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3. Sale of Goods Act Cases

Case 1: Sale vs. Agreement to Sell

Scenario:

  • A agrees to sell B 100 bags of rice after receiving stock from his supplier.
  • Later, A refuses to supply the rice, claiming that he never received the stock.
  • B sues for breach of contract.
  • Since the goods were not in A’s possession at the time of contract, it was an agreement to sell, not a sale.
  • In an agreement to sell, ownership transfers only when the goods are delivered.

Outcome:

  • B could only sue for damages and not for specific performance.

Case 2: Breach of Warranty

Scenario:

  • A buyer purchases a laptop with a one-year free servicing warranty.
  • The seller refuses to provide free servicing.
  • A warranty does not affect ownership but allows the buyer to claim damages.

Outcome:

  • The buyer can sue for damages but cannot cancel the contract.

Case 3: Rights of an Unpaid Seller

Scenario:

  • A seller delivers 100 units of furniture to a buyer.
  • The buyer becomes insolvent before making payment.
  • The seller stops the goods in transit and resells them.
  • Section 50 of the Sale of Goods Act, 1930: If the buyer becomes insolvent, the seller can stop the goods in transit and retain them.

Outcome:

  • The court ruled that the seller had the right to resell the goods to recover losses.
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