Transfer of Property (Ownership rights) | Reason | Rules

Transfer of Property (Ownership rights) in a contract of sale

The time of passing of property in goods from the seller to the buyer is important in view of the following reasons:

Transfer of Ownership in Contract of Sale - Reason, Rules

Transfer of Ownership in Contract of Sale – Reason, Rules

1. It is only the owner who has to bear the risk of loss. In a sale, the buyer has to bear the loss in case the goods are destroyed while in the custody of the seller.

2. If the goods are destroyed by the action of a third party, it is only the owner who can take action against such a person.

3. In the event of the insolvency of the seller or the buyer, the question whether the Official Receiver can take over the goods or not depends on whether the ownership of the goods has passed from the seller to the buyer.

4. The seller can sue the buyer for the price, only if the goods have become the property of the buyer.

The rules, regarding the passing of property from the seller to the buyer, in the Sale of Goods Act are given below:

Rules regarding Transfer of Property in Sale of Goods Act

1. When there is a contract for the sale of unascertained goods, no property in the goods is transferred to the buyer unless and until the goods are ascertained.

2. When there is a contract for the sale of specific or ascertained goods, the property in such goods passes to the buyer at the time the parties intend it to pass. The terms of the contract and the circumstances of the case will indicate the intention of the parties.

3. When there is 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. The fact that the time of payment of the price or the time of delivery of goods has been postponed does not prevent the property in goods to pass to the buyer.

4. When there is a contract for the sale of specific goods not in a deliverable state, the property in the goods does not pass until the seller has made it in a deliverable state.

5. When there is a contract for the sale of specific goods in a deliverable state and the seller has to weigh or measure the goods to determine the price, the property in such goods does not pass until the price is determined.

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