Passing of Property in Sales of Goods Act
There are four primary rules that govern the passing of property:
1.Specific or Ascertained Goods
2.Passing of Unascertained Goods
3.Goods sent on approval or “on sale or return”
4.Transfer of property in the case of reservation of the right to disposal
In this article, we will be looking at the first two rules.
Passing of Ascertained Goods
This is the primary rule of the passing of property. It deals with the passing of specified goods and states that –Specific or ascertained goods pass when intended to pass. Section 19 of The Sale of products Act, 1930, has three sub-sections as follows:
Sub-section (1): Imagine a contract for the sale of specific or ascertained goods with a transparent mention of the time when the parties to the contract shall transfer the property. In such cases, the property is transferred at the time mentioned within the contract.
Sub-section (2): to know the intention of the parties, the terms of the contract, the conduct of the parties, and therefore the circumstances of the case are considered.
Sub-section (3): Sections 20 to 24 of The Sale of Goods Act, 1930, contain rules to ascertain the intention of the parties. This intention is about the time at which the property in goods will pass to the customer . Let’s look at these sections
Section 20 relates to Specific goods during a deliverable state. It states that if the contract is unconditional for the sale of specific goods during a deliverable state, then the property in the goods passes to the customer the moment the contract is made. This rule holds true albeit the time of payment of price or delivery of the products or both is postponed.
Example: Peter goes to an electronics store and buys a tv set. He asks the shopkeeper to deliver it to his house. The shopkeeper agrees. The television immediately becomes the property of Peter.
Specific goods to be put into a deliverable state (Section 21) – Imagine a contract for the sale of products where the vendor has got to do something before the products are ready for delivery. In such cases, the passing of property happens only after the vendor does the items and informs the customer .
Example: Peter buys a laptop from an electronics store and asks for a home delivery. The shopkeeper agrees to it. However, the laptop does not have a Windows operating system installed. The shopkeeper promises to put in it and call Peter before making the delivery. In this case, the property transfers to Peter only after the shopkeeper has installed the OS making the laptop ready for delivery.
Specific goods are in a very deliverable state but the vendor has got to do something to determine the worth – Imagine a contract of sale of products which are in a deliverable state but the vendor has got to do something like weight, measure, test, or perform the other act on the products to determine the worth . In such cases, the property doesn’t pass until the vendor does the act and informs the vendor .
Example: Peter sells a carpet to John and agrees to get it in John’s house as a term of the contract. He delivers the carpet and informs John that he will lay it subsequent day. That night the carpet gets stolen from John’s premises. In this case, John isn’t responsible for the loss since the property had not passed to him. According to the terms of the contract, the carpet would be in a deliverable state only after it’s laid.
Passing of Unascertained Goods
If there’s a contract for the sale of unascertained goods, then the passing of the property of the products to the customer cannot happen unless the products are ascertained. This is specified under Section 18 of The Sale of products Act, 1930.
Further Section 23 lists two important rules for the passing of property of unascertained goods:
Sale of unascertained goods by description: Imagine a contract for the sale of unascertained or future goods by description. If any goods of that description are appropriated to the contract either by the customer or the vendor with the consent of the opposite party, then the property of the goods passes to the buyer. The consent are often express or implied and given before or after the appropriation is formed .
Delivery to the carrier: If the vendor delivers the products to the customer or a carrier or a bailee (whether named by the customer or not) for the aim of transmission to the buyer, but does not reserve the right of disposal, then he is deemed to have unconditionally appropriated the goods to the contract.
Some Points to recollect about the Appropriation of Goods:
If goods are selected with the intention of using them in performing the contract, with the mutual consent of the customer and therefore the seller, then it’s called appropriation of products . Here are some essentials:
A contract for the sale of unascertained or future goods exists
The goods conform to the standard and of the description stated within the contract
They are in a deliverable state
The goods are unconditionally appropriated to the contract either by delivery to the customer of his agent or the carrier.
The appropriation is formed by the customer with the assent of the vendor or the vendor with the assent of the customer .
The assent can be express or implied
The assent can be given before or after the appropriation.
Author: Archita Tiwari,
NATIONAL LAW INSTITUTE UNIVERSITY (1st Year)