Page 121 - DMGT407Corporate and Business Laws

Corporate and Business Laws

Notes to sell, he will have a right to sell the goods at the time when the ownership is to pass. The seller
will break this implied term, for example, if it transpires that the goods were stolen. As a
consequence of this, if the title turns out to be defective, the buyer is entitled to reject the goods
and claim refund of the price (if paid) plus damages. This will be allowed even where the buyer
has used the goods.

Examples:
1. Kamal purchases a car from Bimal who has no title to it. Kamal uses the car for a few
days. After the true owner spots the car and demands it from Kamal, Kamal is bound
to hand over the car to its true owner and he can sue Bimal, the seller without title,
for the recovery of the purchase price even though he has used the car for a few days.
2. Komal sells goods to Bharat by infringing a trade mark. Bharat has the right to
repudiate the transaction on the ground that there is a breach of condition as to the
title.
However, this condition as to title may be negatived by an express term in the agreement. The
obvious examples are sales made by custom authorities, courts, etc.

Sale by description s.15: Where there is a contract for the sale of goods by description there is an
implied condition that the goods shall correspond with the description. A shirt described as 100
per cent cotton, for example, should not contain man-made fibre.

Examples:
1. A ship is sold by description viz.; ‘copper-fastened vessel’, but actually it was only
partly copper-fastened. The condition as to sale by description is broken. This is so
even where the ship is sold subject to all faults and defects.

2. A car is sold as a new car. The buyer finds it to be a used one. The buyer may reject
the car, or retain the car and claim damages.
3. English sainfoin seeds, duly exhibited by a sample, are sold. The bulk corresponds
to the sample but the seeds supplied are giant sainfoin and not the English sainfoin.
There is a breach of condition as to description.
Condition as to quality or fitness [s.16 (1)]. As a general rule, a buyer is supposed to satisfy
himself about the quality of goods he purchases and is also charged with the responsibility of
seeing for himself that the goods suit the purpose for which he buys them. Thus, later on, if the
goods purchased turn out to be unsuitable for the purpose for which he bought them, the seller
cannot be asked to compensate. This rule is called as caveat emptor – let the buyer beware. There
are, however, certain exceptions to this general rule. For example, if you ask the salesman to
recommend a heavy duty carpet which would be suitable for a lounge, it should not be threadbare
after a couple of months. It is only in these exceptional circumstances that there is an implied
condition as to quality or fitness. These circumstances are:
Where the buyer, expressly or by implication, makes known to the seller the particular purpose
for which the goods are required, so as to show that the buyer relies on the seller’s skill or
judgement and the goods are of a description which it is in the course of the seller’s business to
supply (whether he is the manufacturer or producer or not). There is an implied condition that
the goods shall be reasonably fit for such purpose. For the exception to operate, all the three
conditions must be fulfilled, viz.; (a) the purpose must have been disclosed (expressly or
impliedly), (b) the buyer must have relied on the skill or judgement of the seller, and (c) the
seller’s business must be to sell such type of goods.

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