Price of Goods (Sec 9, 10): The Sale of Goods Act, 1930 Notes

Price means the money consideration for a sale of a Goods 2(10)

The following are the modes of determining price of goods: [Sec. 9]

  • Price is specified under the contract. It is the most common method of determining the price. Here, parties decide the price in advance.
  • Price may be determined as per the method specified in contract.
    Example : Delivery of rice on 1st December 2008 at the rate prevailing on that day.
  • Price may be determined in accordance to custom and usage of trade. This method is applicable if parties regularly trade.
  • Where the price is not fixed as above, the buyer shall pay the seller a reasonable price. ‘What is a reasonable price is a question of fact and circumstances.

Fixation of price by third party. (Sec. 10)

If it is so, contract shall specify name of third party.

If third party fails to specify, contract is void but if goods are delivered to buyer and used by him, he is required to pay reasonable price.

If the third party is prevented from fixing price, defaulting party is liable for the damages.

Consequences of Destruction of Specific Goods – Sec 7 – 8

The consequences of destruction of specific goods can be discussed under the following three heads:

  • If goods perish before making the contract
    • Contract is void – ab – initio, due to mistake as to existence of subject matter.
    • It is to be noted that if the seller has knowledge about the destruction of goods, even then the enters into the contract of sale with buyer, then seller is bound to  compensate to the buyer.
  • Where a part of the goods is perished before making contract
    • If the goods was divisible, then the contract can be enforced party and if the goods was indivisible, then the contract becomes void – ab – inito.
      Example: A contracted to sell one wagon containing 700 bags of groundnut to B. Unknown to A, 109 bags had been stolen at the time of sale, Therefore, A made a delivery of 591 bags. Held, the sale was void.

If goods perish after the “Agreement to sell; but before’ Sale [Sec. 8]

The contract is void if subsequently the goods have perished, and there is no fault on the part of the buyer or seller in perishing the goods.
Example: A horse was delivered upon trial for 8 days. However, the horse died within 8 days, without the fault of buyer or seller. Held, the seller must bear the loss, as the contract  was void.

However, parties to the contract may provide otherwise also.

To know the differnce between sale and agreement to sell click here

Section 7 and 8 are applicable only in case of specific goods.

Therefore, if unascertained goods are destroyed either before or after making the agreement, the contract shall not become void. Thus, in an agreement to sell unascertained goods, even if the entire stock of goods is destroyed, the contract that not become void and the seller will have to perform his promise.

Example: ‘A’ agreed to sell to ‘B’ 100 bags of wheat from his stock of 1,000 bags in his go down. The entire stock was destroyed by fire. ‘A’ is bound to deliver 100 bags of wheat or else he will be liable for damages.

If the contract does not otherwise provide, then –

  • Stipulation as to time of payment is not deemed to be essence of contract.
  • Stipulation as to time of delivery is deemed to be essence of contract.

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