LONG ANSWER QUESTIONS
Q.1 What is a contract of sale? What are the essentials of a valid contract of sale?
[MTP & RTP Nov. 2018; MTP May 2019; RTP May 2020; RTP July 2021]
Ans. According to Section 4(1) of the Sale of Goods Act, 1930, “a contract whereby the seller transfers or agrees to transfer the property in the goods to the buyer for a price.”
The following are the essentials of valid contract of sale:—
(i) Presence of two parties, i.e. buyer & seller, is required.
(ii) Transfer of property in goods i.e. ownership, is required in a contract of sale. Transfer of ownership must take place or must be agreed to take place from the seller to the buyer. Thus it includes both sale and agreement to sell.
(iii) The subject matter of a contract of sale must always be goods. Goods mean every kind of movable property other than money and actionable claims.
(iv) The transfer of property in goods must take place from the seller to the buyer for a price.
(v) The contract of sale may be absolute or conditional.
(vi) All the essentials of a valid contract must be present.
Q.2 What are the rules for the ascertainment of price in a contract of sale?
[May 2026, 3 Marks]
Ans. Section 9 of the Sale of Goods Act, 1930, provides 4 modes of ascertainment of price. The price in a contract of sale may be:—
(a) fixed by the contract.
(b)may be left to be fixed in an agreed manner (such as market price or fixation of price by a third party).
(c)may be determined by the course of dealings between parties (such as manufacturing cost, market price).
(d)a reasonable price (if price cannot be fixed in accordance with the above provisions. What is a reasonable price is a question of fact dependent on the circumstances of each particular case?
Further:—
(a)The parties may agree to sell and buy goods on the terms that the price is to be fixed by the valuation of a third party and if such third party fails to make the valuation the contract becomes void.
(b) However, if the buyer has received and appropriated the goods or any part thereof, he becomes bound to pay reasonable price.
(c)If the third party is prevented from making the valuation by the fault of the seller or the buyer, the innocent party may maintain suit for damages against the party in fault.
Q.3 What is meant by ‘goods’ under the Sale of Goods Act, 1930? What are its different types? [Nov. 2018, 4 Marks; MTP Nov. 2018]
Ans. 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. Section 2(7).
Actionable claim means a right to a debt or to any beneficial interest in movable property not in the possession of the claimant, which can be recovered by a suit or legal action. Money means the legal tender or currency of the country and it does not include old coins and foreign currency.
Even Fixed Deposit Receipts are considered as goods under Sale of Goods Act, 1930.
The following are the types of goods:—
1. Existing goods: The goods which are in existence at the time of contract of sale i.e. are either owned or possessed by seller at the time of contract of sale are said to be existing goods. The existing goods may be further classified as follows:—
A. Specific goods
The goods which are identified and agreed upon at the time when the contract of sale is made, are called ‘specific goods’.
B.Ascertained goods
Ascertained goods are those goods which are identified in accordance with the agreement after the contract of sale is made. When out of a large number or large quantity of unascertained goods, the number or quantity contracted for is identified and set aside for such contract, such number or quantity is said to be ‘ascertained goods’.
Thus ascertained goods, are identified after the making but before the performance of the contract, the process being conducted in conformity with the agreement.
C. Unascertained goods
The goods which are not specifically identified and agreed upon at the time when the contract of sale is made, are called ‘unascertained goods’. They are defined by way of description or sample only the time of creation of contact. On appropriation the goods become ascertained. If the identity of contract goods is not established by appropriating them towards the contract, the contract remains in respect of unascertained goods.
2. Future goods: Those goods which are yet to be manufactured or produced or acquired by the seller after the making of the contract of sale, are called ‘future goods’. A contract for the sale of future goods is always an agreement to sell. It is never actual sale because a man cannot transfer what is not in existence.
3. Contingent goods: As per section 6(2) of the Act, contingent goods are those goods the acquisition of which by the seller depends upon a contingency (uncertain event) which may or may not happen. It may be noted that although the contingent goods are a type of future goods but they are different from future goods in the sense that the procurement of contingent goods is dependent upon an uncertain event or uncertainty of occurrence, whereas the obtaining of future goods does not depend upon any uncertainty of occurrence.
Q.4 What is meant by delivery? What are the different modes of delivery? [May 2018, 4 Marks; RTP May 2018; MTP Nov. 2018; MTP July 2021]
Ans. According to the provision of the Sale of Goods Act, 1930, delivery means voluntary transfer of possession from one person to another. To effect delivery of goods any act may be performed by one party in favour of the other party which has the effect of putting the goods into the possession or control of that other party. Delivery can be effected by any of the following ways:
(i)Actual Delivery: It is effected when the goods are physically delivered to the buyer or his agent.
(ii)Constructive delivery: It is used as a method of transferring possession when the goods are in the custody of a third person. When the seller gives such directions to a third party, who has the physical custody of the goods, which has the effect of transferring the goods into the possession of the buyer, without the actual movement or delivery of goods, it amounts to constructive delivery. It is also known as delivery by attornment (acknowledgement).
(iii) Symbolic Delivery: When there is a delivery of a thing in token of transfer of something else, such as a key of godown or warehouse where the goods are stored or documents of title, then it amounts to symbolic delivery.
Q.5 Contract of sale resembles with contracts of hire-purchase. However, sale is distinguished from hire-purchase. Explain hirepurchase agreement and state any five points of distinction between Sale and Hire-purchase. [Sept. 2025, 7 Marks] OR
Distinguish between Sale and Hire Purchase. [Dec. 2021, 6 Marks; MTP Jan. 2025]
Ans. A Contract of sale resembles with contract of hire purchase, as the ultimate object in hire purchase agreement is also the sale of goods, but yet, Sale differ from Hire Purchase on various basis. Hire Purchase Agreements are governed by the Hire-purchase Act, 1972. The term “hire-purchase agreement” means an agreement under which goods are let on hire and under which the hirer has an option to purchase them in accordance with the terms of the agreement and includes an agreement under which—
(
a) Possession of goods is delivered by the owner (hire vendor) thereof to a person (hire purchaser) on condition that such person pays the agreed amount in periodical instalments, and
(
b) The property in the goods shall pass to hire purchaser only on the payment of the last instalment, and
(
c) The hire purchaser has a right to terminate the agreement at any time before the property so passes.
The main points of distinction between the ‘Sale’ and ‘Hire-Purchase’ are as follows:
Basis of DifferenceSaleHire-Purchase
Time of passage of property
Position of the party
Termination of contract
Property in the goods is transferred to the buyer immediately at the time of contract.
The position of the buyer is that of the owner of the goods.
The buyer cannot terminate the contract and is bound to pay the price of the goods.
The property in goods passes to the hirer upon payment of the last instalment.
The position of the hirer is that of a bailee till he pays the last instalment.
The hirer may, if he so likes, terminate the contract by returning the goods to its owner without any liability to pay the remaining instalments.
Burden of Risk of insolvency of the buyer
The seller takes the risk of any loss resulting from the insolvency of the buyer since passage of property has already taken place.
The owner takes no such risk, for if the hirer fails to pay an instalment, the owner has right to take back the goods.
Basis
of DifferenceSaleHire-Purchase
Transfer of title
Resale
The buyer can pass a good title to a bona fide purchaser from him.
The hirer cannot pass any title even to a bona fide purchaser until he pays the last instalment.
The buyer can resell the goods. The hire purchaser cannot resell unless he has paid all the instalments.
SHORT ANSWER QUESTIONS
Q.6 Differentiate between:
(a) Sale and Agreement to Sell
(b) Sale and Bailment
Ans. (a)
[MTP May 2018; MTP May 2019]
BasisSaleAgreement To Sell
1. Transfer of property The title to the goods passes to the buyer immediately. The title to the goods passes to the buyer on future date or on fulfilment of some condition.
2. Nature of Contract It is an executed contract. It is an executory contract.
3. Burden of risk
Risk of loss is that of buyer since risk follows ownership. Risk of loss is that of seller.
4. Nature of rights It creates jus in rem that is the buyer as an owner gets the right to enjoy the goods against the whole world. If the seller refuses to deliver the goods the buyer may sue for recovery of goods by specific performance.
It creates jus in personam that is the buyer has only a personal remedy against the seller. He can sue only for damages for breach and not for recovery of goods.
5. Remedies for breach If the buyer fails to pay for the goods, the seller may sue for the price (suit for price sec. 55) and also has other remedies available to an unpaid seller. If the buyer fails to accept and pay for the goods, the seller can only sue for damages and not for price. (Damages for nonacceptance sec. 56)
6. Insolvency of Buyer If the buyer becomes insolvent before paying the price, the seller shall have to deliver the goods to the Official Receiver on his demand because the ownership of the goods has passed to the buyer.
Since the seller continues to be the owner, he can refuse to deliver the goods to the Official Receiver unless he is paid the price because the seller continuous to be the owner of the goods.
BasisSaleAgreement To Sell
7. Insolvency of Seller If the seller becomes insolvent while the goods are still in his possession, the buyer shall have a right to claim the goods from the Official Receiver because the ownership of goods has passed to the buyer.
(b)
If the seller becomes insolvent, the buyer cannot claim the goods. If the buyer has paid the price he can claim ratable dividend from the estate of the insolvent seller.
SaleBailment
(1)In a contract of sale, the seller transfers or agrees to transfer the property in goods to the buyer for a price.
(2)The buyer can deal with the goods the way he likes.
In case of bailment possession of goods is transferred from the bailor to bailee for some purpose, e.g., safe custody, repair, etc.
The bailee can use the goods only for the intended purpose of bailment.
(3)The buyer gets ownership of the goods.The bailee only acquires possession.
(4)Generally, the goods are not returnable in a contract of sale.
(5)The consideration for a sale is the price in terms of money.
The goods are returnable after a specified period or when the purpose for which they were delivered is achieved.
The consideration for bailment may be gratuitous or non-gratuitous.
Q.7 Describe the consequences of ‘destruction of goods’ under the Sale of Goods Act, 1930, where the goods have been destroyed after the agreement to sell, but before the sale is affected.
[June 2022, 4 Marks; RTP Jan. 2025; RTP Sept. 2025; MTP Jan. 2026]
Ans. Goods perishing before sale but after agreement to sell [Section 8]
- where specific goods had perished or became damaged.
- without the fault of seller or buyer.
- after the agreement to sell is made and before the risk passes to the buyer.
- the contract becomes void.
Thus, the agreement to sell becomes void in the following circumstances:—
(a) The contract of sale must be an agreement to sale and not an actual sale.
(b) The agreement to sale must be for specific goods.
(c) The goods must perish or become damaged after agreement to sale but before sale.
(d) The goods get perished or damaged without any wrongful act or default on the part of the seller or the buyer.
For example, an agreement to sell a car after a certain period becomes void, if the car is destroyed or damaged in the intervening period.
CASE STUDIES
Q.8 A sells a laptop computer to B with a stipulation that payment should be made within 3 days. B makes the payment after 7 days of the contract.
Ans. Hint: Stipulations as to the time for payment of price is not of essence; A cannot avoid the contract on the grounds of the breach of stipulation as to time of payment of price.
Q.9 A agrees to sell two of his cars to B at a price to be fixed by C. He immediately gives delivery of first car. C refuses to fix the price. A asks for the return of the car already delivered while B claims the delivery of the second car too. Decide.
Ans. Hint: The buyer B shall pay a reasonable price to A for the car already taken. As regards the second car, the contract becomes void.
Q.10 Classify the following transactions according to the types of goods they are:—
(i) A wholesaler of cotton has 100 bales in his godown. He agrees to sell 50 bales and these bales were selected and set aside.
(ii) A agrees to sell to B one packet of salt out of the lot of one hundred packets lying in his shop.
(iii) T agrees to sell to S all the oranges which will be produced in his garden this year.
[RTP Nov. 2019; MTP Nov. 2020; MTP Jan. 2025; RTP Jan. 2026]
Ans. Hint: (i) The goods are ascertained goods, in this case, ascertained goods are those which are identified in accordance with the agreement after the contract of sale are known as ascertained goods.
(ii) The goods which are not specifically identified & agreed upon at the time when the contract of sale is made, are called unascertained goods. The packet of salt is unascertained goods in the given case.
(iii) The goods which are yet to be manufactured or produced or acquired by seller after making the contract of sale are called future goods. A contract for the sale of future goods is always an agreement to sell. In the given cases oranges are future goods.
Q.11 Mr. A contracted to sell his swift car to Mr. B. Both missed to discuss the price of the said swift car. Later, Mr. A refused to sell his swift car to Mr. B on the ground that the agreement was void being uncertain about the price. Does Mr. B have any right against Mr. A under the Sale of Goods Act, 1930?
[June 2023, 4 Marks; MTP June 2024; RTP Sept. 2025]
Ans. According to the provisions of the Sale of Goods Act, 1930, the price in a contract of sale may be either fixed by the contract or may be left to be fixed in a manner thereby agreed or may be determined by the course of dealings between the parties. The Act further provides that where the price is not determined by the foregoing provisions, the buyer shall pay the seller a reasonable price. What is a reasonable price is a question of fact dependent on the circumstances of each particular case.
In the given case, Mr. A contracted to sell his swift car to Mr. B, but both of them miss to discuss the price and Mr. A subsequently refuses to sell the car on the grounds that the agreement was void on account of uncertainty of price. Thus applying the above stated provisions to the given case it can be concluded that contention of Mr. A is invalid. The contract is valid and enforceable and Mr. B has a right to demand the sale and delivery of the car and is bound to pay the reasonable price of the car to Mr. A.
Q.12 Sony, a friend of Priya wanted to buy her two-wheeler. Priya agreed to sell her two-wheeler to Sony and it was decided that price of her two-wheeler will be fixed by Priya’s father, who is an auto dealer. Priya immediately handed over the keys to Sony. However, Priya’s father refused to fix the price as he did not want Priya to sell her vehicle. Priya expressed her inability to sell the two-wheeler to Sony and asked for return, but Sony refused to return the same. Explain–
(i) Can Priya take-back the vehicle from Sony?
(ii) Will your answer be different, if Priya had not handed over the vehicle to Sony? [June 2024, 7 Marks; MTP Jan. 2025]
Ans. According to section 9 of the Sale of Goods Act, 1930, the price in a contract of sale may be:fixed by the contact or maybe left to be fixed in a manner agreed (such as market price or fixation of price by a third party) or it may be determined by the course of dealings between the parties.
Further, the parties may agree to sell and buy goods on the terms that the price is to be fixed by the valuation of a third party and if such a party fails to make the valuation the contract becomes void. However, if the buyer has received an appropriated the goods or any part thereof, he becomes bound to pay the reasonable price. What is a reasonable price is a question of fact dependent on the circumstances of particulars of each case.
In the given case, Priya agreed to sell her two-wheeler to Sony for a price to be fixed by Priya’s father. Priya immediately handed over the keys to Sony. However later Priya’s father refused to fix the price.
Thus, applying the above stated provisions to the given case, it can be concluded that:
(i) Priya cannot take back the two-wheeler from Sony, since the delivery of goods has been completed. Now Sony is bound to pay the reasonable price for the same.
(ii) In case Priya had not handed over the vehicle to Sony, then the failure of part of Priya’s father to fix the price would result in the contract of sale becoming void and both the parties would be relieved from giving any performance under the contract.
Q.13 Kapil entered into a contract with Rahul to purchase 1000 liters of mustard oil at a price which should be fixed by Akhilesh. Rahul already delivered 600 liters out of 1000 liters to Kapil but when remaining 400 liters was ready to deliver, Akhilesh denied fixing the price of mustard oil Rahul asked Kapil to return the oil already delivered and avoid the delivery of 400 liters. Kapil sued Rahul for non-delivery of remaining 400 liters mustard oil. Advise in the light of the Sale of Goods Act, 1930. [MTP June 2024; RTP May 2025]
Ans. According to the provisions of Section 9 of the Sale of Goods Act, 1930, the price in the contract of sale may be fixed by the contract, or agreed to be fixed in a manner provided by the contract, e.g., by a valuer, or determined by the course of dealings between the parties. Further, section 10 provides for the determination of price by a third party in the following manner:
(a) Where there is an agreement to sell goods on the terms that price has to be fixed by the third party and he either does not or cannot make such valuation, the agreement will be void.
(
b) In case the third party is prevented by the default of either party from fixing the price, the party at fault will be liable to the damages to the other party who is not at fault.
(c) However, a buyer who has received and appropriated the goods must pay a reasonable price for them in any eventuality.
In the given case, Kapil contracted with Rahul to purchase 1000 litres of mustard oil at the price fixed by Akhilesh. After, Rahul delivered 600 litres, Akhilesh denied fixing the price of mustard oil. Rahul demanded back the oil already delivered and cancel the delivery of 400 litres. Kapil sued Rahul for non-delivery of remaining 400 litres mustard oil.
Thus, applying the above stated provisions it can be concluded that, Kapil is liable to pay a reasonable price of 600 litres already delivered, while for the remaining 400 litres, contract may be avoided.
Q.14 Kartik agreed to sell his laptop to Vasant for a price to be fixed by Kusum a hardware engineer. However, before the delivery of the laptop, Kartik changed his mind and did not share any particulars and configuration of the laptop with Kusum, which made her unable to do the valuation. Kusum refused to do valuation.
Vasant needed laptop for his project, so he promised Kartik that, if the laptop is delivered to him, he would pay a reasonable price for it. However, Kartik decided not to sell his laptop to Vasant. Now, Vasant wants to know from you, being a legal expert, whether Kartik is bound by his promise as he agreed earlier to deliver his laptop to him at a reasonable price. If he does not agree to deliver what is the other remedy available to Vasant? Advise, referring to the provisions of the Sale of Goods Act, 1930. [Sept. 2024, 3 Marks; RTP Jan. 2026]
Ans. According to provisions of section 10 of the Sale of Goods Act, 1930, where there is an agreement to sell goods on the terms that the price has to be fixed by a third party and either he does not or cannot make such evaluation, the agreement shall be treated as void. Further, in case the third party is prevented by the default of either party from fixing the price, the defaulting party will be liable to pay damages to the other party (aggrieved party). However, a buyer who has received and appropriated the goods is bound to pay a reasonable price for them in any eventuality.
In the given case, Kartik agreed to sell his laptop to Vasant for a price to be fixed by Kusum. However, Kartik did not share the particulars of the laptop with Kusum which made her unable to do the valuation.
Thus, applying the above stated provisions to the given case it can be concluded that since the price remains undetermined, Kartik is not bound to sell his laptop to Vasant, even though he may have promised to supply the same at a reasonable price. Further in this case since Kusum was prevented by Karthik from determining the price, the only remedy that is available to Vasant is to claim damages from Kartik which he has sustained due to non-delivery of laptop.
Q.15 Rajnikant agrees to sell some specific goods coming on a ship name “Titanic” to Chiranjivi which will be delivered on arrival of “Titanic”. The ship arrived at the port but goods were not found on the ship. Chiranjivi had to procure the goods from open market at higher price. Afterwards, Chiranjivi sued Rajnikant for recovery of extra payment he made for goods. State with reasons, whether Rajnikant is liable to compensate Chiranjivi under the provisions of the Sale of Goods Act, 1930?
[MTP Sept. 2025]
Ans. According to the provisions of Section 6(2) of the Sale of Goods Act, 1930, Contingent Goods are those goods the acquisition of goods which by the seller depends upon a contingency i.e. an uncertain event, which may or may not happen. Contingent goods are a type of future goods and contracts made for the sale of contingent goods are in the nature of an ‘agreement to sell’ and not a ‘sale’ so far as the question of passing of property to the buyer is concerned. In other words, like the future goods, in the case of contingent goods also, the property does not pass to the buyer at the time of making the contract.
