Business Law and Taxation

Law of Sales of Goods – 1930

Unit 4.2
 KINDS OF GOODS

GOODS

Existing Future Contingent

 KINDS OF GOODS

Existing

Specific Ascertained Unascertained

 Existing Goods
Goods which are owned or possessed by the seller at the
time of making the contract of sale are called existing
goods.
In other words, the goods must be physically in existence.

Example:
Where A agrees to sell his horse to B, believing that it
exists When in fact the horse is dead ,no contract will
arise.
 Existing Goods
 The existing goods may be:

Specific Goods: goods identified and agreed upon at the

time of making of the contract of sale.
Example:
X owns many cows and promises to sell one of them. If
one cow is singled out, the contract is for Specific Goods
 Existing Goods
• Ascertained Goods: Goods identified subsequent to the form-
ation of the contract of sale is known as ascertained goods.

• Example:
• X goes to Maruti car centre to purchase a car. The dealer has
20 models in his shop. These 20 cars shall be called
Unascerta-ined Goods. Now, “X” selects a particular car of a
specific mo-del and the dealer agrees to deliver the same. The
car so selec-ted and approved by X shall be called as
Ascertained Goods.
 Existing Goods
Uascertained Goods: Goods which are NOT specifically
identified by the buyer, but are contracted on the basis of
description.

Example:
X has ten horses. He promises to sell one of them but does not
specify which horse he will sell. It is a contract of sale of ‘
unascertained goods.’
 Future Goods
Those goods which a seller does not possess or own at
the time of the contract. It is to be manufactured or
produced or acquired by the seller after making the
contract of sale.

Example:
X agrees to sell to Y all the mangoes which will be produced in his
farm next year. It is an contract of sale of Future Goods.
 Contingent Goods
Goods the acquisition of which by the seller depends upon
a contingency which may or may not happen [(Section
6(2)].

Example:
P contracts to sell 50 pieces of particular article provided
the ship which is bringing them reaches the port safely.
This is an agreement for the sale of contingent goods.
 EFFECTS OF
DESTRUCTION OF GOODS
1. Perishing Before Formation of Contract:
If the goods spoil at or before the time of the contract, the
agreement is Void.

Example:
A agrees to sell 100 bags of sugar which are in transit by
ship. On arrival of the ship, A discovers that the sugar is
spoiled. The contract becomes void.
 EFFECTS OF
DESTRUCTION OF GOODS
1. Perishing Before Sale but after Agreement to Sell:
Where there is an agreement to sell specific goods and the
goods, subsequently without any fault of the seller or the
buyer perish or suffer such damages in the agreement
before the risk passes to the buyer, the agreement
becomes void and parties not liable for performance.
Example:
A took a horse for 8 days on condition that if found suitable
the bargain would complete. The horse dies on the 3rd day
without the fault of any party. Held, the contract became
void and the seller would bear the loss.
 EFFECTS OF
DESTRUCTION OF GOODS
2. Perishing Before Sale but after Agreement to Sell:
Where there is an agreement to sell specific goods and the
goods, subsequently without any fault of the seller or the
buyer perish or suffer such damages in the agreement
before the risk passes to the buyer, the agreement
becomes void and parties not liable for performance.
Example:
A took a horse for 8 days on condition that if found suitable
the bargain would complete. The horse dies on the 3rd day
without the fault of any party. Held, the contract became
void and the seller would bear the loss.
 EFFECTS OF
DESTRUCTION OF GOODS

3. Perishing of Future and Contingent Goods:

A contract of sale of future and contingent goods is an
agreement to sell. The destruction of future and contingent
goods makes the contract void.
Example:
C agrees to sell to H, 200 tons of potatoes to be grown on C’s land. C
sowed potatoes but a disease attacked the crop and he could deliver
only 10 tons. The contract was held to be void.
 Sale Vs Agreement to Sell
• Distinguishing Factors:

1. Transfer of Property
2. Type of Goods
3. Nature of Rights
4. Risk of Loss
5. Consequences of Buyer’s Breach
6. Right of Resale
Sale Agreement to Sell
1. Transfer of Property
Ownership passes immediately Ownership does not pass
Seller is no longer the owner
2. Type of Goods
Existing and Specific Goods Future and Contingent Goods
3. Nature of Rights
If the seller refuses to deliver If the seller refuses to deliver
the goods, the buyer can sue for the goods, the buyer cannot sue
the recovery of goods. This is for recovery of those goods. He
because the buyer is the owner can only sue for damages.
of those goods
4. Risk of Loss
Ownership passes to the buyer Seller bears the risk
The buyer carries the risk of the
goods being lost, stolen or
destroyed
5. Consequences of Buyer’s