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LA313 - Commercial Law - Topic 2

TRANSFER OF PROPERTY

Aim
To stimulate your understanding of how property in goods is transferred from the seller to the buyer.

Introduction
The buyer of goods would at the end of the day like to take possession and own the goods. Without this, the very objective of the sale would not be achieved. This unit discusses the processes of how this transfer may be effected.

 

Green_and_Black_Diamond.gif (591 bytes) TRANSFER OF PROPERTY
The processes by which property in goods pass on from seller to buyer must be looked at in the context of the nature of the goods. In the case of specific and ascertained goods, the rule is fairly straight forward. Property in the goods passes at the time of the sale.

In unascertained goods, no property in the goods passes unto the buyer until they are ascertained. NB the rule is stated negatively.

Has the Act defined unascertained goods?

NB that intention of the parties is made a condition of transferability of property. Why?

 

Green_and_Black_Diamond.gif (591 bytes) Rules for establishing the time for passing of property
There are generally 5 rules:

(1) Specific goods in a deliverable state
Here property in the goods passes from the seller to the buyer where the contract for sale is unconditional.

Please read the case of
Tarling v Baxter (1827) 6 B & C 360

(2)Specific goods to be in a deliverable state
Where the good is specific but certain steps have to be taken to put the good into a deliverable state, except such steps have been undertaken no property will pass.

Please read the case of
Underwood Ltd v Burgh Castle Brick and Cement Syndicate [1922] 1 KB 343

(3) Specific goods to be weighed
Where the good is specific and in a deliverable state but the price is to be determined as a condition of the sale, except that is done no property in the good passes on to the buyer.

Please read the case of
Nanka-Bruce v Commonwealth [1926] AC 77

(4) Sale or return basis
Except a buyer indicates approval of the goods, on a sale of return transaction, no property in the goods is transferred to the seller.

Please read the case of
Kirkham v Attenborough [1897] 1 QB 201

(5) Unascertained or future goods
Unless the goods have been ascertained, no property in the goods passes to the buyer from the seller.

 

Green_and_Black_Diamond.gif (591 bytes) What is appropriation?
Delivery; manufacturing; assent; disposal right of the seller

See Section 2-105(4) of the UCC which allows for property to pass on unsegregated goods. This is now introduced in the UK 1979 Act by virtue of sections 20A and 20B of the SOG (Amendments) Act 1995.

 

Green_and_Black_Diamond.gif (591 bytes) Romalpa Clause and transfer of property
1. Ownership of goods manufactured and supplied rest with seller

2. Buyer is to act as a constructive trustee by holding the proceeds of sale on behalf of the seller.

Q Is there any specific statutory provisions on Romalpa clause in your Act?

Please read the case of
Aluminium Industrie BV v Romalpa Ltd [1976] 2 All E.R 552

 

Green_and_Black_Diamond.gif (591 bytes) Risk and passing of property
Except a contrary intention is indicated, risk resides with the seller. But where property in the goods are transferred to the buyer, the goods are at the buyers risk whether or not delivery is effected. This assertion makes it possible for the risk to be separated from the property by an agreement.

Q Are there any qualifications to this rule?

Please read the case of
Sterns Ltd v Vickers Ltd [1923] 1 KB 78

 

To fully understand how property and risk in goods are transferred from the seller to the buyer, you should read all the underlisted cases:

Varley v Whipp [1900] 1 QB 513

Kursell v Timber Operators Ltd [1927] 1 KB 298

Healey v Howlett & Sons [1917] 1 KB 337

Sterns Ltd v Vickers Ltd [1923] 1 KB 78

Kirkham v Attenborough [1897] 1 QB 201

Nanka-Bruce v Commonwealth [1926] AC 77

Tarling v Baxter (1827) 6 B & C 360

Aluminium Industrie BV v Romalpa Ltd [1976] 2 All E.R 552

 

Readings:

Goode; pp 214-273

Statutes; Sections 17-19 UK;
Sections 18-27 Fiji Islands Sale of Goods Act;
Sections 17-26 Samoa Sale of Goods Act

 

Review questions

* How would you distinguish the good from property in the good?

* What is the significance of risk in relationship to passing of property?

* Is appropriation the same as ascertainment, why?

 

Click here for Study Tips and Exercises for Topic 2

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