Examination, Acceptance and Rejection of Goods under Sections 41 to 44 of the Sale of Goods Act, 1930: The Right to Examine, When the Buyer Is Deemed to Accept, Rejected Goods, and Liability for Refusing Delivery

Acceptance is the point at which the buyer loses his right to reject. Under Section 13(2), once the buyer has accepted goods under a contract that is not severable, a breach of condition can be treated only as a breach of warranty, and he is left with damages. Sections 41 to 44 therefore matter a great deal. Section 41 gives the buyer a right to examine before he is taken to accept. Section 42 says when he is deemed to accept. Section 43 spares him the burden of returning rejected goods, and Section 44 makes him liable if he fails to take delivery when he should.

The right to examine, the three forms of acceptance, and the duties on rejection and refusal

1. The Right to Examine: Section 41

Section 41, Sale of Goods Act, 1930

(1) Where goods are delivered to the buyer which he has not previously examined, he is not deemed to have accepted them unless and until he has had a reasonable opportunity of examining them for the purpose of ascertaining whether they are in conformity with the contract.

(2) Unless otherwise agreed, when the seller tenders delivery of goods to the buyer, he is bound, on request, to afford the buyer a reasonable opportunity of examining the goods for the purpose of ascertaining whether they are in conformity with the contract.

What is a reasonable opportunity depends on the goods: a quick inspection for simple goods, a test run for machinery, a proper analysis for chemicals. The place of examination is ordinarily the place of delivery, but where goods are sent in sealed containers or to a distant buyer, the courts have accepted examination at the destination.

2. Acceptance: Section 42

Section 42, Sale of Goods Act, 1930

The buyer is deemed to have accepted the goods when he intimates to the seller that he has accepted them, or when the goods have been delivered to him and he does any act in relation to them which is inconsistent with the ownership of the seller, or when, after the lapse of a reasonable time, he retains the goods without intimating to the seller that he has rejected them.

Express acceptance. The buyer tells the seller he accepts.
An act inconsistent with the seller's ownership. Reselling and delivering the goods to a sub-buyer, consuming them, or altering them are the usual examples.
Retention beyond a reasonable time without intimating rejection.

📖 Hardy & Co. (London) Ltd. v. Hillerns and Fowler, [1923] 2 KB 490 (CA)

Facts: Buyers of a cargo of wheat, on its arrival, resold part of it and dispatched it to sub-buyers before examining it. On examination the wheat was found not to conform to the contract, and the buyers purported to reject the whole cargo.

Held: The Court of Appeal held that the buyers had accepted the goods. By reselling and dispatching part of the cargo, they had done an act inconsistent with the seller's ownership, and could no longer reject. They were confined to damages.

Ratio: Reselling and delivering goods to a sub-buyer is an act inconsistent with the seller's ownership, and amounts to acceptance even before examination.

English law later qualified this result by statute, providing that such an act is not acceptance until the buyer has had a reasonable opportunity to examine. Under the Indian Act, the same result can be reached by reading Section 42 with Section 41, which provides that a buyer who has not examined the goods is not deemed to accept them until he has had a reasonable opportunity to do so, though the point should be checked against Indian authority in a particular case.

📖 Bernstein v. Pamson Motors (Golders Green) Ltd., [1987] 2 All ER 220

Facts: A buyer bought a new car, and about three weeks and some 140 miles later its engine seized because of a defect. He sought to reject the car and recover the price.

Held: The court held that the car was not of merchantable quality, but that the buyer had accepted it by keeping it beyond a reasonable time. A reasonable time was the time needed to test the car generally, not the time needed to discover the particular defect. He was confined to damages.

Ratio: A reasonable time for rejection is measured by what is needed to try out the goods generally, and may expire before a latent defect appears.

3. Rejected Goods and Refusal to Take Delivery

Sections 43 and 44, Sale of Goods Act, 1930

43. Unless otherwise agreed, where goods are delivered to the buyer and he refuses to accept them, having the right so to do, he is not bound to return them to the seller, but it is sufficient if he intimates to the seller that he refuses to accept them.

44. When the seller is ready and willing to deliver the goods and requests the buyer to take delivery, and the buyer does not within a reasonable time after such request take delivery, he is liable to the seller for any loss occasioned by his neglect or refusal, and also for a reasonable charge for the care and custody of the goods: Provided that nothing in this section shall affect the rights of the seller where the neglect or refusal of the buyer to take delivery amounts to a repudiation of the contract.

Section 43 places the burden of collecting rejected goods on the seller. The buyer must hold them with reasonable care as a bailee, but need not send them back.
Section 44 gives the seller compensation for storage and other loss when the buyer delays, and preserves his right to treat a refusal amounting to repudiation as ending the contract.

4. Delivery, Examination, Acceptance and Rejection

Delivery is not acceptance. The buyer may receive the goods and still reject them after examination.
Examination precedes acceptance where the buyer has not previously examined the goods.
Rejection must be timely and clear, since keeping the goods without intimating rejection becomes acceptance.
Revocation of acceptance is not a concept of the Indian Act. Once the buyer has accepted, the right to reject is lost under Section 13(2), and his remedy is damages under Section 59, save under a term of the contract allowing rejection.

5. The Position Stated Shortly

Section 41: a buyer who has not examined the goods is not deemed to accept until he has had a reasonable opportunity to do so.
Section 42: acceptance occurs by intimation, by an act inconsistent with the seller's ownership, or by retention beyond a reasonable time.
Hardy v. Hillerns and Fowler: reselling and dispatching goods was acceptance.
Bernstein v. Pamson Motors: three weeks' use of a car was acceptance, although the defect appeared later.
After acceptance, Section 13(2) confines the buyer to damages.
Section 43: a buyer who rightly rejects need not return the goods; notice suffices.
Section 44: a buyer who fails to take delivery after request is liable for loss and storage.