BCOC-133 BUSINESS LAW CHAPTER-18 TRANSFER OF OWNERSHIP AND DELIVERY

 

BCOC-133 BUSINESS LAW
CHAPTER-18 TRANSFER OF OWNERSHIP AND DELIVERY

1. Transfer of Ownership/Property:

• Definition: The term "property" in the Sale of Goods Act refers to

  ownership, emphasizing the legal right to control and dispose of

  goods.

• Possession vs. Ownership: Possession and ownership are distinct

  concepts. While possession relates to physical control, ownership

  implies legal rights and responsibilities.

• Legal Ownership: The focus is on legal ownership, reinforcing

  that being in possession of goods doesn't necessarily make one the owner.

  2. Significance of Transfer of Ownership:
  • Risk Allocation: The principle is that risk follows ownership. The

  party owning the goods during loss or damage bears the associated loss.

  • Example: Loss of books due to a $ire - the owner at the time of the incident bears the loss.

• Action Against Third Party:- Only the owner has the legal right to take action in the case of loss or damage caused by a third party.

• Suit for Price: The seller can demand the price only when ownership has transferred to the buyer.

• Insolvency: The ability of the Official Receiver or Assignee to take over goods in the event of insolvency depends on ownership.

  3.Rules Regarding Transfer of Ownership (Sections 18 to 24):
  • General Rule (Section 19): The transfer of ownership occurs at

  the time the parties intend it to happen. The intention is determined by the contract terms, conduct, and circumstances.

  1. General Rule (Section 19):
  - Ownership is transferred at the time the parties intend it to be

  transferred.
  - Intention is determined by the terms of the contract, conduct of the

  parties, and the circumstances surrounding the agreement.

  2. Classification of Goods:
  - Rules for transfer of ownership vary based on the type of goods

  involved:
  1. Specific or Ascertained Goods (Section 19(2)):

- Goods identified and agreed upon at the time of the contract.

- Rules for goods in a deliverable state, goods not in a deliverable state, and goods in a deliverable state when the seller has to ascertain the price.

2. Unascertained Goods and Future Goods (Section 23):
- Goods not yet identified or existing but not yet in existence.
- Ownership passes when goods are unconditionally appropriated

to the contract.
3. Goods Sent 'On Approval' or 'On Sale or Return' (Section 24):

- Goods sent with the option for the buyer to return them if not satisfied.

3. Specific or Ascertained Goods (Section 19(2)):    a. Goods in Deliverable State:

- Ownership passes when there's an unconditional contract, and goods are in a deliverable state.

- Immaterial whether payment or delivery is deferred.
-Example:- Immediate transfer of ownership for a car sold with

deferred payment.

b. Goods Not in Deliverable State:

- Ownership doesn't pass until the seller does something to make the goods deliverable.

Example: Seller must perform an action like packing or sealing to make the goods deliverable.

c. Goods in Deliverable State, Seller to Ascertain Price:

- Ownership doesn't pass until the seller performs an act (e.g., weighing or measuring) to ascertain the price, and the buyer is informed.

- Example: Ownership transfers when the seller weighs wheat and informs the buyer of the weight and price.

4. Unascertained Goods and Future Goods (Section 23):
- No property in goods is transferred until they are ascertained

(identified).
- Ownership passes when goods are unconditionally appropriated to

the contract.

5. Goods Sent 'On Approval' or 'On Sale or Return' (Section 24): a. Approval or Acceptance:

- Ownership passes when the buyer explicitly approves the goods.

-Example: Buyer informs the seller of acceptance of a delivered scooter on approval.

b. Adoption of Transaction:
- Ownership passes if the buyer takes actions implying acceptance,

even without express approval.
Example: Pledging goods on 'sale or return' basis signals adoption

of the transaction.

c. Failure to Return Goods:

- Ownership passes after a fixed time for return or, if unspecified, after a reasonable time.

-Example: If goods sent on sale or return have no return time specified, ownership passes after a reasonable period.

These rules are essential for determining when ownership of goods is transferred, affecting rights, responsibilities, and risk allocation between the parties involved in a sale of goods contract.

1. Delivery to Carrier:

- De$inition: The seller, upon delivering goods to a carrier, fulfills the delivery obligation as per the contract.

- Points to Consider: 1. Delivery Point:

- Delivery to the carrier is considered delivery to the buyer if it's in accordance with the contract terms.

2. Title Transfer:
- Generally, the seller transfers title to the buyer upon delivery to

the carrier, even if the goods are not yet reached the destination. 3. Risk Transition:

- Risk may pass to the buyer as soon as the goods are handed over to the carrier, depending on the terms of the contract.

2. Reservation of Right of Disposal:
- Definition: The seller may retain control over the goods even after

delivery, restricting the buyer's ability to use or dispose of them.

- Points to Consider:
1. Express Agreement:

- Reservation of disposal rights must be explicitly agreed upon in the contract between the buyer and the seller.

2. Purpose:
- It may be done for various reasons, such as securing payment

or ensuring compliance with certain conditions. 3. Effect on Risk and Title:

- Depending on the terms, risk and title may not pass to the buyer until specific conditions are met, even if delivery has occurred.

3. Passing of Risk:
- Definition: Determining when the risk of loss or damage to the

goods shifts from the seller to the buyer.

- Points to Consider: 1. As Per Incoterms:

- Incoterms (International Commercial Terms) often specify when the risk passes from the seller to the buyer during international transactions.

2. Delivery vs. Payment:
- Risk may pass on delivery, payment, or another specified event,

depending on the terms of the contract. 3. Insurance Consideration:

- Parties might decide risk passes at a different point from title transfer to ensure proper insurance coverage during transit.

These points highlight the nuances involved in delivering goods to a carrier, reserving the right of disposal, and determining when the risk associated with the goods is transferred from the seller to the buyer. Always, the terms agreed upon in the contract play a crucial role in establishing these conditions.

1. Sale by Non-Owner:

• Definition: A sale by a person who is not the owner of the goods.

• General Rule: Only the owner can transfer ownership; thus, a

  non-owner cannot confer ownership.

• Principle: "Nemo dat quid non habet" - No one can give what he

  himself does not possess.

• Section 27 of the Sale of Goods Act:

  - If goods are sold by a non-owner without the owner's authority, the buyer acquires no better title than the seller had.

  • -Exceptions:

- Title by Estoppel:
- If the owner, by statement or conduct, leads the buyer to

believe the seller has authority to sell, the owner may be estopped from denying the seller's authority.

• Sale by a Mercantile Agent:
A mercantile agent in possession with owner's consent can sell

goods in the ordinary course of business, giving the buyer a good title if bought in good faith.

• Sale by One of Joint Owners:
If a joint owner is in possession with the consent of others and

sells to a buyer in good faith, the buyer gets a good title.
• Sale by Person in Possession Under Voidable Contract:

- If a seller in possession under a voidable contract sells before it's rescinded, the buyer gets a good title if bought in good faith and without notice.

2. Delivery of Goods:
• Definition: Voluntary transfer of possession from seller to buyer.

Types of Delivery:
Actual Delivery:
Physically handing over goods. Symbolic Delivery:

• Transfer of symbols (e.g., keys, documents) representing control over goods.

- Constructive Delivery:
- Acknowledgment by the possessor that they hold goods on

behalf of the buyer.
• Rules Regarding Delivery of Goods (11 Points):

1. Delivery may be actual, symbolic, or constructive.
2. Delivery and payment are concurrent conditions.
3. Part delivery may be treated as delivery of the whole unless

specifically separated.
4. The buyer must apply for delivery unless otherwise agreed.
5. Place of delivery is as agreed; if not, it's where the goods are at

the time of sale or agreement to sell.
6. Time of delivery should be within a reasonable time if not $ixed

by the contract.
7. Manner of delivery requires acknowledgment by a third person

for possession transfer.
8. Expenses of delivery are borne by the seller unless agreed

otherwise.
9. Wrong quantity delivery rules for short, excess, or mixed delivery.

10. Instalment deliveries may be rejected unless agreed upon.

11. Delivery to a carrier or wharfinger is deemed prima facie delivery to the buyer.

3. Acceptance of Delivery:
• Conditions for Acceptance:

1. Buyer is deemed to have accepted unless previously examined.

2. Acceptance is indicated by buyer's notification, actions, or retention beyond a reasonable time.

3. Buyer may reject goods but must inform the seller of the refusal.

4. Liability of the Buyer: -Scenario:

- When the seller is ready to deliver, and the buyer neglects or refuses to take delivery.

- Liability:
- Buyer is liable for any loss due to neglect or refusal.
- Seller may charge a reasonable fee for the care and custody of the

goods.
- If refusal amounts to repudiation, the seller can sue for the price

or damages.