Name: Bhanu Jindal

Roll Number: 1724

Semester: III

Subject: Commercial Transactions

Q1:M/s Hazarilal and son’s is firm of art dealers which is owned and controlled by
Anurag which carried on business from a Connaught Palace gallery of New Delhi. In
2010 Anurag wanted to sell two paintings which had been described in 2008 auction
catalogue as being by Mr. G. Munter an artist of the German expressionist school.
Anurag specialized in young contemporary British artists and had no training,
experience or knowledge which would have enabled him to conclude from an
examination of the pictures whether they are of Munter. He also contacted Rajendra
who carried on business as art dealers at C.P. Gallery specializing in the German
expressionist school. He told Rajendra that he had two paintings by Munter for sale and
employee of Rajendra visited Anurag’s gallery to view the painting. Anurag made it
clear that he did not know much about the paintings and that he is not an expert in
them. Rajendra’s employees agreed to buy one of the paintings for Rs.1,00,000/- without
asking any questions about the proverance of the painting or making any further
inquiries about them. The invoice for the paintings described it as being Munter. The
painting was later discovered to be a forged and Rajendra sought repayment of the
purchase price, claiming, inter alia, that the contract is for the sale of goods by
description, therefore could be avoided on the grounds of mis-description or because the
painting was not of merchantable quality.

Rajendra brought a suit in the Tis Hazari District Court of Delhi for repayment. Argue
and decide the case citing relevant provisions and case laws.

A2:

Appearing on behalf of the Plaintiff

Rule: Under Section 12(4), 15 and 16 of Sale of Goods Act, 1930.

Case Law: Baldry v. Marshall

Facts: A consulted a car dealer and told him that he wanted to purchase a car for
touring purposes suggested that a Buggati car will be fit for the purpose. Relying upon
the statement, he bought the Buggati car. Later on, the car turned to be unfit for the
purpose of touring.

The Court observed that the suitability of the car for touring purpose was a condition
because it was so important that the non-fulfillment defeated the very purpose of
 defeated the very purpose of purchasing the car. It was held that A was entitled to
return the car and get back the price paid.

Argument: In the present case, Rajendra bought a painting from Hazarilal on the basis of the
decripition given by him. The description was flawed as the painting was not mercantable in
the first place, being a fake.1 It was the duty of the seller to make sure that the painting is real
and should not have sold it based on shallow descriptions. Therefore, the defendant is liable
to pay damages to the plaintiff.

Appearing on behalf of the Defendant

Rule: Under Section Section of Sale of Goods Act, 1930.

Argument: The defendant is not liable to pay damages.

If a good is sold under a particular patent or trade name and buyer mentions this name to
seller then later he cannot say that the good is not fulfilling the purpose. If this happens,
benefit of doubt to the seller because of the proviso we all take the expression of trade name
as being known about.

In the present case the defendant clearly told the plaintiff that he does not have very much
knowledge about painting and he merely knows that the painting was of Munter. Therefore, it
became the duty of the buyer to ensure that the painting is not a fake, before paying such a
huge sum for the same. The principle of caveat emptor must be applied here.

Therefore the defendant is not liable to pay any damages to the plaintiff.

Judgement

The defendant is not liable to pay damages as he was himself unaware of the peculiarities of
painting and accepted that he had shallow knowledge of paintings. Therefore the buyer has to
take the goods as he himself did not make sure whether the goods were mercantable or not.

1
Grant v. Australian Knitting Mills, 1936 AC 100
Question No.2

Rational Law University, Jodhpur, which is established under the Act No.22 of 1999,
invited tenders for the supply of paints of required specifications. The plaintiff
company’s tender was accepted. A contract was made. According to the terms of the
contract, ‘goods’ were to be inspected by the Inspector for the ensuring the quality. The
dates of delivery of the goods were fixed. The delivery date was extended many times
and finally extended to a particular date. The plaintiff failed to supply the goods in the
extended time as well. The Rational Law University, Jodhpur terminated the contract
without giving a notice. The plaintiff’s contention now is that time of delivery is not the
essence since it was extended from time to time by the University. It would appear there
from conduct of the Rational Law University, Jodhpur that it did not consider the fixed
time to be a condition precedent and at the most, it was warranty and action of the
Rational Law University, Jodhpur in cancelling the contract was an anticipatory breach
and would entitle them to damages.

Argue the above case from both sides citing relevant provisions of law(s) and case laws.
Suppose you are a judge, how would you decide the case?

A2:

Appearing on behalf of the Plaintiff

Issue: Whether the time is of the essence in the contract or not?

Rule: Under Section Section 11 of Sale of Goods Act, 1930.

Case Law: Hartley v. Hymnas

Facts: The plaintiff had to sell cotton yarn to the defendant per week since
September. The plaintiff failed to supply the goods in Sept-Oct but started supplying
the goods after Oct. This reduced and irregular supply continued till March but the
buyer took no strict action up until March and finally terminated the contract.

Held: It was held the buyer waived his right to have the goods delivered on time
despite their being no consideration, as the conduct of the buyer showed that the time
was not of essence in the contract. The buyer was lenient and urgency was missing.
Just mentioning in the contract is not enough and intention has to be considered while
deciding which can be determined through the conduct.

Argument: Tine was not of the essence.

 Herein, the conduct of the Rational Law University wherein it kept on extending the
delivery date many times and finally extended to a particular date, shows that there was no
urgency and immediate requirement of the goods and therefore the time was not of the
essence in the contract.

On behalf of the Defendant

Issue: Whether the time is of the essence in the contract or not?

Rule: Under Section Section 11 of Sale of Goods Act, 1930, time is of essence to the
contract when so mentioned in the contract

There are three scenarios where time is of essence

1. Where parties agree to treat time as essential

2. Payment is essential for you to carry subsequent contracts
3. Nature and necessity of contract (for instance in case of perishable
goods)

Case Law: Hartley v. Hymnas

Facts: The plaintiff had to sell cotton yarn to the defendant per week since
September. The plaintiff failed to supply the goods in Sept-Oct but started supplying
the goods after Oct. This reduced and irregular supply continued till March but the
buyer took no strict action up until March and finally terminated the contract.

Held: that in the ordinary commercial contracts, the general rule followed is that time
as to delivery of the goods is of essence to a contract while time as to payment is
prima facie assumed to not be of essence.

Argument: Tine was of the essence.

Under Section 11, time is of essence to the contract when so mentioned in the contract. In the
present case, the contract of sale between the plaintiff and the defendant mentioned a fixed
date for the delivery of goods in question. The explicit terms of the contract mention the fixed
date of delivery of goods. The defendant agreed for the time of delivery to be extended upon
request of the plaintiff. When the plaintiff did not deliver the goods even on the extended
date, the defendant immediately terminated the contract. Therefore, the present case is
distinguished from Hartley v. Hymnas. This conduct of the defendant shows that time was of
essence and the breach of contract would make the plaintiff liable.

Judgment

Under the relevant case law i.e. Hartley v. Hymnas, it is a settled provision of law that the
conduct of the buyer should match the stipulation of the contract and mere adding of a clause
under section 11, in the contract is not enough. In the present case, even though a clause of
termination of contract on no delivery existed, it is not enough as the conduct of Rational
Law University was not in comprehension with the contract.

Therefore it is held that the time was not of essence and the plaintiff is entitled to damages.