This article is written by Mehak Gurung, a B.A.LL.B. (Hons.) 3rd-year student at Graphic Era Hill University, Dehradun, during her internship at LeDroit India
Keywords
Breach of contract, buyer’s remedies, Sale of Goods Act, damages, specific performance, anticipatory breach.
Abstract
Buyer’s remedies under the Sale of Goods Act address breaches of contract by sellers, ensuring buyers recover losses and maintain fairness in commercial practices. Key remedies include damages for non-delivery, breach of warranty, anticipatory breach, and recovery of the price paid. Using landmark judgments and practical illustrations, this article provides an in-depth analysis of the legal protections available to buyers when sellers fail to perform their contractual obligations.
Damages for Non-Delivery
When a seller neglects or refuses to deliver goods without lawful excuse, the buyer has the right to claim damages under Section 57 of the Sale of Goods Act. This remedy ensures buyers are compensated for financial loss resulting from the seller’s breach.
- Calculation of Damages: Damages are calculated as the difference between the contract price and the market price of the goods at the time of the breach. If substitute goods are bought at a higher price, the difference can be claimed.
- Example: If a buyer contracts to purchase 500 units of a product at ₹1,000 per unit and the seller fails to deliver, causing the market price to rise to ₹1,200 per unit, the buyer can claim ₹200 per unit as damages.
- Case Law: In Hadley v. Baxendale (1854), it was held that damages must be foreseeable and arise naturally from the breach.
Breach of Warranty
A warranty is a condition collateral to the main purpose of the contract. If breached, the buyer cannot reject the goods but can claim damages or seek a price reduction under Section 59 of the Sale of Goods Act.
Buyer’s Options:
- Reduction of Price: The buyer can reduce payment based on the diminished value of goods.
- Damages: The buyer can claim compensation for any financial loss caused by the breach.
- Calculation of Damages: Damages are determined by the difference between the actual value of the goods delivered and the value they would have had if the warranty was fulfilled.
- Example: If a car guaranteed to provide 20 km/l mileage delivers only 15 km/l, causing the buyer to incur ₹10,000 in additional fuel costs, the buyer can claim this amount as damages.
- Case Law: In Ashington Piggeries Ltd v. Christopher Hill Ltd (1972), it was held that warranties must fulfill the intended purpose of the contract.
Specific Performance
Specific performance is an equitable remedy allowing a buyer to compel the seller to fulfill the contract. It is applied when monetary damages are inadequate, typically in cases involving unique or irreplaceable goods. Section 57 of the Sale of Goods Act, along with the Specific Relief Act, governs this remedy.
- Court’s Role: Courts exercise discretion in granting specific performance, particularly when goods are rare or hold special significance.
- Example: If a seller refuses to deliver an antique painting contracted for purchase, the court can order the seller to deliver the specific item.
- Case Law: In C. S. Venkatesh v. A. S. C. Murthy (2020), it was held that specific performance is granted when damages cannot provide adequate relief.
Anticipatory Breach
An anticipatory breach occurs when a party indicates before the performance date that they will not fulfill the contract. Buyers can take action immediately or wait until the performance date.
Buyer’s Options:
- Terminate the Contract: The buyer can treat the contract as breached and sue immediately.
- Keep the Contract Alive: The buyer can wait until the due date and sue if the seller fails to perform.
- Calculation of Damages: Damages depend on the market price of the goods at the time of the breach or on the delivery date.
- Example: If a seller notifies the buyer two weeks before delivery that they will not supply goods, and the market price rises in that period, the buyer can claim the price difference as damages.
- Case Law: In Hochster v. De La Tour (1853), it was held that the non-breaching party could sue immediately for anticipatory breach.
Recovery of Price Paid
If a buyer has prepaid for goods and the seller fails to deliver, the buyer is entitled to recover the payment under Section 61 of the Sale of Goods Act. Additionally, the buyer may claim interest on the amount paid.
- Interest on Refund: Courts may award interest to compensate the buyer for the period during which their money was withheld.
- Example: If a buyer pays ₹50,000 in advance for goods that are not delivered, they can claim a refund along with interest.
- Case Law: In Rowland v. Divall (1923), it was held that a buyer can recover the price paid when the seller fails to transfer ownership or deliver the goods.
Conclusion
The remedies provided under the Sale of Goods Act ensure fairness and accountability in commercial transactions. Buyers can seek damages for non-delivery, breach of warranty, or anticipatory breach, or even compel performance for unique goods. These remedies aim to protect the buyer’s financial interests and maintain the integrity of contracts. By understanding these provisions, buyers are better equipped to address breaches effectively, ensuring that their rights are upheld in every transaction.
References
- Hadley v. Baxendale (1854): https://www.dhyeyalaw.in/hadley-v-baxendale
- Ashington Piggeries Ltd v. Christopher Hill Ltd (1972): https://simplestudying.com/ashington-piggeries-v-christopher-hill-1972-ac-441/
- C. S. Venkatesh v. A. S. C. Murthy (2020): https://www.livelaw.in/top-stories/supreme-court-weekly-round-up-152527
- Hochster v. De La Tour (1853): https://www.lawteacher.net/cases/hochster-v-de-la-tour.php
- Rowland v. Divall (1923): https://casejudgments.com/a-summary-of-rowland-v-divall-1923-case/
