Para 2.16 — GOODS_MANUAL

2.17 Contract Effective Date The date of commencement of the obligations under the contract on the parties to a contract is referred to as the contract effective date. This date should be invariably indicated in each contract, as per agreed terms and conditions. The Ministries/Departments are advised to set the effective date to be a date after the following:

3.0 Salient Features of the Sales of Goods Act, 1930 Agreements for the sale of goods are governed by the general principles of the contract law. A contract for sale of goods has, however, certain peculiar features such as transfer of ownership of the goods and quality aspects implied under a contract for sale of goods, and so on, are not covered in the Contract Act. These peculiarities are the subject matter of the provisions of the Sale of Goods Act, 1930. In this act, the two parties to the contract are called “seller” and “buyer.” This act defines goods, for the purpose of applicability of this act, as every kind of movable property, including stocks and shares, growing crops, goodwill, patents, trademarks, electricity, water, gas, and so on—all that can be exchanged for money but not any kind of immovable property (for example, real estate).

Note 1: The various classes of contracts and assurances of property, which different authorities may execute, are specified in the Notifications issued by the Ministry of Law from time to time.

Note 2: The powers of various authorities, the conditions under which such powers should be exercised, and the general procedure prescribed about various classes of contracts and assurances of property are laid down in Rule 21 of the Delegation of Financial Powers Rules.

a) Date of signing of the contract. b) Furnishing of performance bond in terms of performance security. c) Receipt of Bank Guarantee for advance payment. d) Obtaining an export licence for store supply by the seller and confirmation by the buyer. e) Receipt of End User's Certificate. The supplier shall provide the End User's Certificate within 30 (thirty) days of the signing of the contract.

2.16 Authority for Execution of Contracts As per Clause 1 of Article 299 of the Constitution, the contracts and assurances of property made in the exercise of the executive power of the Union shall be executed on behalf of the President. The words “for and on behalf of the President of India” should therefore follow the designation appended below the signature of the officer authorized in this behalf.

3.2 Concept of Transfer of Property (Passing of Title) 1. Proprietary (ownership) rights and obligations in “goods” are called legally “title to goods” or “property in goods.” The meaning of property here is different from the common connotation of the word. At what point of time or stage in a contract does this passing of title of (property in) goods happen is laid down by this Act. The ownership of goods is different from 'possession of goods' which means the physical custody or control of the goods. Delivery of goods is only a transfer of ‘possession of goods;” and may or may not coincide with the passing of title in goods. This distinction is especially important in procurement. 2. The transfer of property in the goods from the seller to the buyer is the essence of a procurement of goods. Therefore, the moment when the property in goods passes from the seller to the buyer is significant for the following reasons: a) Ownership: The moment the property in goods passes, the seller ceases to be their owner and the buyer acquires the ownership. The buyer can exercise proprietary rights over the goods. For example, the buyer may sue the seller for non-delivery of the goods or when the seller has resold the goods, and so on. b) Concept of “Res Prit Domine” -- Risk Follows Ownership: This concept simply means that, as a general rule, risk follows the ownership, irrespective of whether the delivery (or transfer of possession of goods) has been made or not. If the goods are damaged or destroyed, the loss shall be borne by the person who was the owner of the goods at that time – irrespective of whosoever is in the “possession of the goods.” c) Action against Third parties: When the goods are, in any way, damaged or destroyed by the action of third parties, only the owner of the goods can act (claim, litigation) against them. d) Time at which Property in Goods is Transferred: The property in goods is transferred to the buyer at such time as the parties to the contract intend this to happen, as recorded in the terms of the contract. This needs neither to coincide with the point when payment is made nor with the delivery of Goods and not even with the point of time when the seller dispatches the goods.