Business Laws · The Sale of Goods Act, 1930

Performance of the Contract under the Sale of Goods Act, 1930

Updated 4 October 2026 · Fact-checked

Performance of a contract of sale means the seller delivers the goods and the buyer accepts and pays for them, as the contract says (Section 31). Delivery and payment are concurrent unless agreed otherwise. To solve questions, identify the duty, apply the matching section to the facts, and state the buyer's or seller's right.

Understand Performance of the Contract

A contract of sale is performed when both sides do what they promised. The seller must deliver the goods. The buyer must accept them and pay the price. Section 31 says this in one line: both duties are to be done in accordance with the terms of the contract.

Delivery means voluntary transfer of possession from one person to another. It can take three forms. In actual delivery, the goods are physically handed over. In constructive delivery, there is no physical handover, but the person holding the goods acknowledges that he now holds them for the buyer (for example, a warehouse keeper or other third person). In symbolic delivery, the means of control is handed over instead, such as the key of the warehouse or a document of title like a bill of lading. Check your study material for the exact definition of delivery in Section 2 before the exam.

Unless the parties agree otherwise, delivery and payment are concurrent conditions (Section 32). The seller must be ready and willing to give possession against the price. The buyer must be ready and willing to pay against possession. Neither can demand performance without being ready to perform their own part.

Section 36 holds the practical rules on delivery: who collects or sends the goods depends on the contract; otherwise goods are delivered at the place where they are at the time of sale or agreement. If no time is fixed for sending, it must be within a reasonable time. Where a third person holds the goods, there is no delivery until he acknowledges to the buyer that he holds them on the buyer's behalf. Demand or tender of delivery must be at a reasonable hour. Unless agreed otherwise, the seller bears the expenses of putting goods into a deliverable state.

Then come the buyer's rights on quantity and instalments. Section 37 deals with wrong quantity. Section 38 deals with instalments. Section 44 deals with a buyer who neglects or refuses to take delivery. These are the sections examiners use for fact-based problems.

Key rules to remember

Duties of seller and buyer (Section 31): Seller: deliver the goods. Buyer: accept and pay. Both as per the contract.; Start every answer with this when the question is general.
Concurrent conditions (Section 32): Delivery ⇄ Payment, unless otherwise agreed; Each party must be ready and willing to perform at the same time.
Less quantity delivered (Section 37(1)): Buyer may reject; if he accepts, he pays at the contract rate; The rule is subject to usage of trade, special agreement or course of dealing (Section 37(4)).
More quantity delivered (Section 37(2)): Buyer may (a) accept the contract quantity and reject the rest, or (b) reject the whole; if he accepts the whole, he pays at the contract rate; Buyer chooses; he is not forced to take the excess.
Mixed goods (Section 37(3)): Buyer may accept the goods that match the contract and reject the rest, or reject the whole; Applies when goods of a different description are mixed in.
Instalment deliveries (Section 38(1)): Unless otherwise agreed, buyer is not bound to accept delivery by instalments; The seller cannot force part delivery on the buyer.
Stated instalments separately paid (Section 38(2)): Breach in one or more instalments: repudiation of the whole OR severable breach (compensation only); It depends in each case on the contract terms and circumstances.
Buyer neglects delivery (Section 44): Seller ready and willing + requests delivery + buyer does not take it within a reasonable time → buyer liable for loss caused and a reasonable charge for care and custody; The seller's rights are not affected if the refusal amounts to repudiation.
Delivery rules (Section 36): Place: where goods are at time of sale/agreement. Time: reasonable time if none fixed. Third-party holder: acknowledgement needed. Tender: reasonable hour. Cost of making goods deliverable: seller.; Each sub-rule is subject to contrary agreement where the section says so, such as the seller's expenses.

How to solve Performance of the Contract questions

Use this method for any problem or theory question on performance of a contract of sale.

1Read the facts and mark who is the seller, who is the buyer, and what was agreed (goods, quantity, time, place, price).
2Identify what went wrong: late or no delivery, wrong quantity, mixed goods, part delivery, buyer refusing to take delivery, or payment issue.
3State the general duty first: Section 31 says the seller delivers and the buyer accepts and pays as per the contract.
4Name the matching rule and its section: Section 32 for concurrent payment, 36 for delivery rules, 37 for quantity, 38 for instalments, 44 for buyer's refusal.
5Apply the rule to the facts using names and numbers from the question. Check whether the contract, usage of trade or a special agreement changes the default rule.
6For instalments, decide whether the contract says deliveries are stated and separately paid for. If yes, say it is a question of fact whether the breach is repudiation or severable.
7Write a clear conclusion: what the buyer can do (accept, reject, pay at contract rate) or what the seller can claim (loss, custody charges).

Quickest way: Provision-Facts-Conclusion in three lines

When to use it: Use this for 4 to 5 mark case-study questions where time is short.

Line 1, Provision: write the section and its rule in one sentence, for example 'Under Section 37(2), if the seller delivers more than the contracted quantity, the buyer may accept the contract quantity and reject the rest, or reject the whole.'
Line 2, Facts: link the rule to the question, for example 'Here A ordered 100 bags and received 120.'
Line 3, Conclusion: give the result, for example 'So the buyer may take 100 bags and reject 20, or reject all 120. If he accepts all 120, he pays at the contract rate.'
Memory aid for Section 37: Less, More, Mixed = sub-sections 1, 2, 3. Memory aid for delivery types: Actual = hand, Constructive = acknowledgement, Symbolic = key or document.

Common mistakes in Performance of the Contract

Saying the buyer must accept delivery in instalments.
Students assume part delivery is normal in trade.
Fix: Remember Section 38(1): unless otherwise agreed, the buyer is not bound to accept instalment delivery.
Saying any breach in one instalment cancels the whole contract.
Students memorise 'repudiation' without the second possibility.
Fix: Under Section 38(2) the breach may be repudiation or a severable breach giving only compensation. Say it depends on the contract terms and circumstances, then decide using the facts.
Letting the buyer keep excess goods without paying.
Students forget the payment consequence of acceptance.
Fix: If the buyer accepts the whole of the excess delivery, or accepts less than contracted, he pays at the contract rate (Section 37(1) and (2)).
Treating constructive delivery as no delivery at all.
No physical handover happens, so it feels incomplete.
Fix: When a third person holds the goods, delivery is complete once he acknowledges to the buyer that he holds them on the buyer's behalf (Section 36(3)).
Ignoring 'unless otherwise agreed' and usage of trade.
Students learn the default rules as absolute.
Fix: Check the facts for a special agreement, usage or course of dealing. Section 37(4) and the opening words of Sections 32 and 38(1) allow the parties to change the default.
Mixing up the buyer's liability under Section 44 with a full repudiation.
Both involve the buyer not taking goods.
Fix: Section 44 gives the seller loss caused by the neglect plus reasonable custody charges. The proviso keeps his wider rights if the refusal amounts to repudiation.

Worked examples

Example 1

Ravi agreed to sell 200 kg of rice to Meena at ₹50 per kg. Ravi delivered 250 kg. Meena does not want the extra rice. Advise Meena.

Show the solution

Provision: Section 37(2) covers delivery of a larger quantity than contracted.
The buyer may accept the contracted quantity and reject the rest, or reject the whole.
Facts: contract quantity is 200 kg; delivered 250 kg; excess is 50 kg.
Meena may accept 200 kg and reject 50 kg. She then pays 200 × ₹50 = ₹10,000.
Alternatively she may reject all 250 kg and pay nothing.
If she accepts all 250 kg, she must pay at the contract rate: 250 × ₹50 = ₹12,500.
Section 37(4) makes this subject to usage of trade or special agreement, and none is mentioned here.

Answer: Meena may accept 200 kg and reject the 50 kg excess, paying ₹10,000, or reject the whole lot. If she accepts all 250 kg, she must pay ₹12,500 at the contract rate.

Example 2

A agreed to sell 300 tonnes of cement to B, to be delivered in three stated instalments of 100 tonnes, each to be separately paid for. A delivered the first instalment, but the second instalment was defective. B wants to cancel the entire contract. Can he?

Show the solution

Provision: Section 38(2) applies where goods are to be delivered by stated instalments that are separately paid for.
If the seller makes defective delivery in respect of an instalment, the question is whether the breach is a repudiation of the whole contract or a severable breach giving only a claim for compensation.
The Act says this depends in each case on the terms of the contract and the circumstances.
Facts: only one of three instalments is defective, and the first was properly delivered. That points towards a severable breach unless the contract terms or the seriousness of the defect show otherwise.
So B can claim compensation for the defective instalment, but the right to treat the whole contract as repudiated arises only if the terms and circumstances support it.

Answer: B cannot automatically cancel the whole contract. Under Section 38(2) it depends on the contract terms and circumstances. On these facts the breach appears severable, so B can claim compensation for the defective instalment, unless the terms or circumstances show repudiation.

Exam tips

Write the section number with every rule. For Business Laws, sections 31, 32, 36, 37, 38 and 44 are the key ones for this topic.
Always finish case studies with a one-line conclusion beginning 'Therefore'. Step marks are lost when the final answer is missing.
For Section 38(2) never give a flat yes or no. Say it depends on the terms and circumstances, then apply the facts to reach a view.
Learn the three modes of delivery with one example each. Short definition questions are easy marks.
Use the question's names and figures in your answer. Generic textbook answers score less than applied ones.

Practice questions from The Sale of Goods Act, 1930

Performance of the Contract: frequently asked questions

What are the types of delivery under the Sale of Goods Act?

The three types are actual, constructive and symbolic delivery. Actual means physical handover. Constructive means a person holding the goods acknowledges he holds them for the buyer. Symbolic means handing over the means of control, such as a key or a document of title.

Is the buyer bound to accept delivery by instalments?

No, unless otherwise agreed. Section 38(1) says the buyer is not bound to accept delivery by instalments. The contract may say otherwise.

What can a buyer do if the seller delivers less than the contracted quantity?

Under Section 37(1), the buyer may reject the goods. If he accepts them, he must pay for them at the contract rate. This is subject to usage of trade, special agreement or course of dealing.

Are delivery and payment done at the same time?

Unless otherwise agreed, yes. Section 32 makes them concurrent conditions. The seller must be ready to give possession against the price, and the buyer must be ready to pay against possession.

How do I answer a delivery of goods question in the CA Foundation exam?

Use provision, facts, conclusion. State the section and its rule, apply it to the facts given, and end with a clear result. Write the section number and use the names and figures from the question.