Historical Background and Development of the Sale of Goods Act

The article Historical Background and Development of the Sale of Goods Act' provides a concise overview of the historical development of the Sale of Goods Act in India, shedding light on its origin, key provisions, and a few case laws.

Introduction

The Sale of Goods Act is an essential legal framework to regulate the sale of goods in commercial transactions in India. Over time, the Act has evolved its global trade patterns, technical improvements, and market dynamics. Its fundamental principles uphold contractual duties and safeguard fair commercial practices and consumer rights. The Act is important, supports global trade agreements, and promotes economic stability. Thus, the British Sale of Goods Act served as a model for the Act. The Sale of Goods Act thoroughly explains every part of the Act and references all relevant cases. Further, the Act is shaped according to the prospects by introducing changes in the laws and regulations and new developments in international businesses.

History

The history of the Act is traced back to the colonial era. It was derived from English common law and adheres to 1893’s codified common law principles, including law merchant. By 1920, India regulated provisions that needed to be revised since they were unsuitable. Chapter seven of the Indian Contract of 1872 was used before the Sale of Goods Act was established in 1930. The Act aims to allow contracts between the parties, i.e., the buyer and seller, for the items that the seller agrees to transfer to the buyer in exchange for a specific price within an agreed-upon timeframe.

After Independence, the Act went under several amendments to align it with the modern socio-economic and legal aspects of the country. In 1893, the Indian Contract Act was supplemented by the Sale of Goods Act, which was the result of the English court in England. Around the 1920s, the legislature thoroughly examined case law concerning the sale of commodities under the Indian Contract Act. Thus, chapter seven in the Contract Act of 1872 was repealed by the Sale of Goods Act in 1930, the Act was designed according to the particular circumstances in mind, necessitating several provisions in England. On January 1, 1980, the Act of 1979, which went into effect, unified the laws about selling goods in the United Kingdom. It superseded the Sale of Goods Act 1893 and portions of several other laws, implementing changes made to those Acts during their development. With a few exceptions (such as deals with sales by auction), and governs contracts for selling all kinds of products.

Development

In India, contracts of sale of products are governed by the Act of 1930, which is a mercantile law. It was created in 1930, and with the exception of Jammu and Kashmir, it is applicable throughout the nation. The Sale of Goods Act of 1893 in the United Kingdom had a significant influence on this Act, which established guidelines for the sale of products. The Act still has effect in India despite being revised in 1963. The statute defines terms like goods as any transportable property, with the exception of money and actionable claims.

At present the aspects of the sale of goods, like the contract itself, the parties involved, delivery, property passing, documentation of products, damage or perishing of goods, breach or fault, and more, are all outlined in the act along with definitions, guidelines, and regulations. The Act contains provisions that guarantee impartiality and openness in business dealings and offer recourse in disagreements or infractions. The Act of 1930 is still applicable and significantly impacts how business is conducted in India.

Key Provision

Sale Contract: A contract of sale is in which a seller agrees to provide over the ownership of items to the buyer in exchange for payment or free. The list of required components is needed for a legal sales contract.

Conditions and Warranties: These contain the basic difference the former contains essential terms of the contract of sale while the latter contains ancillary terms.

Transfer of properties among the parties: It provides rules for the seller-to-buyer transfer of property in the items. When both parties wish for property to be transferred, it does so from the seller to the buyer.

Execution of the Contract: The responsibilities of the buyer and seller in regard to delivery, payment, and acceptance of the goods are stated. Also, the fallout from failing to fulfil these commitments or to perform poorly.

Rights of the seller and buyer: The rights consist of two concepts:

- Unpaid Seller’s Rights [Section 46]: In cases, where the buyer neglects to make payment, the protection to the unpaid sellers is provided in the section, that guarantees rights like refusing delivery, cancelling shipment, and reselling the products to the other buyer.

- Right of the Buyer: The rights of a buyer get violated in the event when the seller breaches the agreement, including the right to reject non-conforming products, and, sometimes the right to specific performance.

- Breach of Contract [Section 55 to 61]: In case of a breach, the section provides the parties with options for redress, including the ability to demand specific performance, damages, or contract repudiation.

Limited conditions and warranties [Section 62]: A contract of sale with a list of implied conditions and warranties that includes the title condition, guaranteeing of undisturbed ownership, and the warranty of the free items from any restriction or charge that the buyer is unaware of.

Limitation of Actions [Section 63]: A time limit is specified for filing an action for breach of contract. If not filed within it, the party may not file a claim later.

Auction Sales [Section 64]: Certain principles related to auction sales, like conducting auctions and outlining the rights and privileges of the highest bidder and seller.

Case Studies

In the case M/s M.K.M Moosa Bhai Amin, Kota v. Rajasthan Textile Mills, Bhawanimandi, AIR 1974 Raj 194, the petitioner filed a suit for the recovery of interest on the outstanding debt in addition to the cost of the provided goods. The lower court denied the interest claim, stating that there was no agreement for the payment of interest in case the cost of the supplied commodities was unpaid in full. The petitioner claimed that in the absence of a contract, they were entitled to a fair interest under the provision mentioned in the Sale of Goods Act of 1930. But in normal situations, the defendant was supposed to reimburse the cost of the products within a reasonable period after delivery.

Thus, since the money wasn’t received for over a year, the petitioner sued the defendant to get back his money. It was held that the lower court should have ruled in the favour of the petitioner and granted interest on the amount of the purchase price of the items.

In Contship Container Lines Ltd. v. D.K Lall, Civil Appeal No. 3245 of 2005, the Apex Court outlined the framework of the regulations about the transfer of goods title. In the contract of sale of specific or ascertained goods, the property in them is transferred to the buyer at the specified time by the parties as per the contract. The terms of the contract, the actions of the parties and the case circumstances must be considered to ascertain the parties' intentions. Sections 20 to 24 of the Act state the guidelines for figuring out the intentions of the parties for the point at which the property should pass to the buyer.

Conclusion

In conclusion, the Sale of Goods Act of 1930 has been a fundamental legal framework governing commercial transactions in India, ensuring fairness and transparency in business dealings. Its historical roots, stemming from the colonial era and drawing from the English Sale of Goods Act of 1893, have provided a robust foundation for its development and application over the years. The Act's key provisions, including those related to the sale contract, transfer of property, and rights of both buyers and sellers, have played a significant role in upholding the principles of equity and justice in commercial exchanges.

Furthermore, the Act has been subject to amendments to align with the modern socio-economic and legal landscape, ensuring its continued relevance in the contemporary business environment. Overall, the Sale of Goods Act remains a cornerstone of India's commercial law, fostering trust and stability in business transactions and upholding the rights of both sellers and buyers. Its comprehensive guidelines and regulations have continued to shape the conduct of commercial activities and contribute to the growth and stability of India's business landscape.

Reference

[1] Pollack and Mulla, The Sale of Goods Act, 11th Edition

[2] Tracing The History of The Sale Of Goods Act, 1930, Available Here

[3]  The Sale Of Goods Act, 1930,  Available Here

[4] Indian Contract Act, 1872, Available Here