Page 125 - DMGT407Corporate and Business Laws

Corporate and Business Laws

Notes the same before the weekend, A must deliver the goods before the weekend. If he fails to do so,
B is entitled to repudiate the contract.

Self Assessment

Fill in the blanks:

5. Stipulations that may be intended by the parties to be of a fundamental nature are
called ………..
6. Stipulation as to time for delivery of goods is considered to be essence of ………..

5.4 Passing of Property in Goods

5.4.1 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. There may be situations where a person is the owner of certain goods but is
not in possession of the same or vice versa.
One of the most important questions, in a contract of sale of goods is: When does the property in
the goods pass (transfer) from the seller to the buyer? The determination of the exact moment as
to when the ownership passes from the seller to the buyer is important because of the following
reasons: (i) If the goods are lost or damaged, who will bear the loss shall depend upon as to
whether the ownership is with the seller or the buyer. The general rule is risk follows ownership.
(ii) In the case of damage to the goods by third parties, it is the owner who can take action.
(iii) In the event of insolvency of either seller or buyer, whether the official receiver or assignee,
as the case may be, can claim the goods shall depend upon whether the property has passed to
the buyer or not.

5.4.2 Rules Regarding Passing of Property in Goods from the Seller to
the Buyer

Sections 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 specific 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 under mentioned
rules are applicable for ascertaining the intention of the parties (Ss.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 (s.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. Section 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.

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