Buyer, Seller and Goods under Section 2 of the Sale of Goods Act, 1930: Existing, Future, Specific, Ascertained, Unascertained and Contingent Goods, and Movable Property as Goods

The parties to a sale and its subject matter are defined in Section 2, and the Act then divides goods into several kinds. The classification is not academic. Whether goods are specific or unascertained decides when ownership can pass. Whether they are existing or future decides whether the contract can be a sale at all, or only an agreement to sell. And whether a thing attached to land is agreed to be severed decides whether the Sale of Goods Act or the Transfer of Property Act governs it.

1. Buyer and Seller

Sections 2(1) and 2(13), Sale of Goods Act, 1930

2(1) “Buyer” means a person who buys or agrees to buy goods.

2(13) “Seller” means a person who sells or agrees to sell goods.

Both definitions cover the person who has agreed to buy or sell as well as the person who has actually done so, so the parties to an agreement to sell are buyer and seller from the start. The definition of seller is extended for particular purposes elsewhere in the Act: Section 45(2) treats an agent of the seller to whom a bill of lading has been endorsed, and a consignor or agent who has paid the price, as being in the position of a seller for the purposes of the unpaid seller's rights.

2. Goods

Section 2(7), 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 severed before sale or under the contract of sale.

Movable property is the core. The General Clauses Act, 1897 defines movable property as property of every description except immovable property.
Stock and shares are expressly included, even though a share is in substance a bundle of rights in a company.
Growing crops and grass are goods. The Transfer of Property Act, 1882 reinforces this by providing that immovable property does not include standing timber, growing crops or grass.
Things attached to the land are goods if they are agreed to be severed before sale or under the contract. Trees sold to be felled, or fixtures sold for removal, fall within the Act. The same things sold with the land are part of a sale of immovable property.

Existing and future goods, and the subdivisions that decide when property can pass

3. Existing and Future Goods

Sections 6 and 2(6), Sale of Goods Act, 1930

6. (1) The goods which form the subject of a contract of sale may be either existing goods, owned or possessed by the seller, or future goods.

(2) There may be a contract for the sale of goods the acquisition of which by the seller depends upon a contingency which may or may not happen.

(3) Where by a contract of sale the seller purports to effect a present sale of future goods, the contract operates as an agreement to sell the goods.

2(6) “Future goods” means goods to be manufactured or produced or acquired by the seller after the making of the contract of sale.

Existing goods are those the seller owns or possesses at the time of the contract; the words include goods he possesses as an agent with authority to sell. Future goods are those he will manufacture, produce or acquire afterwards. Because a person cannot transfer ownership of something that does not yet exist or that he does not yet own, Section 6(3) turns a purported present sale of future goods into an agreement to sell. Property can pass only when the goods come into existence and are appropriated to the contract.

📖 Howell v. Coupland, (1876) 1 QBD 258 (CA)

Facts: A farmer agreed to sell 200 tons of potatoes to be grown on a particular field that he owned. Before the crop could be harvested, disease destroyed most of it without any fault on his part, and he could deliver only a fraction of the quantity. The buyer sued for non-delivery.

Held: The farmer was excused. The contract was for a crop from specific land, and it was subject to an implied condition that the crop would exist. When it perished without the fault of either party before the risk passed, the obligation to deliver was discharged.

Ratio: An agreement to sell future goods from a specific source is discharged if the source fails without fault before the risk passes. The principle underlies Section 8 of the Indian Act.

4. Contingent Goods

Contingent goods are a species of future goods. Under Section 6(2), the seller's acquisition of them depends on an event that may or may not happen, such as goods to arrive on a named ship, or goods the seller expects to buy from a third party if that party delivers to him. The contract is an agreement to sell, and if the contingency fails the seller is not liable, provided he did not undertake absolutely to supply.

5. Specific, Ascertained and Unascertained Goods

Specific goods, defined in Section 2(14), are goods identified and agreed upon at the time the contract is made: this car, that painting, the 50 bales marked with a particular number in a named warehouse.
Ascertained goods are not defined in the Act, but are goods that become identified after the contract, usually by being set aside and appropriated to it.
Unascertained goods are goods described only by kind or quantity, such as 100 tonnes of wheat of a stated grade, or 50 bags out of a larger undivided stock.

📖 In re Wait, [1927] 1 Ch 606 (CA)

Facts: A merchant bought 1,000 tons of wheat to be shipped on a named vessel, and sold 500 tons of it to sub-buyers, who paid the price. The 500 tons were never separated from the bulk. The merchant became bankrupt, and the sub-buyers claimed that the 500 tons belonged to them.

Held: The sub-buyers had no property in any of the wheat. Their goods were unascertained, being an unidentified part of an undivided bulk, and property in unascertained goods cannot pass until they are ascertained. They were left with a claim in the bankruptcy for the price they had paid.

Ratio: No property passes in unascertained goods until they are ascertained, whatever the parties intend. The rule is stated in Section 18 of the Indian Act.

6. The Position Stated Shortly

A buyer is one who buys or agrees to buy; a seller is one who sells or agrees to sell.
Goods are movable property other than actionable claims and money, including stock and shares, growing crops, grass and things attached to land agreed to be severed.
Goods are existing or future; future goods cannot be sold, only agreed to be sold, under Section 6(3).
Contingent goods are future goods whose acquisition depends on an uncertain event.
Howell v. Coupland: an agreement for a crop from specific land is discharged if the crop fails without fault.
Specific goods are identified at the contract; ascertained goods are identified afterwards; unascertained goods are described only by kind.
In re Wait: no property passes in unascertained goods until they are ascertained.