Indian SALE OF GOODS ACT, 1930- an introduction

Section 4 of the Sales of Goods Act, 1930 defines a sale of goods as a “contract of sale whereby the seller transfers or agrees to transfer the property in goods to the buyer for price”. The term ‘contract of sale’ includes both a sale and an agreement to sell. A contract of sale is made by an offer to buy or sell goods for a price and the acceptance of such offer by the other party. The contract may be oral or in writing. A contract of sale may be absolute or conditional.

Formalities of a contract of sale (Section 5)

  1. Offer & Acceptance: A contract of sale is made by an offer to buy or sell the goods for a price and acceptance of such offer.
  2. Delivery & Payment: It is not necessary that the payment for the goods to the seller and delivery of goods to the buyer must be simultaneous. They can be made at different times or in instalments – as per the contract.
  3. Express or Implied: The contract can be in writing, oral or implied. It can also be partly oral and partly written.


  1. Two Parties: A sale has to be bilateral because the goods have to pass from one person to another. There must be a buyer – a person who buys or agrees to buy the goods and a seller – a person who sells or agrees to sell goods. The seller and the buyer must be different persons. A part owner can sell to another part owner. A partner may, therefore, sell to his firm or a firm may sell to a partner. But if joint owners distribute property among themselves as per mutual agreement, it is not ‘sale’. A person cannot be the seller of his own goods as well as the buyers of them. However, when a bankrupt person’s goods are sold under an execution of decree, the person may buy back his own goods from his trustee.
  2. Subject matter to be goods: The term ‘goods’ is defined in Section 2(7). It states that ‘goods’ “means every kind of movable property other than actionable claims and money; and includes stock and shares, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale”. Sale of immovable property is not covered under this Act. As per Section 3 of the Transfer of Property Act, 1882, ‘immovable property’ does not include standing timber, growing crops or grass. They are considered movable property and thus goods. Things like goodwill, copyright, trademark, patents, water, gas, electricity are all goods. In the case of Commissioner of Sales Tax vs. Madhya Pradesh Electricity Board , the Supreme Court observed – “…electricity…can be transmitted, transferred, delivered, stored, possessed, etc., in the same way as any other movable property…If there can be sale and purchase of electric energy like any other movable object, we see no difficulty in holding that electric energy was intended to be covered by the definition of “goods”. In the case of H. Anraj vs. Government of Tamil Nadu, it was held that lottery tickets are goods and not actionable claims. Thus, sale of lottery tickets is sale of goods. Sugarcane supplied to a sugar factory is goods within the meaning of Section 2(7) of the Act as held in the case of UP Cooperative Cane Unions Federation vs. West UP Sugar Mills Assn.
  3. Transfer of ownership of Goods: There must be transfer of ownership or an agreement to transfer the ownership of goods from the seller to the buyer – not the transfer of mere possession or limited interest as in the case of pledge, lease or hire purchase agreement). If goods remain in possession of seller after sale transaction is over, the ‘possession’ is with seller, but ‘ownership’ is with buyer. The Act uses the term ‘general property’ implying that sale involves total ownership and not a specific right limited by conditions. Delivery of goods refers to a voluntary transfer of possession of goods from one person to another. Delivery may be constructive or actual depending upon the circumstances of each case. A contract may provide for the immediate delivery of the goods or immediate payment of the price or both. Alternatively, the delivery or payment may be made by instalments or be postponed.
  4. Consideration is Price: The consideration in a contract of sale has to be price i.e., money. If goods are offered as the consideration for goods, it will not amount to sale. It will be barter. If there is no consideration, it will be called gift. But where the goods are sold for definite sum and the price is paid partly in kind and partly in cash, the transaction is a sale. Consideration is an essential for a valid contract as per the Indian Contract Act, 1872. It is the duty of a buyer who has received and appropriated the goods to pay a reasonable price. According to Section 2(10) ‘price’ means the money consideration for the sale of goods. If the price is not fixed, the contract is void ab initio.
  5. Essentials of a valid contract: All the essentials of a valid contract must be present. viz., competent parties, free consent, legal object and so on. The transfer of possession and ownership under the Act has to be voluntary and not be tainted with fraud or duress.

Any stipulation with respect to time is not deemed to be of essence to a contract of sale unless a different intention appears from the terms of the contract.

Aishwarya Says:

I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.

If you are interested in participating in the same, do let me know.

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