Transfer of Property

Semester Project
Report

of Business & labor

Law
On

Transfer of Property

Name
Zeba Aziz

Business & Labor Law

Id
58095

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Transfer of Property

ACKNOWLEDGEMENT
Firstly I would like to thank ALMIGHTY ALLAH for giving me the opportunity and resources to be
able to do something productive with my lives. Without His blessings, i would not have been able to come
as far as we have.
Then I sincere thanks to my course instructor MR. SALMAN AHMED for helping me throughout this
report. This report would not have been possible without motivation & cooperation and continuous
direction of Sir SALMAN AHMED .

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LETTER OF TRANSMITAL
Mr. Sa,lman Ahmed
Course Instructor,
PAF-Karachi Institute of Economics and Technology,
North Nazimabad Campus,
Karachi, Pakistan
Respected Sir,
Here is the semester report required as a component for assessment in the course Business & Labor law.
The material compiled and presented in this report is a result of comprehensive work. This report has
proved to be a great experience. For this, we would like to thanks my course instructor Sir. Salman
Ahmed. for providing for this opportunity, as well as his guidance in the light of his vast experience
I did try my best to cover all the topics of topic in this report.
Dedication
I dedicate this project to my beloved teacher Sir Salman Ahmed. Without his patience, understanding,
support and most of all love, the completion of this work would not have been possible.
Yours Sincerely,
Zeba Aziz

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Table of Contents
Transfer of property.........................................................................................................................1
Elements of sales & Goods..............................................................................................................2
Documents of title of goods............................................................................................................3
Implied warranties ..........................................................................................................................4
Types of contracts............................................................................................................................5
Types of contracts............................................................................................................................6
Rights and duties of the buyer ........................................................................................................7
Rights and duties of the seller..........................................................................................................8

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Transfer of Property in Goods
The property in the good is said to be transferred from the seller to the buyer when the letter acquires the proprietary
rights over the goods and the obligation linked thereto. Property in Goods which means the ownership of goods is
different from possession of goods which mean physical custody or control of the goods. The transfer of property in
the goods from the seller to the buyer is the essence of a contract of sale. Therefore the moment when the property
in goods passes from the seller to the buyer is significant for following reasons:
Ownership -- The moment the property in goods passes, the seller ceases to be their
owner and the buyer acquires the ownership. The buyer can exercise the proprietary rights
over the goods. For example, the buyer may sue the seller for non-delivery of the goods or
when the seller has resold the goods, etc.
Risk follows ownership -- The general rule is that the risk follows the ownership,
irrespective of whether the delivery has been made or not. If the goods are damaged or
destroyed, the loss shall be borne by the person who was the owner of the goods at the
time of damage or destruction. Thus the risk of loss prima facie is in the person in whom the
property is.
Action Against Third parties -- When the goods are in any way damaged or destroyed by
the action of third parties, it is only the owner of the goods who can take action against
them.
Suit for Price - The seller can sue the buyer for the price, unless otherwise agreed, only
after the gods have become the property of the buyer.
Insolvency - In the event of insolvency of either the seller or the buyer, the question whether the goods can be taken
over by the Official Receiver or Assignee, will depend on whether the property in goods is with the party who has
become insolvent.
Essentials for Transfer of Property -- The two essentials requirements for transfer of property in the goods are:
1) Goods must be ascertained: Unless the goods are ascertained, they (or the property
therein) cannot pass from the seller to the buyer. Thus, where there is a contract for the sale
of unascertained goods, no property in the goods is transferred to the buyer unless and until
the goods are ascertained

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2) Intention to PASS Property in Goods must be there: In a sale of specific or ascertained
goods the property in them is transferred to the buyer at such time as the parties to the
contract intend it to be regard shall be had to the terms of the contract, the conduct of the
parties and the circumstances of the case.

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ELEMENTS OF SALES AND GOOD:
A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to
the buyer for a price. It thus includes both an actual 'sale' and an 'agreement to sell', which has been distinguished
later.
'Goods' means every kind of movable property other than actionable claims and money; and includes stocks and
shares, growing crops, grass and things attached to or forming part of the land, which are agreed to be served from
land before sale, or under for contract of sale.
A 'sale' must be distinguished from an 'agreement to sell' since the legal implications of the two terms are vastly
different. A contract wherein, the property in the goods is transferred from the seller to the buyer,
the contract is called a sale, but where the transfer of property in the goods is to take place at a future time, or
subject to some conditions, thereafter to be fulfilled, it is called an agreement to sell. An agreement to sell becomes
a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be
transferred.
Effects of Destruction of Goods - Already Contracted
There are various kinds of goods and the parties have various options to agree about the delivery of the goods. What
shall be the fate of a contract if the goods are perished or destroyed?
Destruction before making of contract -- Where in a contract for sale of specific goods, at the time of making the
contract, the goods, without knowledge of the seller, have perished or become so damaged as no longer to answer to
their description in the contract, the contract shall become null and void. This is based on the rule of impossibility of
performance. Since the subject matter of the contract, which is one of its essential ingredients, itself is destroyed,
the contract cannot be carried out.
'Perishing of goods' includes not only complete destruction of the goods when the seller has been irretrievably
deprived by the goods or when the goods have been stolen or have in some other way been lost and are untraceable,
but also when the goods become un merchantable i.e. when the goods has lost their commercial value.
Destruction After the Agreement to Sell but before Sale -- Where in an agreement to sell specific goods, if
subsequently the goods, without any fault on the part of the seller of buyer, perish or become so damaged as no
longer answer to their description in the agreement, the agreement shall become void, provided the goods are
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perished before the ownership and risk passes to the buyer. This rule is based on the ground of impossibility of
performance.
If the title to be goods has already passed to the buyer, he must pay for the goods though the same cannot be
delivered.
Documents of Title to Goods
A document of title to goods is one, which entitles and enables its rightful holder to deal with the goods represented
by it, as if he were the owner. It is used in the ordinary course of business as proof of the ownership, possession or
control of goods. It authorizes the possessor to receive the goods. It also confers a right on the possessor to transfer
the goods to another person, by mere delivery or by proper endorsement the delivery.
Cash memo, bill of lading, dock warrant, warehouse keeper's or wharfinger's certificate, lorry receipt (L/R), railway
receipt (R/R) and delivery order are some of the instances of document of title to goods.

Express and Implied Conditions / Warranties : A Sale

Conditions and warranties may be express or implied.
Express conditions and warranties are which, are expressly provided in the contract. Implied conditions and
warranties are those which are implied by law or custom; these shall prevail in a contract of sale unless the parties
agree to the contrary.
i) Condition as to title -- In every contract of sale, unless the circumstances of the contract are such as to show a
different intention, there is an implied condition on the part of the seller, that :
In case of a sale, he has a right to sell the goods, and
In case of an agreement to sell, he will have a right to sell the goods at the time when the property is to pass.
The words 'right to sell' contemplate not only that the seller has the title to what he purports to sell, but also that the
seller has the right to pass the property. If the seller's title turns out to be defective, the buyer may reject the goods.
ii) Condition as to Description -- In a contract of sale by description, there is an implied condition that the goods
shall correspond with the description. The term ' sale by description' includes the following situation ;
Where the buyer has not seen the goods and buys them relying on the description given by the seller.
Where the buyer has seen the goods but he relies not on what he has seen but what was stated to him and the
deviation of the goods from the description is not apparent.
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Packing of goods may sometimes be a part of the description. Where the goods do not conform to be method of
packing described (by the buyer or the seller) in the contract, the buyer can reject the goods.
iii) Condition as to Quality or Fitness -- Where the buyer, expressly or by implication, makes known the seller the
particular purpose for which goods are required, so as to show that the buyer relies on the seller's skill or judgment
and the goods are of a description which it is in the course of the seller's business to supply (whether or not as the
manufacturer of producer), there is an implied condition that the goods shall be reasonably fit for such purpose. In
other words, this condition of fitness shall apply, if:
The buyer makes known to the seller the particular purpose for which the goods are required,
The buyer relies on the seller's skill or judgment,
The goods are of a description which he sellers ordinarily supplies in the course of his business, and
The goods supplied are not reasonably fit for the buyer's purpose.
iv) Condition as to Merchantability -- Where the goods are bought by description from a seller, who deals in goods
of that description (whether or not as the manufacturer or producer) there is an implied condition that the goods
shall be of merchantable quality.
Merchantable quality ordinarily means that the goods should be such as would be commercially saleable under the
description by which they are known in the market at their full value.
v) Condition as to Wholesomeness -- In case of sale of eatable provisions and foodstuff, there is another implied
condition that the goods shall be wholesome. Thus, the provisions or foodstuff must not only correspond to their
description, but must also be merchantable and wholesome. By 'wholesomeness' it means that goods must be for
human consumption.
vi) Condition Implied by Custom or Trade Usage: An implied warranty or condition as to quality or fitness for a
particular purpose may be annexed by the usage of trade. In certain sale contracts, the purpose for which the goods
are purchased may be implied from the conduct of the parties or from the nature or description of the goods. In such
cases, the parties enter into the contract with reference to those known usage. For instance, if a person buys a
perambulator or a medicine the purpose for which it is purchased is implied from the thing itself; the buyer need not
disclose the purpose to the seller.
vii) Conditions in a Sale by Sample: A contract of sale is a contract for sale by sample where there is a term in the
contract, express or implied to that effect. Usually, a sale by sample is implied when a sample is shown and the
parties intend that the goods should be of the kind and quality as the sample is.

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viii) Conditions in a sale by Sample as well as by Description: A vast majority of cases where samples are shown,
are sales by sample as well as by description. In a contract for sale by sample as well as by description, the goods
supplied must correspond both with the sample as well as with the description.
Implied Warranties
A condition becomes a warranty when -The buyer waives the conditions or opts to treat the breach of the condition as a breach of warranty ; or
The buyer accepts the goods or a part thereof, or is not in a position to reject the goods.
Implied Warranty of Quiet Possession -- In every contract of sale, unless there is a contrary intention, there is
implied warranties that the buyer's shall have and enjoy quiet possession of the goods. If the buyer's right to
possession and enjoyment of the goods is in any way disturbed as consequences of the seller's defective title, the
buyer may sue the seller for damages for breach of this warranty.
Implied Warranty of Freedom from Encumbrances -- The buyer is entitled to a further warranty that the goods shall
be free from any charge or encumbrance in favor of any third party not declared or known to buyer before or at the
time when the contract is made. If the buyer is required to discharge the amount of the encumbrance it shall be a
breach of this warranty and the buyer shall be entitled to damages for the same.

Types of Contracts (With Regard To Delivery Of Goods)

There are various types of contracts from the point of view of the delivery of goods.
F.A.S. or F.A.R. Contract - F.A.S. stands for 'Free Alongside Ship' and
F.A.R. stands for 'Free Along with Rail'. Under FAS or far contracts, the seller is required to deliver the goods
alongside the ship or rail named in the contract and to notify the buyer that the goods have been so delivered. The
property in the goods passes to the buyer when the seller delivers the goods alongside the ship or rail. Thereafter, it
is the buyer's duty to arrange for the contract of affreightment and insurance of the goods while the transit.
F.O.B. OR F.O.R Contracts -- F.O.B. stands for 'Free on Board' and F.O.R. stands for 'Free on Rail'. In a F.O.B. (or
F.O.R.) contract, the seller is required to deliver the goods on board the ship (or on rail), named in the contract.
Thus, the seller has to bear all expenses upto and including shipment of goods on behalf of the buyer, who is
responsible for their freight, insurance and subsequent expenses.

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Thus, as soon as the goods are put on board the ship, the property in them passes to the buyer. This will be so even
if the goods are not specific or ascertained. The buyer is liable to pay the price even if the goods are lost in transit.
The property in goods shall, however not pass if the seller reserves the right of disposal.
C.I.F. Contract -- The words 'C.I.F.' stand for cost, insurance and freight. A CIF contract is a type of contract
wherein the price includes cost, insurance and freight charges. Under a CIF contract the seller is required to insure
the goods, deliver them to the shipping company, arrange for their affreightment and send the bill of lading and
insurance policy together with the invoice and a certificate of origin to a bank. The documents are usually delivered
by the bank against payment of seller since he continues to be the owner of goods until the buyer pays for them and
obtains the documents. The property in the goods passes to the buyer on the delivery of documents. The buyer is
equally protected as he is called upon to pay only against the documents and the moment he pays, he obtains the
documents, which enable him to get delivery of the goods. If in the meantime the goods are lost neither the buyer
nor the seller is put to loss, whoever is the owner at the time of the loss can recover it from the insurer.
Ex-ship contracts -- Under an 'ex-ship contract the seller has to deliver the goods to the buyer at the port of
destination. In such contracts the property in the goods does not pass until actual delivery. The goods are at the
seller's risk during the voyage. It is therefore, for the seller to insure the goods to protect his interest. The seller is to
pay the freight, or otherwise release the ship owner's lien and to furnish the buyer with a delivery order or an
effectual direction to the ship owner to deliver.

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Rights and Duties of The Buyer
RIGHT

DUTIES

1.

To have delivery of the goods as per contract.

(secs. 31 & 32)

To accept the delivery of goods, when the

seller is willing to make the delivery as per the
contract
(Sec. 31)

2.

To reject the goods when they are not of the

description, quality or quantity as specified in
the contract (Sec 37).

2.

To pay the price in exchange for possession of

the goods

3.

To repudiate the contract when goods are

delivered in installments without any
agreement to that effects [ Sec. 38 (1)]

3.

To apply for delivery of the goods. (Sec. 35)

4.

To be informed by the seller, when the goods

are to be sent by sea route, so that he may
arrange for their insurance [Sec 39 (30]

To demand delivery of the goods at a

reasonable hour ( sec 36 (4)

To have a reasonable opportunity to examine

the goods for ascertaining whether they are in
conformity with the contract. (sec. 41)

To accept delivery of the goods in installments

and pay for them, in accordance with the
contract. (Sec. 38 (2)

To bear the risk of deterioration in the course

of transit, when the goods are to be delivered
at a place other than where they are sold ( sec
40)

6 To sue the seller for recovery of the price, if

dy paid, when the seller fails to deliver the goods.

To sue the seller for damages if the seller

wrongfully neglects or refuses to deliver the
gods to the buyer ( sec 57)

To inform the seller in case the buyer refuses

to accept or rejects the goods ( sec 43)

To sue the seller for specific performance

To take the delivery of the goods within a

reasonable time after the seller tenders the
delivery (Sec. 44)

To sue the seller for damages for breach of a

warranty or for breach of a condition treated
as breach of a warranty

To pay the price, where the property in the

goods are passed to the buyer, in accordance
with the terms of the contract ( Sec 55)

1
0

To pay damages for non-acceptance of goods

( Sec 56)

( Sec 59)
1
0

To sue the seller the damages for anticipatory

breach of contract ( Sec 60)

1
1

To sue the seller for interest where there is a

breach of contract on the part of the seller and
price has to be refunded to the buyer ( sec 61)

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Rights and Duties of the Seller
The rights and duties of a seller, under the Act, may be summarized as below:

RIGHT

DUTIES

1.

To reserve the right of disposal of the goods

until certain conditions are fulfilled. ( sec 25 (1)

To make the arrangement for transfer of

property in the goods to the buyer.

2.

To assume that the buyer has accepted the

goods
,
where
the
buyer

2.

To ascertain and appropriate the goods to the

contract of sale

(i)
Conveys
his
acceptance;
(ii) Does an act adopting the sale; or
(iii) Retains the goods without giving a notice of
rejection, beyond the specified date (or
reasonable time), in a sale on approval. (sec
24)
3.

To deliver the goods only when applied for by

the buyer ( sec 35)

3.

To pass an absolute and effective title to the

goods, to the buyer.

4.

To make delivery of the goods in installments,

when so agreed ( sec 39 (1)

4.

To deliver the goods in accordance with the

terms of the contract ( sec 31)

5.

To exercise lien and retain possession of the

goods, until payment of the price ( sec 47 (1)

5.

To ensure that the goods supplied conform to

the implied / express conditions and warranties.

6.

To stop the goods in transit and resume

possession of the goods, until payment of the
price ( sec 49 (2) and 50

6.

To put the goods in a deliverable state and to

deliver the goods as and when applied for by
the buyer ( sec 35)

To resell the goods under certain circumstances

( sec 54)

To deliver the goods within the time specified in

the contract or within a reasonable time and a
reasonable hour. [ sec 36 (2) and (4)]

To withhold delivery of the goods when the

property in the goods has not passed to the
buyer (sec 46 (2)

To bear all expenses of and incidental to making

a delivery ( i.e. upto the stage of putting the
goods into a deliverable sate 0 (sec 36 (5)

To sue the buyer for price when the property in

the goods has passed to the buyer or when the
price is payment on a certain day, in terms of
the contract, and the buyer fails to make the

To deliver the goods in the agreed quantity.

(Sec. 37 (1).

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payment (sec 55)

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To deliver the goods in installments only when

so desired by the buyer. (Sec 38 (1))

11

To arrange for insurance of the goods while they

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