Different modes for fixing the price of goods according to section 9 are given below:
The money consideration for a sale of goods is known as ‘price‘ [Sec. 2(10)]. We have already seen that the price is an essential element in every contract of sale of goods, that is, no valid sale can take place without a price.
The price should be paid or promised to be paid in legal tender money, unless otherwise agreed. It may be paid in the form of a cheque, hundi, bank deposit etc. For, it is not the mode of payment of a price but the agreement to pay a price in money that is requisite to constitute a valid contract of sale.
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Modes of fixing the price:
According to Section 9 the price may be fixed by one or the other of the following modes:
1. It may be expressly fixed by the contract itself:
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This is the most usual mode of fixing the price. The parties are free to fix any price they like and the court will not question as to the adequacy of price.
But the sum should be definite. Where an alternative price is fixed, the agreement is void ab-initio as it involves an element of wager (Bourke vs Short).
Thus, where A agrees to sell his cow to B for Rs. 5,000 if the cow gives 10 kg milk every day but for Rs 100 only if it fails to do so, there is a wagering agreement void ab-initio.
2. It may be fixed in accordance with an agreed manner provided by the contract:
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For example, it may be agreed that the buyer would pay the market price prevailing on a particular date, or that the price is to be fixed by a third party (i.e., valuer) appointed by the consent of the parties.
But in the following cases where the agreement of the parties as to price is uncertain, price is deemed as ‘not capable of being fixed’ and hence the agreement is void ab- initio for uncertainty:
(a) If the price is agreed to be whatever sum the seller be offered by any third party; or
(b) If the price is left to be fixed by one of the contracting parties, expressly.
Remember that if no price is fixed then the contract is not void for uncertainty because in that case law usually allows market price prevailing on the date of the supply of goods as the price bargained for.
3. It may be determined by the course of dealings between the parties:
For example, if the buyer has been previously paying to a particular seller the price prevailing on the date of placing the order, the course of dealings suggest that in subsequent transactions also the price as on the date of order will be paid.
4. If the price is not capable of being determined in accordance with any of the above modes, the buyer is bound to pay to the seller a reasonable price:
What is a reasonable price is a question of fact dependent on the circumstances of each particular case. Ordinarily, the market price of the goods prevailing on the date of supply is taken as reasonable price.
It is to be remembered that unless otherwise agreed, payment of the price and delivery of the goods are concurrent conditions (Sec. 32).