Sale of Goods Act, 1930 MCQs

Sample Sale of Goods Act, 1930 MCQs with answers

10 of the 100 questions, with the answer and explanation. Open a question to try it yourself first.

1. Q1. Which provision of the Sale of Goods Act, 1930 lays down what a contract of sale of goods is, namely a contract by which the seller transfers or agrees to transfer the property in goods to the buyer for a price?

   1. (A) Section 2(7)
   2. (B) Section 4
   3. (C) Section 12
   4. (D) Section 6
   Show answer and explanation

   Answer: (B) Section 4

   Section 4 of the Sale of Goods Act, 1930 defines a contract of sale of goods and covers both a sale and an agreement to sell. Section 2(7) is the tempting wrong choice, but it only defines the word 'goods', not the contract of sale itself.

   Provision: Section 4, Sale of Goods Act, 1930

2. Q2. Under Section 2(7) of the Sale of Goods Act, 1930, 'goods' means every kind of movable property other than:

   1. (A) Actionable claims and money
   2. (B) Stock and shares
   3. (C) Growing crops and grass
   4. (D) Things attached to the land which are agreed to be severed before sale
   Show answer and explanation

   Answer: (A) Actionable claims and money

   Section 2(7) expressly excludes actionable claims and money from the meaning of goods. Stock and shares, growing crops, grass and things attached to the land that are agreed to be severed before sale are expressly included in the definition, so a sale of any of them is a sale of goods.

   Provision: Section 2(7), Sale of Goods Act, 1930

3. Q3. Under the Sale of Goods Act, 1930, what remedy does a buyer ordinarily have when the seller breaks a warranty?

   1. (A) A right to reject the goods and treat the contract as repudiated
   2. (B) A right to reject the goods, but no right to damages
   3. (C) No remedy, because warranties cannot be enforced
   4. (D) A claim for damages only
   Show answer and explanation

   Answer: (D) A claim for damages only

   Section 12(3) describes a warranty as a stipulation collateral to the main purpose of the contract, the breach of which gives a claim for damages but not a right to reject the goods. The right to reject and treat the contract as repudiated belongs to breach of a condition under Section 12(2), which makes it the most tempting wrong choice.

   Provision: Section 12(3), Sale of Goods Act, 1930

4. Q4. Aadil buys 500 kg of wheat from Neha after inspecting a sample. When the bulk arrives, its quality is poorer than that of the sample. Which implied term has Neha broken?

   1. (A) The implied condition that the bulk shall correspond with the sample in quality
   2. (B) The implied warranty of quiet possession
   3. (C) The implied warranty that the goods are free from encumbrances
   4. (D) The implied condition as to title
   Show answer and explanation

   Answer: (A) The implied condition that the bulk shall correspond with the sample in quality

   In a sale by sample, Section 17(2)(a) implies a condition that the bulk shall correspond with the sample in quality, so Aadil may reject the wheat. The warranties of quiet possession and freedom from encumbrances under Section 14 deal with disturbance and third-party charges, not with quality.

   Provision: Section 17(2)(a), Sale of Goods Act, 1930

5. Q5. The Sale of Goods Act, 1930 deals with the rights and duties of buyers and sellers of movable goods. Which law deals with the rights and duties of buyers and sellers of immovable property?

   1. (A) The Indian Contract Act, 1872
   2. (B) The Specific Relief Act, 1963
   3. (C) The Registration Act, 1908
   4. (D) The Transfer of Property Act, 1882
   Show answer and explanation

   Answer: (D) The Transfer of Property Act, 1882

   The sale of immovable property, and the rights and liabilities of its buyer and seller, are governed by the Transfer of Property Act, 1882, while the Sale of Goods Act, 1930 covers only movable goods. The Indian Contract Act, 1872 is tempting because its general principles apply to all contracts of sale, but it is not the specific law on the transfer of immovable property.

   Provision: Section 55, Transfer of Property Act, 1882

6. Q6. Aadil steals Zoya's bicycle and sells it to Renu, who pays a fair price and has no idea that it is stolen. Who is the owner of the bicycle?

   1. (A) Renu, because she bought it in good faith and paid a fair price
   2. (B) Aadil, because he was in possession of the bicycle when he sold it
   3. (C) Zoya, because no one can give a better title than he himself has
   4. (D) Renu, because a completed sale always passes ownership to the buyer
   Show answer and explanation

   Answer: (C) Zoya, because no one can give a better title than he himself has

   Section 27 embodies the maxim 'nemo dat quod non habet': a buyer acquires no better title than the seller had. A thief has no title, so Renu acquires none and Zoya remains the owner. Good faith and payment of value do not help Renu, because a sale by a thief is not one of the exceptions to the rule.

   Provision: Section 27, Sale of Goods Act, 1930

7. Q7. Farhan sells goods to Renu and receives a cheque for the full price. The cheque is later dishonoured by Renu's bank. What is Farhan's position under the Sale of Goods Act, 1930?

   1. (A) He is not an unpaid seller, because he accepted a cheque as payment
   2. (B) He becomes an unpaid seller only if Renu is declared insolvent
   3. (C) He becomes an unpaid seller, because the conditional payment by cheque has been dishonoured
   4. (D) He can only file a cheque bounce complaint and has no rights as a seller
   Show answer and explanation

   Answer: (C) He becomes an unpaid seller, because the conditional payment by cheque has been dishonoured

   Under Section 45, a seller is an 'unpaid seller' when the whole price has not been paid or tendered, or when a bill of exchange or other negotiable instrument received as conditional payment has been dishonoured. A cheque is only conditional payment, so its dishonour makes Farhan an unpaid seller. Accepting the cheque did not discharge the price, because the condition on which it was accepted failed.

   Provision: Section 45, Sale of Goods Act, 1930

8. Q8. Under the Sale of Goods Act, 1930, in which of the following situations does an unpaid seller lose the right of lien?

   1. (A) When the seller delivers the goods to a carrier for transmission to the buyer without reserving the right of disposal
   2. (B) When the buyer becomes insolvent while the goods are still with the seller
   3. (C) When the seller has delivered only part of the goods and keeps the rest
   4. (D) When the credit period allowed to the buyer expires without payment
   Show answer and explanation

   Answer: (A) When the seller delivers the goods to a carrier for transmission to the buyer without reserving the right of disposal

   Section 49 provides that the lien is lost when the seller delivers the goods to a carrier or other bailee for transmission to the buyer without reserving the right of disposal, when the buyer or his agent lawfully obtains possession, or when the seller waives the lien. The buyer's insolvency and the expiry of the credit period are grounds on which the lien arises, not grounds on which it ends. After part delivery, the seller can still keep a lien on the remainder.

   Provision: Section 49, Sale of Goods Act, 1930

9. Q9. In R.D. Saxena v. Balaram Prasad Sharma (2000), the Supreme Court held that an advocate cannot keep a client's case files as security for unpaid fees. What was the main reason?

   1. (A) The advocate had already been paid his full fees by the client
   2. (B) Case files are not 'goods' under the Sale of Goods Act, 1930, so the advocate has no lien over them
   3. (C) An advocate can exercise a lien only with the prior permission of the Bar Council
   4. (D) Case files are 'goods', but their value was less than the fees claimed
   Show answer and explanation

   Answer: (B) Case files are not 'goods' under the Sale of Goods Act, 1930, so the advocate has no lien over them

   The Supreme Court held that case files cannot be treated as 'goods', because they cannot be converted into money or sold to a third party, so an advocate has no lien over them under Section 171 of the Indian Contract Act, 1872 and must return them, leaving fee disputes to be settled separately. Refusing to return the files was held to be professional misconduct, though the punishment was reduced to a reprimand. The idea that the files are goods of low value is wrong, because the Court denied them the status of goods altogether.

   Provision: Section 2(7), Sale of Goods Act, 1930; Section 171, Indian Contract Act, 1872

10. Q10. In Commissioner of Sales Tax, Madhya Pradesh v. Madhya Pradesh Electricity Board, what did the Supreme Court hold about electricity?

    1. (A) Electricity is only a service, so its supply can never be a sale
    2. (B) Electricity is immovable property because it flows through fixed cables
    3. (C) Electricity becomes 'goods' only when it is stored in batteries
    4. (D) Electricity is 'goods' because it is movable property that can be transmitted, stored and delivered
    Show answer and explanation

    Answer: (D) Electricity is 'goods' because it is movable property that can be transmitted, stored and delivered

    The Supreme Court held that electricity is 'goods' because it is movable property: it can be transmitted, transferred, delivered, stored and possessed like other movable property. The Board was therefore a 'dealer'. In the same case, steam supplied to a mill was held to be more in the nature of a works contract than a sale. The argument that electricity is merely a service and cannot be sold was rejected.

    Provision: Section 2(7), Sale of Goods Act, 1930