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CA Foundation · Business Laws · The Sale of Goods Act, 1930

Meena Textiles in Surat agrees to sell to Rakesh 200 metres of cloth 'to be woven next month in its mill'. Before the cloth is woven, Rakesh asks whether property in the cloth has passed to him. What is the legal position under the Sale of Goods Act, 1930?

Property has not passed. The cloth is yet to be woven, so it is future goods, and a contract for future goods is only an agreement to sell. Ownership can pass only after the goods come into existence and are ascertained and appropriated to the contract.

  1. AProperty has passed because the contract is already made
  2. BProperty has not passed, because the goods are future goods and the contract is only an agreement to sellCorrect
  3. CProperty has passed because Rakesh has paid the price
  4. DProperty has passed only when Rakesh inspects the mill

Explanation

Goods to be manufactured or acquired by the seller after the contract is made are future goods. A contract for the sale of future goods operates only as an agreement to sell. Property cannot pass until the goods exist and are ascertained, so the contract being made is not enough.

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