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Unit 3
Performance of the contract
Introduction
The Sale of Goods Act, 1930 governs the legal framework for contracts involving the sale and purchase of
goods. A key aspect of the Act is the delivery of goods, which outlines how and when goods should be
transferred from the seller to the buyer. Proper delivery is essential to fulfill the contract and protect the
rights and duties of both parties, ensuring fairness and clarity in commercial transaction.

1. Who is a Buyer?
•A buyer is a person/entity acquiring goods or services for consideration.
•can be a consumer, business, or organization.
•Initiates purchase, negotiates terms, and pays the price.

2. Who is a Seller?
•A seller is a person/entity offering goods or services for sale.
•Responds to buyer inquiries, negotiates terms, and completes transactions.
•Can be a manufacturer, wholesaler, retailer, or service provider.

3. Rights and Duties of Buyer

A. Rights of Buyer
1. Right to Delivery of Goods as per Contract (Sections 31 & 32)
Buyer is entitled to receive goods as per the agreed terms (quantity, quality, time, place).

2. Right to Reject Non-Conforming Goods (Section 37)

If goods do not match the contract description, the buyer can reject them.

3. Right to Repudiate Contract for Un agreed Installments (Section 38(1))

Buyer can cancel the contract if goods are delivered in installments without prior agreement.

4. Right to be Informed of Sea Route Shipment (Section 39(3))

Seller must inform the buyer if goods are shipped via sea so that the buyer can arrange insurance.

5. Right to Examine Goods (Section 41)

Buyer can inspect goods before accepting them to check conformity.

6. Right to Sue for Price Recovery

If goods are not delivered, buyer can sue to recover the amount paid.

7. Right to Sue for Damages for Non-Delivery (Section 57)

Buyer can claim damages if the seller refuses or fails to deliver goods.

8. Right to Specific Performance

Buyer ca
n ask the court to compel the seller to deliver goods as per the contract.

9. Right to Sue for Breach of Warranty/Condition (Sections 59 & 60)

If goods don't meet agreed terms, the buyer can sue for compensation.

10. Right to Interest on Price Refund (Section 61)

Buyer can claim interest if the seller refunds the price due to breach.
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B. Duties of Buyer
1. Duty to Accept Delivery (Section 31)
Buyer must accept the goods when seller offers delivery as per the contract.
2. Duty to Pay the Price
Buyer must pay the agreed price in return for the goods.

3. Duty to Apply for Delivery (Section 35)

Buyer must request delivery if required by the contract.

4. Duty to Demand Delivery at Reasonable Hour (Section 36(4))

Delivery should be demanded at a practical and convenient time.

5. Duty to Accept Installments (Section 38(2))

If agreed, buyer must accept partial deliveries.

6. Duty to Bear Transit Risk (Section 40)

If goods are transported, buyer bears the risk of deterioration unless otherwise agreed.

7. Duty to Notify Rejection (Section 43)

If rejecting goods, buyer must inform the seller.

8. Duty to Take Delivery in Reasonable Time (Section 44)

Buyer must take delivery within a reasonable period after it is tendered.

9. Duty to Pay When Ownership Transfers (Section 55)

Buyer must pay the price once the ownership of goods passes.

10. Duty to Pay Damages for Refusal (Section 56)

If buyer refuses to accept goods without valid reason, they must compensate the seller.

4. Rights and Duties of Seller

A. Rights of Seller

1. Right to Reserve Disposal of Goods (Section 25(1))

Seller can retain control over goods until conditions are fulfilled.

2. Right to Assume Buyer’s Acceptance (Section 24)

If the buyer uses, retains, or does not reject goods within time, acceptance is assumed.

3. Right to Deliver on Buyer’s Application (Section 35)

Seller is obligated to deliver only when buyer formally requests.

4. Right to Deliver in Installments (Section 39(1))

If agreed, seller can deliver goods in parts.

5. Right to Exercise Lien (Section 47(1))

Seller can keep goods until the full payment is made.

6. Right to Stop Goods in Transit (Sections 49(2) & 50)

If buyer becomes insolvent, seller can stop goods during transit.
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7. Right to Resell Goods (Section 54

Seller can resell goods if buyer defaults.

8. Right to Withhold Delivery if Property Not Passed (Section 46(2))

If ownership hasn’t transferred, seller can withhold delivery.

9. Right to Sue for Price (Section 55)

If buyer refuses to pay after ownership passes, seller can sue.

B. Duties of Seller

1. Duty to Transfer Property in Goods

Seller must legally transfer ownership of goods to buyer.

2. Duty to Conform Goods to Contract

Goods must match agreed quality, quantity, and description.

3. Duty to Pass Good Title

Seller must pass a valid, undisputed ownership to the buyer.

4. Duty to Deliver Goods as per Contract (Section 31)

Delivery must match the terms like time, place, and manner.

5. Duty to Put Goods in Deliverable State

Goods must be ready for delivery (not under repair or incomplete).

6. Duty to Deliver in Time and Reasonable Hours (Sections 36(2) & 36(4)
Goods must be delivered within a specified or reasonable time.

7. Duty to Bear Delivery Expenses (Section 36(5))

Seller bears delivery expenses till goods are in deliverable state.

8. Duty to Deliver Agreed Quantity (Section 37(1))

Must deliver the exact quantity as per the contract.

9. Duty to Deliver in Installments if Buyer Desires (Section 38(1))

Must deliver in parts only if the buyer agrees.

10. Duty to Arrange for Insurance in Transit (Section 39(2))

Seller should ensure goods are insured during transport.

11. Duty to Inform Buyer about Sea Shipment (Section 39(3))

Must inform the buyer if goods are sent by sea for insurance purposes.

Rules as to Delivery of Goods

1. Effect of Delivery
Delivery must put the buyer in possession of the goods. (Actual or constructive possession)

Illustration:A agrees to sell a laptop to B. A does not need to physically hand it over if B takes it himself
from A's shop. Once B takes the laptop into his control—like carrying it away or placing it in his car—
delivery is complete because B is now in possession.
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-2. Delivery Must Be as per Contract

Seller must deliver goods strictly according to the terms of the contract.

Illustration:
X contracts to sell 100 bags of rice to Y, to be delivered on 1st June at Y’s warehouse. X delivers only 70
bags on 3rd June.
This is a breach of contract because X did not deliver the goods according to the agreed quantity, time,
and place.

3. Buyer Must Apply for Delivery

Seller is to deliver when the buyer claims delivery.
It is the buyer’s duty to apply for it.

Illustration:
M agrees to sell a generator to N. The contract states that N must collect the generator from M’s
warehouse. N fails to visit or request delivery.
M is not at fault for non-delivery because the buyer (N) did not apply for delivery, as required by the
contract.

4. Goods with a Third Party

If goods are with a third person, delivery occurs only when that person acknowledges holding the goods
on behalf of the buyer.

Illustration:
A sells a consignment of furniture to B. At the time of sale, the furniture is stored in a warehouse owned
by C.
Delivery is not complete until C acknowledges to B that he now holds the furniture on B’s behalf.

5. Tender of Delivery
Seller must offer goods in a deliverable state.
Seller is not required to transport the goods unless agreed
If the seller must send them, they must be sent within a reasonable time if no time is fixed.

Illustration:
P agrees to sell 500 kg of rice to Q. The contract is silent about transportation. P keeps the rice packed
and ready at his shop and informs Q to collect it. Q does not come.
P has fulfilled his duty by tendering delivery. Since there was no agreement that P would send the goods,
he is not bound to transport them to Q’s location.

6. Place of Delivery
If the contract specifies a place, goods must be delivered there, during working hours on a working day.
If no place is mentioned:
Deliver at the place where the goods were at the time of the contract, or
If goods were not in existence, then at the place of manufacture or production.

Illustration
R sells a machine to S with delivery at S’s factory. R must deliver it there.
If no place is mentioned, R can deliver it at his warehouse.

7. Cost of Delivery
Seller bears delivery-related expenses, including making the goods deliverable.
Buyer bears costs of receiving the goods.
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Illustration
M sells goods to N. M must pay to pack and prepare the goods for delivery, but N pays for the cost of
collecting or receiving them.
.
8. Risk of Deterioration in Transit
If goods are to be delivered at a place different from their location, the buyer bears the transit risk, unless
agreed otherwise.

Example:

T sells goods stored in City A to U, who wants them delivered to City B. If the goods get damaged while
being transported from A to B, U (the buyer) bears the loss, unless they agreed differently.

9. Delivery in Instalments
Buyer is not bound to accept instalments, unless the contract allows it.

Illustration
X contracts to buy 1000 chairs from Y without any clause about installments. If Y tries to deliver 200
chairs at a time, X can refuse because there was no agreement for installment delivery

Conclusion

The Sale of Goods Act requires sellers to deliver goods in the agreed condition and place, ready for the buyer to
take possession (deliverable state). Sellers must bear delivery preparation costs, while buyers must apply for and
accept delivery on time and pay the price. Buyers usually bear risk during transit if goods are sent elsewhere. Both
parties’ rights and duties ensure smooth, fair transactions and protect their interests