Property Law part C

Sale of goods.

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 ‘Sale’ or ‘agreement to sell’
• “Property” (rights of ownership)
transfers in a sale at time of sale

• An agreement to sell transfers property

at a later time

• This difference affects the rights of the

parties and who bears the risk if the
goods are damaged

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 Property v possession
• Property - means the same thing as ownership or
title

• Possession - refers to the control or custody of goods

• It is important to know when property passes

• risk (risk passes with property);
• the importance of the breach;
• title;
• rights in receivership;
• rights of the parties in the event of a refusal to accept
delivery; and
• where the goods are damaged in transit.

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 Classification of goods
• Unascertained goods: s 21
• Defined by description only, and not
identified and agreed upon when the
contract is made.

• Ascertained goods: s 22
• Goods which have been identified and
agreed upon by the parties.

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 Rules determining the
passing of property

• In the case of unascertained or future

goods, property in the goods will not
pass to the buyer unless and until the
goods are ascertained:
s 21 Goods Act 1958

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 Rules determining the
passing of property
• In the case of specific or ascertained
goods, property (and hence risk)
passes at the time the parties intend it
to pass, taking into account:
• the terms of the contract;
• the conduct of the parties; and
• the facts of each case.
s 22 Goods Act 1958

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 Rules determining the
passing of property

• Where no intention can be determined

in respect of the passing of property, s
23 Goods Act 1958 sets out 5 rules.
• Rules 1 to 4 deal with contracts for the
sale of specific or ascertained goods:
Rule 1
• Property passes when there is an
unconditional contract for the sale of
specific goods in a deliverable state.
CASE: Tarling v Baxter (1827)

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 Rules determining the
passing of property
Rule 2
• In the case of specific goods which must
have something done to them, property
passes when that thing is done.
Rule 3
• Where the seller has to do something to
determine the price, property does not pass
until that thing is done.
Rule 4
• Where goods are provided on approval,
property passes when the buyer does
something to signify approval.

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 Rules determining the
passing of property
• Rule 5 applies to a contract for the sale of
unascertained or future goods by
description:
Rule 5(1)
• In the case of unascertained or future goods
sold by description, where the goods are
unconditionally appropriated to the contract
and ready for delivery, property passes to the
buyer.
CASE: Healy v Howlett & Sons [1917] 1 KB
337

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 Rules determining the
passing of property

Rule 5(2)
• Where delivery is to the buyer or carrier
and there is no right of disposal reserved
by the seller, delivery is an unconditional
appropriation of the goods to the contract.
CASE: Wardar’s (Import and Export) Co
Ltd v Norwood & Sons Ltd [1968]

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 Rules determining the
passing of property

• If a seller imposes a condition or right

on disposal, appropriation is not
unconditional, e.g. a ‘Romalpa’ clause
reserving title with the seller
s 24 Goods Act 1958

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 Passing of risk
• Unless otherwise agreed, the general
rule is that once property has passed
to the buyer, so has the risk:
s 25 Goods Act 1958
• In the case of a sale of specific goods,
if the goods have perished at the time
of sale without the knowledge of the
parties, the seller bears the loss:
s 11 Goods Act 1958

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So we come to the end of property
law
• The next topic is contract – the
means whereby commercial and
almost every other transaction takes
place
• It affects all of us every day
• Therefore it is important for you to
understand the concepts and
operation of contract law

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