Meaning of Goods
The term “goods” is legally defined under Section 2(7) of the Sale of Goods Act, 1930. According to the Act, goods include every kind of movable property, other than actionable claims and money. This definition covers tangible items such as furniture, vehicles, stock, and raw materials, as well as certain intangible items recognized as movable property like growing crops, grass, and things attached to land which can be severed before sale. The exclusion of money and actionable claims (such as debts, insurance claims, or shares not yet allotted) is significant, as these are governed by other laws. Goods, therefore, form the subject matter of a contract of sale under Section 4 of the Act. The comprehensive definition ensures clarity in commercial transactions by distinguishing goods from immovable property and intangible claims.
Types of Goods
The Sale of Goods Act, 1930 further classifies goods into categories to make contractual obligations clearer. Goods can be existing goods, future goods, and contingent goods. Existing goods are those owned or possessed by the seller at the time of the contract, which may be further divided into specific goods, ascertained goods, and unascertained goods. Future goods (Section 2(6)) are those to be manufactured, produced, or acquired after the contract is made. Contingent goods are a subset of future goods, dependent on a specific uncertain event. The classification helps in determining when the property in goods passes from seller to buyer, as per Sections 18–25 of the Act. Thus, the concept and classification of goods form the foundation of sales contracts, ensuring legal certainty in ownership and transfer of property.
Importance of the Definition
The statutory definition of goods under the Sale of Goods Act, 1930 is crucial because it establishes the scope of the Act. Only contracts involving “goods” as defined under Section 2(7) are covered; contracts relating to immovable property, actionable claims, or money fall outside its ambit. This clarity helps in avoiding disputes regarding the subject matter of contracts. Moreover, the classification of goods influences the passing of property and risk allocation between the buyer and seller. For example, in specific goods, ownership may pass immediately, whereas in unascertained goods, property passes only upon identification and appropriation. By clearly defining and categorizing goods, the law ensures predictability in commercial dealings, protection of parties’ rights, and smooth functioning of trade. Without this clarity, contracts for sale could be riddled with ambiguity, leading to litigation and unfair outcomes.
Real-Time Example
Suppose Mr. A, a furniture dealer, enters into a contract to sell 50 chairs to Mr. B. These chairs are already in Mr. A’s warehouse. Since the chairs are in existence and owned by the seller at the time of the contract, they qualify as existing goods under Section 2(7). Ownership can pass to Mr. B as soon as the contract terms are fulfilled. However, if Mr. A agrees to sell chairs to be manufactured next month, these are future goods under Section 2(6). Similarly, if Mr. A agrees to sell chairs only if he receives a supply of timber from a supplier, such chairs will be treated as contingent goods. This example illustrates how the definition and classification of goods under the Sale of Goods Act, 1930, affect the nature and enforceability of sales contracts.
Easy Mnemonic
To remember the Definition and Types of Goods, use the mnemonic “E-F-C”:
- E – Existing Goods (specific, ascertained, unascertained)
- F – Future Goods (to be manufactured or acquired later)
- C – Contingent Goods (dependent on uncertain events)
Think of it as “Every Future Contract” – meaning every contract of sale involves either Existing, Future, or Contingent goods. This simple mnemonic helps recall Section 2(7) and related provisions quickly, ensuring that you remember both the legal definition and its classification under the Sale of Goods Act, 1930.
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