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Sales Of Goods Act: Remedies Available For The Breach Of Contract

Until 1930, the law governing the sale of goods was governed by Sections 76 to 123 of the Indian Contract Act of 1872. However, the legislature recognized that this was insufficient and that a separate Act to govern the sale of goods was required. The Sale of Goods Act was enacted in 1930 and was modeled after the English Statute of Sale of Goods, 1893. Under the Sale of Goods Act, three types of remedies for breach of contract are mentioned.

The Sale of Goods Act of 1930 governs the contract of sale of goods. Except for the state of Jammu and Kashmir, the Act applies to the entire country of India. Until 1930, all transactions involving the sale of goods were governed by the Indian Contract Act of 1872. Sections 76-123 were repealed by the Act of 1930 in 1930. A contract for the sale of goods includes several distinctive elements, such as the transfer of ownership of the products, delivery of the items, the buyer's and seller's rights and obligations, remedies for violation of contract, terms, and guarantees implied by a contract for the sale of goods, and so on. These anomalies are governed by the provisions of the Sale of Goods Act of 1930.

Remedies: Three Remedies Available For Breach Of Contract In Sales Of Good Act:

  • Remedies of the Seller Against the Buyer Sections 55 and 56
  • Remedies available to the buyer against the seller Sections 57, 58, and 59
  • Buyer and seller can seek redress Sections 60 and 61

Buyer's Remedies Against the Seller

When a buyer fails to pay his debts to a seller, the seller becomes an unpaid seller. And the seller now has certain legal rights against the buyer. Such rights are the seller's remedies for the buyer's breach of contract. Such unpaid-seller rights are in addition to the rights he has against the goods he sold.The cases that a seller may bring against a buyer under the Act are broadly classified into two sorts.
  1. Price Suitability
  2. Penalties for non-acceptance

Price Suit:
Section 55[1] of the Sale of Goods Act specifies two requirements. The first is that if any products are passed to the buyer under the contract to a sale and the buyer intentionally neglects payment or refuses to pay for the goods according to the terms mentioned in the contract, the seller may sue the buyer for the payment of the goods' price. The second section provides that if payment is due on a specific day, regardless of whether or not the products have been delivered, and the buyer fails to pay or refuses to pay for the items, the seller may sue the buyer to recover the price of the goods. If the buyer is expected to pay the seller half in-kind and partially in cash, and either payment is not made, the seller has the right to sue the buyer.

If the property of the products has already passed but the seller refuses to pay for the goods, the seller becomes an unpaid seller under the contract of sale. In such a circumstance, the seller has the right to sue the buyer for wrongfully refusing to pay him his due.

However, suppose the sales contract states that the price will be paid at a later date regardless of when the products are delivered. And if the buyer refuses to pay on that day, the unpaid seller may sue for the price of the items. According to the legislation, the actual delivery of the products is unimportant.

Legal Precedents:
  1. Overseas Exporters v. Colley.
    • Damage for Non-Acceptance: Section 56 of the Act states that if the buyer refuses to accept the goods and pays for them intentionally and wrongfully, the seller may sue the buyer for non-acceptance of goods. The harm is to be determined in accordance with the principles outlined in Sections 73 and 74 of the Indian Contract Act of 1872. [2] According to Section 73 of the Contracts Act, if a contract is breached, the party that suffers a loss can recover the amount from the person who breached the contract. The damage that can be recovered is the loss that would have occurred in the normal course of events and that the parties were aware of when they agreed to enter into a contract.

      When calculating the loss, the means available to correct the breach will also be considered. The market price of the products for which a violation has occurred shall be determined based on the date the goods were to be delivered. For example, X and Y signed into a deal to sell wheat.

      On the 15th of the month, X had to deliver 100 bags of wheat to Y. Y refused to accept delivery on the 15th, and the price of one bag on that day was Rs 5, 000. On the 20th of the month, X filed a claim for non- acceptance and the market price for a bag of wheat was Rs 4,500. The market price would be assessed for the purpose of the suit at Rs 5,000. Following the idea stated in Contracts Act Sections 55 and 63. When a date or time is set for the performance of the contract, but another date is set for any reason, that substituted date will be used to calculate the harm incurred. For the seller is expected to provide the products in installments and the buyer rejects any of the installments, the date on which the installment was to be delivered is taken into account when calculating the damage.

      If the buyer wrongly refuses or fails to accept and pay the unpaid seller, the seller may sue the buyer for damages resulting from his failure to accept goods. The vendor may incur certain damages since the buyer declined to acquire the products without justification.

Legal Precedents:
Mr. Suresh Kumar Rajendra Kumar vs. K Assan Koya and his sons
Buyers' Recourse Against the Seller
Under the Sale of Goods Act, the buyer has three remedies against the seller for violation of the contract. They are as follows:
  1. Damages for Non-Delivery:
    According to Section 57 of the Act, if the seller negligently or intentionally fails to deliver the products to the customer, the customer may sue the seller for damages for non-delivery. In the scenario when the property in the products has been transmitted to the buyer, and the buyers have the right to immediate possession, he receives all the remedies an owner of the goods will obtain against anybody whose activities are inconsistent with his rights.

    When calculating the amount of damage, the difference between the contract price and the market price at the time the damage occurred will be used. In the case when the buyer paid the money in advance, the date to be considered for calculating the damages is the day the payment was made. The buyer can also recover the money spent on finding an alternative remedy for the breach.
  2. Remedy for Breach of Warranty:
    According to Section 59 of the Act, when the seller breaches a warranty, the buyer is not entitled to reject the goods on that basis, but he may sue the seller for breach of warranty in diminution or extinction of the price. The seller may also sue the buyer for breach of guarantee in the price reduction or extinction.

    The definition of warranty is provided in Section 12 (3) [3] of the Act. Section 13 specifies that if the seller fails to satisfy any condition, the buyer may regard the breach of condition to be a breach of warranty. In this scenario, too, the buyer has no right to reject the products. This section does not address circumstances of fraudulent misrepresentation on the seller's part, which would allow the buyer to cancel the contract.

    This section also does not address situations in which the buyer can cancel a contract based on the terms expressly stated in the contract due to a breach of warranty. This section cannot be invoked by the buyer if the buyer has properly rejected the goods. The buyer may sue under Section 57 or Section 61[4] of the Act to collect the purchase price and interest. In the event that the seller provides a warranty on the quality of the product and the warranty is breached, the amount of the damages will be calculated on the basis of the value of the products at the time of delivery and what should have been its actual worth pursuant to the contract. In order to establish a breach of warranty, the buyer must have relied on the seller's warranty and behaved reasonably to limit the damage.)

    Legal Precedents:
    Mason v. Burningham, (1949)
    Dingle vs. Hare (1859)
  3. Specific Performance:
    According to Section 57 of the Act, in a case of breach of contract, the Court may, on an application by the plaintiff, require the defendant that the contract be fulfilled specifically, subject to the provisions indicated in the Specific Relief Act, 1877[6]. The court's decree may be unconditional or subject to terms and conditions regarding price, amount of damages, and so on. As previously noted, the provisions relating to the sale of products were formerly covered by the Contracts Act.

    This type of remedy was not provided for in the Contracts Act. The Specific Relief Act was enacted in 1877 to provide an equitable remedy to the aggrieved person. This part simply offers a solution to the buyer. The seller cannot make an application under Section 58 to enforce specific performance because this section gives the seller no powers and only on the buyer's request can special relief be granted. Both the seller and the buyer have recourse.

Under The Sales Of Goods Act, The Buyer And Seller Have Two Options When Dealing With Goods:

  1. Interest In The Form Of Damages And Special Damages:
    Section 62 of the Act specifies that the buyer or seller may seek special damages or interest where special damages or interest are attainable under the law. This treatment has a drawback. The parties should have anticipated that a specific loss could occur if the contract is broken in any way. Furthermore, the specific loss must have occurred after the contract infringement.

    The Interest Act, enacted in1839, mandates that interest be paid as a form of compensation in specific circumstances. It should be highlighted that the seller can only claim interest if he is eligible to collect the amount. When the seller is suing solely for breach of contract damages, he cannot claim interest. The same concept applies to the buyer as well. If he is suing the buyer for breach of warranty, he cannot claim an interest.
  2. Suit for Contract Repudiation Before the Date of Anticipatory Breach:
    Section 60 of the Act stipulates that if one party renounces the contract before the products are delivered, the other party may either wait until the items are delivered or treat the contract as annulled and seek damages. This provision is not found in the English law upon which Indian law is based. The party not in default may choose to keep the contract alive by refusing to recognize the defaulting party's repudiation.

    In such a case, if the defaulter party rejects or is unable to do his part during the performance of the contract, the defaulter party will be discharged, and the situation will be the same as if there had been no repudiation of the contract prior to the contract's date. If the customer cancels the contract before the products are delivered, the seller might still claim for damages. Because such a contract is considered rescinded, the seller may sue for breach of contract.

Frost v. Knight(1872)
In this case that is covered by the Indian Contract Act. K vowed to marry F after his father died. While his father was still living, K informed F that he would not marry her once his father died. F filed a lawsuit for violation of the contract. It was determined that F had the right to accept K's repudiation of the commitment to marry her and sue K. It was decided that one contracting party could simply refuse to perform his contractual responsibilities. In such a circumstance, the other contracting party may file a breach of contract action in court if he can demonstrate that he was always willing to fulfill his duties under the same contract.

P, for example, is a seller, and Q, a buyer. Q cancels the contract before the expiration date, but P refuses to acknowledge the cancellation and keeps the deal alive. P delivers the merchandise on the performance date. However, these are not in accordance with Q's specifications. In this instance, Q has the option to reject the products. P will be unable to obtain any relief. Alternatively, Q may accept the products and treat the breach of condition as a breach of guarantee, claiming damages from P.

For any breach to occur, there must be two parties, there must be goods, there must be transfer of goods, there must be offer, acceptance, intention, and consideration, and most importantly, there must be a price of goods, which must be paid in part or in full. In general, consumers have no right to return products or cancel a contract merely because they no longer want or need the goods.

However, it is common for problems or defects to be detected only after the goods have been purchased. In such instances, a purchaser may have a remedy if it can be demonstrated that a contract term was violated. It's also possible that the company offers a refund policy that the customer can take advantage of.

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