Unit V — Sale of Goods Act, 1930

“In a contract of sale of goods, there is an implied condition… that the goods shall correspond with the description.” — Section 15, Sale of Goods Act, 1930

Sale, Conditions & Warranties

A contract of sale (S.4) is one whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. Where property passes at once it is a sale; where it is to pass at a future time or on a condition, it is an agreement to sell. The distinction is decisive on risk and remedy: in a sale property and risk pass to the buyer (so he bears loss and the seller sues for the price); in an agreement to sell the seller bears the loss and his remedy is damages.

Implied conditions include: as to title (S.14a); sale by description (S.15); fitness for purpose where the buyer makes it known and relies on the seller’s skill (S.16(1)); merchantable quality (S.16(2)); and sale by sample (S.17). Implied warranties include quiet possession (S.14b) and freedom from encumbrances (S.14c).

🛒 Caveat Emptor (S.16) — “let the buyer beware”: the buyer chooses goods at his own risk; the seller is under no general duty to point out defects. Exceptions (where the maxim does not apply): fitness for a disclosed purpose with reliance on the seller (S.16(1)), merchantable quality in sales by description (S.16(2)), sale by sample (S.17), and the seller’s fraud or active concealment.

Passing of Property, Nemo Dat & the Unpaid Seller

Property passes when the parties intend it to (S.19). For specific goods in a deliverable state, property passes when the contract is made (S.20); for unascertained or future goods, on ascertainment and unconditional appropriation (S.18, S.23). The general rule nemo dat quod non habet (S.27) — no one can transfer a better title than he has — protects the true owner, but yields to exceptions that protect an innocent buyer.

flowchart TD
    A["NEMO DAT QUOD NON HABET (S.27)<br/>no one gives a better title than he has"]:::root
    A --> B["Sale by mercantile agent (S.27 proviso)"]:::leaf
    A --> C["Estoppel — owner's conduct (S.27)"]:::leaf
    A --> D["Sale by one of joint owners (S.28)"]:::leaf
    A --> E["Sale under a voidable contract (S.29)"]:::leaf
    A --> F["Seller / buyer in possession after sale (S.30)"]:::leaf

    classDef root fill:#FFF8DC,stroke:#333,color:#000;
    classDef leaf fill:#E6F3FF,stroke:#1E3A8A,color:#000;
    linkStyle default stroke:#888,stroke-width:1px;

An unpaid seller (S.45) — one who has not been paid the whole price — has rights against the goods even after property has passed: a lien to retain possession (S.47), stoppage in transit if the buyer is insolvent (S.50), and resale (S.54); and rights against the buyer personally — a suit for the price (S.55) or for damages for non-acceptance (S.56).

✏️ Sample Solved Problem (IRAC Method)

Problem: B buys a specific car from S, pays for it, but leaves it with S for a few days. S, still in possession, sells and delivers the same car to C, an innocent buyer who pays in good faith. Who is entitled to the car — B or C?

I — Issue

Whether a buyer (C) acquires good title where a seller continues in possession after a first sale and resells to him, against the first buyer (B) who already owns the car.

R — Rule

• General rule (S.27) — nemo dat quod non habet: S, having already sold to B, no longer owns the car and cannot ordinarily pass title.
• Exception — Seller in possession after sale (S.30(1)): where a seller, having sold goods, continues in possession of them and delivers them under a sale to a second buyer who takes in good faith and without notice of the earlier sale, that delivery passes a good title to the second buyer.

A — Analysis

The decoy is ownership: B paid and property passed to him under S.20, so intuitively the car is B’s. But the law makes a deliberate policy choice to protect an innocent purchaser misled by possession. The conditions of S.30(1) are all met — S sold to B yet remained in possession, and delivered to C, who bought in good faith without notice of B’s purchase. C therefore takes good title despite B’s prior ownership. B’s remedy is not against the car but against the wrongdoer S, for damages (conversion / breach).

C — Conclusion

C is entitled to the car. Under the seller-in-possession exception (S.30(1)) the innocent second buyer obtains good title; B, the first buyer, is left to sue S in damages for the loss.

📄 The full bundle (₹199) has the complete Unit V — sale vs agreement to sell, all implied conditions and warranties, caveat emptor, passing of property, every nemo dat exception and the unpaid seller’s rights — plus the Question Bank’s model answers to the merchantable-quality, stoppage-in-transit and sale-or-return problems. Get Notes + Question Bank — ₹199