(..6 d..)
EFFECTS OF THE CONTRACT A) Transfer of Property
(Ss. 18 to 26).
QUESTION BANK.
Q.1. State briefly the rules as to the passing of property from the seller to the buyer in a contract for the sale of goods. Nov. 04.
- 2. “Risk prima-facie passes with property”, explain. What are the exceptions to this principle? Apr. 02, Apr, 01, Apr. 00
Q.3. Explain the rules as to the passing of property under a contract of sale of goods to the buyer from a seller.
Q.4. State fully when does property in the goods pass from the seller to the buyer under the sale of goods Act.
SHORT NOTES.
1) Passing of risk. Apr. 04.
SYNOPSIS
- Transfer of Property as between seller and buyer. (S. 18 to 26): –
- Transfer of title (S. 27 to 30) (Discussed in next topic): –
- Transfer of property as between seller and buyer (S. 18 to 26):-
- Risk prima facie passes with the property (S. 26).
- Property passes when intended to pass (S. 19).
- a) Express intention –, b). Implied Intention: –
- Sale of Specific Goods (Ss. 20 to 22).
- Specific goods in deliverable state (S. 20): –
- Specific goods to be put into a deliverable state. (S. 21):-
- Specific goods to be weighed or measured for the purpose of ascertaining price (S.22)
- Sale of unascertained goods (S. 18 and 23):-
- Goods must be ascertained (S. 18): –
- Sale of unascertained goods after appropriation (S. 23): -Delivery to carrier (S. 23(2)): –
- “Sale or Approval” or “On Sale or return“term” (S. 24):-
- RESERVATION OF RIGHT OF DISPOSAL: – (S. 25)
This chapter is divided into the following two topics.
- Transfer of Property between seller and buyer[1]. (S. 18 to 26): –
- Transfer of title[2] (S. 27 to 30) (Discussed in next topic): –
The contract of sale of goods is effected by the transfer of property between seller and buyer, with title thereof. We will discuss them one by one.
A. Transfer of property between seller and buyer (S. 18 to 26)
i) Risk prima facie passes with the property[3] (S. 26):-
The essence of the sale is the transfer of property in the goods from the seller to the buyer. It often becomes necessary to determine when the seller ceases to be the owner, and the buyer acquires ownership. It is because many rights and obligations of the parties are linked with the passing of property, e.g., the risk of goods loss or deterioration, which prima facie passes with property.[4], the owner gets the right to use and sue for his goods on passing title, etc. Therefore, this topic deals with the determination of the ‘exact time’ of the passing of property in goods from the seller to the buyer in the absence of express provisions in the contract.
ii) Property passes when intended to pass (S.19)
a) Express intention –
Where there is a contract of sale for specific goods, the property in them passes to the buyer at such time as the parties to the contract intend to pass. The intention of the parties is traceable from the terms of the contract, the conduct of the parties and the circumstances of the case.
b) Implied Intention[5]: –
However, where parties have failed to express their intention as to the time of passing property, and it is also not traceable from terms of the contract, the conduct of parties, and the circumstances of the case, it should be implied as per legal rules. Their intention will be ascertained in accordance with the rules laid down in sections 18 and 20 to 24. These rules are presumptions only. These sections deal with three kinds of situations-
(A) sale of specific goods (Ss. 20 to 22).
(B) sale of unascertained goods (S. 18 and 23).
(C.) sale of goods on an approval basis (S. 24).
A. Sale of Specific Goods[6] (S. 20 to 22):-
In case of sale of specific goods[7] The general rule is that the property is passed as soon as the contract is made. Therefore, all rights and risks of the property pass at the time of contract. The basic conditions relating to such sales are laid down in Ss. 20. S. 21 and 22 apply where, though goods are specific but something is required to be done to put goods into a deliverable state[8].
1) Specific goods in a deliverable state[9] (S. 20): –
If the contract is unconditional[10] for the sale of specific goods in a deliverable state, the property in the goods passes to the buyer when the contract is made. It is immaterial whether the time of payment of price or the time of delivery of goods, or both are postponed.
In Tarling V. Baxter[11]
Facts: – A contracted, on the 4th of January, to buy a hay-stack[12] which was on the seller’s land. The price is to be paid on the 4th of February. It was also agreed that the hay was to remain on the seller’s land until the 1st of May and that the hay should not be interfered with until the price was paid. During that period, the stack was accidentally destroyed by fire.
The court held that the property in the haystack had passed to the contract buyer, and ‘A’ the buyer must bear the loss.
2. Specific goods to be put into deliverable state[13] (S. 21): –
Where there is a contract for the sale of specific goods, and the seller is bound to do something to the goods to put them into a deliverable state, such as packing, loading, weighing, etc., the property in the goods does not pass until such a thing is done and the buyer has notice thereof.
3. Specific goods to be weighed or measured for the purpose of ascertaining price (S. 22):-
Where the seller has to take weight or measurement of the goods, or he has to test them or to do something in reference to the goods for the purpose of ascertaining their price, the property does not pass till such thing is done and the buyer has notice thereof.
B. Sale of unascertained[14] goods: – (S. 18 and 23)
The provisions relating to the passing of property on the sale of unascertained goods are split into two sections. They are as follows;
1) Goods must be ascertained[15] (S. 18): –
Where there is a contract for the sale of unascertained goods, no property in the goods passes to the buyer unless and until the goods are ascertained.[16].
Illustration
A contract with B for the purchase of 50 kg of rice. But rice is in a bag of 500 kg. (Unascertained). No property in rice has passed to the buyer unless his 50 kg rice is taken out from a 500 kg bag (ascertained).
2) Sale of unascertained goods after appropriation (S. 23): –
If a contract is made for the sale of unascertained or future goods by description, the property therein does not pass until. –
- a) the goods of that description,
- b) are put in a deliverable state and.
- c) are unconditionally appropriated[17]
to the contract (either by the seller with the assent of the buyer or by the buyer with the assent of the seller). Such assent may be express or implied and may be given either before or after the appropriation is made.
In Rhode V. Thwaites[18]
Facts: Twenty bags of sugar were sold out of a large quantity. Four bags were filled and taken away by the buyer. Subsequently, the seller filled sixteen more bags and informed the buyer, who promised to take them away. But before he could do so, the goods were lost.
Held that- By filling the bags, the seller had unconditionally appropriated them to the contract, and the buyer, by promising to take them away, had given his assent to the appropriation and, therefore, the property had passed to him at the time of loss.
Delivery to carrier[19] (S. 23(2)): –
Where in pursuance of the contract, the seller delivers the goods to the buyer or to a carrier or other bailee (Whether named by the buyer or not) for the purpose of transmission to the buyer and does not reserve the right of disposal, he is deemed to have unconditionally appropriated the goods to the contract.
C. ‘Sale on Approval’ or “On Sale or return term[20]” (S. 24):
When goods are delivered to the buyer ‘on approval’ or “on sale or return” or other similar terms, the property therein passes to the buyer: –
- a) When he signifies his approval (acceptance) to the seller or does any other
act adopting the transaction, - b) If he does not signify his approval or acceptance to the seller but retains the
goods without giving notice of the rejection: – - i) If a time has been fixed for the return of the goods- (property passes) on the expiration of such time and
- ii) If no time has been fixed, – (property passes) on the expiration of a
reasonable time. The essence of the rule is that the property passes either by.
acceptance or by failure to return within a fixed or reasonable time.
In Nirmalabai V. The State,
Facts: – Certain ornaments were delivered to the leady on sale or return terms. The latter undertook to return it in the evening if not satisfied. She did not return the ornaments in the evening.
The court held that: – She had purchased ornaments.
IV. RESERVATION OF RIGHT OF DISPOSAL[21] (S. 25):-
This section deals with the seller’s conditional appropriation of goods. The seller may reserve the right to dispose of the goods by terms of contract or appropriation until the buyer fulfils certain conditions.[22]. This question of reserving rights comes when the parties live in distant places and contract through correspondence. In such cases, the seller does not like to lose his goods in the buyer’s insolvency, and the buyer does not like to part with his money. Such contracts may sometimes take route, railway carriage, etc. In such cases, the seller ships the goods but takes the bill of lading.[23] on his own name or in the name of his agent at the buyer’s place, and send the bill to his agent or bank with the instruction to part with the bill of lading only upon payment of the price by the buyer.
Such contracts are called “C.I.F.” (cost, insurance, and fright), ” F.O.B.” (free on board), or “F.A.S.” (free alongside the ship).
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[1] विक्रेत्याकडून खरेदीदाराकडे मालाचे हस्तांतरण. [विक्रेता से खरीदार को माल का स्थानांतरण।]
[2] मालकीचे हस्तांतरण.- [स्वामित्व का हस्तांतरण।-]
[3] प्रथम दर्षनी मालाच्या हस्तांतराबरोबर जबाबदारीचे सुध्दा हस्तांतरण होते. [प्रथम दृष्टया माल का हस्तांतरण उत्तरदायित्व के हस्तांतरण के साथ होता है।]
[4] S. 26.
[5] अभिप्रेत उद्देष. [अभिप्रेत उद्देष].
[6] विषिश्ट मालाची विक्री. [विशेष माल की बिक्री।]
[7] Specific goods (S. 2 (14)) means goods identified and agreed upon at the time the contract of sale is made. Goods may be (i) Specific or existing, or (ii) Generic or unascertained, e.g. 50 k.g. of rice out of 100 k. g. is unascertained goods unless they are kept aside form 100 k.g. bag (ascertained).
[8] Deliverable state: – S. 2 (3) goods are said to be in deliverable state when they are in such a state that the buyer would under the contract be bound to take delivery.
[9] विषिश्ट माल की जो ताबा देण्याच्या तयारीत ठेवला आहे. [विशिष्ट सामान जो डिलीवरी के लिए तैयार हैं।]
[10] Unconditional contract means, there is no condition in contract upon which the transfer of property is to depend.
[11] (1827)Bo. PR 355.
[12] Hay-stack- a large bile of dry grass.
[13] विषिश्ट माल की ज्याला ताबा देण्याच्या अवस्थेत ठेवण्याचे आहे. त्यासाठी विक्रेत्यास मालाची बांधनी करणे, वाहनात भरने, मोजमाप करने अषी कामे करन्याची आहेत.
[विशिष्ट सामान जिन्हें कब्जा देणे की स्थिती में रखा जाना है। इसके लिए विक्रेता को सामान पैक करना, वाहन में लादना, नापना जैसे कार्य करने होते हैं।]
[14] Unascertained goods means- i) ‘generic goods’ i.e. goods of general nature without any specific indication, such as 50 k.g. rice bag. ii) ‘future goods’ i.e. goods which seller will acquire after making contract of sale. निष्चित न केलेला माल. [अनिश्चित माल]
[15] माल हा निष्चित केलेला असावा. [माल पक्का होना चाहिए]
[16] Ascertained goods means, goods which are specifically identified and kept aside for delivery in deliverable state. E.g. 50 k.g. of rice is taken out of 500 k.g. rice bag. Now this 50 k.g. is identifiable or ‘ascertained goods’.
[17] Unconditional appropriation means specifically keeping aside goods for delivery, without any condition to be fulfilled from either side or goods kept aside with mutual consent of both the parties, for delivery. जेव्हा विक्रेत्याने अनिष्चित माल निष्चित करुन ताबा देण्याच्या परिस्थितीत ठेवलेला असतो व त्याची माहिती खरेदीदारास दिलेली असते.
[जब विक्रेता ने अनिर्दिष्ट माल का कब्जा सुरक्षित कर लिया है और उसके बारे में खरीदार को सूचित कर दिया है।]
[18] (1827) 6 B & C 388.
[19] -वाहकास मालाचा ताबा [वाहक को वितरण]
[20] पाठवलेल्या मालापैकी ठराविक माल खरेदी करणे व शिल्लक माल परत करणे अटीवर. [बिक्री या वापसी शर्त पर]
[21] मालकी हक्क हस्तांतरणाचा अधिकार राखून ठेवणे. [निपटान के अधिकार का आरक्षण]
[22] S. 25 (1).
[23] Bill of lading means ‘title of goods loaded’ in ship.