Before the introduction of Sale of Goods Act, 1930 laws governing the sales were
sections 76 to 123 of the Indian Contract Act 1872. As the businesses around the
country grew, the laws present at that time dealing with them were found
inadequate to handle the new trends and challenges in front of them.
of Goods Act 1930 was introduced with the objective of balancing the rights,
duties, claims and expectations arising in the process of transferring of
property from one person to another i.e of buyers and sellers.
The way of formation of a contract for a sale of goods, its prerequisite,
conditions, etc all is mentioned in this Act. But what happens when after
agreeing to buy/sell some goods buyer/seller refuses at the last moment or
doesn’t deliver the good or doesn’t accept the goods or to put it simply doesn’t
do the agreed task.
This is a situation of breach of contract. “A breach of
contract occurs when a party thereto renounces his liability under it, or by his
own act makes it impossible that he should perform his obligations under it or
totally or partially fails to perform such obligation” (Associated Cinemaa of
America, Inc v World Amusement Co,
Breach is of two type i.e Anticipatory Breach and Present Breach but
irrespective of the type whenever the breach of contract occurs it violates the
rights of the parties of contract. Therefore the Sale of Good Act, 1930 has the
provisions to ensure the rights of buyers and sellers are protected at all cost.
Thus, the aim of this paper is to study the Sales of Goods Act and identify
various ways of through which breach is committed and the remedies which the
buyers and sellers have in case a breach is committed against them so that they
are aware of their rights and can take action so as to protect them.
Different ways of Breaching
A person is breaching a contract whenever he is violating any term stipulated in
Various ways to breach a contract of sale under Sale of Goods Act, 1930 are as
Non-Payment: When under a contract of sale the good has been passed to the buyer and the
buyer neglects or refuses to pay for the goods according to the terms of
contract he is said to be in breach of the contract.
Violation of condition: According to section 12(2) a condition is a stipulation essential to the
main purpose of the contract. In other words it’s a requisite upon which the
whole contract is based on. For example if A informs a car salesman B that
he wants to buy a car with mileage of 20Km/L then sale of any car with less
mileage than that will not fulfill this condition and would be considered a
breach of condition. Breach of condition gives right to treat contract as
Violation of warranty: According to section 12(3) a warranty is a stipulation collateral to the
main purpose of the contract. Any condition which serves as collateral to
the main purpose of contract is a warranty. For example A wants to buy
mobile with 4000mAh battery. This is a condition, whereas smooth functioning
of mobile is a warranty. Breach of warranty gives right to claim damages but
does not gives the right to treat contract as repudiated.
- It is to be noted that according to section 13 the buyer may waive his
right and chose to treat a breach of condition as breach of warranty and
claim not repudiation but only damages.
Installment Deliveries: In case the goods are to be delivered in installments and to be paid
separately for each installments, if the seller makes any defective delivery
regarding one or more installments or the buyer refuses to pay for one or
more requirements, such a case is of breach of contract. However it would
depend on terms of contract and conditions of the case to whether to treat
the breach as repudiation of whole contract or the breach is just to give
rise to claim for compensation and not repudiation of whole contract.
Non acceptance of good: When a buyer neglects or refuses to accept the delivery of goods, he is in
breach of contract.
Non delivery of good: When a seller after entering into a contract of
sale refuses to deliver the goods to the seller, he is in breach of contract.
- It is to be noted that the seller is not breaching the contract if he is
exercising his right of lien/stoppage in transit with respect of
Remedies available to Sellers against BuyersThe following are the remedies under Sale of Goods Act, 1930 which are
available to the sellers in case of breach made by the buyer:
- Suit for the price:
According to the section 55 when under a contract the good has passed to the
buyer after which he refuses to pay for the goods; seller has the right to
sue him for the price of the goods.
Moreover, the section also makes the payment of the good on a certain date
necessary irrespective of whether the buyer has received the delivery of the
goods or note provided there exist a condition for the same in the contract. If
under such a contract of sale buyer refuses to pay for the good on the
stipulated date irrespective of whether he received the good or not; buyer can
sue him for the price of the goods.
- Recovery of losses in case of re-sale of good while exercising the
right of lien/stoppage of good in transit:
According to section 54 in case where the goods are of perishable nature or
the unpaid seller has exercised his right of lien or stoppage in transit
after giving notice to the buyer of his intention to sell the good if the
buyer doesn’t pay him within a reasonable time and after selling it to a
third party in a lower price can sue the original buyer for the losses he
sustained due to his (original buyer’s) breach.
- Damages for non-acceptance:
According to section 56 when under a contract of sale buyer has sold a good
to a seller and afterwards the buyer is wrongfully refuses to accept and pay
for the goods; seller can sue the buyer for non-acceptance.
In the case of Suresh Kumar Rajendra Kumar v K Assan Koya & sons
sold the goods to the seller who afterwards rejected to accept and pay for the
goods. Plaintiff in orderly course of business sold the goods urgently at a
The court held that the seller had to pay damages to the amount of
difference between the price the rice was supposd to be sold and the price it
was finally sold. (Suresh Kumar Rajendra Kumar v K Assan Koya & sons
1989) This case is the perfect example of the seller utilizing the remedies
available to him under section 54 and 56.
Remedies available to Buyers against SellersThe following are the remedies under Sale of Goods Act, 1930 which are
available to the buyers in case of breach made by the sellers:
Damages for non-delivery: According to section 57 if a seller under a contract of sale has sold a good
and afterwards wrongfully refuses to deliver the goods to the buyer; buyer
can sue the seller for damages for non-delivery of goods.
However it is to be noted that a reasonable time must be given to the seller for
making the delivery of the good. Moreover, if the buyer has not informed the
time period in which it is to be delivered by giving notice under section 55 of
the Indian Contracts Act, seller cannot sue for damages.
Damages for breach of warranty: According to section 59; in case where there is breach of warranty by the
seller or the buyer has considered to treat breach of condition as breach of
warranty under section 13, the buyer does not has the right to repudiate the
The buyer in such a case has only two options. First is to set up against the
seller the breach of warranty in diminution or extinction of the price. Second
option available is to sue the seller for damages for breach of warranty.
However it is to be noted that by choosing the first option a buyer does not
lose the right to sue the seller for breach of warranty if in case he suffers
Specific Performances: The section 58 states that subject to the provision of Specific Relief Act
1877, if the contract is breached, the Court may, on the request of the
plaintiff (buyer) direct the seller to perform the contract in a particular
and specified manner. This decree passed by the court may or may not carry
terms and conditions with respect of price, mode of delivery, etc.
Moreover, this right is only available to the buyer. This section provides no
solution to the seller. Furthermore this remedy is available only on request of
Assessing the Amount of Damages to be paid
Whenever a breach of contract is committed damages are awarded to the suffering
party because his/her right was violated and he/she suffered losses because of
it. But what should be the amount of damages to be paid in case of breach of
contract of sale under Sale of Goods, Act. The damages to be paid are calculated
on the basis of the principles of section 73 & 74 of the Indian Contract Act.
According to section 73 of Indian Contract Act, if a person breaks a contract,
the party which suffers the loss due to the breach is entitled to receive, from
the party who breaks the contract, compensation for the loss or damage caused to
him which naturally arose in the course of business from such a breach or the
loss which the party knew would arise if the contract is to be breached.
However, this compensation should not be awarded for any loss which is too
remote or indirect.
Thus whenever there is a breach the following two things are found out
regarding the damages to be paid:
Remoteness of Damages: First of all it is decided for what losses the breacher is responsible i.e whether the loss suffered by the party is too remote
or comes within the purview of reasonable remoteness.
This is an important factor because sometimes there exists situations where one
breach causes a series of events which causes more breaches which sometimes are
too remote for a reasonable person to foresee or know. That is why remoteness of
damages is fixed to pay damages.
Measure of Damages: The amount is calculated next. The amount of damages is equal to loss or
caused to the party which naturally arose in the course of business from
such a breach or the loss which the party knew would arise if the contract
is to be breached.
Remedies available to both Buyers & Sellers
Suite for Repudiation of contract before due date/anticipatory
breach: According to section 60, in case where either buyer or seller repudiates the
contract before the due date or in other words refuses before the due date
to perform the terms of the contract on the due date, the other party has
two options. First, wait for the due date and after the non performance by
the other party sue him for damages. Second, sue immediately without waiting
for the actual non performance of the terms of the contract.
In Hochster v De La Tour the services of the plaintiff was to start from
1st June. But the defendant informed on 11th May that he does not require the
services anymore. The court held that the plaintiff is entitled to sue for
damages before 1st June. (Hochster v De La Tour, 1853)
Interest by way of damages and Special Damages: The section 61 vests the right to recover interest or special damages where
law interest or special damages may be recoverable or in the case where
recovery of the money paid where the consideration for the payment of it has
failed has to be made.
The court may award interest at the rate which it deems reasonable and fit to
the seller for the amount of price from the date of the tender of the goods or
from the date on which the price was payable or to the buyer for the refund of
price in case of breach of contract from the date the payment was made.
It can be concluded that non performance of the duties by buyer or seller as per
the terms of contracts regarding the sale of any good results in breach of
contract which will in turn violate the rights of buyers or sellers.
To protect these rights Sale of Goods Act provides for several remedies which
can be used by buyers and sellers to compensate their losses by claiming the
loss or damage caused by the other party by the way of breach.
These remedies which are provided by the Sales of Goods Act, are given to both
buyers and sellers. However, some remedies exist only for buyer, some only for
seller and some to both buyers and sellers.
Moreover by using the remedies buyers and sellers can claim damages from the
breacher of the contract. These damages are calculated on the basis of
provisions of Indian Contract Act i.e reasonable foreseeability and reasonable
measure of damage.
- Associated Cinemaa of America, Inc v World Amusement Co (Minnesota Supreme Court
- Hochster v De La Tour, E&B 678 (1853).
- Suresh Kumar Rajendra Kumar v K Assan Koya & sons , AIR 1990 Ker 20 (High Court
of Kerela 1989).
- Singh, A., 2017. Indian Contract & Specific Relief. Lucknow: Eastern Book
- Kumar, R. (2019). Breach of Contract in Sales of Goods Act, 1930. Retrieved 27
- Indian Contracts Act, 1872
- Sales of Goods Act, 1930
Award Winning Article Is Written By: Mr.Jai Mishra
Authentication No: NV31732984746-2-1120