transfer of property

Transfer of Property (Commercial Law)

Transfer of Property

It is important in all contract of sale to know the nature of goods that from the subject matter of sale. This will enable us to determine the point in time that the property in the goods lie at any point in time is important because the liability of the seller or buyer will depend largely bon whether or not the property has passed at the time of the loss. Section 16-20 deals with the transfer of property in the goods to the buyer under a contract of sale.

The rules governing the passing of property depends primarily on whether the good are specific or unascertained. The basic rules can be considered under those two headings:

I. UNASCERTAINED GOODS

By S.16 where there is a contract for sale of unascertained goods, no property in the goods is transferred to the buyer unless and until the goods are ascertained. Thus, the property will not pass until the goods have been earmarked or appropriated to the contract with the consent of both parties. In laurie & morewood V John Dudin & sons, a contract for the sale of some maize from the defendant’s warehouse was held not to be the sale of unascertained goods.
The question that would arise is what is ascertained goods?
Section 18 rules 5 (1) puts it thus: subject to contrary intention of a sale of unascertained or future goods by description, where goods of that description in a deliverable in a deliverable state are unconditionally appropriated to the contract.

II. SPECIFIC GOODS

The second basic rule concerns specific or unascertained goods and is contained in S.17 which provides as follows

  1. Where there is a contract for the sale of specific or ascertained goods, the property in them is transferred to the buyer.
  2. For the purpose of the intention of the parties, regards shall be had to the terms of the contract. The conduct of the parties and the circumstances of the case.

    The key word in this section is “intention”. The intention of the parties as to when the property shall pass can be easily determined when there is a term in the contract stating when this should happen.

THE SPECIAL RULE

From the opening word of section 18, it is clear that these rules will only apply when no different intention is shown by the parties. It says that unless a different intention appears the following are the rules for ascertaining the intention of the parties.

5 rules follow these opening words. The first four rules deal with specific rules, while the fifth deals with unascertained goods.

i. RULE 1: Specific goods in a deliverable state: where there is an unconditional contract for the sale of specific goods in deliverable state, the property in the goods passes to the buyer when the contract is made, and it is immaterial whether the time of payment be postponed. The essential element are that
a. Contract must be unconditional
b. Goods must be specific, that is not unascertained or future goods as seen in kursell v. timber.
c. Goods must be in a deliverable state.

ii. RULE 2: specific goods must be put in a deliverable state: where there is a sale of specific goods and the seller is bound to do something to the goods for the purpose of putting them in a deliverable state, the property does not pass until such things be done and the buyer has notice thereof. It is therefore essential that the buyer is notified once the goods have been put in a deliverable state.

iii. RULE 3: specific goods to be weighed measured and tested: where there is contract for the sale of specific goods in a deliverable state, but the seller is bound to weigh, measure, test or do some other act or thing with reference to the goods for the purpose of ascertaining the price. The property does not pass until such act or thing be done and the buyer has notice thereof. This rule is only applicable where the seller is to do something. This was illustrated in boro v. kenedy

iv. RULE 4: approval, sale or return: when goods are delivered to a buyer on approval or on sale or returns or other similar terms the property therein passes to the buyer.
a. When he signifies his approval or acceptance to the seller
b. If he fails to signify his acceptance or approval but retains the goods without giving notice of rejection

Where the buyer does not intend to buy the goods, he must not retain them beyond a reasonable time. In poole v. smith car sale (balham) ltd. It was held that a car had been retained beyond a reasonable time & therefore t3e buyer were liable to pay. The buyer has been responsible for retaining the goods beyond a reasonable time as seen in re ferrie case

v. RULE 5: unconditional appropriation: this deal with unascertained goods and provide that
a. Where there is a contract for the sale of unascertained or future goods… and the goods in a deliverable state are unconditionally appropriated to the contract, the property thereon passes to the buyer.
b. Where in pursuance of the contract, the seller delivers the goods to the buyer or to a carrier, he is deemed to have unconditionally appropriated the goods to the contract.

This rule must be read along with s.16 which says that property in unascertained goods will not pass until they have been ascertained. RULE 5(1) says that when there is a sale of unascertained goods in a deliverable state, property will not only pass when the goods have been unconditionally appropriated to the contract.

To constitute an appropriation of the goods to the contract, the parties must have attached the contract irrevocably to those goods. Assent to appropriation may come before and after the appropriation and may be express or implied.


Contributed by: Abdulganiyu Ismail (AKA) Mastermind
Prepared and Written by: Ucheakonam Chijioke Joshua (CJ)

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