Sales and Good Act 1930: Performance of a Contract of Sale

Performance of the Contract of Sale means carrying out the duties and responsibilities agreed between the seller and the buyer under the Sale of Goods Act, 1930. It includes delivering goods by the seller and accepting and paying for the goods by the buyer. Both parties must follow the terms related to quantity, quality, time and place of delivery. Performance ensures that the contract is completed in a proper and lawful manner. If either party fails to perform, it may result in breach. Understanding performance is important because it helps avoid disputes and ensures smooth and fair trade between buyers and sellers.

Rights of Seller’s:

• Right to Receive Payment

The seller has the right to receive the price of the goods as agreed in the contract. Once the seller delivers the goods as per the terms, the buyer must make timely payment. If the buyer delays or refuses payment, the seller can take legal action. This right ensures that the seller is fairly compensated for the goods supplied. It also promotes smooth business transactions and protects the seller from financial loss.

• Right to Withhold Delivery

If the buyer fails to pay or becomes insolvent, the seller can stop delivery of goods. This means the seller can refuse to hand over the goods until payment is made. This right protects the seller from losing goods without receiving money. It is especially useful when the seller has doubts about the buyer’s ability to pay. Withholding delivery acts as a safety measure in risky situations.

• Right to Stop Goods in Transit

If the goods are already on the way and the buyer becomes insolvent, the seller can stop the goods while they are in transit. The seller can direct the carrier not to deliver the goods to the buyer. This right helps prevent goods from reaching a buyer who cannot pay. It acts as a protective step, allowing the seller to take back control of the goods and avoid loss.

• Right to Resell the Goods

If the buyer refuses to accept and pay for the goods, the seller can resell them. The seller must give notice to the buyer before resale, unless the goods are perishable. If the seller suffers loss due to resale, they can claim damages. This right helps sellers quickly reduce losses and avoid wastage. It also ensures that goods do not remain unused or become damaged.

• Right to Sue for the Price

The seller can file a case to recover the price of goods if the buyer wrongfully neglects or refuses to pay. This right applies when the ownership of goods has already passed to the buyer. The court may order the buyer to pay the agreed price. It provides strong protection to the seller by ensuring they can recover the amount owed. It also promotes responsible behaviour in buyers.

• Right to Sue for Damages

If the buyer breaches the contract by not accepting goods or delaying payment, the seller can claim damages. These damages compensate the seller for financial loss due to the buyer’s failure. The amount depends on the loss suffered. This right encourages buyers to follow contract terms seriously. It ensures that the seller is not unfairly affected by the buyer’s wrongful actions.

Duties of Seller’s:

• Duty to Deliver the Goods

The seller must deliver the goods to the buyer as per the terms of the contract. Delivery should match the agreed quantity, quality and description. The seller must follow the correct time, place and method of delivery. Goods must be handed over in a condition that allows the buyer to take proper possession. If the seller sends goods through a carrier, they must pack them safely and inform the buyer. Proper delivery is important because it completes a major part of the contract. If the seller fails to deliver, it becomes a breach and the buyer may take legal action.

• Duty to Pass Good Title

The seller is responsible for transferring ownership of the goods lawfully to the buyer. This means the seller must have the right to sell the goods and the buyer must get a clear and valid title. The goods should be free from any unknown charges or claims. If the seller does not have proper ownership, the buyer can reject the goods and demand a refund. Passing good title builds trust and ensures that the buyer receives legal rights over the goods. A defective title can cause disputes and lead to legal consequences for the seller.

• Duty to Provide Goods of Right Quality and Condition

The seller must provide goods that match the quality, description and sample agreed in the contract. Goods should be fit for the purpose mentioned by the buyer or for their normal use. They must be free from defects that reduce their value or usefulness. If goods do not meet the expected quality, the buyer can reject them or claim damages. This duty protects buyers from poor-quality goods and promotes fair trade. Supplying the correct quality helps maintain the seller’s reputation and avoids unnecessary conflicts.

• Duty to Follow Delivery Instructions

If the contract specifies instructions for delivery, the seller must follow them carefully. This includes the place of delivery, time of delivery and mode of transport. If the contract is silent, the seller must deliver goods at a reasonable time and place. Failure to follow delivery instructions can cause delays, loss or confusion. The buyer may refuse to accept goods delivered in the wrong manner. By following instructions properly, the seller ensures smooth performance and avoids disputes related to delivery responsibilities.

Rights of Buyer’s:

• Right to Receive Goods as per Contract

The buyer has the right to get goods exactly as described in the contract. The goods must match the agreed quantity, quality and specifications. If the goods do not meet these conditions, the buyer can reject them. This right protects the buyer from unfair or defective supply and ensures that the seller follows the contract honestly. It also gives confidence to the buyer that they will receive proper value for the price paid.

• Right to Reject Goods

The buyer can reject goods if they do not match the contract terms. This includes wrong quantity, poor quality, damaged goods or late delivery. Rejection must be done within a reasonable time and before accepting the goods. This right ensures that the buyer is not forced to purchase goods that are not suitable. If the buyer rejects the goods correctly, they do not need to pay for them and may also claim damages.

• Right to Examine Goods

The buyer has the right to check the goods before accepting them. Examination helps confirm whether the goods are of the right quality and match the contract description. The seller must give the buyer reasonable time to inspect the goods. If the buyer finds defects during inspection, they can refuse to accept the goods. This right ensures transparency and fairness in trade, preventing the seller from supplying defective or wrong goods.

• Right to Sue for Damages

If the seller fails to fulfil the contract, the buyer can claim compensation for the loss suffered. This includes loss due to non-delivery, late delivery or delivery of defective goods. Damages help the buyer recover financial loss caused by the seller’s default. This right encourages sellers to act responsibly. The buyer must show that the loss occurred due to the seller’s breach of contract.

• Right to Sue for Specific Performance

If damages are not enough to solve the problem, the buyer can approach the court and request specific performance. This means the court may order the seller to perform their duties exactly as agreed in the contract. This remedy is used in special situations where goods are unique or damages cannot make up for the loss. It ensures that the buyer receives what they were promised.

• Right of Buyer on Breach of Warranty

If the seller breaches a warranty, the buyer cannot reject the goods but can claim damages. A warranty is a minor condition of the contract. The buyer can use the goods but still demand compensation for the deficiency. This right helps the buyer recover loss without cancelling the entire contract. It applies when the defect is not serious enough to reject the goods.

Duties of Buyer’s:

• Duty to Accept the Goods

The buyer must accept the goods when the seller delivers them as per the contract. Acceptance means taking delivery, checking the goods and confirming that they match the agreed quantity, quality and description. If the goods are delivered in reasonable condition, the buyer cannot refuse them without a valid reason. Once accepted, the buyer becomes responsible for the goods. If the buyer wrongfully refuses to accept the goods, it becomes a breach of contract and the seller can claim damages. Accepting goods on time also helps maintain smooth business relations.

• Duty to Pay the Price

The buyer must pay the agreed price for the goods as mentioned in the contract. Payment may be made in cash, cheque, online transfer or any method agreed by both parties. If the contract specifies a time or mode of payment, the buyer must follow it. Timely payment ensures that the seller receives their rightful amount and prevents financial loss. If the buyer delays or refuses payment, the seller can file a suit for price or claim damages. Paying the price is one of the most important duties because it completes the exchange process in the sale.

• Duty to Take Delivery

The buyer must take delivery of the goods at the time and place agreed in the contract. If no specific terms are mentioned, the buyer should take delivery within a reasonable time. Taking delivery means arranging for transport, labour or storage if required. If the buyer fails to take delivery, the seller may incur extra costs for storage or risk of damage. In such cases, the seller can recover these extra expenses from the buyer. Taking delivery on time ensures smooth movement of goods and avoids unnecessary delays in the sales process.

• Duty to Examine the Goods

The buyer has a duty to inspect the goods at the time of delivery. Examination helps the buyer confirm whether the goods match the sample, description and expected quality. If there are defects, the buyer must inform the seller within a reasonable time. Failure to examine may result in losing the right to reject the goods later. This duty protects both parties by identifying problems early. Proper checking ensures that the buyer receives correct goods and the seller can act quickly if any replacement or correction is needed.

Key Principles:

• Principle of Mutual Agreement

A contract of sale is based on mutual agreement between the seller and the buyer. Both parties must willingly agree to the terms such as price, quantity, delivery and payment. The agreement should be made with free consent and without any pressure or misunderstanding. Mutual agreement ensures that both sides clearly understand their rights and duties. This principle forms the foundation of a valid sales contract and helps avoid disputes. When both parties act with honesty and clarity, the sale process becomes smooth, fair and legally enforceable under the Sale of Goods Act.

• Principle of Transfer of Property

The contract of sale becomes meaningful only when ownership of goods transfers from the seller to the buyer. The exact time of transfer must be clear because it decides who bears the risk of loss or damage. The law provides rules to decide when ownership passes, depending on whether the goods are specific or unascertained. Once property passes, the buyer becomes responsible for the goods even if delivery has not taken place. This principle ensures clarity, protects both parties and helps in deciding rights like suit for price or damages.

• Principle of Delivery and Payment

Delivery of goods and payment of price are the main responsibilities in a contract of sale. The seller must deliver the goods in the agreed manner and the buyer must pay the price as per the contract. Delivery and payment must match the agreed timings, place and mode. If the contract does not specify details, reasonable conditions apply. This principle ensures that the exchange of goods and money happens smoothly. Proper delivery and timely payment protect both parties and prevent financial loss or disputes. It completes the essential performance of the sales agreement.

• Principle of Good Faith and Fair Dealing

Both seller and buyer must act honestly and fairly during the contract of sale. The seller must provide correct goods without hidden defects and the buyer must accept and pay for the goods responsibly. Neither party should cheat or mislead the other. Good faith builds trust and ensures that the sales process follows ethical behaviour. When both parties act fairly, the contract becomes strong and less prone to disputes. This principle also supports the legal idea that commercial transactions should be transparent and based on genuine conduct.