Page 139 - DCOM103_COMMERCIAL_LAW

Commercial Law

Notes 13.6 Passing of Property in Goods

13.6.1 Meaning of ‘Property in Goods’

The phrase ‘property in goods’ means ownership of goods. The ‘ownership’ of goods is different
from ‘possession’ of goods. The ‘possession’ of goods refers to the custody of goods, though
normally a person who is in possession of the goods shall also be its owner but it need not
necessarily be so.

13.6.2 Rules regarding Passing of Property in Goods from the Seller to
the Buyer

Secs.18 to 25 lay down the rules which determine when property passes from the seller to the
buyer. These rules for different kinds of goods are summarised below:

Specific or ascertained goods. In a sale of specifi c or ascertained goods, the property in them is
transferred to the buyer at such times as the parties to the contract intend it to be transferred. The
intention of the parties is ascertained from the terms of the contract, the conduct of the parties
and the circumstances of the case. Unless a contrary intention appears, the undermentioned rules
are applicable for ascertaining the intention of the parties (Secs.20-24).

1. Specific goods in a deliverable state. In the case of specific goods in a deliverable state,
the property passes at the time the contract (unconditional) is made (Sec.20). The fact that
the time of payment or the delivery of the goods or both are postponed does not affect the
passing of the property. Sec.2(3) states that goods are said to be in a deliverable state when
they are in such a state that the buyer would under the contract be bound to take delivery
of them.

2. Specific goods not in a deliverable state. In the case of specific goods to which something

has to be done by the seller to put them in a deliverable state, property passes only when
such thing is done and the buyer has notice thereof (Sec.21).
Unascertained or future goods. When there is a contract for the sale of unascertained goods,
property in the goods is not transferred to the buyer unless and until the goods are ascertained
(Sec.18).
Sec.23 provides that in the case of sale of unascertained goods or future goods by description,
property passes to the buyer when goods of that description in a deliverable state are
unconditionally appropriated to the contract, either by the seller with the assent of the buyer or
by the buyer with the assent of the seller.

Unconditional appropriation. The unconditional appropriation of goods may be made either by
the seller with the buyer’s assent or by the buyer with the seller’s assent. Normally goods shall
be appropriated by the seller. Where he appropriates the goods to the contract, the property shall
pass to the buyer only when the latter has assented to the appropriation. The assent, however,
may be given before or after appropriation. Whether the appropriation is done by the seller or
the buyer, the assent of the other party must be obtained. Where goods are in the possession of
the buyer, he may do the appropriation.
13.7 Summary

A contract of sale is a contract whereby the seller transfers or agrees to transfer the property
in goods to the buyer for a price. Sale is to be distinguished from an agreement to sell.
Where under a contract of sale, the property in goods is transferred from the seller to the
buyer, it is a called a sale.

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