Faculty of Law,
Aligarh Muslim University
On the Topic
‘Sources of Sale of
Goods Law’
Submitted to Nasir Sir
Submitted by:
Nehal Ahmad: 15BALLB-104
Class: B.A.LL.B (Hons)
Semester: 4th
Group: 4th
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Contents
Introduction
Origin
Before
passing of the Indian Contract Act, 1872
Sale
of goods Act, 1930
Sources
of Indian Mercantile Law
Acts
enacted by the Indian Legislature
Judicial
Decisions
Customs
and Trade Usages
The
Law Commission of India Report
Conclusion
Bibliography
Acknowledgement
Contributions
Introduction
Mercantile
law or commercial law is the law that regulates commercial activities of the
economy. It is a very wide term and all the laws that regulate commercial
transaction in India are covered under its ambit. The pre-requisite of such
transaction is a valid agreement between the parties to the contract. It can
either be express or implied.
It
is concerned with the rights and obligations of traders arising out of the
commercial transaction. The trader can be an individual, partnership firm or a
company. All the Acts in India that govern trade or commerce are part of
Mercantile Law of India. For example, Indian Contract Act, 1872, Sale of Goods
Act, 1930,Companies Act, 2013 etc.
The Indian Contract Act itself being based on
the English Common Law, the law relating to the sale of goods in India followed
the principles of the English Common Law, including the Law Merchant. The
English law of sale of goods was codified in 1893 by the enactment of the Sale
of Goods Act which embodied the basic Common Law principles after adapting them
to meet the needs of a growing society
Origin
The
Mercantile Law in India developed with the enactment of the Indian Contract
Act, 1872. Before this, all the commercials transactions were governed by the
personal laws of the party to contract. For example Hindu Law, Mohammedan Law,
etc. The first attempt to codify Mercantile Law in India was made by the
Britishers in 1872 by the enactment of Indian Contract Act. Since then,
numerous laws have been enacted in India to regulate commercial transactions,
such as Partnership Act, Negotiable Instruments Act, etc.
Before passing of the Indian contract Act 1872
Before the passing of
the Indian contract Act, 1872 the law relating to the sales of goods or
movables was not only not uniform throughout British India but it was also
outside the limits of original jurisdiction of the High Courts and was
extremely uncertain in its application. Within the limits of the Presidency-
towns the rules of the English law, including those in the Statute of Frauds,
while applied, whilst in the mofussil it was doubtful whether the Statute of
Frauds were applicable and as observed by the Indian Law Commissioners in their
second report, the judge was to a great extent without the guidance of any
positive law beyond the rule that his decision should be such as he deemed to
be in accordance with “justice, equity and good conscience”. To remedy this
unsatisfactory state of affairs the Indian Law Commissioners framed in their
second report, dated 26th July, 1866, a set of rule relating to the
general law of contracts including therein provisions relating to the sale of
movables. The draft of the law commissioners underwent several challenges at
the hand of the then law Members, Sir Henry Maine and Sir James Stephen, and
also in the select committee of the Indian Legislature. But as stated by Sir James Stephen himself
while presenting the report of the Select Committee on the Indian Contract
Bill, the chapter on the sale of goods, except in regard to the rule as to
market overt represented generally the English law on the subject as it then
stood.
The Indian sales of
goods Bill was introduced in the Legislative Assembly and received its assent
on 15thMarch, 1930. It came on the statute book as the Indian sales Goods Act,
1930. By section 2 of the Indian sale of Goods (Amendment) Act, 1963 the word
“Indian” has been omitted and now it stands as THE SALE OF GOODS ACT, 1930 (3
of 1930) and it came into force on 1-7-1930.
Sales
of Goods Act, 1930
The provisions of the
English Act are far more elaborate and comprehensive than those of Chapter 7th
the Indian Contract Act, and in their arrangement the English Act is more
logical and methodical. Moreover, the adoption of the English Act as the basis
of the present Bill will enable the Indian courts to interpret its provisions
in the light of the decisions of the English Courts. The Sale of Goods Act,
1930
The Sale of Goods Act,
1930
1. Short title, extent
and commencement.—
(1) This Act may be
called the 1[***] Sale of Goods Act, 1930. 2 [(2) It extends to the whole of India
3[except the State of Jammu and Kashmir]
(3) It shall come into
force on the 1st day of July, 1930.
2. Definitions — In
this Act, unless there is anything repugnant in the subject or context,—
(1) “ buyer ” means a person who buys or agrees
to buy goods;
(2) “ delivery ” means voluntary transfer of
possession from one person to another;
(3) goods are said to
be in a “deliverable state” when they are in such state that the buyer would
under the contract be bound to take delivery of them;
(4) “document of title
to goods” includes a bill of lading, dock-warrant, warehouse keeper’s
certificate, wharfingers’ certificate, railway receipt, 1[multimodal transport
document,] warrant or order for the delivery of goods and any other document
used in the ordinary course of business as proof of the possession or control
of goods, or authorising or purporting to authorise, either by endorsement or
by delivery, the possessor of the document to transfer or receive goods thereby
represented;
(5) “fault” means
wrongful act or default;
(6) “future goods”
means goods to be manufactured or produced or acquired by the seller after the
making of the contract of sale;
(7) “goods” means every
kind of movable property other than actionable claims and money; and includes
stock 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;
(8) a person is said to
be “insolvent” who has ceased to pay his debts in the ordinary course of
business, or cannot pay his debts as they become due, whether he has committed
an act of insolvency or not;
(9) “mercantile agent”
means a mercantile agent having in the customary course of business as such
agent authority either to sell goods, or to consign goods for the purposes of
sale, or to buy goods, or to raise money on the security of goods;
(10) “price” means the
money consideration for a sale of goods;
(11) “property” means
the general property in goods, and not merely a special property;
(12) “quality of goods”
includes their state or condition;
(13) “seller” means a
person who sells or agrees to sell goods;
(14) “specific goods”
means goods identified and agreed upon at the time a contract of sale is made;
and
(15) expressions used
but not defined in this Act and defined in the Indian Contract Act, 1872 (9 of
1872), have the meanings assigned to them in that Act.
3. Application of
provisions of Act 9 of 1872.—The unrepealed provisions of the Indian Contract
Act, 1872, save in so far as they are inconsistent with the express provisions
of this Act, shall continue to apply to contracts for the sale of goods.
(3) Where under a
contract of sale the property in the goods is transferred from the seller to
the buyer, the contract is called a sale, but where the transfer of the
property in the goods is to take place at a future time or subject to some
condition thereafter to be fulfilled, the contract is called an agreement to
sell.
(4) An agreement to
sell becomes a sale when the time elapses or the conditions are fulfilled
subject to which the property in the goods is to be transferred.
5. Contract of sale how
made.—
(1) A contract of sale
is made by an offer to buy or sell goods for a price and the acceptance of such
offer. The contract may provide for the immediate delivery of the goods or
immediate payment of the price or both, or for the delivery or payment by
instalments, or that the delivery or payment or both shall be postponed.
(2) Subject to the
provisions of any law for the time being in force, a contract of sale may be
made in writing or by word of mouth, or partly in writing and partly by word of
mouth or may be implied from the conduct of the parties.
6. Existing or future
goods.—
(1) The goods which
form the subject of a contract of sale may be either existing goods, owned or
possessed by the seller, or future goods.
(2) There may be a
contract for the sale of goods the acquisition of which by the seller depends
upon a contingency which may or may not happen.
(3) Where by a contract
of sale the seller purports to effect a present sale of future goods, the
contract operates as an agreement to sell the goods.
7. Goods perishing
before making of contract.—Where there is a contract for the sale of specific
goods, the contract is void if the goods without the knowledge of the seller
have, at the time when the contract was made, perished or become so damaged as
no longer to answer to their description contract.
8. Goods perishing
before sale but after agreement to sell.—Where there is an agreement to sell
specific goods, and subsequently the goods without any fault on the part of the
seller or buyer perish or become so damaged as no longer to answer to their
description in the agreement before the risk passes to the buyer, the agreement
is thereby avoided.
Sources
of Indian Mercantile Law
The
Indian Mercantile Law has developed from many sources. The following are the
main sources of Indian Mercantile Law:
Common Law:
The
Indian Mercantile Law owes its origin to the English Mercantile Law. For a very
long time, India was under the control of Britishers. Therefore, it has a
direct influence on Indian law. The sources of English Mercantile Law are
Common Law, Equity, Law Merchant, and Statute Law. The Common law of England or
the judge made law is the preliminary source of Indian Law. It is the unwritten
law of England that consists of judicial decisions and customs. With the
passage of time, this law became rigid. This rigidity led to the development of
Equity in England.
The
remedy under Common Law was available by obtaining writs, but the writs were
very specific and less than required. This led to dissatisfaction among people.
And in many cases, the remedy under Common Law was not adequate. So, the people
would appeal to the King. The King transferred the cases to the Chancellor, who
would decide those cases by his common sense, natural justice, and conscience.
This led to the development of Equity Courts. Law Merchant is the law that
consists of the principles developed out of the principles of customs and
usages. This ultimately became a part of Common Law of England. Statute law is the written law of England enacted by the
Parliament of England. This written law always overrides the unwritten law i.e.
Common Law and Equity. It is one of the very vital sources of Mercantile Law of
England. For example English Partnership Act, 1890, Sale of Goods Act, 2015,
etc.
Acts enacted by Indian Legislature:
The
greater part of Indian Mercantile law is Legislature enacted. The Acts enacted
by the Indian Parliament are that source of law which makes it possible to
bring uniformity in Indian Law. Changes can be brought in Indian Law
effectively by legislative enactments.
Judicial Decisions:
Judges
interpret the law and put life into the black and white letters of law for its
effective implementation. The decision of judges is binding on all subsequent
decisions unless overruled by a higher court or a larger bench. For example,
the decision of a High Court is binding on all the lower courts under its
jurisdiction, and the decision of a Supreme Court is binding on all the courts
of India except for the Supreme Court itself. The decision of the Supreme Court
has persuasive value for the same bench, but it has binding value in the case,
a larger bench gave the earlier ruling
The
doctrine of the binding value of earlier judicial decisions i.e. the precedent
is followed to maintain uniformity in delivering justice. Whenever the law is
silent on a certain issue, then the judges interpret the law in such a way that
the yawning gaps in the law are filled to ensure justice. The precedents have
binding value to ensure that no two alike cases are decided on two different
principles as this will result in injustice to some. This principle ensures
justice for each and every individual along with a measure of certainty for the
law itself.
Before
independence, the decisions of Privy Council were binding on all the lower
courts as it was the highest court of Appeal for Indians. At present, the
Supreme Court of India is the highest court of Appeal, and its decisions are
binding on all the courts of India. But even today, the decisions of Privy
Council and House of Lords are referred to as precedents in deciding certain
cases and in interpreting certain statutes in India.
The
doctrine of the binding value of earlier judicial decisions i.e. the precedent
is followed to maintain uniformity in delivering justice. Whenever the law is
silent on a certain issue, then the judges interpret the law in such a way that
the yawning gaps in the law are filled to ensure justice. Before independence,
the decisions of Privy Council were binding on all the lower courts as it was
the highest court of Appeal for Indians. At present, the Supreme Court of India
is the highest court of Appeal, and its decisions are binding on all the courts
of India. But even today, the decisions of Privy Council and House of Lords are
referred to as precedents in deciding certain cases and in interpreting certain
statutes in India.
Customs and Trade Usages:
Customs and Usages had played a very vital role in regulating the commercial transactions in India when there was no codified law. In fact, the codified law of India has given superseding powers to the customs and usages. For example, Section 1 of Indian Contract Act states, “Nothing herein contained shall affect any usage or custom of trade not inconsistent with the Act.” A custom becomes binding when certain pre-requisites are fulfilled. For example, antique, reasonable, consistent with law, not against public policy. Then, the custom is recognized by courts, and it becomes a legal obligation. Hundi is the best example of this, and it has been recognized by the Negotiable Instruments Act as well.
The
need for mercantile law is felt when a dispute arises between the two parties
to the contract. Awareness about the law of the land is essential as ignorance
of law is no excuse. Therefore, each and every individual should have knowledge
of the mercantile law of their country. In the absence of knowledge, no rights
can be enjoyed, and no obligations can be met. A
trade practice that is so common in a particular region which is that an
expectation of its being followed in a given particular transaction is
justified. It is usual and customary practice or set of practices connected
with a particular type of business or trade. The rights, duties and obligation
under a contract may arise through different ways, the usage or custom of trade
is one of them. The Indian Contract Act, 1872 specifically preserves any usages
or custom of trade or any incident of any contract which is not inconsistent
with the provisions of the Act. The position of customs and usage of trade in
Indian contract is inferred from saving clause of Section 1.This section
provides that nothing contained in the act shall affect any usage or custom of trade,
not inconsistent with the authoritative provision of the act. It is to be
examined that the object and effect of this section and that of section 62 of
the Indian Sale of Goods Act, 1930 which tells about exclusion of implied terms
and conditions, and therefore it is to maintain such usages or customs of
trade, although they negative or vary, and therefore, it is inconsistent with
the general provisions of the law, so long they bind both the parties to the
contract. It is said in a case Moult vs. Halliday[1] that the trade usage
controls the mercantile contracts, as they are in addition to being subject to
express enactments.
A
trade usage is merely a usage which is well understood and known in fact in
terms of a class of persons and places, and with reference to the business such
that the parties are supposed to have made their contract with the implied
reference to it and having the same intention to be governed in the same manner
and to the same extent as other like persons. In Metzner vs. Boltan,[2] said:
“It is quite certain that general usages are tacitly annexed to all contracts
relating to the business with reference to which they are made, unless the
terms of such contracts expressly or impliedly exclude them.”
It
is evident that cultural diversity in India is a result of years of
intermingling of people. People have inhabited in India since time immemorial.
According to the history, people migrated to India in leaps and bounds
irrespective of their caste, creed, culture or religion. In fact many writers
and thinkers find that Indian culture is an ambiguous concept and in fact
numerous cultures have given rise to this composite Indian culture. However
unity in diversity is something that almost every Indian boasts about. Though
there are a number of languages, and variety of literature, art and cultural
practices still everyone are known as Indians.
India
is the second most populous country in the world. And as we all know that no
matter how much we try, creating a class less society is not possible. No two
persons can be the same. We should now examine the population and their customs
and traditions in a legal point of view. It is not possible on part of the
legislative to identify each and every customs or usages of the communities and
mention it in a legislative act.
However
special care should be taken in order to save such customs or usages. Not only
are they the epitome of the identity of a community but also because usages or
customs have been prevalent since the very inception of mankind. Such customs
or usages date back to history, when even laws did not exist.
Therefore
the view of researcher is that the legal system should have special respect for
such usages and customs and save it in order to save the unity in diversity and
the integrity of the communities inhabiting India.
The Law of commission of India:
Until the first of July, 1930, the law of sale of goods in
India was governed by Chapter VII (sections 76 to 123) of the Indian Contract
Act, 1872. The Indian Contract Act itself being based on the English Common
Law, the law relating to the sale of goods in India followed the principles of
the English Common Law, including the Law Merchant. The English law of sale of
goods was codified in 1893 by the enactment of the Sale of Goods Act which
embodied the basic Common Law principles after adapting them to meet the needs
of a growing society.
2. In India, by 1920 it was found that the law relating to
the sale of goods contained in Chapter VII of the Indian Contract Act was not
adequate to meet the needs of the community and that some of the provisions of
this branch of the law required alteration in the light of new developments in
mercantile transactions. The accretions to the law made by judicial decisions
in England which were embodied in the Sale of Goods Act of 1893 were not to be
found in the analogous provisions contained in the Indian Contract Act. It was
also considered necessary to embody the law relating to sale of goods in a
separate enactment. Hence, in 1926-27 an exhaustive examination of the case-
law bearing on the portions of the Contract Act dealing with the sale of goods
was made by the Legislative Departments. As a result of this examination, a
draft Bill was prepared in 1928. In 1929 a Special Committee consisting of eminent
lawyers examined the draft Bill and the draft Bill, as revised by this
Committee and, subsequently, by a Select Committee of the Legislature, was
enacted as the Indian Sale of Goods Act, 1930 (III of 1930), section 65 of
which repealed Chapter VII 'of the Indian Contract Act, 1872. The Act, as
passed, was mainly based on the provisions of the English Act of 1893, modified
in the light of subsequent judicial decisions in England and India.
3. Having carefully 'examined the provisions of the Act in
the light of judicial decisions in India since 1930, the development of the law
relating to the sale of goods in other countries, the suggestions made by
various commercial bodies and individuals as well as the requirements of the
modern welfare State, we have reached the conclusion that the provisions of the
Act do not require any radical change.
History to Legislate on Scope of Proposed revision
Examination of the provisions of the Act, indicating the
changes required
4. We now proceed to an examination of the sections of the
Act in order to indicate the changes which we consider necessary. The more
important suggestions received from various bodies and persons are referred to
in their appropriate places, and our reasons for accepting or rejecting them
have been stated.
5. In conformity with our recommendation regarding other
Acts, we recommend the deletion of the word 'Indian' from the title of the Act
[sub-section (1) 'of sec-' tion 1.].
6. Suggestions have been received in regard to some of the
definitions contained in section 2.
With reference to the definition of "documents of title
to goods" in sub-section (4), it has been pointed out that there is a
conflict of decisions with regard to the effect of endorsement on a railway
receipt. One view is that the endorsement of a railway receipt, which is a
mercantile document of title, invests the endorsee with a right to maintain a
suit on the basis thereof. This View has been taken by the Punjab1 and
Allahabad and Division Bench of the Bombay High Court. On the other hand, there
is a decision of a Single Judge of the Bombay High Court wherein he has
expressed the opinion that though a railway receipt is a document of title to
goods, mere endorsement of the receipt by itself is not enough to constitute
the endorsee either a bona fide pledgee for value or a bona fide transferee for
value of the goods represented by the railway receipt.
This can hardly be said to be a conflict of judicial opinion
which would justify a clarification of the law, for the View taken by the Single
Judge is contrary to an earlier decision of a Division Bench of that High Court
and the decisions of some other High Courts as well.
7. It has been suggested that the definition of
"goods" in clause (7) of section 2 should include electricity,
"gas and water.
Pollock and Mulla, in their Commentary on the Indian Sale of
Goods Act, 5 have expressed the View that it is Shea 1:
Sam v. G.G. Council AIR. 1949 East Punjab190.
Prasad v. Dominion of India, A-I-K 1954 A11. 747-
Dolatram Dwarkadas V. BE. 69* C.I. Railway Co., A.I.R. I914
Bombay I78. Shamji Bhanii 69' Co'; v. North Western Railway, A.I.R. I947 Bom.
169. 2nd Edition, p. I3.
It was doubtful
whether the Act is applicable to such things as gas, water and electricity. The
Calcutta High Court shares this doubt at least as regards electricity.' In
England also, the position is uncertain. In (1909) 2 K.B. 604,2 the case was
argued on the assumption that electrical energy was to be considered
"goods" for the purposes of the law relating to sale of goods, but it
was expressly stated that the point was not being decided and might have to be
considered later. As regards water, it was held in 11 Q.B.D. 213 that water
supplied by a water 'company to a consumer and standing in his pipes, may be
the subject of a larceny at common law. According to the decision in (1829) 4
C. & ,P. 87', an agreement for the supply of Water by a water company comes
within the exemption of 'contract for sale of goods' under the Stamp Act. Gas
has been held to be goods by the Privy Council.' However, in the United.States
of America, it has been held that a contract to supply power is a contract of
sale." Thus, electricity has been held to be personal property, capable of
sale!' In India, according to section 39_ of the Indian Electricity Act,
electrical energy can be the subject-matter of theft. Article 287 of the
Constitution which prohibits a State Legislature from imposing a tax on 'the
consumption or Sale of electricity' shows that there can be a sale of
electricity.
8. In View of the fact that contracts with regard to the
supply of electrical energy and water are common, we think that the matter
should be placed beyond doubt and an amendment should be made in section 2(7)
so as to include power in the shape of electrical energy, water and gas within
the definition of "goods".
9. The Stock Exchange, Bombay, has suggested that
"stocks and shares" which are included in the definition of
"goods" should be regarded as actionable claims instead of
"goods" as at present. We are unable to accept this suggestion, as
section 82 of the Companies Act, 1956 has 1 Rzsh Beharz' v. Emperor, A.I.R.
1936 Cal. 753 at p. 766. 2 County of Durham Electrical Power Distribution Ca.
V. Commissioners of Inland Revenue, (1909) 2 K.B. 604.
9 Ferens v. O'Brien, (1883) I1 Q.B.D. 21.
" West Middlesax Water-Works Co. v. Suwerkrop, (1829) 4
C. & P. 87.
5 Erie County Natural Gas £7' Fuel Co. Ltd., v. Carroll &
am'., (1911) A.C. 105. Volume XLVI,
American Jurisprudence, P. 216.
Sec. 5 treated "shares or other interest of a member in
a company" as movable property and the existing definition of
"goods" is in accord with that section.' We have carefully' examined
the reasons given by the Stock Exchange but we do not think that they justify
the proposed change.
10. It has been suggested that in the definition of "property"
in clause (11) of section 2, the words "special property" should be
substituted by the words "special interest", on the ground that there
is only one kind of property, vi2., general property, and that special property
is merely a misnomer for special interest in goods. But the use of the
expression 'special property' is so well-established that we think it
undesirable to alter the definition.
11. No change is necessary in section 3.
12. There is no provision in the Act regulating a transac--A
tion of hire-purchase, which is also a method of selling goods. It is a
transaction of hire at the inception with an option to purchase.
In the English Sale of Goods Act of 1893, there was no
provision for such a transaction. Hence, provision was made by a separate Act,
namely, the Hire-Purchase Act of 1938 (I & 2 Geo. 6, c. 53), with a View to
affording protection to the buyer of the goods on hire-purchase, or on similar
terms, against certain abuses which had become apparent in the practice of
hire--purchase trading. This Act has been supplemented by 'the Hire-Purchase
Act, 1954 (2 & 3 Eliz. 2, c. 51).
In our opinion, it is desirable that a separate Act on the
lines of the English Hire-Purchase Acts and other similar laws should be
enacted in India to regulate hire- purchase transactions. The Commission will
make its recommendations in this connection in a separate report.
13. It has been suggested that a provision should be made
for the passing of the property in an undivided share of a large mass of
fungible goods and that fungible goods should be defined as meaning "goods
of which any unit or its nature are by mercantile usage treated as equivalent
to any other unit."
This suggestion is inspired by a similar provision in section
76(1) of the American Unitorm Sales Act approved by the National Conference of
Commissioners on Uniform State Laws, 1906. There is no such provision in the
English Sale of Goods Act.
Having regard to the provisions of our Act which deal with
transactions in such goods, such as section 22, the difliculty of framing an
adequate definition of such goods and having regard more particularly to the
fact that no difficulties have been felt by the absence of such a defini- tion,
we are of the opinion that it is not necessary to accept the suggestion.
14. A suggestion has been made by the Bihar Lawyers'
Association that it should be provided that contracts for the sale of goods can
lawfully be made by writing on a duly stamped paper. It is not quite clear
whether this requirement of a stamped paper is intended to apply only to an
"agreement to 'sell' " or to a 'sale' also. In any case we cannot
accept this' suggestion. It would impose an obligation to reduce to writing
every transaction of sale and we do not think that any reasons exist for
imposing so drastic an obligation. The existing practice would not seem to have
occasioned any difficulties; on the contrary, it seems to have proved useful and
facilitated the transaction of business. Having regard to the volume and the
frequency of transactions of sale of goods. We do not con- sider it advisable
to impose so rigorous a condition.
15. No alternation is considered necessary in sections
659-C5-6") "~ to 12.
(a)
To take away the sale of specific goods by
sample from the operation of section 13 (2) to avoid the conflict with section
17 which provides for implied conditions in the case of contracts for sale by
sample. Property in specific goods in a deliverable state passes to the buyer
when the contract is made (section 20). In modern times, there is a large
volume of sale of specific goods by sam- ple. Section 17 (2) (a) gives rise to
an implied condition that the bulk should correspond with the sample in quality.
However, in a case where the property has passed to the buyer already when the
contract is made (Section 20) and the property is delivered subsequently but it
does not correspond with the sample, the implied condition raised by section
17(2) (a) stands frustrated as the buyer will be compelled to treat the implied
condition as a warranty. In G. Mackenzie and. Co. Ltd v. Nagendm Nath3, it was
held that section 13 is not limited to a breach of an express condition but
extends also to a breach of an implied condition. The result is that the buyer
will have no right to reject the goods and will have to fall back 1 I.L,R. (1936)
63 Cal. p. 736
17. No alteration is necessary in sections 14-15.
18. It was pointed out by the Deputy Director of the Indian
Standards Institution that though under sections 5 and 6 of the Indian
Standards Institution (Certification Marks) Act of 1952, persons are prohibited
from making improper use of standard marks and of certain names. there is no
provision in the law to enable the buyer to repudiate a contract if the goods
sold on the basis that they are in accordance with the standards laid down by
Government do not conform to the Government stand- ards. It was, therefore,
suggested that a provision should be inserted in section 16 of the Sale of
Goods Act that when Government. lays down any compulsory standard for any
products, the products sold should conform to that standard.
We had the advantage of a discussion with the Deputy
Director on this subject.
It appears that the Act itself contains no provision prescribing
any particular standard of quality for any of the standard marks envisaged by
the Act. The Act only penalises the use of standard marks otherwise than in
accordance with its provisions.
There are, of course, some other Acts which lay down or
provide for the making of rules to prescribe standards Secs. 14- 15
Sec. 16.
1 Indian Sale of Goods Act, 2nd Ed._, p. 62.
Secs. 17-24.
Sec. 25.
Sec. 26.
Section 27 of quality such as the Agricultural Produce (Grading
and Marking) Act, 1937 and the Drugs Act, 1940. The Drugs Act prohibts the sale
of goods which are not of the standard quality. It is, however, not possible
from such penal provisions to imply the existence of a condition or warrantly
regarding the quality of the goods, the breach of which may entitle the buyer
to civil conse- quences under the Sale of Goods Act.
What is necessary to achieve the object in View is a
provision which will imply in such cases a condition or war- ranty regarding
the quality of the goods, to the effect that the goods sold are of the quality
which the standard or other mark carries with it. In the absence of an express
or implied condition or warranty regarding the quality of the goods, the
purchaser would not be able to claim a right to repudiate the contract or claim
damages for breach of the warranty. He may be liable for the penalties provided
under the Acts. The enactment of a statutory condition or warranty may affect a
large class of merchants and middlemen. It is a matter of policy to bedecided
by the Union and the State Governments whether they should undertake such
legislation. In the cir- cumstances we do not propose to make any
recommendation on the question raised by the Deputy Director.
19. No alteration is necessary in sections 17 to 24.
20. In sub-sections (2) and (3) of section 25, we pro- pose
to include the case of railway receipts. Goods are frequently consigned by rail
with the railway receipts made out in the name of the consignor or his agent or
bank with the clear intention of reserving a right of dis- posal to the
consignor and there is no reason why in these cases the consignor by rail
should not have the same rights as the consignor by ship.
21. No change is necessary in section 26.
22. It has been suggested by the Government of Bihar that
the Words "good faith" in section 27 should be given the same meaning
as in section 52 ofi the Indian Penal Code. The words "good faith" are
not defined in the Act and the definition in the General Clauses Act is
applicable. We have carefully examined this suggestion but are unable to accept
it. We do not feel that a definition which is appro- priate to the purposes of
the Criminal Law -should be imported into the Civil Law, the considerations
applicable to the two systems being very different.
23. No change is necessary in sections 28 to 53.
Section 28-53.
24. It has been suggested that the following be inserted
Sec. 54.
as sub-section (5) in section 54:
"The seller is bound to exercise reasonable care and
judgment in making a resale and subject to this requirement he may make a
resale either by public or private sale" This suggestion appears to be
based on section 60(5) of the Uniform Sales Act of the United States referred
to earlier. The principle contained in this suggested sub- section has already
been applied by Indian decisions and is in our view implicit in section 54.
25. It has also been suggested that the phrase "perish-
able goods" should be defined. In our opinion, it is diffi- cult to define
this phrase with precision. The phrase is well understood in the commercial
world and judicial de- cisions and text books have made its meaning clear.
28. It was suggested that the Indian Bills of Lading Act,
1856 (Act IX of 1856) should be consolidated with the Sale of Goods Act. In
particular, it was suggested that section 2 of the Bills of Lading Act should
be enact- ed as sub-section (8) to section 51 of this Act which deals .10 with
duration of transit, and that sections 1 and 3 of the Bills of Lading Act
should be inserted in this Act as sec- tions 64B and 64C in order to give
effect to the right of stoppage in transit or claims for freight. A In our
opinion, the ambit of the Bills of Lading Act is wider than that of the Sale of
Goods Act and embodying the provisions of the Bills of Lading Act in the Sale
of Goods Act, would result in disturbing the frame, the structureand the unity
of the Sale of Goods Act. In our view, the proper place for the Bills of Lading
Act would be a comprehensive' enactment dealing with the Law of Carriers, in all
its aspects. The framing of a comprehen- sive law dealing with Carriers is
under our consideration.
29. In order to give a concrete shape to our proposals, we
have, in the Appendix, put them in the shape of draft amendments to the
relevant sections of the Act.' The Appendix is not, however, to be treated as a
draft Bill.
Conclusion
The
Mercantile Law is the Law which regulates commercial activities of the country.
The first attempt to
codify Mercantile Law in India was made by the Britishers in 1872 by the
enactment of Indian contract Act.
The Indian sales of
Goods Bill have been passed by the Legislative Assembly and received its assent
on 15th March, 1930. It came on statute book as Indian sales of
Goods Act, 1930.
The sources of English Mercantile Law are Common Law,
Equity, Law Merchant, and Statute Law. The Common law of England or the judge
made law is the preliminary source of Indian Law. It is the unwritten law of
England that consists of judicial decisions and customs. With the passage of
time, this law became rigid. This rigidity led to the development of Equity in
England.
Bibliography
Primary
source
Statute referred- The sale of Goods Act, 1930(Universal Law
publishing)
The Sales of Goods Act, 1930 (3 of 1930) 2017 BARE ACT with
short notes
Secondary source-
Webliography :- https://blog.ipleaders.in/mercantile-law-sources/
(visited on April 27,2017 at 12:10PM)
Indian Kanoon.com
Acknowledgement
Doing research on this project was one of the most wonderful
experiences of our life. It has honed our research and legal skills which are
considered as important qualities for the professional career in this highly
globalized world.
I am
highly grateful to our respected Mohd. Nasir Sir for such an amazing guidance
and for giving us sufficient time to do exactly what we want to learn in our
educational life.
I am
indebted to all faculties, staffs and above all Aligarh Muslim University for
such competent faculties, adequate facilities and infrastructures to turn this
project into reality.
It is
really an amazing experience to work as a team. We have left no stone unturned
to make it living project. We have divided our works under the following titles:
Aliya Naaz
has contributed the Sale of Goods Act, 1930
Kausar
Khan has contributed origin and the contract of sale goods before 1872
Abid Rizvi
has contributed the sources of sale of Goods Law including Common Law, Judicial
Decisions, Act enacted by the Legislatures. Etc.
Nehal
Ahmad has contributed the Law Commission of India Report 8th.
