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Section 109: Sections 76 to 123 [Repealed by the Indian Sale of Goods Act, 1930]

Indian Contract Act • Official Statutory Text & Practice Guide

Statutory Regulation
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Act 1872
Section 108 All 266 Sections of Indian Contract Act Section 110

Legal Commentary & Landmark Judgments: Section 109

Historical Section 109 of the Indian Contract Act, 1872 established an implied warranty by the seller that he had a right to sell the goods, protecting the buyer against defective ownership, competing proprietary claims, or third-party encumbrances. Modernized and elevated into an implied condition under Section 14(a) of the Sale of Goods Act, 1930, this obligation constitutes an absolute statutory undertaking by the seller.

  • Statutory Implied Undertaking of Right to Sell: The seller guarantees that at the time when property is to pass, he has lawful authority and full proprietary title to transfer unencumbered ownership to the purchaser.
  • Total Failure of Consideration upon Defective Title: Where the seller has no title and the true owner recovers the goods, the buyer suffers a total failure of consideration and is entitled to recover the entire purchase price without deduction for interim use or depreciation.
  • Freedom from Undisclosed Encumbrances: Impliedly guarantees that the goods shall be free from any charge, lien, or encumbrance in favor of any third party not declared or known to the buyer before or at the time the contract is executed.
Key Landmark Precedents:
  • Rowland v. Divall [1923] 2 KB 500: Celebrated authority universally applied across Indian jurisdictions, holding that where a buyer purchased a stolen vehicle and had to surrender it to the true owner after months of use, the breach of the implied condition of title resulted in a total failure of consideration, entitling the buyer to a full refund of the price.
  • Niblett v. Confectioners' Materials Co. [1921] 3 KB 387: Held that a seller who sells goods infringing a third party's registered trademark breaches the statutory undertaking as to title, because the buyer cannot lawfully possess, use, or resell the goods without exposing himself to an injunction.
Courtroom Practice & Strategic Litigation Guidance:

In civil claims where purchased machinery, vehicles, or goods are seized by law enforcement or third-party titleholders, frame the suit not merely for damages, but for recovery of the full contract sum on the ground of total failure of consideration under Section 14 of the Sale of Goods Act read with Section 65 and 73 of the Contract Act.

Section 108 All 266 Sections of Indian Contract Act Section 110