Sales of Goods Act - Module III Quiz

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is a requirement for a contract of sale of goods to be valid?

A price in money must be paid or promised (correct)

The subject matter must be services

Only one party is necessary

Transfer of ownership is optional

Which of the following goods is considered existing goods?

Goods identified by description only

Goods that depend on a future event

Goods owned or possessed by the seller at the time of sale (correct)

Goods that will be produced in the future

How are contingent goods defined in the context of contracts of sale?

Goods that are manufactured after the sale

Goods that are identified and agreed upon

Goods that depend on an uncertain event for acquisition (correct)

Goods that are specifically described

What distinguishes a sale contract from an agreement to sell?

Sales contracts are executed while agreements to sell are executory Signup and view all the answers

Which of the following types of goods includes items that are not specifically identified but described?

Generic / Unascertained Goods Signup and view all the answers

Which of the following is NOT considered as 'goods' under the Sale of Goods Act?

Debts due to a person from another Signup and view all the answers

What is meant by 'specific or ascertained goods'?

Goods identified and agreed upon at the time of sale Signup and view all the answers

Which of the following statements is true regarding the Sale of Goods Act?

Goodwill can be classified as a type of goods Signup and view all the answers

When does the transfer of property in goods occur?

When the contract is made. Signup and view all the answers

What happens to the risk of loss in a sale once the property is transferred?

The risk passes to the buyer. Signup and view all the answers

What is the legal stance if goods perish before the contract is made?

The contract is void. Signup and view all the answers

In the case of a hire purchase agreement, what is the position of the hirer until the last installment is paid?

The hirer is considered a bailee. Signup and view all the answers

What can a seller do if the buyer breaches the contract?

Sue for the price and damages. Signup and view all the answers

How is the sale distinct from a pure agreement?

A sale requires conveyance and agreement. Signup and view all the answers

What happens if the goods are destroyed by accident in a hire purchase agreement?

The risk falls on the owner. Signup and view all the answers

What is true about the seller's rights regarding resale of goods?

The seller cannot resell if property is passed. Signup and view all the answers

What is an implied condition regarding the seller's title in a contract of sale?

The seller must have ownership and right to sell the goods. Signup and view all the answers

Which condition must be satisfied in a sale by description?

The goods delivered must correspond with the description. Signup and view all the answers

In a sale by sample, what is NOT an implied condition?

The quantity of goods delivered must exactly match the sample. Signup and view all the answers

What happens when goods are sold by both sample and description but do not match either one?

The buyer has the right to repudiate the contract. Signup and view all the answers

Is there an implied condition regarding the quality or fitness of goods in a contract of sale?

No, there is no implied condition for quality or fitness. Signup and view all the answers

Which statement accurately describes the implied condition for sales by sample?

The buyer should have a reasonable opportunity to compare the bulk with the sample. Signup and view all the answers

In a sale by description, what defense can a buyer claim?

The buyer can claim the goods were not as described. Signup and view all the answers

Which of the following best describes the implied condition in a contract of sale regarding a seller's future right to sell?

The seller only needs to have ownership when the property passes. Signup and view all the answers

What is a condition for implied quality in goods when the buyer has disclosed the purpose to the seller?

The buyer must rely on the seller's skill or judgment. Signup and view all the answers

Which statement indicates an exception to the implied condition for quality of goods?

The buyer has not disclosed any abnormal circumstances. Signup and view all the answers

What does merchantable quality imply regarding goods?

Goods must be fit for resale under their description. Signup and view all the answers

If a buyer purchases goods under a patent or trade name, which of the following applies?

There is no implied condition of quality. Signup and view all the answers

What does the concept of 'caveat emptor' primarily urge buyers to do?

Make a reasonable examination of the goods. Signup and view all the answers

In a sales contract involving food, what is an implied condition regarding the goods?

They should be wholesome and fit for consumption. Signup and view all the answers

Which aspect does NOT contribute to the implied quality of goods?

The presence of defects making them unfit for use. Signup and view all the answers

According to implied conditions, what is true regarding the seller's responsibility?

The seller is not obligated to guarantee fitness for a particular purpose. Signup and view all the answers

In which circumstance can the right to withhold delivery NOT be exercised?

When the seller has delivered goods to the carrier without reserving disposal rights Signup and view all the answers

Which condition is NOT required for the right of stoppage in transit to be exercised?

The buyer must have paid for the goods Signup and view all the answers

What happens if the seller does not give notice of intention to resell?

The buyer is entitled to all profits from the resale Signup and view all the answers

Under which condition is the right of lien lost?

When the buyer's agent legally takes possession of the goods Signup and view all the answers

What is NOT a requirement for the right of resale to apply?

The buyer has given explicit consent to resale Signup and view all the answers

Which of the following is NOT a time when goods are considered to be in transit?

When the buyer or agent takes delivery Signup and view all the answers

Which factor does NOT lead to the termination of the right of lien?

The buyer becomes insolvent Signup and view all the answers

What must a seller do to maintain the right of stoppage in transit?

Retain physical possession of the goods Signup and view all the answers

Study Notes

Formation of Contract of Sale

The Sale of Goods Act, 1930, was implemented on 1st July 1930 and is derived from the Indian Contract Act, 1872.
A contract of sale involves the transfer of ownership of goods from seller to buyer for a price.
Essential elements include two parties, goods as subject matter, payment or promise of price, transfer of property, and other valid contract conditions.

Definition of Goods

Goods encompass all movable property excluding actionable claims and money, including stocks, shares, and items tied to land if severed beforehand.
Money includes current currency and rare coins; actionable claims refer to debts not immediately usable as goods.

Types of Goods

Existing Goods: Present and owned by the seller at contract time.
Specific/Ascertained Goods: Identified and agreed upon during the contract.
Generic/Unascertained Goods: Not specifically identified but described.
Future Goods: Goods to be produced or acquired after the sale contract.
Contingent Goods: Acquisition of goods is dependent on uncertain future events.

Differences Between Sale and Agreement to Sell

Sale is executed, while an agreement to sell is executory.
In a sale, ownership transfers at contract execution; in an agreement to sell, it happens later.
Risks in a sale pass to the buyer; in an agreement, they remain with the seller.
Breach implications differ; sales permit suing for price and damages, while agreements allow for suing only for damages.

Sale vs. Hire Purchase Agreement

Ownership in a sale transfers immediately; hire purchase ownership transfers only after all installments are paid.
Buyers in a sale cannot terminate but are obligated to pay; hirers can return goods to terminate.
Seller bears loss risk in a sale; in hire purchase, risk lies with the owner until full payment.

Effect of Perishing of Goods

If specific goods perish unknowingly before the sale contract, the contract is void.
If the seller was aware of perishing before the contract, they can’t dispute it.

Implied Conditions in Contracts

Implied conditions presumed by law unless expressed otherwise include:
- Seller's ownership and right to sell.
- Goods must correspond to description for sales by description.
- For sales by sample, bulk must match the sample quality and be free from hidden defects.

Quality and Fitness Implied Conditions

No implied condition for quality unless a specific purpose is disclosed and relied upon.
Merchantable quality: goods must be saleable without defects affecting ordinary use.
For food items, goods must be wholesome and suitable for consumption.

Caveat Emptor Principle

Latin for "let the buyer beware," indicates buyer caution is necessary.
Buyers must examine goods for suitability — sellers have no duty for quality assurance.

Right to Withhold Delivery and Right of Lien

Seller retains the right to withhold delivery of goods until payment is made in specific scenarios, such as no credit stipulation or buyer insolvency.
This right ends if goods are transferred to a carrier or bailee, or if the buyer lawfully obtains them.

Right of Stoppage in Transit

Unpaid sellers can halt the transit of goods until payment if goods are in transit and the buyer has become insolvent.
Transit lasts from carrier receipt until the buyer takes delivery.

Right of Resale

Sellers can resell goods under certain conditions, particularly if goods are perishable or if notice is properly given to the buyer.
Failure to notify results in seller losing damages, while profits from resale are not shared unless agreed.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

This quiz covers the fundamentals of the Sales of Goods Act, focusing on the formation of contracts of sale and hire purchase agreements. Learn about the essential elements that make up these special types of contracts as defined by the Sale of Goods Act, 1930, and how they relate to the Indian Contract Act, 1872.