonoured, unless this payment was absolute and not a conditional payment.

Hence, option (b) is correct.

Question 124.
Which of the following is conducted under Sales of Goods Act?
(a) Goods
(b) Contract
(c) Sales
(d) Partnership
Answer:
(c) The Sale of Goods Act, 1930 deals with the ‘sale’ but not with ‘mortgage’ or ‘pledge’ Thus, it can be sold that only sales is conducted under Sales of Goods Act.

Question 125.
Which is not an implied condition?
(a) Condition as to title
(b) Condition as to wholesomeness
(c) Condition as to Encumbrances
(d) Condition as to sale by sample
Answer:
(c) Implied Conditions are as follows:

  • Condition as to title
  • Sale by description
  • Sale by sample
  • Sale by sample as well as by description
  • Condition as to quality or fitness
  • Condition as to wholesomeness

Thus, Condition as to Encumbrance is not an implied condition.

Question 126.
Seller means a person who:
(a) Sells or agrees to sell goods
(b) Has sold goods
(c) Sells goods
(d) Agrees to sell goods.
Answer:
(a) According to Sec. 4, 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 money consideration called the price.

Question 127.
The unpaid seller may exercise his right of stoppage of goods in transit:
(a) By taking actual possession of the goods .
(b) By giving notice of his claim to the carrier
(c) By giving notice of his claim to the bailee in whose possession the goods are
(d) All applicable.
Answer:
(d) The right to stop in transit may be exercised by the unpaid seller by taking actual possession of the goods or by giving notice of the seller’s claim to the carrier or other person having control of the goods. So, option d is the correct answer, i.e. All applicable.

Question 128.
Right of stoppage can be exercised when:
(a) When seller has not been paid the amount of goods and service
(b) When the buyer has becomes insolvent.
(c) Both of the above
(d) None of the above
Answer:
(c) The right of stoppage in transit is exercisable by the seller only if the following conditions are fulfilled –

  • seller must be unpaid
  • must have parted with the possession of goods
  • The goods must be in transit
  • The Buyer must have become insolvent
  • The right is subject to provision of the Act.

Thus, it contain both (a) & (b) condition. Hence, option c is Correct.

Question 129.
Right of lien is exercised for:
(a) Retaining the possession
(b) Regaining the possession
(c) Both (a) and (b)
(d) Stoppage in transit
Answer:
(a) The word ‘lien’ means a right to retain possession. An unpaid seller, who is in the possession of the goods, is entitled to retain them until payment or tender of the price.

Question 130.
A seller transfers possession of the goods already being sold in good faith:
(a) Valid
(b) Voidable
(c) Void
(d) Invalid
Answer:
(a) Where a seller, after having sold the goods, continues or is in possession of the goods or of the documents of title of goods again sells them to a person who buys in good faith gets good title and makes the sale valid.

Question 131.
Which of the following is not a mercantile agent?
(a) Factor
(b) Salesman
(c) Auctioneer
(d) Brokers
Answer:
(b) Salesman is not a mercantile agent as in the customary course of business as such agent authority either to sell goods or consign goods for the purpose of sale, or to buy goods, or to raise money on the security of goods.

Question 132.
Under what circumstances the unpaid seller can exercise right of resale:
(a) When the goods are very expensive
(b) When the buyer has not paid in terms of the contract does not specify about resale
(c) When he gives notice to the buyer of his intention to resale and the buyer does not within reasonable time pay the price
(d) When the buyer does not pay on demand.
Answer:
(c) The unpaid seller can exercise right of resale when he gives notice to the buyer of his intension to resale and the buyer does not within reasonable time pay the price. It is in case of exercise of right of lien or stoppage in transit.

Question 133.
In a hire purchase contract the hirer:
(a) Is not given the possession of goods
(b) Must buy the goods
(c) Has an option to buy the goods
(d) Must return the goods
Answer:
(c) In a hire purchase contract, it gives the hirer an option to purchase the goods at the end of the hiring period. Consequently, until the final payment, the hirer is merely a bailee of goods and ownership t remain vested in the bailor.

Question 134.
Actual sale of future good is:
(a) Illegal
(b) A myth
(c) Impossible
(d) Possible through an agreement to sell
Answer:
(d) Future goods means goods to be manufactured or produced or acquired by the seller after making the contract of sale, as contract of sale covers saie and agreement to sell both, hence option (d) is correct.

Question 135.
The Sale of Goods Act, 1930 deals with:
(a) Pledge
(b) Guarantee
(c) Mortgage
(d) Sale
Answer:
(d) The Sale of Goods Act, 1930 deals with Sale and Agreement to sell.

Question 136.
In an agreement to sell, the seller in case of damages to good ________.
(a) Can sue the buyer for injunction
(b) Has no recourse
(c) Can sue for price
(d) Can sue for damages
Answer:
(b) In an agreement to sell, the seller in case of damage to goods has no recourse as, he is the owner who have to bear the loss and who cannot sue for damages and in this case the goods are in possession of seller and the ownership also lies with the seller.

Question 137.
Which of the following is not a mercantile agent?
(a) Brokers
(b) Salesman
(c) Auctioneers
(d) Factor
Answer:
(d) The term Mercantile agent includes any person who is authorised to sell on behalf or seller. Eg: Broker, Salesman, Auctioneers.

Question 138.
Contract of sale means:
(a) A contract between one person to another for exchange of property in goods
(b) Contract between two persons only
(c) A contract between buyer and seller for exchange of property in goods
(d) A contract between buyer and seller intending to transfer property in goods for price
Answer:
(d) A contract of sale of Goods means contract between buyer and seller who agree to transfer the property in goods to the buyer for a price. In this the ownership is immediately transferred to buyer even though possession of goods is with seller. Hence, option (d) is correct.

Question 139.
An auction sale is complete on the ________.
(a) Fall of hammer
(b) Delivery of goods .
(c) On the bid being made
(d) Payment of price
Answer:
(a) It is a mode of selling property by inviting bids publically and the property is sold to the highest bidder. Under this sale is complete when the auctioneer announces its completion by the fall of hammer or in another customary manner.

Question 140.
Which is not true in case of a finder of goods?
(a) He can sell the goods if the goods are of perishable nature
(b) He cannot sell the goods in any condition
(c) He can retain the goods till the owner is found
(d) If the owner is found, but the owner refuses to pay lawful charges, then he can retain the goods until payment is received.
Answer:
(b) The statement (b) is incorrect because the finder of cost good can sell the goods if they are of perishable nature.

Question 141.
The difference between sales and cost of goods sold is:
(a) Gross margin
(b) Principal
(c) Revenue
(d) Income
Answer:
(a) Gross Margin = Sales – Cost of Goods Sold

Question 142.
Actual sale of future goods is:
(a) Possible through an agreement to sell
(b) Illegal
(c) Impossible
(d) A myth
Answer:
(a) Agreement to sell a commodity in future. Thus, we can conclude that actual sale of future goods is possible through agreement to sell.

Question 143.
The unpaid seller may exercise his right to stoppage of goods in transit:
(a) By taking actual possession of the goods
(b) By giving notice of his claim to the carrier
(c) By giving notice of his claim to the bailee in whose possession the goods are
(d) All are applicable
Answer:
(d) The unpaid seller may exercise right of lien on goods in transit by:

  • taking Actual Possession
  • giving notice of his claim to carrier
  • giving notice to Bailee who is in possession of goods.

Question 144.
The Phrase Quantum meruit literally means:
(a) As much as earned or reasonable remuneration
(b) The fact in itself
(c) A contract for sale
(d) As much as is gained.
Answer:
(a) Breach of Contract done in many ways and their remedies can claim also in many ways like:

  • Injunction
  • Quantum Meruit
  • Damages
  • Specific Performance

‘Quantum Meruit’ is a latin Phrase which means-‘as much as merited/ earned’ or ‘reasonable remuneration;

Question 145.
A Contract of sale of goods under Section 4 of the Sale of Goods Act, 1930. Comprises of ________.
(a) Executory contract of sale
(b) Executed contract of sale
(c) Both executory and executed contracts of sale
(d) None of the Above.
Answer:
(c) A contract of Sale of Goods Act, 1930 comprise of both ‘Executed and Executory Contracts of Sale’.
Executed Contract of Sale means when both parties performed their obligations at the same time. Example. Cash Sales. Executory Contract means when one party performed and other party not or it can be possible that both parties do not perform their . obligations in present but at future date.

Question 146.
An unpaid seller of goods has a right ________.
(a) Against the buyer only
(b) Against both the buyer and the goods
(c) Against the goods only
(d) None of the above.
Answer:
(b) Unpaid Seller of Goods has right against the both the Goods and the Seller.

Question 147.
Selling follow which rule?
(a) Caveat Emptor
(b) Caveat Vendor
(c) Both (i) & (ii)
(d) None
Answer:
(a) Selling follow the rule of Caveat Emptor which suggest let the buyer be ware.

Question 148.
Caveat Vendor is related to:
(a) Selling
(b) Marketing
(c) Both
(d) None.
Answer:
(b) Caveat Vendor is related to Market, suggest let the seller be ware.

Question 149.
Which of these never treated as money?
(a) Gold Rare coins
(b) Currency coins
(c) Negotiable notes and bills
(d) Tender money
Answer:
(a) Gold rare coins are never be treated as money.

Question 150.
Agreement to sell; ownership is of:
(a) Buyer
(b) Seller
(c) Buyer if agreed by both the parties
(d) None of these
Answer:
(c) In agreement to sell ownership is always possessed by seller, if no agreement in contrary is made.

Question 151.
In case of agreement to sell, liability of seller in case of breach of agreement:
(a) Seller has to pay damage, if found guilty
(b) If breached by buyer, Nominal sum of goods deposited would be seize, also claim damages accordingly
(c) (a) and (b) both
(d) None of these
Answer:
(c) In case of agreement to sell, breach of contract:

  • breach by seller: buyer can claim damages
  • breach by buyer: seize the money received for goods and claim damages (if any)

Question 152.
As per the sales of Goods Act, 1930, ‘goods’ include:
I. Existing goods
II. Future goods
III. Contingent goods
IV. Actionable claims Correct option is:
(a) I, II and III
(b) II, III and IV
(c) I, II and IV
(d) I, II, III and IV
Answer:
(a) As per Section 2(7) of Sales of Goods Act, goods means every kind of movable property other than actionable claims and money and includes stock and shares, growing crops, grass and things attached to contract of sale. Moreover, goods are of following types:

  • Existing goods
  • Specific goods
  • Ascertained goods
  • Unascertained goods
  • Future goods
  • Contingent goods.

Thus, goods include I, II and III point except actionable claims. So the answer is option (a).

Question 153.
Which of the following maxim means “No One can pass a better title than . he himself has”?
(a) Caveat emptor
(b) Nemo dat quod non habet
(c) Res integra
(d) Sine die.
Answer:
(b) “Nemo det Quod non Habet” means no one can pass a better title than he himself have.

Question 154.
Which of the following gives a right to claim damages for its breach?
(a) Conditions
(b) Warranties
(c) Both (a) and (b) above
(d) None of the above
Answer:
(c) “A condition is a stipulation essential to the main purpose of contract, the breach of which given right to treat the contract as repudiated and claim damages”. “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 a right to reject the goods and treat the contract as repudiated”.

Thus, option (c) is correct.

Question 155.
As per Sales of Goods Act, 1930, a sale means:
(a) Sale and Agreement to Sale
(b) Only Cash Sale
(c) Only Credit Sale
(d) (b) and (c) both
Answer:
(a) As per Section 4(1) of the Sales of Goods Act, 1930,” contract of sales of goods is a contract whereby the seller transfers or agrees 2. to transfer the property in goods to the buyer for a price”. Thus sale means sale and agreement to sell.

Question 156.
In Sales of Goods Act, what is involved?
(a) Sales
(b) Mortgage
(c) Pledge
(d) Indemnity
Answer:
(a) The law relating to sale of goods is contained in Sale of Goods Act, 1930. According to section 4, 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 the money consideration called the price.

Question 157.
Unpaid a seller can exercise ________.
(a) Stop page in transit
(b) Lien
(c) Right of resale
(d) All of above.
Answer:
(d) The Sales of Goods Act, 1930 provides, the unpaid seller the following rights against the goods:

  • A lien or right of retention
  • The right of stoppage in transit
  • The right of resale.
  • The right to with old delivery.

Question 158.
Type of Lien:
(a) General and Particular
(b) Particular and Specific
(c) Specific or Particular
(d) General of Specific
Answer:
(a) The right of lien is exercised by the unpaid seller by keeping the goods in possession and refuse to deliver them to the buyer until the fulfillment of or tender of price. The right of lien is of two types:

  • General lien
  • Particular lien

Question 159.
The Sale of Goods Act, 1930 contains:
(a) Services only
(b) Manufacturing goods only
(c) All movable goods
(d) None of Above
Answer:
(a) The Sales of Goods Act, 1930 provides in Section 4, a contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in form of goods.to the buyer for money consideration called price. There, the goods include all kind of movable property other than actionable claims and money.

CS Foundation Business Environment and Law Notes