Skip to content

CA Foundation · Business Laws · The Sale of Goods Act, 1930

Anil Traders sells 50 bags of rice to Kavita 'at a price to be fixed by Mr. Joshi, a rice merchant'. Mr. Joshi dies before fixing the price, and no price is ever fixed. Goods have not been delivered. What is the position?

The agreement is avoided. When a third party named to fix the price fails to do so, the agreement cannot stand unless goods were already delivered and appropriated by the buyer. Since nothing was delivered, Kavita owes no price and the contract lapses.

  1. AKavita must pay a reasonable price in any case
  2. BThe agreement is avoided, since the third party could not fix the priceCorrect
  3. CAnil may fix the price himself
  4. DThe contract becomes a sale at the market price on the date of death

Explanation

Where the price is to be fixed by a third party who cannot or does not do so, the agreement is avoided. A reasonable price is payable only if goods have already been delivered to and appropriated by the buyer. Here no delivery occurred, so the agreement is void.

Did you get it right without looking?

One question tells you little. A timed set on The Sale of Goods Act, 1930 shows your real accuracy, how long you take and where you lose marks.

Practise The Sale of Goods Act, 1930Free diagnostic mock

More The Sale of Goods Act, 1930 questions