the sale of goods act

Q.No. 01:

What is condition & warranty ?

Ans. to the Q.No.01:

Section 12 of the sale of goods act states that a stipulation (or term) in a contract of sale with reference to goods may be a condition or a warranty.

Condition :

A Condition is a stipulation essential to the main purpose of contract , The breach of which fives rise to a right to treat the contract as repudiated-Sec 12 (2)

Warranty :

A Warranty is a stipulation collateral to the main purpose of the contract the breach of which gives rise to a claim for damages but not a right to reject the goods and trat the contract as repudiated-Sec 12 (3).

Whether a stipulation in a contract of sale is a condition or a warrenty depends in each case on the construction of the contract.

A stipulation may be a condition , through called a warranty in the contract-Sec. 12 (4).

Q.No. 02:

Distinction between condition and warranty .

Ans. to the Q.No.02:

Title	Condition	Warranty
Purpose	Main purpose of the contract	Subsidiary to the main purpose of the contract
Essentials vs. Collateral	It is a stipulation which is essential to the main purpose to the main purpose of the contract.	It is a stipulation which is only collateral to the main purpose of the contract.
Right in case of breach	The aggrieved party can terminate the contract	The aggrieved part can claim damages but cannot terminate contract
Treatment	A breach of condition can be treated as a breach of warranty. For example, a buyer may like to retain the goods and claim only damages.	A breach of warranty cannot be treated as a breach of condition.

Q.No. 03:

Distinguish between sales and agreement for sale

Ans. to the Q.No.03:

Basic of Distinction	Sale	Agreement to sell
Transfer of Ownership	Transfer of ownership of goods takes place immediately	Transfer of ownership of goods is to take lace at a future time or subject to fulfillment of some condition.
Executed contract or Executory contract	It is an executed contract because nothing remains to be done.	It is an executor contract because something remains to be done.
Conveyance of proper	Buyer gets a right to enjoy the goods against the whole world including seller. Therefore a sale creates jus in rem. (Right against property)	Buyer does not get such right to enjoy the goods it only creates jus in personam (Right against the person)
Transfer of risk	Trasnfer of risk of loss of goods takes place immediately because ownership transferred. As a result, In case of distruction of goods,The loss shall become by the buyer even though the goods are in the possession of the seller.	Transfrred of risk of loss of goods does not take place because ownership is not transferred a results in case of destruction of goods.The loss shall be brone by the seller even though the goods are in the prossession of the buyer.
Right of seller against the buyers breach	Seller can sue the buyer for the price even through the goods are in his prossion.	Seller can sue the buyer for damages even through the goods are in the proession of the buyer .
Right of buyer against the sellers breach	Buyer can sue the  seller for damages and can sue the third party who bought these goods for goods.	Buyer can sue the seller for damage only
Effect of insolvency of seller having possession of goods	Buyer can claim the goods from the official receiver or assignee because the ownership of goods has transferred to the buyer	Buyer cannot claim the good even when he has paid the price because the ownership has not transferred to the buyer. The buyer who has paid the price can only claim reteable dividend.
Effect of insolvency of the buyer before paying the price	Seller must deliver the goods to the official receiver or assignee because the owenership of goods has transferred to the buyer.He can only claim reteable dividend for the unpaid price	Seller can refuse to deliver the goods unless he is paid full price of the goods because the ownership has not transferred to the buyer.

Q.No. 04:

“No seller of goods can give the buyer of goods a better title to those goods then he himself has “Discuss

Ans. to the Q.No.04:

General Rule :

The general rule is that only the owner of goods can sell the goods .No onecan convey to a transfree a better title than he himself has. If a person transfers articles not belonging to him,The transferee gets no title.

Latin phrase –“Nemo qui non habet “ Which means “ None can give does not himself possess” This rule applies to both movable and immovable property”

Exception:

1. Transfer of title by estoppels
2. Sale by mercantile agent
3. Sale by one of several joint owners
4. Sale by person on possession under voidable agreement
5. Sale by seller in possession of goods after sale
6. Buyer in possession of goods over which the seller has same rights
7. Re-Sale by an unpaid seller
8. Sale on provision of other acts or contract Act.

1. Sale by finder of goods
2. Sale by pownee
   Cases not coming within the exceptions.
   If is to be noted that apart from the cases maintained above ,the general rule applies, and no seller can give a better title that he himself has .
   Example:
   X found a ring, He made a reasonable search for the owner but did not find him. Search for the owner but did not find him.
   He them sold the ring to y. It was held that the true owner can recover the ring from y.
   
   
   Q. No. 05 :
   Meaning and essential element of contract of sale ( Section 4)
   Ans. to the Q.No.05:
   Meaning :
   According the section 4 (1) of the sale of goods act,1930
   “Contrcat of sale of goods is a contract whereby the seller transfers or agrees to another the property in goods to the buyer for a price ,” Contract of sale “ is a generic term which includes both a sale as well as an agreement to sell “
   
   
   Essential elements of contract of sale :

The aforesaid definition clearly indicates the essential elements shown below in :

1. Seller and buyer
2. Goods
3. Transfer of general property
4. Price
5. Essential element of a valid contract.

Q. No. 06 :

Meaning of goods [Section 2 (7)]

Ans. to the Q.No.06:

Goods means every kind of movable property other than actionable claims and money ,and includes the following :

1. Stock and shares
2. Growing crops .grass and thing attached to or forming past of the land which are agreed to be served before sale or under the contract of sale.
   Example of Goods:
   Old rare coins ,stock ,shares ,debentures , goodwill, patents ,trademark, copyright, water, gas ,electricity, grass, growing crops ,trees to be cut and their log wood delivered etc.
   Things excluded from the term “Goods “ :
   The term ‘goods “does not include the following:

1. Actionable claim, which means a claim to any debt or any beneficial interest in movable property not in possession such claims cannot be sold or purchased like goods ,they can only be assigned ,e.g. ,a debt from one person to another.
2. Money ,which means the legal tender and not the old rare coins.
3. Immovable property.
   
   
   Q. No. 07 :
   Type of goods [Section 6]
   
   
   Ans. to the Q.No.07:
   
   
   The goods which from the subject of a contract of sale may be classified in to following categories as shown below – 

Q. No. 08 :

Meaning of an unpaid seller [Section 45 (1)(2)]

Ans. to the Q.No.08:

The seller of Goods is deemed to be an “ Unpaid Seller “-----------

1. When the whole of the price has not been paid or tendered.
2. When a bill of exchange or other negotiable instrument (Such as cheque ) Has been received as conditional payment and it has been dishonored [Section 45 (1)]

The term “Seller “includes any person who is in the position of a seller.

Notes:

1. The seller shall be called an unpaid seller even when only a small portion of the price remains to be paid.
2. It is for the non-payment of the price and not for other expenses, that a seller is termed as an unpaid seller.
3. Where the goods have been sold an credit, the seller cannot be called as an unpaid seller during the credit period unless the buyer becomes insolvent ,on the expiry of credit period if the price remains unpaid ,then only the seller will become an unpaid seller.
4. Where the full price has been tendered by the buyer and the seller has refused to accept it , the seller cannot be called as unpaid seller.

Case (a) x Sold same goods to y for tk.10,000 y paid tk. 9,900 but failed to pay the balance.

X is an unpaid seller because the full price has not been paid.

Q. No. 09 :

Rights of an unpaid seller

Ans. to the Q.No.09:

The rights of an unpaid seller can broadly be classified under the following two categories.

1. Right against the goods
2. Right against the buyer personally

Right against the Goods :

1. Where the property in goods has passed to the buyer

• Right of lien
• Right of stoppage in transit
• Right of resale

1. Where the property in goods has not passed to buyer

• Withholding delivery
• Lien ‘Stoppage in transit
• Resale

Right against the buyer personally :

• Suit for price
• Suit for damage for non-acceptance
• Suit for interest
• Suit for damage for repudiation of the contract.

Q. No. 10 :

Rights of the Buyer ?

Ans. to the Q.No.10:

Following rights of the buyer :

1. Suit for damages for non-delivery
2. Suit for specific performance
3. Suit for breach of warranty
4. In case of repudiation of the contract
5. Suit for interest.

Q. No. 11 :

What do you understand by caveat Emptor? A set there any exceptions to its application to sale of goods ?

Ans. to the Q.No.11:

Caveat emptor is a Latin expression which means “ buyer beware “.The doctrine of convent emptor means that ordinarily , a buyer must by goods after satisfying himself of their quality and fitness .If makes a bad choice he cannot blame the seller on recover damages from him.

“ The rule probably originated at a time when goods were mostly sold in market overt, and the buyer therefore had every opportunity to satisfy himself as to the quality of the goods or their fitness for a particular purpose ,and at common law it was presumed that where the buyer could examine the goods even though he did not ,he relied upon his own skill and judgments.”

Exceptions:

1. Where the buyer relies upon the skill and judgment of the seller.
2. Where by custom an implied condition of fitness is annexed to a contract of sale .
3. Where there is a sale of goods by description, there is an implied condition that the goods are fit for sale.
4. Where the seller is guilty of Fraud .A contract of sale of goods must satisfy all the essential elements of a contract and therefore if the consent of the buyer was obtained by fraud, The seller is not protected by the doctrine of caveat Emptor.
   In case not falling under any of the tour exception noted above,The seller is not liable to any penalty if the goods purchased are found to be unfit by the buyer for the purposes he had in mind.

Q. No. 12 :

What is seller’s lien? Distinguish between a sellers lien and stoppage in transit?

Arbitration Agreement

Q.No. 01:

What is arbitration Agreement ?

Ans. to the Q.No.01 :

Under Arbitration Act of 1940

“Arbitration Agreement “ means a written agreement to submit present or future differences to arbitration , whether an arbitrator is named therein or not”

Q.No. 02:

What are the essentials of an arbitral award ?

Ans. to the Q.No.02 :

The “Award “ means the decision of the arbitrator or the umpire .

Essentials :

1. Writing : The award must be in writing in such form and in such language as the umpire and the arbitrators may think fit.
2. Date and Signature : the award must be signed and dated.
3. Notice : The arbitrators shall give notice in writing of making the award to all the parties.
4. Fees and charges : The arbitrators shall state the amount of fees and charges payable in respect of the arbitration and the award.
5. Legality : The award must be in continuity with the submission .it must be certain and final and give a decision on all matters referred . It must not say anything outside the reference.
   
   
   Q.No. 03:
   On what ground can an award be set aside ?
   Ans. to the Q.No.03 :
   Section 30 of the Act provides that the court can set aside an award only in the following cases :

1. If an award is made after the issue of an order by the court superseding the arbitration or after arbitration proceeding have become invalid under Section 35.
2. Improperly procured.
   When an award has been improperly procured or is otherwise invalid.
3. Error of law :
   The umpire as sale arbitrator is not bound to give a reasoned award and if in passing the award he makes a mistake of law or of fact, there is no ground for challenging the validity of the award.
4. Misconduct :
   Where an arbitrator or umpire has misconduct himself or the proceedings. Misconduct means improper conduct. the following acts have been held to be misconduct under this section bribery ; undue partiality in favour of one party ; arbitrator secretly acquiring an interest in the subject –matter of the arbitration wrongfully refusing to hear a witness or a party ;etc.
5. Moral lapse:
   
   
   Q.No. 04:
   
   
   What conditions are implied in arbitration agreement ?
   Ans. to the Q.No.04:
   The Arbitration Act includes within its scope three types or Method of Arbitration or 4 (Four) Type s method of arbitration .

1. Arbitration without the intervention of court
2. Arbitration with the intervention of the court
3. Arbitration in suits
4. Statutory Arbitration
   But discuss “Arbitration without the intervention of court” section 3 and the first schedule to the arbitration act provides that an arbitration agreement, unless a different intention is expressed therein, shall be deemed to include the following terms:
   
   

1. Sole arbitrator : Unless otherwise expressly provided the reference shall be to a sole arbitrator.
2. Even number of arbitrators and an umpire :if the …….

negotiable instrument

Q.No.01

Define negotiable instrument?

Ans. to the Q.No.01

Documents of a certain type, used in commercial transactions and monetary dealings, are called Negotiable instruments.

“Negotiable “means transferable by delivery and “Instruments’ “means a written document by which a right is created in favour of some person.

The term negotiable instrument literally means “a document transferable by delivery “

A negotiable instrument means a promissory note, bill of exchange or cheque either to order or to bearer “---------Sec-13 (1)

 Q.No.02:

What are the characteristics of a Negotiable instrument?

Ans. to the Q.No.02:

Essential features of Negotiable instruments ---------------

1. Writing and signature
2. Money
3. Negotiability
4. Title
5. Presumptions’
6. Special Procedure
7. Popularity
8. Evidence
9. Transferability
   
10. 
    

Q.No.03:

Explain clearly what is meant by negotiation?

Ans. to the Q.No.03:

Definition of Negotiation:

Negotiation of an instrument is the process by which the ownership of the instrument is transferred from one person to another.

When a promissory note ,Bill of Exchange or Cheque is transferred to any person , So as to constitute that person the holder thereof, The instrument is said to be Negotiated ---------Sec. 14.

Negotiation by Delivery (Sec. 47)

Subject to the provisions of section 58,a promissory note , Bill of Exchange or Cheque payable to bearer is Negotiable by Delivery thereof.

Negotiation by Instrument (Sec. 48)

Subject to the provision of section 58 , A promissory note, Bill of exchange or Cheque payable to order is negotiable by the holder by endorsement and delivery thereof.

Who may negotiate?

The sale maker ,drawer ,payer or endorsee and if there are several makers ,drawers ,payees or endorsees ,all of than jointly can negotiate an instrument, Provided its Negotiability has not been restricted or excluded or exchange by a term used in the instrument.---------------Sec. 51.

The document of Negotiability

Instrument negotiable till payment or satisfaction.

Q.No.04:

In what different ways may an instrument be dishonored?

Or

Distinguish between dishonor by non-payment and dishonor by Non-Acceptance.

Ans. to the Q.No.04:

Mode of Dishonour :

A negotiable instrument may be dishonored in two ways ;

1. By Non-Acceptance and
2. By non-Payment.
   Only bill of Exchange can be dihonoured by non-acceptance, Since only bill required acceptance. Promissory notes, Bills of exchange and cheques can be dishonoured by non-payment .
   
   
   Dishonour by non-acceptance: A bill of exchange is dishonoured by non-acceptance in the following cases :

1. “When after due presentation, the bill is not accepted by drawee “when there are several drawees (who are not partners), refusal by any one of the drawees will amount to dishnour.
2. In case where presentation for acceptance is excused, the bill is treated as dishounered if it is not accepted without presentation.
3. Where the drawee is incompletent to contract, the bill may be treated as dishounred -------Sec. 91.
4. If the acceptance is qualified, the bill may be treated as dishounered .
5. Drawee incase of need: Where a drawee in case of need is named in a bill ,or in any endorsement thereon, the bill is not dishnoured until its has been dishonoured by such drawee .--------------Sec.115.
   
   
   Dishonour by Non-Payment :
   A promissory note ,bill of exchange or cheque is dishonoured by non –payment when the maker of the note or the acceptor of the bill of exchange or the drawee of the cheque makes default in payment up or being duly required to pay the same.--------------Sec. 92.
   Consequence of dishonor :
   
   

Steps to be taken by the holder when a negotiable instrument Is dishonoured ,The holders

1. Becomes entitled to file a suit for the recovery of the amount due from the parties to pay.
2. He must, subject to certain exception, give notice of dishouner to parties against when he entends to proceed.
3. He may also have the instrument noted and portended before a notary public.

Q.No.05:

What is notice of dishonour

Ans. to the Q.No.05:

Definition:

Notice of dishonor means the notice which must be given by the holder of a dishonoured instrument all parties liable to pay the amount due on the instrument.

Q.No.06:

Define Ambiguous instrument ?

Ans. to the Q.No.06:

Ambiguous instrument :

An instrument which owing to faulty drafting, can be interpreted either as a promissory note or as a bill of exchange, is called an Ambiguous instrument.

Example:

P signs an instrument which purports to be an order upon B to pay a certain sum of money to the order of P and Negotiates the instrument to C,

B is a non- existent person. The instrument is drafted like a bill a non-existent person is liable to pay to the holder the money due on it.

An ambiguous instrument can be treated either as a bill or as a note, At the option of the holder-------Sec.17.

The holder must decide once for all, whether to treat the instrument as a bill or as a note –after he decides one way he cannot change his mind.

Q.No.07:

Define Inchoate Instrument?

Ans. to the Q.No.07:

Inchoate Instrument:

An inchoate stamped instrument is a paper signed and stamped in accordance with the law relating to negotiable instruments and either wholly blank or containing an incomplete negotiable instrument. When one person gives to another such a document, the latter is prima facie entitled to complete the document and make it in to a proper negotiable instrument up to the value mentioned in the instrument. if any , or up to the value covered by the stamp affixed on it ,The person signing the instrument is liable on it , in the capacity in which he signed it, to any holder in due course for such amount . But persons who are not holders in due course cannot recover more than the amount intended to be paid by the signatory. -------------Sec.20.

Example:

X signs a promissory not without stating the amount payable ,puts stamp on it sufficient to cover tk.500 and hand it to his clerk y, for making certain purchase ,instructing y to put in the value of the purchases as the amount payable. Y purchases goods worth tk.400 but puts in tk.500 in the promissory note. The note is negotiated to z. who takes it for consideration without any notice of the real transaction .z can recover tk.500 from x .But the shopkeeper is presumably aware of all the circumstances and if he had retained the instrument he would have been entitled to recover only tk.400.

Q.No.08:

What is mean by crossing a cheque ?

Ans. to the Q.No.08:

A cheque is a bill of exchange drawn upon a specified banker and payable on demand--------Sec.6.

A cross cheque is one which has two short parallel lines marked across its face. A cheque marked in this fashion can be paid only to another banker.

Naturally it will not be paid across the counter. The system of crossing cheques arose by mercantile usage and was later on sanctioned by law, the advantage of crossing is that it reduces the danger of unauthorized persons getting possession of a cheque and cashing it. A crossed cheque can only be cashed though a bank of which the payee of the cheque is a customer.

There are different modes of crossing a cheque.

Q.No.09:

Why a cheque is crossed?

Ans. to the Q.No.09 :

Following resion for crossed a cheque :

1. Security
2. Certainty
3. Reduce of risk and uncertainty
4. Payable in a suitable place
5. Prevention of fraud and forgery
6. Identification of fault
7. Transaction of big amount
8. Maintenance of record.

Q.No.10:

Who can cross a cheque ?

Ans. to the Q.No.10:

A cheque can be crossed by the Drawer, the holder and Bank (for collection)

Q.No.11:

Distinction between negotiation and assignment.

Ans. to the Q.No.11:

Negotiation can be distinguished from assignment as under :

Basis of distinction	Negotiation	Assignment
Consideration	In case of negotiation is presumed (Sec. 118)	In case of assignment consideration is to be proved.
How to effect	Instrument payble to bearer are negotiated by mere delivery ,and instrument payble to order are negotiated by endorsement and delivery.	Assignment is done always by means of a written and registered document under the provision of transfer of property Act,1882.
Where to effect	Negotiation can be done in respect of negotiable instruments only	Assignment can be done in case of other documents in addition to negotiable instruments.
Notice	Notice of transfer to the debtor by the transferee is not necessary.	An assignment does not bind the debtor unless notice of assignment has been given by the assignee to the debtor and the debtor in turn expressly or impliedly , has assented.
Title	The title of the holder in due course is better than that of the transferor.	The title of the assigne is subject to all equities in the title of assignor .in other words; assigne gets the right of assignor only.

Q.No.12:

Duration of Negotiability under section -60.

Ans. to the Q.No.12:

A negotiable instrument may be negotiated:

1. By person other than the maker, drawee or acceptor until payment.

By the maker, drawee or acceptor.

Q.No.13:

Meaning discharge of an instrument:

Ans. to the Q.No.13:

An instrument is said to be discharged only when the party who is ultimately liable there on is discharged from liability.

All rights of action under the instrument are completely extinguished and the instrument cases to be negotiable.

Q.No.14:

Modes of discharge of an instrument

Ans. to the Q.No.14:

An instrument may be discharged in anyone of the following ways shown in ----------

1. By payment in due course
2. By party primarily liable becoming holder.
3. By cancellation
4. By release.

Q.No.15:

Meaning of discharge of a party.

Ans. to the Q.No.15:

A party is said to be discharged only when a party or parties (Other than a party ultimately liable on instrument)

To a negotiable instrument is or are discharged and the instrument continues to be negotiable with the liabilities of undercharged parties attaching there to.

Q.No.16:

Modes of discharge of a party

Ans. to the Q.No.16:

A party may be discharged in one of the following ways shown------------

1. By payment
2. By cancellation
3. By release
4. By allowing drawee more than 48 hours to accept.
5. By non-presentment within a reasonable time
6. By payment of a cheque
7. By qualified acceptance.
8. By material alteration .
9. By payment of an instrument on which alteration in not apparent.
10. By acceptor becoming holder of a bill at or after maturing.
11. By operation of law.

Q.No.17:

Distinction between discharge of an instrument and discharge of a party.

Ans. to the Q.No.17 :

Discharge of an instrument differs from discharges of a party in the following respects :

Basis of distinction	Discharge of an instrument	Discharge of a party
When takes place	When the party who is ulitnately liable is discharged from liability.	When any party or parties to an instrument is are discharged.
Negotiability	The instrument cases to be negotiable	The instrument continues to be negotiable.
Extinguishment of all rights of action.	All rights of action under the instrument are completely extinguished.	All rights of action under the instrument are not completely extinguished.
Discharge of all parties	Discharge of an instrument means discharge of all parties.	Discharge of a party does not mean discharge of all parties.