Subject-Matter of Contract — Existing, Future, Specific, Ascertained, Unascertained Goods

Section 6 of the Sale of Goods Act, 1930 sets the goods that can lawfully be the subject-matter of a contract of sale; Section 2 supplies the definitions that classify them. The Act is short, but the subject-matter clauses are the gateway through which every later provision — passing of property, the rules in Sections 18 to 25, the Section 26 risk rule, the unpaid seller's rights — must travel. A merchant who cannot place the goods at hand into the right doctrinal box cannot tell when ownership shifts, who bears the loss, or whether a remedy lies in damages or in price.

This chapter takes the four classifications the Act recognises — existing and future, specific and unascertained, and the in-between status of ascertained — and sets them against the section text and the leading authorities. The classifications are not academic. They decide the result in Tarling v. Baxter, in Union of India v. Tara Chand, in Kursell v. Timber Operators, and in Ambalavana Chettiar v. Express Newspapers. They are the spine of every problem question on passing of property the examiner can frame.

Statutory anchor — Section 6 SoGA

Section 6 of the Sale of Goods Act, 1930 is the gateway provision. It tells you what may form the subject-matter of a contract of sale and, more importantly, expressly permits a sale of goods that the seller does not yet own. The position at common law, before the codification of the Act, was that one cannot sell what one does not have; Section 6 displaces that rule for commercial transactions and sanctions the agreement to sell future goods.

Three propositions emerge. First, the section recognises a binary at the broadest level — existing goods on one side, future goods on the other. Second, it permits a contingent agreement to sell, where acquisition by the seller depends on an event that may or may not happen. Third, it forbids a present sale of future goods: any attempt by the parties to label such a transaction a sale is statutorily downgraded to an agreement to sell, with the consequences for risk, remedy and ownership that the essentials of a contract of sale discussion sets out.

Existing goods — owned or possessed by the seller

Existing goods are those that the seller owns or possesses at the moment the contract is made. Two relations are alternative — ownership or possession. A bailee who has the requisite authority to sell (under the nemo dat exceptions) may pass property in goods he merely possesses; an owner-out-of-possession may equally contract for their sale. The category exists because existing goods are the natural object of an immediate sale: ownership is in a position to pass to the buyer the moment the contract is made, subject to the parties' contrary intention under Section 19.

Ownership and possession distinguished

The Act's definition of property at Section 2(11) is the general property in the goods, not a mere special property. General property is ownership; special property covers limited rights such as those of a pledgee, a finder, or a carrier. A contract of sale is a contract that transfers the general property — that is the doctrinal pivot. A pledge or a hire transfers a special property only and is not within the Act. The same goods may at one moment be the subject of an existing-goods contract (the owner sells), and at another the subject of a future-goods contract (the same person, having alienated, agrees to repurchase upon contingency).

Future goods — Section 2(6) and Section 6(3)

Future goods are defined at Section 2(6) as goods to be manufactured or produced or acquired by the seller after the making of the contract of sale. Three modes of futurity are contemplated: manufacture (the seller has yet to make them), production (the seller has yet to grow or extract them), and acquisition (the seller has yet to buy them in himself). The illustration is familiar: a contract to supply wheat that has yet to be grown, or watches that have yet to be manufactured.

The discipline imposed by Section 6(3) is non-trivial. Parties who treat a future-goods transaction as a present sale will find their bargain re-characterised by the Act as an agreement to sell. Property cannot pass at the date of the contract because the goods do not yet exist or do not yet belong to the seller; the agreement matures into a sale only when the goods come into existence and are appropriated, on which see the rules in Sections 18 to 25.

Tara Chand — coal ash and the limits of remedy

The leading Indian authority on the future-goods category is Union of India v. Tara Chand (AIR 1976 MP 101). The defendants contracted to sell to the plaintiff all the coal ash that might accumulate at a certain pump-house. They cancelled unilaterally; the plaintiff sued not only for breach but also in tort, framing the claim as conversion. The High Court held that the contract was for the sale of future goods. Because no coal ash existed at the moment of contracting, the transaction was an agreement to sell. The buyer never became the owner. The seller, retaining ownership, could not commit conversion against goods of which he was the owner. The only remedy was an action for breach of contract and refund of price.

The case crystallises the practical consequence of Section 6(3). An agreement to sell does not place the goods at the buyer's risk; it does not give the buyer a proprietary remedy; it gives him only a personal action in damages, the position recapitulated in the standard distinction between sale and an agreement to sell. The same point matters when assessing implied terms under the implied-conditions cluster: until property exists, an implied condition of title can only attach upon ascertainment.

Contingent agreements — Section 6(2)

Section 6(2) permits a contract for the sale of goods the acquisition of which by the seller depends upon a contingency. The textbook example is the cargo ex ship — the buyer agrees to take a quantity of nitrate of soda to arrive ex a certain ship, the contract being conditional on the ship arriving and arriving with the specified cargo. If the contingency fails, no obligation crystallises against the seller; the parties are restored to the position before the contract.

Specific goods — Section 2(14)

Specific goods are defined at Section 2(14) as goods identified and agreed upon at the time a contract of sale is made. Two requirements must concur: identification, and agreement. The identification must be concrete enough that, looking at the contract, one can point to the goods themselves — the chestnut horse in stall three; the Bugatti registered as such-and-such; the consignment of newsprint marked with a particular lot number. Goods that exist in bulk, undivided, are not specific even if the bulk itself has been identified.

The illustration in the standard texts is a contract for the sale of a specified ring, watch or horse. Specific goods are the natural subject of an immediate sale because Section 20 will, in default of contrary intention, pass property at the moment of the contract. The Section 19 rules on intention, the Section 20 rule for unconditional contracts in a deliverable state, and the Section 21 rule for goods not in a deliverable state are all written for specific goods, as is much of the chapter on the passing of property.

Specific is not the same as ascertained

The most-tested distinction in this cluster is between specific goods and ascertained goods. The two are not synonyms. Specific goods are identified at the moment of the contract; ascertained goods are goods that, although unascertained at the time of the contract, have since been identified and appropriated to the contract. Every specific good is ascertained from the start; not every ascertained good was ever specific. A contract for fifty bags of rice out of one thousand in a warehouse begins life as unascertained; once fifty bags are set aside and labelled with the buyer's name, they become ascertained but they were never specific.

The exam-angle: Section 18 (no property in unascertained goods until ascertainment) is written in terms of ascertained; Section 20 (property in specific goods passes on contract) is written in terms of specific. Mixing the two is the standard error and the examiner's standard trap.

Kursell — when is identification really identification?

The English authority of Kursell v. Timber Operators and Contractors Ltd. (1927) 1 KB 298 illustrates the limits of identification. The contract was for the sale of all trunks and branches of trees, excluding seedlings and trees of less than six inches in diameter at a height of four feet from the ground. The buyers had fifteen years to cut and remove. The court held that the goods were not specific. Trees of only certain specifications were to be taken, and the goods had not yet been severed; the parties could not point at the moment of contracting to the goods themselves. Description by exclusion is not identification.

The lesson generalises beyond timber. A contract that points to a class of items to be selected, or of a particular description, out of a larger mass is a contract for unascertained goods, not for specific goods, however precise the description.

Unascertained goods — bulk, description and Section 18

Unascertained goods are the residual category. The Act does not define them in its definitions section, but they emerge by negation: goods not identified and agreed upon at the time of the contract. They are typically goods sold by description, or goods drawn from a larger mass — fifty cwt. of sugar from a thousand-cwt. heap, two hundred bushels of wheat from a granary, one tonne of newsprint from a stockpile.

Section 18 is the single most important rule in this category. Until ascertainment, property cannot pass; until property passes, risk does not pass under Section 26; until risk passes, the buyer cannot be made to pay where the goods perish without fault. The rule has the look of a technicality, but it allocates the loss in the typical commercial dispute.

Ambalavana Chettiar — variation that re-unascertains

The Supreme Court in Ambalavana Chettiar v. Express Newspapers (AIR 1968 SC 741) gave the rule its sharpest application. The respondent agreed to sell 415 tons of newsprint then lying in its godown. As an unconditional contract for specific goods in a deliverable state, the property in the entire stock passed to the buyer at the moment of the contract under Section 20. Thirteen days later the parties varied the contract: the buyer would now take only 300 tons out of the 415-ton stock. The Supreme Court held that the variation annulled the passing of property. From the date of variation, the contract was for unascertained goods — any 300 tons out of the larger 415-ton stock — and property could not pass until the 300 tons were ascertained and appropriated. The seller's right of resale under Section 54(2), which presupposes a property that has already passed to the buyer subject to the unpaid seller's lien, was therefore not available.

The case is the locus classicus for the proposition that ascertainment is a continuing requirement: a contract may begin with specific goods and slip back into unascertained-goods territory if the parties redraw its scope, with all that follows for risk and remedy.

Ascertained goods — the bridge between unascertained and specific

Ascertained goods are unascertained goods that have, since the contract was made, been identified and set apart in performance of it. Sections 18 and 23 deal with the moment of ascertainment for goods sold by description. The bridge is appropriation: the seller (or the buyer with the seller's assent) selects goods of the contract description and earmarks them to the contract.

Section 23(1) requires four conditions for property to pass: appropriation, mutual assent (express or implied), conformity to the contract description, and an unconditional appropriation. A seller who keeps goods aside but reserves the right of disposal — for example by sending a value-payable parcel, or by drawing on the buyer through a bill of exchange together with the railway receipt — has not unconditionally appropriated, and property remains with him. A buyer who keeps silent for a month after being asked to take delivery may, by his silence, be taken to have assented to an appropriation already made — the rule applied in Pignataro v. Gilroy & Son (1919) 1 KB 459, where the buyer's silence over a month after a request to take fifteen bags from the seller's warehouse was inferred as assent and the bags were held to have been at the buyer's risk when stolen.

Worked illustrations

1. Specific from the start. A sells B the chestnut horse called Tiger in his stables. Identification and agreement coincide; the goods are specific from the start, and Section 20 will, prima facie, pass property when the contract is made.
2. Future, then ascertained. A agrees to supply B a wrist watch of a particular brand which A has yet to manufacture. The watches are future goods; once A makes one and despatches it to B, that watch is ascertained, and property may pass under Section 23 if all four conditions are satisfied.
3. Unascertained, then ascertained. A agrees to sell B fifty bags of rice out of a stock of one thousand. The fifty bags are unascertained at the moment of contracting; once A marks fifty bags with B's name, or puts the rice into B's sacks (the standard textbook hypothetical), the goods are ascertained and property passes.
4. Specific, then re-unascertained by variation. The Ambalavana Chettiar facts. The 415-ton stock began as specific goods; the variation reducing the quantity to 300 tons re-cast the contract as one for unascertained goods within the larger stock.

Goods within the Act — Section 2(7)

Section 2(7) defines goods as every kind of movable property other than actionable claims and money. The definition includes stock and shares, growing crops, grass, and things attached to or forming part of the land that are agreed to be severed before sale or under the contract of sale. Two consequences for the present chapter follow.

First, goods that the law treats as movable can move between the future and existing categories of Section 6 by reason of their state. Standing timber that is in a state ready to cut is movable property and may be the subject of an immediate sale of existing goods; a tree that continues to draw nourishment from the soil is immovable, and any contract concerning it must clear the severance hurdle before the goods enter the Act at all. The point is the holding of Shantabai v. State of Bombay (AIR 1958 SC 532).

Second, things attached to land — doors, windows, building debris — fall within the definition of goods if agreed to be severed before sale or under the contract. They can therefore be specific goods (the particular door identified in the contract), unascertained goods (any one of fifty doors of a given specification), or future goods (doors yet to be manufactured by the seller).

Money, actionable claims and the borderline cases

Current money is excluded, because money is the consideration for a sale rather than its object; foreign money, however, may be bought and sold, as may old or rare coins that have ceased to be legal tender. Lottery tickets are goods (the transfer of the right to participate in a draw being a beneficial interest in movable property), but a claim in respect of a prize is an actionable claim. The Supreme Court so held in H. Anraj v. Government of Tamil Nadu (AIR 1986 SC 63).

Electricity, water, gas and steam are goods within the definition. The Supreme Court in Commissioner of Sales Tax v. M.P. Electricity Board (AIR 1970 SC 732) held that electric energy, although not tangible, can be transmitted, transferred, delivered, stored and possessed in the same way as any other movable property and so falls within the definition. The point matters for the present chapter because it widens the field of goods that can in principle be specific, ascertained, unascertained or future.

Why the classification matters — passing of property and risk

The classifications are doctrinal but their effect is monetary. The party who owns the goods at the moment of loss bears the loss, by force of Section 26. To know who owns one must know whether property has passed; to know whether property has passed one must know whether the goods are specific, ascertained, unascertained or future, because the rules in Sections 18 to 25 turn on that classification.

For specific goods in a deliverable state under an unconditional contract, the rule in Section 20 passes property at the moment of the contract, irrespective of postponement of price or delivery — the rule applied in Tarling v. Baxter (1827) 6 B&C 360, where a stack of hay sold on 6 January, price payable on 4 February, removable from 1 May, was held to have passed to the buyer when contracted, so that destruction by accidental fire on 20 January fell on the buyer.

For specific goods not in a deliverable state under Section 21, property does not pass until the act remaining to be done is performed and the buyer has notice — the rule applied in Underwood Ltd. v. Burgh Castle Brick & Cement Syndicate (1922) 1 KB 343, where a condensing engine being loaded onto a truck for delivery free-on-rail London was damaged in loading and the loss fell on the seller, the goods not yet being in a deliverable state.

For specific goods in a deliverable state but requiring weighing, testing or some other act for ascertaining the price, Section 22 holds property until the seller does that act and the buyer has notice — the rule in Zagury v. Furnell (1809) 2 Camp 240, where bales of goat skins were destroyed by fire before the seller could verify the count, and the seller bore the loss.

For unascertained goods, Section 18 is decisive: no property until ascertainment. For future goods, the contract is, by Section 6(3), an agreement to sell, and property cannot pass until the goods come into existence and are ascertained. The whole architecture sits inside the Section 26 risk rule, which a chapter of its own examines in detail. Allocation of price-related disputes is a separate sub-axis of the same architecture; the connected price-and-earnest-money discussion is at the price ascertainment chapter.

Distinguishing pitfalls

Three errors recur in answer scripts and need flagging. First, treating specific and ascertained as synonyms — they are sequential stages, and the Act's text turns on the distinction. Second, treating a future-goods contract as a present sale — Section 6(3) statutorily prevents the labelling, and the consequence in Tara Chand shows that the label change matters: no proprietary remedy lies. Third, treating identification by description alone as making goods specific — Kursell shows that description is not identification when the goods have yet to be picked out from a class.

Reading the chapter into the rest of the Act

The classifications are foundational. The reader should keep them in view when working through the rules on destruction in Sections 7 and 8, which turn on whether the goods perished while specific or while still unascertained; through the conditions and warranties chapter, where implied conditions of description and merchantability operate differently for specific and unascertained goods; and through the performance chapter, where the seller's duty to deliver and the buyer's duty to accept are calibrated to the kind of goods. Working through the broader Sale of Goods Act material in this order — definitions, classifications, passing of property, risk — keeps the architecture intact.

Exam-angle: how the classification questions are framed

The classification questions appear in three recurrent forms. The first is the direct: what is the difference between specific and ascertained goods. The second is the applied: a fact-pattern in which goods of a particular kind are sold from a larger mass, and the candidate is asked when property passed and who bears the loss — almost always a Section 18 or Section 23 problem. The third is the trap: a contract that looks like a sale of existing goods but is in truth a sale of future goods because the seller has not yet acquired the goods, with the consequence that Section 6(3) recasts it as an agreement to sell.

The technique is to start with the goods, classify them under Section 2(7) and Section 6, then move to specific or unascertained under Section 2(14) and the residual category, and only then ask which of Sections 18 to 25 governs. The discipline saves the candidate from the standard error of jumping straight to the passing-of-property rule without first locating the goods on the classification grid.