Page 191 - DMGT512_FINANCIAL_INSTITUTIONS_AND_SERVICES

Financial Institutions and Services

Notes Goods: The subject matter of a contract of sale is the 'goods'. 'Goods' mean every kind of
movable property excluding money and auctionable claims. Besides, growing crops, standing
trees and other things attached to or forming part of land, also fall in the meaning of goods,
provided these are agreed to be severed from land before sale or under the contract of sale.
Further, stocks, shares, bonds, goodwill, patent, copyright, trademarks, water, gas, electricity,
ships and so on are all regarded as goods.
Destruction of goods before making of contract: Where in a contract for sale of specific goods, at
the time of making the contract, the goods, without knowledge of the seller, have perished or
become so damaged as no longer to answer to their description in the contract, the contract is
null and void. This rule, however, does not apply in case of unascertained goods.
Destruction of goods after the agreement to sell but before sale: Where in an agreement to sell
specific goods, if the goods without any fault on the part of the seller, have perished or become
so damaged as no longer answer to their description in the agreement, the agreement becomes
void, provided the ownership has not passed to the buyer. If the title to the goods has already
passed to the buyer he must pay for the goods though the same cannot be delivered.
Document of title to goods: A document of title to goods is one which entitles and enables its
rightful holder to deal with the goods represented by it, as if he were the owner. It is used in the
ordinary course of business as proof of ownership, possession or control of goods, e.g. cash
memo, bill of lading, dock warrant, warehouse keeper's or wharfingers certificate, lorry receipt,
railway receipt and delivery order.
Price: The price means the money consideration for transfer of property in goods from the seller
to the buyer. The price may be ascertained in any of the following modes:
1. The price may be expressly stated in the contact.
2. The price may be left to be fixed in manner provided in the contract.

3. Where the price is neither expressed in the contract nor there is any provision for its
determination, it may be ascertained by the course of dealings between the parties.
4. It may be a 'reasonable price'.

5. It may be agreed to be fixed by 'third party valuation'.
The most usual mode is however, by expressly providing price in the contract.
EM or security deposit: In certain contract the buyer pays an amount in advance as earnest
money deposit or as a security deposit, for the due performance on his part of the contract.
Though the amount of earnest money is adjustable towards the price of the goods, it differs from
the price in the sense that while payment towards the prices is recoverable, EM is liable to be
forfeited if the buyer fails to perform his part and the contract goes off.
Doctrine of caveat emptor (Let the buyer beware): If the buyer relies on his own skill and
judgment and takes the risk of the suitability of the goods for his purpose, it is no part of the
seller's obligation to caution the buyer of the defects in the goods or to give to the buyer an
article suitable for his purpose.
If the buyer relies on his own skill and judgment and the goods turn out to be defective, he
cannot hold the seller responsible for the same. This is known as the 'doctrine of caveat emptor'
or 'let the buyer beware'. This applies to all sale contracts invariably, except in following cases:
1. When the buyer makes known to the seller the particular purpose for which he requires
the goods and relies on the seller's skill and judgment.

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