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CSEET · Business Laws and Management · Elements of Law relating to Sale of Goods

Ramesh agrees to buy 50 bags of rice from Sunil Traders on the terms that the price will be paid in three monthly instalments and the delivery will be made after two months. Which statement is correct under Section 5 of the Sale of Goods Act, 1930?

The agreement can still be a valid contract of sale. Section 5(1) expressly allows delivery or payment to be immediate, by instalments, or postponed, so instalment payment and later delivery do not affect the existence of the contract.

  1. AThe agreement is not a contract of sale because payment is not immediate
  2. BThe agreement is not a contract of sale because delivery is postponed
  3. CThe agreement is not a contract of sale unless both delivery and payment are immediate
  4. DThe agreement can be a valid contract of sale even though delivery and payment are postponed or by instalmentsCorrect

Explanation

Section 5(1) provides that the contract may provide for immediate delivery or payment or both, or for delivery or payment by instalments, or that delivery or payment or both shall be postponed. Hence postponement of delivery and instalment payment do not prevent a contract of sale from arising.

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