Sale and Contract for Work and Labour

A contract of sale of goods has to be distinguished from a contract for work and labour, involving the exercise of skill or labour on some material. The dividing line between the two is very minute. The distinction essentially rests on whether the rendering of the service and exercise of skill is the essence of the contract or the delivery of the goods is the essence of the contract, although some labour on the part of the seller might also have been out. In case of the former, it is a contract of work while in the latter case it will be a contract of sale of goods. 

The distinction between the two may be understood by referring to the case of Robinson v. Graves. In this case A engaged an artist to paint a portrait. Canvas, paint and other necessary articles were to be supplied by A to the painter. Applying the above-mentioned test that whether application of the skill and labour in the production of the portrait is the substance of the contract, it was held that it is a contract for work and labour and not a contract of sale. On the other hand, a contract for providing and fixing four different types of windows of certain size according to specifications, designs, drawings and instructions set out in the contract and a contract for making and supplying of wagons or coaches on the underframe supplied by Railways have been held by the Supreme Court to be contracts for work and labour and not a contract of sale.

From the above it should become clear to you that in a contract of sale ownership and possession of goods is transferred, while in a contract for work and labour though there may be delivery of goods, yet the emphasis is on the exercise of skill and labour upon the goods.

Does providing food in a restaurant amount to sale of goods? The Punjab High Court while delivering judgement in Northern India Caterers (India) Ltd., v, Lt. Governor of Delhi observed that the supply of meals, whether to residents or stray customers is essentially in the nature of service and not a transaction of sale. The customers come there not to buy food and drinks but to find bodily satisfaction that service of food in the setting of a restaurant can afford to give.

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