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Sales and Good Act 1930: Transfer of Ownership

Transfer of property in goods

Meaning  of Passing of Property/Transfer of Property

Passing of property implies transfer of ownership and not the physical possession of goods.For example,where a principal sends goods to his agent,he merely transfers the physical possession and not the ownership of goods.Here,the principal is the owner of the goods but is not having possession of goods and the agent is having possession of goods but us not the owner.

Significance of Transfer of Property

The time of transfer of ownership of goods decides various rights and liabilities of the seller and the buyer.Thus,it becomes very important to know the exact time of transfer of ownership of goods from seller to buyer to answer the following questions:

  1. Who shall bear the risk?

       It is the owner who has to bear the risk and not the person who merely has the possession.

  1. Who can take action against third party?

It is the owner who can take action and not the person who merely has the possession.

  1. Whether a seller can sue for price?

The seller can sue for the price only if the ownership of goods has been transferred to the buyer.

  1. In case of insolvency of a buyer whether the official receiver or assignee can take the possession of goods from seller?

The Official Receiver or Assignee can take the possession of of goods from seller only if the ownership of goods has been transferred to the buyer.

  1. In case of insolvency of a seller whether the official receiver or assignee can take the possession of goods from buyer?

The official receiver or assignee can take the possession of goods from buyer onlu if the ownership of goods has not been transferred to the buyer.

Rules relating to Passing of Property/Transfer of Ownership from seller to buyer

For the purposes of ascertaining the time at which the ownership is transferred from seller to the buyer,the goods have been classified into the following three categories:

a) Specific or ascertained goods

Specific goods mean goods identified and agreed upon at the time when a contract of sale is made.[Section 2(14)]

b) Unascertained goods

c) Goods sent ‘on approval’ or ‘on sale on return’ basis.

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