Samacheer Kalvi Class 12 Commerce Solutions Chapter 21 The Sale of Goods Act, 1930

I. Choose the Correct Answers

 

Question 1. Sale of Goods Act was passed in the year
(a) 1940
(b) 1997
(c) 1930
(d) 1960
Answer: (c) 1930
In simple words: The Sale of Goods Act, which sets rules for buying and selling items, became law in 1930. This act helps make sure transactions are fair and clear.

🎯 Exam Tip: Remembering key dates like the enactment of important laws can help score full marks. The Sale of Goods Act of 1930 is a foundational law in commercial transactions.

 

Question 2. Which of the below constitutes the essential element of contract of sale?
(a) Two parties
(b) Transfer of property
(c) Price
(d) All of the options
Answer: (d) All of the options
In simple words: For a sales contract to be valid, it needs all these things: two people (a buyer and a seller), the ownership of the item must change hands, and there must be a price paid for the item. These are all crucial parts of a contract.

🎯 Exam Tip: Always list all necessary elements for a valid contract of sale when asked, as each element is fundamental and missing one makes the contract incomplete.

 

Question 3. Which of the below is not good?
(a) Stocks
(b) Dividend due
(c) Crops
(d) Water
Answer: (b) Dividend due
In simple words: In legal terms, "goods" are movable items you can physically own. Stocks, crops, and water can be considered goods. However, a "dividend due" is money owed to you, which is a financial claim and not a physical movable item, so it's not counted as goods.

🎯 Exam Tip: Understand that the legal definition of "goods" specifically excludes money and 'actionable claims' (debts or rights that need legal action), focusing on tangible, movable property.

 

Question 4. In case of the sale, the ............ has the right to sell
(a) Buyer
(b) Seller
(c) Hirer
(d) Consignee
Answer: (b) Seller
In simple words: In any sale, the person who owns the item and is selling it, known as the seller, is the one who has the legal right to transfer that item's ownership to another person.

🎯 Exam Tip: The seller's primary role is to transfer ownership and possession of goods, hence they must have the legal right to do so.

 

Question 5. The property in the goods means the
(a) Possession of goods
(b) Custody of goods
(c) Ownership of goods
(d) Both (a) and (b)
Answer: (c) Ownership of goods
In simple words: When we talk about "property" in the context of goods, it means having full legal ownership. It's not just about holding or having the goods physically; it means you are the rightful owner.

🎯 Exam Tip: Distinguish carefully between "possession" (physical control) and "ownership" (legal title) as they have different implications in contract law.

 

Question 6. Specific goods denote goods identified upon the time of ............ of sale
(a) Agreement
(b) Contract
(c) Order
(d) Obligation
Answer: (b) Contract
In simple words: Specific goods are items that are clearly chosen and agreed upon by both the buyer and seller exactly when they make the sales contract. This makes sure everyone knows what specific items are being bought.

🎯 Exam Tip: Identifying specific goods at the time of contract is crucial because it often determines when the ownership and risk pass from the seller to the buyer.

 

Question 7. In which of the following types, the ownership is immediately transferred to the buyer?
(a) When goods are ascertained
(b) When goods are, appropriate
(c) Delivery to the carrier
(d) Sale or return basis
Answer: (c) Delivery to the carrier
In simple words: When a sale involves delivery, the ownership of the goods often transfers to the buyer as soon as the items are given to the carrier (like a shipping company) for delivery. This means the buyer becomes responsible from that moment. The moment of transfer is key for determining who bears risk.

🎯 Exam Tip: While ownership typically transfers when goods are 'ascertained' and intended to pass, in practical scenarios, delivery to a carrier for the buyer often signifies the immediate transfer of title and risk.

 

Question 8. ............ is a stipulation which is collateral to the main purpose of the contract.
(a) Warranty
(b) Condition
(c) Right
(d) Agreement
Answer: (a) Warranty
In simple words: A warranty is a smaller promise that is related to a contract but is not the most important part of it. It's a supporting term, not the main reason for the deal.

🎯 Exam Tip: Clearly differentiate between a 'condition' (essential to the contract) and a 'warranty' (collateral to the main purpose) as their breach has different legal consequences.

 

Question 9. The unpaid seller can exercise his right of lien over the goods, where he is in possession of the goods as
(a) Owner of goods
(b) Agent of buyer
(c) Bailee for buyer
(d) All of these
Answer: (d) All of these
In simple words: An unpaid seller can keep the goods until they are paid, even if they are holding the goods as the owner, as an agent for the buyer, or as someone simply keeping them safe for the buyer (a bailee). This right is called a 'lien'.

🎯 Exam Tip: The right of lien allows an unpaid seller to retain possession of goods, emphasizing that physical possession is key for exercising this right, regardless of the capacity in which they hold the goods.

 

Question 10. The unpaid seller can exercise his right of stoppage of goods in transit where the buyer
(a) Becomes insolvent
(b) Refuses to pay the price
(c) Payment of the price
(d) Both (b) and (c)
Answer: (a) Becomes insolvent
In simple words: If a buyer cannot pay their debts (becomes insolvent), an unpaid seller has the right to stop the goods from reaching the buyer while they are still being transported. This prevents further loss for the seller.

🎯 Exam Tip: The right of stoppage in transit is specifically triggered by the buyer's insolvency, allowing the seller to regain control of goods before they reach an unable-to-pay buyer.

II. Very Short Answer Question

 

Question 1. What is a contract of sale of goods?
Answer: A contract of sale of goods is a legal agreement where a seller transfers, or agrees to transfer, the ownership of certain items (goods) to a buyer in exchange for a price. This is a fundamental concept in business law.
In simple words: It's a deal where someone sells an item to another person for money, giving them full ownership of that item.

🎯 Exam Tip: Focus on the keywords "transfer of property (ownership)" and "price" when defining a contract of sale of goods.

 

Question 2. List down the essential elements of a contract of sale.
Answer: The essential elements needed for a contract of sale are:
• Two parties (a seller and a buyer)
• Goods (the items being sold)
• Price (the money exchanged for the goods)
• Transfer of ownership (property) of the goods
• It includes both an immediate 'Sale' and an 'Agreement to sell' (a promise for a future sale). Each element ensures fairness and clarity in the transaction.
In simple words: For a sale contract, you need a seller and a buyer, items to sell, a price, and the ownership of the items must change hands. It also covers promises to sell items later.

🎯 Exam Tip: Memorize these five core elements, as a valid contract of sale requires all of them to be present.

 

Question 3. What is meant by Goods?
Answer: The term "goods" refers to every type of movable property. However, it specifically excludes actionable claims (rights to sue for a debt) and money. This definition helps legal systems classify what can be bought and sold under specific laws.
In simple words: Goods are any physical things you can move from one place to another, but not money or rights to claim money legally.

🎯 Exam Tip: When defining goods, clearly state both what is included (movable property) and what is excluded (actionable claims and money).

 

Question 4. What are contingent goods?
Answer:
• Contingent goods are a type of future goods. This means they are not yet fully owned or available at the time of the contract.
• They are sold by the seller to the buyer, but the sale depends on a specific event (a contingency) that may or may not happen.
• For example, if Britto agrees to sell a tablet to Senthuran only if Britto first receives it from Nallathambi, then this tablet is a "contingent good." This type of sale carries a condition, making it different from a direct sale.
In simple words: Contingent goods are items that will be sold in the future, but only if a certain event happens first.

🎯 Exam Tip: Remember that contingent goods are always linked to an uncertain future event; their existence or acquisition by the seller is conditional.

 

Question 5. What do you understand by Warranty?
Answer: A warranty is a promise or stipulation in a contract of sale that is not essential to its main purpose but is collateral to it. It holds secondary importance compared to a 'condition' in the contract. Warranties often cover things like product quality or repair for a specific period.
In simple words: A warranty is a small promise related to a sale, but it's not the main reason for the sale. It's less important than a condition.

🎯 Exam Tip: Highlight that a warranty is 'collateral' and of 'secondary importance' to differentiate it from a condition, which is 'essential'.

III. Short Answer Questions

 

Question 1. Explain the meaning of the Agreement to sell.
Answer: An "Agreement to sell" means that the ownership or legal title in the goods is set to pass (transfer) from the seller to the buyer at some point in the future. It is an executory contract, meaning it still needs to be performed, and the conditions mentioned in the contract must be fulfilled before the sale is completed. This differs from an immediate sale where ownership changes instantly.
In simple words: An agreement to sell means the items' ownership will be transferred later, once certain conditions in the contract are met.

🎯 Exam Tip: Emphasize that in an agreement to sell, ownership (property) transfers in the future, distinguishing it from an actual 'sale' where it transfers immediately.

 

Question 2. Discuss in detail about the Existing Goods.
Answer: Existing goods are those items that the seller already owns or possesses at the specific time when the contract of sale is made. This means the goods are available for immediate transfer. Existing goods can be further categorized into:
1. Specific Goods: These are goods clearly identified and agreed upon by both parties at the time of the contract.
2. Ascertained Goods: This term is often used with a similar meaning to specific goods, referring to goods that have been identified and set aside for the contract.
3. Generic or Unascertained Goods: These are goods that are not specifically identified or agreed upon at the time of the contract of sale, but are part of a larger stock. Knowing if goods exist at the time of sale affects risk and ownership transfer.
In simple words: Existing goods are items that the seller already has when they make a sales contract. They can be specific items, identified items, or general items from a group.

🎯 Exam Tip: Clarify that 'existing goods' are physically present and owned by the seller at the contract's formation, and briefly explain the sub-categories for a comprehensive answer.

 

Question 3. Discuss the implied conditions and warranties in the sale of goods contract.
Answer: Every contract of sale includes terms that are either directly stated (expressed) or understood without being written down (implied). Implied conditions are terms that the law assumes are part of the contract, inferred from its context or nature. These are very important to the contract's main purpose. These implied terms protect the buyer and ensure fair trade practices. Following are the implied conditions:
1. Conditions as to Title (seller has right to sell)
2. Conditions as to Description (goods match description)
3. Sale by Sample (goods match the sample)
4. Conditions as to Quality or Fitness (goods are fit for purpose)
5. Conditions as to Merchantability (goods are of saleable quality)
6. Condition as to Wholesomeness (goods are safe to consume, if food/drink)
7. Condition Implied by Trade Usage (customary conditions in a particular trade)
In simple words: In every sales contract, certain promises and understandings are automatically included by law, even if not written down. These are called implied conditions and warranties, like the promise that the seller actually owns what they are selling.

🎯 Exam Tip: Provide a brief explanation of what 'implied conditions' are, and then accurately list and briefly describe each of the common implied conditions to show full understanding.

IV. Long Answer Questions

 

Question 1. Explain in detail the elements of the contract of sale. [TTGPI]
Answer: A contract of sale is a specific type of legal agreement. It involves certain key elements that must be present for it to be valid. These four pillars ensure that a sale is legally binding and clear for both parties:
1. Two Parties: A contract of sale always requires two distinct parties: a seller, who is transferring the goods, and a buyer, who is receiving them. These two individuals or entities must be different from each other.
2. Transfer of Property: To complete a sale, the seller must either transfer the ownership (property) of the goods to the buyer immediately, or agree to do so at a later time. Ownership is distinct from mere possession.
3. Goods: The items involved in the contract must be "goods." This legal term refers to movable property but specifically excludes money, actionable claims (rights to sue for a debt), and immovable property (like land or buildings).
4. Price: There must be a monetary consideration, known as the "price," for the goods being sold. Without a price, the transaction cannot legally be considered a sale.
In simple words: A sales contract needs a buyer and seller, goods (movable items), the transfer of ownership of those goods, and a price (money) for them.

🎯 Exam Tip: Explain each element clearly and concisely. Using an acronym like TTGPI can help you recall all the elements: Two Parties, Transfer of Property, Goods, Price, and perhaps Intent to Sell/Buy for completeness.

 

Question 2. Distinguish between Sale and Agreement to Sell. [IRONIC]
Answer: Understanding the difference between a 'Sale' and an 'Agreement to Sell' is crucial in the Sale of Goods Act, as it affects rights and responsibilities. Sale means ownership moves right away, while agreement to sell means it moves later. This distinction is vital for determining legal rights and responsibilities in a transaction.

In simple words: A "sale" means the ownership of goods changes immediately, while an "agreement to sell" means ownership changes later. This affects who takes the risk if something goes wrong or if a party can't pay.

🎯 Exam Tip: When distinguishing, always focus on the core difference: the timing of ownership transfer. All other differences (risk, remedies, insolvency effects) stem from this central point.

 

Question 3. Classify the goods under the Sale of Goods Act.
Answer: Under the Sale of Goods Act, "goods" are defined as every kind of movable property, excluding actionable claims and money. These goods are classified into different categories to determine when ownership passes and what remedies are available. The main classifications are:
1. Existing Goods: These are goods that the seller owns or possesses at the very moment the contract of sale is made. Existing goods are further divided into:
• Specific Goods: Goods that are clearly identified and agreed upon by both the buyer and seller at the time of the contract.
• Ascertained Goods: This term is often used interchangeably with specific goods, meaning goods that have been picked out and identified for the contract.
• Unascertained Goods: These are goods that are not specifically identified or agreed upon when the contract is made, but are described by type or quantity (e.g., 100 bags of wheat from a larger stock).
2. Future Goods: These are goods that a seller does not possess at the time of the contract of sale. They will be manufactured, produced, or acquired by the seller only after the contract has been entered into.
3. Contingent Goods: These are goods whose acquisition by the seller depends on a future uncertain event (a contingency) that may or may not happen.
In simple words: Goods are movable items (not money or claims) and are sorted into three groups: "Existing" (items the seller already has, like specific things or general stock), "Future" (items the seller will get later), and "Contingent" (items the seller will get only if a specific event happens).

🎯 Exam Tip: Clearly define each category of goods and provide a simple example for each to illustrate your understanding, especially for specific, unascertained, and contingent goods.

 

Question 4. Distinguish between Conditions and Warranty. [STORM]
Answer: In a contract of sale, 'conditions' and 'warranties' are terms that define the rights and obligations of both parties. Conditions are very important parts of a sale contract, like the main reason you buy something. Warranties are less important, like smaller promises. Breaking a condition can end the contract, but breaking a warranty usually only means you can ask for money for the damage. Conditions are at the heart of the contract, while warranties are more like supporting promises.

In simple words: Conditions are the main rules of a sale; if broken, the whole deal can be cancelled. Warranties are secondary promises; if broken, you can claim money, but the sale usually still stands.

🎯 Exam Tip: Use a clear table format to highlight the distinctions, focusing on the impact of a breach (contract voidable vs. claim for damages) and the importance (essential vs. collateral).

12th Commerce Guide The Sale of Goods Act, 1930 Additional Important Questions and Answers

I. Choose the Correct Answers

 

Question 1. A contract of sale involves ............ parties
(a) 2
(b) 3
(c) 4
(d) 5
Answer: (a) 2
In simple words: A sales contract always needs two people or groups: one who sells the items (the seller) and one who buys them (the buyer).

🎯 Exam Tip: Remember that a contract of sale is a bilateral agreement, requiring only two distinct parties to be legally binding.

 

Question 2. The transferred property takes place at a future date or on fulfillment of certain conditions, it is called.
(a) Sale
(b) Purchase
(c) Agreement
(d) All of these
Answer: (c) Agreement
In simple words: When the ownership of goods will change hands later, or only if certain things happen first, this is called an "agreement to sell." This makes it different from an immediate sale.

🎯 Exam Tip: The key indicator for an 'agreement to sell' is that the transfer of ownership is not immediate but contingent on a future event or date.

 

Question 3. ............ mean every kind of movable property other than actionable claim and money.
(a) Goods
(b) Cash
(c) LIC policy
(d) Buildings
Answer: (a) Goods
In simple words: Any movable item that is not money or a legal claim (like an LIC policy or a building, which is immovable) is defined as "goods" under this law.

🎯 Exam Tip: The legal definition of 'goods' is specific and excludes financial instruments, claims, and immovable property, which is a common point of confusion.

 

Question 4. Goods owned and possessed by the seller at the time of contract of sale.
(a) Existing
(b) Future
(c) Un ascertained
(d) All of these
Answer: (a) Existing
In simple words: If the seller already owns and has the items when they make the sales contract, those items are known as "existing goods." They are ready to be transferred.

🎯 Exam Tip: Existing goods are physically present and ready for sale, contrasting with future or contingent goods which are not yet available.

 

Question 5. ............ goods denote goods identified and agreed upon at the time of contract of sale.
(a) Future
(b) Specific
(c) Generic
(d) NOTA
Answer: (b) Specific
In simple words: When a buyer and seller clearly pick out and agree on particular items at the exact moment they make a sales contract, those items are called "specific goods." This ensures everyone knows what is being bought.

🎯 Exam Tip: The identification and agreement on particular goods at the contract's formation are the hallmarks of 'specific goods'.

 

Question 6. Which of the following excluded from goods?
(a) Crops
(b) Money
(c) Claims
(d) Stocks and Share
Answer: (b) Money
In simple words: The law that defines "goods" includes many items like crops, but it does not include actual money itself, nor actionable claims or stock certificates. Money is a means of exchange, not an item to be sold as 'goods'.

🎯 Exam Tip: Remember the clear exclusions from the definition of goods: money and actionable claims. Crops, stocks, and shares are generally considered goods.

 

Question 7. ............ contract is Sale under Sale of Goods Act:
(a) Executed
(b) Executory
(c) Executable
(d) NOTA
Answer: (a) Executed
In simple words: A "sale" is a contract where the ownership of goods has already passed from the seller to the buyer. This means the sale is complete and finished.

🎯 Exam Tip: An 'executed' contract means all obligations have been fulfilled, including the transfer of ownership, making it a completed sale.

 

Question 8. ............ represents a stipulation which is collateral to the main purpose of the contract.
(a) Warranty
(b) Condition
(c) Valid
(d) None of the options
Answer: (a) Warranty
In simple words: A warranty is a smaller promise within a contract that supports the main agreement but isn't central to its core purpose. Breaking a warranty leads to different consequences than breaking a condition.

🎯 Exam Tip: The term 'collateral' is key for defining a warranty, indicating it is secondary to the primary objectives of the contract.

 

Question 9. Monetary consideration for the goods sold is called
(a) Price
(b) Product
(c) Goodwill
(d) Sales
Answer: (a) Price
In simple words: The money that is paid in exchange for the goods in a sale is officially known as the "price." It is an essential element for any valid sale.

🎯 Exam Tip: Remember that 'price' is a mandatory component of a contract of sale; without monetary consideration, it might be a gift or barter, but not a sale.

I. Choose the Correct Answers

 

Question 8. ............ represents a stipulation which is collateral to the main purpose of the contract
(a) Warranty
(b) Condition
(c) Valid
(d) None of the options
Answer: (a) Warranty
In simple words: A warranty is a promise that is less important than the main part of a contract. It supports the main agreement but isn't the core of it.

🎯 Exam Tip: Remember that "collateral" means it's an additional or secondary promise, not the primary condition for the contract.

 

Question 9. Monetary consideration for the goods sold is called .................
(a) Price
(b) Product
(c) Goodwill
(d) Sales
Answer: (a) Price
In simple words: The price is the money paid for goods in a sale. It is the agreed-upon value in currency.

🎯 Exam Tip: The price is a crucial element in any contract of sale, as without it, it might be considered a gift or barter, not a sale.

 

Question 10. Choose the correct statement:
(i) Condition is a stipulation is essential to the main purpose of the contract of sale.
(ii) Warranty is a stipulation is a collateral to the main purpose of the contract of sale.
(iii) There must be three parties to a contract of sale.
(a) All the three are correct
(b) All the three are incorrect
(c) (i) and (ii) are correct
(d) (i) and (iii) are correct
Answer: (c) (i) and (ii) are correct
In simple words: A condition is a very important part of a sale contract, while a warranty is a less critical side promise. Also, a sale contract only needs two parties: a buyer and a seller.

🎯 Exam Tip: Clearly understanding the difference between a "condition" (main part) and a "warranty" (side part) is key to solving contract-related problems.

II. Match

 

Question 1. Match the following items from List-I with List-II.

(a) (i) - 4 (ii) - 3 (iii) - 2 (iv) - 1
(b) (i) - 4 (ii) - 2 (iii) - 3 (iv) - 1
(c) (i) - 4 (ii) - 3 (iii) - 1 (iv) - 2
(d) (i) - 3 (ii) - 4 . (iii) - 2 (iv) - 1
Answer: (a) (i) - 4 (ii) - 3 (iii) - 2 (iv) - 1
In simple words: This match explains different types of goods in a sale contract. Ascertained goods are like specific goods, unascertained goods are not yet chosen, contingent goods depend on future events, and future goods are made after an agreement.

🎯 Exam Tip: Understanding the exact definitions of different types of goods (specific, ascertained, unascertained, future, contingent) is essential for legal clarity in sales contracts.

III. Assertion and Reason

 

Question 1. Assertion (A): A contract of sale involves two parties. The seller and the Buyer, Reason (R) : The Buyer and seller should be two different persons.
(a) (A) and (R) are true. (R) is the correct explanation of (A)
(b) (A) and (R) are False.
(c) (A) and (R) are true. (R) is not the correct explanation of (A)
(d) (A) is true and (R) is false.
Answer: (a) (A) and (R) are true. (R) is the correct explanation of (A)
In simple words: Both the statement (Assertion) and its explanation (Reason) are correct. A sale contract always needs a seller and a buyer, and these two must be different people for a true sale to happen.

🎯 Exam Tip: In Assertion and Reason questions, first determine if both statements are true individually, then check if the Reason correctly explains the Assertion.

IV. Short Answer Questions

 

Question 1. Discuss in detail the right of an unpaid seller against the Buyer personally.
Answer: An unpaid seller has specific legal rights against the buyer when payment is not made. These rights help the seller recover their money or deal with breaches of contract.
(i) **Suit for price:** The seller can sue the buyer to get the agreed price if the ownership of the goods has been transferred to the buyer, but the buyer refuses to pay.
(ii) **Suit for damages for non-acceptance:** If the buyer wrongly refuses to accept the goods, the seller can sue them to get money for the losses caused by this refusal.
(iii) **Suit for cancellation of contract:** If the buyer cancels the contract before the delivery date, the seller can sue for this early cancellation. This means the seller can ask for money for the loss of the sale.
In simple words: When a buyer doesn't pay for goods or breaks the sale agreement, the seller can take them to court to get the money owed, claim for losses if the goods aren't accepted, or sue if the contract is canceled too soon.

🎯 Exam Tip: Focus on distinguishing between suing for the actual price (when ownership passes) and suing for damages (when the buyer refuses or cancels).

V. Long Answer Questions

 

Question 1. Discuss in detail the rights of an unpaid seller against the goods.
Answer: An unpaid seller has several important rights against the goods themselves to protect their interests when a buyer fails to pay. These rights help the seller secure payment or minimize losses.
**Right to Lien:** This right allows the seller to keep possession of the goods until the buyer pays the full price.
* The seller must still have the goods in their possession.
* The goods must have been sold on credit terms that have expired, or no credit was agreed upon.
* This right relies on the seller physically holding the goods.
**Circumstances under which the right of lien is lost:**
* When the seller hands over the goods to a carrier or another third party for delivery to the buyer, without holding back the right to dispose of them.
* If the buyer takes delivery of the goods from the carrier (e.g., from a booking office).
* When the seller willingly gives up their right of lien.
**Right to Stoppage in Transit:** This right allows the unpaid seller to stop the goods while they are on their way to the buyer and get them back.
* This applies when goods are with a carrier or third party for transmission to the buyer, but the buyer has not yet received them.
* The seller can stop the goods and take them back into their possession.
**Termination of Right of Stoppage:**
* The right to stop goods in transit ends once the goods reach the buyer or their agent, and the carrier informs the buyer that they are holding the goods on the buyer's behalf.
**Right to Resale:** If the buyer doesn't pay, the unpaid seller can resell the goods to someone else under certain conditions.
* This is permitted if the goods are perishable (spoil quickly).
* It is also allowed if the seller had specifically reserved the right to resell them in the original contract. This helps the seller recover the lost sale.
In simple words: If a buyer doesn't pay, the seller can hold onto the goods (lien), stop them from reaching the buyer if they are in transit, and even sell them to another person. These are ways for the seller to get their money or reduce their losses.

🎯 Exam Tip: Clearly differentiate between the "right of lien" (holding goods still in possession) and the "right of stoppage in transit" (reclaiming goods already shipped but not yet delivered to the buyer).