Category: Commerce Notes PPT

Almost every kind of business involves the sale and purchase of goods as part of its transaction. People in business are often entering into a contract of sale to sell their commodities. All these sales are governed by the Sale of Goods Act, 1930 which is one of the most important types of contracts under the law of India.

Every individual, whether a legal professional or a common man, who deals in the transaction of goods regularly, must understand the important terms of this contract. This article will acquaint you with some of the important terminology used in the Sale of Goods Act, 1930. 

This act defines a contract wherein the seller of particular goods transfers or agrees to transfer the goods to the buyer for some price. This mercantile law was formed on the 1st of July 1930 when India was under the British Raj. This law had been borrowed mostly from the Sale of Goods Act, 1893 of Great Britain. The law is applicable all over India except for Jammu and Kashmir. As per section 2 of this act, a contract of sale is a generic term which refers to both sale and agreement to sell and is characterized by:

Important Terms in the Sale of Goods Act, 1930

1. Buyer – This is mentioned in section 2(1) and defined as a person who either purchases or agrees to purchase certain products. The buyer appears as one of the parties in the contract of sale.

2. Seller – This is defined in section 2(13) and defined as a person who either sells or agrees to sell certain products. The seller appears as one of the parties in the contract of sale.

By combining the definitions of a buyer and seller, we can conclude that it is not mandatory to transfer goods to be deemed as a buyer or a seller. Just by agreeing or promising to sell and buy goods, you become buyer and seller as per the contract of sale.

3. Goods – Goods are any merchandise or possession. An important clause in the contract for sale goods is described in Section 2(7) as:

1. It is a moveable property (except for money and actionable claims)

2. Stocks and shares

3. Growing crops, grass, standing timber

4. The things that are attached to the land but are agreed to be severed before the sale. For example, if a resort is offering complimentary food along with lodging and customers do not want to take the food. Then the rebate on food is not applicable as the food was not part of the sale.

Thus, we conclude here that goods are moveable property barring money and actionable claims. Goods are classified into many categories, as explained in the next section.

Types of Goods Under Sale of Goods Act 1930

Section 6 of the act explains in detail all types of goods in the Sale of Goods Act. There are mainly three categories of goods:

1. Existing Goods – If the goods exist physically at the time of contract and the seller is in legal possession of the goods, then it is termed as existing goods. They are further divided into three types:

1. Specific Goods – They are defined under section 2(14) and refer to goods that are identified and agreed to be transferred, at the time of making the contract. For example, A wants to sell a Bike of a certain model and year of manufacture, and B agrees to buy the bike. Here the bike is a specific good.

2. Ascertained Goods – These types of goods are identified by judicial interpretation and not by law. Any good where the whole or part of the good is identified and marked for sale at the time of the contract comes under ascertained goods. These goods are earmarked for sale.

3. Unsanctioned or Unascertained Goods – Those goods that are not specifically identified for sale, at the time of the contract, fall under the category of unsanctioned goods. For example, there is a bulk of 1000 quinols of wheat out of which 500 quinols are agreed to be sold. Here the seller can choose the goods from the bulk and is not specified.

2. Future Goods – The definition of future goods appears in section 2(6). The goods which do not exist at the time of contract but are supposed to be produced, acquired, or manufactured by the seller are called future goods. For example, A sells chairs and B wants 300 chairs of a specific design which A agrees to manufacture at a future date. Here chairs are future goods.

3. Contingent Goods – You can find the answer to what is contingent goods in section 6(2) of the Sale of Goods Act. A contingent good is a kind of future good, but it is dependent on the happening (or the absence of) certain conditions. As an example, X has agreed to sell 100 mangoes from his farm to Y at a future date. But this sale depends on the fact whether the trees in X’s farm give a yield of 100 mangoes by the date of the contract.

Delivery

Delivery of goods appears in section 2(2) and describes the process of transferring the possession of goods from one person to another. The person receiving the goods could either be the buyer or another person authorized by the buyer to receive the goods. There are different types of delivery of goods as described below:

• Actual Delivery – If the commodity is handed over directly to the buyer or the person authorized by the buyer then that’s called an actual delivery.

• Constructive Delivery – When the transfer of goods is done without any change in possession, then it is a constructive delivery. It could mean that the seller, even after selling the goods, holds them as bailee for the buyer.

• Symbolic Delivery – In this case, the goods are not delivered, but a symbolic means of obtaining possession is involved. For example, handing over the keys of a warehouse where the goods are stored is a symbolic delivery. Such delivery is usually done when the goods are bulky or heavy.

The law of supply and demand represents the interaction between manufacturers and consumers. This theory shows how these two concepts are interlinked, and the price of a product can affect its sales. The supply-demand curve represents this concept in a graphical manner for better understanding.

Supply and demand law are one of the fundamentals of economics that is related to almost every principle of economics. Moreover, this supply-demand principle also affects the equilibrium prices of a product and often determines its price. However, there are various reasons that can affect this principle.

Shift in Supply Demand Curve

If there are any changes in this curve, it has a direct effect on market equilibrium. Here are some notable factors that can affect supply and demand –

1. Change of Demand

The demand for a product changes due to one of the following factors –

• Population

• Per capita income

• Preferences

• Value of the essential commodities

• Value of substitute items

• Forecast of change in prices

2. Change in Supply

Supply of an item alters owing to the following reasons –

• Number of manufacturers

• Taxes levied

• Technological advancement

• Aim of the companies

• Cost of factors of production

• Cost of competitive products

• Expectation of future price change

This offers a brief idea about the major factors that have an effect on supply and demand. However, to understand this concept in detail, one must understand how a market reacts when both supply and demand curve shifts.

When Demand Changes

Increase in demand and decrease in demand plays a crucial role in determining the price of a product. Here is a detailed discussion regarding that –

When supply remains constant, but the demand surges, it tends to shift the demand curve rightwards. If the demand for a product steadily rises, it ultimately affects the equilibrium price. Therefore, this price rise also increases competition among buyers, which also hikes the price of a product.

On the flip side, this rise in price serves as an incentive to the manufacturers. They will then increase production and supply that will result in falling demand. A point to note here is that this process stays operational until a new equilibrium is set. Resultantly, there is a hike in both the equilibrium price and quantity.

Similarly, if the supply remains constant, and demand for a product plummets, the demand curve will shift towards the left. In a situation like this, a condition of excess supply occurs at the equilibrium level. This situation leads to a competition between sellers, who want to sell their products due to this fall of prices.

Alternatively, once a product’s prices go down its market demand increases. This demand then leads to an increase in supply and manufacturing. This process then continues till a new equilibrium is in place. Resultantly, there is a reduction in the equilibrium price as well as quantity.

When Supply Changes

Supply-demand curve also observes a shift when there is any alteration in the supply of a product. Here are two phenomena regarding that –

When demand remains constant with a change in supply, it tilts the supply curve towards right. Therefore, when the supply of a product rises its demand at the equilibrium level also increases. This situation leads to a competition among sellers, which results in a drop in prices of a product.

Moreover, this lowering of prices also increases the demand for a product in the market, which also affects its production. This process continues till a new equilibrium is found, and at that point, the price of a product decreases and its quantity increases.

Similarly, when the demand of a product remains constant, but its supply plunges, it shifts the supply curve towards left. This reduction of supply creates an excess demand at the equilibrium level, which results in an increase in the price.

Contrarily, this price hike will be accompanied by a lowering of demand and excess supply. This process will also carry on until a new equilibrium is found. Thus, the equilibrium price of a product will rise, but its quantity will fall.

Change of Both Supply and Demand

The market situation is more complicated than the above-mentioned increase and decrease in supply and demand. Usually, supply and demand do not alter individually; instead, they change simultaneously. Here are four such occasions that arise in the real world –

1. Demand decreases and supply decreases

2. Demand increase and supply increases

3. Supply increase but demand decreases

4. Supply decreases and demand increases

A supply-demand curve is a pictorial representation of this discussion. This chapter of modern economics is vital for individuals to learn as it can help them comprehend the basis of economics. On e-learning platforms like , they can access relevant study materials of this chapter. Also, they can register for an online class and doubt clearing session to enhance their preparations further.

The process of hiring suitable or eligible candidates in any organization for particular positions is called staffing. In this process, the education, skills, knowledge of the candidate is assessed for particular job roles in a company. 

Definition of Staffing

Staffing is referred to as one of the crucial functions of management. It includes the entire process of assessing a candidate to fill in a vacant position in an institution for a particular position at a particular time. In any form of organization, the Human Resource team plays an important role in the utilization of machines, money, and material of the company in a judicious way. With the recruitment or right employees for the right job role, any company can expand and succeed. 

Therefore, it is the effort of the Human Resource department to bring in efficiency inside a company. The process of staffing greatly depends on the aptitude, ability, talent, and specialization of a candidate. It is important because, with the right employee, the pre-set goals of the company can be achieved with the hundred per cent manpower contributions. 

Functions of Staffing

The most important function of staffing is to get suitable candidates for different job positions in an organisation. It helps in recruiting the right person for the right job which results in delivering a higher level of performance and maximum amount of productivity. Also through various aspects, it helps in promoting the maximum utilization of the human resource department. 

When the human resource department is able to recruit the right person for the right job there is job satisfaction amongst workers. Moreover, this factor also helps in increasing the morale of the workers. Not only it helps in the better utilization of the human resource but it also helps in the continuation and expansion of the organization through improvement managers.  

Importance of Staffing

As stated earlier that staffing is one of the important functions of the management department in an organization. To achieve efficient performance in the management, staffing should be given importance. It is necessary because if an organization does not have employees who are competitive and skilful in nature then the company is likely to face hurdles or failure in the long run. The management is able to function better, plan better, become more organized, and have better control with the help of the right employee assigned in the right job. All these cater to efficient performance in the organization. 

Only the right kind of employee with the right set of skills will be able to utilize the latest technology, material, and capital. Hence, by performing the staffing function the management will be able to make efficient use of technology. Unavoidable is the fact, that a significant amount of money is invested in the recruitment, training, and development of the candidates. Therefore, to achieve the maximum amount of output, the staffing procedure should be carried out carefully keeping in mind the objective. This is known as the optimum utilization of Human Resources. 

Moreover, there is also a need for the development of human capital. It is important for the human resource department to assess the requirement of manpower. According to that, they can train the existing employees for their career and advancement and bring in new employees who can justify their recruited position. By these approaches, understanding, and implication, the company is ought to have a better prospect in the future. 

The increase in private sector companies has also increased the need for a good working culture that can keep the employees motivated. This is the reason why the Human Resource department looks out for employees who have suitable education, needs, and socio-cultural factor and can increase the efficiency of the organization. This makes the human aspect of the organization crucial. The employees of an organization tend to work better with non-financial and financial incentives and achieve their objectives. By building an environment that has higher morale the employees will be able to achieve their objective in a better manner. 

The characteristics of staffing are that it is a people-oriented function and is also the basic function of management. Moreover, it requires human skills and is a continuous function. All form of organization requires staffing. The managers are involved in various staffing activities. Hence, he or she is highly responsible for all the existing and new employees who are working in the organization. The managers manage them to get the work done efficiently and accomplish the goals of the organization righteously.

A stock exchange is a market operating to sell and purchase securities and bonds that are issued by government bodies as well as public and municipal bodies. There are predefined rules and regulations that play an active role in the purchases and selling of such products.

Since this market does not directly deal with money, instead conducts exchanges pertaining to securities, this type of market is termed as a capital market. The stock exchange meaning is often associated with the term shares. You might have heard about buying or selling shares at a specific price, or even that the price of shares is either increasing or plummeting.

Features of a Stock Exchange

To understand the stock exchange, students should know the characteristics of the same. Having a clear idea of the workings will aid in getting an overall comprehension of the topic.

The features of the stock exchange can be listed in the following ways –

It is the capital market that deals with the sales and purchase of securities of the government, government organizations, and corporate companies. It also engages in the procurement and sales of debentures, bonds issued by various organizations.

Though the exchange does not necessarily involve the direct trade of bonds and debentures, there are brokers and members of the exchanges who facilitate such trade.

The stock exchange definition says that it has to deal with only the organizations or companies that are listed under its ambit. Even the securities to be traded must be registered with the stock exchange.

The members of the stock exchange or even the brokers are to be authorized in order to carry out the trading activities, failing which the trade might not be considered valid.

Among the functions of the stock exchange, the trading activities directly impact the growth of an organization or business. Therefore, it acts as a measuring tool for businesses in terms of assessing their overall growth.

The functioning of all the stock exchanges in India is regulated by SEBI or the Securities and Exchange Board of India. Therefore, every stock exchange is meant to oblige and abide by the pre-fixed rules and regulations of SEBI.

Altogether, stock exchanges make up for the effective functioning of a business. Commerce students have to be aware of the importance of the stock exchange in the Indian marketplace. 

In addition, they should also know how the trading of bonds and debentures can directly impact business growth. A deeper insight into these topics will help them in understanding the topic closely.

Task for you: Find out the merits and demerits of investing in the stock market.

What is the Role of a Stock Exchange?

The functional report of the stock exchange reveals that it is one of the integral parts of an economy. Irrespective of whether the economy is growing or not, a stock exchange acts as a barometer to gauge the growth of organizations, both governmental and non-governmental.

The functions of a stock exchange can be understood through the following pointers –

The stock is responsible for assessing the rise and fall in demand for the securities of the organizations and business. After that, they fix the prices of the same accordingly; the securities in most demand are priced higher than others.

It also ensures the safety of trading activities. Since only the indexed and authorized members can list their securities with the stock exchanges, one can rest assured of the security these exchanges provide.

The listing of multiple organizations in the stock exchange leads to effective investment and disinvestment of the securities. Likewise, people can invest in higher productive investment schemes. Therefore, it will lead to the overall economic growth of the organization.

Another role of the stock exchange is to provide a market where investors can readily buy and sell securities. As a result, the investors can rest assured that their investments are secured and can be liquidated as and when required.

The stock exchanges value the organizations whose share prices are significantly higher than others. It is due to the profit-making capabilities of those companies, hence capital allocation is also carried out in a convenient manner by them.

Stock exchanges encourage the habit of saving and investing among the common people. These are secured and offer remarkable benefits with comparison to other options such as gold or silver. Purchasing shares of profitable companies are among the most lucrative options as an investment, as one can earn profit by selling the same share later at a higher price.

Task for You: Find out the names of some of the largest stock markets in the world.

However, to complete the stock exchange project, students need to have an appropriate understanding of how it functions. It is a multi-faceted domain and requires a student to be dynamic in his/her approach to be able to comprehend the same quickly.

It is thus advised that you study the subject carefully before delving into the projects or assignments. A clearer understanding is likely to help you sail through even the difficult topics easily.

To know more about these stock exchanges, you can take a look at our online learning programs. You can develop an in-depth knowledge of stock exchanges functions and their relevant features. Also, you can gain access to high-quality study material for your reference.

Importance of Learning about Stock Market

Having a brief understanding of the stock market might help you have your basics cleared in business studies. This is an important topic to study not only from an exam’s point of view but also to know about how the market functions.

Understanding the various trading techniques is essential to know the practical approaches that help in the actual marketplace. . The trader can play the business better if he or she understands it. Some exchanges, for instance, will use algorithms alongside order-driven markets, and understanding this will help a trader get the most out of their deals. As a result, understanding the differences between quote and order-driven trading processes is quite beneficial.

Start of the Stock Market System

Though stock trading started very long back ago in the 1500s in Antwerp. However, it is generally acknowledged that modern stock trading began with the exchange of stocks in the East India Company in London. Several businesses with the name East India were granted licenses by the British, French, and Dutch governments all through the 1600s. All products returned from the East were conveyed by water, which involved perilous journeys frequently beset by violent weather and pirates. Owners of the ships routinely looked out for investors to provide financial security for a journey to offset these dangers. In exchange, investors earned a share of the financial profits if the ship returned safely, packed with products for trade.

 

The First Stock Exchange Market

When the Dutch East India Corporation became the earliest openly marketed company in Amsterdam, it pioneered modern stock trading. The corporation chose to sell shares and pay returns to shareholders in order to obtain funds. The Amsterdam stock exchange was then officially established in the year 1611.

Professional management involves the administration of an organization in a well-reasoned way. A professional manager must not possess only professional skills, but technical and administrative skills as well. If a professional manager has long experience of business affair management, it acts as an added advantage for successful professional management. The task of a professional manager is to ensure employee success and in turn, the success of the organization as a whole. Efficient teamwork and motivating the workforce are among the number of management tasks a manager needs to perform.

 

What are the Professional Manager Roles and Responsibilities?

A professional manager has quite a lot of tasks. Expertise in management tasks makes them an inevitable part of an organization. The must-have skills for professional managers to perform their manager responsibilities are excellent communication skills, ability to make decisions, leading from the front if needed, an efficient delegation of jobs, supervision, performance analysis and implementation of strategies. Also, people skills and conceptual skills are equally important. Armed with these skills, the management roles and responsibilities are performed duly. So, what are the manager’s responsibilities? They are listed below:

 

1. Defining Your Objectives

As a manager, provide a clear direction to the organization as the first and foremost task. Establish visions and missions for the organization.

A manager should not delegate this task to anyone else, but must complete it himself. When the company’s objectives are defined, employees work towards a common purpose and are unified.

2. Growth Management

In addition to managing growth and ensuring the survival of the firm, a manager has other responsibilities. Growth and survival of this firm are threatened both internally and externally.

The factors related to the firm’s internal functions (such as selecting the correct technology, hiring the right people, etc) are mostly under the company’s control. The manager must deal with external factors like government policy and economic conditions.

3. Keeping Efficiency High and Improving it

In order for a firm to operate efficiently, managers possess a variety of roles and responsibilities. First of all, he must check to ensure that the firm is efficient, i.e. there is no waste of resources. Secondly, he must make sure that this efficiency is properly maintained.

4. Creativity

Management is a job that requires innovation on the part of the manager. In order for the firm to successfully solve its problems, innovative solutions must be found. Not only are new ideas necessary, but they must also be nurtured and implemented. Managers are responsible for doing both of these on an ongoing basis.

5. Be on the Lookout for Competitors

Market competition is something that needs to be planned for and prepared for by the manager. Keeping up with changes and/or increased competition can never be taken for granted.

6. Leading by Example

It is usually the leadership that determines an organization’s future. The manager must also have good leadership qualities. In order to achieve the company’s goals, he must inspire and motivate employees.

A leader leads from the front, as well as a manager who demonstrates the qualities and work ethic that other members of a team can learn from.

7. Management of Change

Change is a fact of life in every company and organization. Managers are responsible for bringing this sweeping change about. Among his responsibilities, he must ensure that the company’s transformation is smooth and uneventful.

8. Selecting the Right Technology

Managing in the 21st century is a challenging task for all managers. A wide variety of IT processes are available today.

You face challenges in using the most suitable technology for your organization. In essence, this means choosing the right software, communication system, and networking system.

Contracts of sale are those contracts that act as proof of the transfer of ownership of any object from one person to another in exchange for a price. The Sale of Goods Act India came up amidst the British Raj. The Sale of Goods Act 1930 was a law enacted in colonial, pre-Independence India for the benefit of merchants in India. The act relates to contracts for the sale of goods for all the states of India except for Jammu & Kashmir. Contracts of sale include the agreement on the part of the buyer as well as that of the seller.

 

Elements of the Sales of Goods Act India 1930

While trying to understand the Sale of Goods Act, it is imperative to understand the key terms used in the Act. These include the two parties (i.e., the buyer and the seller), the mercantile agent, goods, price, and the transfer of general property.

Let’s discuss these various elements to understand better.

 

Two Parties

As mentioned before, the two parties in the Sale of Goods Act 1930 are the buyers and the sellers.

1. A buyer is a person who is willing to or has agreed to buy a good.

2. A seller is a person who is willing to or has agreed to sell a good.

There has to be an agreement between these two parties for there to be a sale as per the Sale of Goods Act 1930. You can note here that a sale need not have gone through for the contract to designate a buyer as a buyer, and a seller as a seller; the contract is enough to assign these roles to the parties.

 

Mercantile Agent

Rather than the buyer and supplier negotiating between themselves, a third-party agent can be used to coordinate the specifics of the contract on behalf of these parties. This third-party agent is called the mercantile agent, and they come in the form of brokers, auctioneers, and others.

 

Goods

The primary purpose of establishing a buyer and a seller is so that there is an agreement about the good which is supposed to be for sale. These goods need to be clearly defined in the sale contract as per the Sales of Good Act.

 

In differing words, the contract states that any movable property which is listed within a contract, which is to go through the transfer of ownership as per the contract (except for money and actionable claims), is considered a good.

 

The Act only recognises movable property like growing crops, stocks, shares, vehicles, among others. Immovable property such as land is not under the jurisdiction of this particular Act.

 

The goods for sale may be either existing, future goods, or contingent goods. Existing goods are those which are already in existence when the contract is formed. Future goods refer to goods that will be produced after the creation of the contract. Contingent goods are an extension of future goods, but they have contingency clauses within the contract of sale.

 

Price

The price must most certainly be included in the contract; otherwise, the contract is deemed redundant. A sale is defined by the exchange of ownership of a good between two parties at a specific price, and thus it is a critical element of the Sale of Goods Act India. A transfer of ownership of goods can only be done with the payment or promise of fulfilment of the price mentioned in the contract.

 

There are two ways in which the price can be paid by the sales contract. The Sale of Goods Act 1930 says that the payment must be made either in the form of full cash, or part of it with the promise to pay the rest of it later.

The price mentioned in the contract should be pre-decided by the parties at hand.

 

Transfer of General Property

The transfer of general property is differentiated from the transfer of specific property. General property refers to any property owned by a seller, whereas specific property refers to the property the seller is transferring the ownership of to someone else through a sales contract. The Sale of Goods Act 1930 looks only at the transfer of general property.

 

Important Topics covered Under the Sales of Goods Act 1930

The Sale of Goods Act of 1930 governs contracts or agreements relating to the sale of goods. Except for the state of Jammu & Kashmir, this act took effect on July 1, 1930, throughout India. provides you with complete guidance to study. The Sale of Goods Act 1930 – Elements and Transfer of General Property. Let’s go through some of the act’s key terminology and sections.

• Important Term Definitions

• Sale and Purchase Agreement

• Calculation of the Price

• Condition and Warranty Concept

• Conditions (Express and Implied)

• Warranties, both express and implied

• The Caveat Emptor Doctrine

• Part 1 of the property transfer process

• Part 2 of Property Transfers

• Risk passing

• Transfer of Ownership

• Performance of a Sales Contract

• Unpaid Seller’s Rights Against Goods

• Unpaid Seller’s Rights Against Buyer

• Auctioneering