Sale by Sample under Law of Contract: Explained

The provision of Sale by Sample can be figured from Section 17 of the Sales of Goods Act, 1930. To be classified as Sale by Sample under the Contract of Sale, the terms should be expressed or implied, in order to come into effect.

 The sole criteria on which the Contract of Sale by Sample is based on the norm that the bulk of goods delivered to the buyer will match the sample submitted by the seller. The seller is in violation of an implicit condition of the contract if the bulk does not fit the sample and the buyer may reject the products on these grounds. A reasonable opportunity must be provided by the seller to the buyer of comparing the bulk with the sample and conducting an inspection. It is requisite that the goods must be free from any defect that would not be evident on a reasonable inspection of the sample, rendering them unmerchantable. In cases where goods are deemed to be defective upon noticing the defect later on i.e. not clearly visible on a reasonable examination of the sample, the buyer holds the authority to reject the goods upon discovering a defect in the product. This remedy is also available upon buyer’s notice when he/she finds some goods to be defective. On grounds of morality, Sale by Sample provides us to figure out the real meaning and intention of the party’s incoherence to the subject matter of the Contract.

Nature:

Sale of goods is a specific form of commercial contract acknowledged and governed by law in India. Sale is a typical bargain between the buyer and seller. Sale of Goods Act, 1930 authorizes the parties to alter provisions of law with specific conditions. However, in some situations, this liberty is critically narrowed down.

Sale of Goods Act, 1930 is the act to define law relating to sale of goods which extends to whole of India. In every contract of sale of goods, there are implied conditions which can be found under Sale of Goods Act, 1930 and one such sale with implied terms is by providing a sample.

Scope:

Section 17 of Sale of Goods Act, 1930 deals with a contract of sale by sample. In a contract of Sale by Sample, there are implied conditions as to quality or fitness in contract of sale of goods which are presumed to be present in contract by law unless the circumstances of contract show a different intention. They may, however, be negated by an express agreement.

Sale by Sample generally takes place when buyer wants to purchase in bulk. For example, when a person needs to buy recyclable plates or napkins, best way would be to get a sample from seller and examine it before buying in bulk. And if sample good is satisfying the needs and specifications, then buyer enters in contract of sale with seller on basis of sample provided.

Section 17 of Sale of Goods Act deals with Sale by Sample. Sale by Sample often arises in those situations or circumstances wherein a sample of proposed goods is shown to you as a buyer and then you place your order on basis of that sample under the pretext that bulk/final consignment that is being supplied to you shall correspond to sample in quality in pursuance of a contract in future.

A contract of sale by sample has to be expressly entered into which means whenever you are in contract of sale by sample, you need to incorporate adequate provisions in contract which indicates that it’s contract of sale by sample and there is common intention of parties w.r.t kind and quality of consignment as sample is.

In such cases, sub-clause (2) of Section 17 provides certain implied conditions whenever there is a sale by sample:

a) Final delivered consignment/bulk shall resemble or correspond and have same quality and features as were shown and given to buyer in sample form.

Example: There are companies like Amway, who used to send free samples of their products for usage as marketing strategy. OR. Whenever we go to malls, there are small counters where they cook and offer certain kinds of food items to taste and if you like that item then you are persuaded into buying that product.

There are examples of transactions of sale by sample whereby a portion of product is offered for usage and if it satisfies your needs and you like the product based on your usage then you as customer end up buying original product in bulk.

b) It shall by implied in such contracts that buyer has reasonable opportunity to compare final delivered product with sample that was shown.

Example: In sale by sample of two bags of wheat, seller allowed buyer to inspect smaller parcel of wheat but not of bulk consignment of wheat. In this case, it was held that buyer was entitled to refuse to take any latent of wheat consignment.

c) Whenever you are being given sample for use, as buyer, you are supposed to inspect sample and ensure that sample is not defective and if it is so, you need to point out features that does not suit you or which are to be considered defect according to you as buyer.

Whenever you are buying a product through sale by sample, it shall be implied that it is free from any form of latent defects. It should not have any such defects which cannot be reasonably examined or detected on preliminary/reasonable examination of goods provided as sample.

Example: A firm sold a particular type of shoes which were manufactured with some special kind of sole by way of sample for Indian Army. Later, shoes were found to contain paper, and this was not identifiable on reasonable-ordinary inspection. In such case, buyer is entitled to refund of price of whole final consignment along with the damages by seller for these latent defects.

For instance, we go to mall and we are being asked to try out a cup of green tea as sample. On taking a sip of that sample of green tea, I like taste of it. However, if tea bag is faulty/broken or doesn’t suit my taste buds, then these are defects/inconsistencies which can be easily identified on reasonable examination.  If despite identifying these inconsistencies it doesn’t suit my taste buds or if I don’t conduct reasonable examination and I end up accepting and buying green tea, then I cannot sue or hold seller liable.

This is due to the condition is w.r.t only those latent defects which are not identifiable by thorough examination of sample. Say, green tea is not suitable for my digestive system. This isn’t something that can be discovered on having first sip. It can only be identified if I have it on regular basis and can be termed as latent defect.

Products must be free from any such defects which might render those commodities unmerchantable and which aren’t apparent on fair and plausible examination of commodities provided as sample. Defect should be such that it renders goods unmerchantable i.e. if sold again, it cannot fetch same value at which it was bought in first place. And defects are not apparent on reasonable examination and are latent in nature.

If defects in final consignment which are noticed later are not apparent on reasonable examination of sample that are provided, then buyer can reject goods on discovering defects later as this will be considered as breach of implied condition of contract of sale by sample. If there are some goods which are found to be defective, then buyer has the option to reject entire final consignment/bulk on discovering defects later.

Merely by delivering goods and if features of final consignment are corresponding with sample, it does not mean that seller is free from his obligations to ensure that goods should meet purpose for which buyer is buying goods. Purpose of sample is to present real meaning and intention of parties w.r.t subject matter of contract.

The seller is not free from his/her obligation even after the correspondence of the delivered goods with the sample. This is applicable in cases where the delivered goods fail to meet the buyer’s purpose. When there is a breach of condition, the buyer is ought to be recovered through damages. It was similarly held in the English case law of Wallis v. Pratt[1], there was a quality and type differential in the seeds supplied and the sample provided. The buyer was compensated on the grounds of breach of the Contract and it amounted to the seed supplier to indemnify for the losses. In a Contract of Sale, the issue persists when there is no clarity or expressed provisions with regards to Sale by Sample. In a relevant manner, the seller should expressly or impliedly promise, and the quality of the goods should justify the description of the sample at the time of the Sale. In frequent scenarios, Samples are displayed to give no more than some/little indication of the nature of the goods offered. This is because when Sale is by Sample the regulations regarding merchantability are different from ordinary sales, the only condition is that the goods should be free from defects not evident on a reasonable examination of the sample.[2] This is the exact issue that persists in between a customer and a seller as far as the defective quality of the commodity is concerned.

A contract of sale in the sale by the sample is considered linear in its provisions but an efficient contract ought to cover a lot of variables in its expression. The same can be made with more clarification through implied and express conditions in the Contract of Sale.

In India, there has been a fair bit of protection already provided to the consumer, but the protection sought to the consumer only attaches the fringe of the problem. Since the consumer establishes some sort of reliability and trust on the seller.^[3] When these problems arise, the concept of a warranty is sound and capable of solving it. The same should be kept in tandem to the interest of consumers in the marketplace and responsibility/liability to be placed on manufacturers and sellers for defective goods.

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