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

Shalini, a baker, sells a cake to Tarun in her shop for Rs 800 and he takes it away immediately. Shalini does not own the flour used to make it, as she bought it on credit. Which statement is correct?

It is a sale of existing goods owned by Shalini. Buying the flour on credit does not affect her ownership of the flour or the cake, and the cake passes to Tarun immediately for a price, which makes it a completed sale.

  1. AIt is a sale of existing goods, owned by Shalini when soldCorrect
  2. BIt is a sale of future goods, as the flour was not paid for
  3. CIt is an agreement to sell, because the flour was bought on credit
  4. DIt is not a sale, because the cake was made from another person's goods

Explanation

Flour bought on credit still belongs to Shalini, since credit affects payment, not ownership. The cake she made is existing goods in her ownership at the time of sale, and property passes to Tarun at once. Option B wrongly treats unpaid purchase as lack of ownership.

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