Sale of Goods Act – Law Governing Supply Contracts

In the last post we discussed Indian Contract Act, a statue applicable to the contractual relationships between the parties. Please click on the link below to read the post again

In this post we are going to discuss Sale of Goods Act, a specific law related to sale/purchase of good

Sale of Goods Act

Sale of Goods Act, 1930 is the another most important and relevant Business Law for Contracts and Procurement. This law was enacted in 1930 and known as Sale of Goods Act, 1930. The statue came into force on 1st July 1930 and was drafted based on English Sale of Goods Act, 1893

The Act defines set of rules with regards to Sale of Goods. The Statue deals with transaction of sale/purchase of moveable goods between buyer and seller. The term “Goods” is clearly defined under the law and hence statue apply to the things covered in the definition. This act provides the norms with regards to: Formation, Performance and Suit for Breach with regards to the Contract of Sale of Goods between the buyer and seller. It also provides stipulations regarding the rights of buyer and un-paid seller

Sale of Goods Transaction

Chapter VII of Indian Contract Act, 1872 also lay down certain provisions in relation to Sale of Movable Goods. However, subsequently, after few decades, environment of business & trade undergone substantial changes. Hence new relationships developed between business entities. So the provision of Chapter VII of Indian Contract Act appeared to be inadequate to address issues concerning mercantile transaction

Accordingly, need was felt to enact a new law that exclusively set forth the specific provisions in relation to sale/purchase dealings of modern business relationships/methods. However, general provision of Indian Contract Act will continue to apply to newly enacted Sale of Goods Act

Sale of Goods constitutes the majority share of all the business transaction undertaken across the globe. So a thorough understanding of this act is important to fully appreciate the subject

Relationship of Sale of Goods Act with Indian Contract Act

Indian Contract Act and Sale of Goods Acts are: related, interdependent & complementary. They are not totally independent statues. This is clear from the followings provisions of Sale of Goods Act 1930

  • Chapter 1, Section 2 – Definitions, Serial No (15) of Sale of Goods Act, 1930 says that the expression used but not defined in this act and defined in Indian Contract Act, 1872 have the meaning assigned to them in that act
  • Section 3 of Sale of Goods Act, 1930 titled Application of Provision of Act 9 of 1872 stated that all such provisions of Indian Contract Act, 1872, if not inconsistent with express provisions of Sale of Goods Act, shall continue to apply to the Contract for Sale of Goods
  • Sale of Goods Act uses terms such as Contract of Sale of Goods or Agreement to Sell, Offer, Acceptance, void & voidable contracts. The true meaning of such terms has been defined in Indian Contract Act, 1872
  • Sale of Goods Act refers to the Indian Contract Act at number of places. So, this act is a specialized branch of Indian Contact Act rather than a distinct act

Indian Contract and Sale of Goods Act not mutually exclusive

From the above, we can say that two acts are not mutually exclusive. Actually they do consist of common term and overlapping provisions. Hence both Acts must be read together to draw a full understanding on the subject. Sale of Goods Act, 1930 is subsequently step to provide specific provisions in relations to Sale of Goods while keeping the fundamental & general provision of Indian Contract Act, 1872 intact and applicable thereto


Disclaimer Statements:

Agreement not declared void Capacity of the parties Consideration necessary for a valid contract Contract Administration Contract Formation Contract Management Contract Objectives Contract Principles Difference between MOU and Contract Equity Free Consent Indian Contract Act Intention to create legal relationships Justice Lawful Consideration Law Governing Contracts Law governing supply contracts MOst suitable use of MOU Offer and Acceptance Reasonableness Sale of Goods Act Significance of MOU Voidable Contracts Void Agreements What is a Contract What is agreement What is consideration What is MOU whether all agreements are contracts