Legal Definitions - fungible goods

Fungible goods are items that are interchangeable with other items of the same type, quality, and quantity. This means that one unit of a fungible good is considered equivalent to any other unit, and its value is determined by measurement (such as weight, volume, or count) rather than by unique characteristics or individual identity. When dealing with fungible goods, a buyer or seller typically does not care which specific unit they receive, as long as it meets the agreed-upon standards.

• Example 1: Agricultural Commodities

  Consider a large grain elevator storing thousands of tons of corn. If a food manufacturer purchases 500 tons of #2 yellow corn, they are not concerned with which specific kernels of corn they receive from the elevator. Any 500 tons of #2 yellow corn from that storage facility are considered identical and equally valuable for their purposes. The value is based on the quantity and grade, not on the individual characteristics of specific corn kernels.

• Example 2: Petroleum Products

  When a trucking company orders 10,000 gallons of diesel fuel, they expect to receive fuel that meets a specific industry standard. They do not care if the fuel comes from a particular refinery or storage tank, as long as it is standard diesel fuel. One gallon of diesel is considered the same as any other gallon of diesel, making it a fungible good whose value is determined by its volume and adherence to quality specifications.

• Example 3: Standardized Building Materials

  A contractor purchasing 5,000 standard 2x4 lumber pieces for a construction project illustrates fungible goods. As long as the lumber meets the specified dimensions, grade, and material (e.g., pine), the contractor does not need to inspect each individual piece for unique features. Any 2x4 of that specific type and quality is interchangeable with another, and the order is fulfilled based on the total quantity of standard units.