Rights and Duties of Buyer and Seller (2024)

The Sales of Goods Act 1930 outlines the rights and duties of buyer and seller.

The Sales of Goods Act 1930 plays a pivotal role in regulating contracts related to the sale of goods. This legislation governs the various aspects of such transactions, ensuring fairness, transparency and legal validity. However, it’s important to note that contracts falling under the Sales of Goods Act are also subject to the principles outlined in the Indian Contract Act.

Further, the Transfer of Property Act deals with the rights and duties of buyers and sellers of immovable property. And Sales of Goods Act deals with the rights and duties of buyer and seller in a contract of sale.

Who is a Buyer?

A buyer is an individual organisation or entity that acquires goods or services in exchange for payment. In a commercial context, a buyer is a party that seeks to obtain products or services from a seller or supplier.

The buyer is typically the party that initiates a transaction, expresses interest in a product or service, negotiates terms and ultimately makes a purchase. Buyers can be consumers purchasing goods for personal use, businesses procuring raw materials or finished products for resale or production or any entity seeking services to meet specific needs. A buyer is a party actively acquiring goods or services in a market-based transaction.

Who is a Seller?

A seller is an individual organisation or entity that sells goods or services to potential buyers. In a commercial context, a seller is the party that supplies products or services and seeks to exchange them for a monetary payment or other consideration.

The seller is typically the party that responds to buyer inquiries, negotiates terms and completes the sale transaction. Sellers can be individuals running small businesses, manufacturers producing goods, retailers selling products to consumers or service providers offering various services. A seller is a party actively providing goods or services in exchange for value in a market-based transaction.

What are the Rights and Duties of Buyer and Seller?

Under the Sale of Goods Act 1930, buyers and sellers are given rights and duties that govern their interactions in commercial transactions.

The Sale of Goods Act forms the foundation of business dealings, providing essential guidelines for fair and equitable exchanges of goods.

Rights and Duties of Buyer

Rights of Buyer

Rights of the Buyer as per the of the Sale of Goods Act, 1930:

Right to Delivery of Goods as per Contract:

The buyer has the unequivocal right to receive the goods in accordance with the terms and conditions specified in the contract. Sections 31 and 32 of the Sale of Goods Act, 1930 underscore the buyer’s entitlement to expect timely and exact delivery of the goods they have agreed to purchase.

Right to Reject Non-Conforming Goods:

If the delivered goods do not match the description, quality or quantity explicitly stated in the contract, the buyer retains the right to reject them. Section 37 protects the buyer against receiving goods that fail to meet the agreed-upon specifications.

Right to Repudiate the Contract in the Absence of Agreement for Instalments:

When the seller delivers the goods in instalments without prior agreement, Section 38(1) grants the buyer the right to repudiate the contract. This safeguards the buyer from being subjected to unexpected or unapproved instalment deliveries.

Right to Be Informed and Arrange for Insurance:

If the seller intends to send the goods via sea route, Section 39(3) obliges the seller to inform the buyer accordingly. This enables the buyer to make arrangements for insurance coverage to protect against potential damage during transit.

Right to Examine Goods for Conformity:

The buyer has the right to examine the goods thoroughly to ascertain whether they conform to the specifications outlined in the contract. Section 41 of the Sale of Goods Act, 1930 ensures that the buyer has a reasonable opportunity to inspect the goods before accepting them.

Right to Sue for Price Recovery:

In the event that the seller fails to deliver the goods as agreed, the buyer possesses the right to file a suit to recover the price already paid for the goods.

Right to Sue for Damages for Non-Delivery:

If the seller wrongfully neglects or refuses to deliver the goods to the buyer, Section 57 grants the buyer the right to seek damages for any losses incurred due to the non-delivery.

Right to Sue for Specific Performance:

The buyer has the right to approach the court for specific performance if the seller fails to meet their contractual obligations. This legal recourse aims to compel the seller to fulfil their duties as per the contract.

Right to Sue for Breach of Warranty or Condition:

Sections 59 and 60 of of the Sale of Goods Act, 1930 empower the buyer to sue the seller for damages in case of a breach of warranty or a condition treated as a breach of warranty, respectively. These provisions safeguard the buyer’s interests and provide remedies for any deviations from the contract terms.

Right to Sue for Interest on Breach of Contract:

In situations where the seller breaches the contract and a refund of the price to the buyer becomes necessary, Section 61 allows the buyer to claim interest as compensation for the breach.

Duties of Buyer

Duty to Accept Delivery of Goods:

When the seller is willing and ready to make the delivery per the contract (as per Section 31), it becomes the buyer’s duty to accept the goods without delay. By doing so, the buyer acknowledges receipt and demonstrates compliance with the agreed-upon terms.

Duty to Pay the Price for Possession:

One of the primary obligations of the buyer is to pay the agreed price in exchange for possession of the goods. This financial commitment ensures that the seller receives due compensation for the goods provided.

Duty to Apply for Delivery:

The buyer is responsible for formally applying for the delivery of the goods (as stated in Section 35). By doing so, the buyer initiates the process of receiving the goods as per the contract terms.

Duty to Demand Delivery at Reasonable Hour:

The buyer retains the right to demand delivery of the goods at a reasonable hour, as Section 36(4) outlines. This duty ensures that the seller arranges the delivery at a suitable time, avoiding any undue inconvenience to the buyer.

Duty to Accept Goods in Installments:

If the contract allows for the delivery of goods in instalments (as specified in Section 38(2)), the buyer must accept such deliveries and make payments accordingly. This duty ensures that the buyer adheres to the agreed-upon delivery schedule and payment terms.

Duty to Bear the Risk of Deterioration in Transit:

Suppose the goods are to be delivered to a location other than where they were sold (as per Section 40). In that case, the buyer assumes the responsibility for any deterioration or damage that may occur during transit. This duty accounts for the risk associated with the goods transportation.

Duty to Inform the Seller of Refusal or Rejection:

If the buyer refuses to accept or rejects the goods, they have a duty to inform the seller accordingly (as stated in Section 43). This communication ensures transparency and allows the seller to take appropriate action.

Duty to Take Delivery within a Reasonable Time:

Upon the seller’s tender of delivery, the buyer is obliged to accept the goods within a reasonable timeframe (as per Section 44 of of the Sale of Goods Act, 1930). This duty prevents unnecessary delays and streamlines the delivery process.

Duty to Pay the Price as Property Passes:

When the property in the goods is transferred to the buyer as per the terms of the contract (as per Section 55), the buyer must pay the price as agreed upon. This duty aligns with the transfer of ownership and ensures proper compensation to the seller.

Duty to Pay Damages for Non-Acceptance:

In the event of the buyer’s non-acceptance of the goods (as per Section 56), the buyer is obligated to pay damages to the seller as compensation for any losses incurred.

Rights of Seller

Rights of the Seller as per the of the Sale of Goods Act, 1930:

Right to Reserve Disposal of Goods:

The seller has the right to retain control and ownership of the goods until specific conditions are fulfilled (as outlined in Section 25(1)). This provision allows the seller to safeguard their interests and ensures that the goods are not transferred until the agreed-upon conditions are met.

Right to Assume Buyer’s Acceptance:

Under certain circ*mstances, the seller may assume that the buyer has accepted the goods. This assumption occurs when the buyer conveys their acceptance, performs an act indicating adoption of the sale or retains the goods without giving a notice of rejection beyond the specified date or reasonable time (in a sale on approval), as per Section 24. This right helps prevent unnecessary delays and facilitates smoother transactions.

Right to Deliver Goods upon Buyer’s Application:

The seller is obligated to deliver the goods only upon formal application by the buyer (as stated in Section 35). This ensures that the seller provides the goods when the buyer is ready to receive them, avoiding premature deliveries or unnecessary storage costs.

Right to Deliver Goods in Installments:

When the agreement stipulates delivery in instalments, the seller has the right to deliver the goods accordingly (as per Section 39(1)). This right enables the seller to fulfil the contract in a phased manner as agreed upon, ensuring flexibility and ease of execution.

Right to Exercise Lien and Retain Possession:

The seller holds the right to exercise a lien on the goods and retain possession until the full payment of the price is received (as specified in Section 47(1) of of the Sale of Goods Act). This right empowers the seller to protect their interests and ensures that payment is made before the buyer takes possession of the goods.

Right to Stop Goods in Transit:

If the buyer fails to make the payment, the seller has the right to stop the goods while they are in transit and resume possession until the price is paid (as per Sections 49(2) and 50). This right allows the seller to recover the goods if the buyer defaults on payment.

Right to Resell Goods under Certain Circ*mstances:

In specific situations, such as the buyer’s default, the seller has the right to resell the goods and claim damages for any losses incurred (as per Section 54). This right protects the seller from potential losses and ensures that they can recover their losses through a resale.

Right to Withhold Delivery when Property has not Passed:

If the property in the goods has not passed to the buyer (as per Section 46(2)), the seller can withhold delivery until the necessary conditions for transfer of ownership are met. This right aligns the delivery with the transfer of ownership.

Right to Sue for Price:

When the property in the goods has passed to the buyer or when the price is due on a specific date as per the contract, and the buyer fails to make the payment, the seller has the right to sue the buyer for the price (as per Section 55 of of the Sale of Goods Act). This right ensures that the seller can seek legal recourse for unpaid dues.

By exercising these rights, the seller can protect their interests, uphold the terms of the contract and ensure a fair and equitable transaction. These rights empower the seller to take appropriate actions in response to the buyer’s actions or inactions, promoting transparency and accountability in commercial dealings.

Duties of Seller

Duty to Arrange for Transfer of Property:

The seller has the duty to make the necessary arrangements for the transfer of property in the goods to the buyer. This includes ensuring that all legal requirements for the transfer of ownership are fulfilled as per the contract.

Duty to Appropriate and Conform Goods to the Contract:

The seller must ascertain and appropriate the goods to the contract of sale, ensuring that the goods provided meet the specified requirements and conform to any implied or express conditions and warranties. This duty assures the buyer of receiving goods that meet the agreed-upon standards.

Duty to Pass Absolute and Effective Title:

The seller is responsible for passing the buyer an absolute and effective title to the goods. This ensures that the buyer obtains rightful ownership and possession of the goods without any encumbrances or disputes.

Duty to Deliver Goods as per Contract Terms:

The seller must deliver the goods in accordance with the terms of the contract, as outlined in Section 31. This includes complying with the agreed-upon delivery date, location, and other stipulated conditions.

Duty to Put Goods in Deliverable State:

Before delivery, the seller is obligated to put the goods in a deliverable state. This means ensuring that the goods are ready for delivery and comply with the contract’s specifications.

Duty to Deliver Goods in a Timely Manner:

The seller must deliver the goods within the time specified in the contract or within a reasonable time and during reasonable hours (as per Section 36(2) and (4)). This ensures that the buyer receives the goods without undue delay.

Duty to Bear Expenses of Delivery:

The seller is responsible for bearing all expenses related to making the delivery up to the stage of putting the goods into a deliverable state (as per Section 36(5)). This includes costs incurred in preparing the goods for delivery and transporting them to the buyer.

Duty to Deliver Agreed Quantity:

The seller must deliver the goods in the agreed quantity as specified in the contract (as per Section 37(1)). This ensures that the buyer receives the exact quantity of goods they have agreed to purchase.

Duty to Deliver Goods in Installments per Buyer’s Desire:

If the contract allows for delivery in instalments, the seller must deliver the goods accordingly, but only when desired by the buyer (as per Section 38(1)). This obligation provides flexibility to the buyer in receiving goods in multiple shipments.

Duty to Arrange for Insurance during Transmission:

The seller is responsible for arranging for insurance of the goods while they are in transit or custody of the carrier (as per Section 39(2)). This duty protects the goods from potential damage or loss during transportation.

Duty to Inform Buyer about Goods Sent via Sea Route:

If the goods are sent via a sea route, the seller must inform the buyer in a timely manner, enabling the buyer to obtain insurance coverage for the goods (as per Section 39(3)). This ensures that the buyer can safeguard their interests during maritime transportation.

Conclusion

The rights and duties of buyers and sellers are critical components of commercial transactions.

Buyers have the right to receive goods as per the contract, reject non-conforming goods and seek damages for breach. They must pay the agreed consideration, apply for delivery and accept goods within a reasonable time.

Sellers have the right to payment, delivery in instalments, and to exercise lien and stop goods in transit. They must transfer property, deliver goods as agreed and ensure goods conform to contract terms.

Both parties are subject to the principles of the Sale of Goods Act and the Indian Contract Act, ensuring fair and ethical interactions in the marketplace.