81  Sale of Goods Act, 1930: Sale and agreement to sell; Doctrine of Caveat Emptor; Rights of unpaid seller and rights of buyer

81.1 Background and Scope

The Sale of Goods Act, 1930 governs the sale of movable goods in India. It was carved out of the Indian Contract Act 1872 (sections 76-123) and came into force on 1 July 1930. It has 66 sections in 7 chapters. The Act complements the general principles of the Contract Act — every contract of sale must still satisfy the §10 essentials.

81.2 Sale vs Agreement to Sell

Tip§ 4 — Sale vs Agreement to Sell
Aspect Sale (§ 4(3)) Agreement to Sell (§ 4(3))
Property transfer Immediate Future / on condition
Type Executed contract Executory contract
Risk Buyer (risk follows property) Seller
Effect of seller’s resale Buyer can sue for damages only Buyer gets only damages
Effect of insolvency Buyer can claim goods Buyer cannot
Type of right Jus in rem (against world) Jus in personam (against seller)

81.3 Goods — Classification (§ 2(7), § 6)

TipTypes of Goods
  • Existing — owned/possessed by seller at time of contract.
    • Specific (§ 2(14)) — identified and agreed upon.
    • Ascertained — identified after contract.
    • Unascertained — generic.
  • Future — to be manufactured/produced/acquired.
  • Contingent — depends on a contingency.

81.3.1 Document of Title vs Document showing Title

Bill of lading, dock warrant, warehouse-keeper’s certificate, railway receipt, delivery order — documents of title under §2(4); invoice / cash memo merely shows title.

81.4 Price (§§ 9-10)

May be fixed by contract, agreed manner, by course of dealing, or by a third party. If not fixed → reasonable price.

81.5 Conditions and Warranties (§§ 11-17)

TipCondition vs Warranty
Aspect Condition (§ 12(2)) Warranty (§ 12(3))
Essentiality Essential to main purpose Collateral
Breach effect Right to repudiate + damages Right to damages only
Conversion Can be waived → warranty Cannot become condition

81.5.1 Implied Conditions

TipImplied Conditions
  • § 14(a) — Title — seller has right to sell.
  • § 15 — Description — goods shall correspond with description.
  • § 16(1) — Quality / Fitness for buyer’s particular purpose (when communicated and reliance shown).
  • § 16(2) — Merchantable quality.
  • § 17 — Sample — goods to match sample + reasonable opportunity to compare + no defects rendering unmerchantable.
  • § 15-17 — Sale by description and sample.

81.5.2 Implied Warranties

TipImplied Warranties
  • § 14(b) — Quiet possession.
  • § 14(c) — Free from encumbrance/charge.
  • § 16(3) — Customary warranty.
  • Warranty of disclosure of dangerous nature of goods.

81.6 Doctrine of Caveat Emptor (§ 16)

“Let the buyer beware”.

The buyer must take reasonable care to satisfy himself before purchase. Exceptions where doctrine does not apply:

TipExceptions to Caveat Emptor
  • Fitness for buyer’s particular purpose (§ 16(1)) — when made known and buyer relies on seller’s skill.
  • Merchantable quality (§ 16(2)).
  • Sale by description (§ 15).
  • Sale by sample (§ 17).
  • Trade usage / custom (§ 16(3)).
  • Fraud / Misrepresentation by seller — falls back on Contract Act.
  • Consumer goods — Consumer Protection Act 2019.

81.7 Transfer of Property (§§ 18-25)

TipRules of Transfer
  • § 18 — In unascertained goods, property does not pass until ascertainment.
  • § 19 — Property passes when intended by parties.
  • § 20 — In unconditional contract for sale of specific goods in deliverable state, property passes at contract.
  • § 21 — Specific goods in non-deliverable state — property passes when made deliverable + notice.
  • § 22 — Specific goods to be weighed/measured — property passes after weighing + notice.
  • § 23 — Unascertained or future goods — property passes on appropriation with assent.
  • § 24 — Goods on approval / “sale or return” — passes on acceptance / lapse of time.
  • § 25 — Reservation of right of disposal.
  • § 26 — Risk prima facie passes with property (res perit domino).

81.8 Sale by Non-Owners (§§ 27-30)

General rule (§ 27): Nemo dat quod non habet — no one gives what he does not have. Exceptions:

TipExceptions — Nemo Dat Rule
  • Sale by mercantile agent (§ 27 proviso).
  • Sale by one of joint owners (§ 28).
  • Sale by person in possession under voidable contract (§ 29) before rescission.
  • Seller in possession after sale (§ 30(1)).
  • Buyer in possession after purchase (§ 30(2)).
  • Sale by unpaid seller exercising right of resale (§ 54(3)).
  • Sale by finder (§ 169 Contract Act), pawnee (§ 176), Estoppel.

81.9 Performance of the Contract (§§ 31-44)

Duty of seller — deliver; duty of buyer — accept + pay. Rules of delivery: payment & delivery are concurrent (§ 32), delivery may be actual / symbolic / constructive (attornment), place (§ 36), time (§ 37), instalments (§ 38), carrier (§ 39), wrong quantity (§ 37).

81.10 Rights of an Unpaid Seller (§§ 45-54)

Unpaid seller (§ 45) — when whole of the price has not been paid/tendered, or when a bill or other negotiable instrument has been received as conditional payment and the condition has not been fulfilled.

TipRights of Unpaid Seller
Against the goods (Rights in rem) Against the buyer (Rights in personam)
Lien (§§ 47-49) — retain possession until price paid Sue for price (§ 55)
Stoppage in transitu (§§ 50-52) — when buyer insolvent Sue for damages for non-acceptance (§ 56)
Right of resale (§ 54) — perishables / after notice Repudiation before due date (§ 60)
Sue for interest (§ 61)

81.10.1 Stoppage in Transit

Conditions: seller is unpaid + goods in transit + buyer is insolvent. Mode: take possession or notice to carrier (§ 52).

81.11 Rights and Duties of Buyer

TipBuyer’s Rights
  • Sue for damages for non-delivery (§ 57).
  • Specific performance (§ 58) — where goods specific or ascertained.
  • Sue for breach of warranty (§ 59).
  • Sue for repudiation before due date (§ 60).
  • Sue for interest and special damages (§ 61).
  • Sue for refund on non-acceptance.
TipBuyer’s Duties
  • Accept delivery and pay price.
  • Apply for delivery (§ 35).
  • Take delivery at reasonable hour.
  • Bear cost of obtaining delivery (§ 36(5)).
  • Liable for buyer’s refusal — for storage and care.

81.12 Auction Sale (§ 64)

Each lot is prima facie a separate contract; sale complete on fall of hammer; bidder may withdraw before that; pretended bidding by seller renders sale voidable.

flowchart TB
  S[Sale of Goods Act 1930] --> SA[Sale vs Agreement<br/>§4 — present vs future]
  S --> CW[Conditions §§11-17<br/>Warranties · Caveat emptor]
  S --> T[Transfer §§18-26<br/>Specific · Unascertained · Risk]
  S --> UP[Unpaid Seller §§45-54<br/>Lien · Stoppage · Resale]
  S --> B[Buyer Rights<br/>§§57-61]
    classDef default fill:#003366,color:#ffffff,stroke:#ffcc00,stroke-width:3px,rx:10px,ry:10px;

NoteDistractor warning

PYQ trap: Sale = transfer of property; Agreement to sell = future. Risk follows property (§26); Caveat emptor §16; Nemo dat §27; Unpaid seller §45. Auction sale § 64.

81.13 Practice Questions

Q 01ActEasy

Sale of Goods Act came into force on:

  • A1 Jan 1930
  • B1 July 1930
  • C1 April 1930
  • D1 Sept 1932
View solution
Correct Option: B
**1 July 1930**.
Q 02§4Easy

Sale vs Agreement to Sell distinction is in:

  • A§ 4
  • B§ 12
  • C§ 16
  • D§ 26
View solution
Correct Option: A
**§ 4**.
Q 03CaveatEasy

"Caveat emptor" means:

  • ALet the buyer beware
  • BLet the seller beware
  • CLet the law decide
  • DNo buyer no seller
View solution
Correct Option: A
**Let the buyer beware** — §16.
Q 04RiskMedium

Risk *prima facie* passes with:

  • ADelivery
  • BProperty (§ 26)
  • CPayment
  • DInsurance
View solution
Correct Option: B
**§ 26 — res perit domino**.
Q 05UnpaidMedium

Definition of unpaid seller is given in:

  • A§ 45
  • B§ 47
  • C§ 50
  • D§ 54
View solution
Correct Option: A
**§ 45**.
Q 06StoppageMedium

Stoppage in transit can be exercised only if buyer is:

  • AInsolvent
  • BOutside India
  • CMinor
  • DAlien enemy
View solution
Correct Option: A
**Insolvent** — §§ 50-52.
Q 07Cond-warrMedium

Difference between condition & warranty is in:

  • A§ 12
  • B§ 13
  • C§ 16
  • D§ 19
View solution
Correct Option: A
**§ 12** — condition (12(2)) vs warranty (12(3)).
Q 08Nemo datMedium

"Nemo dat quod non habet" reflected in:

  • A§ 27
  • B§ 30
  • C§ 45
  • D§ 64
View solution
Correct Option: A
**§ 27**.
Q 09AuctionMedium

An auction sale is complete:

  • AOn highest bid
  • BOn fall of hammer
  • COn payment
  • DOn delivery
View solution
Correct Option: B
**§ 64** — fall of hammer.
Q 10SpecificMedium

Definition of specific goods is in:

  • A§ 2(14)
  • B§ 12
  • C§ 18
  • D§ 26
View solution
Correct Option: A
**§ 2(14)** — specific goods.
Q 11Sale by sampleHard

Implied condition in sale by sample is in:

  • A§ 15
  • B§ 16
  • C§ 17
  • D§ 19
View solution
Correct Option: C
**§ 17** — sample.
Q 12TitleMedium

Implied condition as to title is in:

  • A§ 14(a)
  • B§ 14(b)
  • C§ 16(1)
  • D§ 17
View solution
Correct Option: A
**§ 14(a)** — right to sell.
Q 13GoodsEasy

"Goods" under SoGA means:

  • AMovable property other than money and actionable claims
  • BImmovable property
  • CCash and bank balances
  • DServices only
View solution
Correct Option: A
**§ 2(7)** — every kind of movable property excluding money & actionable claims.
Q 14ApprovalHard

"Sale on approval" / "sale or return" rules are in:

  • A§ 23
  • B§ 24
  • C§ 26
  • D§ 35
View solution
Correct Option: B
**§ 24**.
Q 15LienMedium

Unpaid seller's right of lien is contained in:

  • A§§ 47-49
  • B§§ 50-52
  • C§§ 54-55
  • D§§ 57-58
View solution
Correct Option: A
**§§ 47-49**.
Q 16FutureMedium

Sale of *future goods* automatically becomes:

  • AA sale
  • BAgreement to sell
  • CVoid
  • DConditional contract
View solution
Correct Option: B
**§ 6(3)** — future goods → agreement to sell.
Q 17PropertyHard

Property in unconditional sale of specific goods in deliverable state passes:

  • AAt delivery
  • BAt contract (§ 20)
  • CAt payment
  • DAt consumption
View solution
Correct Option: B
**§ 20** — at contract.
Q 18MerchantableMedium

Implied condition of merchantable quality is in:

  • A§ 14
  • B§ 16(2)
  • C§ 17
  • D§ 23
View solution
Correct Option: B
**§ 16(2)**.
Q 19Buyer remedyHard

Buyer can sue for non-delivery under:

  • A§ 56
  • B§ 57
  • C§ 58
  • D§ 61
View solution
Correct Option: B
**§ 57** — damages for non-delivery.
Q 20MatchMedium

Match section with provision:

Section Provision
(i) § 4 (a) Caveat emptor
(ii) § 16 (b) Sale vs Agreement to sell
(iii) § 27 (c) Auction sale
(iv) § 64 (d) Nemo dat
  • A(i)-(b), (ii)-(a), (iii)-(d), (iv)-(c)
  • B(i)-(a), (ii)-(b), (iii)-(c), (iv)-(d)
  • C(i)-(c), (ii)-(d), (iii)-(b), (iv)-(a)
  • D(i)-(d), (ii)-(c), (iii)-(a), (iv)-(b)
View solution
Correct Option: A
Direct mapping.

81.14 Quick Recall

ImportantQuick recall
  • Act: SoGA 1 July 1930, 66 sections, carved out of Contract Act.
  • §4: Sale (executed, property passes) vs Agreement to sell (executory).
  • Goods: existing (specific §2(14)/ascertained/unascertained), future, contingent.
  • Condition vs Warranty: §12; conditions can be waived to warranties.
  • Implied conditions: §14(a) title, §15 description, §16(1) fitness, §16(2) merchantable, §17 sample.
  • Caveat emptor §16 — exceptions (fitness, merchantable, sample, custom, fraud).
  • Transfer: §§18-25; §26 — risk follows property.
  • Nemo dat §27; exceptions (mercantile agent, voidable contract, seller/buyer in possession, etc.).
  • Unpaid seller §45: lien §§47-49, stoppage §§50-52, resale §54, sue for price §55.
  • Buyer remedies: §§57-61.
  • Auction §64 — fall of hammer.