The Sale of Goods Act, 1930 for CA Foundation
The Sale of Goods Act, 1930: what a contract of sale is, conditions and warranties, when ownership and risk pass, title by non-owners, the unpaid seller's rights and auction sales.
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Practise The Sale of Goods Act, 1930 free
What you'll learn
- Contract of sale, conditions and warranties
Identify a contract of sale and tell a condition from a warranty. - Ownership, risk, title and the unpaid seller
Decide when property and risk pass, and apply the unpaid seller's rights.
Key formulas
| Risk | Passes with property (res perit domino, s.26) |
|---|---|
| Title | Nemo dat quod non habet (s.27), with exceptions |
| Unpaid seller's rights | Lien (s.47), stoppage in transit (s.50), resale (s.54) |
| Auction | Complete on the fall of the hammer (s.64) |
Concepts explained
Conditions, warranties and caveat emptor
A condition is essential to the main purpose of the contract (breach: reject the goods); a warranty is collateral (breach: damages only). The buyer must generally take care (caveat emptor).
What it means
- Implied conditions: title (s.14), description (s.15), quality or fitness when the buyer relies on the seller's skill (s.16(1)), merchantability (s.16(2)), sample (s.17), wholesomeness for food.
- Implied warranties: quiet possession, freedom from encumbrances, disclosure of dangerous nature.
- A buyer may treat a breach of condition as a breach of warranty (s.13), and must do so after accepting the goods.
- Exceptions to caveat emptor: fitness for purpose relied on, merchantable quality, sample, usage of trade, fraud.
- Bought from a chemist for heating; it bursts
Answer: Breach of condition of fitness (buyer relied on seller's skill)
- Buyer has used the goods for months
Answer: Can only claim damages (treated as warranty)
Related terms
- Caveat venditor: let the seller beware (exceptions to caveat emptor)
- Merchantable quality: fit to be sold under that description
Exam tip: Remember the remedy: condition → reject; warranty → damages.
Passing of property, risk and title
When ownership passes decides who bears the loss: risk passes with property. The rules depend on whether the goods are specific or unascertained.
What it means
- Specific goods in a deliverable state: property passes when the contract is made (s.20).
- Unascertained goods: no property passes until they are ascertained (s.18), then on appropriation (s.23).
- Goods on approval: property passes on approval, an act of adoption, or keeping beyond the time allowed (s.24).
- Nemo dat (s.27): no better title than the seller's; exceptions include a mercantile agent, joint owner in sole possession, voidable contract not yet rescinded, seller or buyer in possession.
- Specific scooter sold, destroyed before delivery without seller's fault
Answer: Buyer bears the loss (property and risk had passed)
- Thief sells a phone to an honest buyer
Answer: Buyer gets no title; the owner can recover it
Related terms
- Res perit domino: the thing perishes for its owner
- Delivery types: actual, symbolic, constructive
Exam tip: First ask: specific or unascertained? That answers when property (and so risk) passes.
Rights of an unpaid seller
A seller who hasn't been paid in full (or whose cheque has bounced) has rights against the goods as well as against the buyer personally.
What it means
- Lien (s.47): keep the goods while in possession, until paid.
- Stoppage in transit (s.50): only when the buyer is insolvent and the goods are with a carrier.
- Resale (s.54): for perishable goods, or after notice if the buyer still doesn't pay.
- Against the buyer: suit for price, damages for non-acceptance, interest.
- Buyer's cheque is dishonoured; goods still in seller's shop
Answer: Seller is unpaid and can exercise lien
- Goods on a truck; buyer declared insolvent
Answer: Seller can stop them in transit
Related terms
- Auction sale: complete on the fall of the hammer; reserve price may be set
- Part payment: seller is still an unpaid seller
Exam tip: Possession → lien. In transit + insolvent buyer → stoppage.
Memory tricks
Breach of condition: reject goods; breach of warranty: damages only.
Lien (s.47), stoppage in transit (s.50), resale (s.54).
Risk passes with property (s.26).
Try 3 CA Foundation-style questions
Q1. Which of the following is NOT 'goods' under the Sale of Goods Act?
- Stock and shares
- Actionable claims and money
- Growing crops agreed to be severed before sale
- Goodwill
Show answer
Answer: (2) Actionable claims and money
Goods means every kind of movable property other than actionable claims and money; it includes stock and shares, growing crops and grass.
Q2. A stipulation essential to the main purpose of a contract of sale is a
- warranty
- guarantee
- condition
- representation
Show answer
Answer: (3) condition
Section 12: a condition is essential to the main purpose; its breach lets the buyer reject the goods.
Q3. The rule 'nemo dat quod non habet' means
- no one can give a better title than he himself has
- let the buyer beware
- the thing perishes for its owner
- the seller must disclose defects
Show answer
Answer: (1) no one can give a better title than he himself has
Section 27: a buyer from a non-owner gets no better title than the seller had, subject to exceptions such as a mercantile agent or a seller in possession.
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