Rules Regarding Transfer of Property
1. Where Goods Are Specific or Ascertained: Specific goods refer to those identified and agreed upon at the time of a sale contract, while ascertained goods become known to a certain extent after the contract. Section 19 of the Sale of Goods Act emphasizes that the transfer of property in specific or ascertained goods occurs when intended by the parties. The determination of intention involves considering the contract terms, parties’ conduct, and circumstances. The flexibility of the law allows parties to mutually decide when ownership is transferred, be it at the time of delivery, payment, or other agreed-upon points.
2. Rules for Ascertaining the Intention of the Parties: When dealing with specific goods in a deliverable state, not in a deliverable state, or requiring further action for price ascertainment, the parties’ intention determines property transfer time. Section 20 states that if specific goods are in a deliverable state and the sale is unconditional, ownership transfers when the contract is made. Sections 21 and Section 22 outline scenarios where goods are not in a deliverable state and the seller needs to act for price ascertainment. A clear understanding of these rules is crucial to avoid disputes and ensure smooth transactions.
3. Where Goods Are Unascertained, or Future Goods: For unascertained or future goods, the Sale of Goods Act highlights that ownership transfers once the goods are identified or ascertained and appropriately set apart for delivery. Ascertainment of goods, as per Section 18, involves establishing the identity of goods, and Section 23 emphasizes unconditional appropriation for the transfer of ownership. These provisions underline the importance of a clear understanding of when the goods are deemed ascertained or appropriated. Parties must fulfill the conditions of ascertainment and appropriation to transform an ‘agreement to sell’ into a ‘sale,’ ensuring legal clarity in ownership transfer.
4. Where Goods Are Sent on Approval or ‘on Sale or Return: Section 24 of the Sale of Goods Act outlines scenarios where ownership in goods delivered on approval or ‘on sale or return’ terms passes to the buyer. The buyer’s actions, such as approval, adoption of the transaction, or failure to return within a specified or reasonable time, determine ownership transfer. Recognizing these conditions is crucial for both buyers and sellers when engaging in transactions with such terms.
5. Risk Prima Facie Passes With Property: Section 26 establishes the general rule that risk prima facie passes with property, emphasizing that risk follows ownership. This means the owner bears the burden of loss, irrespective of possession or payment status. While exceptions exist, understanding this fundamental principle is essential for both sellers and buyers to navigate potential losses associated with goods. Parties should be mindful of the general rule that ‘risk follows ownership’ as they engage in transactions, considering exceptions to ensure comprehensive risk management.
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