Page 126 - DMGT407Corporate and Business Laws

Unit 5: Law of Sale of Goods

Notes
Examples:

(a) Ram offers to sell his car to Shyam at ` 90,000. Shyam accepts the offer. As soon as the
contract is made, the property in the car passes to Shyam. It shall make no difference
even if the price is to be paid later or the delivery is postponed to a stated day or
even if the goods are sold on credit, because the contract is an unconditional one for
the sale of specific goods in a deliverable state.
(b) Pyare agrees to sell Sultan a standing stock of hay for a fixed price payable on 4
February next. The delivery is to be made on 1 of May following. Sultan becomes
the owner immediately the contract is made.
Does the endorsement of a railway receipt amount to transfer of goods thereby represented?
The endorsement of a railway receipt in favour of another person does not by itself passes
property in the goods to the endorsee. It merely constitutes the endorsee the agent of the
consignor to receive the goods.
2. Specific goods not in a deliverable state: In the case of specific goods to which something
has to be done by the seller to put them in a deliverable state, property passes only when
such thing is done and the buyer has notice thereof (s.21).

Examples:

(a) The whole of the contents of a cistern of oil are sold and the seller has to put the oil
in casks to be then delivered to the buyer. The ownership will not pass till the oil is
actually put into casks ready for delivery and the buyer is notified accordingly.
(b) A condensing engine, fixed at a particular place, is agreed to be sold FOR (Free On
Rail) for a fixed price. The engine is damaged while being taken to the railway
station. The seller will himself bear the loss as the ownership has not passed to the
buyer. The seller is required, under the contract, to place it on rail before it can be
said to be in a deliverable state.
3. Where there is a contract for the sale of specific goods in a deliverable state but the seller
is bound to weigh, measure, test or do some other thing with reference to them, for
ascertaining the price, the property does not pass till such act or thing is done and the
buyer has notice thereof (s.22). However, this section is applicable only where, by contract,
the seller has to do something mentioned therein. However, if the buyer wants to weigh
goods for his own satisfaction, the section would not apply.

Example: A stock of rice is sold at an agreed price per ton. The rice is to be weighed by
the agents of the seller as also of the buyer for ascertainment of the price. A part of the rice is
weighed and carried away by the buyer’s agent, but the remaining is swept away by floods. The
loss of the remainder would be borne by the seller, since the ownership thereof had not passed
as the required weighing had not been done.
Unascertained or future goods: When there is a contract for the sale of unascertained goods,
property in the goods is not transferred to the buyer unless and until the goods are ascertained
(s.18).

Example: Ghanshyam agrees to sell Ram Rattan 200 quintals of wheat out of larger
quantity lying in Ghanshyam’s godown. The agreed price is to be paid on the day appointed

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