Property Law for

Business
Chapter V
INC
GUNTUR
PUTTU
GURU
PRASAD
Topics to be understood in this chapter
 Classification of property

 Contract of Sale- movable property

 Borrowing against property

 Hire purchase of Property

 Lease of Property

 Exchange/ gift/ Assignment of Property

 Intellectual property Rights

Property Includes Immovable
and Movable
Property
 Meaning- It can be Real or Personal property.
 Real property- signifies real property that is land and
ordinarily things attached to earth, growing on, or affixed
to it, including buildings, standing tree, grass and crops.
 The term is also used to declare any rights that issue
from the ownership of land. The term land, in its general
usage, includes not only the face of the earth but
everything of a permanent nature over or under it,
including minerals, oil, and gases.
 The ownership rights of the property is against the whole
world - ( jus in rem) (Right in Rem)
 Property may consists of movable property ( Personal
property) (Right in Personam) and immovable property
( Real Property)
Legislations pertaining to property
laws in India
 The Transfer of Property Act, 1882 (immovable property for
transfer of property inter-vivo i.e. Living Persons)
 Sale of Goods Act, 1930 (movable property)
 Indian Trusts Trusts Act, 1882 (Something (as property) held by
one party (the trustee) for the benefit of another (the beneficiary)
 Indian Easements Act, 1882
 Easements-(law) the privilege of using something that is not your
own (as using another's land as a right of way to your own land)
 Indian Succession Act, 1925 etc (Acquisition of property by
descent or by will) (A group of people or things arranged or
following in order)
But mainly the contents of this chapter covers the TP Act and the
SOG Act including the protection
of intangible property including Intellectual Property Rights (IPR)
 Sale of Goods
 It can be classified in to tangible and intangible
property
 It may be Tangible property/ Real/corporeal
( Which has the physical existence- It consists of
both movable and immovable property) or
 Intangible property- Those which are invisible and
cannot be perceived by natural senses-
Copyright, Patents, Trade Marks etc
 The personal property is movable property
 Sale - it is a contract, whereby the seller transfers or
agrees to transfer the property in goods to the buyer
for a price (S.4).
 Such sale can be absolute or conditional
Contract of Sale under SOG Act,
1930
The essentials of a Sale are as follows:
 Bilateral Contracts – ( Two parties) The sale of
goods to pass from the buyer to seller.
 Parties- Seller and the buyer-“Buyer" means a
person who buys or agrees to buy goods. “Seller"
means a person who sells or agrees to sell goods
 Goods- "goods" means every kind of moveable
property other than actionable claims and money; and
includes stock and shares, growing crops, grass, and
things attached to or forming part of the land which are
agreed to be severed before sale or under the contract
of sale.
 Price ( Money)- Consideration –"price" means the
money consideration for a sale of goods; In absence of
money as consideration, it is not a sale but exchange or
barter
 Contract of Sale can be either absolute or conditional
Meaning of Actionable Claim
 An ‘actionable claim" means a claim to any debt,
other than a debt secured by mortgage of
immoveable property or by hypothecation or pledge
of moveable property, or to any beneficial interest in
moveable property not in the possession, either
actual or constructive, of the claimant, which the
Civil Courts recognize as affording grounds for relief,
whether such debt or beneficial interest be
existent, accruing, conditional or contingent.
 Sale
The performance of contract of sale constitutes
has three stages-
 Passing of risk
 Transfer of possession (Custody or control of goods) of
goods
 Transfer of ownership of goods i.e., title from the buyer to
the seller
In order to pass the risk or the possession of goods
including the ownership, the “delivery’ of goods and the
other terms of the contract of sale have to be taken into
consideration
(Delivery- means voluntary transfer of possession from one
person to another)
Conditions for transfer of
goods
 Goods must be ascertained- It is a condition precedent
to the transfer of property from the seller to the buyer.
 The intention ( expressed intention) of the parties is
important to transfer the property from the buyer to the
seller.
 The passing of property does not depend on payment of
price or on delivery of goods or both , but it depends on
the intention of the parties to the contract.
 Transfer of title from the seller to the buyer must be
defectless, based on the maxim “ nemo dat quod non
habet” – “No person can give a better title than what he
himself has” – The buyer will not get a good title if the
seller’s title has defects.
Sale by Non-owners
 In a few exceptional circumstances, the seller of the goods can confer a
good title even without having one, The circumstances are as follows :
 Sale by one of joint owners
 Sale by person in possession under voidable
contract
 Seller or buyer in possession after sale
 Sale by an unpaid seller
 Sale by a mercantile agent
 Sale with the authority of goods with authority and consent
of the true owner.
 Finder of lost goods, if the true owner cannot be found,
 Pawnee of the goods under certain conditions
 A finder of the Negotiable Instruments, if it is endorsed in
blank or payable to bearer if taken without notice of the
defect in title.
Difference between sale sand
agreement to sell
Sale Agreement to sell
 Transfer of property-(Executed)  Transfer of property-(Executory)
 Goods-Existing and specific goods  Goods-Future and contingent goods
 Risk- The loss falls on the buyer, if  Risk-The loss falls on the seller,
the goods are destroyed. even if the possession is with the
 Consequences of Breach -For buyer.
breach of contract, the seller can sue Consequences of Breach- The
for price even when it is in the seller to sue only for damages, even
possession of the seller if the goods are in possession of the
 Right to Resell- the seller cannot re- buyer.
sell the goods  Right to Resell -in case of re-sale,
the buyer, who takes the goods for
consideration and without notice of
the prior agreement, gets good title.

cont….
Sale
 General & particular
Property- gives right to the
buyer to enjoy the goods as
against the world at large
including the seller i.e., jus in
rem)
 Insolvency of Buyer- In a
sale, if the buyer becomes
insolvent before he pays for
the goods, the seller, in the
absence of a lien over the
goods, must return them to the
official receiver or assignee.
 Insolvency of Seller- In a sale
if the seller becomes insolvent,
the buyer, being the owner, is
entitled to recover the goods
from the official receiver, or
assignee.
Agreement to Sell
 General & particular Property-
It creates ‘jus in personam’ i.e.,
gives a right to the buyer against
the seller to sue for damages.
 Insolvency of Buyer -In an
agreement to sell, if the buyer
becomes insolvent and has not
yet paid the price, the seller is not
bound to part with the goods, until
he is paid for.
 Insolvency of Seller- In an
agreement to sell, if the buyer,
who has paid the price, finds that
the seller has become insolvent,
he can only claim rateable
dividend and not the goods
because property in them has not
yet passed to him.
 Conditions and Warranty
 A condition is a stipulation essential to the main purpose
of the contract, the breach of which gives rise to a right to treat
the contract as repudiated. A stipulation in a contract of sale
with reference to goods which are the subject thereof may be a
condition or a warranty.
 A warranty is a stipulation collateral to the main purpose of the
contract, the breach of which gives rise to a claim for damages
but not to a right to reject the goods and treat the contract as
repudiated.
 Conditions and warranties may be express or implied.
 Whether a stipulation in a contract of sale is a condition or a
warranty depends in each case on the construction of the
contract. A stipulation may be a condition, though called a
warranty in the contract.
 Express conditions and warranties are which, are expressly
provided in the contract. Implied conditions and warranties are
those which are implied by law or custom; these shall prevail in
a contract of sale unless the parties agree to the contrary.
Buyer’s rights
 The buyer has to examine the goods
 The buyer has to accept the delivery of the goods
 The buyer can reject the goods if they are not as per
the description. He is not under an obligation to
return the rejected goods
 The buyer has the right to resell the rejected goods
 The buyer has the right to resell the goods, if they
are perishable
 The buyer can recover the amount from the seller , if
he had incurred any as a bailee.
Buyer’s Liabilities

Only when certain conditions are fulfilled the buyer liabilities

will arise:
 Buyer cannot reject the goods after he has accepted them unless
agreed upon otherwise.
 The buyer is liable for negligence or for refusing to take delivery of
goods once the seller is ready and willing to deliver the goods and
requests the buyer to take delivery, and does not take goods within
a reasonable time.
 When the buyer fails to take delivery within a reasonable time he will
be liable to the seller for any loss, damage incurred on failure to
take delivery.
 In the above type of cases the rights of the seller get affected where
the neglect or refusal of the buyer to take delivery amounts to a
repudiation of a contract.
Buyer’s Duties
 To take delivery of goods and make payment
 In case of any changes in quality or quantity, the buyer has the
duty to accept or reject the whole of the goods or accept that part
of the goods as required and reject the rest.
 In some cases it may be the duty of the buyer to apply for
delivery and within a reasonable hour.
 To give notice for the rejection of the goods
 Duty to pay the price after the goods passes on to the buyer
 If the buyer pays to fails the price within reasonable time , the
seller may file a suit for payment of damages, which the court
may order to compensate the seller.
Who is an unpaid Seller
The seller of goods is deemed to be an "unpaid
seller" within the meaning of SOG’s Act is-
 When the whole of the price has not been
paid or tendered;
 When a bill of exchange or other negotiable
instrument has been received as conditional
payment, and the condition on which it was
received has not been fulfilled by reason of
the dishonour of the instrument or otherwise.
Rights of an unpaid Seller
The unpaid sellers right depends upon the passing of the
possession of the goods:
In case the property in the goods may have passed to the buyer,
the unpaid seller of goods, as such, has by implication of law-
 a lien on the goods for the price while he is in possession of
them;
 in case of the insolvency of the buyer a right of stopping the
goods in transit after he has parted with the possession of them;
 a right of re-sale as limited by this Act.
 Where the property in goods has not passed to the buyer, 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.
Pledge
A pledge also known as pawn is a bailment
or deposit of movable or to a creditor to
secure repayment for some debt. The
property in such contract constitutes the
security for debt.
 In a contract of pledge the possession of the
property is with pledgee/ pawnee, and the
pledgor or the pawnor can claim it back only
when there is a payment of the debt, with all
the other charges.
Hypothecation
 Hypothecation is a product of Trade Usage and not a statutory
creation in India
 It is pledge of property as collateral for a debt without transfer of
possession to the party making the loan. The borrower retains
legal ownership of the property but provides the lender with a lien
over the property until the debt is paid off.
 Therefore the hypothecator holds such property or goods as a an
agent and not as an owner.
 In hypothecation the property is in actual possession of the
borrower, whereas in pledge it is with the creditor.
 E.g.-Banks that give a loan to purchase a car, hypothecate the
car in their name as security.
Hire Purchase
 “Hire-purchase agreement" means an agreement under
which goods are let on hire and under which the hirer
has an option to purchase them in accordance with the
terms of the agreement and includes an agreement.
 In a HP agreement possession of goods is delivered by
the owner thereof to a person on condition that such
person pays the agreed amount in periodical
installments, and the property in the goods will pass to
such person on the payment of the last of such
installments.
 The person i.e. the owner has the right to
 Terminate the agreement at any time before
the property so passes.
Essentials/ Parties
to the contract of HP
 “Hirer”- is the person who obtains
or has obtained possession of goods from an owner
under a hire-purchase agreement, and includes a
person to whom the hirer’s rights or liabilities under
the agreement have passed by assignment or by
operation of law.
 “Owner“- is the person who lets or has let, delivers
or has delivered possession of goods, to a hirer
under a hire-purchase agreement and includes a
person to whom the owners property in the goods or
any of the owners rights or liabilities under the
agreement has passed by assignment or by
operation of law.
Cont….
Essentials Cont…
 Hire- is the sum payable periodically by the hirer
under a hire-purchase agreement
 Hire- Purchaser Price- is the total sum payable by
the hirer under a hire-purchase agreement in order
to complete the purchase of, or the acquisition of
property in, the goods to which the agreement
relates and includes any sum so payable by the hirer
under hire-purchase agreement by way of a deposit
other initial payment, or credited or to be credited to
him under such agreement on account of any such
deposit or payment
Transfer of Property
 “Transfer of property" as per the TP Act means an
act by which a living person conveys property, in
present or in future, to one or more other living
persons, or to himself, [or to himself] and one or
more other living persons; and "to transfer property"
is to perform such act.
 ‘Living person’ under the Act includes company,
association of persons, body of individuals whether
incorporated or not.
 The TP Act mainly deals with " immovable
property" which does not include standing timber,
growing crops or grass;
To Understand the meaning of
 Sale

 Mortgage

 Lease

 Exchange

 Gift

 Assignment

 Charge

 Actionable claim
Sale of Immovable
Property
"Sale" is a transfer of ownership in exchange for a price
paid or promised or part-paid and part-promised. Any
transfer of tangible immoveable property of the value of
one hundred rupees or more can only be made by a
registered instrument.
Essentials of Sale:
 Immovable property like house, land etc,
 Seller
 Buyer
 Price
 Sale Deed- The instrument through which the property
can be transferred.
Mortgage
 A mortgage is the transfer of an interest in specific immoveable
property for the purpose of securing the payment of money
advanced or to be advanced by way of loan, an existing or
future debt, or the performance of an engagement, which may
give rise to a pecuniary liability.
The essential of the mortgage are:
Competent parties-
 Mortgagor- Transferor
 Mortgagee -Transferee
 Principal money and the Mortgage-money- Loan and the
interest of which payment is secured for the time being.
 Mortgage-deed- The instrument (if any) by which the transfer is
effected.
 Registration- If the property mortgaged is more than Rs.100
Different Kinds of Mortgage
 Simple

 Mortgage by conditional sale

 Usufractuary mortgage

 English Mortgage

 Mortgage by deposit of title deeds

 Anomalous Mortgage
Lease
 A lease of immoveable property is a transfer of a
right to enjoy such property, made for a certain time,
express or implied, or in perpetuity, in consideration
of a price paid or promised, or of money, a share of
crops, service or any other thing of value, to be rendered
periodically or on specified occasions to the transferor by
the transferee, who accepts the transfer on such terms.
Essentials-
 Lessor -the transferor
 Lessee- the transferee
 Premium- the price
 Rent- the money, share, service or other thing to be
so rendered ( Consideration)
 Subject matter- Immovable property
 Certain or fixed period of time- it can even be
perpetual, it can be from year– year, it can be for a
term exceeding one year.
Termination of lease
A sale is related to transfer of ownership
In lease, it is only a “ transfer of a right to enjoy an interest
in the land”.
Termination of lease
 By lapse of time
 By happening of a specified event
 By termination of lessor’s interest
 By merger
 By surrender
 By implied surrender
 By forfeiture
 After expiry of the notice to quit
Exchange
When two persons mutually transfer the ownership
of one thing for the ownership of another, neither
thing or both things being money only, the
transaction is called an "exchange".
The exchange can involve the transfer of property
either movable or immovable. Therefore it includes
barter of goods.
Essentials of a valid Exchange
 Two parties- Transfer between living persons.
 Exclusive Ownership
 Mutual transfer or reciprocal transfer of estates
 It can include movable or immovable property but
does not include intangible property
 Consideration is in the form of property and not
payment of price
 Formalities to be followed are similar to that of sale
of property.
Gift
 The transfer of certain existing moveable or immoveable
property made voluntarily and without consideration, by
one person, called the donor, to another, called the
donee, and accepted by or on behalf of the donee.

 Acceptance of gift must be made during the lifetime of

the donor.If the donee dies before acceptance, the gift is
void.

 The purpose of making a gift of immoveable property,

the transfer must be effected by a registered instrument
signed by or on behalf of the donor, and attested by at
least two witnesses.
 For making a gift of moveable property, the
transfer may be effected either by a registered
instrument signed as per the law or by delivery.
 Such delivery may be made in the same way as
goods sold may be delivered.
 The property to be gifted must be existing
property and should be transferable.
 Gift cannot be made for future property.
 Gift to be made to an ascertainable person and
not to general public
Essentials of a valid gift
 Two parties- Donor and Donee
 Intention to donate
 Subject matter- Tangible property, It may be movable or
immovable.
 No Consideration- Transfer to be made without
consideration.
 Voluntary- It must be voluntarily transfer and with free
consent.
 Transfer of ownership- It is compulsory to transfer
ownership. Even if the transfer is based on any
conditions, it can be considered to be valid gift under the
concept of onerous gift.
 Acceptance- Gift must be accepted
 Delivery-It should be delivered
Mohammedan
Law (Gift)
 Hiba- An unconditional transfer of ownership and does
not require registration
 It is without any consideration or returns
 Airat- is a grant of limited interest in respect of use of
property
 Gift not be made under any compulsion, as it needs to
be transferred voluntarily with free will and gratuitously.
Essentials-
 Declaration of the gift by the donor
 Relinquishment of ownership and dominion by the donor
 Acceptance of the gift by the donee or any body on behalf of
donee
 Delivery of possession of the gifted property by donor to
donee.
 Gift can be revoked even after the delivery of possession.( TP
Act not applicable
Revocation of Gift
 Generally gifts are irrevocable.
 It can be revoked only if there is an agreement
between the parties on happening of a specified
event, which does not happen at the will of the
donor.
 In order to validate the revocation the agreement
must be valid agreement.
 Gift can be revoked on the ground of undue
influence.
 It has to be revoked within three years.
Assignment of property
 Transfer of claim/ right/interest/property from one person
to another.
 The TP Act envisages the transfer by various modes like
mortgage, lease, sale including bailment, pledge etc.
wherein the interest in property is transferred.
General rules of assignment are -
 To be in writing, to enable the assignee to sue in his own
name
 It should be addressed to the assignee
 No particular format is required unless the intention is
clear.
A future debt may be transferred by way of security.