Unascertained goods

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Unascertained goods are goods that are not specific. Whether the good is considered unascertained is of definite importance in the passing of property between seller and buyer [1]. It is clear that the test of whether or not the goods are 'specific' is to be applied at the moment of contracting. Goods which do not meet the test are initially unascertained, but may afterwards become identified and agreed upon at which point they are said to become ascertained [2].

Kinds of unascertained goods

There may be at least three different kinds of unascertained goods [3][4]:

  • The goods are to be manufactured by the seller. In this case, they will usually become ascertained as a result of the process of manufacture, although, if the producer is making similar goods for two or more customers, some further actions may be necessary to make it clear which goods have been appropriated to which customer.
  • The goods may be part of an undivided bulk. If the seller has 1,000 tons of Western White Wheat on board of a cargo ship and sells 500 tons to buyer A and 500 tons to buyer B, the Wheat is an unascertained good, since it is not possible to tell which 500 tons have been sold to which purchaser. Important practical consequences flow from this rule: in this situation, the goods became ascertained only when it can be established which Part of the cargo is assigned to which contract.So, in Karlhamns Oljefabriker v Eastport Navigation (1982), 22,000 tons of copra were filled up on board a ship in the Philippines, of which 6,000 tons were sold to a Swedish customer. At this stage, of course, the goods were unascertained. The ship called at Rotterdam and at Hamburg on its way to Sweden and 16,000 tons were offloaded at these two ports. It was held that the goods became ascertained on the realization of discharge in Hamburg, as it was then possible to say with confidence that the remainder of the cargo was destined for the purchaser.
  • The goods are being sold by a generic description, such as 500 tons Western White Wheat. In such an instance, the seller could fulfil the contract by delivering any 500 tons of Western White Wheat provided that it was of satisfactory quality and met all the requirements. If the seller was a trader in wheat, he or she might well have more than 500 tons of wheat but would not be obligated to use that wheat to perform the contract; he or she could and often would choose to buy additional wheat on the market to fulfil the order. Where there is an active market, sellers and buyers may be entering into a compound series of sales and purchases according to their view of how the market is moving and leaving who gets what wheat to be sorted out later. This is particularly likely where the sales are for delivery at a later date rather than for immediate shipment. In this situation, the seller may form procedures to use a parcel of wheat to deliver to buyer A and another parcel to buyer B. Usually, forming of these procedures will not make the goods ascertained until the seller makes some act of appropriation which prevents a change of mind.

Examples of Unascertained goods

  • Raw materials, such as coal, oil, and iron ore, that must be refined or processed before they can be used
  • Unprocessed agricultural products, such as grain, which need to be harvested, cleaned, and packaged before they can be sold
  • Livestock, such as cattle, that need to be bred and raised
  • Unmanufactured goods, such as timber or minerals, that need to be extracted or mined
  • Unfinished products, such as furniture that needs to be crafted
  • Commodities futures contracts, which are agreements to buy or sell a certain quantity of a certain commodity at a certain price on a certain date

Advantages of Unascertained goods

Unascertained goods can offer a range of advantages to buyers and sellers. These include:

  • Flexibility: Unascertained goods are not specific, allowing buyers and sellers to negotiate more flexible terms and conditions. This is beneficial to both parties, as it allows them to tailor the agreement to their individual needs.
  • Price: Unascertained goods can be bought and sold at a lower price than specific goods, as the buyer does not have to pay for the goods until they are identified. This can be beneficial for both parties, as the seller can sell their goods for a higher price.
  • Reduced Risk: As the goods are not specified, buyers and sellers do not have to worry about the quality of the goods until they are identified. This reduces the risk of being stuck with a product which they are dissatisfied with.
  • Variety: Unascertained goods can offer buyers and sellers a wider variety of products, as they are not limited to a specific good. This can be beneficial for buyers, as they can find a product that meets their needs.

Limitations of Unascertained goods

Unascertained goods pose several limitations, including:

  • Lack of specificity: Unascertained goods are not specific, which makes it difficult to identify them or determine their exact characteristics or qualities.
  • Unclear ownership: It is unclear who owns the goods until they are specific and identified, which can lead to disputes between the buyer and seller as to who is entitled to them.
  • Difficulty in pricing: It is difficult to set a price for unascertained goods since they are not specific and their exact value is unknown.
  • Risk of loss: Unascertained goods are at risk of being lost or damaged before they are specific and identified, which could result in a financial loss for both parties.
  • Contractual ambiguity: As unascertained goods are not specific, they may not be covered by the terms of an agreement between the buyer and seller, which could lead to disputes and conflicts.

Other approaches related to Unascertained goods

Other approaches include generalization, classification, and individualization.

  • Generalization is the process of grouping goods together, like in a bulk sale, where the goods are not individually identified.
  • Classification is the process of categorizing goods according to their form, function, or other characteristics.
  • Individualization is the process of identifying individual goods, be it through serial numbers, bar codes, or other methods.

In summary, other approaches related to Unascertained goods include generalization, classification, and individualization. These processes help to identify goods and define the passing of property between seller and buyer.

Footnotes

  1. ↑ Furston M., 2012 p.21
  2. ↑ Macleod J., 2009 par.20.8-9
  3. ↑ Furston M., 2012 p.21-22
  4. ↑ Griffiths M., 2002 p.141-142


Unascertained goods — recommended articles
Purchase specification — Retender — Disclaimer of warranties — Sole distributor — Conditional contract — Tri party agreement — Special warranty deed — Delivery Notice — Contra deal

References

Author: Jakub Irauth

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