Post Graduate Programme in

Management1
(PGPM)

LEGAL ASPECTS OF BUSINESS

(LAB)

Dr Parul V Gupta
PhD (Law), LL.M., PGDBM

Dr. Parul Gupta

 Session 8
2

⚫ Transfer of Ownership
⚫ Rule for transfer of ownership in case of
generic, specific and future goods
⚫ Rights of an Unpaid Seller

Announcement – Group Assignment

Dr. Parul Gupta

 Transfer of Property
3

⚫ The property in the goods is said, to be

transferred from the seller to the buyer when
the buyer acquires the proprietary rights
over the goods and the obligations linked
thereto.
Transfer of property in goods is
distinct from delivery of goods.
⚫ Here property implies the ownership of the
goods not the possession

Dr. Parul Gupta

 Transfer of Property
4

Significance of Transfer of Property

⚪ Ownership
⚪ Risk follows ownership
⚪ Action against third parties
⚪ Suit for Price
⚪ Insolvency

Dr. Parul Gupta

 Transfer of Property
5

The Seller offered to sell to the Buyer a certain

machine for Rs. 5,000. The buyer refused to buy
the machine in its then existing condition and said
that he would not buy the machine unless certain
work was done on it. The Seller asked the Buyer to
get the work done himself and deduct the expense
from the cost of the machine. To this the Buyer
agreed and took the machine to a repair shop.
While being repaired the machine was destroyed
accidently without any fault of the repairmen.

Dr. Parul Gupta

 Rules For A Valid Transfer of Property
6

(i) Transfer of property in existing and specific or

ascertained good

(1) Specific goods in a deliverable state (Section 20)

(2) Specific goods are not in a deliverable state but to be put

into a deliverable state (Section 21)
There was a contract for the wood of Oak trees in a certain
forest. Q, the buyer purchased the wood from P, the
seller selecting certain portion of trees and rejecting
others. According to the custom of trade, P was to
separate the selected portions from the rejected
portions. But Q threw upon himself the duty of
separating the two portions.
Dr. Parul Gupta
Rules For A Valid Transfer of Property
7

(i)Transfer of property in existing and specific or

ascertained good
3) Specific goods in a deliverable state, when the seller
has to do anything there to in order to ascertain price
(Section 23)
There was a contract for the sale of 289 bales of goat
skin. Every bale contained 5 dozens smaller bales.
According to the contract the price was to be
determined according to the price of smaller bales and
the seller was to count the number of smaller bales in
every bigger bale.
(4) Goods sent on approval or “on sale or return basis”
(Section 24)
Dr. Parul Gupta
Rules For A Valid Transfer of Property
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(ii) Generic or unascertained or future goods

(Section 18 & 23)

UNCONDITIONAL
APPOPRIATION

Dr. Parul Gupta

 Rules for Valid Appropriation
9

a. The appropriation must be of the goods

which are the subject matter of the contract,
both as quality and quantity.
b. The appropriation must be intentional.
c. The appropriation must be either by the
seller with the assent of the buyer or by the
buyer with the assent of the seller.
d. The appropriation must be unconditional

Dr. Parul Gupta

Rules For A Valid Transfer of Property
10

(ii) Generic or unascertained or future goods

(Section 18 & 23)

Case: Aldridge v Johnson

⚫ Discussion Point
⚫ Was the property in goods transferred? Who
was the owner?

Dr. Parul Gupta

Rules For A Valid Transfer of Property
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Judgment & Explanation

It was held, that the property in the barley in the

155 sacks passed to the buyer by the appropriation
made by the seller (vendor), with his assent, à
priori as well as subsequently. Sometimes the
right of ascertainment rests with the buyer
(vendee), sometimes solely with the buyer
(vendor). In the above case it was vested in the
vendor only. When he had done the outward act
which showed which part was to be the vendee's
property, his election was made and the property
passed.
Dr. Parul Gupta
 Rights of An Unpaid Seller
12

⚫ Unpaid Seller (Sections 45-54)

⚪ When the whole of the price has not been

paid or tendered.
⚪ When a negotiable instrument or a bill of
exchange has been received as conditional
payment and the condition in which it was
received has not been fulfilled by reason
of the dishonor of the instrument or
otherwise.
Dr. Parul Gupta
 Rights of An Unpaid Seller
13

1. Rights against the goods

(A) when the property has passed to buyer

⚫(i) Lien (Sections 47-49 and 54)

⚪ (i) The goods have been sold without stipulation as to

credit; or
⚪ (ii) The goods have been sold on credit, but the term of
credit has expired; or
⚪ (iii) Where the buyer becomes insolvent, even though the
period of credit may not have expired.

Dr. Parul Gupta

 Rights of An Unpaid Seller
14

(ii) Stoppage in transit (Sections 50-52)

Duration of transit [Section 51(1)]

⚪ (i) When the buyer obtains delivery before the arrival of the
goods at their destination;
⚪ (ii) When, after the arrival of the goods at their
destination, the carrier acknowledges to the buyer that he
holds the goods on his behalf.
⚪ (iii) When the carrier wrongfully refuses to deliver the
goods to the buyer.

Dr. Parul Gupta

 Rights of An Unpaid Seller
15

⚫(iii) Right of re-sale (Section 54)

⚪ Where the goods are perishable;
⚪ Where the right is expressly reserved in the contract;
⚪ Where in exercise of right of lien or stoppage in
transit, the seller gives notice to the buyer to apprise
the buyer with his intention to re-sell, and the buyer,
does not pay or tender the price within a reasonable
time.

Dr. Parul Gupta

 Rights of An Unpaid Seller
16

1. Rights against the goods

(B) Where the property in goods has not

passed to the buyer,

Right of withholding the possession

⚫the unpaid seller has, in addition to his other
remedies, a right of withholding delivery
similar to and co-extensive with his rights of
lien and stoppage in transit where the property
has passed to the buyer.
Dr. Parul Gupta
 Rights of An Unpaid Seller
17

2. Rights of an unpaid seller against the buyer

(i) Suit for price (Section 55)

(ii) Suit for damages for non-acceptance (Section

56)

(iii) Suit for special damages and interest

(Sec.61)

Dr. Parul Gupta

 18

Announcement
Group Assignment
Submission - Session 13

Dr. Parul Gupta

 19

Dr. Parul Gupta