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

Mohan Furniture in Jaipur agrees to sell a dining table to Seema for Rs 18,000. Seema pays Rs 18,000 but, by the contract, the table will be delivered and ownership will pass only after polishing is done next week. How is this transaction classified under the Sale of Goods Act, 1930?

It is an agreement to sell. The property in the table is to pass only after polishing, which is a future time or condition. Payment of the full price does not convert it into a sale, because a sale requires the property to pass at the time of the contract.

  1. AAgreement to sell, because transfer of property is to take place at a future timeCorrect
  2. BSale, because the full price has been paid
  3. CBailment, because Mohan keeps the table for polishing
  4. DHire-purchase, because payment precedes delivery

Explanation

Where the transfer of property in goods is to take place at a future time or subject to some condition to be fulfilled later, the contract is an agreement to sell. Payment of price does not by itself make it a sale; ownership must pass at the time of contract. Nothing suggests bailment or hire-purchase.

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