Law of sale of Goods

The law as to the sale of goods was originally embodied in sections 76 to 123 of the Indian Contract Act, 1872. However, as the provisions of the sections 76 to123 were found inadequate to meet the complexities of growing mercantile transactions, the said sections were repealed and the sale of Goods Act 1930 took birth. It is well known that our sale of Goods Act, 1930 is based upon and is largely a re-production of the English sale of Goods Act 1893 and in principle the law of sale of goods in both the countries is now the same and, therefore, English authorities in interpretation of different sections although not technically binding in India, would have great persuasive value.

Law relating to sale of goods is a branch of Contract Law as the general principles of contracts are applicable to contracts for sale of goods such as offer and its acceptance, capacity of parties, free consent, consideration and legality of the object.

Scope of the Act:

The sale of Goods Act applies only to movables than actionable claims and money and not to immovables which are governed by the Transfer of property Act 1882. Actionable claims mean chose in action or thing in action. It means the person has a right to recover a thing by suit but does not have the enjoyment of the thing.

Goods [Sec 2 (7)]:

Goods means every kind of movable property other than actionable claims and money and includes tock 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.

Goods may be – (1) Existing, or (2) Future

Existing goods are further classified into –

a) Specific goods
b) Un-ascertained or Generic goods

Specific goods mean goods identified and agreed upon at the time a contract of sale is made [Sec2 (14)]. These goods are already in existence and are physically present in some person’s possession and ownership for example contract for the sale of a specific watch or specific car.

Generic or un-ascertained goods are indicated by description and not separately identified for example sale of one kg of oil from 100 kgs of oil with the merchant is a sale of un-ascertained goods. When one kg is separated from 100 kgs of oil the sale is of specific goods.

Future goods means goods to be manufactured or purchased or acquired by the seller after the making of the contract of sale [Sec 2 (6)]. These goods do not exist at the time of contract of sale, but subsequently come existence.


A agrees to sell B a sofa cum bed which he would manufacture. It is a case of sale of future goods.

Shares and stock are goods. Even things like goodwill, copyright, trade mark, patent etc are all goods. Gas and electricity though not governed by the sale of Goods act, has been held to be goods. Money is the only consideration in sale of goods. Money means current money. Current money is not goods. If goods are sold for goods the transaction is ‘Exchange’ governed by the Transfer of Property Act, 1882, Price, therefore under the Act means money consideration for sale of goods. Sale of old coins or notes for money in sale of goods

Document of Title to goods:

Document of title to goods includes a bill of lading dock warrant, warehouse keeper’s certificate, wharfinger’s certificate, railways receipt warrant or order for the delivery of goods and any other document used in the ordinary course of business as proof of the possession or control of goods or authorizing or purporting to authorize, either by endorsement or by delivery, the possessor of the document to transfer or receive goods thereby presented.

In a short, a document of title to goods is a proof of possession or control over the goods. The holder of the document of title to goods is authorized to receive the goods. He is also authorized to transfer the possession of the goods either by endorsement or by delivery.

Bill of lading, dock warrant, warehouse keeper’s certificate, wharfinger’s certificate railway receipt, delivery warrant are some of the documents of title to goods. Any document used in the ordinary course of business, which entitles the possessor of e document to receive the goods unconditionally is a document of title to goods.

A delivery order is a document of title to goods and its possessor has the right not only to receive the goods but also to transfer it to another by endorsement or delivery.

A bill of lading is a writing signed on behalf of the owner of the ship in which goods are embarked, acknowledging the receipt of the goods, and undertaking to deliver them at the end of the voyage subject to such conditions as may be mentioned in the bill of lading. It is well settled in commercial world that a bill of lading represents the goods and the transfer of it operates as a transfer of the goods.