Performance of sale contract, Delivery

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 Performance of a Contract of Sale: Sale of Goods Act, 1930

The Sale of Goods Act, 1930, outlines the responsibilities and duties of the seller and the buyer in executing a contract of sale. These responsibilities are centered around the delivery of goods by the seller and the acceptance and payment for those goods by the buyer. The act provides detailed rules on the delivery, acceptance, installment deliveries, and remedies for breaches of the contract.

Performance of the Contract

Both parties in a contract of sale have specific duties:

  • Seller: Deliver the goods.
  • Buyer: Accept the goods and pay for them as per the contract.

Unless otherwise specified, the payment and delivery are concurrent conditions, meaning they usually occur simultaneously.

Delivery of Goods (Sections 33-39)

Delivery refers to the voluntary transfer of possession from the seller to the buyer and can be actual, constructive, or symbolic:

  • Actual Delivery: Physical handover of goods from seller to buyer or their agent.
  • Constructive Delivery: The person in possession acknowledges holding the goods on behalf of the buyer.
  • Symbolic Delivery: Transfer of a symbol representing the goods, such as keys to a warehouse or a bill of lading.

Rules as to Delivery

  • Effect of Delivery: Should enable the buyer to take possession.
  • Accordance with Contract: Goods must be delivered as per the contract terms.
  • Application by Buyer: Buyer must apply for delivery.
  • Third-Party Possession: Delivery occurs when the third party acknowledges holding the goods for the buyer.
  • Tender of Delivery: Seller must make the goods available for the buyer to take possession.
  • Place of Delivery: As specified in the contract, or otherwise at the seller's location or where the goods are produced.
  • Cost of Delivery: Seller bears the cost of delivery unless agreed otherwise.
  • Risk in Transit: Buyer bears the risk of deterioration during transit if delivery is at a location other than the seller’s premises.
  • Installment Deliveries: Buyer is not obliged to accept delivery in installments unless agreed.

Acceptance of Goods by the Buyer

Acceptance occurs when the buyer:

  • Informs the seller of acceptance.
  • Retains the goods without rejecting them after a reasonable time.
  • Performs an act inconsistent with the seller’s ownership (e.g., reselling or pledging).

If the delivered quantity is incorrect, the buyer may:

  • Reject all goods.
  • Accept all goods.
  • Accept the ordered quantity and reject the rest.

If the goods do not conform to the description, the buyer can reject the entire delivery or accept only the correct goods.

Installment Deliveries

If a contract specifies delivery in installments, a breach in one installment may be treated as a breach of the entire contract or as a severable breach, depending on the contract terms.

Suits for Breach of Contract

Seller’s Remedies:

  • Sue for Price: If the property has passed to the buyer and the price is not paid.
  • Sue for Damages for Non-Acceptance: If the buyer wrongfully neglects or refuses to accept and pay for the goods.

Buyer’s Remedies:

  • Sue for Damages for Non-Delivery: If the seller fails to deliver the goods.
  • Set Off Breach of Warranty: The buyer can claim damages for a breach of warranty and set it off against the price payable.
  • Recovery of Amount Paid: If the goods are not delivered after payment.
  • Specific Performance: Obtain a court order for the delivery of specific goods.

Anticipatory Breach

If one party repudiates the contract before the delivery date, the other party may:

  • Treat the contract as ongoing and wait until the delivery date.
  • Treat the contract as rescinded and sue for damages.

Measure of Damages

The Sale of Goods Act does not specify the rules for measuring damages, implying that the rules in Section 73 of the Indian Contract Act, 1872, apply. These rules allow recovery of damages naturally arising from the breach or those that the parties contemplated when the contract was made.

Important Points to Remember

  • Concurrent Conditions: Payment and delivery usually occur simultaneously.
  • Types of Delivery: Understanding the difference between actual, constructive, and symbolic delivery is crucial.
  • Acceptance: The buyer's actions after delivery determine acceptance.
  • Installment Contracts: Terms must be clear to avoid disputes over breaches.
  • Legal Remedies: Both parties have legal avenues to address breaches, emphasizing the importance of contract terms and conditions.