Duty of the Seller to Deliver Goods to the Buyer:
The delivery of goods to the buyer is a fundamental obligation of the seller under section 8 of the Sale of Goods Act, 1962 (Act 137). This note discusses the delivery of goods in a sale of goods contract.
Meaning of Delivery to Buyer:
Per section 81 of Act 137, delivery means the “…voluntary transfer of possession from one person to another;” Usually, the seller has possession of the goods as well as the property in the goods. When the seller transfers possession of the goods to the buyer, he is said to have delivered the goods to the buyer.
Quantity of Goods to be Delivered to Buyer:
When the seller delivers goods to the buyer, the seller must deliver the quantity of goods he contracted to sell to the buyer. However, there are instances where the seller may deliver more or less of the quantity of goods the buyer and seller agreed should be delivered to the buyer. The following rules apply when these happen:
1. Where the Seller Delivers Goods less than he Contracted to Sell the Buyer:
Section 14(1) of Act 137 provides that the buyer may reject the goods, but if he accepts the goods so delivered, he must pay for them at the contract rate.
2. Where the Seller Delivers Goods more than he Contracted to Sell the Buyer:
Per section 14(2) of Act 137, the buyer has the following options:
1. May not reject all the goods by reason only of the excess quantity.
2. He may accept all the goods so delivered, and pay for the extra goods at the contract rate.
3. He may accept the goods that should have been delivered and reject the remainder. If the buyer incurs costs in separating the goods that should have been delivered from the excess goods that were delivered, the buyer may recover damages from the seller for the cost of separation.
Finally, when the seller delivers to the buyer the goods he contracted to sell together with goods of a different description not included in the contract, section 14(3) of Act 137 provides that
(a) the buyer may accept all the goods so delivered, paying a reasonable price for the extra goods; or
(b) if the goods which the seller contracted to sell and has delivered are less than the quantity specified in the contract, the buyer may reject the whole; or
(c) the buyer may accept the goods included in the contract and reject the remainder. In this event, the buyer may recover damages from the seller representing the cost (if any) of separating the goods included in the contract from the remainder, and also damages (if any) in respect of the deficiency (if any) in the goods delivered.
When the Seller should be Ready to Deliver the Goods:
Per section 15(1) of Act 137, “unless otherwise agreed the seller must be ready and willing to deliver the goods in exchange for the price.”
Time of Delivery:
Section 16 of Act 137 provides that
(1) If no time is fixed for the delivery of the goods, they must be delivered within a reasonable time.
(2) Unless a contrary intention appears stipulations as to the time of delivery are conditions of a contract of sale.
(3) The parties to a contract of sale may, whether with or without consideration, agree that delivery should be made at a date or time other than that stipulated for in the contract, and in this event, the seller is bound to deliver and the buyer is bound to accept delivery of, the goods at that date or time unless the parties agree to any further change.
(4) Where the buyer agrees to accept delivery from the seller at a date later than stipulated in the contract without substituting another date therefor the seller must deliver the goods within a reasonable time, having regard in particular to the reasons for which delivery was postponed, and the buyer may, on reasonable notice to the seller, notify him of the latest date on which delivery will be accepted.
(5) Where the seller contracts to use his best endeavours to deliver the goods on, or not later than, a given date the seller must, unless a contrary intention appears (but without prejudice to his obligations so to use his best endeavours), deliver the goods within a reasonable time after that date.
State of Goods before Delivery and Cost of Putting the Goods in such State:
Before the goods are delivered, they must be put in a deliverable state. Per section 81(3) of Act 137, “Goods are in "a deliverable state" within the meaning of this Act when they are in such a state that the buyer would under the contract be bound to take delivery of them.”
The cost of putting the goods in a deliverable state is borne by the seller. Section 17 of Act 137 provides that “unless otherwise agreed, the expenses of and incidental to, putting the goods into a deliverable state must be borne by the seller.”
Means of Delivery to Buyer:
Section 18(1) of Act 137 provides that
Unless otherwise agreed the seller may deliver the goods to the buyer by—
(a) transferring to him the actual physical control over the goods; or
(b) transferring to him the means of obtaining actual physical control over the goods; or
(c) transferring to him documents of title to the goods.
The provision in paragraph (a) represents actual delivery. When a buyer contracts with a seller for the sale of the latest iPhone to the buyer, and the seller hands over the iPhone to the buyer, the seller has (you guessed it) actually delivered the goods to the buyer.
The provision in paragraph (b) is usually called symbolic delivery. For instance, when the seller hands over the keys to a warehouse that contains the goods sold to the buyer, the seller is deemed to have delivered the goods to the buyer.
Sometimes, delivery of goods may occur without any change in possession of the goods. Usually, this happens when documents of the title to the goods are transferred to the buyer without any corresponding change in the possession of the goods.
Whilst the buyer usually receives the goods delivered by the seller, an agent of the buyer can validly receive goods from the seller on behalf of the buyer. Section 18(2) of Act 137 provides that “unless a contrary intention appears, delivery of the goods to the buyer's agent or to his order is a delivery to the buyer”
Also, Section 18(3) of Act 137 provides that “unless a contrary intention appears, delivery of the goods to a carrier, pursuant to, or consequent upon a contract of sale, for transmission to the buyer is a delivery to him.” See the further provisions in section 20 of Act 137on delivery by carrier.
Further, section 18(4) of Act 137 provides that “Where the goods are in the possession of a third party they are delivered to the buyer when the third party acknowledges to him that he holds the goods on his behalf”
Place of Delivery:
Section 19 of Act 137 provides that:
Unless a contrary intention appears the place of delivery is the seller's place of business, if he has one, and if not, his residence:
Provided that in a contract for the sale of specific goods which to the knowledge of the parties when the contract is made are in some other place, then subject to any contrary intention that place is the place of delivery.
Effects of the Seller’s Failure to Deliver Goods:
Section 53 of Act 137 provides that
Where the seller wrongfully neglects or refuses to deliver the goods to the buyer, in accordance with the terms of the contract, or where the buyer rejects the goods delivered by the seller having the right so to do, the buyer may maintain an action against the seller for damages for non-delivery”
See section 54 of Act 137 on how damages for non-delivery are assessed.