Daily Times

Pakistan, India and Bangladesh should enact a common law governing the sale of goods to boost economic growth and get rid of financial complexities. There is a need to modernise the Sale of Goods Act, 1930 to get rid of economic problems. At the outset, it seems pertinent to discuss the origin of the sales law in the UK, later adopted by its colonies. A man named Chandelor purchased from a man named Lopus a certain stone for the princely sum of 100 pounds in 17th century England. The stone was reputed to have magical healing powers. Immediately after the purchase, Chandelor found out that the purchased stone had no powers whatsoever, let alone magical healing ones. Annoyed, Chandelor took Lopus to a court of law. Before the court, Lopus objectively explained that although he had affirmed that the stone had healing powers, he had not warranted that it did. The court of law accepted Lopus’ argument. While Lopus was allowed to keep hold of the money, Chandelor was left merely with a stern warning — let buyers beware!

This warning resounded in the ears of consumers throughout the Empire until the UK enacted the Sale of Goods Act, 1893 (thereinafter SOGA 1893). This law provided some respite to consumers as a buyer could now examine goods supplied to him by the seller and reject them if they were not in line with the contract between them. In certain circumstances, the buyer could cancel the contract and in others sue the seller for damages. The UK’s colonies and dominions welcomed this law and adopted it without much variation. In 1930, the Government of India followed suit and enacted the Sale of Goods Act, 1930 (SOGA 1930). Post-independence, Pakistan enacted the Federal Laws (Revision and Declaration) Act, 1951, under which it adopted a number of Indian laws. The Sale of Goods Act, 1930 was one of these. SOGA 1930 was the law concerning sale of goods in the UK as well. Britain replaced the 1930 SOGA with 1979 SOGA, which is now in practice across the UK and Wales, and a few changes have been introduced by SOGA 1994.

Contracts are essential for running businesses and making sales to consumers. They formalise an agreement between parties and can cover a broad range of matters, including the sale of goods and associated services such as repairs and maintenance. If we look at India, Pakistan and Bangladesh, these countries still follow the Sale of Goods Act, 1930 incorporated by British India, which now seems outdated and too vague. It is fair to demand that it be amended as soon as possible as customs and practices concerning the sale of goods have changed over the period of more than 80 years. No doubt, Pakistan, India and Bangladesh have their own legal systems based on common law principles leading to various contract laws. It is arguable that there is a case for a new optional consumer code to cover distance selling across the three countries. The current text of SOGA 1930 does not always strike the right balance. Distance selling needs its own clear rules, designed around automated processes. A common sales law should be based on more general contract law principles and it is fair to think that it would benefit from greater focus on distance sales. It may be said that Pakistan, Bangladesh and India should improve their diplomatic relationship. However, the trading relationship among them may play a vital role. Traders and the Chamber of Commerce should demand for enactment of a common sales law, which may benefit the trading corporations and consumers.

Countries around the globe are moving forward to counter financial and economic crises, which can only be possible by harmonising the sales law. The European Union’s 27 member states have their own sales laws. However, to counter uncertainties and promote an air of certainty for traders and consumers, the European Commission published a proposal for a “Common European Sales Law” (or CESL), which traders may choose to use to govern their cross-border contracts. It covers the sale of goods, the supply of digital content and some related services. If the consumer explicitly agreed, the law governing the contract would then be the CESL rather than a national system. The CESL would effectively be a separate legal regime, which, if chosen, would take precedence over the mandatory rules of domestic law. Arguably, the common sales law breaks down barriers and maximises benefits for consumers and businesses. Trading companies need not wrestle with the uncertainties that arise from having to deal with multiple national contract systems. It is also arguable that small and medium sized companies may appreciate the enactment of the common sales law to expand their business into new markets easily.

From the perspective of consumers, providing the high level of consumer protection in three countries will mean they will be able to rely on the common sales law as a mark of quality. It is fair to believe that the common sales law in Pakistan, Bangladesh and India will help break down trade barriers and give consumers more choice and a high level of protection, especially when buying online. It will offer a single set of rules for cross-border contracts within the countries. For example, Bangladesh and India, as far as trade is concerned, are more developed and closer in trade than Pakistan. If the subcontinental countries fail to agree on the enactment of a common sales law then the trading corporations and the consumers will have to suffer.

The writer is an advocate of the High Court and is lecturing in the Law of International Trade. He can be reached at greenlaw123@hotmail.com