Business Law - Sale of Goods Act 1930 PDF

T.Y. B.COM (SEM – V) – BUSINESS LAW – I UNIT – IV SALE OF GOODS ACT, 1930 Q.1. Define a contract of Sale of Goods. Explain the essential elements of a contract of “Sale of Goods”. A.1. “A contract of sale of goods is a contract, where b...

T.Y. B.COM (SEM – V) – BUSINESS LAW – I UNIT – IV SALE OF GOODS ACT, 1930 Q.1. Define a contract of Sale of Goods. Explain the essential elements of a contract of “Sale of Goods”. A.1. “A contract of sale of goods is a contract, where by the seller transfers or agrees to transfer the property in goods, to the buyer, for a price”. (1) Two Parties :- There must be minimum two parties i.e. buyer & seller. “Buyer” a person, who buys or agrees to buy goods. “Seller” is a person, who sells or agrees to sell the goods. (2) Goods :- There must be goods. Goods are the subject matter of the contract of sale. Goods means every kind of movable property, actionable claims & money. (3) Price :- In a contract of sale, goods are sold for price. So, there must be price. Price is the money consideration, in the contract of sale. Further, prices must be paid in terms of money. Thus, price is the basic essence of the contract of sale. (4) Transfer of General Property :- Property in goods means the ownership of goods. To establish a contract of sale of goods, the ownership of goods must be transferred from seller to buyer. When the ownership is transferred immediately, it becomes an Absolute Sale. When the seller only agrees to transfer the ownership good, it becomes an agreement to sale. (5) Essential elements of valid contract :- All the essential elements of a valid contract must be present in contract of sale. Q.2. Write a short note on Goods. What are the various types of Goods ? OR Discuss the subject matter of the contract of Sale of Goods. A.2. We know that sale means transfer of the ownership of goods from seller to the buyer for price. This indicates that, for making a contract of sale, there must be goods. Goods are the subject matter of the contract of goods. Goods mean every kind of movable property which can be transferred from one place to another except immovable property, actionable claim and money. Goods includes stock and shares, growing crops, grass & things attached to or forming part of land, which are agreed to be served before sale. Goods can be classified into various types as shown below : (A) Existing Goods :-  They are those goods which are owned & possessed by the seller, at the time of sale.  Only the existing goods can be the subject matter of a sale. The existing goods maybe: SALE OF GOODS ACT, 1930 1  (1) Specific Goods : They are those goods, which are identified & agreed upon by the buyer, at the time of the contract of sale. Example - out of two cars, A & B, the buyer agrees to buy car A. here, car A becomes specific goods. (2) Ascertained Goods : Ascertained goods are those goods, which are ascertained by buyer, subsequent to the formation of the contract of sale. (3) Unascertained Goods : They are those goods which are not identified & agreed upon at the time of contract of sale. They are defined only by description & maybe a part of a lot. Example – Akshay desires to buy horse from Ajay. Ajay shows him 8 horses. Suppose, Akshay agrees to buy a particular horse. The particular horse which is identified is an example of specific goods. Now, if Akshay provides certain description of horse which he desires to buy & when such horse is separated from the lot, it becomes ascertained. Till, the horse of a particular description is ascertained, all the horses are unascertained. (B) Future Goods :- They are those goods, which are not in the possession of seller at the time of the contract, but which will be manufactured, produced or acquired by him after the formation of contract. (C) Contingent Goods :- They are those goods, the acquisition of which by the seller depends upon certain contingency, which may or may not happen. Q.3. Explain the difference between sale & agreement to sell. A.3. According to Indian Sale of Goods Act, “A contract of sale of goods is a contract, whereby the seller transfers or agrees to transfer, the property in goods, to the buyer, for a price”. This definition indicates that in a contract of sale, the seller transfers or agrees to transfer the property in goods (ownership of goods) to buyer for price. Now, when the ownership of goods is immediately transferred, it becomes an absolute or unconditional sale. But, when the seller just agrees to transfer the ownership of goods, it is only an agreement to sell. Following are the main points of distinction between sale and agreement to sell : (1) Transfer of Property :- In a sale, the property in goods (ownership of goods) is immediately transferred from seller to buyer. So, buyer becomes the owner of goods & seller ceases to the owner. While in agreement to sell, the ownership is not immediately transferred. The ownership is to be transferred at a future time (or upon fulfillment of certain conditions). So, seller remains the owner & buyer does not become the owner of the goods. (2) Nature of Contract :-  A sale is an executed (completed) contract, because in sale nothing remains to be done thereafter.  But, an agreement to sell is an executory contract, because it is to be performed in future. (3) Risk of Loss :-  We know that “Risk follows the ownership” i.e. whoever is the owner he has to suffer the risk of loss. Therefore:  In case of sale, if the goods are damaged or destroyed after sale, the buyer has to suffer the loss eventhough the goods are in possession of the seller (because buyer is the owner of goods. So he has to suffer loss).  While in agreement to sell, if the goods are damaged or destroyed, the seller has to suffer the loss, eventhough goods are in the possession of the buyer (because seller is the owner of goods). SALE OF GOODS ACT, 1930 2  (4) Types of Goods :-  A sale can place only of existing & specific goods.  While an agreement to sell is mostly of future & contingent goods. In some cases, it may be of unascertained existing goods. (5) General & Particular Property :-  A sale is a contract plus conveyance, and it creates jus-in-rem. i.e. it gives the buyer a right to enjoy the possession as well as the ownership of goods.  An agreement to sell is just a pure & simple contract, which creates jus-in- personam i.e. it gives both the parties, a right to enforce the contract against each other. (6) Consequence of breach by buyer :-  After sale, if there is a breach of contract by buyer (if buyer fails to pay price of goods), the seller can sue for price eventhough the goods are still in his possession.  In agreement to sell, if there is breach of contract by buyer, the seller can only sue for damages (& not for the price) eventhough the goods are in possession of the buyer. (7) Right to re-sell :-  In case of sale, the seller cannot resell the goods (except in certain cases i.e. in case of an unpaid seller). Even if, he does it, buyer does not acquire ownership of such goods.  In case of agreement to sale, seller can resell the goods, and if buyer takes the goods for consideration & without the notice of prior agreement, he gets good title over the goods. (8) Insolvency of Buyer :-  After sale, if buyer becomes insolvent before the payment of price, (in absence of right of lien, seller must deliver goods to the Official Receiver of the Court, & then he claim rateable dividend for the price of the goods.  But, in case of agreement to sell, if buyer becomes insolvent before the payment of price, the seller is not bound to deliver the goods until payment (i.e. he can refuse to deliver the goods). (9) Insolvency of Seller :-  In sale, if seller becomes insolvent, the buyer, as an owner, can recover the goods from the Official Receiver.  In an agreement to sell, if buyer has paid the price, he can claim only rateable dividend & not the goods. Q.4. Explain the principal of Caveat Emptor. Discuss its exceptions. OR Discuss “Let the buyer beware”. A.4.  In the law of sale of goods, there is a fundamental principle/rule & it is “Let the buyer beware”.  This means, while buying the goods buyer should be careful & cautious. He should thoroughly examine the goods before he buys.  When the buyer purchases goods at his own risk & judgement, it is not the duty of seller to point out the defects in the goods.  When the buyer purchases the goods at his own risk & judgement, he must check the goods.  If the goods turn out to be defective or do not suit his purpose, he can not blame the seller.  In absence of mis-representation or guarantee by the seller, seller can not be held responsible for that.  Example - A buys DVD Player at Rs. 2500. On inquiry, he comes to know the same is available in the market at the price of Rs. 2200. In this, the seller can not SALE OF GOODS ACT, 1930 3  be held responsible got charging higher price. This is because; it is the duty of buyer to make full inquiry of the price before buying the DVD Player.  Exceptions :- In the following cases, the rule of Caveat Emptor is not applicable: (1) Fitness for buyer’s purchase :-  If the buyer informs the seller about the purpose (for which goods are required) & if he depends upon the skill & judgement of seller, then it is duty of seller to supply goods suitable for the purpose.  Inspite of this, if the goods supplied by seller are not suitable, then seller is liable. (2) Sale under a patent or trade name :-  Where goods are sold under a patent or trade name, there is no implied condition that goods shall be reasonably fit for any particular purpose.  In this case, buyer has to depend upon the skill & judgement of the seller. (3) Merchantable Quality :-  In case of sale by description (who is dealing in goods of that description), there is an implied condition that the goods shall be merchantable quality (goods shall be free from any defect).  Here, if goods are not of merchantable quality, seller will be held liable. (4) Usage of Trade :- When due to custom or usage of trade, there is an implied condition or warranty as regards the quality of goods, the seller will be liable if the goods are not of proper quality. (5) Consent by fraud :-  Where the consent of the buyer is obtained by fraud or if the seller has intentionally concealed (not disclosed) a defect, which could not be discovered on reasonable examination of the goods, seller will be liable for this.  In the above mentioned exceptional cases, if the goods sold by seller are defective, he can be held responsible for the same. Q.5. Discuss the provisions of Sale of Goods Act regarding conditions & warranties. 0Discuss various implied conditions & warranties. A.5. Before making a contract of sale, a seller makes certain statements or stipulation regarding the goods, which form subject matter of contract of sale. Such statements made by seller may be conditions or warranties. Thus, conditions & warranties are the statements made by the seller to the buyer, regarding the goods. But, both differ from each other in their legal effects.  Conditions & Warranty :-  A condition is a statement or stipulation, which is essential to the main purpose of the contract. it forms the basis of the contract. it goes to the root of the contract. if there is breacho f condition, the other part can reject the contract.  A warranty is a statement or stipulation, which is collateral to the main purpose of the contract. it is not of such vital importance as like a condition. So, if there is a breach of warranty, the aggrieved party can claim damages but cannot reject the contract.  Distinction between a Condition & Warranty :- Following are the main points of distinction between condition and warranty. (1) Essential &: Collateral : A condition is a statement or stipulation which is essential to the main purpose of contract. While a warranty is a statement or stipulation, which is collateral to the main purpose of contract. SALE OF GOODS ACT, 1930 4  (2) Superior & Subsidiary Promises : Conditions are the basis or foundation of a contract. They are the superior promises given by the seller to the buyer. While warranties are the subsidiary promises. (3) Breach : If there is a breach of condition, the aggrieved party can repudiate (avoid / reject) the contract. But, if there is breach of warranty, the aggrieved party can sue for damages only, but he cannot reject the contract. (4) Relationship : A breach of a condition may be treated as a breach of warranty, if the aggrieved party is contended with damage only. But, a breach of warranty cannot be treated as a breach of condition.  Implied Conditions : (1) Condition as to title :-  In a contract of sale, (unless the circumstances of the contract show a different intention), there is an implied condition on the part of seller that : (a) In case of sale, seller has a right to sell the goods. (he must be the owner of the goods). (b) In case of an agreement to sell, he will have a right to sell the goods, at the time when the property (ownership) is to pass.  This is a general implied condition regarding the title of the goods. This condition is present in all kinds of sale. Here, title means a right to sell the goods.  Example - X bought a car from Y and used it for two months. Later on, it was found that Y had not title to the car. So, C had to hand over the car to its true owner. Here, X can recover the price from Y. (2) Sale by Description :-  When the buyer, relying upon the description of goods given by the seller, places order & buys the goods, it becomes sale by description.  In case of sale by description, there is an implied condition that the goods shall correspond with the description.  It means, goods must be according to description. Now, if the delivered by seller are not according to description, then buyer is not bound to accept the goods.  Example - X placed an order for Dehra Doon Basmati Rice to Y. but, the seller supplied another type of rice (say, Colam). Here, X is not bound to accept this rice. (3) Sale by sample :-  When the sample is shown by seller & goods are purchased by buyer (relying upon the sample), it is sale by sample.  In case of sale by sample, following are the three implied conditions. (a) The bulk shall correspond with the sample in quality. It means, the whole lot of goods should be as per sample in quality. If the quality of goods is not according to sample, the buyer can reject the goods. (b) The buyer shall have a reasonable opportunity of comparing the bulk with sample. This means, depending upon the nature of transactions, reasonable or sufficient time should be given to buyer for inspection. If this condition is violated, the buyer can terminate the contract. (c) The goods should of merchantable quality. It means, the goods should be free from any latent defect (those defects, which are not discoverable even after a reasonable examination of the sample). If there is such defect, the seller will be liable. However, the seller is not liable for the defects, which are apparent (discoverable) on ordinary examination of the sample. SALE OF GOODS ACT, 1930 5  (4) Condition as to quality of fitness :-  Generally in a contract of sale, there is not implied condition as to quality or fitness of the goods for a particular purpose.  But, when (a) The buyer informs the seller that he wants goods for a particular purpose, & (b) If he depends upon the skill & judgement of the seller, (whose business is to supply goods of the description), then, there is an implied condition that goods must be reasonable fit for that purpose.  In this case, if the goods are not suitable for that purpose, the buyer can return the goods.  Example - A buyer wants a hot-water bottle. The seller shows him a bottle & tells him that is fit for storing hot-water. Now buyer buys the bottle & while using it, the bottle is burst & he is injured. This proves that the bottle was not fit as a hot-water bottle. So, in this case, seller is responsible for the violation of this condition.  Further, this implied condition does not apply – (i) If a person (purchasing an article for a particular purpose) is suffering from an abnormality (say, he is very short or fat) & such abnormality is not informed to seller, or (ii) If the buyer purchases an article under a patent or branch name. (5) Condition as to merchantability :-  In case of sale by description, there is an implied condition that the goods are of merchantable quality.  This means, goods should be of such a quality that a reasonable person, acting reasonably, will accept it after its proper examination. (6) Condition as to wholesomeness :-  In case of eatables & provisions, in addition to the implied condition as to merchantability, there is another implied condition that the goods shall be wholesome.  This means, the goods should be suitable for consumption by human-being.  Law has introduced this condition for the general health of people. (7) Condition implied by custom :- An implied condition as to quality or fitness for a particular purpose maybe added by the usage of trade in the locality concerned.  Implied Warranties : (1) Warranty of quiet possession :-  In a contract of sale, there is an implied warranty that the buyers shall have & shall enjoy quiet possession of the goods.  This means, buyer has a right to enjoy the possession of the goods.  If this right of possession & enjoyment is disturbed in any way, due to the defective title of the seller, the buyers can claim damages from the seller. (2) Warranty of freedom from encumbrances :-  In a contract of sale, there is implied warranty that the goods shall be free from any charge or encumbrance in favour of third party.  Now, if the possession is disturbed due to any charge on the goods the buyer can sue for damages. (3) Warranty as to quality or fitness :- An implied warranty to quality or fitness for a particular purpose maybe added by the usage of trade. (4) Warranty to disclose dangerous nature of goods :- When the goods sold by seller are of dangerous nature, but buyer is not aware of this, it is the duty of seller to inform this to the buyer. Otherwise he will be liable for damages. SALE OF GOODS ACT, 1930 6  Q.6. “No one can pass a better title than what he has” Discuss with exceptions. OR Discuss sale by non-owner. OR What is the general condition in a contract of sale. Explain this condition with its exceptions. A.6.  In contract of sale, there is one general implied condition that seller must have title to the goods.  This means, he must have an authority to sell the goods or he must be the owner of the goods.  If he is not the owner & even if he sells the goods, then buyer does not become the owner of the goods.  Example - if X steals TV & sells it to Y. Y doesn’t become the owner of the goods, who can sell it. If the seller has no title to the goods, the buyer does not acquire better title even if he has acted honestly & has paid its price. (If the title of the seller is defective, then the title of the buyer will be also defective). Thus, nobody can pass a better title than what he has.  Thus, according to this general rule, a non-owner (who is not the owner or who has not authority to sell) cannot make a valid sale. However, there are certain exceptions to this rule in which even a non-owner can make a valid sale. These exception are as follow : (1) Sale by a Mercantile Agent :-  A mercantile agent is a person who in ordinary course of business has an authority either to sell the goods, or to consign goods for the purpose of sale, or to buy goods, or to raise money on the security of the goods.  Now, he can make a valid sale on behalf of his principal, if the following conditions are satisfied. (a) He was in possession of the goods, with the consent of his principal. (b) He sells the goods, in ordinary course of business of a mercantile agent. (c) The buyer acts in good faith. (d) At the time of contract of sale, the buyer had no notice that the agent had no authority to sell.  Example – A, owner of a car, delivered it to B, a mercantile agent, for selling it at not less than Rs. 45000. However, B sold this car to C for Rs. 35000, who bought it in good faith & without notice of any fraud. B missappointed the money. A filed a suit to recover the car from C. it was held that B was in possession of the car with the consent of A for the purpose of sale. So, C obtains a good faith to title to the car. Here, A cannot recover the car from C. (2) Sale by a person, not the owner or title by estoppel :-  Where the true owner, by his act or behaviour, leads the buyer to believe that the seller has the authority to sell the goods & induces him to buy the goods, the buyer gets a better title.  Example – A tells to B in presence of C (who is the real owner) that he (A) is the owner of the goods. C keeps silence. After sometime, A sells these goods to B. Now, C cannot recover the goods from B, because he behaved in such a way that A seems the owner of goods. (3) Sale by one of the joint owner or co-owners :- If one of the joint-owners is in sole possession of the goods, with the permission if the other co-owners, he can make a valid sale of goods. (4) Sale by seller, in possession of goods, after sale :-  We know that, after sale, seller does not remain the owner of the goods sold.  However, if he is in possession of such goods, he can make a valid sale of such goods to third party, if : (a) The buyer buys the goods in good faith, & (b) He had no notice of previous sale. SALE OF GOODS ACT, 1930 7   Example – A sells certain goods to B & promises to deliver the goods on the next day. Now, before its delivery to B, A sells it to C, who buys them in good faith & without the notice of prior sales to B. here, C gets a good title to the goods. (5) Sale by a buyer is possession of goods :-  Where a person having the goods or having agreed to buy the goods, obtains the possession of goods with the consent of the seller & sells to some one, the buyer acquired good title to the goods, if he buys in good faith, without the notice of any lien or other right or original seller.  Example – A purchased some furniture on hire purchase from B, and B agreed to transfer its ownership to A on payment o last installment. However, before payment last installment, A sold it to C, who purchased in good faith. Here, C acquires good title over the goods. (6) Sale by a person, in possession goods, under a avoidable contract :- If a person is in possession of goods under a voidable contract i.e. without the free consent of other party, then before the contract is avoided by the other party, he can make a valid sale of this goods. (7) Sale by an unpaid seller :- When an unpaid has exercised the right of lien or right of stoppage in transit, he can resell the goods & the buyer acquires a good title to the goods (as against its original buyer). (8) Exceptions in other Acts :- In following cases, non-owner can make a valid sale under the provisions of some other acts : (a) A pledgee or pawnee has limited right to sell the goods pledged with him in certain circumstances. (b) Even, a finder of goods, can make a valid sale of goods, under certain circumstances. (c) Under the law of insolvency, the Official Receiver or Official Assignee or Liquidator of companies has a right to sell the property or goods of the insolvent. In all the above cases, if the non-owner sells the goods, the buyer gets a valid title. Q.7. Discuss the rights of unpaid seller. A.7.  Who is unpaid seller ? :- A seller is considered as unpaid seller, when : (a) The whole of the price has not been paid, (b) A bill of exchange or any other negotiable instrument has been received by him as a conditional payment, but it has been dishonoured. There two types of rights of unpaid seller : (A) Rights against the goods :- Where the property in goods has passed to the buyer, an unpaid seller has the following rights against the goods : (1) Right of Lien :  A right of lien means a right to retain the possession of the goods, so long as price is not paid by the buyer.  This means, to recover the price, seller can refuse to deliver the goods to the buyer.  This right is available to unpaid seller, only in following three cases : (a) when the goods are sole on cash, but price is not paid, or SALE OF GOODS ACT, 1930 8  (b) when the goods are sold on credit, but even after the expiry of the terms of credit, price has not been paid, or (c) When the buyer becomes insolvent.  The right of lien depends upon the actual possession of the goods.  So, this right is available only if the goods are in the possession of the seller. So, this right of lien is also known as “Possessionary Lien”.  Similarly, the right of lien can be exercised by the unpaid seller only for the price & not for any other charges such as warehouse charges.  Where, the unpaid seller has made part delivery of goods, he can exercise the right of lien on the remaining goods.  Termination of Lien :- As this right depends upon the actual possession, when the possession is lost, this right comes to an end. This right comes to an end in following cases: (a) When the seller delivers the goods to a carrier or other bailee (for the purpose of termination to buyer, without reserving the right of disposal of the goods). (b) When the buyer or his agent lawfully obtains the possession of the goods. (c) When the seller waives his right of lien on the goods. (2) Right of stoppage in Transit :  This is a right of stopping the goods in transit & to regain its possession.  After losing the possession of goods, so long as goods are in transit, the unpaid seller, (i) Can stop the goods in transit, (ii) Can take back its possession, & (iii) Can refuse to deliver until the payment of the price.  This right is available to unpaid seller, only (i) When the buyer becomes insolvent, & (ii) When the goods are in transit.  This right of stoppage in transit is an extension of the right of lien. It can be exercised only in case of insolvency of the buyers & when the goods are in transit.  Termination of this right :- Right of stoppage in transit comes to an end in following cases: (a) If the buyer or his agent obtains the possession of the goods, before the arrival of the goods at the appointed destination. (b) If after the arrival of the goods at its destination, the carrier agrees to keep or to hold the goods on behalf of the buyer. (c) If the carrier wrongfully refuses to deliver the goods to the buyer.  Distinction between Right of Lien & Right of Stoppage in Transit :- Right of Lien Right of Stoppage in Transit (1) It is a right to retain the possession (1) It is a right to regain or to resume of goods. possession goods. (2) It can be exercised even if buyer (2) It can be exercised only if the buyer has not become insolvent. has become insolvent. (3) It can be exercised only on those (3) It can be exercised only those goods which in the possession of the which are in transit. seller. (4) It starts when goods have lost the possession of seller & it continues till (4) It comes to an end, when the the goods are in transit. possession is lost by the seller. (3) Right to Resale :  The unpaid seller can resell the goods in the following circumstances : (a) Where the right of resale is expressly reserved in a contract of sale. SALE OF GOODS ACT, 1930 9  (b) Where the goods are of perishable nature, he can resell the goods without any notice to the buyer. (c) Where he has given notice to the buyers of his intention to resell the goods & even after the notice, if the price is not paid within a reasonable time.  Further, in case of resale, if there is a loss to the seller, he can recover it from the buyer, because it is the result of the breach of contract by the buyer.  But, if there is surplus (profit) on the resale, buyer has no right to get it because he cannot be allowed to take the advantage of his own mistake.  In case, notice is not given, the unpaid seller is not entitled. (i) to recover any loss on the resale of goods, & (ii) to retain any surplus arising on the resale of the goods. Here, the buyer is entitled to recover such surplus as his right. (4) Right of with-holding delivery : Where the property in goods has not passed to the buyer, the unpaid seller has a right of with-holding the delivery of goods. (B) Rights against the buyer personally :- (1) Suit for Price : (a) Where the property in goods has passed to the buyer & the buyer neglects to pay the price for the goods, the seller can file a suit against the buyer for the price of the goods. (b) Where the property in goods has not passed to buyer & price is payable on certain day irrespective of delivery of goods, but the buyer refuses to pay the price, the seller can file a suit against the buyer for the price, eventhough the property in goods has not passed to the buyer. (2) Suit for Damages : When the buyer wrongfully refuses to accept the goods & to pay for the same, the seller can sue him for damages for non-acceptance. (3) Repudiation of contract before due date : Where the buyer repudiate the contract of sale before the date of delivery, the seller may threat the contract as subsisting (existing) & may wait till the date of delivery or he may treat the contract as repudiated & sue the buyer for damages. (4) Suit for interest : When there is a specific agreement between seller & buyer regarding payment of interest on the price of the goods, then the seller can recover interest on the price of the goods from the due date of payment. But, if there is no such specific agreement regarding payment of interest, then seller can charge interest on the price of goods from the date of notice of payment of price. These are the rights of unpaid seller against the buyer personally. Q.8. Write a short note on C.I.F. contract & F.O.B. contract. A.8. (A) C.I.F. Contract :- A contract of C.I.F. means a contract at a price which includes cost, insurance and freight.  Duties of seller : (1) To make an invoice of the goods sole, (2) To ship (at the port of shipment) goods of the description contained in the contract. (3) To produce a contract of affreightment (bill of lading) under which goods will be delivered at the destination. (4) To arrange for an insurance. SALE OF GOODS ACT, 1930 10  (5) To send forward & tender shipping documents, namely the invoice, bill of lading & policy of insurance to buyer. (6) To tender at the earliest to the buyer, all the shipping documents.  Duties of Buyers : Buyer is bound to accept the documents if they are complete & pay the price irrespective of the arrival of goods. He is bound to pay against the delivery of documents, whether the goods have arrived or not. In C.I.F. contract, buyer may reject the goods if they are not in accordance with the contract eventhough property has passed to him. (B) F.O.B. Contract :- The abbreviation of F.O.B. is used for the term “Free on Board”. The meaning of the word is that the seller is to put the goods on board at this own expense. Once the goods are put on board, the property and risk passes to buyer. The goods are at buyer’s risk & he is responsible for the freight & subsequent charges including insurance. So far seller is concerned – (1) The seller must deliver the goods on board at his own expenses. (2) He must give notice of shipment to the buyer, so as to enable him to insure goods. (3) Failure to give the notice to the buyer, the seller takes the risk during the voyage. (4) If he is prevented from shipping the goods by the buyer’s failure to name the ship, he can sue for damages arise for non-acceptance & not for the price. So far buyer is concerned – (1) The buyer cannot claim delivery of the goods before shipment. (2) He must apply for license to export or import where such is necessary.  SALE OF GOODS ACT, 1930 11