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The Sale of Goods Act, 1930 (the “SGA”) governs the sale of goods in Pakistan and provides for standard default terms and conditions of sale. Normally, these standard terms are modified by the Buyer and Seller through a formal written agreement, called a “Contract of Sale” under the SGA. The SGA and the Contract Act 1872, both of which are federal laws, are the two primary laws regulating commercial activities in Pakistan. The SGA has not been updated, except for minor additions.
The SGA provides the basic terms and conditions of sale for goods and the procedure for transfer of ownership of property from the Seller to the Buyer in the Contract of Sale. A Contract of Sale is essentially a valid contract (i.e., meeting formal requirements of Contract Act, 1872 whether oral or written), which is entered into freely by Parties having legal capacity to do so, and which is based on lawful consideration (i.e., the price) in exchange for transfer of ownership of the goods.
The SGA also deals with Agreements to Sell, which are only relevant in case of future goods (see below) or where the transfer and delivery does not take place until a future date or when some condition is fulfilled. Once the goods are transferred, the agreement is “converted” into a Contract of Sale.