Explain the meaning and scope of "Sale by sample"

A sale by sample rests on a deceptively simple idea — that the small parcel shown to the buyer becomes, in law, a silent promise about the whole consignment — and Section 17 of the Sale of Goods Act, 1930 works out precisely what that promise entails and what happens when it is broken.

When Is a Sale "By Sample"

Section 17(1) tells us that a contract of sale is a sale by sample only where there is a term in the contract, express or implied, to that effect. Merely showing a sample during negotiations does not, by itself, convert a transaction into a sale by sample — if a seller exhibits a sample merely to indicate the general sort of goods he is offering, without any contractual term that the bulk shall correspond to it, the sale is not a sale by sample at all, though the seller may still be liable for fraud if the bulk turns out to be markedly different. Where, however, the parties expressly agree that the goods shall be "equal in quality to the sample," or where such a term can be gathered by implication from the transaction, the sale is by sample, and the special incidents of Section 17(2) attach to it. It has even been held that a sale remains one by sample where samples are chemically analysed and reduced to a formula before the bulk contract is concluded.

The Three Implied Conditions Under Section 17(2)

Section 17(2) implies three distinct conditions into every sale by sample.

• The bulk shall correspond with the sample in quality.

• The buyer shall have a reasonable opportunity of comparing the bulk with the sample.

• The goods shall be free from any defect rendering them unmerchantable, which would not be apparent on reasonable examination of the sample.

Each of these conditions operates independently, and all three must be satisfied for the seller to have discharged his obligations — satisfying one does not excuse a breach of another.

Bulk Must Correspond With Sample: The First Condition

The first and most fundamental condition is that the bulk delivered must equal the sample in quality, since "quality" under Section 2(12) includes the state or condition of the goods. If the bulk fails to match the sample, the buyer is entitled to reject the goods — unless he has already accepted them, or, in the case of specific goods, property has already passed to him, in which case, by virtue of Section 13(2), his remedy is confined to damages as for breach of warranty. Where only part of the goods matches the sample and part is inferior, the buyer may reject the whole consignment, or accept it entirely and claim damages for the inferior portion — but he cannot cherry-pick, retaining the conforming part while rejecting the rest, unless the contract happens to be severable.

Reasonable Opportunity to Compare: The Second Condition

The second condition guarantees the buyer a reasonable, not merely a practicable, opportunity to compare the bulk against the sample before he can be said to have accepted the goods. This right was vindicated in the English case where a seller contracted to sell two parcels of wheat by sample — one of 700 bushels, the other of 1,400 — and permitted inspection of only the smaller parcel while refusing inspection of the larger. The court held that the buyer was entitled to refuse the entire consignment, since a partial opportunity to inspect a fraction of the bulk did not satisfy the statutory guarantee of a reasonable opportunity to compare. This right of examination is distinct from the general right of examination conferred by Section 41, and may, in certain trade contexts, be validly postponed by express contractual terms — as in C.I.F. contracts, where payment is made in cash against shipping documents on arrival, and the buyer's right of prior inspection yields to the commercial necessity of the documentary sale, though he retains the right to reject afterward if the bulk, on subsequent examination, does not correspond to the sample.

Freedom From Latent Defects: The Third Condition

The third condition is, in many ways, the most protective of the buyer, because it operates independently of the sample itself — it is not open to the seller to say that the sample itself concealed the same defect, since his duty to furnish merchantable goods is paramount to any comparison with the sample. The leading illustration is the English decision in Godley v. Perry, where a shopkeeper purchased plastic toy catapults by sample for resale to children; the sample appeared entirely sound on ordinary inspection. When one catapult sold to a child shattered in use and caused serious eye injury, the court held that the defect was latent, undiscoverable by any reasonable examination of the sample, and the seller was liable under this third limb notwithstanding that the bulk did, in fact, correspond with the sample in appearance. Neither inspecting the bulk nor examining the sample beforehand excludes an inquiry into whether the goods are otherwise merchantable and fit for their ordinary purpose.

Sale by Sample Combined With Description: Section 15's Overlay

Section 15 supplies an important qualification when a sale is both by sample and by description — it is not sufficient that the bulk corresponds with the sample if the goods do not also correspond with the description, since correspondence with description goes to the very nature of the article, while correspondence with sample affects only its quality. The old English authority illustrates this vividly: where a buyer purchased "foreign refined rape oil warranted only equal to samples," and the sample itself, unbeknownst to either party, actually consisted of rape oil adulterated with hemp oil, the bulk delivered matched the sample perfectly — yet the buyer was still entitled to reject the goods, because neither the sample nor the bulk was "foreign refined rape oil" as described in the contract. The warranty as to sample governed only quality, not the fundamental identity of the article contracted for. A similar illustration is given for Fair Bengal cotton — a buyer who purchases by sample, inspects the bulk, and finds it corresponds to sample, may still reject the goods if the cotton delivered does not answer to the trade description "Fair Bengal," since the sample warranty cannot cure a failure of description.

Remedies on Breach

The remedies available on breach of any condition implied under Section 17 follow the general scheme already laid down for conditions and warranties. Where the buyer has not accepted the goods and property has not passed, he may reject the goods outright and treat the contract as repudiated under Section 12(2). Where, however, he has accepted the goods under Section 42, or where property in specific goods has already passed and Section 13(2) applies, his breach of condition is reduced to a breach of warranty, and his remedy lies under Section 59 — he may set up the breach in diminution or extinction of the price, or sue separately for damages, but he can no longer reject the goods.

Summary