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Sale of Goods And Hire Purchase

Learn about the Sale of Goods Act (1930), the classification of goods and delivery, the difference between the sale of goods and hire purchase through this article.

The sale of goods act is about a deal between seller and buyer. It is an act that is universal around the globe. As per this act, when a contract is made between a buyer and seller, there should be a contract mentioning all the details regarding the contract. The goods should be exchanged from seller to buyer for a reasonable price at a given period. According to the hire purchase act, the goods will be transferred to the buyer only after complete payment.

Sale of Goods Act-In Brief

The Sales of Goods and Hire Purchase Law was earlier mentioned in the Indian Contract Act (1872). Later on, after evaluation, the rules were separated, and a new act came into force in 1930.

It was first named the Indian Sale of Goods Act 1930, and later, it was amended on 22 Sep 1963 and renamed The Sale of Goods Act, 1930.

Just like its name, this act deals with the sale of goods, i.e. movable properties.

Terms and Terminology

  • If a seller Sells Now/today – it is called a sale.
  • If a seller agrees to sell at a future date – it is called an agreement to sell.
  • A Seller [Sec 2(13)]- who sells/agrees to sell.
  • A buyer [Sec 2(1)]- who buys/agrees to buy
  • Price means the money consideration for a sale of goods.


By ‘Goods’, we mean every property that is movable other than money and actionable items.

Actionable claims – ‘Actionable claims’ can be by an action or suit, e.g., debt. It includes stock or crops.

Existing Goods 

As per section (6), these are the goods that actually exist at the time of contract. They can be,

  • As per section (2(14)), Specific goods are the kind of goods that are viewed and acknowledged at the time of contract.
  •  The goods viewed and acknowledged after the contract are known as ascertained goods.
  • In contrast, unascertained goods are not viewed and acknowledged during making a contract.
  • Future Goods- These goods only exist after making a contract. After the contract, the seller is instructed to make and produce the mentioned goods in the contract. Therefore, this contract is only an agreement to sell non-existing goods.
  • Contingent Goods-  According to section (6(2)), these goods are the ‘not yet happened’ kind of goods. Sellers do not have the goods currently. It can be under manufacturing, or it may be in transit. Like future goods, contracts made upon contingent goods are also an agreement to sell on a currently not existing property.


Delivery means the voluntary transfer of possession from one person to another.

  •  Actual delivery: The act of physically delivering goods to buyer.
  • Constructive delivery: When goods are effected without there being any transfer of possession. For example, in case of delivery by atonement.
  • Symbolic delivery: When something is delivered in lieu of goods when goods are in transit, for example document or token.

Difference Between Sale and Hire Purchase

According to the hire purchase act (1972), a Hire purchase agreement is a contract that helps the hirer to keep the goods without purchasing them. In simple words, the buyer cannot afford it- so he rented it.

  • The hirer makes a contract with an owner saying he will be paying off in instalments.
  • The agreement mentions the ownership transfers to the hirer only after the last instalment.
  • Hirer is only taking the goods in instalments. So, he can wind up the contract anytime.

Basis of 




Time of passing


Buyer gets the ownership of goods at the time of contract.

Hirer gets the ownership only after the last instalment.

Position of the


Buyer becomes the owner as soon as the contract is made.

Hirer becomes the owner only after completing payments in instalments.

Termination of 


Once the contract is made, the buyer should pay the money mentioned in the contract.

Hirer can wind up the contract anytime before the last instalment, if he wants to.


The Sale of Goods Act, 1930, is meant to regulate the selling and buying of goods. The act mainly concludes that there must be a contract where the seller must transfer the property in goods to the buyer.

There must be a price fixed for a transfer. If the goods are in existence at the time of the agreement, the contract shall be treated as the contract of sale; for goods that are to be transferred in the future, it shall be an agreement to sell.

A Hire-purchase system is the best way to hire goods that are generally expensive to buy and later own them if one wishes to. However, such agreements turn out to be more expensive as they include interest added to their instalment amount.


Frequently asked questions

Get answers to the most common queries related to the UPSC Examination Preparation.

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