Also known as: sale of future goods
Written by attorneys · grounded in primary & secondary sources — see below
A contractual arrangement for the purchase of a thing not yet in existence or not yet in the seller's possession. The price of such a purchase typically depends on the actual yield and thus can fluctuate. A purported present sale of future goods operates only as a contract to sell.
Elijah Edwards agreed in writing to sell the entire corn harvest from his Field 12 to Equinox Energy at a set price per bushel. No crop had been planted at signing. Equinox Energy paid a deposit and adjusted its processing equipment. When Elijah later planted soybeans instead, Equinox claimed a present interest in any corn. The arrangement created only a contract to sell because the corn was not existing and identified at contracting.
Elite Dynamics signed a contract stating it sold all reclaimed aluminum its new plant would generate next year to Emerald Enterprises. The plant was not yet operational and no aluminum had been produced. Emerald later disputed its rights when production began. The agreement operated as a contract to sell future goods because the aluminum did not exist or become designated at the time of contracting.
Select any source to read its text and confirm it supports the definition.
The transaction operates only as a contract to sell. No present interest passes until the goods come into existence and are identified to the contract.
No. Reliance or expenditures by the buyer do not satisfy the requirements that goods be existing and identified before any interest can pass.
Identification occurs when the goods are shipped, marked, or otherwise designated by the seller as goods to which the contract refers.