Business Law - Law of Sale of Goods

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Various businessmen and consumers normally have the freedom to get into whatever contract they see fit for themselves. Contracts involving sales of goods may however be liable by some statutory restrictions. Various rules and guidelines are created keeping in mind the safety and security of the consumers.

The Law of Sale of Goods provides such guidelines and liabilities for the safety and security of the consumers. Any firm or person entering into the business of selling goods to consumers should be aware of the fact that the law will impose certain terms and conditions on each transaction.

Consumers can be defined as the group of people who buy certain commodities which will not be involved in their trade, profession or business. Consumers lie at the end of the trade chain.

Important Sections

Most of the terms and conditions of the Law of the Sale of Goods, 1979 are found between sections 12 and 15 of the law. Some of the important aspects of the law are discussed below.

Section 12

• The right to sell goods must be held by the seller.

• In case the goods are found to be stolen, the seller loses the right to sell the goods.

• In such situations, the buyer might take the responsibility of returning the goods to the rightful owner and the seller must compensate for the buyer’s loss.

• A commodity hired by a seller cannot be sold as the buyer has no legal rights on the commodity and the commodity is still in possession of the hiring party.

• The seller cannot claim a full refund from the buyer in case the seller did not know that the commodity he sold was stolen.

Section 13

• If a commodity is being sold by using its description, the commodity must correspond to the description.

• If the buyer relies at least on parts of the commodity, which he is buying according to the description, those parts of the commodity must be present in the commodity.

• This section is a strict liability and applies to both the sellers and those selling goods in the course of business.

• The information provided in the registered documents does not provide any defense.

Section 14(2)

This section deals with the quality of the product. This section imposes the following criteria to be fulfilled by a commodity to be considered of satisfactory quality −

• The commodity must be fit for serving all the purposes for which it is sold.
• The appearance and finish of the commodity must be acceptable.
• There should be freedom for minor defects of the product.
• The good should be safe and durable.

Buyers cannot expect legal remedies in accordance with the following −

• Fair wear and tear
• Misuse or accidents
• In case the item is not needed anymore

Section 14(3)

• Any specific purpose for which a commodity is bought by the buyer must be conveyed to the seller by the buyer and the seller must comply with the purpose.

• The purpose may be regardless of the purpose for which the commodity is commonly bought.

Section 15

• This section deals with the contracts of sale determined by sample.

• If the seller and the buyer come across a contract of sale by the sample, the sample of goods provided by the seller to the buyer must correspond to the whole bulk of the commodity.