Meaning of Unascertained Goods
Under the Sale of Goods Act, 1930, goods are classified into specific and unascertained goods. According to Section 2(14), unascertained goods are those which are not specifically identified or agreed upon at the time the contract of sale is made. Unlike specific goods, these goods remain uncertain until they are selected, separated, or appropriated for the buyer.
For instance, if a merchant agrees to sell 100 bags of rice from a stock of 500 bags, the goods are unascertained until the particular 100 bags are set aside for the buyer. The ownership or property in unascertained goods does not pass to the buyer at the time of agreement; rather, it passes only when the goods are ascertained and appropriated to the contract. This legal principle ensures clarity and avoids confusion in commercial transactions, as buyers cannot claim rights over unspecified goods.
Legal Principles Governing Unascertained Goods
The passing of property in unascertained goods is governed by Section 18 of the Sale of Goods Act, 1930, which states that no property in unascertained goods is transferred to the buyer unless and until the goods are ascertained. Furthermore, Section 23 provides that property in goods is transferred only when there is an unconditional appropriation of the goods to the contract with the assent of the buyer, which may be expressed or implied.
This means that until the seller identifies and separates the goods meant for the buyer, the buyer only has a contractual right, not ownership. The law protects both parties by ensuring that the buyer cannot be held liable for loss or damage to the goods until ownership passes, and the seller retains rights over the goods until appropriation occurs. This makes the doctrine of ascertainment crucial in safeguarding fair trade practices.
Importance and Limitations
The concept of unascertained goods is important as it emphasizes that the property and risk in goods do not pass until identification. This principle prevents disputes where sellers might otherwise attempt to hold buyers responsible for loss or damage to unidentified goods. However, it also limits the rights of the buyer because, before appropriation, the buyer cannot enforce rights such as claiming delivery or suing for conversion. Additionally, if goods perish before ascertainment, the risk lies with the seller, not the buyer.
Hence, the law ensures a balance: the seller retains control and responsibility until specific goods are earmarked, while the buyer gains ownership and risk only after appropriation. In commercial practice, this clarity reduces uncertainty in large-scale sales contracts involving bulk or fungible goods such as grains, oil, or coal. Thus, unascertained goods highlight the significance of appropriation and assent in transferring ownership rights under the Act.
Real-Life Example
Suppose Mr. A, a grain dealer, agrees to sell 50 quintals of wheat from his stock of 500 quintals stored in a warehouse to Mr. B. At the time of contract, no particular 50 quintals are separated from the bulk, making the goods unascertained. Later, Mr. A measures and sets aside 50 quintals specifically for Mr. B, and informs him. Once Mr. B assents to this appropriation, the goods become ascertained, and the ownership passes to B.
If a fire breaks out in the warehouse before separation, the loss will fall upon A, as the goods were still unascertained. However, after appropriation, the risk transfers to B. This example shows how the law ensures that buyers are not unfairly burdened with responsibility for unspecified goods, while also defining the point at which ownership passes from seller to buyer.
Mnemonic to Remember – “USAID”
To easily recall the essentials of Unascertained Goods, use the mnemonic USAID:
- U = Unascertained goods are not identified at the time of contract.
- S = Section 18 – No property passes until ascertainment.
- A = Appropriation required with buyer’s assent (Sec. 23).
- I = Identification of goods is mandatory before ownership passes.
- D = Delivery and risk transfer only after ascertainment.
Think: “USAID helps buyers and sellers – ownership starts only after goods are Identified and Appropriated.”
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