Contract Of Sale – Two definitions related to this is given below. Please read first before reading the Essential Characteristics.
- According to Section 4(1): “It is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a certain price.”
- According to Blackstone, when one person transfers the ownership of goods to another for the consideration of a price, a sale is said to have been made.
Contract Of Sale
(1) Buyer and Seller – Like in other contracts, a contract of sale also has two parties who make the contract. The parties in a contract of sale are the buyer and the seller. The person who buys the goods or makes an agreement to buy is called the buyer, and the person who sells goods or makes an agreement to sell is called the seller. The two parties, i.e., the buyer and the seller, are two different persons.
(2) Goods – The subject-matter of the contract is essentially the goods. Goods, as per the Sale of Goods Act, are movable property other than actionable claims and money. Under the definition of goods laid down in the Act, stocks and shares, growing crops, grass or other things attached to, or being a part of, land which are separated from land before the sale, or have been agreed to be separated under the contract of sale are classified as goods. Ancient and rare coins are also classified as goods.
(3) Price – Goods are always sold for a price. Price is a consideration in terms of money. There must be a consideration for the sale of goods, and the consideration must be in terms of money. Money is the prevalent legal tender of the country. In other words, in a valid contract of sale, the goods must be exchanged for money. Exchange of goods for goods-i.e., a barter-is not deemed to be a sale. But, in the case of Aldridge vs. Johnson, it was held that a transaction partly for money and partly for goods was a sale.
(4) Transfer of Ownership – In a contract, it is essential that the ownership of goods is transferred from the seller to the buyer. The transfer of ownership can be at the time of making the contract, or it can be at a future date. When the transfer takes place at the time of the contract, it is called a ‘sale’. If the transfer is to take place at a future date, it is called an ‘agreement to sell’.
(5) Elements of a Valid Contract – It is a distinct type of contract, and must essentially have, the basic elements of a valid contract. A contract of sale can be ‘express’ or it can be implied’. An express contract may be made by word of mouth, or it may be in a written form. There are no specific formalities to be observed in a contract of sale. When one party makes an offer to sell some goods that he owns to another, and the other party accepts the offer, a contract is made. It is also not essential that the price of goods is paid immediately. The price can also be paid later.