Sale of Goods Act: Conditions and Warranties, Transfer of Property and Unpaid Seller Questions

Question 1

Define sale of goods.

Accepted Answer

Sale of goods is a contract where ownership (property) in goods is transferred from seller to buyer for a price.

Question 2

What is agreement to sell?

Accepted Answer

Agreement to sell is a contract where transfer of ownership is to take place at a future time or subject to a condition.

Question 3

Define condition (Sale of Goods).

Accepted Answer

A condition is a stipulation essential to the main purpose of the contract; breach may allow rejection of goods and damages.

Question 4

Define warranty (Sale of Goods).

Accepted Answer

A warranty is a stipulation collateral to the main purpose of the contract; breach gives right to damages but not rejection.

Question 5

Who is an unpaid seller?

Accepted Answer

An unpaid seller is one who has not been paid the whole price or whose conditional payment (like cheque) has been dishonoured.

Question 6

What is lien of unpaid seller?

Accepted Answer

Lien is the right of unpaid seller to retain possession of goods until the price is paid.

Question 7

Differentiate between sale and agreement to sell (any three points).

Accepted Answer

Sale vs agreement to sell:

| Point | Sale | Agreement to sell |
|---|---|---|
| Property transfer | immediate | future/conditional |
| Nature | executed | executory |
| Risk | generally with buyer (as property passes) | generally with seller until sale |

Question 8

Differentiate between condition and warranty (any three points).

Accepted Answer

Condition vs warranty:

| Basis | Condition | Warranty |
|---|---|---|
| Importance | essential | collateral |
| Remedy | reject + damages | damages only |
| Effect | may repudiate contract | contract continues |

Question 9

State any three implied conditions/warranties (brief).

Accepted Answer

Any three implied terms:

1) Condition as to title.
2) Condition as to sale by description.
3) Condition as to sale by sample.

(Also: warranty of quiet possession, freedom from encumbrances.)

Question 10

Explain transfer of property in goods (any three points).

Accepted Answer

Transfer of property means transfer of ownership. Key points:

1) Property passes when parties intend it to pass (for specific goods).
2) For unascertained goods, property passes only after goods are ascertained/appropriated.
3) Risk generally follows property unless otherwise agreed.

Question 11

State any three rights of unpaid seller against goods.

Accepted Answer

Rights against goods (any three):

1) Right of lien.
2) Right of stoppage in transit.
3) Right of resale (under conditions).

Question 12

Explain stoppage in transit (any three points).

Accepted Answer

Stoppage in transit means the unpaid seller’s right to stop goods while they are in transit when buyer becomes insolvent.

1) Applies when buyer becomes insolvent.
2) Goods must be in transit (not yet delivered).
3) Seller may resume possession and then exercise lien/resale as permitted.

Question 13

Explain conditions and warranties and differentiate them using a table with suitable examples.

Accepted Answer

In a contract of sale, stipulations may be conditions or warranties.

A **condition** is a stipulation essential to the main purpose of the contract. Its breach gives the buyer the right to reject the goods and also claim damages.

A **warranty** is a stipulation collateral to the main purpose of the contract. Its breach gives only the right to claim damages and not the right to reject the goods.

| Basis | Condition | Warranty |
|---|---|---|
| Importance | essential to main purpose | collateral to main purpose |
| Remedy on breach | reject goods + damages | damages only |
| Effect | may treat contract repudiated | contract continues |

Example: If a buyer orders “new original” machine and receives old machine, it is breach of condition and buyer can reject. If a warranty about minor accessory is breached, buyer generally claims damages.

Thus, the difference mainly lies in importance and remedy.

Question 14

Explain the rights of an unpaid seller. Use a table showing rights against goods and against buyer personally.

Accepted Answer

An unpaid seller is one who has not received the price or whose cheque has been dishonoured. The law provides special rights to protect the unpaid seller.

| Category | Rights | Meaning |
|---|---|---|
| Against goods | Lien | retain possession until price paid |
| Against goods | Stoppage in transit | stop goods in transit if buyer insolvent |
| Against goods | Resale | resell goods under conditions (often after notice) |
| Against buyer personally | Suit for price | recover price when property has passed/price payable |
| Against buyer personally | Damages for non-acceptance | compensation for refusal to accept |

Therefore, unpaid seller rights help secure payment and reduce loss when buyer defaults or becomes insolvent.

Question 15

Write a detailed note on transfer of property and risk in sale of goods and explain why it is important. Include key points and a small table.

Accepted Answer

Transfer of property means transfer of ownership in goods from seller to buyer. It is important because it decides who bears the risk, who can sue third parties, and what remedies are available.

Key points:
1) Property in specific/ascertained goods passes when the parties intend it to pass.
2) In unascertained goods, property passes only after goods are ascertained and appropriated to the contract.
3) General rule: **risk follows property** unless otherwise agreed.

| Situation | Property | Risk (general rule) |
|---|---|---|
| Property has passed to buyer | buyer becomes owner | buyer bears risk |
| Property not yet passed | seller remains owner | seller bears risk |

Hence, knowing when property passes is essential for deciding liability in case of loss, damage or insolvency.

Point	Sale	Agreement to sell
Property transfer	immediate	future/conditional
Nature	executed	executory
Risk	generally with buyer (as property passes)	generally with seller until sale

Sale of Goods Act: Conditions and Warranties, Transfer of Property and Unpaid Seller

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