Sections 9-10 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.
A contract of sale needs a price, but it does not always state one at the outset. Section 9 lists the ways the price may be fixed and, failing those, requires "a reasonable price". Section 10 deals with an agreement to sell at a price to be fixed by a third party's valuation, and with what happens if the valuer cannot or does not value the goods.
The price may be fixed by the contract, left to be fixed in a manner agreed, or determined by the course of dealing between the parties. If it is not determined in any of these ways, the buyer shall pay the seller a reasonable price, which is "a question of fact". Where a third party's valuation fixes the price and the valuation is not made, the agreement is avoided, unless the goods have been delivered to and appropriated by the buyer, who must then pay a reasonable price.
Reading note
This article follows the consolidated text of the Act consulted (latest amendment shown: Act 28 of 1993); later amendments should be checked in the official text. "Price" is defined in section 2(10) as "the money consideration for a sale of goods"; see our article on the section 2 definitions. Sections 9 and 10 sit under the sub-heading "The price" in Chapter II. A price clause that is vague is the commonest source of dispute, so it is worth settling it in the contract through proper agreement drafting.
Section 9(1): three ways to fix the price
"The price in a contract of sale may be fixed by the contract or may be left to be fixed in manner thereby agreed or may be determined by the course of dealing between the parties."
| Way of fixing | Meaning in plain words |
|---|---|
| Fixed by the contract | the contract states the price or a method that produces it |
| Left to be fixed in manner thereby agreed | the contract names a way (for example, a rate list or an index) and the price follows from it |
| Determined by the course of dealing | the earlier dealings between these parties set the price |
The wording "left to be fixed in manner thereby agreed" means the manner must come from the contract itself. "Course of dealing between the parties" is a third source and refers to the way these parties have dealt before.
Example (the writer's own, not printed in the Act): Chopra Dairy has supplied milk powder to Hira Sweets every month for years at the rate in the previous invoice. This month's order does not mention a rate. The earlier dealings may fix the price under section 9(1).
Section 9(2): a reasonable price
"Where the price is not determined in accordance with the foregoing provisions, the buyer shall pay the seller a reasonable price. What is a reasonable price is a question of fact dependent on the circumstances of each particular case."
Three points:
- It applies only where the price is not determined by the contract, the agreed manner or the course of dealing.
- The buyer "shall pay" a reasonable price. A contract is not left without a price.
- The text does not define a reasonable price. It says only that it is "a question of fact dependent on the circumstances of each particular case". This article gives no formula, because the section gives none.
Example (the writer's own): Dev Garments orders ten rolls of a special fabric by telephone from Lal Textiles. No rate is mentioned, and the parties have not dealt before. Under section 9(2) Dev Garments must pay a reasonable price, and what is reasonable will depend on the circumstances.
Even so, an ambiguous price clause is safer replaced by a fixed rate or a clear formula.
Section 10(1): agreement to sell at valuation
"Where there is an agreement to sell goods on the terms that the price is to be fixed by the valuation of a third party and such third party cannot or does not make such valuation, the agreement is thereby avoided."
Notice the opening words: it speaks of an agreement to sell, the category in section 4(3), where the property is to pass later. The two failures are in the words "cannot or does not": the valuer may be unable, or may simply not do it. In either case the agreement is "avoided".
The proviso
"Provided that, if the goods or any part thereof have been delivered to, and appropriated by, the buyer, he shall pay a reasonable price therefor."
Two things must have happened: the goods (or part of them) must be delivered to the buyer, and appropriated by him. Then the buyer pays a reasonable price for those goods or that part. The proviso does not define "appropriated"; the word is used again in sections 23 and 24, which are explained in later articles.
Example (the writer's own): Prakash Orchards agrees to sell its apple harvest to Mehta Fruit Co. at the price an independent valuer, Mr. Rao, will fix. Mr. Rao falls ill and cannot value the crop. The agreement is avoided. But if Mehta Fruit Co. had already taken delivery of part of the apples and used them, it must pay a reasonable price for that part.
Section 10(2): valuer prevented by fault
"Where such third party is prevented from making the valuation by the fault of the seller or buyer, the party not in fault may maintain a suit for damages against the party in fault."
"Fault" is defined in section 2(5) as "wrongful act or default". If, for example, one side keeps the valuer away from the goods, the other side, which is not in fault, may sue for damages. The text names only the right to sue for damages; it does not set a measure. For the general law of compensation for breach, see Section 73 of the Indian Contract Act, 1872. That law applies to sales of goods under section 3 of this Act so far as it is not inconsistent.
Comparison of sections 9 and 10
| Point | Section 9 | Section 10 |
|---|---|---|
| Kind of contract | contract of sale generally | agreement to sell with price fixed by a third party's valuation |
| When it applies | whenever the price is to be ascertained | when a third party cannot or does not value |
| Consequence | reasonable price if not otherwise determined | agreement avoided; reasonable price if goods delivered and appropriated |
| Remedy for obstruction | not covered | party not in fault may sue for damages |
Practical drafting points
- State the price or the formula. Do not rely on a "reasonable price" as a convenience: it is a question of fact on the circumstances.
- If a valuer is to fix the price, name the valuer, a substitute, a time limit and who pays the fee. The Act's rule on failure is the fallback, not the plan.
- Keep invoices and rate lists. They show the course of dealing.
- Where the goods have been delivered before the price is fixed, record that they are appropriated by the buyer, because the proviso to section 10(1) depends on it.
Need help with price clauses?
If price clauses, rate schedules or valuation terms in your supply contract are loosely worded, we can draft or tighten the agreement so that the price is fixed by a method both sides can follow.
Key takeaways
- The price may be fixed by the contract, by a manner agreed in it, or by the course of dealing.
- Otherwise the buyer pays a reasonable price; what is reasonable is a question of fact.
- If a third-party valuation fails, the agreement to sell is avoided.
- If goods have been delivered to and appropriated by the buyer, a reasonable price is payable.
- A party not in fault may sue for damages if the other party's fault prevents the valuation.
Read next
- Section 5 of the Sale of Goods Act, 1930: how a contract of sale is made
- Section 11 of the Sale of Goods Act, 1930: stipulations as to time of payment and other time terms
- Section 23 of the Sale of Goods Act, 1930: unascertained goods, appropriation and delivery to carrier
- Section 73 of the Indian Contract Act, 1872: compensation for breach
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.