Sources of Sale of Goods Law: a project work

Faculty of Law,

Aligarh Muslim University

A Project Work

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: 4^th

Group: 4^th

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 26^th 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 7^th 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 15^th 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.

 Contributions

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 8^th.