Sales of Goods Act, 1930 - Transfer of Property

The main purpose of a sale is to transfer the ownership of goods from the seller to the buyer. In Sales of Goods Act, 1932 word Property is used in palace of ownership. It’s the General Property and not the Special property in the goods that gets transferred to the buyer.

It is important to know when the property in the goods gets transfers to the buyer due to following reasons. 

Risk passes with the ownership
In case of Damage or destruction of the goods it is the owner of the goods who has to bear the loss. So if the ownership has been transfreed then the buyer is the one who has to suffer the loss else the seller will bear the loss

Action against third party
Right against third party is held by the owner. In case ownership is already transferred the buyer is the one who can take an action against the third party. 

Insolvency of buyer
In case of insolvency of buyer if the ownership of the goods has been transferred then the seller has to deliver the goods to the buyer’s official assignee. In case ownership has not been transferred then seller is not bound to hand over the goods. 

Suit for price
In case ownership is transferred and goods are dilvered but the price is not paid the seller can not ask for the return of the goods. He can only file a suit for price. 

RULES REGARDING TRANSFER OF PROPERTY
SPECIFIC OR ASCERTAINED GOODS IN A DELIVERABLE STATE
In case of specific goods in deliverable state ownership gets transferred the moment buyer and seller agree on the price to be paid by the buyer for the goods

SPECIFIC GOODS NOT IN A DELIVERABLE STATE
In case of specific goods not in deliverable state ownership gets transferred when the seller brings the goods in Deliverable state and informs about the buyer about the same.

UNASCERTAINED GOODS
Unascertained goods are those goods which are not identified at the time of entering into contract of sale. When the goods are ascertained and buyer is informed about the same the ownership gets transferred. Process of ascertaining goods is called appropriation of goods. This can be done either by the seller or the buyer with permission of the other. 

GOODS ARE SENT 'ON APPROVAL' OR 'ON SALE OR RETURN' BASIS
In case goods are sent on return or approval basis ownership gets transferred 
  • When buyer signifies his approval or acceptance
  • When buyer adopts the transactions by using goods or some other way like selling the goods, pledging the goods, etc.
  • When buyer fails to return the goods within reasonable or prescribed time.

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