Rules regarding Transfer of Property

Rule regarding Transfer of Property in specific or ascertained goods:

In the case of specific or ascertained goods the property is transferred to the buyer at such time as parties intend to be transferred. For ascertaining the intention of parties regard shall be had on terms of the contract, the conduct of parties and circumstances of the case. The parties may intend to pass the property as wanted at the time making the contract, or when goods are delivered or when the goods are paid.

Only when the intention of parties cannot be judged from the contract or conduct or circumstances of the case, the rules in Section-20, 21,22,23, will apply.

1.  When goods are in a deliverable state(Sec 20). Where there is an unconditional (i.e., not subject to any condition precedent to be fulfilled by the parties) contract for the sale of specific goods in a deliverable state, the property in the goods passes to the buyer as soon as the contract is made, and it is immaterial whether the time of payment of the price or the time of delivery of the goods, or both are postponed.

Example

(a)  A buys a bicycle for Rs. 300 on a month’s credit and asks the shopkeeper to send it to his house. The shopkeeper agrees to do so. The bicycle immediately becomes the property of A.

(b)  P buys a table for Rs 100 on a week’s credit and arranges to take delivery of the table the next day. A fire broke out in the furniture mart the same evening and the table is destroyed. The property in the table has passed to P and the is bound to pay the price.

The goods are said to be in a ‘deliverable sate’ when they are in such a state that the buyer would, under the contract, be bound to take delivery of them [sec.2(3)]. For example, in illustration (b) above, if the seller has to polish the table to make it acceptable to the buyer, it is not in a deliverable state until it is so polished, and the buyer does not acquire property at the time of the contract.

2.         When goods have to be put into a deliverable state: (Section. 21) in the case of sale of specific goods, when the seller is bound to do ‘something’ to do goods for making them in a deliverable state, the property does not pass until such thing is done and the buyer has notice thereof. Something may be like polishing, packing, finishing, etc. It is important that ‘that something’ to be done must be completed and the fact that it has been done must be brought the notice of buyer. The fact that the goods having put in a deliverable state must come to the knowledge of the buyer in some way or the other. Example: A agrees to sell to B the whole of turpentine oil lying in a cistern. It is further agreed that the oil is to be put into casks by A and then B is to take them away. Some of the casks are filled in the presence of B, but before they are removed or the remainder filled, the whole is destroyed accidentally bye fire. B must bear the loss of oil which had been put into the casks because in all these casks the property has passed to him as nothing further remained to be done to them by the seller. But the property in the casks not filled up remained in the seller, at whose risk they continued (Rugg vs Minett).

3.      When the goods have to be measured etc, to ascertain price: In a contract of specific sale of goods in deliverable state, but the seller is bound to weigh, measure, test or do something with reference to the goods for the propose of ascertaining price, the property does not pass until such act is done and the buyer has notice thereof.

It may be noted that if the seller has done all what he was required to do under the contract and nothing remains to be done by him, the property passes to the buyer even if the buyer has to do something for his own satisfaction.

Example

A sold to B 289 bales of goat skins, each bale containing five dozens, and the price was for certain sum per dozen skins. It was the duty of A to count the goat skins in each bale. Before A could do the same, the bales were destroyed by fire. Held, that the property in the goods had not passed to the buyer (i.e.B) as something still remained to be done by the seller (i.e. , A) for ascertaining the price, and as such the loss caused by fire had to be borne by the seller ( i.e., A) (Zagury vs Furnell).

4.     When goods are delivered on approval: (Section 24) When goods are delivered to the buyer on approval or ‘on sale or return,’ or on other similar terms, the property therein passes to the buyer:

(i)    When he signifies his approval or acceptance to the seller or does any other act adopting the transaction, e.g., uses the goods, pledges the goods or resells them;

(ii)   If he does not signify his approval or acceptance to the seller but retains the goods, without giving notice of rejection, beyond the time fixed for the return of goods, or if no time has been fixed, beyond a reasonable time.

What is Goods? Types of Goods

Rights of an Unpaid Seller against the goods

Essential Features of Right of Stoppage of Goods in Transit

Who is an Unpaid Seller? Characteristics of an Unpaid Seller  Buyers wrong is unforgivable in purchase  Rules regarding transfer of title on sale  What are the benefits of a Bonded Warehouse?  Effect of Pershing of Goods  Documents to Title To Goods  Who are the Common Carriers?  Difference between Common Carriers and Private Carriers

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