Contract of sale how made? (Sec 5)
A contract of sale may be made in writing or by word of mouth or partly in writing and partly by word of mouth or may be implied from the conduct of the parties or from the course of dealings between the parties. A contract of sale is made in any of the following three ways:
1) Offer and acceptance: An offer to buy or sell goods by one party for a price and acceptance of such an offer by another party is necessary.
2) Delivery: The contract may provide for immediate delivery of the goods or delivery by installments or delivery at a future date.
3) Ascertainment of Price: (Sec 9) The contract may provide for immediate payment of the price or payment by installment or payment may be postponed. Price must be money consideration for a sale of goods. [Sec 2 (10)]
In the contract of sale, the price may be fixed by the contract or may be left to be fixed in a manner thereby agreed or maybe determined by the course of dealings between the parties. Where the price is not so fixed, the buyer shall pay a reasonable price. Reasonable price is a question of fact depending on the circumstances of each particular case.
Price to be fixed when agreement is to sell at valuation; (Sec 10):
Where the price is to be fixed by the valuation of a third party and such party fails to make such valuation, the agreement becomes void. If, however, the buyer has taken delivery, or the goods are appropriated by the buyer, he shall pay a reasonable price therefore. Where such third party is prevented from making a valuation, buy the fault of the seller or buyer the party who so prevents is liable to be sued for damages by the party who is in fault.
4) Goods: he contract of sale of goods may be for existing or future goods
5) Contract: Contract of sale of goods must possess all the essentials of an ordinary contact.
Hire purchase Agreement:
The possession of the goods passes to the buyer who promises to pay the price of the goods in certain installments. Unless full price of the goods is paid, the ownership of the goods remains with the seller. It is both a contract, of bailment and an agreement to sell.
The purchaser has an option to buy goods by way of payments in stipulated installments. After he pays all the installments with hire charges, he becomes the owner of the goods. In a hire purchase agreement, the hirer becomes the possessor or bailee of the goods immediately and at the same time has a right to terminate he agreement at his pleasure, for example he has an option to return the goods. If there is no such option existing, the agreement would be an agreement to, sell and not a hire purchase agreement even though payments are to be made by installments. Mere payments by installment would therefore not make a transaction a hire purchase one. The hirer, if he chooses not to make any further installments may discontinue the payment and in such a case, possession of the goods passes back to the seller. The seller may seize the property and also sue for arrears of installments due. The installments paid by the hirer to the seller are not returnable. These installments are adjusted towards the hire charges. At the same time, the hirer has an option to pay the full amount at any time and purchase that goods hired.
Supreme Court has laid down that the sum and substance of hire purchase agreement is two fold. One, the owner under the hire purchase agreement enters into a transaction of hiring out the goods on the terms and conditions mentioned in the agreement and second, the option to purchase exercisable by the hirer on payment of all the installments of hire, arises when the installments are paid and not until then. Here is no agreement to buy goods, the hirer being under no obligation to buy but has an option to return the goods or to become its owner by payment in full of the agreed hire installments and the price for exercising the option.
A hire purchase agreement in its very nature implies has two aspects. There is first an aspect of bailment of the goods subjected to the hire purchase agreement and there is next an element of sale which fructifies when the option to purchase, which is usually a term of hire purchase agreement, is exercised by the intending purchaser. The distinguishing feature of a typical hire purchase agreement therefore is that the property does not pass when the agreement is made out but only passes when the option is finally exercised after complying with all the terms of the agreement.