Sale of Goods - Chapter 7 - Performance of the Contract

Chapter IV of the Sale of Goods Act, 1930 describes about the 'Performance of the Contract' which consists of sections from 31 to 44. These sections mainly deal with delivery of goods i.e. rules of delivery, effect of part delivery, instalment deliveries etc.

2. Duties of Seller and Buyer

Section 31 of the Act says-"It is the duty of 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".

When there is a contract for sale of goods, the simple rule behind that agreement is to deliver the goods by the seller and the buyer has to pay the sum for which both the parties have agreed upon. Here, the property includes the right to possession, and it is the duty of the seller to complete the contract by giving the buyer possession, whether the goods are in the hands of seller or of a third party and the buyer's obligation is to accept the goods and pay the price. Here, 'duty to accept' make 'taking of delivery of the goods' an integral part of the contract and refusal by buyer in rejecting the goods will be amounted to a breach of 'duty of accept'. There is also a distinction between acceptance of goods and taking delivery of them.

The buyer may signify his approval regarding goods he wants to purchase though he may not have taken delivery of the goods. It may not be out of place to mention here that the Act does not expressly impose any duty to take delivery although it prescribes sanctions when there is a delay in taking delivery of goods.

This section must be read subject to the provisions of Chapter V (to be discussed in next Chapter of this book) and section 7. The parties may but make such stipulations as they please as to matters which may excuse delivery by the 'seller or payment of the price.

3. Payment and Delivery, two Concurrent Conditions (Section 32)

Q. Do you agree with the facts that payment and delivery in sale of goods are two concurrent conditions, to be fulfilled in sale?

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.

This section resemble to section 28 of the English Act. In the 'Notes on; Pordage v. Cole, Edn., 1871, p. 556, it was observed-

'Where two acts are to be done at the same time, as where A covenants to convey an estate to B on such a day, and in consideration thereof B covenants to pay a sum of money on the same day, neither can maintain an action without sharing performance of, or an offer to perform, his part though it is not certain which one of them is obliged to do the act, and this particularly applies to all cases of sale'.

In the case; Morton v. Lamb, (1797) 7 TR 125: 4 RR 395, it was observed that there is a general principle under section 51 of the Contract Act, the seller is not bound to deliver, and commits no breach of contract in failing to deliver, if the buyer is not ready and willing to pay the price on delivery. In another case; Dixon v. Fletcher, (1837) 3 M&W 146: 49 RR 543, where it was said that the buyer is not bound to pay the price, and is not liable to an action for failure to accept the goods, if the seller was not ready and willing to let the buyer have the goods on demand.

In the case; Vishnu Sugar Mills Ltd. v. Food Corporation of India, MANU/BH/0005/1987 : AIR 1987 Pat 22 (31), it was observed that in a statutory sale, in the absence of any agreement to the contrary, whilst the seller is obliged to sell and then deliver the goods under the sanction of law, here the buyer is equally bound to tender the price thereof against delivery. The facts were that Food Corporation of India brought a new formula for payment of the price of the 'levy sugar' which required that delivery should first be made to the corporation against an initial small payment. After that the sellers had to send the relevant documents to a centralized payment office at Muzaffarpur leaving sellers to the tender mercy of the corporation officials for clearance of their bills or the payment. The High Court held that the corporation must abide by the payment procedure in conformity with the cardinal rule that in the context of compulsory statutory sale the law mandates a concurrent tender of price against delivery of sugar and not a deferred payment thereafter on the whimsicality of the compulsory purchaser in absence of any mutual agreement of the parties to the contrary.

� Readiness and Willingness

In the latter part of the section it is mentioned-

'The seller shall be ready and willing to give possession of the goods'. It shows capacity of the seller. There is no need that the goods should be in actual possession of the seller to fulfil the contract but it is sufficient if he has such control of them that he can cause them to be delivered; Kunwar Bhan-Sukha Nand v. Ganpat Rai-Ram Jiwan, (1926) 7 Lah 442: 94 IC 304. At the same time, the buyer should be ready and willing to pay if he has made proper arrangements for securing payment; Kidar Nath Bihari Lal v. Shimbhu Nath-Mandu Mal, (1926) 8 Lah 198: 99 IC 812.

In the case; Dayabhai Dipchand v. Maniklal Vribhukan, 8 BHC AC 133, it was held that a wrongful refusal by one party to be bound by the contract discharges the other from the performance of conditions which he would otherwise have to fulfil and the latter is thereupon exonerated from the necessity of proving his readiness and willingness to perform them.

4. Delivery

Section 33 of the Act says as-

"Delivery of goods 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".

4.1 Delivery of Goods

Q. What is symbolic delivery? Explain it with the help of relevant cases.

This section has similarity with section 90 of the Contract Act with the added words-'which the parties agree shall be treated as delivery'. The goods may be delivered to a third party only when the buyer has nominated him. In the case; Four Point Garage Ltd. v. Carter, (1985) 3 All ER 12, the buyer purchased a motor car and requested the seller to deliver it directly to a sub-purchaser from the buyer, and it was so delivered. It was held that the buyer had obtained the constructive possession of the vehicle.

In another case; Union of India v. West Punjab Factories Ltd., MANU/SC/0039/1965 : AIR 1966 SC 395, the parties had agreed that the seller would deliver the goods at buyer's godowns, further the goods were to be dispatched by railway at the seller's risk and the delivery to be taken by surrendering the railway receipt and signing the delivery. Here, it was held that there was no real delivery to the consignee, for the goods had not been unloaded and were still under the control and custody of the railway.

4.2 Acceptance and Receipt

If an agreement or contract is done between two consenting parties then it is the duty of seller to deliver the goods to the buyer and the latter has to pay the price. One of the essentials of sale of goods is that the buyer should 'accept part of the goods so sold and actually receive the same.'

4.3 Symbolic Delivery

Delivery of goods keep an important place when there is a sale of goods, since it gives the buyer actual control of the place where the goods are and thereby of the goods themselves. Sometimes, the term 'symbolic delivery' is also used. Lord Hardwicke in the case; Word v. Turner, 2 Ves Sr 431, 1 Dick 170, said about 'symbolic delivery' as-'delivery of the key of bulky goods....has been allowed as delivery of the possession, because it is the way of coming at the possession or to make use of the thing and therefore the key is not a symbol which would not do.'

But, if a person keeps the goods in a room and hands over the key to the buyer then it is an emphatic declaration of intention to transfer control. In the case; Ancona v. Rogers, (1876) 1 Ex D 285 (CA), the facts was that A went to live in B's house with B's consent and C, acting under A's orders, took furniture of A's to B's house, put it in certain rooms, locked the doors of those rooms and took away the key, to the knowledge of B's servants and without any objection, it was held that A had not delivered the goods to B to hold as bailee, but on the contrary B had given possession to A of the rooms in which the goods were placed.

In the case; Milgate v. Kebble, (1841) 3 Man & Gr 100: 60 RR 475, delivery of a key does not operate as delivery of the goods under the lock if it does not, in fact, give complete access to them. Here the seller gave the buyer, the key of a receptacle in which the goods were, but retained the key of an enclosure, it was held without difficulty that the buyer had not acquired possession.

4.4 Constructive Delivery

Q. What is constructive delivery? Discuss it with the help of some cases.

It may also happen that delivery may involve charge in the possession of goods and delivery may also take place without any change in their actual and visible custody. And in such cases, there is said to be constructive delivery in such cases. These have been classified as follows.

4(d)(i) Acts of the buyer who treats himself as owner and the seller as his servant or bailee are relevant to prove delivery as against the buyer. Here, we can cite the example of the case; Castle v. Sworder, (1861) 6 H&N 828: 123 RR 860 Ex Ch, 'A' ordered a certain quantity of goods (not specified although) from B and B sent A an invoice in which particular goods were specified as sold to A 'free for six months', i.e. to remain, in B's warehouse without charge and credit was also given for six months and at the end of six months A asked B if he would take the goods back or sell them on A's account, this was held evidence of assent by A to B holding those goods for him as warehouseman.

So that the buyer pays, or agrees to pay, warehouse rent for goods left in the seller's warehouse is not of itself sufficient to show that the seller holds as his bailee.

In the case; Hurry v. Mangles, (1808) 1 Camp 452: 10 RR 727, Lord Ellenborough, said-'If I pay for a part of a warehouse, so much of it is mine'. But, these observations would be applicable if the buyer had actually rented part of the warehouse, or agreement to pay it. Lord Ellenborough's language doesn't go along with commercial usage. In the ordinary economic sense the owner who is paying such rent is entitled to get his goods stored in any particular part of the warehouse.

4(d)(ii) Sometimes it happens that a seller and buyer agree with the assent of a third person, in whose custody the goods are and who has been keeping the goods for seller and will keep on holding them for the buyer. Such attornment has the effect of transferring legal possession to the buyer. In this situation all the three parties should concur otherwise delivery won't take place.

In the case; Godts v. Rose, (1855) 17 CB 229: 104 RR 668, the seller directed the warehouseman to transfer the goods sold to the buyer's order, the warehouseman did it accordingly and sent the invoice and certificate of transfer by his clerk to the buyer with a request for payment but the payment request was turned down, it was held that there was no attornment hence no delivery as the buyer had not given his assent to the warehouseman holding the goods as his agent.

In the case; Hurry v. Mangles, (1808) 1 Camp 452: 10 RR 727, example (6), we can find the example of attornment. The payment of rent by the buyer is not sufficient to show that the seller holds as his bailee, but this case is not the same where the first buyer sells to a sub-buyer and the original seller by his direction assents to hold the goods for the sub-buyer.

4(d)(iii). If the buyer is already holding the goods as the seller's bailee, the seller agrees with him that he shall hold them as owner, the character of the possession is changed accordingly and the buyer ceases to hold as bailee and begins to hold as owner, as where an agent entrusted with goods for sale agrees to buy them himself; Edan v. Dudfield, (1841) 1 QB 302: 55 RR 258.

5. Effect of Part Delivery (Section 34)

Q. Explain the effect of part delivery with relevant case laws.

Section 34 of the Sales of Goods Act, 1930 says as-

"A delivery of part of goods, in progress 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; but a delivery of part of the goods with an intention of severing it from the whole, does not operate as a delivery of the remainder".

Part Delivery-

In the case; Kemp v. Falk, (1882) 7 App Cas 573 (586), it was observed by Lord Blackburn that the common law rule, which this section affirms, is that delivery of part may be delivery of the whole if it is so intended and agreed, but not otherwise, and the burden of proof seems to be on the party affirming that such was the intention.

Brett LJ has described 'part delivery' as-It seems to me that a delivery of part or even of the bulk of a cargo is not prima facie a delivery of the whole. Parties are bound to show that the part delivery took place under such circumstances as to make it a constructive delivery.

In the case; Bolton v. L&YR Co., (1935) 62 IA 89: 58 Mad 670: 154 IC 1097: MANU/PR/0021/1935 : AIR 1935 PC 67, Siles J. said-'It is now held that the delivery of part operates as a constructive delivery of the whole only where the delivery of part takes place in the course of the delivery of the whole and the taking possession by the buyer of that part is the acceptance of constructive possession of the whole i.e. a recognition that the actual holder of the residue has begun to hold as the buyer's agent.

6. Buyer to apply for Delivery

Section 35 of the Sale of Goods Act, 1930 speaks that the buyer has to apply for delivery of goods.

'Apart from any express contract, the seller of goods is not bound to deliver them until the buyer applies for delivery.'

� Buyer's Duty to Apply for Delivery

There is a similarity between this section and section 93 of the Contract Act except some words-'in the absence of any special promise' for which in this section 'apart from any express contract' has came in the place. So, the meaning of section is very clear i.e. if in the contract, the term of delivery is clear then there is no need for buyer to apply for delivery but if such term has not been expressed, than the buyer will have to apply.

In the case; Sivayya v. Ranganayakulu, (1935) 62 IA 89: 58 Mad 670: 154 IC 1097: MANU/PR/0021/1935 : AIR 1935 PC 67, it was observed that even if there is an obligation on the part of the seller to inform the buyer when the goods are in a deliverable state, it is not a 'special promise' though it may postpone the obligation of the buyer to apply for delivery, and after the lapse of a reasonable time to enable the goods to be procured by the seller, the buyer would be entitled and bound to apply for delivery.

Citing the example of; Smith v. Chance, (1819) 2 B & Ald 753 (755), the learned Author Chalmers has described regarding this section-'it was for the buyer to take delivery and that in the absence of any different agreement the duty of the seller to deliver was satisfied by his affording to the buyer reasonable facilities for taking possession of the goods at the agreed place of delivery'.

In an Indian case; Juggernath Khan v. Maclachlan, (1881) 6 Cal 681, the facts were that when the buyer applies for delivery and the seller then fails to deliver, the seller is guilty of a breach of contract. As per the contract terms, the goods were to be all delivered in the month of November on a 7 day's notice from the buyer, the buyer in early November gave the notice for delivery. It was held that by the terms of contract, the buyer had the right to fix the date of delivery, and the seller having failed to deliver as required by the notice was guilty of a breach of contract.

7. Rules to Delivery [Section 36]

Q. Define the rules of delivery.

In sale of goods, there are many rules which bind both the sellers and buyers to perform their duties and honour the terms of contract. Delivery constitutes an important part in the sale. Section 36 speaks about the Rules to delivery in following terms-

"(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.

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.

(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.

(4) 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.

(5) Unless otherwise agreed, the expenses of and incidental to putting the goods into a deliverable state shall be borne by the seller.

7.1 Place of Delivery

Q. What are the rules of delivery of goods? Under provisions of section 36 of the Sale of Goods Act?

Sub-section (1) speaks about the place where the goods have to be delivered. This sub-section, we can say is the modified form of section 94 of the Contract Act and has also similarities with section 29 of the English Act. In the absence of any special agreement, 'the place of delivery is the seller's place of business if he has got one and if not his residence, unless the contract is for the sale of specific goods, which may be some other place and known to both the parties.

In the case; Grenon v. Lachmi Narain, (1896) 4 Cal 8 LR 23 IA 119, there was a contract for the sale of goods and the goods were to be delivered at any place in Bengal to be mentioned hereafter does not fall within the operative part of this sub-section, for there is a special term as to delivery giving the buyer the right to fix the place anywhere in Bengal, and the words 'to be mentioned hereafter' express only what the law would have implied that the seller is entitled to reasonable notice of the buyer's choice.

If the goods are delivered at a place other than that stipulated, the buyer may recover the expenses incurred in forwarding them to the agreed place of delivery.

Here, it would be pertinent to mention section 49 of the Contract Act, which is as follows:

"Place for the performance of promise, where no application to be made and no place fixed for performance-When a promise is to be performed without application by the promisee and no place is fixed for the performance of it, it is the duty of the promisor to apply to the promisee to appoint a reasonable place for the performance of the promise and to perform it at such a place". It can easily be construed from the above section its closeness with that of sub-section (1) of section 36.

7.2 Time for Delivery

When there is a sale but no time has been fixed for delivery then it's up to seller to deliver the goods within a reasonable time. But, if the seller fails on this account even due to some government's order or intervention of war, still liability falls upon him.

In the case; Nagnath Kaulwar & Sons v. Govindram Shyamasunder, MANU/MH/0282/2004 : AIR 2004 Bom 271, there was a contract for supply of a certain quantity of rice, but the time for delivery was not fixed. After sometime, the seller shown his inability to deliver the rice as the railway wagons were not available. After that, the seller informed the buyer regarding cancellation of contract, as there was no chance of getting railway wagons available for transporting the rice. The buyer claimed in the court for damages since the seller did not dispatch the goods within reasonable time and it attracts the provisions of section 36. The Court allowed the claim for damages.

7.3 Duty of Seller to Dispatch

Section 36(2) what is a reasonable time, it's a question of fact. Evidence is required regarding surrounding circumstances in which the contract was made in order that question may be determined. If delivery has not been made within a reasonable time then the buyer is not bound to accept the goods even though the delay may not have been due to the seller's default; Jackson v. Union Marine Insurance Co., (1874) LR 10 CP 125 Ex Ch.

7.4 Delivery 'as required'

Sub-section (2) conveys the meaning that nothing further remains to be done by the buyer. The request for delivery is a pre-condition to the seller's obligation to delivery. If no time frame has been given to make it then the request must be made within a reasonable time and if there is excessive delay by the buyer, the seller is prejudiced, the seller may be discharged, and in certain circumstances, such delay may amount to evidence of the abandonment of the contract by mutual consent, or to conduct on the part of the buyer misleading the seller into believing that the contract has been abandoned and therefore stopping the buyer from setting it up. [It was the observation of the court in the case; Pearl Mill Co. v. Ivy Tannery Co., (1919) 1 KB 78.

7.5 Attornment of Bailee

As per the provision of sub-section (3), the assent of the buyer and the seller to the attornment is assumed and it merely declares that there is no delivery until the bailee also assents; P.P. Looke v. NS Mathew, (1967) 11 Comp LJ 146, so, it is the duty of both the seller and the buyer to do what is necessary to obtain the assent of the bailee, consequently if the buyer has done all that he is required to do, but still cannot obtain it, he may repudiate the contract and if there is failure to do so is due to the buyer's default, the seller may treat the delivery as duly made; Pattison v. Robinson, (1816) 5 M&S 105 (110) and Bartlett v. Holmes, (1853) 13 CB 630: 93 RR 658.

7.6 Expenses of Delivery

Sub-section (5) of the sections says-"Unless otherwise agreed, the expenses of and incidental to putting the goods into a deliverable state shall be borne by the seller." So, if somehow the expenses is incurred on the goods in putting it in a deliverable state then such expenses will be borne by seller and not the buyer.

8. Delivery of Wrong Quantity

Section 37 of the Sale of Goods Act speaks about the wrong quantity of goods. Whether it is less or more compared to prescribed quantity of goods, the buyer has to pay only the sum for which both the parties have agreed upon. We may first see here the provisions of this section which is follows:-

"(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."

8.1 Delivery of less Quantity of Goods

Sub-section (1) says in unambiguous terms that if the seller supplies the goods less in quantity as mentioned in the contract then the buyer can reject the goods but if the buyer accepts the lesser quantity of the goods then he will have to pay the price as per the terms of the contract. In the case; Kingdom v. Cox, (1848) 5 CB 522 (526), if the seller does not fulfil his contract by tendering less than the stipulated quantity and cannot call upon the buyer to accept it and equally the buyer cannot call for delivery of anything short of the full quantity, if he is not prepared to accept the whole if the law were otherwise, either party could impose a new contract upon the other.

In another case; Champion v. Short, (1807) 1 Camp 53: 10 RR 631, it was held that the tender of a less quantity by the seller amounts to a new contract up to the extent, which the buyer must accept and pay for, or reject the whole of the amount tendered, he cannot accept part of the goods and reject the rest, unless indeed the seller acquiesces in such a course, which would be an acceptance by him of a counter after by the buyer.

In one more case; Regent OHG Aisenstadt and Barig v. Francesco of Jermyn Street Ltd., (1981) 3 All ER 327, it was observed that if delivery is to be done in instalments then the buyer cannot reject the whole of the goods on the ground of short delivery of one or more instalments unless such short delivery is a repudiation of the whole contract.

8.2 Delivery in Excess of Contract Quantity

Sub-section (2) of this section says that if the seller sends the quantity of goods which is larger than the quantity mentioned in the contract terms, then it is upto the buyer to accept the whole or reject the excess quantity of the goods. If, the buyer accepts the whole quantity (i.e. including excess) then he will have to pay the price at the contract rate to the buyer.

In the case; Cunliffe v. Harrison, (1851) 6 Ex 903 (906), A delivery of fifteen hogsheads, under a contract to deliver ten, is no performance of that contract, for the person to whom they are sent cannot tell which are the ten that are to be his, and it is no answer to the objection to say that he may choose which ten he likes, for that would be to force a new contract upon him.

Justice Ahmadi, in the case; Dudhia Forest Co-op. Labourers & Artisans Society Ltd. v. Mohammed Saiyed and Abdul Rehman's Co., (1980) 21 GLR 272, observed that "a slight deficiency in the quantity will not entitle the buyer to reject the goods or claim damages because some flexibility in such contracts of sale of goods in bulk is unavoidable and trivial short fall in quantity must be overlooked."

8.3 Delivery of contractual goods together with others

Sub-section (3) says that if the buyer delivers the goods mixed with that goods which did not figure in the terms of contract then in such circumstances, it is upto buyer to accept the goods as per the contract and reject the rest or reject the whole consignment.

This sub-section replaces and modifies in favour of the buyer. Section 119 of the Contract Act, which, limited the buyer's right to reject to cases where there is risk or trouble in separating the goods ordered from the goods not ordered'. In the case; Levy v. Green, (1859) 1 E&E example (2), Byles J., said-

"I do not say that, in all cases where the goods ordered are sent together with others not ordered, the vendee would have a right to refuse to accept any; but, if there is any danger or trouble attending the severance of the two, or any risk that the vendee might be held to have accepted the whole if he accepted his own, he is at liberty......to refuse to accept at all.

In Nicholson v. Bradfield Union, (1866) LR 1 QB 620, a contractor for the supply of coal sent coals partly according to contract and partly not, and mixed them all together in delivery, it was held that the whole quantity so delivers must be considered not according to contract'.

9. Instalment Deliveries

Section 38 of the Act speaks about the deliveries of goods in instalment-

"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."

9.1 Instalment Deliveries

Sub-section (1) of this section is a corollary to section 37(1). In the case; Reuter v. Sala, (1866) LR 1 QB 620, it was observed that neither seller nor buyer can claim to make or demand delivery of less than the full quantity and neither, therefore, can, in the absence of agreement, insist that delivery should be made by instalments.

Such an agreement is made expressly and may also be inferred from the circumstances of the case i.e. from the conduct of the parties in delivering and accepting an instalment, or from the nature of the contract e.g. when it is obvious that the full quantity of the goods cannot be delivered in one delivery.

9.2 Entire Contracts

A contract is entire contract where the liability of one party to perform is dependent upon complete performance of his obligations by the other Bramwell LJ, held, in the case; Honck v. Muller, (1881) 7 QBD 92 (100), that the whole of what is to be done on one side is the consideration of the whole of what is to be done on the other. Here, there was an agreement for delivery by instalments, but the price is made payable on complete delivery, or where there is no stipulation that it shall be paid before complete delivery, the contract is still an entire contract.

In the case; Oxendale v. Wetherell, (1829) B&C 386: 33 RR 207, it was observed-there was a contract to deliver a large quantity of goods which consisted of distinct parcels, within a specified time, and the seller delivers part, he cannot before the expiration of that time, bring an action to recover the price of that part delivered.

9.3 Severable Contracts

The contract may provide for delivery by instalments and payment for each instalment, and be of such a nature that each delivery is really like a delivery under a separate contract, to be paid for separately. The seller must then deliver instalments according to the contract and the buyer must accept and pay for them, but in case of a failure by either party to fulfil his obligations in respect of one instalment, 'the parties may well be assumed to have contemplated a payment in damages rather than a recession of the whole contract; Howell v. Evans, (1926) 134 LT 570.

9.4 Failure in paying an Instalment

Q. What would be the effect of non-payment of an instalment on contract? Discuss with case laws.

A mere refusal or failure by the buyer to pay for one or more instalments, unaccompanied by any other act, does not amount to a repudiation of the contract by the buyer as it was observed in the case; Freeth v. Burr, (1874) LR 9 CP 208. The seller can't rescind the sale if there is a case of insolvency. Although, he may refuse to deliver unless he is paid for instalments already delivered and receives cash for subsequent instalments.

In the case; Withers v. Reynolds, (1831) 2 B&AD 882: 36 RR 782, a buyer who had to get a quantity of straw in instalments and was to pay on delivery said to the seller,-"you may bring your straw, but I will not pay you on delivery as under the contract I ought to do. I will always keep one bundle of straw in hand so as to have a check upon you." It was held that he had shown an intention to repudiate the contract and that the seller might treat it as an end. So, in any case where such a refusal can be inferred, the seller may treat the contract as rescinded.

10. Delivery to Carrier or Wharfinger

Section 39 tells about delivery of goods though a carrier or delivery of goods to a wharfinger for safe custody. It is as follows:

"(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."

10.1 Delivery to Wharfinger or Carrier

In England, it's a century old proposition as well as settled law that if a tradesman ordered goods to be sent by a carrier, though he does not name any particular carrier, the moment the goods are delivered to the carrier it operates as a delivery to the purchaser'. As it was also held in the case; Shree Bajrang Jute Mills Ltd. v. State of Andhra Pradesh, MANU/SC/0032/1964 : AIR 1966 SC 376, delivery to the carrier will, unless the seller reserves the right of disposal, pass the property in the goods to the buyer and the general result of delivery to the carrier or wharfinger is that the goods are then at the buyer's risk that the carrier or wharfinger is his agent and that he alone may sue that latter for damages done by him to the goods, or failure to deliver them.

In another case; Maniar Narottam Das Dharamshi v. Barjatya Traders, 21(2) GLR 89 (99), it was said "where there is a contract where the delivery of goods is done through 'bilti' and the goods are consigned by the seller to self with Railways and the receipt is endorsed in favour of a bank for being given duly endorsed to the buyer against payment. The property in the goods doesn't pass to the buyer as soon as it is handed over to Railways under section 39 as the goods are not delivered for transmission to the buyer within the meaning of this section."

10.2 Duty of Seller on Delivering Goods in a Carrier

Sub-section (2) of section 39 says that unless the buyer has authorized the seller, the latter shall make such contract with the carrier or wharfinger on behalf of the buyer as may be reasonable having regard to the nature of goods and other circumstances which prevail at that very time. But, if the seller skips to do so, and the goods are lost or damaged during the course of transit or during the custody of the wharfinger, the buyer may choose to decline in accepting the delivery as his own or may hold the seller responsible in damages.

This sub-section is not confined to any particular type of contract of carriage and would apply to the contracts for the carriage of goods whether by land, sea or air or by any combination of the three. This sub-section will also apply even where the seller is merely 'authorised' but not 'required' to send the goods to the buyer.

10.3 Transit by Sea

Sub-section 3 says that where the goods are sent by the seller to buyer by a route which involves sea then in such circumstances it is very usual to get the goods insured and the seller will surely give such notice to the buyer as may enable him to insure them during the sea transit and if the seller fails to do so, the goods shall be deemed to be at his risk during such sea transit.

Even if the transport is partially through sea transit, it would be within the expression route involving sea transit and duty to give notice under sub-section (3) will arise.

Generally there are four means by which a claim can be made for damage to goods on board a ship. These are as follows-

(a)the shipper may sue in contract, assuming that he has not divested himself of his rights by endorsement on the bill of lading,

(b)a consignee whose name is given on the bill of lading can sue in contract under the Bills of Lading Act,

(c)there is also a possibility of taking a delivering of goods at the part of discharge which may give rise to implied contract, and

(d)the person who was the owner of the goods at the time when the damage occurred can sue in tort.

11. Risk where Goods are delivered at a Distant Place

Section 40 of the Act speaks as follows-

"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."

Earlier, there was a suggestion to omit this section as it tendered to confuse sellers and also inconsistent with the seller having undertaken to bear the risk. But it was decided to retain it to secure conformity between Indian and English Law.

This section applies the principle generally and not only to the case of a manufacturer; it is however limited by the rule that perishable goods which are consigned to a distant place are not merchantable unless they are in a condition to remain saleable for a reasonable time.

12. Buyer's Right of Examining the Goods

Q. Can a buyer reject the goods after delivery if he finds that the supplied goods do not commensurate with the quality agreed at the time of contract? Explain it.

Section 41 speaks about rights of buyer to examine the goods which he has not examined previously.:

"(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."

Right to Examine the Goods.-It is very genuine on the part of buyer to examine the goods what he has purchased or proposed to purchase. As per sub-section (1) in cases where there has been no previous examination of the goods, 'the mere fact that the buyer has taken delivery of them does not amount to an acceptance until he had a sufficient period for examining them to see whether they are or are not in accordance with the contract. A right of inspection to ascertain whether such condition has been complied with is in the contemplation of both parties to such a contract, at the same time no complete and final acceptances so as to irrevocably vest the property in the buyer can take place before he had exercised or waived that right.

This section gives buyer a right to examine the goods and not a right to repudiate the contract. The right of inspection could only arise either when the consignee had taken the delivery from the carrier or when the goods were tendered for delivery to the buyer.

In the case; Ruttonjey v. Jamnadas, (1882) 6 Bom 692, it was observed that reasonable opportunity of examination is all that the Act requires; it is buyer's business to verify, not the seller's to supply further proof that the goods are according to contract. What is a reasonable time in which the buyer should examine the goods when they are available to him for inspection is a question of fact to be judged on facts and circumstances of each case. The Bombay High Court while projecting the facts stated the principles-

The facts of the case were that the defendant agreed to purchase from the plaintiff, 100 bales 'fully good fair Kishli cotton', to be delivered from 15th March to 1st April, 1881. On 30th March, the plaintiffs sent the defendant a letter enclosing a sampling order, which was received by the defendant's agent at 11.30 a.m. that day. The defendant got samples taken of the cotton, and a dispute having arisen as to the quality and classification of the cotton, the plaintiffs wrote to the defendant on 31st March asking him to attend with his surveyor at 1 p.m. on that day to survey the cotton as, otherwise an ex parte survey would be held. It being a mail day, the defendant's surveyor could not attend at the appointed hour, and the plaintiffs had an ex parte survey held by their own surveyors and pronounced the cotton to be of the description contracted for. Shortly afterwards the defendant asked for a survey by a letter which reached the plaintiffs at 2.19 p.m. on that day. The plaintiff did not comply with the application, and called upon the defendant to take delivery of the goods.

The plaintiffs filed a suit for breach of contract. It was defendant's plea that no reasonable opportunity was given to them to examine the goods, as there was no joint survey, and that the time allowed by the plaintiffs for examination of the cotton was not sufficient. It was held by the court that the defendant had reasonable opportunity within the meaning of this section.

Latham J. said as-

The rule in the section 38 of the Contract Act agrees with the rule of English law laid down in Benjamin's Sale of Goods¹ but there is little authority as to what is a reasonable opportunity of inspection......in the present case the sampling order was delivered to the defendant by 11.30 a.m. on the 30th March, and he had till 1 p.m. on the 31st March, before any refusal by the plaintiffs, to allow a further examination is alleged. Now Vizbookandas Atmaram seems to have been certainly dilatory in his examination, he not having compared the samples with the standards till past noon on the 31st and it seems to me that a period of over 24 hrs. gave a reasonable opportunity to see whether the cotton offered was the cotton which the plaintiffs were bound by their contract to deliver.

Then we are to go further and to say that the purchaser is entitled to continue inspecting and examining until there are expiration of the period for delivery? I find no authority for this and in many cases it would be unreasonable to place no limit on the inspection. Is a purchaser at liberty to open and taste every bottle of wine in a lot sold or in the present case to pass every pound of cotton through an expert's hands? There must be some limit and I think that a reasonable opportunity is the limit alike for vendor and purchaser, and that such a reasonable opportunity had been had by 1 p.m. on 31st March. The goods need not be in the seller's actual possession, control is enough.²

13. Acceptance

Q. When it can be said that the goods have been accepted by the buyer? Explain it with the help of relevant cases.

Section 42 speaks about the acceptance of goods as follows-

"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."

From the section, it appears that buyer may accept the goods even before they are delivered, by intimating to the seller that he accepts them as he may do by actually selecting the goods, or directing delivery to be made to third

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1. 2nd Edn., pp. 573 and 576.

2. Pollock and Mulla, the Contract and Specific Act, 11th Edn., 1994, p. 515 (also cited Arunachalam Chettiar v. Krishna Aiyyar, (1925) 49 Mad LJ 530.

parties; in Cusack v. Robinson, (1861) 1 B&S 299, just to take delivery does not amount to acceptance and this is particularly the case where delivery is made to a carrier. If however, after delivery the buyer deals with the goods in a manner inconsistent with the ownership of the seller, he thereby accepts them, nor does it signify that he so deals with them before the time which he has for examining them has elapsed.

In the case; Hardy & Co. v. Hillerns & Fowler, (1923) 2 KB 490 (498) (CA) the corresponding section of the English (Section 35) was discussed by Atkin LJ as follows-

"One of the acts upon the doing of which the buyer is deemed to have accepted the goods is that he intimates to the seller that he has accepted them. I think it is plain that such an intimation may be made before he has had a reasonable opportunity of examination and if such an intimation is made then it appears to me that without more the section operates and he is to be deemed to have accepted them. In the same way, when he does an act in relation to the goods which is inconsistent with the ownership of the seller, the section must be treated as coming into operation notwithstanding that the reasonable opportunity of examining them has not expired; as for instance where a man having had goods delivered to him turns them, or part of them, at once into his mill and uses them in the manufacture. In the present case the Tribunal of Appeal have found that the buyer had not had a reasonable opportunity of examination until 23 March a date which is subsequent to the act relied on by the sellers as being inconsistent with their ownership, but that finding is, in my opinion, immaterial.

Therefore, we have here to face the problem whether the act of the buyers in reselling and dispatching the goods was inconsistent with the ownership of the sellers. If it was they must be deemed to have accepted them. I would like to point out, in reference to that provision, that all the words of the section must have given effect to them. The words are 'when the goods have been delivered to him'- that is to the buyer-'and he does any act' of the kind specified. That means that the buyer must have got delivery before he does the act; J&J Cunningham Ltd. v. Robert A Munro & Co., (1922) 28 Com Cas 42.

� Time for Rejection

By contract, the parties may limit the time within which the buyer must determine whether to accept or reject the goods and if after the expiration of such a limit, or if no time be fixed, he does not reject, within a reasonable time, he is deemed to have accepted them. We can understand it further, where it was considered that whether a buyer had goods for a reasonable time and hence had lost his right to reject them, the nature of the particular defect and the speed with which it might have been discovered were irrelevant, since section 42 was directed solely to what was a reasonably practical interval between a buyer receiving the goods and his ability to return them, with keeping it in mind regarding desirability of finality in commercial transactions.

14. Buyer not bound to return Rejected Goods

Q. Is buyer bound to return the rejected goods?

Section 43 has the provision that with rejection of goods, buyer is not bound to return the same to the seller. It says-

"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."

It is well-established common law that whenever a buyer rejects the goods, it is not his duty to send the same back to the seller, but it is sufficient for him to give clear notice to the seller that the goods have been rejected and the seller should collect them back i.e. the goods are lying at the seller's risk; Grimoldby v. Wells, (1875) LR 10 CP 391.

In another case; Phaggu Mal v. Babu Lal, (1913) 35 All 325: 19 IC 254, it was observed that the buyer is not bound to put himself to the expense and trouble of returning the goods and it is the seller's business to take away the goods, if he is so minded.

The buyer also owes a duty of care in relation to such goods which may entitle him to reimbursement for expenses incurred; China Pacific SA v. Food Corporation of India, (1982) AC 939.

The goods must be put at the disposal of the seller; the buyer for instance cannot claim to keep them as security for the price which he may have paid in advance. The buyer in such a case is not in a position analogous to that of an unpaid seller within the meaning of section 45(2); JL Lyons & Co. v. May & Baker Ltd., (1923) 1 KB 685.

15. Liability of Buyer for Neglecting or Refusing Delivery of Goods

Section 44 keeps a tab on buyers who fails to take the delivery of goods. It speaks on-

"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."

This section in unambiguous term protects the rights of seller saying that if the seller has requested the buyer to take the delivery of goods within a reasonable time but if the buyer fails to succeed the requests of seller then the buyer would be 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.

In the case; Harlow and Jones Ltd. v. Panex International Ltd., (1967) 2 Lloyd's Rep 509, 531, Lord Ellenborough gave the ruling as follows:

"If the buyer does not carry away the goods bought within a reasonable time, the seller may charge him warehouse room; or he may bring an action for not removing them, should he be prejudiced by the delay. An arrangement by which the seller had agreed with the person from whom he had himself bought the goods that he would be liable to pay storage charges only to the extent that he could recover from the buyer would not preclude such seller from claiming storage charges."

As it was observed in the case of; Charles Rickards Ltd. v. Oppenhaim, (1950) 1 All ER 420 CA, that the seller's request must be for the buyer not to accept only but to take delivery. Just delay in taking the delivery by the buyer does not entitle the seller to rescind the contract, unless indeed the date at which he is to do so is the essence of the contract. Where the time of delivery is postponed by the seller at the request of the buyer and if no period of postponement is fixed, the seller may give notice to the buyer and requests buyer to take delivery of the goods within a reasonable time and the buyer must then take delivery of goods within that time.