The Sale of Goods Act, 1930 is a piece of legislation that governs the sale of goods in India. One of the most important aspects of the Act is the transfer of property from the seller to the buyer. The transfer of property is an essential element of a sale, and it is necessary to determine when the property passes from the seller to the buyer.
Section 18 of the Act states that the property in the goods is transferred to the buyer at such time as the parties to the contract intend it to be transferred. The intention of the parties is determined by the terms of the contract, the conduct of the parties, and the circumstances of the case.
The transfer of property in a contract of sale is dependent on two factors: (i) the intention of the parties, and (ii) the delivery of goods. The intention of the parties is determined by the terms of the contract, the conduct of the parties, and the circumstances of the case. Delivery of goods means putting the buyer, or his agent or carrier, in possession of the goods.
There are two types of goods: specific goods and unascertained goods. Specific goods are goods that are identified and agreed upon at the time the contract is made. Unascertained goods are goods that are not identified or agreed upon at the time the contract is made.
Transfer of Property in Specific Goods
In a contract for the sale of specific or ascertained goods, the property in the goods passes to the buyer when the parties intend it to pass. The parties may intend for the property to pass immediately or at a later time. The general rule is that the property in the goods passes to the buyer when the contract is made, and the goods are in a deliverable state.
A contract for the sale of specific goods may provide for the property in the goods to pass at a future time. For example, a contract may provide for the property in the goods to pass on payment of the purchase price. In such a case, the property in the goods will not pass until the condition is fulfilled.
If the seller is required to do something to put the goods in a deliverable state, such as packaging or labelling, the property in the goods will not pass until the seller has done so. If the goods are in a deliverable state but the seller is required to do something to ascertain the price, such as weighing or measuring the goods, the property in the goods will not pass until the seller has done so.
Transfer of Property in Unascertained Goods
In a contract for the sale of unascertained goods, the property in the goods does not pass to the buyer until the goods are ascertained. The goods are ascertained when they are identified and set aside from the rest of the seller’s stock. The property in the goods will pass to the buyer when they are ascertained, even if the goods have not been delivered.
The seller may be required to do something to ascertain the goods, such as manufacture or selection. If the seller is required to do something to ascertain the goods, the property in the goods will not pass until the seller has done so.
Risk of Loss
The risk of loss in a contract for the sale of goods is an important consideration. The risk of loss refers to the risk that the goods will be damaged or destroyed before they are delivered to the buyer. The risk of loss may pass to the buyer at a different time than the property in the goods.
If the property in the goods has passed to the buyer, the risk of loss will also pass to the buyer. If the property in the goods has not passed to the buyer, the risk of loss will remain with the seller.
The Sale of Goods Act, 1930 lays down the rules for the sale of goods in India. One of the key provisions of the Act pertains to the risk of loss of goods. According to the Act, the risk of loss of goods passes from the seller to the buyer at a particular point in time, depending on the terms of the contract of sale.
The general rule regarding the risk of loss is that it passes from the seller to the buyer when the goods are delivered to the carrier for the purpose of transmission to the buyer. This is known as the “shipment contract” or “FOB (Free on Board) contract” rule. In such a contract, the seller is responsible for loading the goods onto the carrier and the buyer bears the risk of loss from the time the goods are delivered to the carrier.
However, if the contract provides for delivery of the goods at a specific place, rather than delivery to a carrier, the risk of loss passes to the buyer at the time of delivery. This is known as the “destination contract” rule. In such a contract, the seller is responsible for delivering the goods to the buyer at the specified location, and the risk of loss passes to the buyer upon delivery.
There are also other factors that can affect the transfer of risk of loss. For example, if the goods are sold “on approval” or “on sale or return”, the risk of loss remains with the seller until the buyer accepts the goods. Similarly, if the seller is in breach of contract, the risk of loss may remain with the seller until the buyer has had a reasonable opportunity to inspect the goods and accept or reject them.
In addition to these rules, the parties to a contract of sale can also agree to specific terms regarding the transfer of risk of loss. For example, they may agree that the risk of loss will pass at a specific point in time, regardless of whether the goods have been delivered to a carrier or to the buyer.
It is important for both buyers and sellers to understand the rules regarding the transfer of risk of loss in order to avoid disputes and ensure that they are properly protected in the event of loss or damage to the goods.