PERFORMANCE OF
CONTRACT
SECTION 31-40
PERFORMANCE OF CONTRACT
• Delivery
• According to Section 2(2) of the SOGA Delivery means voluntary transfer of possession of goods from one person
to another. Hence, if a person takes possession of goods by unfair means, then there is no delivery of goods.
• The Duties of the Buyer and Seller (Section 31)
• Section 31 — It is the duty to the seller to deliver the goods and of the buyer to accept and pay for them, in
accordance with the terms of the contract of sale.
• Performance of a contract of sale implies a duty of the seller to deliver the goods, and of the buyer to accept the
delivery of the goods and make payment in accordance with the terms of the contract.
• Thus, it is the duty of the seller to deliver the goods and the buyer to pay for them and accept them, as per the terms
of the contract and the law on sales.
PERFORMANCE OF CONTRACT
• Concurrency of Payment and Delivery (Section 32)
• Section 32, "Payment and delivery are concurrent conditions.—Unless otherwise agreed,
delivery of the goods and payment of the price are concurrent conditions, that is to say, the
seller shall be ready and willing to give possession of the goods to the buyer in exchange for the
price, and the buyer shall be ready and willing to pay the price in exchange for possession of
the goods."
• The delivery of goods and payment of the price are concurrent conditions as per the law on sales
unless the parties agree otherwise. So, the seller has to be willing to give possession of the goods to
the buyer in exchange for the price. On the other hand, the buyer has to be ready to pay the price in
exchange for possession of the goods.
PERFORMANCE OF CONTRACT
• How is Delivery Made?
• Delivery—Delivery of goods sold may be made by doing anything which the parties agree shall be treated as
delivery or which has the effect of putting the goods in the possession of the buyer or of any person authorized
to hold them on his behalf. (Sec. 33)
• Delivery of goods sold may be made by doing anything which the parties agree shall be treated as delivery or which
has the effect of putting the goods in the possession of the buyer or of any person authorized by him. The delivery of
goods can be made either by putting the goods in the possession of the buyer or any person authorized by him to hold
them on his behalf or by doing anything else that the parties agree to.
• Mode of Delivery :
• 1. Actual delivery: Actual delivery means physical transfer of goods by the seller to the buyer. The delivery may be
made by the agent of the seller to the agent of the buyer.
PERFORMANCE OF CONTRACT
• 2. Symbolic delivery:
• Where the goods are bulky, it is usual for the seller to give symbolic delivery. For
example, where the timber is lying in a warehouse, the delivery of key is regarded as
symbolic delivery which has the effect of putting the buyer in possession or actual control
of the goods.
• It should be noted that the key must give complete access to the goods. If for example,
the key of a room in which the goods are kept is given but the key of the main gate or
door is not given, it is not regarded as a valid delivery
PERFORMANCE OF CONTRACT
• 3. Constructive delivery:
• In place of actual or symbolic delivery, the goods may be delivered without any change in
their actual or visible custody. For example, where the goods at the time of sale are in
possession of a third person and such third person acknowledges to the buyer that he
holds the goods on his (buyer’s) behalf, the delivery is called constructive delivery.
• Example:
• A sells to B 100 bags of rice lying in C’s warehouse. C acknowledges to B that he is
holding these 100 bags on behalf of B. It is constructive delivery by A to B.
PERFORMANCE OF CONTRACT
RULES REGARDING DELIVERY :
Delivery to Deterioration
Part delivery
carrier/wharfinger during transit
Buyer to apply for Instalment Buyer's right to
delivery deliveries examine the goods
Delivery of wrong
Place of delivery
quantity
Expenses of
Time for delivery
delivery
PERFORMANCE OF CONTRACT
• Rules Regarding Delivery :
• 1. Delivery by whom and to whom (Sec. 31):
• It is the duty of the seller to deliver the goods and of the buyer to accept and pay for the goods
delivered.
• 2. Delivery and payment are concurrent conditions (Sec. 32):
• Unless otherwise agreed, delivery of goods and payment of price are concurrent conditions, i.e., at
the same time or reciprocally.
• The seller shall be ready and willing to deliver the goods and the buyer shall be ready and willing to
pay the price in exchange for delivery of the goods.
PERFORMANCE OF CONTRACT
• 3. Mode of delivery (Sec. 33):
• Section 33 Delivery.—Delivery of goods sold may be made by doing anything which
the parties agree shall be treated as delivery or which has the effect of putting the
goods in the possession of the buyer or of any person authorised to hold them on his
behalf.
• The delivery may be actual, symbolic or constructive. The parties may agree to any mode
of delivery expressly or impliedly.
PERFORMANCE OF CONTRACT
• 4. Effect of part delivery (Sec. 34):
• A delivery of part of the goods, in the process of the delivery of the whole, has the
same effect, for the purpose of passing the property in such goods, as a delivery of the
whole. However, delivery of part of the goods, with an intention of severing it from the
whole, does not operate as a delivery of the remainder.
• If a part-delivery of the goods is made in progress of the delivery of the whole, then it has
the same effect for the purpose of passing the property in such goods as the delivery of the
whole. However, a part-delivery with an intention of severing it from the whole does not
operate as a delivery of the remainder.
PERFORMANCE OF CONTRACT
• Example:
• Certain goods lying at wharf were sold in a lot. The seller instructed the wharfinger to
deliver them to the buyer who had paid for them and the buyer, thereafter, accepted them
and took away part. Held, there was delivery of the whole.
• A ship arrived at the port laden with a cargo of wheat. The owner endorsed the bill of lading
to A. The master of the ship reported to the customs that the cargo was for A. Next day, A
made entry of the wheat in his name at the customs house. Thereupon, part of the cargo was
delivered to A. Held, this constituted a delivery of the whole [Slubey v. Hey ward].
PERFORMANCE OF CONTRACT
• 5. Delivery to be made on request of the buyer (Sec. 35):
• Section 35, "Buyer to apply for delivery.— Apart from any express contract, the seller of
goods is not bound to delivery them until the buyer applies for delivery.
• Thus, apart from any express contract, a seller is not bound to deliver the goods unless and until
requested by the buyer.
• If the seller fails to deliver the goods on the application of the buyer, the seller is guilty of breach
of contract.
• A seller is not bound to deliver the goods until the buyer applies for delivery unless the parties
have agreed to other terms in the contract.
PERFORMANCE OF CONTRACT
• 6. Place of delivery [Sec. 36(1)]:
• Rules as to delivery.— (1) Whether it is for the buyer to take possession of the goods or for the seller to send
them to the buyer is a question depending in each case on the contract, express or implied, between the
parties. Apart from any such contract, goods sold are to be delivered at the place at which they are at the
time of the sale, and goods agreed to be sold are to be delivered at the place at which they are at the time of
the agreement to sell, or, if not then in existence, at the place at which they are manufactured or produced.
• In the absence of an agreement, express or implied, the goods sold are to be delivered at the place at which they
are at the time of sale. The goods agreed to be sold are to be delivered at the place at which they are at the time of
the agreement to sell, or if not then in existence, at the place at which they are manufactured or produced. The
delivery of goods to the carrier for transmission to the buyer is prima facie deemed to be ‘delivery to the buyer’
unless contrary terms exist in the contract.
PERFORMANCE OF CONTRACT
• When a sale contract is made, the parties might agree to certain terms for delivery, express or
implied. Depending on the agreement, the buyer might take possession of the goods from the
seller or the seller might send them to the buyer. If no such terms are specified in the contract,
then as per law on sales.
• The goods sold are delivered at the place at which they are at the time of the sale.
• The goods to be sold are delivered at the place at which they are at the time of the agreement to
sell.
• However, if the goods are not in existence at such time, then they are delivered to the place
where they are manufactured or produced.
PERFORMANCE OF CONTRACT
• 7. Time of delivery:
• Section 36(2), "Where under the contract of sale the seller is bound to send the
goods to the buyer, but no time for sending them is fixed, the seller is bound to send
them within a reasonable time."
• Section 36(4), "Time for tender of delivery, -Demand or tender of delivery may be
treated as ineffectual unless made at a reasonable hour. What is a reasonable hour is
a question of fact."
PERFORMANCE OF CONTRACT
• If any time is specified by the parties, the goods must be delivered by that time.
• (i) If the seller is bound to send the goods to the buyer and no time has been fixed by the parties,
the goods must be delivered within a reasonable time [Sec. 36(2)]. What is reasonable time is a
question of fact in each case?
• (ii) The demand for delivery should be made at a reasonable hour. What is a reasonable hour is a
question of fact?
• Consider a contract of sale where the seller agrees to send the goods to the buyer, but not time of
delivery is specified. In such cases, the seller is expected to deliver the goods within a
reasonable time.
PERFORMANCE OF CONTRACT
• 8. Delivery of goods in possession of third persons [Sec. 36(3)]: Where the goods at
the time of sale are in the possession of a third person, there is no delivery by seller
to buyer unless and until such third person acknowledges to the buyer that he holds
the goods on his behalf:
• Provided that nothing in this section shall affect the operation of the issue or
transfer of any document of title to goods.
PERFORMANCE OF CONTRACT
• Where the goods at the time of sale are in possession of a third person, there is no delivery by the seller to
the buyer unless such third person acknowledges to the buyer that he holds the goods on his behalf.
• It should be noted that this rule does not affect the transfer of goods by means of a document of title of
goods, e.g., where goods have been sold by a bill of lading, consent of the third party is not necessary.
• If at the time of sale, the goods are in possession of a third party. Then there is no delivery unless the third
party acknowledges to the buyer that the goods are being held on his behalf. It is important to note that
nothing in this section shall affect the operation of the issue or transfer of any document of title to the
goods.
• It is important that the demand or tender of delivery is made at a reasonable hour. If not, then it is rendered
ineffectual. The reasonable hour will depend on the case.
PERFORMANCE OF CONTRACT
• 9. Expenses of delivery:
• Section 36(5),"Unless otherwise agreed, the expenses of and incidental to putting the
goods into a deliverable state shall be borne by the seller."
• Unless otherwise agreed, the expenses of and incidental to putting the goods into a
deliverable state shall be borne by the seller. In case the buyer is compelled to pay these
expenses, he can recover the same from the seller.
• The seller will bear all expenses pertaining to putting the goods in a deliverable state
unless the parties agree to some other terms in the contract.
PERFORMANCE OF CONTRACT
• 10. Effect of delivery of wrong quantity (Sec. 37)
• Section 37. Delivery of wrong quantity.—(1) Where the seller delivers to the buyer a quantity of goods less than he
contracted to sell, the buyer may reject them, but if the buyer accepts the goods so delivered he shall pay for them at the
contract rate.
• (2) Where the seller delivers to the buyer a quantity of goods larger than he contracted to sell, the buyer may accept the
goods included in the contract and reject the rest, or he may reject the whole. If the buyer accepts the whole of the
goods so delivered, he shall pay for them at the contract rate.
• (3) Where the seller delivers to the buyer the goods he contracted to sell mixed with goods of a different description not
included in the contract, the buyer may accept the goods which are in accordance with the contract and reject the rest,
or may reject the whole.
• (4) The provisions of this section are subject to any usage of trade, special agreement or course of dealing between the
parties.
PERFORMANCE OF CONTRACT
• (i) Short Delivery [Sec. 37(1)]:
• Where the seller delivers lesser quantity than contracted for, the buyer has the option to accept
or reject the whole. Naturally, when he accepts, he must pay for them at the contract price. If the
seller delivers a lesser quantity of goods as compared to the contracted quantity, then the buyer
may reject the delivery. If he accepts it, then he shall pay for them at the contracted rate.
• Example:
• A ordered B to supply 10 bags of rice. B supplied only 6 bags. A is at liberty to accept 6 bags or
to reject them. When he accepts them, he must pay for the 6 bags at the contracted price.
PERFORMANCE OF CONTRACT
• (ii)Large delivery:
• If the seller delivers a larger quantity of goods as compared to the contracted quantity, then the buyer may
accept the quantity included in the contract and reject the rest. The buyer can also reject the entire delivery. If
he wants to accept the increased quantity, then he needs to pay at the contract rate.
• Example:
• A ordered B to supply 10 bags of rice. B supplied 15 bags. A has the option to accept 10 bags and pay for
them. He may accept even 15 bags and pay for him. He is entitled to reject the whole [Cunliffe v. Harrison],
• It should be noted that the right to reject the goods in excess of the contract does not apply where the
variation is negligible. This is due to the reason that the law does not take account of trifles, i.e., the Court
applies the maxim de minimise non curat lex.
PERFORMANCE OF CONTRACT
• (iii) Delivery of mixed goods [Sec. 37(3)]:
• Where the seller delivers to the buyer the goods he contracted to sell mixed with goods of a different description not
included in the contract, the buyer may accept the goods which are in accordance with the contract and reject the
rest, or may reject the whole. If the seller delivers a mix of goods where some part of the goods are mentioned in
the contract and some are not, then the buyer may accept the goods which are in accordance with the contract and
reject the rest. He may also reject the entire delivery.
• Example: Certain specific articles of China were ordered. The seller in addition sent some of his articles of China.
Held, the buyer could reject the whole [Levy v. Green.]
• The provisions of this section are subject to any usage of trade, special agreement or course of dealing
between the parties. These rules can be modified by a contract expressly or implied, i.e., usage or custom
of the trade [Sec. 37 (4)].
PERFORMANCE OF CONTRACT
• 11. Delivery by installment (Sec. 38):
• Instalment deliveries.—(1) Unless otherwise agreed, the buyer of goods is not bound to accept
delivery thereof by instalments.
• (2) Where there is a contract for the sale of goods to be delivered by stated instalments which
are to be separately paid for, and the seller makes no delivery or defective delivery in respect of
one or more instalments, or the buyer neglects or refuses to take delivery of or pay for one or
more instalments, it is a question in each case depending on the terms of the contract and the
circumstances of the case, whether the breach of contract is a repudiation of the whole
contract, or whether it is a severable breach giving rise to a claim for compensation, but not to
a right to treat the whole contract as repudiated.
PERFORMANCE OF CONTRACT
• 11. Delivery by installment (Sec. 38):
• Unless otherwise agreed, the buyer of goods is not bound to accept delivery in installments. He
may, if he so desires, refuse the goods.
• Example:
• 25 tons of pepper October/November shipment was sold. The seller shipped 20 tons in November
and 5 tons in December. Held, the buyer was entitled to reject the whole [Reuter v. Sala],
• The buyer does not have to accept delivery in installments unless he has agreed to do so in the
contract. If such an agreement exists, then the parties are required to determine the rights and
liabilities and payments themselves.
PERFORMANCE OF CONTRACT
• In case there is a contract for the sale of goods to be delivered by stated installments which are to be
paid for separately and the buyer or seller commits a breach in respect of one or more installments. In
such a case a question arises as to whether the buyer or seller can treat it as a breach of the whole
contract, or a severable breach giving rise to a claim for compensation.
• The answer to this question would depend upon facts and circumstances of each case. However, the
following factors should be kept in mind:
• (i) The quantum of breach which it bears to the contract as a whole.
• (ii) The degree of probability that it will be repeated [Maple Flock Co. Ltd. v. Universal Products Ltd.
• (iii) The nature of breach whether it goes to the root of the transactions.
PERFORMANCE OF CONTRACT
• Section 39. Delivery to carrier or wharfinger.—
• (1) Where, in pursuance of a contract of sale, the seller is authorised or required to send the goods to the buyer, delivery
of the goods to a carrier, whether named by the buyer or not, for the purpose of transmission to the buyer, or delivery of
the goods to a wharfinger for safe custody, is prima facie deemed to be a delivery of the goods to the buyer.
• (2) Unless otherwise authorised by the buyer, the seller shall make such contract with the carrier or wharfinger on behalf
of the buyer as may be reasonable having regard to the nature of the goods and the other circumstances of the case. If the
seller omits so to do, and the goods are lost or damaged in course of transit or whilst in the custody of the wharfinger, the
buyer may decline to treat the delivery to the carrier or wharfinger as a delivery to himself, or may hold the seller
responsible in damages.
• (3) Unless otherwise agreed, where goods are sent by the seller to the buyer by a route involving sea transit, in
circumstances in which it is usual to insure, the seller shall give such notice to the buyer as may enable him to insure them
during their sea transit, and if the seller fails so to do, the goods shall be deemed to be at his risk during such sea transit.
PERFORMANCE OF CONTRACT
• 12. Delivery to carrier or wharfinger (Sec. 39).
• (i) Unconditional delivery to carrier or wharfinger means delivery by buyer (sec.
39):
• Where in pursuance of a contract of sale, the seller is authorized or required to send the
goods to the buyer, delivery of goods to a carrier for the purpose of transmission to the
buyer or to a wharfinger for safe custody is prima facie deemed to be a delivery of the
goods to the buyer.
PERFORMANCE OF CONTRACT
• (ii) Seller’s duty to reasonably secure goods before delivery [Sec. 39(2)]:
• Where the goods are delivered to a carrier or wharfinger, it is the duty of the seller to reasonably secure
the responsibility of the carrier for the safe delivery of the goods. In case the seller fails to do so, he will
be liable to make good the loss suffered by the buyer.
• Example:
• B, at Agra orders A, who lives at Calcutta, three casks of oil to be sent to him by railway. A takes three
casks of oil directed to B to the railway station and leaves them there without conforming to the rules
which must be complied with in order to render the railway company liable for their safe carriage. The
goods are lost on the way. There has not been a sufficient delivery to charge B in a suit for the price.
[Clarke v. Hutchin].
PERFORMANCE OF CONTRACT
• (iii) Seller’s duty to inform the buyer to get the goods insured in case the goods
involve a sea transit [Sec. 39(3)]:
• Where the goods are sent by the seller to the buyer by a route involving sea transit, the
seller is bound to give such notice to the buyer as may enable him to insure the goods
during sea transit. Failure to do so will mean that the goods are at the seller’s risk during
the transit and the seller will have to make good the loss suffered by the buyer.
PERFORMANCE OF CONTRACT
• Deterioration during transit (Section 40)
• Section 40, "Risk where goods are delivered at distant place.—Where the seller of
goods agrees to deliver them at his own risk at a place other than that where they
are when sold, the buyer shall, nevertheless, unless otherwise agreed, take any risk
of deterioration in the goods necessarily incident to the course of transit."
• If the goods are to be delivered at a distant place, then the liability of deterioration
incidental to the course of the transit lies with the buyer even though the seller agrees to
deliver at his own risk.
PERFORMANCE OF CONTRACT
• Section 41, "Buyer’s right of examining the goods.—
• (1) Where goods are delivered to the buyer which he has not previously examined, he
is not deemed to have accepted them unless and until he has had a reasonable
opportunity of examining them for the purpose of ascertaining whether they are in
conformity with the contract.
• (2) Unless otherwise agreed, when the seller tenders delivery of goods to the buyer, he
is bound, on request, to afford the buyer a reasonable opportunity of examining the
goods for the purpose of ascertaining whether they are in conformity with the
contract.
PERFORMANCE OF CONTRACT
• 13. Acceptance of delivery by the buyer:
• (i) Buyer’s right to examine the goods [Sec. 41)]:
• Where goods are delivered to the buyer which he has not previously examined, he is not deemed
to have accepted them unless and until he has had a reasonable opportunity of examining them
for the purpose of ascertaining whether they are in conformity with the contract. If the buyer did
not get a chance to examine the goods, then he is entitled to a reasonable opportunity of
examining them. The buyer has the right to ascertain that the goods delivered to him are in
conformity with the contract. The seller is bound to honor the buyer’s request for a reasonable
opportunity of examining the goods unless the contrary is specified in the contract.
PERFORMANCE OF CONTRACT
• Section 42, "Acceptance.—The buyer is deemed to have accepted the goods
• when he intimates to the seller that he has accepted them, or
• when the goods have been delivered to him and he does any act in relation to them
which is inconsistent with the ownership of the seller, or
• when, after the lapse of a reasonable time, he retains the goods without intimating to
the seller that he has rejected them."
PERFORMANCE OF CONTRACT
• When is buyer deemed to have accepted the delivery of goods? (Sec. 42):
• A buyer is deemed to have accepted the delivery of goods when:
• He informs the seller that he has accepted the goods; or
• Does something to the goods which is inconsistent with the ownership of the seller; or
• Retains the goods beyond a reasonable time, without informing the seller that he has
rejected them.
PERFORMANCE OF CONTRACT
• The buyer has the following options:
• (i) Short delivery: Lesser quantity than ordered for. He may accept or reject the whole.
• (ii) Excess delivery: More quantity than ordered for. He may accept the quantity asked and pay for the same or reject the
whole.
• (iii) Delivery of goods ordered mixed with other goods not ordered: He may accept the goods ordered and reject the
rest or the whole.
• 11. The buyer is not bound to accept the delivery by installments.
• 12. Unconditional delivery to the carrier or wharfinger means delivery to the buyer. In this case, the seller should:
• (1) Reasonably secure the goods, and
• (2) In case of goods involving sea route, the seller should inform the buyer to get the goods insured.
PERFORMANCE OF CONTRACT
• Return of Rejected Goods (Section 43)
• Section 43, "Buyer not bound to return rejected goods.—Unless otherwise agreed,
where goods are delivered to the buyer and he refuses to accept them, having the
right so to do, he is not bound to return them to the seller, but it is sufficient if he
intimates to the seller that he refuses to accept them.
• If a buyer, within his right, refuses to accept the delivery of goods, then he is not bound to
return the rejected goods to the seller. He needs to inform the seller of his refusal though.
This is true unless the parties agree to other terms in the contract.
PERFORMANCE OF CONTRACT
• Refusing Delivery of Goods (Section 44)
• Section 44, "Liability of buyer for neglecting or refusing delivery of goods.—When the seller is ready and
willing to deliver the goods and requests the buyer to take delivery, and the buyer does not within a
reasonable time after such request take delivery of the goods, he is liable to the seller for any loss occasioned
by his neglect or refusal to take delivery, and also for a reasonable charge for the care and custody of the
goods:
• Provided that nothing in this section shall affect the rights of the seller where the neglect or refusal of the
buyer to take delivery amounts to a repudiation of the contract."
• If the seller is willing to deliver the goods and requests the buyer to take delivery, but the buyer fails to do so
within a reasonable time after receiving the request, then he is liable to the seller for any loss occasioned by his
refusal to take delivery. He is also liable to pay a reasonable charge for the care and custody of goods.
