High sea sale

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RAJAN

RAJAN (Querist)
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22 September 2015 We sold few items on high sea sale basis, can we receive back the items by issuing credit note.

RAMESH KUMAR VERMA

RAMESH KUMAR VERMA (Expert)
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24 September 2015 There could be possibility whereby the goods sold on High Seas could be rejected by customers. Normally, in a works contract, the transfer of property is contemplated only after the customer giving his provisional / final acceptance. Having regard to such a stipulation forming part of the contract, the seller is contractually obliged to replace the defective part and complete the job as per terms of contract. The judicial precedents that support this view have been mentioned below for ready reference.

In the case of Metal Alloy Co Vs. CTO [(1977) 39 STC 404 (Cal)], the High Court of Calcutta has held that the return of goods and rejection of goods stand on different footings. Return of goods is a bilateral transaction brought about by the consent of the seller and the purchaser, which consent may have been effected either prior to the delivery of the goods or subsequent to such delivery. Rejection of goods, on the other hand, is a unilateral transaction governed by the provisions of the Central Act or the Sale of Goods Act, open only to purchaser.

The Court further held that “where there was a contract for sale of stirrup pumps according to the stipulation and the goods supplied were rejected on the ground that they were not in accordance with the stipulated specifications, there was no completed sale and no property in the goods was transferred or passed to the purchaser and there was no sale of goods within the meaning of the Central Act or the Sale of Goods Act.”