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Business Law - Sales of Goods Act Case Studies

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Business Law - Sales of Goods Act Case Studies

  1. 1. BUSINESS LAW SALE OF GOODS ACT, 1930 GROUP 6 : MMM 2013–2016
  2. 2. SALE OF GOODS ACT, 1930 It is a contract by which the ownership of movable goods is transferred from the seller to the buyer. The term ‘contract of sale’ is defined in Section 4(1) of the Sale of Goods Act as: “A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price”
  4. 4. When & What 1985 – 1986 The Petitioner, Mr. Ravinder Raj books a Cream Colour Maruti 800 Car by Paying Rs.10000/- July 15, 1988 Respondent 2 informs the Petitioner that his Maruti Car Allotment has Matured for Delivery Feb 16, 1989 The Petitioner pays a sum of Rs.78351.05 towards the total cost of the Car. March 01, 1989 There is an increase in the excise duty payable, causing a price hike of Rs.6710.61. March 18, 1989 Ravinder Raj received a letter from Respondent 2 to deposit the excess amount payable. April 05, 1989 The Petitioner under protest pays the excess amount.
  5. 5. Thereafter The Petitioner applies to the District Consumer Forum Judgement - The request is rejected The Petitioner then applies to the State Forum Judgement - The State Forum accepts the Petitioner's Claim The Respondents then go before the National Commission Judgement - The Nation Forum reverses the State Forum's Order The Petitioner finally goes to the Supreme Court by way of Special Leave Petition. Here According to the Petitioner # He was not responsible in any way for the delay in delivery of the Vehicle. # He should not be made to bear the increase in Price. According to the Respondents and their Learned Counsel # Amount Paid was subject to the Price Prevailing on the Date of Invoice. # Delay in delivery was because of the Colour of Vehicle which the Petitioner had requested # No evidence of any deliberate intention on part of the Respondents to delay delivery.
  6. 6. Sale of Goods Act, 1930 According to Section 64 of the Sale Goods Act, 1930, The burden of any increase in the price by way of additional taxes would have to be borne by the Customer and not by the Manufacturer. According to Section 46A (1) (b) of the Sale of Goods Act, 1930 It is the liability of the Petitioner to pay the extra price when the excise duty had been enhanced prior to the delivery of the Vehicle.
  7. 7. FINAL JUDGEMENT “ The Special Leave Petition fails and is dismissed ”
  10. 10. • Petitioner: M/s JCL International Ltd. – JCL provides solutions for supply & distribution of LPG as domestic, industrial and automotive fuel. They carry out LPG bottling for Shell, Bharat Petroleum and Hindustan Petroleum Corporation. • Respondent: Bharat Petroleum Corporation Ltd. – Bharat Petroleum Corporation Limited (BPCL) is one of the largest public sector, oil marketing company in India. ABOUT PETITIONER &RESPONDENT JCL’s CLAIM: To Consider Provisional Price as Final Price
  11. 11. JCL entered into a contract with BPCL for supply of LPG Cylinders at Rs 679.67 BPCL issued amendment to the Purchase Order which was signed by both parties fixing the price of cylinder at Rs. 702.98. Cylinders delivered to BPCL and contract ends. Both the parties enter into a fresh contract for supply of cylinders during the financial year 2000-2001 at Rs 702.98 BPCL communicates the revised price of the cylinder supplied during the previous year, from Rs. 702.98 to the provisional price of Rs. 645 May 1999 July 1999 March 2000 October 2000 SEQUENCE OF EVENTS
  12. 12. BPCL alleged to have unlawfully, arbitrarily retained/deducted about Rs. 28.69 lakhs from the amount payable Petitioner asks to appoint an Arbitrator under ‘Arbitration Clause’ Arbitrator was appointed, conducts the arbitration, and due to transfer– and a new Arbitrator is appointed Arbitrator dismisses the claim of the Petitioner (JCL) Oct 2000 June 2001 August 2001 - 2006 Oct 2006 SEQUENCE OF EVENTS
  13. 13. Petitioner challenges the decision, Petition allowed and new Arbitrator appointed The Judgement – ‘A Letter dated 30th July by Respondent clearly mentioned to the Petitioner that the price of cylinder was provisional and will be revised on the basis of the pricing set by MOP & NG’ – contents of this letter are not in dispute and are crucial to the case Oct 2006 Sept 2009 SEQUENCE OF EVENTS
  14. 14. • Section 9 of the 1930 Act allows the parties not to fix the price at the time of the transfer and to leave the determination of the amount of consideration to a later date • Also re-fixing or revising of price was done with due notice and/or in breach of terms and condition of the contract and/or statutory provision • Thus, considering the provisions of Sale of Goods Act and the Contract Act, the fixation of provisional price cannot be stated to be impermissible and creates no rights in favour of JCL’s claims THE JUDGEMENT
  15. 15. Section 9 of Sales of Goods Act (1) The price in a contract of sale may be fixed by the contract or may be left to be fixed in manner thereby agreed or may be determined by the course of dealing between the parties. (2) Where the price is not determined in accordance with the foregoing provisions, the buyer shall pay the seller a reasonable price. What is a reasonable price is a question of fact dependent on the circumstances of each particular case.
  17. 17. AMMIREDDY OILS LTD. ORIENTAL INSURANCE Vs. CASE NO. 3 ACTS CITE: Sale of Goods Act 1930, Sec.4(3)(4),Sec.6(1)(2),Sec.14(3),Sec.20,21,22
  18. 18. AMMIREDDY OILS LTD. Vs. ORIENTAL INSURANCE Insures stock under fire policy C with under spontaneous combustion clause. APPELLANT / COMPLAINANT Engaged in the manufacturing rice-bran oil & de-oiled bran APPELLEE / DEFENDANT Engaged in the provision of insurance services 20.08.1991 Enters into a agreement to sell 1000M.T to Alfred Toepfer India, broker for M/s. Alfred C. Toepfer International Gmbh in Hamburg The defendant after an insurance survey settled the claim for INR 2L for the loss of 350M.T of de-oiled bran Due to a fire accident appellant claims loss of 685.39MT amounting to INR 14.80L 05.09.1991 21.12.1991 21.12.1991 Dissatisfied by the settlement, the appellant invoked Clause 13 of the conditions of the policy and seeked arbitration. 04.12.1992 Oriental Insurance company contested the matter by claiming that the material had already been sold and also presented other facts.
  19. 19. AMMIREDDY OILS LTD. Vs. ORIENTAL INSURANCE APPELLEE / DEFENDANT’S ARGUMENT As the DOB stock was already sold to M/s Alfred Toepfer(India) Ltd. the appellant was no longer the owner of the goods. The appellee also claimed that 25% of stock has lost its value through pre-sponteneous ignition. Furthermore, the surveyors report claimed negligence by the appellant. • Stock was mismanaged due to which the Appellee could not quantify the loss. • The fire took place due to dumping of stocks in one corner of the warehouse wall-to-wall and choking the ventilation grills also. • It was also ascertained that 219 M.T of DOB was lost in cyclone in May 1991. KEY FACTS • There was a term in the agreement that if the seller fails to deliver the entire quantity contracted and/or fails to deliver the quality rejected at the port of loading, the seller was supposed to pay to the buyer dead freight at ruling contract rate and default price of sailing of the vessel for the quantity not delivered. • Around 1000MT of DOB was to be produced and delivered. But only 685.39MT was produced and were not of the right quality. • The shipment date ascertained was 25/11/91 (at buyers option) and the fire accident date was 21/12/91.
  20. 20. AMMIREDDY OILS LTD. Vs. ORIENTAL INSURANCE COURT VERDICT • There was no dispute that the stock was in the possession of the appellant and the question of payment by the buyer does not arise. • The policy might indicate fire only. But if it provides cover for loss and damage to the property insured “caused by own fermentation, natural heating and spontaneous combustion” the insurance company cannot claim that the loss was not covered. • The court ruled that a total of 466.39 M.T of DOB @ Rs.780/- per M.T should be paid by the insurance company as 219 M.T is lost in cyclone and not covered under the Fire Policy ‘C’. • Also the appellant was entitled to interest of 9%p.a w.e.f 1993.
  22. 22. C.N. Anantharam Vs Fiat India Ltd. In October, 2002, Mr. C.N. Ananatharam purchased a Fiat Siena Weekender vehicle form Sundaram Automobiles, Bangalore According to Mr. Anantharam immediately after registration of the vehicle, he was taken the car for the drive, when certain defects particularly in the engine began to manifest. DISPUTE VERDICT C.N.Anantharam was not satisfied with the performance of the vehicle and accordingly, insisted that the vehicle be replaced with a new vehicle or the amount paid by him as sale price be refunded. Mr. C.N. Anantharam filed complaint before the IVth Additional District Consumer Disputes Redressal Forum, Bangalore Urban, on 17 April, 2003. The forum directed dealer to refund the amount as claimed by Mr. C.N Anantharam.
  23. 23. • Aggrieved by the said order Fiat India Ltd & Fiat Sundaram Automobiles (Respondents 1 and 2 ) filed appealed in Karnataka State Consumer Disputes Redressal Commission, Bangalore. On 15th June, 2006. VERDICT • Karnataka State Consumer Disputes Redressal Commission, Bangalore - Forum directed Respondents 1 and 2 to replace the vehicle or refund the amount C.N. Anantharam Vs Fiat India Ltd. • Still unsatisfied the matter was further taken to the National Consumer Disputes Redressal Commission, New Delhi. VERDICT • The National Consumer Disputes Redressal Commission, New Delhi directed the dealer and the manufacturer are directed to remove the defect. • If necessary by reconditioning the vehicle and deliver it to the complainant in the presence of an independent technical expert. • The expert shall certify that the vehicle is free from any defect which shall be final for all purposes. • All this should be done within a period of three months.
  24. 24. Arguments raised by petitioner and respondent 1) Petitioner – Raise an argument on the very first day that the vechile has an inherited defect which could not be removed. Hence he wanted the enitre amount refunded along with the interest. 2) Respondent - The vehicle had been duly certified to be completely roadworthy and it was the Petitioner who was at fault for not having taken delivery of the same, despite the same being ready. C.N. Anantharam Vs Fiat India Ltd. Unsatisfied with the decision, Mr. C.N Ananthram filed a ‘Special Leave Petitions’ challenging the order of the National Commission on the following grounds:  Whether it can be said that the manufacturing defect of the vehicle was such that it warranted replacement, and whether the refund of justified?; and  Whether both the dealer and the manufacturer are jointly and severally liable in regard to deficiency of service?
  25. 25. C.N. Anantharam Vs Fiat India Ltd Court direct that if the independent technical expert is of the opinion that there are inherent manufacturing defects in the vehicle, the petitioner will be entitled to refund of the price of the vehicle and the lifetime tax and EMI along with interest @ 12% per annum and costs, as directed by the State Commission. COURT VERDICT
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