Page 124 - DMGT407Corporate and Business Laws

Unit 5: Law of Sale of Goods

Notes
Example: There was a sale of ‘foreign refined rape-oil’ warranted only equal to sample.
The oil supplied was the same as the sample, but it was not ‘foreign refined rape-oil, being a
mixture of it and other oil. Held, the buyer could refuse to accept the goods.
Implied warranties: There are two implied warranties. These are: (i) quite possession of the
goods [s.14 (b)]; and (ii) goods free from any charge or encumbrance [s.14 (c)].
1. Warranty of quiet possession [s.14 (b)]. In a contract of sale, unless contrary intention
appears, there is an implied warranty that the buyer shall have and shall enjoy quiet
possession of the goods. Thus, if the right of enjoyment or possession of the buyer is
disturbed by the seller or any other person, the buyer is entitled to sue the seller for
damages.
2. Warranty of freedom from encumbrance [s.14(c)]. The buyer is entitled to another warranty
that goods are free from any charge or encumbrance in favour of a third person, not
declared to or known to the buyer. Thus, this implied warranty will not be applicable
where the buyer has been informed of the encumbrance or has a notice of the same.
Further, the claim under this warranty shall be available only where the buyer discharges
the amount of encumbrance.

5.3.1 Stipulation as to Time

The question of performance of contract in time is very crucial for business persons who purchase
or sell goods. Therefore in every contract for the sale of goods, a time limit for performance of
the promise is fixed. If it is not done due to oversight, or for some practical reasons or the parties
are unwilling to bind themselves in a rigid manner, then the performance is to be done within
a reasonable time. In case the performance is not done by a party as stipulated in the contract, the
other party can recover damages for the breach of the contractual stipulation.

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Caution There may be cases where timely performance is very crucial for the promisee
and damages may not be of much help. In such a case the right to treat the contract as
terminated may also not be of much use.
In case of contract for the sale of goods, two rules as to the importance of time are laid down by
s. 11. These are: (i) unless a different intention appears from the terms of the contract, stipulation
as to time of payment is not deemed to be of the essence of a contract of a sale; (ii) whether any
other stipulation as to time is of the essence of the contract or not depends on the terms of the
contract.

Thus, the first rule deals with the time of payment. In this case time is not a condition of the
contract unless a different intention appears from the terms of the contract. Thus, the failure by
the buyer to pay on the stipulated date shall not entitle the seller to treat the contract as repudiated,
though he is entitled to withhold delivery until he is paid and resell the goods if the buyer does
not pay or tender the price within a reasonable time. Consequently, if before such resale by the
seller, the buyer tenders the price, even though it be on a date after the date stipulated in the
contract, the seller cannot, in the absence of an intention to the contrary, treat the contract as at
an end and refuse to deliver the goods to the buyer.
The second rule leaves the whole thing upon the intention of the parties as is reflected in the
contract. In general, stipulation as to time for delivery of goods is considered to be essence of
time. Thus, if A has entered into a contract with B to sell a certain thing and promises to deliver

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