Business Laws and Ethics · Sale of Goods Act, 1930

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

Updated 10 October 2026 · Fact-checked

Performance means the seller delivers the goods and the buyer accepts and pays, as the contract says (Section 31). Unless agreed otherwise, delivery and payment are concurrent (Section 32). To solve a question, find the contract terms, apply the delivery rules for place, time and possession, then decide the remedy.

Understand Performance of the Contract

A contract of sale is made by an offer to buy or sell goods for a price and its acceptance (Section 5). Once it exists, both sides must perform. Performance is the stage where goods move and price is paid.

Section 31 sets the basic duty. The seller must deliver the goods. The buyer must accept and pay for them. Both duties are owed in accordance with the terms of the contract. So the contract comes first. The Act's default rules apply only where the parties have said nothing different.

Section 32 says delivery and payment are concurrent conditions unless otherwise agreed. The seller must be ready and willing to hand over possession in exchange for the price. The buyer must be ready and willing to pay in exchange for possession. Neither can demand performance without being ready to perform their own side. The contract may instead allow credit, or delivery or payment by instalments, or postponement (Section 5(1)).

Section 36 gives the delivery rules. Whether the buyer collects or the seller sends depends on the contract, express or implied. Without such a contract, goods are delivered where they are at the time of sale. Goods only agreed to be sold are delivered where they are at the time of the agreement, or, if not then in existence, where they are made or produced. If the seller must send the goods but no time is fixed, he must send them within a reasonable time. A demand or tender of delivery can be ineffectual unless made at a reasonable hour, which is a question of fact. Unless otherwise agreed, the seller bears the expenses of putting the goods into a deliverable state.

Delivery is commonly described as actual, constructive or symbolic. Actual delivery is physical handing over. Constructive delivery happens without physical transfer, for example when a third person holding the goods acknowledges to the buyer that he holds them for the buyer (Section 36(3)). Symbolic delivery is by handing over something that represents the goods, such as a document of title. The Act does not use these three labels in the text above, so use them as classroom terms and base the legal rule on the section.

Section 38 deals with instalments. The buyer need not accept delivery by instalments unless otherwise agreed. If the contract has stated instalments, separately paid for, and one is missed or defective, the result depends on the contract terms and the circumstances. It may be a repudiation of the whole contract or a severable breach giving only a claim for compensation.

Key rules to remember

Duties of seller and buyer: Seller: deliver the goods. Buyer: accept and pay. Both as per the contract of sale.; Section 31. The contract terms prevail over default rules.
Concurrent conditions: Delivery of goods ⇄ payment of price (unless otherwise agreed); Section 32. Each party must be ready and willing to perform their own part.
Place of delivery: Sold goods: where they are at the time of sale. Agreed to be sold: where they are at the time of agreement, or, if not then in existence, where made or produced.; Section 36(1). Applies apart from any contract to the contrary.
Time of sending: No time fixed and seller bound to send: within a reasonable time; Section 36(2).
Goods with a third person: No delivery until the third person acknowledges to the buyer that he holds the goods on the buyer's behalf; Section 36(3). Issue or transfer of a document of title is not affected.
Reasonable hour: Demand or tender may be ineffectual unless made at a reasonable hour; it is a question of fact; Section 36(4).
Cost of making goods deliverable: Borne by the seller, unless otherwise agreed; Section 36(5). Cost of putting goods into a deliverable state, not transport.
Instalment deliveries: Buyer not bound to accept instalments unless otherwise agreed. Breach in a separately paid instalment: repudiation or severable breach, depending on the contract and circumstances; Section 38(1) and (2).
Buyer neglecting delivery: Seller ready and willing, requests delivery, buyer does not take it within a reasonable time → buyer liable for loss and reasonable charge for care and custody; Section 44. Repudiation rights of the seller are not affected.
Effect of part delivery: Part delivery in progress of delivering the whole = delivery of the whole for passing of property. Part delivery to sever it from the whole ≠ delivery of the remainder; Section 34. Unpaid seller's lien on the remainder continues unless waiver is shown (Section 48).

How to solve Performance of the Contract questions

Use this order for any problem on performance, delivery or payment.

1Read the facts and mark what the contract says on time, place, mode of delivery and payment. Section 31 makes the contract the first source.
2If the contract is silent, apply the default rule: concurrent delivery and payment (Section 32), place of delivery (Section 36(1)), reasonable time (Section 36(2)).
3Check who holds the goods. If a third person does, ask whether he has acknowledged to the buyer (Section 36(3)).
4Check the tender: was it at a reasonable hour (Section 36(4)) and were the goods in a deliverable state (Section 36(5))?
5If delivery is in parts, decide the type. Instalments under Section 38, or part delivery under Sections 34 and 48.
6If the buyer refuses to take delivery, apply Section 44. If the seller fails, consider Section 58 for specific or ascertained goods.
7State the conclusion in one line, quoting the section number, and say who is liable for what.

Quickest way: Four-question check

When to use it: For MCQs and short case-lets where you have under two minutes.

Does the contract say something different? If yes, that decides it.
Is it a delivery, payment or acceptance issue? Match to Section 31, 32 or 44.
Is more than one lot involved? Instalments are Section 38. Part delivery is Section 34 or 48.
Is the goods' location, time or hour in doubt? Use Section 36 sub-clauses.

Common mistakes in Performance of the Contract

Saying the buyer must always accept delivery by instalments.
Students assume delivery in lots is normal trade practice.
Fix: Section 38(1): the buyer is not bound to accept instalments unless otherwise agreed.
Saying any missed instalment ends the whole contract.
Students treat all breaches as repudiation.
Fix: Under Section 38(2), it depends on the contract terms and circumstances. It may be only a severable breach giving a claim for compensation.
Assuming the buyer pays first or the seller delivers first.
Credit sales are common in daily life.
Fix: Unless otherwise agreed, delivery and payment are concurrent (Section 32). Both sides must be ready and willing.
Treating goods held by a warehouse keeper as delivered at the time of sale.
Students ignore Section 36(3).
Fix: There is no delivery until the third person acknowledges to the buyer that he holds the goods on the buyer's behalf. A document of title can operate differently.
Confusing the cost of making goods deliverable with transport cost.
Both are called delivery expenses.
Fix: Section 36(5) covers expenses of putting goods into a deliverable state, borne by the seller unless otherwise agreed. Transport depends on the contract.
Treating part delivery as delivery of the whole in every case.
Section 34 is remembered only in half.
Fix: It counts as delivery of the whole only when made in progress of delivering the whole. Part delivery meant to sever it from the whole does not deliver the remainder.

Worked examples

Example 1

Ravi Traders agrees to sell 500 bags of rice lying in its godown in Nagpur to Meena Foods. The contract says nothing about place, time or payment. Ravi Traders tenders delivery at the godown at 11 pm. Meena Foods refuses. Is the refusal justified?

Show the solution

The contract is silent, so use the default rules.
Under Section 36(1), the goods are delivered where they are at the time of sale, the Nagpur godown. The place is correct.
Under Section 36(4), a demand or tender may be ineffectual unless made at a reasonable hour. What is reasonable is a question of fact.
11 pm is unlikely to be a reasonable hour for a commercial godown, so the tender can be treated as ineffectual.
Under Section 32, delivery and payment are concurrent, so Meena Foods must also be ready to pay on proper tender.

Answer: Meena Foods can treat the 11 pm tender as ineffectual under Section 36(4). Ravi Traders should tender again at a reasonable hour, and then both must perform concurrently under Section 32.

Example 2

Kiran Steels agrees to supply 300 tonnes of steel to Anand Constructions in three monthly lots of 100 tonnes, each lot to be paid for separately. The first lot is delivered and paid for. The second lot is defective. Can Anand Constructions cancel the whole contract?

Show the solution

The contract has stated instalments to be separately paid for, so Section 38(2) applies.
Defective delivery of one instalment is a breach.
The law does not say automatically that the whole contract ends. Whether it is a repudiation of the whole or a severable breach depends on the contract terms and the circumstances.
Relevant facts: how serious the defect is, what the contract says about instalments, and how the defect affects the rest of the supply.
If it is a severable breach, Anand Constructions can claim compensation but cannot treat the whole contract as repudiated.

Answer: There is no automatic right to cancel. Under Section 38(2), the answer depends on the contract terms and circumstances. If the breach is severable, only compensation can be claimed. If it amounts to repudiation, Anand Constructions may treat the whole contract as ended.

Exam tips

Quote Section 31 for duties, Section 32 for concurrency, and Section 36 sub-clauses for delivery rules. Section numbers earn marks.
In case-lets, first say what the contract provides. Then say what the Act provides if it is silent.
For instalment questions, never give a flat answer. Say it depends on the contract terms and circumstances (Section 38(2)).
MCQs often test small phrases: reasonable hour, reasonable time, third person's acknowledgment, and seller bearing the cost of making goods deliverable.
Link Section 44 to the unpaid seller's remedies. Write the buyer's liability for loss and reasonable care and custody charges.

Practice questions from Sale of Goods Act, 1930

Performance of the Contract in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Performance of the Contract: frequently asked questions

What are the duties of seller and buyer under the Sale of Goods Act?

Section 31 says the seller must deliver the goods and the buyer must accept and pay for them. Both duties follow the terms of the contract. Section 32 adds that, unless agreed otherwise, delivery and payment are concurrent.

Is the buyer bound to accept delivery in instalments?

No, not unless otherwise agreed (Section 38(1)). If the contract does provide stated instalments paid for separately, a breach in one instalment may be a repudiation or only a severable breach. This depends on the contract and circumstances.

What are actual, constructive and symbolic delivery?

Actual delivery is physical handing over. Constructive delivery happens without physical transfer, such as when a third person holding the goods acknowledges to the buyer that he holds them for the buyer. Symbolic delivery is through a document of title or similar symbol. Section 36(3) gives the acknowledgment rule.

What happens if the buyer does not take delivery?

If the seller is ready and willing and requests delivery, and the buyer does not take it within a reasonable time, the buyer is liable for the loss caused and a reasonable charge for care and custody of the goods (Section 44). The seller's rights are not affected if the refusal amounts to repudiation.