Page 138 - DMGT407Corporate and Business Laws

Unit 5: Law of Sale of Goods

to physical deterioration; it also includes commercially perishable goods and goods liable to Notes
deterioration so as to make them unmerchantable.
Right of resale is also available where, by the contract, seller has expressly reserved a right of
resale in case the buyer makes a default [s. 54(4)]. In case the seller exercises his right of resale
under this clause, the original contract is rescinded but, however, without prejudice to the
seller’s right to recover damages for its breach.
Measure of damages: The measure of damages in case of resale is the difference in the contract
price and the price realised on such resale plus the expenses of resale.
Time within which the right of resale to be exercised: The seller must exercise his right of resale
within a reasonable time. What is a reasonable time will be determined by the facts of the case.

Some cases when even if the buyer knows of the defect in the seller’s title, he will acquire a valid
title to the goods: The general rule regarding transfer of property provides that the buyer must
have purchased for value and bona fide, i.e., without having knowledge about the defect in the
title of the transferor. However, there are three cases where he gets good title, even when he
knows that the transferor’s title is defective. These are: (i) when an unpaid seller resells the
goods in accordance with s.54, (ii) when a sale is made by the finder of lost goods in accordance
with s.169 of the Indian Contract Act, 1872. (iii) when the pledgee sells the goods in accordance
with s.178 of the Indian Contract Act, 1872.
Right of unpaid seller where the property in the goods has not passed to the buyer: Section 46(2)
provides that where the property in the goods has not passed to the buyer, the seller would have
the same right of lien and stoppage in transit which he would have had as if the property has
passed.

Remedies for Breach of a Contract

In addition to the rights of a seller against goods provided in Ss. 47 to 54, the seller has the
following remedies against the buyer personally. (i) suit for price (s.55); (ii) damages for non-
acceptance of goods (s.56); (iii) suit for interest (s.56).
1. Suit for Price (S.55): Where under a contract of sale the property in the goods has passed to
the buyer and the buyer wrongfully neglects or refuses to pay the price, the seller can sue
the buyer for the price of the goods. Where the property in goods has not passed to the
buyer, as a rule, the seller cannot file a suit for the price; his only remedy is to claim
damages. However, s. 55(2) provides that where under a contract of sale the price is
payable on a day fixed irrespective of delivery and the buyer wrongfully neglects or
refuses to pay the price, the seller may sue the buyer for the price although the property in
the goods has not passed and the goods have not been appropriated to the contract.

Example: A sold certain goods to B for ` 5,000 and the price was agreed to be paid before
the expiry of ten days of the contract. B fails to pay the price within the stipulated time. A can file
a suit for price against B even though the goods have not been delivered or the property in
goods has not been passed to B.
2. Suit for Damages for Non-acceptance (S.56): Where the buyer wrongfully neglects or
refuses to accept and pay for the goods, the seller may sue him for damages for non-
acceptance. Where the property in the goods has not passed to the buyer and the price was
not payable without passing of property, the seller can only sue for damages and not for
the price. The amount of damages is to be determined in accordance with the provisions
laid down in s. 73 of the Indian Contract Act, 1872. Thus, where there is an available
market for the goods prima facie, the difference between the market price and the contract

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