Performance of Contract of Sale

What is Performance of Contract of Sale?

The Sale of Goods Act 1930 states under Sec 31 that, “It is the duty of the seller to deliver the goods and the buyer to accept and pay for them, in accordance with the terms of the contract of sale.”

The performance of a contract of sale defines a simple transaction where the seller delivers the goods in exchange for a payment made by the buyer. Sections 31 to 40 of the Sale of Goods Act, 1930 state the rules and regulations that govern the sale of goods and their delivery.

Let’s define delivery, buyer, seller and their duties.


Definition of Delivery

Under Section 2 (2) of the Sale of Goods Act, 1930, the delivery meaning has been stated as, 

“voluntary transfer of possession of goods from one person to another.” The transfer of goods from one person to another will be considered a delivery under a sale of goods act only when:

  • The transfer of goods is voluntary

  • The transfer is not done by means of theft, fraud or force

  • Mere possession of good does not constitute a valid delivery of goods


Duty of the Buyer and the Seller 

It is the duty of the seller to deliver the goods as per the contract of sale. It is the duty of the buyer to accept the goods and make a payment as per the contract of sale. 


Payment and Delivery are Concurrent 

The payment and delivery of goods are concurrent conditions. The seller of the goods should be ready to make the delivery of goods in exchange for a payment and the buyer must be ready to make the payment for the delivery of goods unless agreed otherwise.


Rules Regarding the Delivery of Goods


Delivery 

The delivery of goods can be done by putting the goods in the possession of the buyer or any other person authorized by the buyer to hold the goods on his behalf.


Partial Delivery of Goods

Partial delivery of goods made as progress towards full delivery has the same effect as full delivery, for the purpose of passing the property in the goods. Partial delivery done with the intent of severing it from the whole does not constitute as the delivery of the remaining goods.


Buyer Must Apply for Delivery 

The buyer of the goods must apply to the seller for the delivery of goods unless otherwise stated in the terms, where terms of delivery meaning is the conditions mentioned in the contract.


Place of Delivery

Both the buyer and the seller must agree to terms of delivery, express or implied,  at the time of drawing up the contract of sale. If no such terms and conditions have been specified in the contract:

  • Delivery of goods to be sold is done at the place where they are at the time of sale

  • Delivery of goods to be sold is made at the place at which they are at the time of the agreement to sell. If the goods are not in existence at that time, they are delivered at the place of manufacture. 


Time of Delivery

If the time of delivery of goods has not been specified in the contract, it must be made within a reasonable time. 


Goods in Possession of Third Party 

If the goods are in possession of a third party at the time of sale, then the third party must acknowledge to the buyer that the goods are being held on his behalf.


Time for Tender of Delivery 

The demand for delivery must be made at a reasonable hour unless otherwise specified in the contract. 


Delivery Expenses 

The expenses incurred for putting the goods in a deliverable state must be borne by the seller unless otherwise stated in the contract. 


Delivery of Wrong Quantity of Good

Goods for delivery means the goods sent by the seller at the time of delivery. If the seller sends a lesser or a larger quantity of the goods for delivery than what is specified in the contract, the buyer has a right to reject the delivery of goods. If the buyer delivers a mix of goods where some parts are not as per the contract, the buyer has the right to reject the goods that are not in accordance with the contract.


Solved Example


John Agrees to Sell 100 kgs of Potatoes to Smith. At the Time of Delivery:

  1. John Sends 60 kgs of Potatoes and 60 kgs of Tomatoes to Smith

  2. John Sends 120 kg of Potatoes to Smith 

Can Smith Refuse to Take the Delivery of the Goods?


Ans. In the above scenarios, since the delivery of goods is not according to the contract, Smith can exercise the following options:


When the seller has sent a mix of goods:

  1. The buyer can reject the complete order since it is not as per the contract

  2. The buyer can accept the delivery of 60 kgs of potatoes 


When the seller has sent a larger quantity than specified in the contract:

  1. The buyer can reject the complete order since it is not as per the contract

  2. The buyer can accept the delivery of 60 kgs of potatoes 

  3. The buyer can accept the entire 120 kgs at the rate specified in the contract

FAQs (Frequently Asked Questions)

Q1. When is the Buyer Deemed to Have Accepted the Delivery of Goods?

Ans. According to Section 42 of the sale of goods Act, the buyer is deemed to have accepted the delivery of goods when :


  • He informs the seller that he has accepted the goods

  • When he does something to the goods which are inconsistent with the ownership of the seller

  • When he retains the goods in his possession beyond a reasonable time, without informing the seller about his intention to reject the goods

Q2. What Happens When the Buyer Refuses the Delivery of Goods?

Ans. When the seller is willing to make the delivery of goods and asks the buyer to take the delivery but the buyer fails to do so within a reasonable time of receiving the delivery request then:


  • The buyer will bear any expenses for the reasonable care of the goods

  • The buyer will also bear any loss incurred due to his refusal to take delivery