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

Under the Sale of Goods Act, 1930, a contract of sale provides for delivery of goods and payment of price. Which statement about the timing of delivery and payment is correct as per Section 5?

The parties are free to fix the timing. Under Section 5(1), the contract may provide for immediate delivery or payment or both, for delivery or payment by instalments, or for postponing delivery or payment or both. The Act does not force simultaneous or prior payment.

  1. ABoth delivery and payment must always be made immediately
  2. BThe contract may provide for immediate delivery or payment or both, or for delivery or payment by instalments, or for postponement of either or bothCorrect
  3. CPayment must always precede delivery
  4. DDelivery by instalments is not permitted under the Act

Explanation

Section 5(1) states that a contract of sale may provide for immediate delivery or immediate payment or both, or for delivery or payment by instalments, or that delivery or payment or both shall be postponed. The Act therefore leaves timing to the parties. Options stating a fixed order or a ban on instalments contradict this.

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