Sales of Goods Act 1930: Scope of Act

Contracts or agreements related to the sale of goods are governed under the Sale of Goods Act 1930. This act came into effect on the 1st of July 1930 in the whole of India except the state of Jammu and Kashmir.

Formation of contract of sale

Contract of sale of goods

A contract of goods is a contract whereby the seller transfers or agrees to transfer the property to goods to the buyer for a price. There may be a contract of sale between one part-owner and another [Sec. 4(1)]. A contract of sale may be absolute or conditional [Sec 4(2)].

The term ‘contract of sale’ is a generic term and includes both a sale and an agreement to sell.

Sale and agreement to sell: when under a contract of sale, the property in the goods is transferred from the seller to the buyer, the contract is called a ‘sale’, but where the transfer of the property in the goods is to take place at a future time or subject to some conditions thereafter to be fulfilled, the contract is called an ‘agreement to sell’ [Sec. 4(3)]. An agreement to sell becomes a sale when time elapses or the conditions, subject to which the property in the goods is to be transferred are fulfilled [Sec. 4(4)].

Meaning of goods [Section 2(7)]

Goods means every kind of movable property other than actionable claims and money, and includes the following:

Stock and share

Growing crops, grass and thing attached to or forming part of the land which are agreed to be served before sale or under the Contract of sale.

Types of Goods [Section 6]

Existing Goods

Existing goods mean the goods which are either owned or possessed by the seller at the time of contract of sale. The existing goods may be specific or ascertained or unascertained as follows:

(a) Specific Goods [Section 2(14)]: These are the goods which are identified and agreed upon at the time when a contract of sale is made-For example, specified TV, VCR, Car, Ring.

(b) Ascertained Goods: Goods are said to be ascertained when out of a mass of unascertained goods, the quantity extracted for is identified and set aside for  a given contract. Thus, when part of the goods lying in bulk are identified and earmarked for sale, such goods are termed as ascertained goods.

(c) Unsanctioned Goods: These are the goods which are not identified and agreed upon at the time when a contract of sale is made e.g. goods in stock or lying in lots.

Future Goods [Section 2(6)]

Future goods mean goods to be manufactured or produced or acquired by the seller after the making of the contract of sale. There can be an agreement to sell only. There can be no sale in respect of future goods because one cannot sell what he does not possess.

Contingent Goods [Section 6(2)]

These are the goods the acquisition of which by the seller depends upon a contingency which may or may not happen.