Classify what actually arrived
Section 37 of the Sale of Goods Act, 1930 distinguishes short delivery, excess delivery and contracted goods mixed with goods of an uncontracted description. The default rules are subject to trade usage, special agreement or course of dealing. Start with the operative purchase terms, agreed tolerances and correct units of measure before choosing a response.
Read the applicable text: India Code: Sale of Goods Act, 1930, sections 37 and 41–43.
Apply the appropriate branch
On short delivery the buyer may reject; if the buyer accepts what arrived, it pays at the contract rate for those goods. On excess delivery the buyer may accept the contracted quantity and reject the excess, or reject all; if it accepts all, it pays at the contract rate for all delivered goods. On a mixed-description delivery the buyer can accept conforming goods and reject the rest, or reject the whole. Identify any condition or agreed treatment that alters the default position.
Separate receipt, inspection and acceptance
A warehouse receipt may show unloading without proving legal acceptance. Preserve the contract, count or weighment, lot identity, inspection results and communications. Under section 41, a buyer who has not previously examined the goods normally has a reasonable opportunity to check conformity before being deemed to accept them. Under section 42, the buyer may accept by notifying the seller, acting inconsistently with the seller’s ownership after delivery, or retaining the goods beyond a reasonable time without communicating rejection. Record the applicable facts and timing. Keep disputed units identified and avoid consuming or redistributing them before deciding how to handle the exception. When the buyer has the right to reject, section 43 ordinarily requires notice to the seller without requiring the buyer to return the goods, unless the parties agreed otherwise.
Reconcile the payable without deciding every remedy
For simple accepted units apply the contract rate and compare it with the invoice and any valid adjustment. Keep rejected units, shortfalls, transport costs and disputed amounts on distinct lines. A reconciliation does not by itself decide damages, credit-note treatment, tax or whether rejection was effective.
Six worked illustrations
All facts and amounts are fictional. Calculations illustrate the stated assumptions, not a predetermined legal outcome.
Illustrative example 1: Accept a short delivery
A buyer orders 100 units at ₹750 and accepts 92 delivered. The accepted-goods amount is ₹69,000. Eight units are short, representing ₹6,000 at the contract rate. That figure values the shortfall; it does not establish damages.
Illustrative example 2: Reject the excess
A contract is for 250 units at ₹120 and 270 arrive. The buyer accepts 250 and rejects 20 on the stated facts. The accepted-goods amount is ₹30,000.
Illustrative example 3: Accept the whole excess delivery
The buyer accepts all 270 units at the same ₹120 contract rate. The amount is ₹32,400, which is ₹2,400 more than for 250 units.
Illustrative example 4: Mixed descriptions
A seller delivers 88 conforming units at ₹400 each and 12 units of a description not contracted for. The buyer accepts the 88 and rejects the rest. The accepted-goods amount is ₹35,200 before any other issue.
Illustrative example 5: Check a contract tolerance
Assume a contract permits delivery within 2% of 1,000 kg and bills accepted actual weight. The permitted band is 980–1,020 kg. A measured delivery of 985 kg is 15 kg, or 1.5%, below order and within that band. At ₹90 per kg the amount is ₹88,650.
Illustrative example 6: Identify the disputed invoice amount
An invoice bills 160 units at ₹500. The buyer accepts 145 conforming units and separately documents the remaining 15 as rejected. The invoice is ₹80,000, the accepted-goods amount is ₹72,500, and the variance for review is ₹7,500.
Ten-step verification table
| Step | Action | Evidence |
|---|---|---|
| 1 | Confirm current quantity, description and units | Purchase agreement and amendments |
| 2 | Check tolerances, trade usage and past dealing | Contract and supported practice |
| 3 | Record delivered quantities and condition | Weighment and receiving record |
| 4 | Separate conforming and disputed units | Lot-level inspection schedule |
| 5 | Identify the applicable section 37 branch | Documented legal classification |
| 6 | Establish the actual acceptance or rejection | Communications and conduct evidence |
| 7 | Segregate rejected or disputed stock | Custody and movement records |
| 8 | Recompute the accepted-goods payable | Contract rate and units accepted |
| 9 | Match any invoice adjustment and review separate taxes | Invoice reconciliation and tax file |
| 10 | Retain evidence for unresolved claims | Chronology and dispute working |
Sixteen practitioner FAQs
1. Can the buyer reject a short delivery under the default rule?
Yes. If the buyer accepts it, payment is at the contract rate for what was delivered.
2. Must the buyer keep excess units?
No. Review the statutory choices and the actual agreement.
3. What if the buyer keeps all excess units?
Under section 37(2), accepting all means paying for all delivered at the contract rate.
4. Can the buyer retain conforming goods in a mixed lot?
Section 37(3) allows acceptance of conforming goods and rejection of the rest, or rejection of the whole.
5. What if the contract has a permitted weight band?
Apply the agreed terms and verify the measurement before using the default rule.
6. Can prior dealing affect the result?
Section 37(4) expressly recognises course of dealing, usage of trade and special agreement.
7. Does unloading necessarily prove acceptance?
Review the conduct and statutory acceptance rules; unloading alone may not resolve it.
8. Can issuing disputed goods into production matter?
Yes. Examine actual conduct under the acceptance rules and preserve the event trail.
9. Which rate applies when accepted short goods are billed?
Section 37(1) refers to the contract rate.
10. Can invoices be approved before resolving a unit mismatch?
Separate accepted and disputed quantities and apply the contract and approval controls.
11. Is a delivery discrepancy automatically a tax credit note?
No. Review the applicable invoicing and tax requirements separately.
12. Does rejection always create a damages entitlement?
Assess the legal basis and facts separately.
13. How should a lot with two descriptions be recorded?
Identify the conforming and disputed descriptions by batch and quantity.
14. Does a supplier’s packing list override a verified weighment?
Compare the evidence and the contract measurement basis.
15. Can rejected units remain physically on site?
Yes. If rejection is valid, section 43 generally requires the buyer to notify the seller of refusal and does not require return unless otherwise agreed. Document custody and follow the applicable terms.
16. What makes the payable working reviewable?
Show ordered, delivered, accepted and disputed units, the contract rate and supporting communications.