Modes of ascertaining the price in a contract of sale

Meaning of price. Price is the consideration in money for a sale of goods (s. 2(10), Sale of Goods Act, 1930). A price in money must be paid or promised, although the consideration may be partly money and partly goods. Because price is an essential of a contract of sale, the Act tells the parties how it is to be settled.

Modes under section 9. The price in a contract of sale may be ascertained in any of the following ways:

1. Fixed by the contract itself. The parties state the figure. Example: a Pune dealer agrees to supply 40 laptops to a coaching institute at ₹45,000 each.
2. Agreed to be fixed in a manner the contract provides, for instance by a valuer. Example: a farmer in Ludhiana and a buyer agree that a used tractor will go at whatever figure an approved valuer certifies.
3. Determined by the course of dealing between the parties. Example: a Surat cloth wholesaler has for years billed a regular Jaipur retailer at its current price list less 5%; a fresh order placed without any mention of price is priced on that same basis.
4. A reasonable price where none of these settles it. If the parties leave price out altogether, the contract does not fail for uncertainty: it stays valid and the buyer must pay a reasonable price.

Price fixed by a third party's valuation (section 10). Where goods are agreed to be sold at a price to be fixed by the valuation of a third party:

1. No valuation made. If the third party does not, or cannot, make the valuation, the agreement is avoided (it becomes void).
2. Goods already taken. Even then, a buyer who has received and appropriated the goods, or any part of them, must pay a reasonable price for what he has taken.
3. Valuation prevented by a party. If the seller or the buyer, by his default, prevents the third party from fixing the price, the party at fault is liable in damages to the party not at fault.

Example: Kavita agrees to sell two paintings to Arjun at a price to be fixed by a named gallery owner in Delhi, and hands over one painting at once. The gallery owner declines to value them. The agreement is avoided for the painting not yet delivered, but Arjun must pay a reasonable price for the one he has received and kept.

Conclusion. The price may thus be fixed by the contract, fixed later by an agreed method such as a valuer, or inferred from the parties' course of dealing; failing these, a reasonable price is payable, and a third-party valuation that is never made avoids the agreement except for goods the buyer has already taken.