Meaning and Types of Goods

Sale of Goods Act does not extend to the sale and purchase of immovable property. The subject-matter of a contract of sale is goods. Let us, therefore, understand the meaning of the term ‘goods’ and explain its various types relevant to the contract of sale.

Meaning of Goods

Goods are defined to mean every kind of movable property other than actionable claims and money. The term includes stock and shares, growing crops, grass, and things attached to, or forming part of the land which are agreed to be severed before sale or under the contract of sale [Section 2(7)].

Stock and shares have been expressly included in the definition of goods primarily to avoid any misunderstanding because they are excluded from the term ‘goods’ under English Law.

You will have noticed that ‘money’ and ‘actionable claims’ have been expressly excluded from the term ‘goods. ‘Money’ means the legal tender, it excludes old coins and foreign currency, as they can be sold or bought as goods. Sale and purchase of foreign currency is, however, regulated by the Foreign Exchange management Act. ‘Actionable claims’ like debts are things which a person cannot make use of, but which can be claimed by him by means of a legal action. Actionable claims cannot be sold or purchased like goods; they can only be assigned.

Thus, you should note the goods include every kind of movable property, i.e., things which can be carried from one place to another. However, all such things which form part of the land itself but are agreed to be served from the land under the contract of sale, are considered as goods. Thus, grass, growing crops, trees to be cut and their logwood to be delivered are goods as per the above definition, similarly things like goodwill, copyright, trade mark, patents, water, gas, electricity are all goods and may be the subject-matter of a contract of sale.

Types of Goods

The goods forming subject-matter of the contract of sale may be classified into following types as shown in Figure




















Existing Goods

As per Section 6 of the Act, existing goods are those goods which are owned or possessed by the seller at the time of contract of sale. The seller is either the owner of goods or he is in possession of goods. For example, A, a manufacturer of fans, sells a fan to B. It is a contract of sale of existing goods because A owns the fan. Similarly, when a person sells goods possessed by not owned by him such as sale by an agent, it is a sale of existing goods. For instance, in the above example, if the manufacturer sends the fans to his agent in Delhi and sells them through the agent it is a sale of existing goods because the dealer possesses the goods, although he is not the owner of them, at the time of the contract of sale.

The existing goods may be:

i) Specific goods: These are the goods which are identified and agreed upon by the parties at the time a contract of sale is made [Section 2(14)], for example, a specified watch, ring or a car.

ii) Ascertained goods: Though normally used as synonym for specific goods, ascertained goods are intended to include goods which have become ascertained subsequently to the formation of the contract. In re Wait, Lord Atkin observed that ascertained probably means “identified in accordance with the agreement after the time a contract of sale is made.” When the ‘unascertained goods’ are identified and agreed upon by the parties, the goods are called ‘ascertained’. You should note that ascertainment involves unconditional appropriation of the goods as the subject-matter of a particular contract. Thus, when out of a mass of unascertained goods, the quantity contracted for is identified and set aside for a given contract, the goods are said to be ascertained.

iii) Unascertained goods: These are the goods which are not identified and agreed upon at the time when the contract is made. They are identified only by description. For example, A, who owns an ambassador car show room, has 50 cars and agrees to sell any one of them to B. The contract is for unascertained goods, because which particular car shall be sold to B has not been identified at the time of the contract of sale.


Future Goods

As per [Section 2(6)] of the Act ‘future goods’ means goods to be manufactured or produced or acquired by the seller after making the contract of sale. Thus, future goods are goods which either are not in existence at the time of contract of sale or they may be in existence when the agreement of their sale is entered upon but have not yet been acquired by the seller by that time. For example, S agrees to buy the entire crop of wheat that would yield in B’s farm, at the rate of rupees 200 per quintal. This is an agreement of sale of future goods. As future goods are not in the possession of the seller at the time of contract, they can become the subject-matter of an agreement to sell only, and not the contract of sale.


Contingent Goods

Contingent Goods are the goods the acquisition of which by the seller depends upon a contingency which may or may not happen [Section 6 (2)]. For example, A agrees to sell to B a certain painting only if C, its present owner, sells it to him. Here the contract is for the sale of contingent goods as the availability of the painting depends on its sale by C.

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