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CMA Intermediate · Business Laws and Ethics · Sale of Goods Act, 1930

Mehta Traders agreed to supply 200 bags of a particular grade of rice from its godown, with delivery in instalments. Which statement about such a contract is consistent with Section 5(1)?

Section 5(1) allows a contract of sale to provide for immediate or postponed delivery and payment, or for delivery or payment by instalments. So instalment delivery of rice is valid, and no rule forces prepayment or a single lump-sum payment.

  1. ADelivery by instalments is not permitted in a contract of sale
  2. BPayment must always be made before delivery
  3. CThe price must be paid in one lump sum on the contract date
  4. DThe contract may provide for delivery or payment by instalments, or for either or both to be postponedCorrect

Explanation

Section 5(1) says the contract may provide for immediate delivery or payment or both, or for delivery or payment by instalments, or for postponement of delivery or payment or both. Hence instalment delivery is valid. The options requiring lump sum or prior payment contradict this flexibility.

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