What is Transfer of Property?

Transfer of property in a contract of sale is primarily the transfer of property in goods by the seller to the buyer. The exact time at which property in goods passes from seller to the buyer is of great importance. ‘The transfer ‘of property in goods’ means transfer of ownership of goods.

 ‘Property in goods’ is different from possession of goods. Possession simply refers to the custody of goods. Although the property in goods may pass from the seller to the buyer, but the goods may be in posses­sion of the seller as unpaid seller or as a bailee for buyer. In some cases the property in goods to still be with the seller although the goods may be in possession of the buyer or his agent or a carrier for transmission to the buyer.

The Following Require special Notice

1.    Risk ‘prima-facie’ passes with property. As a general rule the risk of the loss of goods is prima-facie in the person in whom property is. Section 26 provides to the same effect, thus, “Unless otherwise agreed, the goods remain at the seller’s risk until the property therein is transferred to the buyer, but when the property therein is transferred to buyer, the goods are at the buyer’s risk whether delivery has been made or not.” Thus, if after the contract the goods are destroyed or damaged the question  who is to bear the loss is to be decided not on the basis of possession of the goods but on the basis of ownership of goods. Whosoever is the owner of the goods at the time of loss must bear the loss.

Example

A buys goods from B and property has passed to him, but the goods remained in B’s warehouse. Before delivery of goods to A, there is a fire in B’s warehouse and all the goods are de­stroyed. A must bear the loss and pay the price of goods to B, if he has not paid it so far.

The opening words of Section 26, namely, ‘unless otherwise agreed’ are of great significance. These words imply that ‘risk passes with property’ is not an absolute or inflexible rule, but a prima facie one. Risk is no test of property passing. There is nothing to prevent the parties from contracting that risk shall pass even before passing of property or vice versa.

1.  Action against third parties: If after the contract of sale, the goods having damaged by a third party, it is only the person in whom the property vests who can take action against the wrong doer.

2.  Suit for price: Generally speaking the seller can sue for the price if the property in goods has passed to the buyer.

3. Insolvency of the seller or the buyer: In case of insolvency of the buyer or seller, whether official receiver or assignee can take over goods shall depend upon whether the property in goods was with the party who has become insolvent. Example: If the seller becomes insolvent before giving delivery of the goods but the property in goods has already passed on to the buyer who has paid the price, the official receiver have no claim on goods.

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 ============================================================================== This site is mainly dedicated for Students of Law Schools, Law Universities, Students of Higher Education in Law, Admission in Law Schools, Scholars in Law, Students of Bar-at-Law, Law admission information, College of Law, Law Notes, Law Training, Law Tuition,  Law Study Guidelines, Business Law, Students of ACCA, CIMA, CFA,CA,ICWA,CPA