1|Page

PROPERTY IN GOODS.

1.0 INTRODUCTION.
Goods refer to movable property in the nature of chattels or personalities and therefore do not
include land and fixtures. The Kenyan law relating to purchase of goods is contained in the Sales
of Goods Act (cap 31)
Section 3 (1) of the act defines sale of goods as “ a contract whereby the seller transfers or
agrees to transfer the property in goods to the buyer for a money consideration called price”
Elements of the definition
a. A sale of goods is a contract. There must be an offer to buy or sell followed by a
corresponding acceptance. Section 6 provides that a contract for the sale of goods worth
Ksh. 200 or more should be evidenced in writing1; otherwise the contract is
unenforceable. All other conditions prescribed by common law for the validity of contract
must be met [ see the Law of contract cap. 23 or previous class notes]
b. The contract effects a transfer pf property in goods , where the transfer is immediate the
contract constitutes a sale where the transfer is delayed the contract constitutes an
agreement to sell.
Goods according to Section 2(1) of the Sale of Goods Act, are defined as including “…all
chattels personal other than things [or choses] in action and money, and all ablements [i.e,
cultivated crops that are normally harvested annually], industrial growing crops and things
attached to or forming part of the land which are agreed to be severed before sale or under the
contract of sale.”2
Basically by definition goods do not include money things or choses inn action, assignable rights
or benefits accruing under contract. They must therefore be tangible and movable by nature.
Goods include personalities of every description capable of physical possession, transfer and
delivery. Goods may be classified in relation to their existence or non-existence at the time at the

1
The law of Contract Chapter 23 Laws of Kenya s 3(3)
2
The sale of Goods Act, Revised 1964(1931) s 2(1)
2|Page

contract of sale is made, or in terms of whether they have or have not been identified at the time
of sale. According to section 7(1) of the Act: “goods which form the subject to a contract of sale
may either be existing goods owned or possessed by the seller, or future goods to be
manufactured or acquired by the seller after the making of the contract of sale.3
2.0 PASSING OF PROPERTY BETWEEN BUYER AND SELLER.

Ownership in the goods from the seller to buyer is the essential of a contract of sale. Property
passes when intended to pass. Section 26 of the sale of goods act provides that unless otherwise
agreed the goods remain at the seller's risk until the property therein is transferred to the buyer,
but when the property is transferred to the buyer, the goods are at the buyer's risk whether
delivery has been made or not.

For the purpose of transfer of property, goods have been divided into specific and unascertained.
Specific goods are those identified and agreed upon at the time a contract of sale is made while
unascertained are those not identified and agreed upon. SECTION 19,20,21 and 22 of the SALE
OF GOODS ACT provides the rules regarding to transfer of specific goods while SECTION
18,23 and 25 provide the rules for transfer of property in ascertained goods.

TRANSFER OF SPECIFIC GOODS.

Property is transferred or passed when there is an intention to pass. The intention of the parties
shall comply to the terms of the contract, the conduct of the parties and the circumstances of the
case. In Saks v Tilley there was a contract for sale of diamonds. The condition for the supply of
diamonds was acceptance of the bill of exchange by the buyer. Along with the parcel of
diamonds, the bill was sent and the invoice was marked " settled by acceptance". It was held that
the intention of the parties was that the ownership in the goods should not pass until the bill is
accepted.

Other cases on intention include:

United India Insurance Company v O. Jameela Beevi

United Breweries Limited v State of Andhra Pradesh

Unless a different intention appears, the rules contained in Sections 20 to 24 are ruled for
ascertaining the intention of the parties as to the time at which the property of goods is to pass to
the buyer.

3
The sale of Goods Act Revised 1964 (1931) s 7(1)
3|Page

Specific goods in a deliverable state.

Goods in a deliverable state are those that are ready to be delivered For example, where a buyer
purchases a table and the table has to be polished by the seller before delivery, the said table is
not deliverable. It becomes deliverable when polished.

Where a contract of sale is unconditional for the specific goods in a deliverable state, the
property in the goods passes to the buyer when the contract is made. Whether the time for
payment or the delivery of goods or both is postponed, the property would still pass to the buyer.

Property passes to the buyer at the time of making the contract when the following conditions are
satisfied;

-The contract is an unconditional one.

-The goods are specific.

-The goods are in a deliverable state.

In Sandhu saran Singh v W.B State Electricity Board, the plaintiff submitted a tender for the
purchase of specified quantities of M.S. Rodes of a particular description, lying in the specified
railway yards. The tender was accepted. Under the terms, the buyer had to deposit the price and
complete the removal of the entire goods in installments within specified time. The plaintiff
removed part of the goods after depositing proportionate price. Due to unavoidable
circumstances such as heavy breaches on the road owing to rain and landslide and consequent
difficulty in transporting the remaining goods, the buyer sought extension of time. The seller did
not grant the extension and wrote to the buyer cancelling the contract in respect of the remaining
goods and began to make a re-sell of those goods.

The buyer brought an action to restrain the seller from selling the remaining goods. He pleaded
that it was sale of specific goods in a deliverable state and the contract was unconditional,
therefore ownership had passed to the buyer when the contract was made on the acceptance of
his tender. Therefore, the seller had no right to cancel the contract and re-sell the goods.

3.Specific goods to be put in a deliverable state.

Where the seller has to do something to the goods to make it deliverable, the property does not
pass to the buyer until such thing is done and notice has to be made to the buyer. For example, a
seller agrees to sell the amount of salt lying in his go down but according to the terms of the
contract, he has to get it packed in bags. The property in salt will not pass to the buyer until the
seller has packet the salt into bags and buyers get notice of the same.
4|Page

TRANSFER OF PROPERTY OF UNASCERTAINED GOODS.

In contract of sale of unascertained no property in the goods is transferred to the buyer at the
time of making the contract.

The property cannot pass until the goods are ascertained. After the goods have been ascertained,
the property in them will pass when the parties intend to pass it. According to SECTION 23, the
property in respect of unascertained goods passes to the buyer when the following conditions are
satisfied;

-There is appropriation of the goods to the contract either by the seller or by the buyer. That is,
doing of any act by the parties which indicates that certain goods are to be assigned to a
particular contract. For example, a seller agrees to supply a wrist watch which he has yet to
manufacture, and after manufacturing some watches, he dispatches one to me that particular
watch has been appropriated to the contract by the seller.

-The appropriation of the goods is made by one party with the assent of the other. That is, if the
seller makes an appropriation, the buyer has to assent to it and if the buyer makes the
appropriation, the seller has to assent to it. The appropriation is incomplete unless the assent of
the party has been obtained and property will not be passed.

-The goods appropriated to the contract are of the same description as given in the contract and
are in a deliverable state. If the goods are of a different description or those not in a deliverable
state are appropriated to the contract no property will pass by such an appropriation.

-If goods are appropriated to the contract but the appropriation is conditional the property in the
goods does not pass.

3.0 PROPERTY IN FUTURE GOODS BY DESCRIPTION AND IN DELIVERABLE

STATES.

In a contract for sale of unascertained or future goods by description and in a deliverable state
and goods of that description and in a deliverable state are unconditionally appropriated to the
contract either by the seller with the assessment and the assent of the seller the property in the
goods thereupon passes to the buyer. The assent may be express or implied and may be given,
either before or after the appropriation is made. Where in pursuance of the contract the seller
delivers the goods to the buyer or to a carrier or other bailee or custodian (whether named by the
buyer or not) for the purpose of transmission to the buyer but does not reserve the right of
disposal in accordance with section 21(1), he is deemed to have unconditionally appropriated the
goods to the contract in terms of section 20€ of the act.
5|Page

In the case of Jugal v Raw Cotton company supreme court laid down that the words in present or
future qualify the word conveys and not the word property.

4.0 PASSING OF RISKS.

Passing of risks means that the responsibility for loss of or damage to goods passes from the
seller to the purchaser. The concept of passing of risks is important in understanding who has the
liability to bear the loss in case the property or goods sold are destroyed or damaged.
Section 26 of the Sale of Goods Act 1931 lays down certain rules relating to the passing of risks.
When goods are sold they remain at the seller’s risk until they are transferred to the buyer.
Property in the goods is said to have been transferred from the seller to the buyer when the buyer
acquires proprietary rights over the good.
Once they have been transferred to the buyer the goods if not delivered the risk is vested to the
buyer.
6|Page

Delivery is defined under the Sales of Goods Act as the voluntary transfer of possession from one
person to another.
EXCEPTIONS
There are two exceptions to the general rule that the risk passes with the transfer of property in
the goods. This exception is
If the delivery has not been made due to the fault of either party, then the liability of damage will
lie on the party at fault.
. In cases where the delivery has not been made to the buyer due to the fault of the buyer the risks
remains to the buyer
In cases where the delivery has not been made due to the fault in the seller the risk remains to the
seller.
In Dembly Hamilton and Co Ltd V Barden The seller agreed to supply 30 tons of apple juice
by samples. The seller crushed 30 tons of apples at once to ensure that they are according
to samples and filled them in casks. After looking of installments had been delivered the
buyer refused to take further deliveries and the juice got spoilt. It was held that the
property in the goods was still with the sellers but the loss had been borne by the buyer.