Study Points

Following are the important rules regarding the delivery of good.

1. Delivery Ways :-
When goods are sold then delivery can be made by symbolic, actual or constructive way. It depends upon the parties that which way they adopt.


2. Time of Delivery :-
The seller should deliver the goods on a specified date. If the time is not fixed then delivery should be with in a reasonable time.


3. Payment And Delivery :-
Both the actions should be at the same time. The buyer should make the payment and seller should deliver the goods in exchange of payment at the same time, just like the cash sale on the customer of a super stores.


4. Place of Delivery :-
A delivery of goods should be at a specified place mentioned in the contract.
Example :- "X" agrees with "Y" to supply furniture on 38-Tipu Road Ahmadabad. "X" is bound to supply the goods on the same place, where parties made contract.


5. Delivery Expenses :-
The expenses of putting the goods into deliverable state must be born by the seller, otherwise as the parties agree.
Example :- "X" sells the T.V to "Y". The expenses of packing the T.V will be born by the seller.


6. Delivery to Carrier :-
When seller is required to send the goods to the buyer, the delivery to carrier is considered delivery to the buyer.
Example :- "X" sells computer to "Y". "X" handed over the computer to the carrier to be delivered to "Y". it means delivery has been made.


7. Defective Delivery :-
A buyer can reject or accept the defective and wrong delivery. In case of rejection buyer is not bound to return it to the seller.
Example :- Mr. Imik buys 1000 books of Economics from Khan publishers. Publishers sends 500 books. Mr. Imik may reject the whole or accept 500 and ask for the rest.


8. Good In the Custody of Third Party :-
If the sellers goods are in the custody of the third party, the delivery is not possible until the third party agrees to handed over the sold goods to the buyer on behalf of the seller.
Example :- "M" has his cycle in the store of "Y". "M" sells the cycle to "B" and gives him letter to take from "Y". "Y" agrees to deliver the cycle to "B".


9. Delivery in Installments :-
The buyer is not bound to receive the goods in installments but if the buyer and seller are agree then the delivery of goods may be made in installments.


10. Buyer Should Apply for Delivery :-
It is the duty of the buyer that he should apply for the delivery of goods. The seller is not bound to supply the goods without the demand of the buyer. If seller fails to supply the goods on demand then he will be held responsible.


11. Partial Delivery Effect :-
If some portion of the goods has been made with the intention of delivering the rest of goods then the ownership of the whole goods is deemed to pass to the buyer as some portion is delivered.
Example :- "X" sold 10 bikes to "Y". "Y" received 5 and paid their price. "Y" refused to accept the rest 5 bikes. It was a partial delivery.


12. Refusal of Buyers Liability :-
When seller is ready to sell the goods. While buyer is not ready to accept the delivery, then buyer will be liable to the seller for the loss arising due to his refusal.
Example :- "X" agrees to sell out ten bags of apples to "B". "B" refuses to take delivery. Apples destroy and "X" suffers a loss. "X" is entitled to claim damages from "B".


13. Acceptance Of Buyer :-
The buyers acceptance can be judged by the following facts :

1. Buyer himself can intimate the seller that he has accepted the goods.

2. By his any action related to the goods like resale or by pledge.

3. When he retains for a reasonable time, it means he has accepted the goods.

Delivery :-
According to the sales act, it is defined in the following words, "Delivery means voluntary transfer of possession from one person to another."


"Before delivery the goods must be in deliverable state."

In a contract of sale delivery is an essential element.


Kinds Of Delivery :-
Following are the important kinds of delivery :

1. Actual or Physical Delivery :-
It is called an actual delivery when a seller delivers the goods physically to the buyer or his agent, to take the possession.

If the seller has received the price but does not deliver the goods to the buyer. They buyer can sue the seller for price with reasonable interest.

Example :- Mrs. Anu sells a car to Mr. Narain. Car is delivered to Mr. Narain. It will be called the actual delivery.


2. Symbolic Delivery :-
If the key of any store is delivered to any person, it will be considered the goods in the store are also delivered to that person. It is a symbolic delivery.

Example :- Mr. Ram sells the car to Mr. Anarta which are kept in the "Show Room". Mr. Ram gives the key of show room to Mr. Anarta. It is a symbolic delivery.


3. Constructive Delivery :-
When there is a change in the legal character without any visible change in actual and visible custody it is called constructive delivery.

Example :- Mr. Andor has bus, which he has rented out to Mr. Nelson. It is in the custody of Mr. Nelson. Mr. Andor sells and transfers complete title to Mr. Hick. The bus remained in the custody of Mr. Nelson. There is no change in the custodian. Here only the title of the property has changed. Now Mr. Nelson agrees to hold on behalf of the buyer. It is called constructive delivery.


There are also some other kinds :

4. Implied Deliver.

5. Partial Delivery.

6. Mixed Delivery.

7. Delivery in Installments.

8. Short Delivery.

9. Delivery In Excess of Quantity.

10. Delivery of Goods of Inferior Quality.

Remedies To Parties For the Breach of Contract of Sale :-
Following remedies are available to both the parties :


REMEDIES FOR SELLER

1. Suit For the Price :-
When the goods are passed to the buyer under the contract of sale and buyer refuses or neglects to pay, then a seller may sue him for the payment.


2. Goods Not Transferred :-
If goods are not passed to the buyer but according to the contract if the payment is not made in time, a seller has a right to sue for price.


3. Suit For Damages :-
If a buyer refuses to accept the goods or neglects to make payment, a seller has right to sue for damages for non-acceptance.


4. Liability of Buyer :-
A buyer is liable to the seller for any loss occurred by his negligence or refusal in taking the delivery.



REMEDIES FOR BUYER

1. Recovery of Prices & Interest :-
The seller or buyer may recover interest or special damages if these are recoverable by law. If the seller has received the price but does not deliver the goods to the buyer. The buyer can sue the seller for price.

Example :- "M" agrees to buy a bus from "N" and makes the payment in advance. "M" does not supply the bus. "M" can sue for refund of price with interest.


2. Suit For Losses :-
A buyer may sue the seller for damages if a seller refuses or wrongfully neglects to deliver the goods.

Example :- "X" sells 100 bags of sugar to "Y" at Rs. 5000 per bag. "X" does not supply the fixed date. The price f sugar increases. "Y" can sue for damages due to non delivery.


3. Application For Specific Performance :-
If the seller refuses to deliver the specific goods to the buyer, court may compel the seller to deliver the goods and issue the decree of specific performance on the application of buyer.

A decree is granted. When subject matter of the contract is about rare goods.

Example :- Mr. Chand promises to Mr. Khurli a rare Diamond. Later on Mr. Chand refuses. Mr. Khurli can sue for specific performance.


4. Suit For Breach Warranty :-
In some cases a buyer has also a remedy to sue where there is a breach of warranty by the seller.

The buyer is entitled to sue for damages if he has paid the price to the seller. If the buyer has not paid the price he may ask the seller to reduce the price.

Example :- "X" promises to sell and deliver the computers to "Y" on 1st April 2011. But "X" delivers on 1st May. "Y" can claim damages.


5. Suit For Cancellation :-
If there is a breach of condition by the seller, the buyer can avoid the contract and claim damages.

Example :- "X" agrees to sell to "Y" the Honda car. "X" sends Toyota car to "Y". "Y" can avoid the contract and claim damages.

UNPAID SELLER :-

Seller :- A person who sells the goods or agrees to sell the goods is called seller.

Unpaid :- It means payment is not made or without payment.

In simple words, "Unpaid seller" means a person who has sold the goods for a price but price has not been paid to him.


Sales act defines the "unpaid seller" in the following words :

Unpaid Seller Is A Person :-

i. To whom the whole price has not been paid or tendered.

ii. And where a bill of exchange or other negotiable instruments has been accepted by him as a condition on which it was received has not been fulfilled by reason of dishonor of the instrument or otherwise.


It is also declares that any person who is in the position of a seller like agent is also considered seller.



Rights Of Unpaid Seller or Lien Of Unpaid Seller :-

He has following important rights against goods.


1. Right of Lien :-
For the recovery of price an unpaid seller has a right to keep the goods in his own possession.

Example :- Mr. Hunny sells the goods to Mr. Abhijit for Rs. 10 lac. Mr. Abhijit pays 5 lac and promises to pay the remaining 5 lac after two month. Mr. Hunny has a right of lien on the goods.


2. Right of Stopping :-
If buyer becomes insolvent, an unpaid seller has a right of stopping the goods in transit.

Example :- "X" sells 100 bales of cotton to "Y" but delivery will be two stages. "X" delivers 50 bales first. Later on he comes know that "Y" has become insolvent. "X" can stop delivery of bales in transit.


3. Right of Resale :-
An unpaid seller is considered the owner of the goods until he is not paid by the buyer. So he has a right to sell his goods subject to few conditions.

Example :- "X" sells one horse to "Y" on credit. "Y" does not pay. "X" can resell to other person.


4. Right of Delivery :-
The unpaid seller has a right of with holding the delivery of goods where the property in the goods has not passed to the buyer.


5. Right of Claim :-
The unpaid seller has also a right to claim the buyer for the prices of goods.


i. Suit For Price :- If the goods have passed to the buyer and buyer refuse to pay the price, the seller can sue for price.

Example :- "M" sells the goods to "Y" for Rs. 5 lac. "Y" refuses to pay. "M" can sue for price.


ii. Suit For Damages For Non Acceptance :- If buyer refuses to accept and pay for the goods, the seller has the right to sue him for damages non-acceptance. He can recover only damages and not full price.


iii. Suit For Interest & Special Damages :- The unpaid seller can recover the reasonable interest on the unpaid price goods sold. The seller can also sue the buyer for special damages where both the parties are aware of such loss at the time of contract.


Termination Of Lien :-

An unpaid seller loses the lien in the following cases :

1. Termination By Waiver :-
If an unpaid seller himself waives his right of lien then it will be terminated.


2. Goods in Buyer's Possession :-
When a buyer or his agent obtains the possession for goods lawfully, unpaid seller lien terminates.


3. Does Not Reserve The Right of Disposal :-
When unpaid seller fails to reserve the right of disposal of the goods at the times of delivery to the bailee for transferring it to the buyer. Then this right of lien terminates.

Transfer of Title By The Owner :-

"A seller cannot convey a better title to the buyer then he himself has."

Only the owner of the goods or his authorized person can sell the goods. If the seller is not the owner of the good then a buyer can not become the owner of the good even he has paid the value of good.

Example :- Mr. Nonee steal a car and sells to Mr. Rao for sale. Mr. Rao cannot become the owner of a car because Mr. Nonee seller was not the owner of car.


1. Agent Exceptions of Rules :-
If goods are in a possession of a mercantile agent, he can pass a good title even he had no authority or his authority was restricted.


2. Sale By Unpaid Seller :-
An unpaid seller can sell the goods to the subsequent buyer if first buyer fails to make the full payment.

Example :- Mr. Fiji sells a horse to Miss. Fauzi for ten thousand and receives Rs. 3 thousand advance. Miss. Fauzi promises to pay the balance on next Sunday at the time of delivery. Miss. Fauzi does not pay the balance on Sunday. Mr. Fiji retains the horse and sells it to Mr. Maddy.


3. Sale By Pledgee :-
Under some special circumstances a pledgee can also sell the goods and buyer also gets a good title.

Example :- Mr. Nelson borrows Rs. 10 lac from commercial bank and pledges his 10 acre land. Mr. Nelson fails to return the loan and Commercial bank sells the land to Mr. Rishi the buyer gets the good title.


4. Sale of Lost Goods :-
If a person finds some lost good. Finder can sell the goods under some circumstances. The buyer gets the good title.

Example :- Mr. Zaib finds a lost cow in the well. He hires the services of some people and draws the cow out of well. He spends Rs. 5 thousand on this event. Mr. Rana owner of the cow comes to know about the refuses to pay Rs. 5 thousand to Mr. Zaib. Mr. Zaib sells the cow Mr. Kumar. Mr. Kumar gets a good title.


5. Mercantile Agent :-
If the goods or documents of title are in the possession of a mercantile agent, he can pass a good title. He can convey a better title to the buyer without having any authority to do so.


6. Second Sale Due To Possession :-
A person has sold the goods but the goods or documents continuously remains in his possession. He may sell them to the third party. If third party obtains the delivery of the goods and he has no knowledge about the previous sale he will get a good title.

Example :- Mr. Kohli sells a horse to Miss. Jolly has no place to keep it in her house. She leaves the horse in the house of Mr. Kohli. Mr. kohli sells horse Miss. Preety fraudulently who buys in god faith. Miss. Preety will get a good title to the horse.


7. Sale By One of the Joint Owner :-
If there are many partners in business and one of them has the sole possession of goods with the permission of the other partners. If he sells the goods, the buyer will get a good title of goods, if he buys in good faith.

Example :- There are three parties "X", "Y" and "Z". They own a shop in common. Shop is in the possession of "X" and he looks after the shop. "X" sells the shop to "M". "M" gets a good title.


8. Sale Under Implied Authority :-
In some cases the conduct or any act of owner of goods leads the buyer to believe that seller id the owner of the goods. It is presumed that seller has the authority to sell the goods. In such cases buyer can get a better title of goods than the seller.

Example :- Mr. Nazir a factory owner gives his employee. Mr. Rashid a quarter for living and also allows to repair. Mr. Rashid writes his name on the quarter and also do some repair to induce the public to believe that quarter belongs to him. Miss Sonny purchased the house from Mr. Nazir in good faith. So Sonny acquires a good title than a seller.


9. Sale Under Voidable Contract :-
If a person obtains the goods under voidable contract and sells before the revocation of contract to other person. The buyer who obtains such goods has better title of goods if he acts in good faith.

Example :- Mr. Shan by misrepresentation induced Mr. Hafiz to sell and deliver his car to him. After obtaining the car he sells the car to Miss. Nida before the revocation of contract. Miss Nadia purchases the car in good faith and she does not know that title is defective. She acquires a good title.


10. Solvency Case :-
In case of companies and individuals the official receiver can convey better title to the buyer.

Example :- Mr. Sher becomes insolvent. Mr. Naveed is the official receiver of Mr. Sher, and he can sell some goods of Mr. Sher to Mr. Ali. Mr. Ali gets a good title.


11. Sale Before the Agreement To Buy :-
A buyer obtains possession of the goods with the consent of the seller, he may sell or pledge before the agreement completes.

Example :- Mr. Shuka agrees to buy a bus a pay for it, if his lawyer approves it. Mr. Shuka obtained the possession of the bus and sells to Miss. Neelum. After his lawyer disapproves. In this case Miss. Neelum gets a good title.