Transfer of Ownership, Provisions of Sale of Goods Act' 1930

Sale of Goods Act' 1930 Notes
Business Laws Notes B.Com 1st & 2nd Sem CBCS Pattern

Transfer of ownership

Provisions of the Sale of Goods Act, 1930 relating to transfer of ownership are stated below:

1. Goods must be ascertained: As per sec 18 this Act, the property in the goods does not pass to the buyer unless and until the goods are ascertained.

2. Intention of the parties for such transfer: The property on goods transferred to the buyer only when the parties to the contract intended to be transferred. The intention of the parties is ascertained from the terms of the contract. When the intention of the parties cannot be ascertained, the following provisions of the Act are applicable:

(i) Specific goods: (Sec. 20 to 22)

(a) Specific goods in a deliverable state: In an unconditional contract for the sale of specific goods in a deliverable state, the property in the goods passes to the buyer when the contract is made.

(b) Specific goods to be put into a deliverable state: Where there is a contract for the sale of specific goods and the seller is bound to do something to the goods to put them into a deliverable state, the property does not pass until such thing is done.

(c) Specific goods in a deliverable state but the seller has to weigh, measure, test or do some other act or thing 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 Goods: (Sec 23)

(a) Where there is a contract for the sale of unascertained or future goods by description and goods of that description and in a deliverable state are unconditionally appropriated to the contract, the property in the goods thereupon passes to the buyer.

(b) Delivery to carrier: Where, in pursuance of the contract, the seller delivers the goods to the buyer or to a carrier or other bailee for the purpose of transmission to the buyer and does not reserve the right of disposal, he is deemed to have unconditionally appropriated the goods for the purpose of the contract.

(iii) Goods on approval or ‘on sale or return’: (Sec 24)

When goods are delivered to the buyer on approval or on sale or return or other similar terms, the property therein passes to the buyer:

(a) When he signifies his approval or acceptance to the seller

(b) When he does any other act adopting the transaction.

(c) If he does not signify his approval or acceptance to the seller but retains the goods without giving notice of rejection, then, if a time has been fixed for the return of the goods, on the expiration of such time, and, if no time has been fixed, on the expiration of a reasonable time.

Reservation of Right of Disposal (Sec 25)

Sec 25(1): The seller may reserve the right of disposal of the goods until certain conditions are fulfilled. The property in the goods does not pass to the buyer until the conditions imposed by the seller are fulfilled.

Sec 25(2):  Where goods are shipped or delivered to a railway administration for carriage by railway and by the bill of landing or railway receipt, the goods are deliverable to the order of the seller or his agent, the seller is prima facie deemed to reserve the right of disposal.

Sec 25(3): Where the seller of goods draws on the buyer for the price and transmits to the buyer the bill of exchange together with the bill of lading and buyer fails to honour the bill of exchange, the property in the goods does not pass to him.