TRANSFER OF Property and Risk Flashcards
What happens when the buyer has paid the price in regards to Transfer of property and passing risk?
Unless agreed otherwise, buyer is entitled to take delivery of goods as soon as paid the price, w/n property has even passed to him. So buyer can be in possession of goods even if he isn’t the owner.
So difference b/w transfer of ownership in goods and possession of ownership is important to remember.
Why is it important to know when the property in goods passes?
Payment - Unless otherwise agreed, seller may only sue buyer for the price once property in goods has passed s.49 SGA.
Insolvency- If either seller/ buyer = insolvent, rights of the other innocent party may depend on w/n property in goods has transferred to buyer.
Subsequent transfer of ownership- Unless buyer has acquired ownership in goods, he cannot transfer ownership to another party.
Risk- s.20 SGA, unless parties have agreed otherwise, risk = borne by owner of goods. Risk= of theft, loss, damage to goods but NOT risk of non-payment. Different rules apply depending on w/n the buyer is a consumer.
How is transfer of property in specific goods explained?
- apply s.17 SGA to explain that property in specific/ascertained goods transfers to buyer when parties in contract intend it to pass.
- s17(2) SGA - For purpose of ascertaining intention of parties regard shall be had to terms of the contract, conduct of parties and circumstances of case.
What happens in regards to transfer of property in specific goods when the parties fail to make their intentions clear?
- s18 SGA applies + has 4 rules to examine.
1) for when unconditional contract for sale of specific goods in deliverable state = PinG passes to B when contract made irrespective of w/ time of payment, delivery/ both are postponed.
2) for where contract for sale of specific goods exists + S is bound to do something to goods for purpose of putting them in a deliverable state= PinG passes when thing is done and B noticed it is done.
3) For where goods are delivered to buyer on approval/on sale/on return/ other similar items=PinG passes when a) B signifies approval/acceptance to S/does any other act adopting transaction. b) if B doesn’t signify approval/acceptance to S but retains goods w/o giving notice of rejection then if time has been fixed for return of goods, on expiration of that time , and if no time has been fixed, on the expiration date of a reasonable time.
What does s16 of SGA provide?
That in case of contract of sale of goods where the goods are unascertained, no transfer/ agreement to transfer property in goods to buyer can exist until goods become ascertained. This is the case EVEN if parties agree otherwise.
What’s the exception to s16 SGA?
-s20 SGA regarding undivided shares in goods forming part of a bulk.
Where was it simply stated by the Court of Appeal that when goods will become ascertained?
-Re Wait (1927)
Goods will become ascertained when its identified as THE goods to be used in performance of the contract.
What are the statutory sections to apply regarding unascertained goods and property passing?
- s16 SGA to explain property can never transfer till goods = ascertained
- s17(1) SGA to explain once goods = ascertained, property will pass to buyer when parties in contract intend it to pass
- if goods= ascertained but no time for intended ownership to pass can be determined from the parties, s18 Rule 5 comes into play.
What does s18 rule 5 deal with?
-transfer of property in unascertained/ future goods by description
What does s18 rule 5 state?
Property passes in goods to buyer when goods that match contract description + in deliverable state are unconditionally appropriated to contract. Can be done by either seller/ buyer but must be with assent of other that can be express/ implied + may be given before/ after appropriation is made.
What case defines unconditional appropriation?
-Carlos v Charles (1957) - irrevocably earmarking those goods as the ones to satisfy contract. So seller cannot supply substitute goods in purported performance of contract.
What is appropriation by delivery to carrier?
Rule 5(2) - appropriation by delivery to the buyer or carrier:
-property in goods passes to B when S delivers goods to B or carrier for purpose of transmission to B, and does not reserve right of disposal, he is to be taken as unconditionally appropriating goods to the contract.
Goods must be ascertained
Healy v Howlett & Sons
What is the exception of Rule 5(2) regarding appropriation by delivery to buyer or carrier?
-This rule doesn’t apply in cases where seller has reserved right of disposal, meaning S has reserved title in the goods. Instead Retention of Title deals with this as this comes under reservation of title.
What rules and what case apply for ascertainment and appropriation by exhaustion?
Rule 5(3) and (4) – Karlshamns Oljefabriker (The Elafi)
Where do the rules for ascertainment and appropriation by exhaustion apply?
To cases where B agrees to buy goods out of a specified bulk.
