Also known as: present sales
Written by attorneys — see sources below.
A sale of goods accomplished by the making of the contract. Goods must be both existing and identified before any interest in them can pass under the agreement.
Nova Plastics agreed in writing to supply Apex Appliances with 5,000 custom-molded casings for a new appliance line. At signing the casings had not been manufactured and no inventory had been marked for Apex. Because the goods were neither existing nor identified, the agreement operated only as a contract to sell rather than a present sale transferring immediate ownership.
A state conveyed mineral rights in a producing field to a private corporation through a transaction labeled a present sale. Title to the oil and gas passed out of state ownership at the moment of the agreement, subjecting the income from later extraction to ordinary state taxation rather than any claimed exemption.
By the Enabling Act Congress required as a condition precedent to the admission of Oklahoma into the Union that her constitution should make provision for common schools. For their benefit it granted certain lands to the State with the proviso that those valuable for minerals, gas and oil should not be sold prior to January 1, 1915, but might be leased. The State Constitution established a common school system and pledged her faith to preserve the lands so conveyed by the United States as a sacred trust. It required keeping the lands for the uses and purposes for which they were granted. The legislature prescribed regulations for leasing and directed payment of the proceeds into the school fund. In January 1914 some of these lands were leased to the Coronado Oil and Gas Company. Renewals followed in 1919. Under the first lease the State received fifty per cent of gross production. Under the second lease the State received twelve and one-half per cent of gross production. During the years here important the lessee’s entire income came from the sale of its portion of such output. The Commissioner of Internal Revenue assessed income and excess-profits taxes upon the corporation’s net income for 1917, 1918 and 1919. The Board of Tax Appeals approved his action. The Court of Appeals, District of Columbia, ruled otherwise. The latter held that the lease to the Coronado Company was an instrumentality of the State for the utilization of lands dedicated to the support of public schools and that to tax the fruits of the lease would burden her in the performance of the governmental function of maintaining such schools. This conclusion was necessary under Gillespie v. Oklahoma.
View caseA present sale occurs only when the goods are both existing and identified at the time the contract is made. If either condition is missing the transaction is treated as a contract to sell future goods.
No. An unplanted crop is future goods because it is neither existing nor identified at contracting. The agreement therefore operates only as a contract to sell once the crop comes into existence and is identified.
Yes. Harvested corn already in an identified silo is existing goods. Specifying a quantity from that silo sufficiently identifies an undivided share, allowing a present sale of that interest even without physical separation.
The original agreement remains a contract to sell. Once the goods exist and are identified, title can pass at that later time, but the transaction never retroactively becomes a present sale.
…or if the Purchasers shall abandon said property, the Vendors shall have the right, at their option, to rescind and cancel the present sale and declare this contract as null and void thereafter, and the amount of the purchase price paid by the Purchasers hereunder shall be considered and treated as rent and liquidated damages…