top of page

Rules of Delivery in Sale of Goods Act

Updated: May 6



Rules of Delivery in Sale of Goods
Rules of Delivery in Sale of Goods


Content:-



Performance by Delivery


The parties involved in any contractual agreement are obligated to fulfil their respective duties as outlined within the contract. They retain the liberty to specify the manner in which these obligations are to be carried out, such as through phased deliveries, upfront or staggered payments, and other arrangements.


As per Section 3 of the relevant legislation, it is incumbent upon the seller to ensure the delivery of goods, while the buyer is responsible for accepting and compensating for them according to the terms delineated in the sales contract.


In instances where certain details, such as the timing of delivery, are not explicitly addressed in the contract, adherence to the guidelines stipulated in the Sale of Goods Act becomes mandatory.


Mode of Delivery


As outlined in Section 2(2), the term "delivery" of goods refers to the voluntary transfer of possession from one party to another.


Section 33, Sales of Goods Act elaborates that delivery of goods sold can take various forms, including actions agreed upon by the parties or those that effectively place the goods under the control of the buyer or their representative.


This encompasses actual, symbolic, or constructive delivery methods.


Actual delivery entails the physical handover of goods from the seller to the buyer. It's important to note that unless there's a tangible transfer of control, actual delivery hasn't occurred.

 
 

Symbolic delivery involves the transfer of a symbolic representation of the goods, such as a warehouse key or a bill of lading, enabling the buyer to exercise authority over the goods.


Constructive delivery, also known as fictitious delivery or delivery by attornment, occurs when parties treat certain actions as delivery despite no actual change in custody.


For instance, if a seller agrees to hold goods on behalf of the buyer, the legal status of the seller shifts from owner to bailee, even though physical possession remains unchanged.


Section 36(3) exemplifies constructive delivery, stating that if goods are in the possession of a third party at the time of the sale, there's no delivery until the third party acknowledges holding the goods for the buyer.


Consent from all involved parties—the seller, buyer, and third-party custodian—is imperative. Failure to obtain such consent nullifies the delivery, as seen in the case of Godts v Rose (1855) 17 CB. 229, where the seller directed their warehouseman to hold goods on the buyer's behalf without the buyer's agreement, rendering the delivery invalid.


Merely issuing a delivery order doesn't constitute delivery of goods. However, in cases involving the transfer of document titles like bills of lading, symbolic delivery suffices, and no acknowledgment from the carrier is necessary for the delivery to be deemed complete.


Seller’s Duty to Deliver


The obligation of the seller to deliver the goods is stipulated under Section 31. According to this provision, "The seller is bound to deliver the goods in accordance with the terms of the contract."


If the contract specifies details regarding the timing, location, and method of delivery, the seller must adhere to these specifications.


Importantly, this duty applies regardless of whether the seller is the rightful owner of the goods or whether they are physically in possession of the goods at the time of the sale agreement.

 
 

 Buyer’s Duty to Apply


Under Section 35, it's established that "Apart from any express contract, the seller of the goods is not bound to deliver them until the buyer applies for delivery."


This means that unless there's a specific agreement stating otherwise, the seller is not obligated to provide the goods until the buyer formally requests them.


Consequently, the buyer cannot hold the seller responsible for the non-delivery of goods unless a demand has been made and the seller fails to comply with it. However, if the terms of the contract stipulate that the seller is to dispatch the goods upon readiness, the buyer is exempt from the obligation to apply for delivery.


Essentially, the buyer's duty to request delivery is contingent upon any express provisions outlined in the contract.


Time of Delivery and Payment


As per Section 32, "Unless otherwise agreed, delivery of the goods and payment of the price are concurrent conditions," meaning the seller must be prepared and willing to transfer possession of the goods to the buyer in exchange for the price, and the buyer must be ready and willing to pay the price in exchange for possession of the goods.


When a contract involves reciprocal promises to be fulfilled simultaneously, neither party is obliged to fulfil their promise unless the other party is also prepared to fulfil theirs. This principle was upheld in the case of Sujanmal v Radhey Shyam AIR 1976 Raj 98.


In the case of Vishnu Sugar Mills Ltd. v F.C.I. (AIR 1987 Pat 22), where the respondent (F.C.I.) purchased "levy sugar" from the petitioner under a statute mandating compulsory sugar sales at set rates, a unilateral change in payment procedure by the corporation, resulting in significant payment delays after delivery, was deemed unlawful.


In such scenarios involving compulsory sales under statutes and no specified agreement regarding timing of payment/delivery, simultaneous tender of price against delivery is required by law.


Being ready and willing to perform the contract doesn't necessitate immediate action; for instance, the buyer isn't expected to have cash readily available for payment upon request but should have arrangements in place for timely payment.


Similarly, the seller isn't required to maintain a ready stock of goods from the moment the contract is formed.



Place of Delivery


In instances where the contract doesn't specify the place of delivery, certain principles govern the determination of this crucial detail.


In a sale, if the contract doesn't mention the delivery location, the place of delivery defaults to where the goods are located at the time of the sale.


Conversely, in an agreement to sell, where the goods are at the time of the agreement becomes the designated place of delivery.


For future goods yet to be manufactured or produced, the place of delivery is where these goods are eventually manufactured or produced.

 
 

Effect of Part Delivery


Section 34 deals with the impact of partial delivery on the transfer of property rights. It states that delivering a portion of the goods constitutes delivery of the entire lot if it's part of a progressive delivery process.


For instance, if a buyer, intending to take delivery, weighs the entire batch of goods but only removes a portion due to transport logistics, the delivery of that part is considered delivery of the whole batch. In such cases, if the undelivered portion suffers damage or loss, the buyer bears the responsibility, as seen in Hammond v Anderson (1803) 1 B& PNR 69.


However, if a portion of the goods is delivered with the intention of separating it from the rest, it doesn't constitute delivery of the entire lot.


For example, in a contract for the sale of 1000 bags of wheat, if the buyer requests delivery of 200 bags and the seller complies with a delivery order for that specific portion, it doesn't signify delivery of the entire quantity.


Similarly, granting permission to cut and remove a portion of a stock of hay doesn't equate to delivery of the entire stock, as demonstrated in Bunnery v Poyntz (1833) 4 B & Ad 568.


Likewise, if A sells 50 maunds of rice to B, and after the sale, B sells 10 maunds to C, the subsequent transfer of the 10 maunds to C at B's request doesn't legally constitute delivery of the entire quantity.


Furthermore, if a sale agreement involves delivery and payment for four bales of goods, and the buyer receives and pays for one bale but refuses to accept the others due to poor quality, delivering one bale doesn't amount to delivery of all four. In such cases, the seller's recourse is for breach of contract, not for payment of the entire price, as illustrated in various legal precedents.


Delivery of Wrong Quantity


Section 37 provides for the repercussions of delivering an incorrect quantity of goods, emphasising the seller's duty to provide goods of the specified quality, quantity, and description outlined in the contract.


When the seller delivers a quantity either smaller or larger than agreed upon, it constitutes a proposal for a new contract.


Regarding short delivery, if the seller supplies less than the contracted quantity, the buyer retains the right to reject the goods. However, if the buyer accepts the delivered goods, they must pay for them at the contract rate but still reserve the right to pursue damages for the shortfall.


The buyer can reject on the grounds of short delivery only if the deviation significantly impacts the essence of the contract. However, minor deficiencies may be overlooked, as per the principle of de minimis non curat lex, meaning the law disregards trifling deviations.


In cases of excess delivery, where the seller provides more than agreed upon, the buyer has the option to accept the contracted quantity and reject the surplus, reject the entire consignment, or accept the excess.


The decision hinges on whether the excess is significant or negligible, and whether the seller invoices for the excess quantity.


Case Laws

In instances of mixed delivery, where goods of a different description are included, the buyer may accept the compliant goods and reject the remainder or reject the entire consignment. In Moore & Co. v Landsuer & Co. (1921) 2KB 519, for instance, the buyer was entitled to reject a consignment where only half of the tins were packed according to the contract specifications.


It's important to note that the buyer's right extends only to rejecting the goods, not cancelling the contract outright.


The seller retains the option to remedy the situation by supplying the correct quantity, as established in Vilas Udyog Ltd. v Prag Vanaspati Products AIR 1975 Guj 112. If the buyer has already paid for the entire consignment but chooses to reject the non-compliant goods, they can seek a refund for the amount paid for the rejected portion.


The Sale of Goods Act offers a sturdy framework for equitable transactions, defining responsibilities between sellers and buyers across various delivery methods—physical, symbolic, or constructive. It ensures fairness and justice, providing clear definitions and guidance.

 
 








0 views0 comments

Recent Posts

See All

Comments


bottom of page