Transfer of goods ownership

Transfer of goods ownership

Meaning of Transfer of Ownership


In the agreements for the sale of goods, the main thing is the transfer of ownership of goods. When the buyer becomes the over of the goods, only then is the transfer of the ownership of goods considered to have been estab-lished.

Significance of Transfer of Ownership

In the contracts for sale of goods, the transfer of ownership is considered to be very significant due to the following causes :

(1) Transfer of Risk Along With the Ownership-The person who holds ownership on the good, also bears the risk, as connected with those goods. Hence, it is very essential to know as to when does the ownership of goods pass from the seller to the buyer.

(2) Right to File Suit Against Third Parties- If some of the third parties have caused loss or have created dam-age in the sale of goods, the owner of the goods without ownership, cannot file any suit upon them.

(3) Acquiring of Goods by the Liquidator-If the buyer or the seller becomes insolvent, the official receiver could obtain the goods from only such person who possesses its

Rules for Transfer of Ownership

Ordinarily, the transfer of ownership from the seller to the buyer becomes effective at the time when both of them settle the transaction. If both of the parties don’t fix up any particular time, the ownership is deemed to have been transferred when they desired or intended the transfer.

From the point of view of transfer of ownership of goods, the same may be divided into the following

(1) Transfer of Ownership in Case of Definite or Ascertained Goods- The transfer of ownership in definite or ascertained goods is effected when both the parties to the agreement for sale of goods intend to transfer the same. The intention is established on the basis of the following rules:

(i) When Goods is in a Deliverable State-When the goods is in a condition fit for being delivered and the contract is unconditional, the ownership from the seller is transferred to the buyer when the contract is made. Here, it is insignificant whether the time of the payment of the price of goods or the hour of its delivery, both have been postponed. It is necessary that the contract should be unconditional and the goods must be capable of being delivered and specific.

(ii) When the Goods has to be Brought in a Deliverable State- When the seller has to do something to bring the goods into a deliverable state, the ownership is not transfened till it is considered to be deliverable.

(iii) When for Ascertaining the Price of Goods- Its Weight or Measurement has to be Undertaken. If some specific goods is in a deliverable state, but for determining its price the seller is required to weigh, measure, test or do any other act, the ownership shall not be deemed to have been transferred unless such act is-performed and its information is sent to the buyer.

(2) Transfer of Ownership in Case of Unascertained Goods- The transfer of ownership of general or unascertained
goods shall not be treated to have been made unless the goods have been made as definite, ascertained and appropriated.

Appropriation means separating the goods sold from other goods so as to determine and identify the actual goods to be delivered. Appropriation should be unconditional and can be done either:

(1)By the seller with the buyer’s consent, or

(2)By the buyer-with the seller’s consent.

Appropriation of goods can be done in any of the following ways:

(i) By separating the quantity contracted from the other goods;

(il) By putting the quantity contracted for in suitable receptacles, and

(iii) By delivery to the common carrier or other sort of bailee for the purpose of transmission to the buyer without reserving the right of disposal.

EX-Rameh is a furniture dealer. There are tables in large numbers in his goodown. Rajeev contracts him for purchase of 10 tables. Since the time and goods are indefinite in the contract, hence the ownership is not transferred. If Ramesh or Rajeev separate 10 tables, immediately on sepa-ration of such tables, the ownership shall be transferred.

(3) Transfer of Ownership in Case of Goods Sent on the Approval-or-Return Basis- In case of the goods being sent on the approval-or-return basis, the following are the rules regarding the transfer of ownership:

(i) When the buyer intimates the seller regarding the purchase of the goods, then from the very time of intimation, the ownership of goods from seller to the buyer shall become effective.

(ii) When the buyer detains the goods with himself for the period in excess of the agreed period, without approval or information in this regard for more than the reasonable time, then on the expiry of such agreed or reasonable time, the ownership of goods shall be transferred to the buyer from the seller.

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