Sales of Goods Act- Transfer of ownership in Specific Goods

Introduction

We have discussed definition of goods, types of goods in this article. To understand when exactly ownership is transferred from one person to another, it is first necessary to understand definition of goods and it's classification.

Specific goods are such goods which are identified at the time of contract of sale. We will discuss here when the ownership passes from seller to buyer in these goods. Section 19, 20, 21,22 and 24 of the act deal with transfer of ownership.

Why we even need to know about passing of ownership ?

There are tons of reason. Suppose Mr Mallya and Mr Choksi enter into contract of sale of truck of beer. Let's assume Mr Mallya is seller and Mr Choksi is buyer. What if ???

Beer got destroyed after contract, who will bear the loss ?

If anyone of them become insolvent, whos assignee will get the money ? Or may be get a beer to drink ?

In above scenarios it become important to understand who was the owner of the property.

Provisions related to transfer in specific goods.

Intention of parties (Section 19)

To figure out who is the owner at particular point of time, we need to go into intention of parties as per the contract. This is provided in section 19 of the act. Also it will be determined from the act of parties. Take for example A sells some goods to B. B, the buyer , buy insurance of such good after contract of sale. B buys the insurance because he feels that he is owner. In such case the ownership will passes to B.

Property in deliverable state (Section 20)

You go to buy a phone. Phone is in working condition. It means phone is deliverable state. If you go to buy a sofa, which needs to be polished, it is not in deliverable state, it will turn into deliverable state when seller polishes it. 

Section 20 deals with property or goods in deliverable state. Below are few essentials for section 20

• Goods must be specific goods
• Subject matter goods are in deliverable state
• Contract is unconditional, meaning there is no if's and but's about goods or their delivery in contract

If all of the above things are present in contract, goods passes to buyer as soon as contract is executed, even though delivery as well as payment  is postponed.

Specific goods not in deliverable state (section 21)

You want to buy timber for sofa. You have identified the tree from which you want a timber. But tree is not yet felled and cut. Essentially, the goods which you want to buy is not in deliverable state. Section 21 provides that ownership of such goods will remain with seller till such goods are not put in deliverable state. In such case seller is bound to do something to the goods to put them in deliverable state. In above example, if there if fire and tree gets burned, seller will bear the loss because he was owner a he hadn't put the tree in deliverable state.

Here another important thing is notice that the goods have been put in deliverable state must be given to buyer. So if seller in above case cut the tree, but didn't inform the buyer and it catch fire, seller would still be liable to bear the loss.

When some actions are pending on seller's side. (Section 22)

Section 22 states that if some actions are pending from sellers side, seller will be owner of such goods till he completes those tasks and inform the buyer.

Take for example, Patanjali Food Park orders wheat, stating that price will be determined based on quality of wheat, content of protein and fibre etc. Seller in this case have to test wheat in some laboratory to determine it's quality, content of what is mentioned under contract. Till seller completes this action and inform Patanjali about it, ownership will remain with seller.

Section 22 states when seller is bound to measure, test or do some other act or thing with reference tot the goods for the purpose of ascertaining the price of property ownership will remain with him.

Goods on approval, sale or return (Section 24)

What if Amazon gives you a I-phone for use for 8 days, and say if you like the phone, then pay the money or else return it. Meaning contract will be executed on your approval. How will be the ownership will be determined in this case.

There are few scenarios in which you become a owner. (Or a buyer will become a owner_

• You tell Amazon that you like the phone and want to buy it withing 8 days, then after such approval you will become owner. Meaning you reply with assent.
• You don't tell anything to Amazon for like a month and don't return it within reasonable time, in this case also you will become an owner. 
• You do some act, by which it can be inferred that you wanted to own that phone. For example, you go to your friends and boast about your I-phone, take a selfie with them, and then post it on a facebook "mah phone, mah friens". In this case too you will become an owner.

Above are some provision which deals with transfer of ownership as to specific goods. In next article we will discuss the transfer of ownership in un-ascertain goods.

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