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Section 2(7) of the Sale of Goods Act 1930 defines Goods. There are three types of Goods,  Existing Goods,
Future Goods and Contingent Goods.

Meaning and Definition of Goods 

Section 2(7) of the Sale of Goods Act defines Goods... According to Section 2(7) of the Said 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
severed before sale or under the contract of sale.

The Scope of the definition of the word "goods" under the Indian Sale of Goods Act is wider than that under
the English Act.

3) Kinds of Goods - 

There are three types of Goods which are as follows -

 (a) Existing Goods

 (b) Future Goods and

 (c) Contingent Goods

 (a) Existing Goods - In this types of goods, Goods are owned and possessed by the Seller at the time of
the making of the Contract of Sale.

Illustration -

       A sells 5 bags of Sugar to B, which is laying down in the Godown... The Suger Bags are called "existing
goods.

Existing goods may be divided into specific goods and Uncertain Goods.

    i) Specific Goods - Goods identified and agreed upon at the time of sale is made are called "specific
goods"

   ii) Uncertain Goods -  Goods which are not identified at the time of making the contract of sale are
called uncertain Goods.

(b) Future Goods and - 

          According to Section 2(6) of the said Act, "future goods" means goods to be manufactured or
produced or acquired by the seller after the making of the contract of sale.

Illustration -  

       X agrees to Sell Y, the grass to be grown on his land next month.

(c) Contingent Goods -  Contingent Goods means "goods" the acquisition of which by the seller depends
upon a contingency of happening or non-happening of an event. 

Illustration- 

       "ABC" agrees to sell a land to "XYZ" if he wins the race. ABC's title is subject to the contingency of
winning and hence the land is called Contingent Goods
“Goods” under the Sale of Goods Act, 1930
On March 27, 2015 By Neerja Gurnani

https://www.lawctopus.com/academike/goods-under-the-sale-of-goods-act-
1930/#:~:text='Goods'%20is%20defined%20as%20per,under%20the%20contract%20of%20sale.
%E2%80%9D

By Aditya Sood

Editor’s note:  ‘Goods’ have been defined under § 2(7) of the Sale of Goods Act, 1930, to
include every kind of movable property, including stocks, shares, crops, grass, severable
objects, etc. It is supplemented by the definitions of movable and immovable property
under § 3(36) and § 3(26) of the General Clauses Act, 1897.

This paper lays down certain dilemmas that have not been resolved despite the
definitions and examines the case laws that may shed light on the same. It also examines
the difference between English and Indian law on this issue. Primarily, it seeks to clarify
whether certain commodities such as electricity, lottery tickets, software programs,
money. etc can be included within the definition of “goods”.

Introduction
This research paper primarily investigates the dilemma regarding the scope of definition
of “goods” for the purposes of Sale of Goods Act, 1930 (hereinafter referred to as the
‘Act’). I have differentiated the position of law in England and India. However, due to the
vastness of the definition I have limited the scope of my paper to three of the major
commodities which have been subject of controversies, namely:

(1) Electricity,

(2) Lottery tickets, and

(3) Software programs.

Definition of “goods”
 ‘Goods’ is defined as per Section 2 (7) of the ‘Act’ as. “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 severed
before sale or under the contract of sale.”

[Actionable Claim in general terms signifies a claim or a debt for which you can take an action,
which means there’s a claim and you can approach the court for the enforcement of the same. Here
it signifies a debt and the actionable claim holder can move to the

The debt here is an unsecured debt. Actionable claim resembles Chose in Actions of English
Law. But the law in India regarding actionable claims is narrower than English Chose in Action.

Examples:

1. A lends Rs. 1, 00,000/- to B without any security. The debt given by A is an

actionable claim and in case of failure on the part of B to repay it, A can move to

A lends Rs. 1, 00,000/- to B. B keeps his property X as a security, which is worth Rs. 10, 00,000/-.
This debt is not an actionable claim.]
Section 3 of Transfer of Property Act, 1882 defines Actionable Claim

1. any debt which is not secured by:

 Mortgage of immovable property, or

 Hypothecation, or pledge

2. Any beneficial interest in movable property, which is not in possession of the claimant.

3. And the civil court recognizes these claims to be the affording ground for relief.

Definition of “Movable Property”

As per section 3(36) of the General Clauses Act 1897, “movable property” is defined as
“property of every description except immovable property.” Section 3(26) of the same
Act reads as, “Immovable property shall include land, benefits to arise out of land, and
things attached to the earth, or permanently fastened to anything attached to the earth.”
 Hence, a conjoint reading of the two sections gives us a clear definition that anything
that is attached to the land maybe termed as “movable property”, provided that there is
an element of severability involved.[1] The element of severability is important while
deciding on the nature of the property, and this element can be established by
ascertaining the nature of the property, intention of the parties and the terms of the
contract between them.[2] For instance, timber[3] falls under the ambit of “goods” as
per S.2(7)[4] because timber trees are severed from the land for the purpose of sale and
hence they become a commercial commodity.[5]

In the case of Tata Consultancy Services v. State of Andhra Pradesh[6] it was held that
property as per Sale of Goods Act means general property over the goods and not
merely a specific property.[7] The usage of the word ‘includes’ further expands the
definition, as it includes in the definition not only goods of the prescribed nature but it
also imports those things that are specifically provided by the interpretation clause.[8]

Difference between the English law and the Indian law

In English law as per S. 61(1) of the Sale of Goods Act 1979, “goods” include personal
chattels[9] which can be further divided into “choses in possession” and “choses in
action”.[10] As per the English law only the former is included in the definition of
“goods” whereas the latter which include commodities like shares, debentures, bills of
exchange, and other negotiable instruments are excluded from the definition as they all
are actionable claims.[11] On the other hand in India, the definition as elucidated in
S.2(7)[12] is much wider in scope than the English definition as it includes stocks and
shares as within the scope of “goods”.

The following discussion primarily focuses on the point that whether certain types of
commodities can be included within the definition of “goods” or not.

 Electricity as “goods”: Inclusion of intangible energy within the definition of

goods

Electricity does not come under the definition of “goods” as per English law.[13] There
have been judicial decisions in England where electricity has been referred to as ‘thing’
and an ‘article’[14] and also as ‘tangible personal property’[15], but there has been no
judicial decision which includes electricity within the definition of ‘goods’ for the
purpose of Sale of Goods Act.[16] Moreover, the legal possession of electrical energy is
a challenging proposition as “it is capable of being kept or stored only by changing the
physical or chemical state of other property which is itself the subject of possession.”[17]
In India however, the situation is quite different. In the Calcutta High Court case
of Associated Power Co. v. R.T. Roy [18] it was held that electricity comes under the
ambit of ‘goods’ under the article 366 (12) of the Constitution[19] as well as S. 2 (7) of
the ‘Act’. This proposition was affirmed in a Madras High Court case where the learned
judge held that electricity was under the definition of ‘goods’ since it is capable of
delivery, and it does not matter whether it is a tangible or intangible form of energy.
[20] The Law Commission of India in its 8th report proposed that electricity and water
should be included in the definition of ‘goods’ under S. 2(7) of the ‘Act’.[21] Meanwhile,
the Supreme Court (in Commissioner of Sales Tax, Madhya Pradesh v. Madhya Pradesh
Electricity Board, AIR 1970 SC 732.)while discussing about the definition of ‘goods’ as
mentioned in the Madhya Pradesh Sales Tax Act (2 of 1959), found that the definition
included all kinds of movable property.[22] The court further held that:

“The term “movable property” when considered with reference to “goods” as defined for
the purposes of sales tax cannot be taken in a narrow sense and merely because electric
energy is not tangible or cannot be moved or touched like, for instance, a piece of wood
or a book it cannot cease to be movable property when it has all the attributes of such
property……It can be transmitted, transferred, delivered, stored, possessed etc., in the
same way as any other movable property.”[23]

However, Pollock & Mulla, in their commentaries, have expressed their concerns over
the applicability of the ‘Act’ for electricity because, there is no contractual obligation on
part of the public authority to supply ‘electricity’, rather it is a statutory obligation on part
of the authority providing these ‘goods’.[24] The supply of such commodities would not
amount to a ‘sale’ for the purposes of the ‘Act’.[25] The Electricity Act 2003 (the Electricity
Act) is the parent legislation governing the electricity sector in India  As a result, any breach
or failure on part of the public body to supply electricity would be dependent upon the
terms of the statute governing the public body.[26]

Thus, on one hand it can be said that ‘electricity’ comes under the definition of ‘goods’
however the applicability of the ‘Act’ in case of sale of electricity is a dubious
proposition.

 Exclusion of Lottery tickets from the definition of “goods”

As per Black’s Law Dictionary, ‘lottery’ is defined as ‘a chance for a prize for a price’.
[27] For the purposes of the ‘Act’ lottery tickets are clearly a movable property, however
it has been a matter of debate that whether they are an actionable claim as defined
under S.3[28] of Transfer of Property Act, 1882.
In the Supreme Court case of H. Anraj v. Government of T.N.[29] it was held that a
lottery ticket primarily involved two rights: (1) the right to participate in the draw and (2)
the right to win the prize, depending on chance. In that case it was held that the former
right was a “transfer of a beneficial interest in movable goods” and hence was a sale
within the meaning of Art 366 (29-A)(d) of the Constitution whereas the latter right was
a chose in action and thus not “goods” for the purpose of levy of sales tax.[30]

However, the ruling of this decision was challenged in a later Supreme Court verdict
of Sunrise Associates v. Government of NCT of Delhi.[31] It was held that sale of a
lottery ticket amount to a sale of an actionable claim. The conclusion of the Court was
based on the reasoning that there was no difference between right to win and right to
participate in a lottery draw, as no purchaser pays the consideration for a right to
participate in the draw, instead he pays it for the right to win.[32]

Thus, the classification by H. Anraj case (supra) of the right to participate as right in
praesenti  and the right to win as a right in futuro,  was incorrect as both these rights
are in futuro.[33] As a result the earlier judgment was overruled to that extent and
“lottery tickets” were excluded from the definition of “goods”.

 Conundrum surrounding Software programs

In the case of TCS v. State of Andhra Pradesh[34] the Supreme Court held that a
software program on a CD or a floppy drive would be a “good” for the purposes of
levy of sales tax.[35] A software program is a collection of instructions or
commands that are given to a computer to perform a given task.[36] The main
area of debate is that “Do software programs – being intellectual creations of
human mind – be treated as “goods” for the purposes of the ‘Act’ or not?”

One of the landmark cases in this regard was the case of St Albans City and
District Council v. International Computers Ltd[37] where Sir Iain Glidewell
observed that a hardware device has no use of its own unless it is supplemented
with a software and it was only because of necessity that software was
contained in a physical medium like a disk or a floppy furthermore, in case the
disk is sold and there is a defect with the program, then there would be a prima
facie  liability against the disk manufacturer as well. Thus, he held that the
tangible disk and the software program both will be included within the definition
of “goods”.

In the TCS case (supra) a special mention was given to ‘canned software’[38],

where it was held by the learned judge that once a software is uploaded on a
medium like a CD or a floppy drive, it ceases to be a work of intellectual creation.
 This is primarily because each of these mediums becomes a marketable
commodity in itself.[39] “Marketability” of a commodity was the determining
factor whether it is a “good” or not. It has also been held that “operational
software” which was uploaded on a hard-disk does not lose its character as a
tangible good.[40]

It has also been a matter of debate as to inclusion of computer software within

the definition of “goods” as defined in section 2[41] of the Uniform Commercial
Code, 1952. It is argued that since “custom designed” computer software is a
product of a labor intensive process and it must be considered as a service
rather than a good. However, sale of most of the software programs resemble
sales of any other consumer product available for consumption, and it is usually
sold through separate pre-existing packages.[42] On the other hand contracts for
providing data processing services have been held to be contracts for services
rather than contracts for “goods”.[43]

With the help of the above discussion it is clear that despite of being an
intangible commodity, “computer software” can be included in the definition of
“goods” for the purposes of the ‘Act’.

 Exclusion of ‘Money’ from the definition

Money is specifically excluded from the definition of “goods” under S.2(7) of the
‘Act’, because it is the medium of exchange used at the time of sale of goods.
[44] Hence, money is not regarded as a “chattel but as something ‘sui generis’”.
[45] However, a coin which was intended to be sold as an item of curiosity will be
said to be a “good”, as it was passed on as a commodity and not as a currency.
[46]

Conclusion
Through the course of this research paper I have tried to identify some of the major
controversies surrounding certain commodities and their inclusion in the definition of
“goods” as per S.2(7) of the ‘Act’. The discussion helped to prove that “electricity” (even
being an intangible good) comes under the ambit of goods, while on the same hand
lottery tickets (being movable goods per se) are excluded because they are “actionable
claims”. This helps us to show that being a movable property in itself is not a conclusive
proof of being a “good”. Also, the debate on software programs elucidated the
importance on “marketability” aspect of “goods”.
Hence, it evident that due to rapid developments in science and technology, the
definition of goods cannot be compartmentalized into straight jacket distinctions and
the scope of this section will expand over time.

Edited by Neerja Gurnani

[1] Pollock & Mulla, The Sale of Goods Act, 33 (Satish J Shah ed., 8th ed., 2011).

[2] Id.

[3] Id.  (defining timber as wood fit for building and repairing houses).

[4] Sale of Goods Act, 1930.

[5] Kanakapalam Estate v. State of Kerela, (1989) 73 STC 336.

[6] (2005) 1 SCC 308.

[7] Id.  (discussing the definition of ‘goods’ as prescribed under the Sale of Goods Act,
“’goods’ would comprehend tangible and intangible properties, materials, commodities
and articles and also corporeal and incorporeal materials, articles and commodities.”)

[8] Scientific Engg. House (P) Ltd. v. CIT, (1986) 1 SCC 11.

[9] See  Benjamin’s Sale  of Goods, 64 (M. Bridge et al. eds., 8th ed. 2010) (elucidating
that “goods” as per the English definition covers all “those tangible, movable items that
we call things in possession.”).

[10] Benjamin’s Sale  of Goods, 68 (M. Bridge et al. eds., 8th ed. 2010).

[11] Id.

[12] Sale of Goods Act, 1930.

[13]Pollock & Mulla, The Sale of Goods Act, 44 (Satish J Shah ed., 8th ed., 2011).
(discussing that S.61 (1) of English Sale of Goods Act 1979 prescribes only personal
chattels as “goods” whereas the definition under S.2 (7) of the Indian Sale of Goods Act
1930 is much wider as it includes all ‘movable property’).

[14] Betnley Bros. v. Metcalfe & Co., [1906] 2 K.B. 548, 552-553.

[15] Re Social Services tax Act, (1970) 74 W.W.R. 246.

[16] Benjamin’s Sale  of Goods, 71 (M. Bridge et al. eds., 8th ed. 2010).

[17] Id.

[18] AIR 1970 Cal 75.

[19] Constitution of India, art. 366 (12) (defining goods as, “goods includes all materials,
commodities, and articles.” Hence, going by this definition it can be argued that since
electrical energy is capable of being brought and sold,  it will come under the ambit of a
‘commodity’ or an ‘article’).

[20] Kumbakonam Electric Supply Corp Ltd. v. Joint Commercial Tax Officer, AIR 1964
Mad 477.

[21] Law Commission of India, Eighth Report on the Sale of Goods Act, 1930  (1958)
(stating that, firstly under S.39 of the Indian Electricity Act, ‘electricity’ can be subject
matter of theft. Secondly, Art. 287 of the Constitution prohibits the State Legislatures to
impose a tax on the ‘consumption or  sale of electricity’ which implies that electricity can
be sold just like any other commodity. )

[22]Supra  note 13.

[23] Commissioner of Sales Tax, Madhya Pradesh v. Madhya Pradesh Electricity Board,

AIR 1970 SC 732.

[24] Supra  note 13.

[25] Id.

[26] Id.

[27]Black’s Law Dictionary 947 (6th ed. 1991) (stating the essential elements of a lottery
as “consideration, prize and chance”).

[28] The Transfer of Property Act, 1882, § 3 (defining actionable claim, “’actionable

claim’ means a claim to any debt, other than a debt secured by mortgage of
immoveable property or by hypothecation or pledge of moveable property, or to any
beneficial interest in moveable property not in the possession, either actual or
constructive, of the claimant, which the Civil Courts recognize as affording grounds for
relief, whether such debt or beneficial interest be existent, accruing, conditional or
contingent.”).
[29]
 (1986) 1 SCC 414.

[30] Id.  (quoting Sabyasachi Mukherjee, J, “the right to participate in the draw under a
lottery ticket remains a valuable right till the draw takes place and it is for this reason
that licensed agents or wholesalers or dealers of such tickets are enabled to effect
sales thereof till the draw actually takes place and therefore lottery tickets, not as
physical articles but as slips of paper or memoranda evidencing the right to participate
in the draw can be regarded as dealer’s merchandise and therefore goods which are
capable of being bought or sold in the market.”).

[31] (2006) 5 SCC 603.

[32] Id.

[33] Pollock & Mulla, The Sale of Goods Act, 38 (Satish J Shah ed., 8th Ed., 2011).

[34] (2005) 1 SCC 308.

[35] Id.  (quoting S.B. Sinha, J, “definition of ‘goods’, as under the Sale of Goods Act
1930, is of a wide import and it includes both tangible as well as intangible properties. It
would become goods provided it has the attributes thereof having regard to (a) its
utility; (b) capable of being bought and sold; and (c) capable of transmitted, transferred,
delivered, stored and possessed. If a software whether customized or non-customized
satisfies these attributes, the same would be goods.”).

[36] Pollock & Mulla, The Sale of Goods Act, 43 (Satish J Shah ed., 8th ed., 2011).

[37] [1995] FSR 686.

[38] Supra  note 31. (“Canned “software” means that is not specifically created for a
particular consumer. The sale or lease of, or granting a license to use, canned software
is not automatic data processing and computer services, but is the sale of tangible
personal property. When a vendor, in a single transaction, sells canned software that
has been modified or customized for that particular consumer, the transaction will be
considered the sale of tangible personal property if the charge for the modification
constitutes no more than half of the price of the sale.”).

[39]See  Advent Systems Ltd. v. Unisys Corpn, 925 F. 2d 670. (drawing an analogy to a
“compact disc recording of an orchestral rendition. The music is produced by the
artistry of musicians and in itself is not a “good,” but when transferred to a laser-
readable disc becomes a readily merchantable commodity. Similarly, when a professor
delivers a lecture, it is not a good, but, when transcribed as a book, it becomes a good.”)
[40] Commnr. of Central Excise, Pondicherry v. ACER India Ltd., 2004 (8) SCALE 169.

[41] U.C.C. Law §.2-103 (k) : “”Goods” means all things that are movable at the time of
identification to a contract for sale. The term includes future goods, specially
manufactured goods, the unborn young of animals, growing crops, and other identified
things attached to realty as described in Section 2-107. The term does not include
information, the money in which the price is to be paid, investment securities under
Article 8, the subject matter of foreign exchange transactions, or choses in action.”

[42]Bonna Lynn Horovitz, Computer Software as a Good under the Uniform Commercial

Code: Taking a Bite Out of the Intangibility Myth [notes], 69 B. U. L. Rev. 129, 153 (1985),
http://heinonline.org/HOL/Page?
handle=hein.journals/bulr65&div=9&collection=journals&set_as_cursor=11&men_tab=sr
chresults&terms=definition%20of%20goods|software&type=matchall (last visited Feb.
19, 2014) (stating that majority of sales of software programs are “off the shelf”
transactions which are analogous to any other commercially consumed “good”. The
mere fact that it was designed because of the intellectual abilities of an individual does
not change the basic characteristic of the commodity as a “good”.)

[43] Id.  (arguing that data processing transactions are based on the skill and ability of
the person handling these programs rather than the computer software itself. Thus,
these contracts cannot be regarded as sale of “goods”).

[44] Pollock & Mulla, The Sale of Goods Act, 40 (Satish J Shah ed., 8th ed., 2011).

[45] Id.

[46] Moss v. Hancock, [1899] 2 Q.B. 111.

https://www.toppr.com/guides/business-laws/the-sale-of-goods-act-1930/definitions-of-important-
terms/

II. Goods
One of the most crucial terms to define is the goods that are to be
included in the contract for sale. The Act defines the term “Goods” in
its sec 2(7) as all types of movable property. The sec 2(7) of the Act
goes as follows:

“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 severed
before sale or under the contract of sale will be considered goods”

As you can see, shares and stocks are also defined as goods by the Act.
The term actionable claims mean those claims which are eligible to be
enforced or initiated by a suit or legal action. This means that those
claims where an action such as recovery by auction, suit, refunds etc.
could be initiated to recover or realize the claim.

We say that goods are in a deliverable state when their condition is such

that the buyer would, under the contract, be bound to take delivery of
these goods. Goods may be further understood in the following
subtypes:
 (Source: SimplyNotes)

1. Existing Goods

The goods that are referred to in the contract of sale are termed as
existing goods if they are present (in existence) at the time of the
contract. In sec 6 of the Act, the existing goods are those goods which
are in the legal possession or are owned by the seller at the time of the
formulation of the contract of sale. The existing goods are further of the
following types:

A) Specific Goods

According to the sec 2(14) of the Act, these are those goods that are
“identified and agreed upon” when the contract of sale is formed. For
example, you want to sell your mobile phone online. You put an
advertisement with its picture and information. A buyer agrees to the
sale and a contract is formed. The mobile, in this case, is specific good.

B) Ascertained Goods:

This is a type not defined by the law but by the judicial interpretation.

This term is used for specific goods which have been selected from a
larger set of goods. For example, you have 500 apples. Out of these 500
apples, you decide to sell 200 apples. To sell these 200 apples, you will
need to separate them from the 500 (larger set). Thus you specify 200
apples from a larger group of unspecified apples. These 200 apples are
now the ascertained goods. More and better ex. Difference between
specific and ascertained goods

C) Unascertained Goods:

These are the goods that have not been specifically identified but have
rather been left to be selected from a larger group. For example, from
your 500 apples, you decide to sell 200 apples but you don’t specify
which ones you want to sell. A seller will have the liberty to choose any
200 apples from the lot. These are thus the unascertained goods.

2. Future Goods
In sec 2(6) of the Act, future goods have been defined as the goods that
will either be manufactured or produced or acquired by the seller at the
time the contract of sale is made. The contract for the sale of future
goods will never have the actual sale in it, it will always be an
agreement to sell.

For example, you have an apple orchard with apples in it. You agree to
sell 1000 apples to a buyer after the apples ripe. This is a sale that has to
occur in the future but the goods have been identified already and the
agreement made. Such goods are known as future goods.

3. Contingent Goods
Contingent goods are actually a subtype of future goods in the sense
that in contingent goods the actual sale is to be done in the future. These
goods are part of a sale contract that has some contingency clause in it.
For example, if you sell your apples from your orchard when the trees
are yet to produce apples, the apples are a contingent good. This sale is
dependent on the condition that the trees are able to produce apples,
which may not happen.

Poole v Smith’s Car Sales (Balham) Ltd, p 230, Poole left a car with the defendants to sell for 325
pounds sterling on a ‘sale or return basis’. 3 months later, the car still had not been sold. Poole
demanded the return of the car in 3 days. When it was returned to him, it was in a damaged
condition and Poole refused to accept it. In the circumstances, the defendants had retained the car
for more than a reasonable time. The Court held that the defendants had to pay for the car