Sale of Goods Act, 1930: Full Guide to Buyer-Seller Rights, Key Sections, Examples & Judgments (2025 Update) -

Introduction

The Sale of Goods Act, 1930 (SOGA) remains the backbone of every commercial transaction in India involving movable goods. Governing ₹45 lakh crore+ retail market (2025), it defines contract formation, warranties, delivery rules, and remedies for breach. Though supplemented by CPA 2019 for consumers, SOGA applies to B2B, auctions, and non-consumer sales. Key principle: Caveat Emptor (buyer beware) shifted to implied warranties via Sections 14–17.

Historical Development

Pre-1930: Indian Contract Act, 1872 (Chapter VII) loosely covered sales.
1930: Enacted based on English Sale of Goods Act, 1893.
1963: Amended post Law Commission Report – added hire-purchase clarity.
Post-1986: CPA 1986/2019 overrides for consumers but SOGA prevails in commercial disputes.
2025 Status: Applies to e-commerce B2B, auctions, wholesale, export contracts.

Key Sections (In-Depth with Examples)

Section 2 – Definitions

Goods (2(7)): Movable property (cars, rice, software on CD). Excludes money, immovable property. Example: Laptop sale → covered. Land sale → not covered.

Section 4 – Sale vs Agreement to Sell

Sale: Title transfers immediately.
Agreement to Sell: Title transfers later (future/conditional). Example: Pay ₹50,000 cash for bike → sale. Pay ₹10,000 advance, balance on delivery → agreement to sell.

Section 7 – Perishable Goods Destruction Contract void if goods perish before sale without seller’s fault. Example: 500 kg mangoes rot in transit due to flood → contract void, deposit refunded.

Section 12–17 – Conditions & Warranties

Sec 12 – Title: Seller must have right to sell. Example: Stolen car sold → buyer gets refund + damages (even if seller unaware).
Sec 13 – Sale by Description: Goods must match description. Example: “Brand new iPhone 16” but refurbished delivered → breach; full refund.
Sec 14 – Fitness for Purpose: Implied if buyer relies on seller’s skill. Example: Paint seller recommends “waterproof” → peels in rain → replacement + ₹5,000 damages.
Sec 15 – Sale by Sample: Bulk must match sample. Example: 100 kg Basmati sample perfect, bulk mixed with cheaper rice → reject entire lot.
Sec 16 – Quality/Merchantable: Goods fit for ordinary use. Example: New fridge compressor fails in 3 days → repair/replace under implied warranty.
Sec 17 – Sale by Sample + Description: Both must match.

Section 18–26 – Delivery Rules

Sec 20: Buyer must collect unless agreed.
Sec 23: Part delivery ≠ full acceptance. Example: 800/1000 chairs delivered → pay only for 800.

Section 27 – Buyer’s Duty: Pay & accept. Example: Refuse genuine goods → seller can sue for price.

Section 31 – Seller’s Duty: Deliver as agreed.

Section 45 – Unpaid Seller Rights

Lien (hold goods till payment).
Stoppage in transit.
Resale (perishable/deteriorating). Example: Buyer insolvent, goods in truck → seller stops truck, resells → recovers loss.

Section 55–61 – Remedies

Damages for Non-Delivery: Market price – contract price. Example: Wheat ₹40/kg contracted, market ₹50/kg → ₹10/kg x quantity damages.
Specific Performance: Rare goods (court orders delivery). Example: Rare painting → court forces delivery.

Section 64 – Auction Sales Highest bidder wins; fall of hammer = contract. Example: Art auction, bid ₹5 crore → binding on hammer fall.

Key Landmark Judgements

1. Rowland vs Divall (1923, UK – Applied in India) Stolen car sold → buyer used 3 months → still entitled to full refund (no title passed).

2. Nagpur High Court – Baldostomedad vs Bombay Co. (1950) Cotton seeds mixed with foreign matter → entire consignment rejected under Sec 15.

3. Calcutta High Court – Indian Steel vs BP Fernandes (1955) Seller knew purpose (export crates) → wood unfit → damages + replacement under Sec 14.

4. Supreme Court – Godhra Electricity vs State (2003) Electricity = goods → SOGA applies to supply contracts.

5. Delhi High Court – Amazon vs Buyer (2024) B2B bulk laptop order defective → resale right invoked, Amazon paid ₹8 lakh damages.

Conclusion

SOGA 1930 balances buyer caution with seller accountability via implied warranties. For consumers, CPA 2019 offers faster redressal (e-Daakhil, mediation). For businesses, SOGA governs title, risk, remedies. Always document description, sample, delivery terms. File in civil courts (not Consumer Commissions for B2B). A clear contract prevents 90% disputes.

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