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

Meera Traders agreed to buy 200 bags of rice from Kaveri Mills. The agreement says that delivery of the rice will be made after 60 days and the price will be paid 30 days after delivery. Which statement is correct under the Sale of Goods Act, 1930?

The agreement is a valid contract of sale. The Act expressly allows the contract to provide that delivery or payment, or both, shall be postponed. So the postponement of both delivery and payment does not affect its validity as a contract of sale.

  1. AThe agreement is not a contract of sale because both delivery and payment are postponed
  2. BThe agreement is a valid contract of sale because delivery or payment or both may be postponedCorrect
  3. CThe agreement becomes a contract of sale only when the price is paid
  4. DThe agreement is valid only if it is put in writing

Explanation

Section 5(1) states that the contract may provide for delivery or payment by instalments, or that delivery or payment or both shall be postponed. So postponing both does not defeat the contract. Option 4 is wrong because a sale contract may also be oral or implied from conduct, subject to any other law.

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