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

Arun gives his old scooter to his friend Biju and says, 'Keep it as a gift; no payment is needed.' Biju takes delivery. Under the Sale of Goods Act, 1930, is this a contract of sale?

This is not a contract of sale because a gift has no price. A contract of sale needs transfer of property in goods for a price, and the transfer here is free. Delivery and passing of ownership alone do not make it a sale.

  1. AYes, because property in the goods has passed to Biju
  2. BYes, because delivery of the scooter has been made
  3. CNo, because there is no price in money or money's worthCorrect
  4. DNo, because the scooter is second-hand and not new goods

Explanation

A contract of sale requires a transfer of property in goods from seller to buyer for a price. A gift has no price, so it falls outside the Act even though ownership and possession pass. Second-hand goods can be sold under the Act, so option D is wrong.

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