Skip to content

CMA Foundation · Fundamentals of Business Laws and Business Communication · Sale of Goods Act, 1930

At an auction of a painting, the sale was not notified to be subject to any right to bid on behalf of the seller. The seller Mehta secretly engaged his friend to bid so as to push up the price. What is the effect on the sale?

The buyer may treat the sale as fraudulent. Where the seller has not reserved a right to bid, he cannot bid himself or employ someone to bid, and a sale made in breach of this rule is open to being treated as fraudulent by the buyer.

  1. AThe sale is void for all purposes and neither party can enforce it
  2. BThe sale may be treated as fraudulent by the buyerCorrect
  3. CThe sale is valid and the buyer has no remedy
  4. DThe sale is valid only if the reserve price was exceeded

Explanation

Under Section 64(4), where no right to bid is notified for the seller, the seller cannot bid himself or employ another to bid, and a sale contravening this rule may be treated as fraudulent by the buyer. The sale is therefore not void outright; the buyer has the option. Saying it is void for all purposes ignores that the remedy lies with the buyer.

Did you get it right without looking?

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

Practise Sale of Goods Act, 1930Free diagnostic mock

More Sale of Goods Act, 1930 questions