Rules for Delivery of Goods

What is Concept of Delivery?

Section 2(2) of Sale of Goods Act defines ‘delivery’ as a ‘voluntary transfer of possession from one person to another.’ Thus, if the transfer of goods is not voluntary and is taken by theft, by fraud, or by force, then there is no ‘delivery.’

Moreover, the ‘delivery’ should have the effect of putting the goods in possession of the buyer. The essence of the delivery is a voluntary transfer of possession of goods from one person to another. There is no delivery of goods where they are obtained at pistol point or theft.

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Rules for Delivery of Goods

Following are the rules for delivery of goods:

1. Delivery and Payment are Concurrent Conditions
2. Modes of Delivery
3. Effect of Part Delivery
4. Buyer to Apply for Delivery
5. Place of Delivery
6. Time of Delivery
7. Acknowledgement by a Third Person
8. Expenses of Delivery
9. Delivery of Wrong Quantity and Quality
10. Instalment Deliveries
11. Delivery to Carrier or Wharfinger
12. Buyer’s Risk for Deterioration of Goods in Transit
13. Buyer’s Right of Examining the Goods
14. Acceptance of Delivery by Buyer
15. Buyer not Bound to Return Rejected Goods
16. Liability of Buyer for Neglecting or Refusing Delivery of Goods

Delivery and Payment are Concurrent Conditions

Unless otherwise agreed, delivery of goods and payment of price are concurrent conditions. In other words, the seller shall be ready and willing to give the possession of the goods to the buyer in exchange for the price and the buyer shall be ready and willing to pay the price in exchange for possession of the goods. For example, in a cash sale both the parties perform their respective obligations simultaneously.

Modes of Delivery

Irrespective of the mode of delivery whether actual, symbolic or constructive, it must have the effect of putting the goods in the possession of the buyer or his authorized agent.

Effect of Part Delivery

Section 34 of Sale of Goods Act lays down two rules in this regard, which are as follows:

1. Where the part delivery is made in progress (in continuation) of the whole delivery, then it is treated as a delivery of whole and the ownership of the whole quantity is supposed to pass to the buyer.
   
   
2. Where the part delivery is made with the intention of separating it from the whole lot, then such part delivery does not operate as delivery of the remainder part also. It means that delivery of a severed (separated) part is not treated as a delivery of the whole and therefore the ownership of the whole quantity is not transferred to the buyer such part of goods is delivered to him.

Examples:

1. X sells 10 quintals imported plastic granules to Y. The granules are lying at a wharf (raised platform at the sea-shore for loading and unloading of goods).
   
   X hands over a delivery order to the wharfinger to deliver the goods to Y who has paid the price for the granules. Y subsequently weighed 4 quintals of the granules and took them with him. This delivery of a part of goods amounts to delivery of whole goods.
   
   
2. X sells to Y the entire crop of wheat growing in his field. Y asks X for a permission to cut and remove a part of the wheat.
   
   Here, the intention of the buyer and the seller is clearly to separate the part delivery from the remainder in the field. Thus, the delivery of the part of wheat does not amount to delivery of the whole.

Buyer to Apply for Delivery

Section 35 of Sale of Goods Act provides that if there is no express agreement between the parties to its contrary, the seller of goods is not bound to deliver them until the buyer applies for delivery. Thus, it is a statutory obligation on the buyer to call upon the seller to perform delivery.

It may, however, be noted that if the seller so chooses he may deliver the goods without any application on that behalf by the buyer. But in case the goods are to be subsequently obtained or procured by the seller.

Then it is the duty of the seller to intimate the buyer that the goods have been obtained by him, even then the buyer is supposed to apply for delivery. The buyer can have no cause of action against the seller if the buyer fails to apply for delivery.

Place of Delivery

According to Section 36(1) of Sale of Goods Act, whether the buyer is to take possession of the goods or the seller is to send them, is a question that depends upon the terms of the contract and therefore it will differ from case to case. Apart from any such contract, the rules regarding the place of delivery are as follows (rules to apply when nothing is agreed upon):

1. The goods sold are to be delivered at the place at which they are lying at the time of sale.
   
   
2. In case of ‘agreement to sell’, the goods to be sold are to be delivered at the place at which they are lying at the time of agreement to sell.
   
   
3. If goods are ‘future goods’ and therefore they are not in existence at the time of the contract, then such goods are to be delivered at the place at which they are being manufactured or produced.

Time of Delivery

Where the place of delivery is agreed upon, the goods are delivered at that place during business hours on a working day. Section 36 (2) of the Act provides that where the seller is bound to send the goods to the buyer under the terms of the contract but no time for sending them is fixed, the seller is bound to send them within a reasonable time.

Section 36(4) provides that the demand of delivery or tender of delivery may be treated as ineffectual unless it is made at a reasonable hour. What is ‘reasonable time’ or ‘reasonable hour’ is a question of fact it will depend upon the circumstances and facts of each individual case.

Example:

A sold to B a certain quantity of spirit made from molasses. A delivered 1/3rd of the quantity sold to B and B presses for the delivery of rest of the quantity also. But the seller delayed it. In the meantime, an act of Parliament was passed which prohibited the distillation of spirit from molasses and annulled all the contracts for the sale of such spirit.

It was held that A, the seller, was liable to pay damages to B, the buyer, as he had failed to deliver the goods within a reasonable time.

Acknowledgement by a Third Person

Section 36(3) of the Act lays down that where the goods at the time of the sale are in the possession of a third person, there is no delivery by seller to buyer unless and until such third person acknowledges to the buyer that he holds the goods on his behalf.

Expenses of Delivery

Section 36(5) of the Act provides that unless otherwise agreed, the expenses of putting the goods into a deliverable state and also the incidental expenses in this connection both shall be borne by the seller.

Delivery of Wrong Quantity and Quality

Section 37(4) lays down that if there is no usage of trade, or no special agreement or no course of dealing between the parties, then the following rules shall apply when delivery of wrong quantity and quality is made:

1. When quantity is short: Where the seller delivers to the buyer a number of goods less than he contracted to sell, the buyer may reject the delivery. However, if he accepts the less quantity of goods so delivered, he shall pay for them at the contract rate. Section 37(1)
   
   
2. When quantity is in excess: Where the seller delivers to the buyer a number of goods larger (more) than he contracted to sell, the buyer may accept the quantity included in the contract and reject the rest, or he may reject the whole. But if the buyer accepts the whole of the goods so delivered, he shall pay for them at the contract rate. Section 37(2)
   
   
3. When the quality is mixed: Where the seller delivers to the buyer the goods he contracted to sell mixed with the goods of a different description not included in the contract, the buyer may accept the goods which are in accordance with the contract and reject the rest, or he may reject the whole.

Instalment Deliveries

In the absence of an agreement to the contrary, the buyer is not bound to accept delivery by instalments. [Section 38(1)] Sometimes, there may be a contract where goods sold are to be delivered by separate instalments each of which is to be separately paid for.

There will be a breach of such contract in the following two cases:

1. If the seller makes no delivery or makes defective delivery, in respect of one or more instalments.
   
   
2. If the buyer neglects or refuses to take delivery of or pay for, one or more instalments. In each of the above breach, it will depend upon the terms of the contract and the circumstances of each individual case whether (a) the whole contract is repudiated, or (b) it is a severable (separable) breach giving rise to a claim for compensation but not to a right to treat the whole contract as repudiated. [Section 38(2)]

Example:

A contracted to supply to B a fixed quantity of coal. A shipped only a part of the agreed coal and informed B about the same. However, B Did not object to this. It was held that the buyer merely consented to delivery of coal by instalments and was bound to accept delivery of the other instalments.

Delivery to Carrier or Wharfinger

In this connection there are the following rules:

1. Where the seller is authorised or required to send the goods to the buyer, the delivery of the goods to a carrier for the purpose of transmission to the buyer of the delivery of the goods to a wharfinger for safe custody, is prima facie deemed to be a delivery of the goods to the buyer. Section 39(1)
   
   
2. It is the duty of the seller to make with the carrier or the wharfinger such contract as would sufficiently protect the buyer’s interest in the goods. If he fails in his duty and the goods are lost or damaged, then the buyer may hold the seller liable for damages or he may refuse to treat the delivery to the carrier or the wharfinger as delivery to himself. Section 39(2)
   
   
3. Unless otherwise agreed, in cases where goods are sent to the buyer by a route involving sea transit and it is usual to get them insured, then it is the duty of the seller to give such notice to the buyer so as to enable him to insure the goods. If the seller fails to do so, the goods shall be deemed to be at his risk during the sea transit.

Buyer’s Risk for Deterioration of Goods in Transit

According to Section 40 of the Sale of Goods Act, where goods are delivered at a distant place, the liability of such deterioration in the goods as is necessarily incidental to the course of transit, will fall on the buyer even though the seller agrees to deliver them at his own risk.

Buyer’s Right of Examining the Goods

Section 41 of the Act lays down that where those goods are delivered to the buyer which he has not previously examined, he is entitled to examine them for his satisfaction. He is not deemed to have accepted them unless and until he has had a reasonable. opportunity for such examination. And unless otherwise agreed, the seller is bound to afford the said opportunity at the time of delivery if the buyer requests for the same.

Acceptance of Delivery by Buyer

According to Section 42 of Sale of Goods Act, the buyer is deemed to have accepted the goods:

1. When he intimates to the seller that he has accepted them.
   
   
2. When the goods have been delivered to him and he does any act in relation to them which is inconsistent with the ownership of the seller, for example, he pledges them or resells them.
   
   
3. When after the lapse of a reasonable time, he retains the goods-without intimating to the seller that he has rejected them.

Buyer not Bound to Return Rejected Goods

Section 43 of the Sale of Goods Act lays down that unless otherwise agreed, where the buyer refuses to take delivery of the goods and if he has a right to do so, he is not bound to return them to the seller, but it is sufficient if he intimates to the seller that he refuses to accept them.

Liability of Buyer for Neglecting or Refusing Delivery of Goods

According to Section 44 of the Act, when the seller is ready and willing to deliver the goods and requests the buyer to take delivery and the buyer does not take delivery within a reasonable time after such request, the buyer is liable to the seller for loss occurred by his neglect or refusal to take delivery; and also for a reasonable charge for the care and custody of the goods.

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