Discuss in detail the provisions relating to transfer of property in the goods under the Sale of Goods Act, 1930.

Question: Discuss in detail the provisions relating to transfer of property in the goods under the Sale of Goods Act, 1930. [JJS 2018]

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Answer

In India, sale of goods is governed by the statute of The Sale of Goods Act, 1930. This legislation lays down the rights and duties of both the buyer and seller and also outlines the rules for the transfer of ownership of goods from the buyer to the seller. The determination of the transfer of property in goods is equally important to ascertain when the ownership of the goods is transferred/passed from the seller to the purchaser.

Certain key provisions that discuss the transfer of property (ownership) in goods are as:

1. Passing of Property in Goods

a. Section 18: Specific and Unascertained Goods: The transfer of property in goods is only possible when the goods to be transferred are ascertained or in the form to be transferred as and when the sale occurs between the parties.

b. Section 19: Property Passes When Intended to Pass: It is trite law that the ownership of the goods passes to the purchaser when the parties intend it to pass. The intention of the parties can be ascertained from the terms of the agreement, the conduct of the parties, and the facts and circumstances of each case.

2. Rules for Ascertaining the Intention of the Parties

a. Section 20: Specific Goods in a Deliverable State: When the goods are already in a deliverable state and parties have entered into an unconditional contract for the sale of goods (specific), the property in the goods passed to the buyer as soon as the contract is entered into.

b. Section 21: Specific Goods Not in a Deliverable State: If the parties have entered into a contract for the sale of specific goods and the seller is required to do something to put the goods into a deliverable state, the property in the goods does not pass until that thing is done by the seller and the buyer is provided with the notice thereof.

c. Section 22: Specific Goods in a Deliverable State: When the seller is required to do anything Thereto: When there is a contract for the sale of specific goods in a deliverable state, but the seller is bound to weigh, measure, or test, or do some other act concerning the goods for ascertaining the price, the property does not pass until such act or thing is done and the buyer has been given notice thereof.

d. Section 23: Sale of Unascertained Goods and Appropriation: 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, either by the seller with the assent of the buyer or by the buyer with the assent of the seller, the property in the goods thereupon passes to the buyer.

3. Goods Sent on Approval or “Sale or Return”

a. Section 24: Goods Sent on Approval or "Sale or Return": This section outlines three scenarios when goods are delivered to the buyer on approval or sale or return or other similar terms, as to when the property passes to the buyer:-

• When he signifies his approval or acceptance to the seller or does any other act adopting the transaction.
• 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.

4. Transfer of Risk

a. Section 26: Risk Prima Facie Passes with Property: Unless otherwise agreed, the goods remain at the seller's risk until the property therein is transferred to the buyer, but when the property therein is transferred to the buyer, the goods are at the buyer's risk whether delivery has been made or not.