7 Essential Elements of a Contract for the Sale of Goods in India

The essential elements of a contract for the sale of goods are enumerated below:

1. Movable Goods:

The Sale of Goods Act deals only with movable goods, excepting actionable claims and money:—Sec. 2(7). This Act does not apply to immovable properties.

2. Movable Goods for Money:

There must be a contract for the exchange of movable goods for money. Therefore in a sale there must be money-consideration. An exchange of goods for goods is not a sale. But it has been held that if an exchange is made partly for goods and partly for money, the contract is one of sale.

3. Two Parties:

Since a contract of sale involves a change of ownership, it follows that the buyer and the seller must be different persons. A sale is a bilateral contract. A man cannot buy from or sell goods to himself. To this rule there is one exception provided for in section 4(1) of the Sale of Goods Act. A part-owner can sell goods to another part-owner. Therefore a partner may sell goods to his firm and the firm may sell goods to a partner.

Examples:

(i) P & Q are each of V owners of a certain stock of movable goods. P can sell his rights to Q. After the sale Q becomes owner of a share.

4. Formation of the contract of sale:

A contract of sale is made by an offer to buy or sell goods for a price and the acceptance of such offer. The contract may provide for the immediate delivery of the goods or immediate payment of the price or both, or for the delivery and payment by installments, or that the delivery or payment or both shall be postponed.—Sec. 5(1).

5. Method of forming the contract:

Subject to the provision of any law for the time being in force, a contract of sale may be in writing, or by word of mouth, or may be implied from the conduct of the parties.—Sec. 5(2)

6. The terms of contract:

The parties may agree upon any term concerning the time, place, and mode of delivery. The terms may be of two types: essential and non-essential. Essential terms are called Conditions, non-essential terms are called Warranties. The Sale of Goods Act provides that in the absence of a contract to the contrary, certain conditions and warranties are to be implied in all contracts of sale.

7. Other essential elements:

A contract for the sale of goods must satisfy all the essential elements necessary for the formation of a valid contract, e.g., the parties must be component to contract, there must be free consent, there must be consideration, the object must be lawful etc.