Future Goods, Contingent Goods, and Existing Goods Under Section 6: How the Nature of Goods Dictates Contractual Obligations
- Umang
- May 17
- 15 min read
Table of Contents
Why the Classification of Goods Is Not Merely Academic
A farmer agrees to sell next year's wheat crop from his field in Punjab. A collector agrees to sell a Picasso painting — provided he can first acquire it from its current owner. A wholesaler agrees to sell 50 bales of cotton from a godown holding 100 bales, without yet identifying which bales.
Each of these is a valid contract. But none of them is a sale in the completed, executed sense. Each operates only as an agreement to sell. And in each case, the reason lies not in a defect in the parties' intention or the form of the contract, but in the nature of the goods themselves.
Section 6 of the Sale of Goods Act, 1930 classifies the subject matter of a contract of sale into two primary categories — existing goods and future goods — with contingent goods constituting a further recognised sub-type. That classification is not a taxonomic exercise. It determines whether a present sale is legally possible, when property passes from seller to buyer, who bears the risk if the goods are destroyed, and what remedies are available if the contract fails. These are questions of immediate commercial consequence, and they are answered differently depending on which category the goods fall into.
The Statutory Framework: Section 6 and the Definitions it Draws Upon
Section 6(1) of the Sale of Goods Act, 1930 provides that the goods which form the subject matter of a contract of sale may be either existing goods — that is, goods owned or possessed by the seller at the time of the contract — or future goods.
Section 6(2) adds that there may be a contract for the sale of goods the acquisition of which by the seller depends upon a contingency that may or may not happen. These are the contingent goods.
Section 6(3) enacts a rule of critical importance: where a seller purports to effect a present sale of future goods, such a contract operates not as a completed sale but as an agreement to sell the goods.
These three sub-sections must be read together with the definitions in Section 2 — particularly Section 2(6), which defines future goods, and Section 2(14), which defines specific goods — to obtain the full picture.
Existing Goods: The Three Sub-Categories
Existing goods are goods that are owned or possessed by the seller at the time of the contract of sale. The ownership qualification is important: goods possessed by an agent of the owner, or by a pledgee who has custody but not ownership, are also considered existing goods for purposes of the Act, because the Act recognises that possession without ownership is sufficient. Within the category of existing goods, the Act and judicial interpretation identify three distinct sub-classes.
Specific Goods: Section 2(14)
'Specific goods' are defined under Section 2(14) as goods that are identified and agreed upon at the time the contract of sale is made. The identification must occur at the contract stage itself, not subsequently.
The example is straightforward: five cars of different models are on a dealer's lot. A buyer agrees to purchase the 'Santro' car specifically. That particular vehicle is identified and agreed upon at the time of the contract — it is specific goods. Similarly, a Samsung Galaxy S7 Edge, or a particular Whirlpool washing machine of 7 kg, individually selected at the time of contracting, would be specific goods.
The importance of this category lies in what follows from it. Specific goods are susceptible to void contracts under Section 7 (if they have already perished at the time of contracting) and to avoided agreements under Section 8 (if they perish after the agreement to sell but before risk passes).
Unascertained goods, by contrast, are not susceptible to these provisions in the same way, because until goods are ascertained, there is no specific subject matter that can be said to have perished.
Ascertained Goods: Lord Atkin in re Wait
'Ascertained goods' are not expressly defined in the Sale of Goods Act, 1930 — the term is a judicial creation. Lord Atkin, in the celebrated decision in re Wait [(1927) 1 Ch. 606], observed that ascertained goods probably means goods "identified in accordance with the agreement after the time a contract of sale is made."
The distinction between specific and ascertained goods is therefore temporal. Specific goods are identified at the time the contract is formed. Ascertained goods are goods that were unascertained at the time of the contract but have subsequently been identified in accordance with the agreement.
In practice, the two terms are often used interchangeably, but the conceptual difference is not trivial — particularly for purposes of the passing of property rules under Sections 18 to 23.
Consider: a wholesaler has 100 bales of cotton in his godown. He agrees to sell 50 bales to a buyer. At the time of the contract, no specific 50 bales are identified — the goods are unascertained.
Later, 50 bales are selected and set aside. At that moment, they become ascertained. The contract was initially for unascertained goods; after selection, it becomes a contract for ascertained goods, and property can now pass.
Generic or Unascertained Goods
'Generic or unascertained goods' are goods indicated only by description and not specifically identified at the time of the contract. They are not a named, particular item; they are a type or quantity of item, to be selected or produced later.
Aruna Automobiles has 500 Bajaj scooters on display. A customer agrees to buy one Bajaj scooter, without specifying any particular piece. That contract is for unascertained goods: no particular scooter out of the 500 has been identified as the subject matter of the sale.
Similarly, if X has ten horses and agrees to sell one of them without specifying which, the contract is for unascertained goods.
The commercial significance is profound. Property in unascertained goods cannot pass to the buyer at the time of the contract. There is simply no identified subject matter for the property to reside in. This is the rule of Section 18 of the Act.
Future Goods: Section 2(6) and the Agreement-to-Sell Rule
Section 2(6) defines 'future goods' as goods that are yet to be manufactured, produced, or acquired by the seller after entering into the contract of sale.
The definition contemplates three scenarios: goods that need to be manufactured (factory-produced items), goods that need to be produced (agricultural produce, livestock yield), and goods that need to be acquired (i.e., the seller does not yet own or possess them).
Examples of contracts for future goods are everywhere in commerce. A farmer who agrees to sell the wheat to be grown in his field in the coming season is contracting for future goods — those goods do not yet exist.
Similarly, a person who agrees to sell to a buyer all the milk his cow may yield during the coming year is selling future goods. The goods are to be produced in the future by the seller.
A Present Sale of Future Goods Is Impossible
Section 6(3) draws a consequence of fundamental importance: a seller cannot effect a present sale of future goods. If a seller purports to do so — that is, if the contract is framed as a completed sale of goods that do not yet exist — the transaction does not operate as a sale but as an agreement to sell. The seller is making a promise to transfer property in goods that will come into existence in the future; he is not, and cannot be, transferring property now.
The reason is elementary: a person cannot transfer what is not in existence. The law will not give effect to a present purported transfer of goods that have not yet come into being. Accordingly, a contract for the sale of future goods is always an agreement to sell — never a completed, executed sale.
This rule has significant implications. Since the contract operates as an agreement to sell, property has not passed to the buyer. Risk, therefore, remains with the seller. The buyer acquires no ownership interest in the goods merely by virtue of entering into the contract, however unconditional the terms may appear.
When Future Goods Perish Before Appropriation
If future goods are specific — that is, if the contract identifies a specific class or source of future production — and those goods are destroyed before they come into existence or before they are appropriated to the contract, the destruction amounts to supervening impossibility.
The contract becomes void under Section 56 of the Indian Contract Act, 1872.
The consequences are as under an agreement to sell under Section 8: neither party bears liability to the other, provided the loss occurred without fault.
Contingent Goods: Section 6(2) and the Uncertain Event
Section 6(2) recognises a further category: goods the acquisition of which by the seller depends upon a contingency that may or may not happen. These are contingent goods.
The defining characteristic of contingent goods is the interposition of an external event — a contingency — upon which the seller's ability to procure and supply the goods depends. That contingency may happen or it may not; neither party can control it with certainty.
Contingent Goods as a Species of Future Goods
Contingent goods are, as the source material expressly acknowledges, a part or kind of future goods. The seller does not currently possess them, and whether he will ever possess them depends on something happening in the world external to the contract.
The illustrative examples are instructive.
Prakash agrees to sell Onkar's car to Saurabh — provided Onkar sells the car to Prakash first. The car exists (it is not a non-existent object), but Prakash does not own it.
His ability to deliver it as seller depends entirely on the contingency of Onkar agreeing to sell. If Onkar refuses to sell, Prakash cannot perform. Those goods — Onkar's car — are contingent goods in Prakash's hands.
Equally, if P contracts to sell 50 pieces of a particular article provided the ship carrying them reaches port safely, the goods are contingent goods. The articles exist on the ship; P may have procured or ordered them. But whether P will acquire them in a form enabling delivery depends on the contingency of the ship arriving safely.
Effect on Passing of Property
Like future goods, contingent goods operate contractually as an agreement to sell — not as a completed sale — so far as the question of passing of property is concerned. Property does not pass to the buyer at the time of the contract.
It will pass, if at all, only when the contingency is fulfilled and the seller actually acquires the goods, followed by their appropriation to the contract.
Until that moment, the seller retains the risk. If the contingency fails — if Onkar refuses to sell, or if the ship sinks — the seller cannot perform, and the agreement is discharged.
How the Classification Dictates Passing of Property
The classification of goods as existing/specific, existing/unascertained, future, or contingent is the gateway to the passing-of-property rules in Sections 18 to 25. Each category follows a different regime.
Specific Goods in a Deliverable State: Section 20
Where there is an unconditional contract for the sale of specific goods in a deliverable state, property passes to the buyer when the contract is made — regardless of whether the time for payment or delivery is postponed. This is the rule of Section 20.
The principle was applied in Tarling v Baxter [(1827) 6 B&C 360], where a contract was made on 6 January for the sale of a certain stack of hay, with payment due on 4 February and removal not until 1 May. The stack was accidentally destroyed by fire on 20 January.
The court held that property had passed to the buyer at the time of the contract, and accordingly the buyer bore the loss — even though the price was unpaid and the goods had never been removed.
Specific Goods Not in a Deliverable State: Section 21
Where specific goods are not yet in a deliverable state — because the seller has to do something to them before the buyer is bound to take delivery — property does not pass until the seller has done that thing and the buyer has notice of it.
The distinction was sharply illustrated in Turley v Bates [(1863) H&C 200]. Where the weighing or other act necessary to put goods in a deliverable state was to be done by the seller, property passed only on that act being done.
If the weighing or ascertainment were for the buyer's own satisfaction rather than as a contractual precondition, the result would be otherwise, and the loss would fall on the buyer.
Unascertained and Future Goods: Sections 18 and 23
Section 18 lays down the foundational rule: in a contract for the sale of unascertained or
future goods, property does not pass until the goods are ascertained. There is simply no identifiable subject matter in which property can vest.
Samuel agrees to sell Benson 100 quintals of sugar from a large quantity stored in a godown.
The price is to be paid later. Property does not pass until the required 100 quintals are segregated from the bulk. Until that separation and ascertainment, the goods remain unascertained, and Section 18 bars the passing of property.
The Appropriation Mechanism Under Section 23
Once goods are ascertained, Section 18 is satisfied. But for property to actually pass in the case of unascertained goods sold by description, Section 23 requires a further step: unconditional appropriation of the goods to the contract.
Appropriation means the selection of goods with the exclusive intention of using them in performance of the contract, with the mutual consent of the parties. The conditions are: the goods must be of the agreed description; they must be in a deliverable state; the appropriation must be unconditional; and it must be made either by the seller with the assent of the buyer or by the buyer with the assent of the seller.
Assent may be express or implied, and may be given before or after appropriation.
Section 23(2) creates a specific rule for delivery to a carrier: where the seller delivers the goods to the buyer or to a carrier without reserving the right of disposal, the seller is deemed to have unconditionally appropriated the goods to the contract. Property passes on that delivery.
This was illustrated in Carlos & Co. v Charles Twigg & Co. [(1957) 1 L.R. 240], where sellers had agreed to supply cycles F.O.B. to a foreign buyer. The buyer paid the price; the sellers packed the cycles in boxes. Before shipment, the sellers became insolvent. The buyers argued that by packing the cycles, the sellers had unconditionally appropriated the goods.
The court rejected this argument — shipment was the decisive act that the parties had intended as the moment of appropriation, and since the goods had not been shipped, property had not passed to the buyers.
The contrast between an appropriation that is conditional (seller retains documents of title until payment is made) and one that is unconditional (seller delivers to carrier without reservation) is precisely the difference between property passing and property being withheld.
Perishing of Goods and the Classification Nexus
The classification of goods as specific, unascertained, future, or contingent has direct bearing on the two perishing-of-goods provisions in the Act.
Section 7: Goods Perishing Before the Contract
Section 7 applies only to specific goods. Where, at the time the contract is made, specific goods have already perished — or have become so damaged as to no longer answer their contractual description — without the seller's knowledge, the contract is void. There is no subject matter.
If A agrees to sell B fifty bags of wheat stored in a godown, and both parties are unaware that a waterlogging event had already destroyed those bags before the contract was signed, the agreement is void under Section 7.
The provision is inapplicable to unascertained or future goods. Unascertained goods drawn from a larger bulk do not "perish" in the Section 7 sense when part of the bulk is destroyed, because the subject matter of the contract had not yet been identified from that bulk.
Section 8: Goods Perishing After Agreement to Sell
Section 8 applies where there is an agreement to sell specific goods, and the goods subsequently perish or become so damaged before risk passes to the buyer — without fault of either party. The agreement is avoided.
The pre-conditions make the classification essential. The provision requires: an agreement to sell (not a completed sale), specific goods, perishing without fault, and before risk has passed. If the contract was a completed sale — as in Tarling v Baxter where property had already passed — the loss falls on the buyer as owner. Section 8 operates only where the goods are still at the seller's risk at the time they perish.
Practical Illustrations and Problem-Solving
Illustration 1: T agrees to sell Q 1,000 quintals of potatoes to be grown on T's field during the next season. Q pays an advance. The crop fails entirely due to drought without fault of either party. Is the contract void?
The contract is for future goods — potatoes yet to be produced. It operates as an agreement to sell. When the future goods, being specific (identified by source), fail to come into existence due to the drought, performance becomes impossible under Section 56 of the Indian Contract Act, 1872. The agreement is discharged. T must refund the advance received.
Illustration 2: A has 500 Bajaj scooters. He agrees to sell 50 to B at a specified price, without identifying which 50. Before any appropriation, A's godown catches fire and all 500 scooters are destroyed. Who bears the loss?
The contract was for unascertained goods — no specific 50 had been identified. Property had not passed under Section 18. Risk follows property; as property had not passed, the loss falls on A. B may seek refund of any advance paid but has no obligation to pay for goods never appropriated to his contract.
Illustration 3: Prakash agrees to sell to Saurabh the car of Onkar, provided Onkar agrees to sell it to Prakash first. Onkar refuses to sell. Saurabh sues Prakash for damages. What is Saurabh's remedy?
The car was contingent goods. The contract operated as an agreement to sell. When the contingency — Onkar agreeing to sell — failed, Prakash could not perform. Saurabh has a claim for damages for breach of contract (a jus in personam), but cannot claim the car itself or sue in tort, since property never passed.
Conclusion
Section 6 of the Sale of Goods Act, 1930 draws a map of goods classification that is simultaneously a map of contractual obligations.
Existing goods — specific, ascertained, or unascertained — each follow their own passage-of-property regime under Sections 18 to 23. Future goods can never be the subject of a present sale; a seller who purports to sell them now accomplishes only an agreement to sell. Contingent goods, being a species of future goods, carry the additional burden of an external event upon which the seller's very ability to perform depends.
The classification dictates everything downstream: when property passes, who bears the risk of destruction, whether Sections 7 or 8 apply to void or avoid the contract, and what remedy the aggrieved party has. Lord Atkin's observation in re Wait — that ascertained goods are those "identified in accordance with the agreement after the time a contract of sale is made" — captures a precise moment in the lifecycle of a contract, the moment at which unascertained goods crystallise into a specific subject matter. Before that moment, no property passes and no sale is complete.
For law students, the practical lesson is to resist the temptation to characterise every commercial transaction as a completed sale. Ask, first, what the goods are — existing or future? Identified or not? Is there a contingency involved? The answers determine the legal character of the transaction and the rights that flow from it.
Frequently Asked Questions
Q: What is the difference between specific goods and ascertained goods under the Sale of Goods Act, 1930?
Specific goods, as defined under Section 2(14), are identified and agreed upon at the time the contract of sale is made. Ascertained goods, as judicially interpreted by Lord Atkin in re Wait [(1927) 1 Ch. 606], are goods identified in accordance with the agreement after the contract is made. In practice they are often used synonymously, but the timing of identification distinguishes them: specific goods are identified at contract formation; ascertained goods were initially unascertained and become identified later.
Q: Can a contract for the sale of future goods ever operate as a completed sale?
No. Section 6(3) of the Sale of Goods Act, 1930 expressly provides that where a seller purports to effect a present sale of future goods, the contract operates only as an agreement to sell. Since future goods do not yet exist, no present transfer of property is possible. The seller undertakes to transfer property once the goods come into existence and are appropriated — not before.
Q: What are contingent goods, and how do they differ from future goods?
Contingent goods, under Section 6(2), are goods the acquisition of which by the seller depends on a contingency that may or may not happen. They are a sub-category of future goods in the sense that, like future goods, the seller does not currently own or possess them. The difference is that future goods do not yet exist (they are to be manufactured or produced), while contingent goods may already exist but the seller's ability to acquire them depends on an uncertain external event — such as a third party agreeing to sell.
Q: When does property pass in a contract for unascertained goods?
Under Section 18, property cannot pass in a contract for unascertained or future goods until the goods are ascertained. Once ascertained, Section 23 further requires that the goods be unconditionally appropriated to the contract — either by the seller with the buyer's assent, or by the buyer with the seller's assent. Only when both conditions are met does property pass.
Q: Does the perishing of future goods discharge the contract?
If the future goods are specific — identified by a particular source or description — their destruction before appropriation amounts to supervening impossibility under Section 56 of the Indian Contract Act, 1872, discharging both parties from their obligations. If the future goods are generic (to be supplied from any available stock), the seller cannot plead impossibility merely because one source has been destroyed; he must source the goods from elsewhere.
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