Transfer of ownership and

delivery of goods
 Meaning of transfer of ownership

 “Property in goods “ – means ownership of goods

 Possession of goods – means custody of goods

 Transfer of ownership means transfer of general right of

ownership to the buyer. On such transfer buyer can enjoy
peaceful possession , can use and can further sell those
goods .
 Risk passes
with
ownership
Significance of ownership

Right to take
Insolvency of significanc action
the seller e against third
party

Right to file
a suit for
price
1. Risk Passes with ownership

 Acc. To Sec 26 of this Act “risk prima facie passes with

the property”
 The rule states that the transfer of ownership of goods
decides rights and liabilities of the seller and buyer.
 In case of destruction of goods ,the real owner bears the
loss, regardless of whose possession it was.
 2. Right to take Action against third
party

 When the goods are damaged due to some

fault on the of third party , it is the owner
who has the right take action and not the
person who had the possession of the goods at
that time .
 3. Right to file suit for price

 In contract of sale , ownership of the goods is

transferred to the buyer for the payment of the
price. It is therefore the seller who becomes
entitled to recover the price from the buyer only
when the property in goods or ownership has
passed on to the latter
 4. Insolvency of the seller or buyer
 After having made a contract of sale , the seller or buyer may
become insolvent.
 In such circumstances , the right of the official Receiver or
Assignee to take over the goods depends on the fact that
whether the party declared insolvent , is the owner of goods or
not.
 If the buyer has been declared insolvent , and ownership has
been transferred to him, goods are still in the possession of the
seller. The official receiver of the buyer will claim the goods
from the seller
Rules regarding Transfer of property or
ownership
 In a contract of sale of specific or ascertained goods , the
property or ownership passes to the buyer , at the time , when
the parties are intended to do so,
 Thus the entire transfer of property is left to the intention of the
parties.
 The parties are free to determine any time for transferring
ownership from the seller to the buyer
 Sometimes the intention of the parties may not be clear from the
contract itself. In such cases, conduct of parties and the
circumstances of the case would be given due consideration for
ascertaining the intention of parties
For the purpose of knowing the time , of passing the
ownership from seller to buyer , the goods are classified into
3 groups

Specificor ascertained goods

Generic or unascertained goods
Goods sent “on approval” or “sale or
return basis”
Specific or ascertained goods

Specific goods are those that are

identified and agreed upon at the time of
making a contract of sale.
According to Sec19 of this Act “where
there is a contract for the sale of specific
or ascertained goods the property in
them is transferred to the buyer at such
time as the parties to a contract intend
it to be transferred”
The following rules are applicable to know the intention of
parties with respect to the time when the property in
goods is transferred to the buyer

Specific goods in deliverable state

Specific goods not in deliverable state

Specific good to be measured and weighted for

determining price
 1. Specific goods in deliverable state

 When the contract is

 unconditional
 Made for specific goods
 Which are ready to be delivered
 Ownership of goods passes from the seller to the
buyer
 When the contract is made
2. Specific goods not in deliverable state
 At the time of making contract
 The goods may not be in deliverable state
 to make them ready for delivery ,
 the seller has to do something
 Such as packing , sealing, polishing, extra fitting and filling them in
containers etc.
 In such cases ownership is transferred on the completion of such
Acts.

 Acc. To Sec 21 of this Act “where there is a contract of sale for

specific goods and the seller is bound to do something to goods for
the purpose of putting them in deliverable state, the property does
not pass until such a thing is done and the buyer has notice
3. Specific goods to be measure or weighted
for determining price
 Sometimes , the contract of sale is made for specific goods , which
are in a deliverable state. But to determine the price of goods , they
are to be measured , weighted or tested. The ownership of such
goods will be transferred when the task of weighting , measuring or
testing is complete.

 According to sec 22 of this Act “where there is a contract of sale for

specific goods , in a deliverable state, but the seller id bound to
weight , measure test or do some other act with reference to goods
for the purpose of ascertaining the price, the property , does not
pass until such act or thing is done and the buyer has notice thereof
“
II. Unascertained future Goods
 When there is a contract of sale for unascertained goods, no
property in goods is transferred to the buyer unless the goods
are ascertained (Sec.16)
 Thus no ownership is transferred to the buyer until goods are
identified and ascertained.
 2 processes are involved – process of ascertainment and the
process of appropriation
 Ascertainment – goods are identified and separated from the lot
 Appropriation – the goods are selected with an exclusive
intention . It can be done by putting goods in bags or boxes or
putting oil in bottles
Some points to be noted for appropriation

Act of showing intention to identify and determine specific goods

A bilateral act , done by the mutual consent of the buyer and

seller

The consent of the seller or buyer may be given before or

after the appropriation is made

Appropriation can be made either by the seller with the consent

of the buyer or by the buyer with the consent of the seller

The consent may be express or implied

III. Goods sent “on approval” or “on sale or
return basis”
 Acc. To sec 24 of this Act” when goods are
delivered to the buyer on approval or sale or return
basis or on other similar terms , the property
therein passes to the buyer when a) when he
signifies his approval or acceptance to the seller or
b) he does any other act adopting the transaction or
c) if he does not signify the approval or acceptance
to the seller, but retains the goods giving a notice
of rejection”
1. When he signifies his approval
 On the approval or acceptance of goods , when the
buyer informs the seller , the property in goods
passes to the buyer
 Eg:
A delivered a scooter to b on approval basis . As
soon as B approves it and give notice to A ,
ownership passes from the seller to B
2. Adoption of transaction

 When the buyer does not send his express approval to the seller , but some
act regarding goods which shows that he has accepted goods , the property in
will pass on to such adoption
 3. Failure to return
 When the buyer does not inform the seller of his
approval or rejection and retains the goods , at the
expiration of a reasonable period of time, the
ownership passes to the buyer .
 Sale by Non-Owners

 The general rule of law , says that it is only the real owner
of goods or the person authorized by the real owner can sell
goods and also transfer the title of those goods to another
person.
 In contrast to this , a person who is not an owner of the
goods, cannot sell goods and even if he sells goods, the
buyer will not get the title of goods
 “Nemo dat quod non habet” – “this means no one can sell
what he himself has not got “
Definition

 According to sec.27 of this Act ,”subject to the provisions

of this Act and of any other law for the time in force ,
where goods are sold by the person who is not the owner
thereof and who does not sell them under the authority
as, with the consent of owner the buyer acquires no
better title what the seller had .”
Analysis of the definition

Only Owner can sell goods and transfer the title

Any other person having the authority and consent

of the owner

Incase of a defective ownership, these defects will

pass on to the buyer and the title will also be
defective
Exceptions to the rule
 The general rule protects the interest of the owner , but there are
some exceptions to this Title by
Sale by estoppel
Sale by
official
mercantile
receiver or
Agent
assignee

Sale by
Sale by joint
pawnee or
owners
pledgee

Exceptions
Sale by
person in
Sale by the
provision
finder of
under
goods
voidable
contract

Sale by seller
Sale by
in possession
unpaid seller Sale by the after sale
buyer in
possession
after sale
1. Title by estoppel (Sec.27)
 When the real owner makes a statement – either by words or mouth
or written or in someway induces the buyer to believe that the
seller has the authority to sell. Later if the owner denies, he will be
stopped and the buyer will get the right as well as the title of the
good.

 The following points need to be noted

 The real owner is , standing by when sale is affected
 He is assisting in the process of sale
 He is helping putting goods into the possession of another person
 He has made the representation to the prospective buyer ,
regarding authority of the person selling goods.
2. Sale by a Mercantile Agent
Where the Mercantile agent, with the consent of the owner , is in the possession of
the goods or of a document of the title to the goods , any sale made by him , the
buyer will get the title provided he buys in good faith and for value.
A mercantile agent is one who, in the customary course of his business , has as such
agent , authority either to sell goods , or to consign goods for the purpose of sale or
buy goods or to raise money on the security of goods (sec2(9).
The buyer of goods from a mercantile Agent , who has no authority from the
principal to sell, gets a good title to the goods if –
- the agent is in possession of goods or documents of title to the goods with the
consent of the owner
The agent sells the goods while acting in the ordinary course of business of
mercantile agent
The buyer acts in good faith believing that the agent had authority to sell.
3.Sale by joint owners
 According to Sec. 28 of this Act “if one of the
several joint owners of goods , has the sole
possession of them by the permission of other joint
owners and he sells them to a person , who buys
them in good faith and has , at the time of contract
of sale, no notice of the fact that seller has no
authority to sell , the buyer will get the title of
goods”
4. Sale by the person in possession under
voidable contract
 According to Sec.29 of this Act” where a seller is in possession of goods
under voidable contract and he sells the goods to a bona fide buyer ,
before the contract rescinded, the buyer gets the title to goods
 The following conditions must be satisfied:
 The seller must be in possession of goods under voidable contract –
consent caused by either by coercion, undue influence,
misrepresentation and by fraud.
 Buyer must have bought goods, without having notice of seller’s
defective title
 The goods are sold before the aggrieved party avoids contract.
 5. Sale by seller in possession after sale
 Acc.to Sec. 30(1) where the person having sold the goods
continues or is in possession of goods or of the document
of the title of the goods , if he resells the same goods to
another buyer, the buyer shall get good title to the goods
, provided he buys them in good faith and without the
notice of previous sale”
 6. Sale by the buyer in possession after
sale
 Acc. To Sec30(2) of this Act” where the buyer has bought the goods
in agreement to sell and has got the possession of goods or
document of title on those goods with the consent of the seller.
Such buyer sells those goods to the second buyer , who buys these
goods in good faith and has no knowledge of any right of original
seller on those goods. He will get good title to the goods “
 7. Sale by unpaid seller:
 In a contract of sale, the unpaid seller has the right to sell
the goods. Acc. To sec 54(3) of this Act “where an unpaid
seller , exercised his right of lien or stoppage in transit and
gets back possession of the goods, if he resells such goods ,
the subsequent buyer gets the title of the goods as against
the original buyer”
8. Sale by finder of goods
 When the person finds the goods belonging to another and takes
custody of those goods , spend some money on maintenance . He
can sell the goods under following conditions:
 - if the goods are of perishable nature and losing their value day by
day
 The money spent by the finder of goods exceeds 2/3 of the total
cost of goods
 On tracing the real owner of these goods , such owner refuses to
pay lawful maintenance charges.
 9. Sale by pawnee or pledgee

 When the debtor makes default in repaying the debt or

performing the promise on due date, the pawnee or
pledgee has a right to sell the goods which have been
pledged against the debt after giving reasonable notice of
this fact to the debtor. Though the pawnee is not the
owner , if he sells goods , the buyer will get the good title
m
 10. Sale by official receiver or assignee.

 In case, the person is declared insolvent by the court

, his property is handed over to the official receiver
or the assignee. Though they are not owners of the
property of the insolvent but they can pass on the
good title to the buyer of the property