Business Laws and Ethics · Sale of Goods Act, 1930

Goods and Their Classification under the Sale of Goods Act, 1930

Updated 10 October 2026 · Fact-checked

Under the Sale of Goods Act, 1930, goods are moveable property other than actionable claims and money. They are existing goods (owned or possessed by the seller) or future goods (to be made or acquired after the contract). If specific goods perish without fault, the contract is void (Section 7) or the agreement is avoided (Section 8), depending on timing.

Understand Goods and Their Classification

A contract of sale needs goods as its subject. Section 2(7) says goods means every kind of moveable property other than actionable claims and money. It includes stock 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. Land and a debt are therefore not goods.

Section 6 classifies goods by the seller's position. Existing goods are owned or possessed by the seller. Future goods are goods to be manufactured, produced or acquired by the seller after the contract is made (Section 2(6)). A third type is described in Section 6(2): a contract for goods whose acquisition by the seller depends on a contingency which may or may not happen. These are often called contingent goods. Note that the Act does not define contingent goods as a separate class; it simply says such a contract may exist.

Under Section 6(3), if the seller purports to effect a present sale of future goods, the contract operates only as an agreement to sell. Property cannot pass in goods that do not yet exist or are not yet owned. Goods can also be specific (identified and agreed upon when the contract is made, Section 2(14)) or unascertained. Section 4 then tells you whether the deal is a sale or an agreement to sell.

Perishing of goods is tested on timing. If specific goods have perished, without the seller's knowledge, when the contract was made, the contract is void (Section 7). If they perish after an agreement to sell but before risk passes to the buyer, without fault of seller or buyer, the agreement is avoided (Section 8). Finally, price means the money consideration for a sale of goods (Section 2(10)). Without a money price, such as in a barter, it is not a sale under this Act.

Key rules to remember

Goods: Goods = every kind of moveable property, other than actionable claims and money; Includes stock, shares, growing crops, grass, and things attached to land agreed to be severed (Section 2(7)).
Existing vs future goods: Existing = owned or possessed by seller; Future = manufactured, produced or acquired after the contract; Sections 6(1) and 2(6).
Contingent acquisition: Seller's acquisition of goods depends on a contingency that may or may not happen; A valid contract is possible (Section 6(2)).
Sale of future goods: Present sale of future goods = agreement to sell; Section 6(3).
Goods perished before contract: Specific goods perished, seller unaware, at time of contract → contract void; Section 7.
Goods perished after agreement: Specific goods perish without fault of either party before risk passes → agreement avoided; Section 8.
Price: Price = money consideration for a sale of goods; Section 2(10).
Agreement at valuation: Third party fails to value → agreement avoided; goods delivered and appropriated → reasonable price; Section 10.

How to solve Goods and Their Classification questions

Use this method for any question on classifying goods or on perishing of goods.

1Identify the subject matter. Is it moveable property? Exclude money, actionable claims and land (except things agreed to be severed).
2Check who owns the goods and when. Owned or possessed at contract date means existing goods; to be made or acquired later means future goods.
3Look for a contingency in the seller's acquisition. If present, apply Section 6(2).
4If the contract says 'sells' future goods, apply Section 6(3): it is only an agreement to sell.
5For perishing, fix the timeline: before contract, or after agreement to sell but before risk passes.
6Check the conditions: goods must be specific, the loss must be without fault, and for Section 7 the seller must not know.
7State the consequence: void (Section 7) or avoided (Section 8), and conclude with the answer.

Quickest way: Timeline test for perishing of goods

When to use it: Use for MCQs and short cases where goods are destroyed or damaged.

Draw a line: contract date, then risk passing.
Goods already gone at contract date and seller unaware: Section 7, contract void.
Goods lost after agreement to sell, before risk passes, no fault: Section 8, agreement avoided.
If anyone is at fault, or risk has already passed, neither section applies; the loss follows the normal rules.
Goods not specific (unascertained)? These sections do not apply.

Common mistakes in Goods and Their Classification

Treating land or a debt as goods.
Students assume anything sold is goods.
Fix: Goods are moveable property only. Money and actionable claims are excluded; things attached to land count only if agreed to be severed.
Saying a present sale of future goods is a valid sale.
The word 'sale' is used loosely.
Fix: Apply Section 6(3): it operates only as an agreement to sell.
Mixing up Sections 7 and 8.
Both deal with perishing of specific goods.
Fix: Section 7 is before the contract (void); Section 8 is after an agreement to sell and before risk passes (avoided).
Applying Section 7 when the seller knew of the loss.
Students skip the condition.
Fix: Section 7 requires that the goods perished without the seller's knowledge.
Ignoring fault in Section 8.
Students focus only on the destruction.
Fix: The loss must be without fault (wrongful act or default) of seller or buyer, as per Section 2(5).

Worked examples

Example 1

On 1 March, Rohit agrees to sell to Meera a specific lot of 500 bags of rice lying in his godown for ₹6,00,000. Unknown to Rohit, a fire had destroyed the entire lot on 28 February. Decide the position.

Show the solution

The goods are specific: the lot is identified and agreed upon at the time of contract.
The goods had perished before the contract was made, on 28 February.
Rohit did not know of the loss when the contract was made.
Section 7 applies: where specific goods have, without the seller's knowledge, perished at the time of contract, the contract is void.

Answer: The contract is void under Section 7. Neither party can enforce it.

Example 2

Anil agrees to sell to Bhavna a specific machine for ₹8,50,000, delivery and risk to pass on 30 June. On 15 June, without any fault of either party, the machine is destroyed by lightning. Advise the parties.

Show the solution

The machine is specific goods, and there is an agreement to sell, since property and risk are to pass later.
The destruction happened after the agreement but before risk passed to the buyer.
The loss was without fault of seller or buyer.
Section 8 applies, so the agreement is avoided.

Answer: The agreement is avoided under Section 8. Anil need not deliver and Bhavna need not pay the ₹8,50,000.

Exam tips

Write the section number with each rule; examiners reward it, so cite Sections 2(7), 6, 7, 8 and 10 correctly.
In case studies, underline the dates. The timing decides between Section 7 and Section 8.
For MCQs, remember the words: Section 7 'void', Section 8 'avoided'.
In a theory answer, give a one-line example for each class: existing goods, future goods, contingent goods.
Do not state a Section 6(2) rule as a separate statutory class; say the Act describes a contract dependent on a contingency.

Practice questions from Sale of Goods Act, 1930

Goods and Their Classification in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Goods and Their Classification: frequently asked questions

What is the difference between existing goods and future goods?

Existing goods are owned or possessed by the seller when the contract is made. Future goods are goods the seller will manufacture, produce or acquire after the contract is made.

What are contingent goods?

Section 6(2) allows a contract for goods whose acquisition by the seller depends on a contingency that may or may not happen. Such goods are commonly called contingent goods, though the Act does not name them as a separate class.

What is the difference between Section 7 and Section 8?

Section 7 covers specific goods that had already perished, unknown to the seller, when the contract was made, so the contract is void. Section 8 covers loss after an agreement to sell but before risk passes, without fault, so the agreement is avoided.

Is a barter a contract of sale?

No. A contract of sale requires a price, which means money consideration under Section 2(10). Exchange of goods for goods does not meet that test.