INTRODUCTION:

The Sale of Goods Act, 1930 governs the contracts relating to sale of goods. It applies to the
whole of India except the State of Jammu & Kashmir. The contacts for sale of goods are subject
to the general principles of the law relating to contracts i.e. the Indian Contact Act. A contract for
sale of goods has, however, certain peculiar features such as, transfer of ownership of the goods,
delivery of goods rights and duties of the buyer and seller, remedies for breach of contract,
conditions and warranties implied under a contract for sale of goods, etc. These peculiarities are
the subject matter of the provisions of the Sale of Goods Act, 1930.

The Sale of Goods Act, 1930 gives the definition of Existing or Future goods through the section
6 of the Act. The following section 7 discusses regarding the Goods perishing before making of
contract.

SECTION – 6 :

Existing or future goods.—

(1) The goods which form the subject of a contract of sale may be either existing goods, owned
or possessed by the seller, or future goods.
(2) There may be a contract for the sale of goods the acquisition of which by the seller depends
upon a contingency which may or may not happen.
(3) Where by a contract of sale the seller purports to effect a present sale of future goods, the
contract operates as an agreement to sell the goods.
1.Existing Goods
Existing goods mean the goods which are either owned or possessed by the seller at the time of
contract of sale.The existing goods may be specific or ascertained or unascertained as follows:
a) Specific Goods [Section 2(14)]:
These are the goods which are identified and agreed upon at the time when a contract of sale is
made-For example,specified TV,VCR,Car,Ring.
b) Ascertained Goods:
Goods are said to be ascertained when out of a mass of unascertained goods,the quantity
extracted for is identified and set aside for a given contract.Thus,when part of the goods lying in
bulk are identified and earmarked for sale, such goods are termed as ascertained goods.
c) Unsanctioned Goods:
These are the goods which are not identified and agreed upon at the time when a contract of sale
is made e.g. goods in stock or lying in lots.
2. Future Goods [Section 2(6)]
Future goods mean goods to be manufactured or produced or acquired by the seller after the
making of the contract of sale. There can be an agreement to sell only. There can be no sale in
respect of future goods because one cannot sell what he does not possess.
3. Contingent Goods [Section 6(2)]
These are the goods the acquisition of which by the seller depends upon a contingency which
may or may not happen.

SECTION - 7
S. 7. Goods perishing before making of contract.-
Where there is a contract for the sale of specific goods, the contract is void if the goods without
the knowledge of the seller have, at the time when the contract was made, perished or become so
damaged as no longer to answer to their description in the contract.

Non-existence of the Subject-matter of the Contract

This section, it will be observed, applies, both to sales and to agreements to sell. It Corresponds
to S 6 of the English Act and is declaratory of the Common Law:

The rule has been established for many years that where a contract relates to specific goods
which did not then exist, the case is not to be treated as one in which the seller warrants the
existence of those specific goods, but as one in which there has been a failure of consideration
and mistake. The English Act does not contain the words 'or become so damaged as no longer

to answer to their description in the contract.' The addition of these words remove doubt as to
whether the section applies to such a case, though probably even without them it would be held
to do so, for as LORD ELLENBOROUGH characteristically put it in a case relating to
insurance, 'it surely cannot be less a total loss because the commodity subsists in specie, if it
subsists only in the form of a nuisance.

From the state of the authorities in England, indeed, it may be said that the section will apply not
only to cases where the goods have been destroyed or have been so damaged as no longer to
answer to their description, but also to cases where the seller is irretrievably deprived of them, as
when they have been stolen or lawfully requisitioned by the government or have, in some other
way, been lost and cannot be traced. Where on the date of execution of agreement the parties
were unaware of the destruction and damage to a good number of trees due to fire in the forest, it
was held that the agreement for cutting and felling timber of marked trees in the forest was void.

Knowledge of the Parties

The knowledge of the seller is the important consideration, for the contract is void if the goods
have perished without his knowledge. It does not, therefore, matter what was the knowledge of
the buyer-not that it is likely that any one would agree to buy goods which he knew to have
perished. On the other hand, if the seller, knowing the goods to have perished, agreed to sell
them, he would be liable in damages if the buyer did not know of this fact, as in other cases
where a person promises for valuable consideration to do something which he knows he cannot
perform. In the highly improbable event of both knowing that the goods had perished the
contract would, on general principles, be void. There will not be any effective contract for the
sale of goods which are not known by either party to exist-such as, jewellery contained in a
secret drawer of a cabinet which is sold. Different considerations will however, apply where the
nature of goods sold include the possibility of unknown additional goods, e.g, oysters.

These sections can be broadly understood by going through these following case laws.