Thursday, July 19, 2012

Definition and Essentials of Contract of Sale


Contract of Sale of Goods:
According to Section 4 of the Sale of Goods Act, 1930, ‘A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in the goods to the buyer for a price.’
The term ‘Contract of sale’ is a generic term and includes both a sale and an agreement to sell. Where under a contract of sale, the property in the goods is transferred from the seller to the buyer (i.e. at once), the contract is called a ‘sale’ but where the transfer of the property in the goods is to take place at a further time or subject to some condition thereafter to be fulfilled, the contract is called an ‘agreement of sell’. [Section 4(3)].
The following are thus the essentials of a contract of sale are:-
a.       Number of parties: Two or more parties are necessary namely the seller and buyer.
b.      Goods: The subject matter of a contract of sale must be goods.
c.       Price: The consideration for a contract of sale is price.
d.      Transfer of property – In a contract of sale, there must be transfer of property, from the seller to the buyer.
e.      All essential elements of a valid contract.

Two Parties
Two or more parties are necessary in a contract of sale namely the seller and buyer.
Buyer [ Sec 2 (1) ] :- Buyer means a person who buys or agrees to buy goods.
Seller [Sec 2 (13)] :- Seller means a person who sells or agrees to sell goods.
Goods
Goods is defined in Section 2 (7) as ‘Every kind of moveable property other than actionable claims and money; and includes stocks and shares, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale.’ Trademarks, copyrights, patent rights, goodwill, electricity, water and gar are all considered as goods.
Goods may be (a) existing, (b) future, or (c) contingent. The existing goods may I be (i) specific or generic, (ii) ascertained or unascertained.
Price
No sale can take place without a price. Thus, if there is no valuable consideration to support a voluntary surrender of goods by the real owner to another person, the transaction is a gift, and is not governed by the Sale of Goods Act. Therefore, price. which is money consideration for the sale of goods, constitutes the essence for a contract of sale. It may be money actually paid or promised to b/3 paid. If a consideration other than money is to be given, it is not a sale.
a)      Modes of Fixing Price (Sections 9 and 10):  The price may be fixed:
b)      at the time of contract by the parties themselves, or
c)       may be left to be determined by the course of dealings between the parties, or
d)      may be left to be fixed in some way stipulated in the contract, or
e)      may be left to be fixed by some third-party.
Passing of Property or Transfer of Ownership (Sections 18-20)
In a contract of sale, there must be transfer of property, from the seller to the buyer.
Essential Elements of a Valid Contract
a)      Intention to create legally binding relationship
b)      Their must be Offer and Acceptance
c)       Their must be Two or more persons
d)      Competence of parties to the contract
e)      Lawful consideration
f)       Free consent of parties
g)      Lawful Object
h)      Certainty of performance
i)        Legal Formalities
j)        Not declared to be void

Labels

accounting policies accounting standards accounts of non trading concern advanced financial accounting ahsec 11 ahsec 12 ahsec notes ahsec notes 11 amalgamation of firms analysis and interpretation of financial data auditing bcfm bills of exchange branch accounting brf bst12 business communication business economics business environment business regulatory framewrok business statistics Business studies cash flow format cash flow statement caveat emptor cbse 11 cbse 12 cbse notes cbse12 cfp cfp online test cheque cheques combination consideration consumer protection act contract act corporate accounting correlation cost accounting cost and management accounting cpt cpt notes crossing of a cheque define statisitcs dibrugarh university dibrugarh university notes dibrugarh university question paper dibrugarh university solved papers dibrugarh university syllabus direct tax law discharge of contract dissolution of partnership economics 11 entrepreneurship essentials of a contract fianancial accounting financial accounting financial management Financial statements Financial statements analysis fm forecasting goods guwahati university guwahati university syllabus Hire Purchase Holding Companies house property HRM Human Resource Management ifs ignou income income and expenditure account income tax index number indian contract act indian financial system information technology insolvency of partner Installment Purchase Internal Reconstruction of a Company issue of shares it notes joint venture kkhsou kksou leadership M.com management management accounting marginal cost marginal costing marketing management mbo measure of central tendency measure of dispersion most important questions for CMS motivation mrtp act ncfm Negotiable instruments new industrial policy'1991 nios online test organisational behaviour and theory partnership pbm permutation planning principle of business mangement promissory note quantitative techniques and research methodology quasi contract ratia ratio analysis receipts and payments account reconciliation statement redemption of preference shares regression royalty accounts sale of goods act sale or return sapm security analysis and portfolio management semester I Semester II semester III sez solved assignments Special Economic Zone swot time series analysis