Skip to content

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

Ketan agreed to buy 500 kg of sugar from Ramesh at Rs 40 per kg for delivery on 1 July. Ramesh failed to deliver. The market price on 1 July was Rs 46 per kg. Ketan did not buy any substitute sugar. What is the measure of damages Ketan can ordinarily claim for non-delivery?

Ketan can claim Rs 3,000. For non-delivery, damages are the difference between the contract price and the market price on the date of breach, which is Rs 6 per kg on 500 kg. Buying a substitute is not necessary to claim these damages.

  1. ARs 3,000Correct
  2. BRs 20,000
  3. CRs 23,000
  4. DNil, since he did not buy the substitute

Explanation

The measure of damages for non-delivery is the estimated loss arising directly from the breach. Where there is an available market, it is the difference between the contract price and the market price on the date of breach. That is (46 - 40) x 500 = Rs 3,000. Rs 23,000 is the market value of the goods, which is wrong because Ketan did not pay the price. Buying a substitute is not a condition for claiming damages.

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