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Section 120: Sections 76 to 123 [Repealed by the Indian Sale of Goods Act, 1930]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 119 All 266 Sections of Indian Contract Act Section 121

Legal Commentary & Landmark Judgments: Section 120

Historical Section 120 of the Indian Contract Act, 1872 provided that if the buyer wrongfully refused or neglected to accept and pay for goods properly tendered by the seller, the seller was entitled to maintain an action for damages for non-acceptance. Modernized under Section 56 of the Sale of Goods Act, 1930, this provision establishes the seller's primary compensatory remedy for buyer default.

  • Valid Tender of Delivery: The seller must prove a valid, unconditional tender of conforming goods in accordance with the contract terms at the agreed time and place.
  • Wrongful Refusal by Buyer: The buyer's neglect or refusal to take delivery and pay the price must be without lawful justification (e.g. without defect or delayed delivery).
  • Measure of Damages under Market Principle: Damages are assessed on the date of breach, measured by the difference between the contract price and the prevailing market price of the goods on the date when they ought to have been accepted.
Key Landmark Precedents:
  • Murlidhar Chiranjilal v. Harishchandra Dwarkadas AIR 1962 SC 366: The Supreme Court held that in a suit by the seller for damages for non-acceptance, the measure of damages under Section 73 of the Contract Act and sales law is the difference between contract price and market price on the date of breach, and the seller must mitigate damages by selling in the open market.
  • Colley v. Overseas Exporters [1921] 3 KB 302: Authoritative ruling holding that where property in goods has not passed to the buyer due to the buyer's failure to name an effective ship, the seller cannot sue for the price, but is relegated to an action for damages for non-acceptance.
Courtroom Practice & Strategic Litigation Guidance:

In drafting a suit for damages for non-acceptance, obtain certified market price bulletins from trade chambers or agricultural produce committees (APMCs) for the exact date of breach. Pleading only the contract price without proving the market shortfall on the breach date will result in an award of only nominal damages.

Section 119 All 266 Sections of Indian Contract Act Section 121