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CMA Intermediate · Business Laws and Ethics · Sale of Goods Act, 1930

Anil Farms contracts on 1 June to sell to Bharat Mills the entire mango crop to be harvested from its orchard in the next season, stating that the property in the crop passes to Bharat Mills with immediate effect. Which statement is correct under the Sale of Goods Act, 1930?

It operates as an agreement to sell. Future goods can be contracted for, but where the seller purports to make a present sale of them, the Act treats the contract as an agreement to sell, not a completed sale.

  1. AIt is a sale because the parties stated that property passes now
  2. BThe contract is void because future goods cannot be the subject of a contract of sale
  3. CIt operates as an agreement to sellCorrect
  4. DIt is a sale only after the price is paid in full

Explanation

Section 6(1) allows future goods as the subject of a contract of sale. Section 6(3) says that where the seller purports to effect a present sale of future goods, the contract operates as an agreement to sell. So the stated intention does not make it a sale, and the contract is not void.

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