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Flashcards in Head 11: Transfer of Corporeal Moveables Deck (28):
1

Is there a requirement of writing for the transfer of corporeal moveables?

No requirement of writing.

The structure of the law is much simpler too because there are only a limited number [There are no servitudes, no real burdens, no leases.] of subordinate real rights which can affect moveable property.

2

What is the first question one must about about the transfer of corporeal moveables? Why?

'What is the reason for the transfer?'

If it is:
⁃ Contract of Sale = SOGA 1979
⁃ Not sale (e.g. Barter, donation, exchange) = common law rules

3

What are the two requirements to transfer property by donation or exchange at common law?

Two main non sale transfers: donation and exchange.

In order to transfer at common law, the two requirements are:
⁃ 1) Delivery (traditio) (no delivery, no transfer)
⁃ 2) Mutual intention

[The reason intention is required is that people often transfer things without intending to transfer ownership. So for example, A might lend a book to B - delivery has happened but if there is no intention to transfer ownership then ownership is not transferred.]

4

What is the form of delivery required for a donation or exchange?

The form delivery must take depends on who is in possession of the goods:

⁃ 1) If transferor A is in natural possession he must hand over the goods to transferee B (or his agent). [actual delivery [Known as actual delivery because the goods physically move.]].

⁃ 2) If A is in civil possession[ The classic example here is goods being stored in a warehouse for A. If A wants to transfer ownership to B, A must contact the warehouse to tell them that they are now to hold the property for B. In this example the property does not physically move.

Alternatively A tells the detonator to actually delivery the property to B.] either the detentor makes actual delivery to B or [constructive delivery] he is instructed by A to hold for the benefit of B.

⁃ 3) If the goods are in transit by ship, A hands over to B the bill of lading. [symbolical delivery].

5

How is a sale of goods regulated?

Sale is regulated by the SOGA 1979.

6

What are 'goods' in Scots Law?

"Goods" in Scotland are ""all corporeal moveables except money[ Money is transferred under the common law (by delivery)]; and in particular 'goods' include emblements, industrial growing crops and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale and includes an undivided share in goods" (s 61(1)).

[Classic example is trees - trees when growing in land are actually heritable property (they are regarded as part of the land). However the sale of goods act applies to trees being sold because under the contract they will be severed before or under the contract of sale.It would also apply to the sale of a building if the building was to be dismantled and re-erected somewhere else (e.g. monster moves)]

7

What is the difference between existing and future goods?

“Existing goods” are those that the seller already has, while “future” goods are those “to be manufactured or acquired by him after the making of the contract of sale”.

8

What are specific goods?

"Specific goods" = goods ascertained and agreed upon at the time the contract is made — e.g. They are identifiable at the time of the contract — including an individual share, specified as a fraction or percentage, of goods identified and agreed on (s 61(1))

9

What are unascertained goods?

"Unascertained goods [Often in commercial contracts the goods are not specifically identified - you are rather buying quantities (e.g. 500 nails).

NB unascertained goods may later be ascertained, but goods unascertained at the time the contract is made can never be specific goods.]" = goods not identified and agreed upon at the time the contract is made (no statutory definition) (e.g. Sale for 1,000 tonnes of wheat, the seller may have 3,000 tonnes and no particular grains can be identified as being those sold.) Unascertained goods, on becoming identifiable are called “ascertained”.

Note: unascertained goods may later be ascertained, but goods unascertained at the time the contract is made can never be specific goods and ownership cannot pass — this is the specificity principle.

10

Is corporeal moveable property required to be registered?

Corporeal moveable property is unregistered.

There are three areas of qualification: motor vehicles (DVLA), ships (Ship Register) and aircrafts (only the mortgage over an aircraft has to be registered).

These registers are nothing to do with property rights - they are simply administrative registers. Registration is irrelevant for ownership

11

What is the basic rule of transfer of goods?

The basic rule of transfer is given by SOGA, s. 17: assuming the goods are ascertained or specific, “the property in them is transferred to the buyer at such time as the parties…intend it to be transferred”. No external act as such (delivery) is needed. So parties are free to say that ownership passes at delivery, before delivery or after delivery.

12

What is specificity principle?

The general rule is that ownership of goods cannot be transferred until the goods are ascertained[ So where it is a contract for the sale of unascertained goods, there cannot be any transfer until the goods have been ascertained.] - s 16. This is the specificity principle.

13

When are ascertained goods transferred?

Specific or ascertained goods are transferred at such time as the parties intend[ SOGA does not require delivery, merely intention, but there must be a contract of sale.]: s 17. In other words, only mutual intention is required (no delivery). The parties can make whatever arrangement they want, including retention of title until payment of the price or any sums owed under other contracts.

14

Which section of the 1979 Act applies where the intention to transfer goods cannot be ascertained?

In written contracts, it is usual to have a provision saying when ownership is to pass. But in oral contracts it is usual for there to be nothing. Accordingly there is an additional section (s 18) which applies where the intention cannot otherwise be ascertained. This sets out 6 rules.

15

What are the 6 rules set out in s 18?

Rule 1: where there is an unconditional contract for the sale of specific goods in a deliverable state, ownership passes when the contract is made and it is immaterial whether the time of payment or the time of delivery, or both, be postponed.
[This rule is most often applied in practice. It creates a risk for the seller: ownership passes immediately the parties then shake hands on the deal, without payment. Where the buyer becomes insolvent, s. 41 says that the seller, on losing the real right of ownership, acquires a subordinate real right, called the seller’s lien - but this lien is lost as and when the goods are delivered. Hence sellers who wish to be protected even after delivery will opt for retention of title].

Rules 2 and 3 : where, in relation to specific goods, seller has (a) to put the goods in a deliverable state, or (b) to weigh, measure or carry out some other act with respect to the goods in order to fix the price, ownership does not pass until that is done and the buyer informed.

Rule 4: relates to goods delivered to the buyer on approval or on sale or return.

Rule 5[ Essentially the opposite of rule 1.]: 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, then ownership passes to the buyer, and the assent may be expressed or implied and may be given either before or after the appropriation is made. The most common example of unconditional appropriation is delivery of the goods: rule 5(2).

Rule 6: SOGA s19 - “if the contract contains a reservation of a right of disposal, unless certain conditions are satisfied, then the parties are presumed to intend ownership not to pass until those conditions have been satisfied.

16

Does the publicity principle apply to the transfer of corporeal moveables?

There is no requirement of publicity - this is in breach of the publicity principle.

17

What is the clause of retention of title? When does it apply and who does it protect?

SOGA 1979, s 17 says that ownership passes when the parties intend it to pass. A sale contract can say that it passes when the buyer pays. In practice most written contracts for the sale of goods have such a provision — a clause of retention of title, or reservation of title. If the buyer fails to pay, the seller can rescind the contract on the ground of material breach and then demand redelivery of the goods on the basis that the seller is still the owner. A clause of retention of title can validly say that ownership is not to pass unless all sums owed by the buyer to the seller have been paid.

Where a pre-paying buyer runs the risk of the seller’s insolvency and this occurs, the buyer is now protected from the seller’s insolvency under SOGA 1979, ss 20A and 20B. These provisions provide that the pre-paying buyer would take a pro indiviso share of the bulk (a sort of co-ownership). This applies only to quasi-specific goods (e.g. 200 tonnes out of 1000 tonnes of wheat).

However, this protection becomes difficult when accession or specification occurs. In all such cases the seller’s retained ownership will be defeated.

18

Does the nemo plus rule apply to transfer of corporeal moveables?

Yes - Unlike registered land [Due to s 86.], the nemo plus rule usually applies. Indeed it is re-enacted by Sale of Goods Act 1979 s 21(1). So if Alan borrows Tom's book and sells it to Betty, who buys in good faith, the owner is Tom and not Betty. Even so, there are some very limited [In exams they examiner will often try to persuade students that these exceptions do apply but in reality they hardly ever do apply.] exceptions to nemo plus:

19

When does personal bar apply and what does it transfer?

(a) Personal bar [kr - virtually never applies]
⁃ Operates (1) where owner (Tom) allows another (Alan) to appear as owner (or as agent with a power of sale) and (2) a third party (Betty) purchases from that person in reliance on his apparent ownership/power. See SOGA 1979 s 21(1).
⁃ Transfers Tom's title for what that is worth. So derivative and not original acquisition. [ The reason it is personal bar is because Tom is barred from arguing that he did not transfer ownership.]

20

Does statute ever allow a non-owning possessor to transfer title? When does this apply?

Yes - but note these are NOT general good faith protection provisions - they are highly specific.

(i) Buyer in possession: SOGA 1979 s 25:
⁃ Where the seller (Alan) is in the process of buying the goods from the owner (Tom), and has possession but not ownership, he can pass Tom's title[ NB it is Tom's title which Betty receives - so the law simply misses out Alan. (so it is in effect a direct transfer from Tom to Betty, even though the sale is between Alan and Betty).] to a bona fide[ So Betty must be in good faith.] third party (Betty).
⁃ National Employers Mutual General Insurance Association Ltd v Jones [1990] - in this case the 'Tom' in the scenario was not actually owner, which meant that the Betty did not become owner either.
⁃ Defeats retention of title clauses.

(ii) Seller in possession: SOGA 1979 s 24:
⁃ Where the seller (Alan) has sold the goods to the someone else (Tom) and has retained possession but not ownership[ So ownership has passed but the goods haven't been delivered yet.], he can pass a good title to a bona fide third party (Betty[ Betty will receive Alan's title - even though formally speaking, Alan is no longer the owner.]).

(iii) Cars subject to hire purchase agreements.
⁃ Where the person selling is in the process of buying the car by hire-purchase a private purchaser in good faith can receive a valid title in terms of the Hire Purchase Act 1964 Part III.

21

When is money transferred?

⁃ The SOGA does not apply to money. Money is transferred by delivery.
⁃ There is an unqualified good faith acquisition rule with money.

[ So if someone pays you money and the money was not actually theirs then the money nonetheless becomes yours if you were in good faith.]

A good faith acquirer becomes owner of coin and bank notes. See Craufurd v Royal Bank (1749) Mor 875.

22

Does accretion apply to corporeal moveables?

Yes probably

23

Does positive prescription apply to corporeal movables?

Probably does not apply to corporeal moveables. But ownership of corporeal moveables is lost after 20 years by negative prescription except in a question with a thief or someone privy to the theft. See Prescription and Limitation (Scotland) Act 1973 s 8 and sch 3 para (g).

24

What happens when title to goods are voidable? Does transfer still occur?

A voidable title is good unless or until it is avoided (by an action for re-delivery). Voidable titles to corporeal moveables are rare, avoidance rarer still.

⁃ One example is the MacLeod v Kerr case where ownership was acquired by fraud, then the fraudulent acquirer sold the car to an innocent third party.

If Alan's title is voidable (eg at the instance of Tom) he can still transfer ownership to Betty. And as with other types of property (for land see Head 6), if Betty is

(i) a purchaser
(ii) in good faith, then she receives an unchallengeable title: see SOGA 1979 s 23 (re-enacting the common law), and Macleod v Kerr 1965 SC 253.

If these conditions are not met, Betty's title is voidable too and can be set aside by Tom.

25

Are transfers of corporeal movables subject to the offside goals rule?

Like other types of property, corporeal moveables are subject to the 'first in time, first in right rule' and to the offside goals rule [The offside goals rule applies in principle, but there has never been a case.].

26

Risk is the chance of injury to or destruction of the subject of a sale without fault on the part of any responsible person. Whether the seller or buyer has the risk depends on when the risk passes. When could it pass?

For moveable property[ For land the default rule is that risk passes with the contract.] SOGA 1979 s 20:
⁃ Where the buyer is a consumer, risk passes with delivery
⁃ Where the buyer is NOT a consumer, risk passes with ownership.

For corporeal moveables risk passes with delivery where the buyer is a consumer, but otherwise with ownership: SOGA 1979 s 20. But parties may make their own rule by contract.

27

When does warrandice occur in a transfer of corporeal moveables?

Unlike the position for land, there is only one juridical act (the contract of sale) and not two. So warrandice occurs only once. SOGA 1979 implies the following warranties into the contract:
⁃ S 12: guarantee (1) of valid title, (2) of unencumbered title
⁃ S 14: guarantee of satisfactory quality for sales in the courts of a business

28

What are the remedies for breach of warrandice?

Remedies are rescission + damages (for material breach) or damages alone (typically for diminution in value) - s 53A.