Performance of Contract Delivery and Buyers Duties

Performance of Contract: Delivery of Goods, Modes, Rules & Buyer’s Duties

The parties to any contract are bound to perform their obligations under the contract. According to Sec. 31 it is the duty of the seller to deliver the goods and of the buyer to accept and pay for them in accordance with the terms of the contract of sale.

Delivery of Goods

According to Sec. 2(2), “delivery” of the goods means voluntary transfer of possession of goods from one person to another.

Modes of Delivery of Goods

Sec. 33 provides that “delivery of goods sold may be made by doing anything which the parties agree shall be treated as delivery or which has the effect of putting the goods in the possession of the buyer or his agent". It means that the delivery may either be actual or symbolic or constructive.

Actual Delivery – In actual delivery, goods are themselves handed over by the seller to the buyer.

Symbolic Delivery – In symbolic delivery, there is a transfer of some symbol representing the goods, for example, key of the warehouse in which the goods are kept, or the bill of lading, or railway receipt, so that the buyer is able to have control over the goods.

Constructive Delivery – It is a fictitious delivery where the goods are deemed to be delivered. There is only doing of something which the parties treat as the delivery of goods, although there is no change in actual custody. For example, where the goods is in custody of third person who in accordance with seller’s order acknowledge to hold them on buyer’s behalf and buyer assent to it.

Rules Regarding Delivery of Goods

1. Buyer’s Duty to Apply for Delivery (Section 35)

Apart from any express contract, the seller of the goods is not bound to deliver them until the buyer applies for delivery”. Thus, the buyer cannot blame the seller for the non-delivery of goods unless he made a demand and the seller failed to deliver the goods.

2. Delivery in Accordance to Contract (Section 31)

The seller is bound to deliver goods in accordance to the terms of the contract. The contract may provide for time, place or manner of delivery etc.

3. Delivery and Payment Are Concurrent Conditions (Section 32)

“Unless otherwise agreed, delivery of the goods and payment of price are concurrent conditions, i.e., the seller shall be ready and willing to give possession of the goods to the buyer in exchange for the price and the buyer shall be ready and willing to pay the price in exchange for possession of the goods”.

4. Rules as to Delivery (Section 36)

Section 36 lays down following rules as to delivery:

1. Place of Delivery – If the contract between the parties does not indicate the place of delivery, then place of delivery is as follows :


• In case of Sale – The place of delivery is the place where the goods are at the time of sale.
• In case of agreement to sell – The place of delivery is the place where the goods are at the time of agreement to sell.
• In case of future goods – The place of delivery is the place at which they are manufactured or produced.
2. Time for Delivery – If no time is fixed for delivery, the seller is bound to send them within a reasonable time which is a question of fact.
3. Delivery by Attornment – If the goods are in the possession of third person, there is no delivery unless and until the third person acknowledged to the buyer that he holds good on behalf of the buyer.
4. Time for Tender of Delivery – Goods sold must be demanded by the buyer and tender by the seller during reasonable hour which is a question of fact.
5. Expenses of Delivery – Unless otherwise agreed, the expenses of and incidental to the putting the goods in a deliverable state shall be borne by the seller.

5. Effect of Part Delivery (Section 34)

Delivery of a part of the goods amounts to a delivery of the whole for the purpose of passing the property provided that a part of the goods are delivered in progress of the delivery of the whole. Thus where the buyer, with a view of taking delivery, gets the whole of the goods weighed but takes away only a part of them (according to his convenience e.g. transport arrangement) the delivery of the part would operate as a delivery of the whole.

In such a case, if the undelivered lot is damaged or destroyed, the buyer will bear the loss.

6. Delivery of Goods of Wrong Quantity or Different Description (Section 37)

Seller’s duty includes a duty to deliver goods of the same quality, in the required quantity and in accordance with their description given in the contract.

Following rules has been laid down in cases of goods of wrong quantity or different description :

1. Less Quantity – If the seller supplies less quantity than he contracted to sell the buyer has a right to reject the goods. But if the buyer accepts the goods so delivered he shall pay for them at the contract rate.
• In Dhudhia Forest Cooperatives Ltd. v Mohd. Saiyed (1980), it was held that the buyer’s right of rejection is subject to the rule of de minimis non curat lex (the law does not take trivial deviation into account), and therefore, if there is slight deficiency in the goods supplied that must be overlooked.
2. Larger Quantity – Where the seller delivers a quantity larger than he contracted to sell, the buyer may accept the goods included in the contract and reject the rest, or he may reject the whole, or may accept the whole. If the buyer accepts the whole of the goods so delivered, he shall pay for them at the contract rate.
3. Goods of Different Description – Where the seller delivers the goods mixed with goods of a different description not included in the contract, the buyer may accept the goods which are in accordance with the contract and reject the rest, or may reject the whole.

(In Vilas Udyog Ltd. v Parag Vanaspati Products, it was held that buyer has only a right to reject the goods but not to cancel the contract. The seller in such a case can again supply the contract quantity).

7. Installment Deliveries (Section 38)

As a general rule, buyer is not bound to accept the delivery of goods by installments.

Where the contract for the sale of goods provides for instalment deliveries which have to be separately paid for, the problem arises as to what should happen if the seller fails to deliver an instalment or delivers defective goods in one instalment or the buyer refuses to take or pay for an instalment? Whether the breach by the buyer or the seller in respect of one or more instalments amount to a breach of only a part of the contract or the whole of it?

1. 38(2) says that it is a question of fact, in each case depending on the terms of contract and the circumstances of the case, whether the breach of contract is a repudiation of the whole contract or whether it is a severable breach giving rise to a claim for compensation.
2. In Mersey Steel Co. v Naylor & Co. (1884),it was held that if the failure of the performance of a part of the contract goes to the root of the contract, it may be considered to be a breach of the whole of it, but if the contract is a severable one and the failure to perform a part of it is not going to affect the performance of the remaining one, then it should be considered to be a breach only in respect of that part.
3. Two factors have to be taken into consideration while deciding whether the breach amount to breach of only a part of the contract or the whole of it:
• Firstly, the quantitative proportion which the breach bears to the whole contract and,
• Secondly, the degree of probability of the repetition of the breach.

8. Delivery to Carrier or Wharfinger (Section 39)

Where in pursuance of a contract the seller is authorised or required to send the goods to the buyer, delivery of goods to the carrier or wharfinger is prima facie deemed to be a delivery of goods to the buyer.

Buyer’s Duties

Section 31 lays down that the buyer has the duty to accept the goods and pay for the goods in accordance to the terms of the contract.

1. Duty to Accept the Goods

If the goods has been properly tendered, buyer is bound to accept them. He is not bound to accept them if they are not in accordance with the contract. According to Section 42, the buyer is deemed to have accepted the goods in the following circumstances:

• When, after the lapse of a reasonable time, he retains the goods without intimating to the seller that he has rejected them.
• When the goods have been delivered to him and he does any act in relation to them which is inconsistent with the ownership of the seller. For example, sale, pledge, etc.
• When he intimates to the seller that he has accepted them.

2. Duty to Pay the Price

The buyer’s duty is to pay the price in accordance with the contract. If the price remains unpaid, apart from the right to sue the buyer for the price, the seller has right of lien, Stoppage in Transit etc.

 

Judex Tutorials

Judex Tutorials is a premier Judiciary coaching institute dedicated to prepare law students for judicial services exams. Whether you prefer online judicial classes, offline sessions, or need access to recorded lectures, we offer flexible preparation options. If you like our blog as class notes, follow and subscribe our social media platforms on Facebook, Instagram and YouTube as well.