PERFORMANCE OF THE CONTRACT OF SALE
Table of Contents
Business Low Notes :-
Duties of seller and buyer: It is the duty of the seller to deliver the goods and of the buyer ‘to accept and. pay for them in accordance with the terms of the contract of sale.
Unless otherwise agreed upon payment of the price and the delivery of the goods are concurrent conditions, that is to say, the seller must be ready and willing to deliver the goods to the buyer and the buyer must be ready and willing to pay against delivery.
Both payment and delivery take place at the same time unless otherwise agreed. The seller must deliver the goods according to the terms of the contract and if he fails to do so, the buyer can claim damages. Similarly, the buyer must pay for the goods and accept delivery, and if he wrongfully refuses to accept delivery ; he shall have to pay compensation to the seller .
Rules regarding delivery : Delivery is the voluntary transfer of possession from one person to other. Delivery may be made by doing anything which the parties agree shall be treated as delivery. The mode of-giving possession is to be determined by the parties.
Delivery may be actual, constructive or symbolic. Actual delivery take place where the goods are handed over to the buyer or his authorised agent. Constructive delivery takes place when the person in possession of the goods acknowledges that he holds that the goods on behalf of and at the disposal of the buyer. For instance, the seller agrees to hold the goods as bailee for the buyer.
Symbolic delivery is made by indicating or giving a symbol. Here the goods themselves are not delivered, but the means of obtaining possession of the goods is delivered, e.g., the key to the warehouse where the goods are stored is handed over to the buyer, or the bill of lading which will entitle the holder to receive the goods on the arrival of the ship is given.
- Delivery should have the effect of putting the buyer in possession. For example where the wood of fallen trees is sold the buyer should be able to cart away the wood after cutting
- The seller must deliver the goods according to the
- Apart from any express contract, the seller of goods is not bound to deliver them until the buyer applies for
- Where goods at the time of the sale are in the possession of a third person, there is no delivery by the seller to the buyer unless and until such third person acknowledges to the buyer that he holds them on his
- Where under the contract the seller is bound to send the goods to the buyer, but no time is fixed, the seller must send them within a reasonable
- Demand by the buyer and tender by the seller of delivery must be made at a reasonable
- Apart from any express contract, the goods are to be delivered at a place where they happen to be at the time of the contract of sale, or if the contract is with respect to future goods, at the’place at which goods are manufactured or
- The seller has to bear the cost of delivery unless the contract otherwise
- Where goods are delivered to a carrier or wharfinger, the seller is bound to enter into a reasonable contract on the behalf of the buyer with the carrier for the safe transmission of “the goods; if he fails to do so, the buyer may claim damages in case the goods are destroyed. If the transit would be by sea, the seller must inform the buyer in time so that he may have the goods insured, or the seller may insure them on behalf of the buyer.
- Where the seller is ready and willing to deliver the goods and request the buyer to take delivery and the buyer does not comply with his request within a reasonable time the buyer is liable to the seller for any loss occasioned by his neglect, and to a reasonable charge for the care and custody of the
Acceptance of goods by the Buyer: The buyer has a right to have delivery as per contract, and accepts them when- they are according to the contract.
Acceptance by the buyer takes place when he :
- intimates to the seller that he has accepted the goods or
- does any act to the goods which is inconsistent with the ownership of the seller e.g., pledges or resells them; or
- retains the goods, after the lapse of reasonable time, without intimating to the seller that he has rejected
When goods are delivered to the buyer which he has not previously examined he is not deemed to have accepted them until he has had reasonable opportunity to examine them.
If the seller sends to the buyer a large or smaller quantity of goods than ordered, the buyer may-(l) reject the whole, or (2) accept the whole, or (3) accept the quantity.he ordered and reject the rest.
But what the buyer accepts he must pay for at the contract rate, If the seller delivers with the goods, ordered, goods of a wrong description. the ‘buyer may accept the goods ordered and reject the rest, or reject the whole.
If a buyer has a right to reject the goods, he is not bound to return the rejected goods to the seller, but it is sufficient if he intimates to the seller that he refuses to accept them.
( BBA 1st Semester Business Low Notes )
RIGHTS OF AN UNPAID SELLER
Who is an unpaid seller
A seller is an unpaid seller-(l) when the whole of the price has not been paid or tendered; or (2) when a conditional payment was made by a bill of exchange or other negotiable instrument, and the instrument has been dishonoured.
In simple words, an unpaid seller is one who has sold goods on cash terms and to whom the price of the goods is payable immediately. It does not include a seller who has sold goods on ‘credit and the period of credit has not expired.
An unpaid seller has two-fold rights: (A) against the goods, (B) against the buyer personally.
(A) Rights against th« goods Rights of unpaid seller against the goods
An unpaid seller of goods, even though the property in the goods has passed to buyer, has following rights against the goods :
- a lien on the goods for the price while he is in possession of them;
- a right of stoppage in transit in case of the buyer’s insolvency;
- right of resale under certain circumstances;
If the property in the goods has not passed the unpaid seller can withhold delivery of the goods. Right of Lien
An unpaid seller of goods in possession of goods sold by him may exercise his lien on the goods and refuse to deliver them’ to the buyer until full payment or tender of the price in cases where
- the goods have been sold without any stipulation as to credit;
- the goods have been sold on credit, but the term of credit has expired;
- the buyer has become insolvent;
The seller may exercise his right of lien even if he is in possession of the goods as agent or bailee for the buyer. Lien can be .exercised for the remaining part of shipment, where the seller has already deliyered a part of the goods,
lien can be exercised for non-payment or the price, and not for any other charges. For example, the seller cannot claim lien for godown charges which he had to incur for storing the goods in exercise of his lien for the price.
Lien depends upon physical possession. Therefore an unpaid seller loses his lien on the goods :
- when he delivers them to a carrier or other bailee for the purpose of transmission – to the buyer without reserving the right of disposal of the goods;
- when the buyer or his agent lawfully obtains possession of the goods;
- by waiver of the Right of stoppage in tranaist
The right of stoppage in transit is an extension of the right of lien, but it arises only on the insolvency of the buyer It is a right to regain possession of goods not paid for, while in transit, in case the buyer becomes insolvent. So the right of stoppage in transit begins where the right of lien ends.
The goods are deemed to be in transit from the time they are delivered to the carrier or to the time they are delivered to the buyer or his agent. The goods are still in transit if they are rejected by the buyer.
The right of stoppage in transit comes to an end as soon as the buyer or his agent takes delivery of the goods either at the destination or before their arrival at the destination.
It also comes to an end if, after the arrival of the goods at their destination; the carrier acknowledges to the buyer that he holds the goods on his behalf.
The right to stop in transit also ends if the carrier wrongfully refuses to deliver the goods to the buyer or his agent.
If the buyer has in the meantime obtained Bill of Lading or other documents of title to the goods and assigned the same for value to a bonafide purchaser, the right of stoppage would be lost. Where A sells and consigns certain goods to B, A being still unpaid B becomes insolvent;
while the goods are in transit. B assigns the B/L for consideration to C. It was held, the B/L is a document of title to goods. C was not aware of b’s insolvency and he had received B/L for consideration. C got a good title to the goods and A though he was an unpaid seller could not stop the goods in transit.