Short notes on the Kinds of Goods

‘Goods’ form the subject matter of a contract of sale. We have already seen the meaning of the term ‘goods’ as per Section 2(7). Goods may be classified into the following types:

1. Existing goods;

2. Future goods; and

3. Contingent goods.

1. Existing goods:

Goods which are physically in existence and which are in seller’s ownership and/or possession, at the time of entering the contract of sale are called ‘existing goods.’ Where seller is the owner, he has the general property in them. Where seller is in possession, say, as an agent or a pledgee, has a right to sell them.

Existing goods may again be either ‘specific’ or ‘unascertained.’

(a) Specific goods:

Good identified and agreed upon at the time of making of the contract of sale are called ‘specific goods’ [Sec. 2(14)]. It may be noted that in actual practice the term ‘ascertained goods’ is used in the same sense as ‘specific goods.’

(b) Unascertained goods:

The goods which are not separately identified or ascertained at the time of making of the contract are known as ‘unascertained goods’. They are indicated or defined only by description. For example, if A agrees to sell to B one bag of sugar out of the lot of one hundred bags lying in his godown, it is a sale of unascertained goods because it is not known which bag is to be delivered. As soon as a particular bag is separated from the lot for delivery, it becomes ascertained or specific goods.

The distinction between ‘specific’ or ‘ascertained’ and ‘unascertained’ goods is important in connection with the rules regarding ‘transfer of property’ from the seller to the buyer.

2. Future goods:

Goods to be manufactured, produced or acquired by the seller after the making of the contract of sale are called ‘future goods’ [Sec. 2(6)]. These goods may be either not yet in existence or be in existence but not yet acquired by the seller. It is worth noting that there can be no present sale of future goods because property cannot pass in what is not owned by the seller at the time of the contract. So even if the parties purport to effect a present sale of future goods, in law, it operates only as an ‘agreement to sell’ [Sec. 6(3)].

Illustrations :

(a) A agrees to sell to B all the milk that his cow may yield during the coming year. This is a contract for the sale of future goods.

(b) X agrees to sell to Y all the mangoes which will be produced in his garden next year. It is contract of sale of future goods, amounting to ‘an agreement to sell.’

(c) P contracts on 1 January 1990, to sell to B ten bales of Egyptian cotton to be delivered and paid by 1 March, 1990. This is a valid contract of sale, amounting to an agreement to sell, even though P has no cotton bales with him at the time of making the contract.

3. Contingent goods:

Goods, the acquisition of which by the seller depends upon an uncertain contingency are called ‘contingent goods’ [Sec. 6(2)]. Obviously they are a type of future goods and therefore a contract for the sale of contingent goods also operates as ‘an agreement to sell’ and not a ‘sale’ so far as the question of passing of property to the buyer is concerned. In other words, like the future goods, in the case of contingent goods also, the property does not pass to the buyer at the time of making the contract. It is important to note that a contract of sale of contingent goods is enforceable only if the event on the happening of which the performance of the contract is dependent happens, otherwise the contract becomes void.

Illustrations :

(a) A agrees to sell to B a specific rare painting provided he is able to purchase it from its present owner. This is a contract for the sale of contingent goods.

(b) X agrees to sell to Y 25 bales of Egyptian cotton, provided the ship which is bringing them reaches the port safely. It is a contract for the sale of contingent goods. If the ship in sunk, the contract becomes void and the seller is not liable.