Section 37 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 37 tells a buyer what he may do when the seller delivers less than the contracted quantity, more than the contracted quantity, or the contracted goods mixed with goods of a different description. This article explains the four sub-sections as per the consolidated text of the Act consulted (latest amendment shown: Act 28 of 1993); amendments after that should be checked in the official text.
If the seller delivers less than he contracted to sell, the buyer may reject the goods, but if he accepts them he shall pay at the contract rate. If the seller delivers more, the buyer may accept the contract quantity and reject the rest, or reject the whole; if he accepts the whole, he pays at the contract rate. If contracted goods arrive mixed with goods of a different description, he may accept the right goods and reject the rest, or reject the whole. All of this is subject to any usage of trade, special agreement or course of dealing.
Sub-section (1): less than the contracted quantity
"Where the seller delivers to the buyer a quantity of goods less than he contracted to sell, the buyer may reject them, but if the buyer accepts the goods so delivered he shall pay for them at the contract rate." The sense is that if the buyer accepts the goods delivered, he pays at the contract rate.
Two things follow from the words. First, the buyer has a choice: he "may reject". Second, if he accepts the short quantity, the price is worked out at the contract rate for the quantity he accepted. The section does not say the buyer must pay the full contract price for the quantity he did not receive.
Example (our own, not from the Act): Lakshmi Foods orders 1,000 cartons of packed biscuits from Dev Distributors at a contract rate of Rs. 400 a carton. Dev sends 900. Under sub-section (1), Lakshmi Foods may reject the 900. If it accepts them, it pays at the contract rate for those 900 cartons. If the shortfall becomes a written complaint, a legal notice should state the ordered and delivered quantities exactly.
Sub-section (2): more than the contracted quantity
"Where the seller delivers to the buyer a quantity of goods larger than he contracted to sell, the buyer may accept the goods included in the contract and reject the rest, or he may reject the whole. If the buyer accepts the whole of the goods so delivered, he shall pay for them at the contract rate."
The buyer has two options and a consequence:
- accept the goods included in the contract and reject the rest;
- reject the whole;
- if he accepts the whole delivered, he pays "at the contract rate" for all of it.
Example (our own): Under the same order, Dev sends 1,100 cartons. Lakshmi Foods may take 1,000 and reject 100, or reject all 1,100. If it accepts all 1,100, it pays at Rs. 400 a carton for the lot.
How and when the buyer is "deemed to have accepted" goods is dealt with in section 42; see our article on the buyer's right to examine goods and acceptance. That matters here, because section 42 treats an act inconsistent with the seller's ownership as acceptance.
Sub-section (3): contracted goods mixed with goods of a different description
"Where the seller delivers to the buyer the goods he contracted to sell mixed with goods of a different description not included in the contract, the buyer may accept the goods which are in accordance with the contract and reject the rest, or may reject the whole."
The shape matches sub-section (2): accept the right goods and reject the rest, or reject everything. Note the words "of a different description not included in the contract". A mixed lot of the contracted grade of cotton yarn and a different grade not in the contract falls here. Section 15 of the Act separately requires that goods sold by description correspond with the description; see our article on sale by description. Sub-section (3) deals with what the buyer may do with a mixed delivery; it does not by itself say what remedy follows beyond rejecting.
Sub-section (4): usage, special agreement and course of dealing
"The provisions of this section are subject to any usage of trade, special agreement or course of dealing between the parties." This is the safety valve. Many trades supply a small margin over or under the quantity as a matter of custom. If a usage of trade, a special agreement or a course of dealing says so, the section yields to it. The section does not list any usage, and does not say what margin, if any, a trade may tolerate. That is left to the facts of the trade and the parties.
Section 62 is a general rule of the same kind: what arises "by implication of law" may be negatived or varied by express agreement, the course of dealing or usage that binds both parties. See our article on exclusion of implied terms.
The three situations side by side
| Situation | Sub-section | Buyer's choices as printed | If he accepts |
|---|---|---|---|
| Less than contracted | (1) | May reject | Pays "at the contract rate" |
| More than contracted | (2) | Accept the contract goods and reject the rest, or reject the whole | If he accepts the whole, pays "at the contract rate" |
| Mixed with goods of a different description | (3) | Accept the contract goods and reject the rest, or reject the whole | The sub-section is silent on the rate |
| All three | (4) | Subject to usage of trade, special agreement or course of dealing | Per the usage or agreement |
Practical points
- Record the count on receipt. The right to reject arises on the delivery of the wrong quantity, so a signed goods-received note with the counted quantity fixes what was delivered.
- Tell the seller promptly. Under section 42 a buyer may be deemed to have accepted goods when, after a reasonable time, he retains them without intimating rejection. Under section 43 it is enough to intimate the refusal; the buyer need not send the goods back unless otherwise agreed. See our article on rejected goods and refusing delivery.
- Write the tolerance into the contract. If your trade ships with a plus-or-minus margin, say so in the supply terms; sub-section (4) allows a special agreement to override the rule.
- Send a written notice. A short, dated notice naming the shortfall or excess and the choice the buyer makes keeps the position clear for both sides.
Need help with a notice about short or excess delivery?
When a delivery does not match the order, the first letter sets the tone for everything that follows. We can draft a clear legal notice that states what was ordered, what arrived and what the buyer elects to do, and we can also review the quantity and tolerance clauses of your supply terms.
Key takeaways
- Less than contracted: the buyer may reject; if he accepts, he pays at the contract rate.
- More than contracted: accept the contract quantity and reject the rest, or reject the whole; accepting the whole means paying at the contract rate.
- Mixed with goods of a different description: accept the contract goods and reject the rest, or reject the whole.
- Usage of trade, special agreement or course of dealing prevails over the section.
Read next
- Section 36 of the Sale of Goods Act, 1930: rules as to delivery
- Section 38 of the Sale of Goods Act, 1930: instalment deliveries
- Sections 41-42 of the Sale of Goods Act, 1930: examination and acceptance
- Section 37 of the Indian Contract Act, 1872: obligation of parties to perform or offer to perform
Disclaimer: Based on the consolidated text of the Sale of Goods Act, 1930 consulted on 2 October 2026, whose latest amendment shown is Act 28 of 1993. It explains the words of the statute only; later amendments and the way courts apply these sections should be checked. This article is general information, not legal advice; check the official text before acting.