Classification of Goods in Business Law
In business law, the term "goods" refers to all movable property apart from actionable claims and money.3 min read
The classification of goods in business law can be tricky to understand. In business law, the term "goods" refers to all movable property apart from actionable claims and money. This includes growing crops, grass, and other things attached to land or forming a part of the land, as well as stocks and shares. There are three main types of goods: existing goods, future goods, and contingent goods.
Existing goods are goods that physically exist and belong to the seller at the time of contract of sale. Existing can be further divided into two categories:
- Specific Goods: These are goods that are specifically agreed upon between the seller and buyer at the time of making the contract of the sale. For example, the seller may agree to sell the buyer a specific item bearing a specific number. These are sometimes known as "ascertained goods." This distinction becomes important because of the rules regarding the transfer of property between parties.
- Unascertained goods: These are goods that are agreed upon at the point of making the contract of sale but are not specifically identified in the contract. For example, a seller may agree to sell a buyer one out of a number of items of the same type (e.g., bags of sugar) without defining which specific item the buyer will receive. As soon as the specific item is defined, for example when being prepared for delivery, this becomes specific, or ascertained goods.
Future goods are goods that are not yet in existence or that do not yet belong to the seller when the contract of sale is made. This could be goods that are yet to be manufactured or that the seller has not yet acquired. For example, a farmer may agree to sell a buyer all of the milk produced by his/her cows in the coming year. This is called an "agreement to sell." Because the milk does not yet exist at the point of making the contract, it is an example of future goods.
Although contingent goods are a type of future goods, they differ in that they are dependent on a specific contingency. For example, a seller may agree to sell a buyer some specific goods that are due to arrive on a particular ship. If, when the ship arrives, it does not contain those goods, the buyer will still have fulfilled his agreement, because the sale was contingent on the ship containing those specific goods.
Contract of Sale
A contract of sale is a specific legal contract concerning the exchange of goods between two parties, the seller and a buyer. The contract of sale concerns the transfer of goods, property, or services from the seller to the buyer, in exchange for an agreed-upon sum of money.
The UK's Sale of Goods Act
The Sale of Goods Act 1979 exists to regulate contracts relating to the sale and purchase of goods in the UK. The main purpose of the Act is to lay down the rules, presumptions, and implied terms that reflect the conditions of the most common sales contracts.
The Act was designed in order to protect buyers by putting more responsibility on the seller. Often, the rules of the Act are only used when the parties have not made their responsibilities clear.
Section 61 of the Sale of Goods Act states that the term "goods" includes all personal property but does not include any services, money, or intangible property rights such as a chose in action (the right to sue). Products of the soil are usually considered goods because they are sold with a view to severance. If land that has crops growing on it is sold, those crops are not usually considered goods, because they are not "severed before sale or under contract of sale," which is required by Section 61 of the Sale of Goods Act.
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