Transfer time for the sale of goods involves the transfer of ownership of the property from the seller to the buyer.
For the following reasons, it is necessary to determine the exact time at which ownership of the goods passes from the seller to the buyer:
- Risk passes through the property. The rule is, prima facie risk passes with the property. Where the goods are lost, damaged, accidentally or otherwise, the owner of the goods shall incur the loss, subject to certain exceptions at the time of loss or damage of the goods.
- Any action taken in connection with third parties. If a third party damages the goods, it is the owner who can take action.
- What are the implications of insolvency? In the case of either the buyer or insolvency of the seller, it is necessary to know if the official customer will take control of the goods. The answer depends on whether ownership of the goods is with the insolvent party.
- Price suit. The seller’s price suit will not lie unless the property has passed on to the buyer unless the contract provides for other reasons.
Sections 18 to 25 of the Goods Sale Act set out the rules that determine when ownership of the property passes from the seller to the buyer. These rules can be summarized as follows:
- Transfer of property in unspecified goods
- Transfer of ownership in ascertained goods
- Transfer of property in ascertained goods
- Transfer of property in the sale by approval
- Transfer of property when the right of disposal is reserved
A Latin maxim says: ‘Nemo dat quod non habet’ which means that no one can give what he doesn’t have. This is the ground principle regarding the transfer of title. Sections 27 to 30 of the Sale of Goods Act, 1930 specify these laws about the transfer of title.
Transfer of Title
Section 27 deals with the sale by a person who is not the owner. Imagine a sale contract where the seller –
- Is not the owner of the goods
- Does not have consent from the owner to sell the goods
- Has not been given authority by the owner to sell the goods on his behalf
In such cases, the buyer acquires no better title to these goods than the seller had, provided the conduct of the owner precludes the seller’s authority to sell.
Exceptions to Section 27
In the following scenarios a non-owner of goods can transfer a better title to the buyer:
1] Sale by a Mercantile agent (Proviso to Section 27)
2] Sale by one of the Joint Owners (Section 28)
3] Sale by a Person in Possession of Goods under a Voidable Contract (Section 29)
4] Sale by a Person who has already sold the Goods but Continues to have Possession [Section 30 (1)]
5] Sale by Buyer obtaining possession before the Property in the Goods has Vested in him [Section 30 (2)]
7] Sale by an Unpaid Seller [Section 54 (3)]
8] Sale under the Provisions of other Acts
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