Kinds of Goods under the Sale of Goods Act, 1930

Almost every type of business somewhere or the other involves the sale and purchase of goods as part of its business operation. In some cases, sales and purchases are made to support the main business framework and in some cases, sales and purchases are the main business. Businesses often enter into a contract of sale to sell their commodities to other parties. The Sale of Goods Act, 1930 is an umbrella act that governs all forms of sales. A sale is a general contract wherein the seller or owner of particular goods transfers or agrees to transfer the goods to a buyer at an agreed price.

As per Section 2 of the Sale of Goods Act, 1930, “a contract of sale is a term that includes both sale and agreement to sell and is characterized by an offer to buy goods for a price or an offer to sell goods for a price, and acceptance of the offer.”

Geeky Takeaways:

• Every individual, whether a businessman or a common man, who deals in the transaction of goods regularly, must understand the important terms of the Sale of Goods Act, 1930.
• India is one of the largest economies that has adequate measures to ensure the safety of its business.
• The sale of commodities is one of the most important types of contract under the law in India.
• This act was passed because the provisions of the contract act were found to be inadequate to deal with new situations that were arising due to an increase in mercantile situations.

Kinds of Goods under the Sale of Goods Act, 1930

According to Section 2(7) of the Sale of Goods Act 1930, Goods means “Every kind of movable property other than actionable claims and money; and includes stock and shares, growing crops, grass, and things attached to or forming part of the land, which are agreed to be separated from the land before a sale or under the contract of sale”. The term Goods includes tangible and intangible goods like goodwill, copyrights, patents, trademarks, etc. For goods even stock and shares, gas, steam, water, electricity, and decree of the court are also included in the term goods. To sum up, goods means:

• Every kind of immovable property.
• It excludes actionable claims and money in circulation.
• It also includes stock and shares, gas, steam, water, electricity, and decree of the court.

1. Existing Goods

According to Section 6 of the Sales of Goods Act, 1930, “Existing goods are those goods that exist at the time of making a contract of sale or in other words these goods are physically present at the time of contract.” Existing goods are owned/acquired or have the seller at the time of entering the contract of sale. There can be three distinctions in existing goods:

I. Specific Goods: 

According to Section 2(14) of the Sales of Goods Act, the goods that are particularly identified and which are agreed upon at the time of the formation of the contract of sale are known as Specific Goods.

For example, Rohit went to Rahul’s mobile shop. Rahul’s shop has different types of smartphones from different companies. Rohit specifically selects the Samsung S23 12+256GB phantom black variant. Rahul agrees to sell the Samsung S23 12+256GB phantom black variant to Rohit. In this case, the sale is for a specific mobile phone and hence is a specific good.

II. Ascertained Goods: 

Ascertained Goods are those goods that are identified as per the agreement after the contract of sale is initiated. However, the term Ascertained Goods is not defined in the act but has been carved out of judicial judgments and interpretations. In a real scenario, ascertained goods are used in the same sense as specific goods. When out of a big lot or out of a huge quantity of unascertained goods, a particular number or particular quantity to be contracted for is identified, such particularly identified goods are called Ascertained Goods. It is worth noting that before the ascertainment of the goods, the contract was for the sale of unascertained goods.

For example, Mukesh is a dealer of clay pots and has 2,000 clay pots, which he keeps in his warehouse. Rahim contracts with Mukesh to purchase 500 clay pots. Rahim selected 500 clay pots out of 2,000 and set them aside to purchase. As the clay pots that are to be sold are identified and agreed upon after the formation of the contract, this is a contract for Ascertained Goods.

III. Unascertained Goods: 

Unascertained Goods are those goods that are not particularly identified or ascertained at the time of the making of the contract. Unascertained Goods are indicated or defined only by description or sample.

For example, Tim, a dealer of pulse agrees to sell 50kg of pulse to Jim out of a lot of 1,000kg. Here, the goods that will be sold to Jim are not specific as they will be given out of the lot of 1,000kg, Tim may randomly select 50kg of pulse and sell it to Jim. This is a case of Unascertained Goods.

2. Future Goods

According to Section 2(6), “Future goods are those goods that are to be manufactured, produced or acquired by the seller after entering the contract of sale.” These are the goods that do not exist at the time of the contract of sale and will be manufactured/acquired/produced as per the description of the contract. It is to be noted that a contract for the sale of future goods is in all cases an agreement to sell. It is never considered an actual sale because a person cannot transfer goods that do not exist.

For example, GeeksforGeeks contracts with a clothing brand to supply them with 500 custom-designed hoodies. This is an agreement of sale, as the sale will take place at a future date after the clothing brand manufactures the hoodies as per the design. This is a sale of future goods.

3. Contingent Goods

According to Section 6(2) of the act, “When the acquisition of goods is dependent upon an uncertain contingency or an uncertain event, it is called Contingent Goods.” Contingent goods are deemed to be an agreement to sell and not a considered sale, as in the case of future goods the property in goods is not transferred to the buyer at the time of making a contract.

For example, Kartik contracts with Murli that he will buy 100 units of umbrellas if it rains in June. Here, the agreement is based on a contingency, and it is a case of Contingent Goods.

Effect of Perishing of Goods

1. Goods Perishing before making of Contract: It is established under Section 7 of the Sales of Goods Act, 1930. In the case of a contract for the sale of specific goods, if at the time when the contract was made, the goods perish or get damaged without the knowledge of the seller, and they fail to have the same characteristics or description as it was mentioned at the time of contract, then the contract will be void.

2. Goods perishing before sale but after an Agreement to Sell: It is established under Section 8 of the Sales of Goods Act, 1930. When there is an agreement to sell specific goods, and subsequently the goods perish or get damaged without the fault of the seller or buyer and such goods fail to have the same characteristics or description as it was mentioned at the time of contract, then the contract will be void.

3. Perishing of Future Goods: In cases where the future goods are specific, any destruction of goods will amount to a supervening impossibility, and the contract shall be void.

Conclusion

The Sale of Goods Act, 1930 is an umbrella act that governs all forms of sales. A sale is a general contract wherein the seller or owner of particular goods transfers or agrees to transfer the goods to a buyer at an agreed price. The Sales of Goods Act, 1930 specifies all rights and duties of the seller and other provisions which are of major prominence. The Sales of Goods Act is centered around the contract of sale of goods, where the goods have been defined as “Goods means every kind of movable property other than actionable claims and money, and includes stock and shares, growing crops, grass, and things attached to or forming part of the land, which are agreed to be separated from the land before sale or under the contract of sale.”

Frequently Asked Questions (FAQs)

1. What do Goods mean?

Answer:

According to Section 2(7) of Sale of Goods Act, 1930 Goods means “Every kind of movable property other than actionable claims and money; and includes stock and shares, growing crops, grass, and things attached to or forming part of the land, which are agreed to be separated from the land before sale or under the contract of sale”.

2. What are Existing Goods?

Answer:

According to Section 6 of the Sales of Goods Act, 1930, Existing Goods are those goods that exist at the time of making a contract of sale or in other words these goods are physically present at the time of contract. Existing Goods are owned/acquired or are in possession of the seller at the time of entering the contract of sale.

3. What are the further classifications in Existing Goods?

Answer:

There are three kinds of existing goods:

• Specific Goods
• Ascertained Goods
• Unascertained Goods

4. What are Contingent Goods?

Answer:

According to Section 6(2) of the Act, When the acquisition of goods is dependent upon an uncertain contingency or an uncertain event, it is called Contingent Goods. Contingent Goods are deemed to be an agreement to sell and not a considered sale.

5. What is the effect of perished goods in the case of Future Goods?

Answer:

In cases where the future goods are specific, any destruction of goods will amount to a supervening impossibility and the contract shall be void.