S.31 states the twin obligations at the heart of every sale: it is the duty of the seller to deliver the goods and of the buyer to accept and pay for them, in accordance with the terms of the contract. The rest of the Act elaborates these two duties and the rights that mirror them.
Legal Framework
| Provision | Subject | Key Rule |
|---|---|---|
| S.31 | Duties of seller and buyer | Seller to deliver, buyer to accept and pay, in accordance with the contract |
| S.32 | Concurrent conditions | Delivery and payment are concurrent unless otherwise agreed |
| S.41 | Buyer's right of examination | Where goods are delivered which the buyer has not previously examined, he is not deemed to have accepted them until he has had a reasonable opportunity of examining them |
| S.42 | Acceptance | The buyer accepts when he intimates acceptance, does an act inconsistent with the seller's ownership, or retains the goods beyond a reasonable time without intimating rejection |
| S.43 | Buyer not bound to return rejected goods | It is sufficient to intimate rejection; the buyer need not send the goods back |
| S.44 | Liability of buyer for neglecting or refusing delivery | The buyer is liable for any loss occasioned by his neglect or refusal to take delivery, and for a reasonable charge for care and custody |
Duties of the Seller
| Duty | Basis |
|---|---|
| Deliver the goods according to the contract | S.31, S.33 to S.39 |
| Pass a good title | S.14(a) |
| Deliver goods conforming to description, quality and sample | S.15 to S.17 |
| Put the goods into a deliverable state | S.21, S.36(5) |
| Deliver the correct quantity | S.37 |
| Make a reasonable contract with the carrier and give notice enabling insurance | S.39(2), S.39(3) |
| Deliver at the right place and within a reasonable time | S.36 |
| Bear the expenses of putting the goods into a deliverable state | S.36(5) |
Duties of the Buyer
| Duty | Basis |
|---|---|
| Apply for delivery where required | S.35 |
| Accept delivery of conforming goods | S.31 |
| Pay the price | S.31, S.32 |
| Take delivery within a reasonable time and bear the loss of any delay | S.44 |
| Pay for goods accepted, even where some are rejected | S.37 |
| Bear the risk of deterioration necessarily incident to transit | S.40 |
The Buyer's Right of Examination (S.41)
Where goods are delivered to the buyer which he has not previously examined, he is not deemed to have accepted them unless and until he has had a reasonable opportunity of examining them for the purpose of ascertaining whether they are in conformity with the contract.
Why examination precedes acceptance: Acceptance extinguishes the right to reject, which is the buyer's principal protection against non-conforming goods. It would be unjust to fix him with acceptance before he has had any chance to discover whether the goods conform. S.41 therefore inserts a mandatory opportunity to examine between delivery and any deemed acceptance.
Interaction with payment against documents: Where the contract provides for payment against documents, the buyer may be bound to pay before examining the goods. The right of examination then operates after payment, and if the goods do not conform his remedy is to reject and recover the price.
Acceptance (S.42)
The buyer is deemed to have accepted the goods in three situations:
| Mode | Explanation |
|---|---|
| Intimation of acceptance | The buyer tells the seller he accepts the goods |
| Act inconsistent with the seller's ownership | Reselling, pledging, consuming, altering or processing the goods |
| Retention beyond a reasonable time without intimating rejection | Silence coupled with delay operates as acceptance |
Why acceptance is so consequential: Once the buyer has accepted, he loses the right to reject and repudiate, even for breach of a condition, and is confined to damages. This is why the moment of acceptance is contested in almost every sale dispute involving defective goods.
Facts: Wheat was delivered which did not conform to the contract. Before the buyers had completed examination, they resold and dispatched part of the consignment to sub-buyers. They then sought to reject the whole consignment.
Issue: Had the buyers lost the right to reject by dealing with part of the goods?
Held: Yes. Dispatching part of the goods to sub-buyers was an act inconsistent with the seller's ownership, which amounted to acceptance. The right to reject was lost and the buyers were confined to damages.
Relevance: The standard authority on acceptance by conduct. Cite where a buyer has resold, processed or otherwise dealt with goods before rejecting.
Facts: Part of a consignment was discharged at the port and the balance arrived about a fortnight later after the ship had discharged other cargo elsewhere.
Held: The buyer could retain the part delivered, paying for it at the contract rate, and reject the balance. Accepting part of a delivery does not compel acceptance of a later, interrupted balance.
Relevance: Shows that acceptance of part does not always amount to acceptance of the whole, and complements Hardy and Co on the limits of acceptance by conduct.
Rejection (S.43)
Where the buyer rightly refuses to accept the goods, he is not bound to return them to the seller. It is sufficient that he intimates his refusal.
Position after rejection: The buyer holds the goods as an involuntary bailee. He must not deal with them as owner, but he owes only a limited duty of care and may claim reasonable expenses of custody.
Buyer's Refusal to Take Delivery (S.44)
Where the seller is ready and willing to deliver and requests the buyer to take delivery, and the buyer does not within a reasonable time take delivery, the buyer is liable for:
| Head | Content |
|---|---|
| Loss occasioned by his neglect or refusal | Deterioration, extra handling, lost opportunity |
| A reasonable charge for care and custody | Storage and preservation of the goods |
Effect on risk: Under the proviso to S.26, where delivery is delayed through the fault of either party, the goods are at the risk of the party in fault as regards any loss which might not have occurred but for that fault. A buyer who delays collection therefore assumes the risk of loss attributable to the delay, even if property has not passed.
Illustrations
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Right of examination: A delivers sealed cartons of components to B, who has not seen them before. B signs the transporter's receipt. This is not acceptance: under S.41 B is entitled to a reasonable opportunity of examining the contents before being taken to have accepted.
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Acceptance by intimation: After examining goods B emails A confirming they are in order. B has accepted under S.42 and cannot afterwards reject, even if a breach of condition later comes to light. His remedy is damages.
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Acceptance by an act inconsistent with the seller's ownership: B receives wheat which does not conform, but before completing examination resells and dispatches part to sub-buyers. Applying Hardy and Co v Hillerns and Fowler (1923), B has accepted and lost the right to reject.
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Acceptance by retention: B receives machinery in March, discovers a defect in April, and says nothing until August. Retention for that period without intimating rejection amounts to acceptance under S.42.
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Acceptance of part does not compel acceptance of the whole: Part of a consignment is delivered and the balance arrives a fortnight later. Applying Behrend and Co Ltd v Produce Brokers Co Ltd (1920), B may keep and pay for the part delivered and reject the balance.
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Rejection without return: B rightly rejects defective goods and informs A, leaving the goods in his own godown pending collection. Under S.43 B need not send them back and may claim reasonable custody charges.
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Buyer's refusal to take delivery: A is ready to deliver perishable goods on 1 June and asks B to collect. B collects on 20 June, by which time the goods have deteriorated and A has incurred cold storage charges. Under S.44 B is liable for the deterioration and the storage charges, and under the proviso to S.26 the risk of that loss falls on B.
Recall Check
- Why does S.41 insert an opportunity of examination before acceptance can be deemed?
- Name the three modes of acceptance under S.42 and state the consequence of acceptance.
- Is a buyer who rightly rejects goods bound to return them to the seller?
Key Cases
Hardy and Co v Hillerns and Fowler (1923) Hardy and Co v Hillerns and Fowler 1923
Issue: Whether reselling and dispatching part of a non-conforming consignment amounted to acceptance.
Rule: An act inconsistent with the seller's ownership constitutes acceptance under S.42 and extinguishes the right to reject.
Held: The buyers had accepted and were confined to damages.
Behrend and Co Ltd v Produce Brokers Co Ltd (1920) Behrend and Co v Produce Brokers Co 1920
Issue: Whether accepting part of an interrupted delivery compelled acceptance of the balance.
Rule: A buyer who contracted for delivery of the whole need not accept a fragmented delivery.
Held: The buyer retained and paid for the part delivered and validly rejected the balance.
Distinctions
| Basis | Delivery | Acceptance |
|---|---|---|
| Nature | Voluntary transfer of possession by the seller | Assent by the buyer to take the goods as fulfilling the contract |
| Provision | S.2(2), S.33 to S.39 | S.42 |
| Effect on the right to reject | None; delivery alone does not bar rejection | Extinguishes the right to reject |
| Who acts | The seller | The buyer |
| Basis | S.41 Examination | S.42 Acceptance |
|---|---|---|
| Function | Protects the buyer before acceptance is deemed | Fixes the buyer with the goods |
| Timing | After delivery, before acceptance | On intimation, inconsistent act, or lapse of reasonable time |
| Consequence | Preserves the right to reject | Confines the buyer to damages |
| Basis | Rightful Rejection | Wrongful Refusal to Take Delivery |
|---|---|---|
| Cause | Goods do not conform to the contract | Goods conform but the buyer will not accept |
| Buyer's obligation to return | None; intimation suffices (S.43) | Not applicable |
| Liability for loss and custody | Buyer may claim custody expenses | Buyer liable for loss and a reasonable custody charge (S.44) |
| Risk | Remains with the seller | Shifts to the buyer for loss attributable to the delay (S.26 proviso) |
Flashcards
State the twin duties in S.31.
It is the duty of the seller to deliver the goods and of the buyer to accept and pay for them, in accordance with the terms of the contract.
What does S.41 give the buyer?
A reasonable opportunity of examining the goods, before he can be deemed to have accepted them, where he has not previously examined them.
Name the three modes of acceptance under S.42.
Intimating acceptance, doing an act inconsistent with the seller's ownership, and retaining the goods beyond a reasonable time without intimating rejection.
What is the consequence of acceptance?
The buyer loses the right to reject the goods and repudiate, even for breach of condition, and is confined to damages.
Did reselling part of a consignment amount to acceptance in Hardy and Co v Hillerns and Fowler?
Yes. Dispatching part to sub-buyers was an act inconsistent with the seller's ownership.
Must a buyer who rejects goods send them back?
No. Under S.43 it is sufficient to intimate the refusal to accept.
What is the buyer liable for if he neglects to take delivery?
Under S.44, any loss occasioned by his neglect or refusal, and a reasonable charge for the care and custody of the goods.
How does delay in taking delivery affect risk?
Under the proviso to S.26, the goods are at the risk of the party in fault for the delay as regards loss which might not have occurred but for that fault.
Exam Scenario
Problem: Preeti buys 400 sealed cartons of imported ceramic tiles from a supplier, sight unseen, for a hotel project. The cartons are delivered on 2 July and she signs the transporter's delivery challan. On 4 July she opens 20 cartons, finds the tiles are a different shade from the contract sample, and immediately dispatches 60 unopened cartons to a sub-contractor at another site to keep that work moving. On 6 July she emails the supplier rejecting the entire consignment. The supplier says she accepted the goods by signing the challan and by sending cartons to the sub-contractor, and separately claims storage charges because Preeti has left the remaining cartons at her godown rather than returning them. Advise Preeti.
Step 1: Dispose of the delivery challan first
Signing a transporter's delivery challan evidences receipt of possession, not acceptance.
Under S.41, where the buyer has not previously examined the goods, he is not deemed to have accepted until he has had a reasonable opportunity of examining them. The tiles were sealed and bought sight unseen, so the signature on 2 July did not amount to acceptance.
Step 2: Classify the shade discrepancy
Non-correspondence with the sample is a breach of condition under S.17, which prima facie entitles Preeti to reject.
Step 3: Confront the dispatch of 60 cartons
This is the real difficulty. Sending goods on to a sub-contractor is an act inconsistent with the seller's ownership within S.42.
Applying Hardy and Co v Hillerns and Fowler (1923), such a dealing constitutes acceptance and extinguishes the right to reject. Preeti has therefore accepted those 60 cartons and is liable to pay for them, her remedy in respect of them being damages for breach of condition rather than rejection.
Step 4: Confine that acceptance to the 60 cartons
Argue that the acceptance does not extend to the whole consignment. Applying Behrend and Co Ltd v Produce Brokers Co Ltd (1920), acceptance of part does not necessarily compel acceptance of the whole, and S.37(3) recognises the buyer's right to accept conforming goods and reject the rest.
| Cartons | Status | Governing rule | Consequence |
|---|---|---|---|
| 60 dispatched to the sub-contractor | Accepted by conduct | S.42, Hardy and Co (1923) | Must pay, with damages for the shade defect |
| 340 retained and rejected on 6 July | Validly rejected | S.41, S.37(3), Behrend (1920) | No liability for the price |
Rejection was intimated on 6 July, only four days after delivery, which is well within a reasonable time.
Step 5: Defeat the storage claim under S.43
A buyer who rightly refuses to accept is not bound to return the goods. Intimation of rejection suffices.
Preeti holds the 340 cartons as an involuntary bailee, owing only a limited duty of care, and is entitled to reasonable expenses of custody rather than being liable for storage. The supplier's claim fails and Preeti may in fact charge him.
A signed challan is not acceptance. It records receipt of possession. S.41 guarantees a reasonable opportunity of examination first, and sealed goods bought sight unseen have not been examined.
Partial examination does not license dealing with the rest. Preeti opened 20 cartons and then dispatched 60 unopened ones. That dispatch is what costs her the right to reject those cartons.
Acceptance is not automatically total. Resist the supplier's argument that dealing with 60 cartons accepts all 400. Behrend (1920) and S.37(3) keep the rejection of 340 alive.
Breach of condition plus acceptance leaves damages only. For the 60 cartons the S.17 breach survives, but the remedy converts from rejection into damages.
Rejection carries no duty to return. Under S.43 the rejecting buyer may hold the goods and claim custody expenses, so a storage counterclaim runs the wrong way.
Conclusion. Preeti must pay for 60 cartons, with a damages claim for the shade defect, may reject the remaining 340, and owes no storage charges.
See Also
- Delivery of Goods : the rules on mode, place and time of delivery which the seller's duty under S.31 requires him to observe.
- Conditions and Warranties : why acceptance matters, since it converts a right to reject into a claim in damages.
- Remedies for Breach of Contract of Sale : the remedies available to each party once a breach is established.