Page 118 - DMGT407Corporate and Business Laws

Unit 5: Law of Sale of Goods

Self Assessment Notes

Fill in the blanks:
1. A sale has to be …………………because the property in goods has to pass from one person
to another.

2. The consideration in a contract of sale has necessarily to be …………………

5.2 Goods and their Classification

5.2.1 Meaning of Goods

‘Goods’ means every kind of movable property, other than actionable claims and money; and
includes stocks and shares, growing crops, grass and things attached to or forming part of the
land which are agreed to be severed before sale or under the contract of sale. Thus, things like
trade marks patents, copyright, goodwill, water, gas, electricity are all goods and therefore,
may be the subject matter of a contract of sale. In general, it is only the movables, i.e., things
which can be carried from one place to another that form ‘goods’. Landed property, therefore,
does not constitute goods. However, all such things which are part of the land itself and agreed
to be severed from the land under the contract of sale are considered as goods. Thus, where the
trees are sold, to be cut and then taken away by the buyer, that will be a contract for a sale of
movable property. ‘Goods’ includes stock and shares of companies incorporated under the
Companies Act, 1956.
The term ‘goods’ excludes money.

Did u know? What is Money?
‘Money’ means legal tender and not the rare coins which can be sold and purchased as
goods.
The legal tender money is an essential aspect of every sale because the price of goods, has
to be expressed in terms of money and therefore, ‘money’ itself cannot be subject of a sale.
Foreign currency may, however, be bought or sold. Also the term ‘goods’ excludes
actionable claims. The actionable claims are things which a person cannot make use of, but
which can be claimed by him by means of a legal action, e.g., a debt.

5.2.2 Documents of Title to Goods

A document of title to goods may be described as any document used as proof of the possession
or control of goods, authorizing or purporting to authorise, either by endorsement or by delivery,
the possessor of the document to transfer or receive goods thereby represented. Section 2(4)
recognises the following as documents of title of goods: bill of lading, dock warrant, ware-
housekeeper’s certificate, wharf certificate, railway receipt, warrant or order for the delivery of
goods and any other document used in the ordinary course of business as a document of title.

5.2.3 Classification of Goods

Goods may be classified as existing, future and contingent. Existing goods are those which are
owned or possessed by the seller at the time of the contract (s.6). Instances of goods possessed
but not owned by the seller are sales by agents and pledges. Existing goods may be either

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