Delivery of Wrong Quantity and Delivery by Instalments under Sections 37 and 38 of the Sale of Goods Act, 1930: Short, Excess and Mixed Delivery, and Whether a Defective Instalment Repudiates the Whole Contract

Two common performance problems have their own sections. Section 37 deals with a seller who delivers the wrong quantity: too little, too much, or the contract goods mixed with others. In each case the buyer is given a choice of rejecting or accepting, and must pay at the contract rate for what he keeps. Section 38 deals with delivery by instalments: the buyer is not bound to accept delivery in parts unless he agreed, and where the contract provides for separate instalments, a problem with one of them raises the question whether the whole contract is at an end or only that instalment.

The buyer's options on wrong quantity, and the question raised by a defective instalment

1. Delivery of the Wrong Quantity: Section 37

Section 37, Sale of Goods Act, 1930

(1) Where the seller delivers a quantity of goods less than he contracted to sell, the buyer may reject them, but if the buyer accepts the goods so delivered he shall pay for them at the contract rate.

(2) Where the seller delivers a quantity of goods larger than he contracted to sell, the buyer may accept the goods included in the contract and reject the rest, or he may reject the whole. If the buyer accepts the whole of the goods so delivered, he shall pay for them at the contract rate.

(3) Where the seller delivers the goods he contracted to sell mixed with goods of a different description not included in the contract, the buyer may accept the goods which are in accordance with the contract and reject the rest, or may reject the whole.

(4) The provisions of this section are subject to any usage of trade, special agreement or course of dealing between the parties.

Short delivery. The buyer may reject all, since he contracted for the whole quantity and part may be useless to him, or keep what arrived and pay pro rata.
Excess delivery. He may take the contract quantity and reject the excess, reject everything, or take everything at the contract rate. He cannot be forced to separate the contract goods from the excess.
Mixed delivery. He may accept the conforming goods and reject the rest, or reject the whole.
Trade usage and agreement. Contracts often permit a margin, such as five per cent more or less, and Section 37(4) gives effect to it.

📖 Shipton, Anderson & Co. v. Weil Brothers & Co., [1912] 1 KB 574

Facts: A contract was for about 4,950 tons of wheat, with a margin allowed either way. The sellers delivered a quantity that exceeded the permitted maximum by 55 pounds, and did not charge for the excess. The buyers rejected the whole cargo.

Held: The buyers were not entitled to reject. The excess was so trifling in relation to the whole that it fell within the principle that the law does not concern itself with trifles, and could not justify rejection.

Ratio: A microscopic deviation in quantity does not entitle the buyer to reject under Section 37, though any appreciable deviation does.

2. Delivery by Instalments: Section 38

Section 38, Sale of Goods Act, 1930

(1) Unless otherwise agreed, the buyer of goods is not bound to accept delivery thereof by instalments.

(2) Where there is a contract for the sale of goods to be delivered by stated instalments which are to be separately paid for, and the seller makes no delivery or defective delivery in respect of one or more instalments, or the buyer neglects or refuses to take delivery of or pay for one or more instalments, it is a question in each case depending on the terms of the contract and the circumstances of the case, whether the breach of contract is a repudiation of the whole contract, or whether it is a severable breach giving rise to a claim for compensation, but not to a right to treat the whole contract as repudiated.

📖 Maple Flock Co. Ltd. v. Universal Furniture Products (Wembley) Ltd., [1934] 1 KB 148 (CA)

Facts: A contract provided for the sale of rag flock to be delivered in loads, each to be separately paid for. One of the first sixteen loads delivered was found to contain far more chlorine than the standard allowed. The buyers claimed to treat the whole contract as repudiated.

Held: The Court of Appeal held that they were not entitled to do so. The breach was severable. The main tests were the ratio that the breach bore to the contract as a whole, and the degree of probability that it would be repeated. A single defective load out of sixteen, with no likelihood of repetition, did not justify ending the contract.

Ratio: Whether a breach in one instalment repudiates the whole contract depends chiefly on its size in relation to the whole and the likelihood of its recurring.

3. Applying Section 38(2)

The proportion of the breach to the contract as a whole: a failure in a large or early instalment weighs more than one in a small or late instalment.
The likelihood of repetition: a one-off error suggests a severable breach; a systemic defect suggests the seller cannot or will not perform.
The terms of the contract, including whether it treats instalments as independent.
The conduct of the parties, such as a buyer's persistent failure to pay, which may show an intention no longer to be bound.
The remedy for a severable breach is compensation for that instalment, while the rest of the contract continues.

4. The Position Stated Shortly

Section 37(1): on short delivery the buyer may reject, or accept and pay at the contract rate.
Section 37(2): on excess delivery he may accept the contract quantity, reject all, or accept all at the contract rate.
Section 37(3): on mixed delivery he may accept the conforming goods and reject the rest, or reject all.
Section 37(4): all of this yields to usage, agreement and course of dealing.
Shipton, Anderson v. Weil: a trifling excess does not justify rejection.
Section 38(1): the buyer need not accept delivery by instalments unless he agreed.
Section 38(2) and Maple Flock: whether a defective instalment repudiates the whole depends on its proportion to the contract and the likelihood of repetition.