Important Terms: Sale of Goods Act, 1930

Buyer and Seller

 Buyer [Section 2(1)]

The definition of the ‘buyer’ is stated under Section 2(1) of the Act. It defines
Buyer as a person who either buys or agrees to buy certain commodities. In
the contract of sale, the Buyer is one of the parties to the contract.

 Seller [Section 2(13)]

On the contrary, the Act defines ‘seller’ as a person who either sells or
agrees to sell particular commodities under Section 2(13). The Seller
becomes the other party to the contract. The existence of both the parties
i.e. the Buyer and the Seller must be there to enter into a contract of sale.

The conjoint reading of the above two sections give us a conclusion that to
be recognized as a Buyer or Seller under the Act, it is not necessary to
actually transfer the goods. Even if you agree or promise to buy or sell the
goods you would be considered and identified as a Buyer or Seller as per the
Act.

Goods [Section 2(7)]

The dictionary meaning of the term goods is merchandise or possession. The
term “Goods” is one of the crucial clauses in the Contract of Sale.

According to Section 2(7) of the Act, “goods” include-

 Any movable property except actionable claims and money;

 Stock and shares;
 The growing crops, standing timber, grass;
 The things that are attached or forming part of the land which is
agreed to be severed from the land before the sale. It has been held
in the State of Maharashtra v. Champalal Kishanlal Mohta that
things which are attached to land are the subject matter of the
contract of sale if they are severed before the sale.
For eg: A resort was offering stay along with food at a consolidated charge. If
customers do not take food, the rebate on food is not allowed as the supply
of food does not come under the definition of “goods” as per the Act.

It is concluded from the above definition that the Act deals with the sale of
goods i.e. movable property only. On the other hand sale of immovable
property is governed by the Transfer of Property Act,1882. It is noted that
the actionable claims and money are excluded from the ambit of the
definition. Actionable claims are the claim or debt for which legal action can
be taken and can be enforced. For eg: recovery of refund is an actionable
claim and is not included in the purview of the above definition. Further, the
goods can be classified under several categories. Let’s see below.

Types of goods
The classification of goods in terms of business law can be quite ticklish to
understand. Section 6 of the Act describes the types of goods. The goods are
classified into existing goods, future goods, and contingent goods. Let’s study
all three briefly.

Existing Goods
If the goods are physically present at the time of contract and are in the
legal possession or owned by the seller during the formulation of the contract
of sale is referred to as existing goods. The existing goods are further
classified into:

 Specific Goods [Section 2(14)]: Referring to Section 2(14) of the

Act, the goods that are specifically identified and agreed upon to be
transferred at the time of the formation of the contract are called
specific goods.
Illustration- ‘A’ wants to sell his HP Laptop of a particular model number and
advertises the same. ‘B’ agrees to purchase the laptop. Both entered into the
contract of sale. Here the laptop is a specific good.

 Ascertained Goods: The Act does not define the ascertained goods
but is conferred by judicial interpretation. The goods are said to be
ascertained wherein some or whole part of goods is identified and
set aside for the purpose of the contract. Such goods are specifically
earmarked for sale.

 Unascertained Goods: The goods that have not been specifically

identified to be sold are known as unascertained goods. For
example, from 1000 quintals of wheat, the seller agreed to sell 500
 quintals. Here the goods are not specified. The seller has the liberty
to choose from the bulk.

Future Goods [Section 2(6)]

The goods which are not in existence and to be manufactured or produced or
acquired by the seller after entering into the contract of sales are considered
as future goods. It must be noted that there can only be an agreement to
sell contracts as there can be no actual sale in respect of future goods. This
is defined under Section 2(6) of the Sale of Goods Act.

Illustration – Amit is a manufacturer of chairs. Shyam ordered Amit to

manufacture 200 units of chairs of specific design and they made an
agreement for the same. This is the sale with respect to future goods.

In the case of Union of India v. K.G. Khosla & Co. Ltd, goods were
manufactured according to the specification mentioned in the contract.
Therefore, the goods are “future goods” within the meaning of Section
2(6) of the Act.

Contingent Goods [Section 6(2)]

According to Section 6(2), the sale of certain goods which depend upon
happening or non-happening of certain events is termed as contingent
goods. For instance, ‘A’ has agreed to sell ‘B’ certain goods at a particular
date if the former receives the goods from the manufacturer before the said
date. This agreement is based on contingencies, hence such goods are called
contingent goods.

Delivery [Section 2(2)]

By delivery of goods we mean, the voluntary transfer of the possession of
goods from one person to the other. The transfer of possession is the end
result of the whole delivery process. It is not necessary that the person to
whom the goods are delivered is a buyer, he can be any other person
authorized by the buyer. The definition of the term delivery is defined
under Section 2(2) of the Act.

Kinds of Delivery
There are different forms of delivery of goods according to the Sale of Goods
Act, 1930:
Actual Delivery
Actual delivery takes place when the goods are physically handed over to the
buyer or any person authorized by him. Say for example A, the seller of
furniture handed over the ordered furniture to B, the case is of actual
delivery of the goods.

Constructive Delivery
In the case of constructive delivery, the transfer of goods can be done
without a change in the possession or custody of goods. Acknowledgment
and attornment can be called constructive delivery.

Constructive delivery can be effected in the following ways:

 Wherein the seller agrees to hold the sold goods as a bailee.

 Wherein the buyer who is in the actual possession of goods as a
bailee of the seller holds the goods as his own after the sale.
 Where a third party like transporter or agent, agrees to hold the
goods for the buyer.

Symbolic Delivery
Symbolic delivery is made wherein the goods are heavy and bulky and it is
difficult to hand over the goods to the buyer physically. In this situation, the
delivery is made by indicating or giving a symbol that the goods are under
the possession of the buyer. For example, the delivery of the keys of the
warehouse where the goods are kept is considered to be the symbolic
delivery. A document like a bill of lading must be given to the buyer to make
him entitled to hold the delivered goods.

The document of the Title to Goods [Section 2(4)]

As per Section 2(4), we can confer that the Document of the title to goods
includes a bill of lading, dock-warrant, warehouse keeper’s certificate,
railway receipt, multimodal transport document, warrant or order for the
delivery of goods. It also includes any other documents that are used in the
usual course of business proving the possession or control of goods or which
proves the authority of the possessor to transfer or receive the goods. The
document is a very imperative document for taking any legal action without
which one cannot proceed with the proceeding in the court.
What Is a Bill of Lading?
A bill of lading (BL or BoL) is a legal document issued by a carrier to a shipper that
details the type, quantity, and destination of the goods being carried. A bill of lading
also serves as a shipment receipt when the carrier delivers the goods at a
predetermined destination. This document must accompany the shipped products,
no matter the form of transportation, and must be signed by an authorized
representative from the carrier, shipper, and receiver.

Dock warrant
Dock warrant, in law, a document by which the owner of a marine or river dock certifies that the
holder is entitled to goods imported and warehoused in the docks

Fault [Section 2(5)]

Any wrongful act or default committed is considered as “fault” under Section
2(5) of the Sale of Goods Act, 1930.

Mercantile Agent [Section 2(9)]

As per the definition given under Section 2(9) of the Act, Mercantile Agent is
a person who is having the authority in the customary course of business
either to sell or consign the goods under the given contract. The Agent is
authorized to act on behalf of the buyer or seller. An agent can also raise
money on the security of the goods if authorized. The example includes
agents, auctioneers, brokers, dealers, etc.

Price [Section 2(10)]

According to Section 2(10) of the Act, The consideration for the sale of goods
is called price. Price is the money that is paid or promised to be paid by the
buyer or any person authorized by the buyer to the seller. Below are the
different modes by which price can be determined:

 Parties mutually decide the price of the goods in the contract of

sale. In Aluminium Industries Ltd. v. Minerals and Metals Trading , it
is observed that the price prevailing on the date of delivery will be
the price to be paid by the buyer. Subsequently, the seller issued a
delivery note for the goods but without any valid reason delayed the
delivery. The seller demanded an increased price which occurred
 due to delayed delivery. It was held that the seller was at fault thus
he could not compel the buyer to pay an increased price.
 It may be left to be fixed in the future.
 It may be determined in the course of dealing between the parties.

Property [Section 2(11)]

According to Section 2(11) of the Act, property generally means title or the
ownership rights of the goods. In the process of a sale, there is a transfer of
ownership or we can say the transfer of property from one party to the
other.

Quality of Goods [Section 2(12)]

Section 2(12) of the said Act gives the definition of “quality of goods”. The
quality includes the state or condition in which the goods are expected or
promised to be delivered. It is one of the important clauses to be included in
the Contract of Sale. If the quality of the delivered goods has not complied
with the contract then it is considered to be the breach of the Contract.

Insolvent [Section 2(8)]

A person who ceases to pay his debts in the normal course of business, or is
unable to pay even his due debts in the eyes of law is declared as
insolvent. Section 2(8) states the definition of the term “insolvent”. The law
gives certain rights and duties to an insolvent person.