The price means the money consideration for the sale of goods [Section 2 (10)]. Price may be fixed in any of the following modes provided in Section 9:

• How Price May Be Fixed (Section 9):

• • By the contract itself.
• • By the course of dealing between the parties.
• • To be determined in some agreed manner.
• • By a third-party valuation (and if they fail to fix it, the agreement is voidable, unless goods are delivered and appropriated, then a reasonable price is payable).

Explanation:

• i. The fixation of price by the contract of sale [Section 9 (1)]: The price may be expressly fixed the contract of sale. The parties may fix any price they like.
• ii. The fixation of price in a manner provided in the contract of sale [Section 9 (1)]: The contract of sale may provide for some manner in which ‘price is to, be fixed. In such cases, the price may be fixed in a manner provided in the contract.
• iii. The fixation of price by course of dealings [Section 9 (1)]: Sometimes, the customs or usage of trade provides certain principles for the determination of the price. In such cases, the price may be determined from the course of dealings between the parties.
• iv. The fixation of a reasonable price [Section 9 (2)]: Sometimes, none of the above principles is applicable. In such cases, the buyer shall pay to the seller a reasonable price. The term ‘reasonable’ price is a question of fact which depends on the circumstances of each particular case.

Condition and Warranty:

These are crucial terms determining the rights and remedies of the parties.

1. Stipulation as to time (Section 11): Whether any other stipulation as to time is of the essence of the contract or not depends on the terms of the contract. Generally, in mercantile contracts, time of delivery is of the essence.

2. Condition [Section 12(2)]:

• • A stipulation essential to the main purpose of the contract.
• • Breach of a condition gives the aggrieved party a right to treat the contract as repudiated (i.e., reject the goods and terminate the contract).
• • Illustration: A agrees to buy a car from B, on the condition that it must be capable of reaching a speed of 150 km/h. If it cannot, A can reject the car.

3. Warranty [Section 12(3)]:

• • A stipulation collateral to the main purpose of the contract.
• • Breach of a warranty gives rise to a claim for damages but not a right to reject the goods and treat the contract as repudiated.
• • Illustration: A buys a car from B with a warranty that the mileage will be 15 km/l. If the mileage is 12 km/l, A can claim damages, but cannot return the car.

4. When Condition May Be Treated as Warranty [Section 13]:

• • The buyer may waive a condition.
• • The buyer may elect to treat the breach of condition as a breach of warranty and claim damages instead of repudiating the contract.
• • Where the contract is not severable, and the buyer has accepted the goods or part thereof, the breach of any condition can only be treated as a breach of warranty, unless there is a term of the contract, express or implied, to the contrary.
• • Explanation: This protects sellers from endless rejections after goods have been used.