Sale of Good

Transfer of Property
 TRANSFER OF PROPERTY
• There is a need to distinguish between
concept of property in goods : title or
ownership from possession.
• The passing of property in goods does not
means the possession also passes to the
buyer.
 • SOG = important to ascertain when the
property in goods passes to the buyer
• Section 26 of SOGA

When property passes

to the buyer,
Before property goods are the buyer’s
passes to the buyer, risk
the goods remain at Irrespective whether
the seller risk goods have been
delivered to the buyer or
not
Section 26 of SOGA
Risk prima facie passes with property
Unless otherwise agreed, the goods remain at the
seller’s risk until the property therein is transferred to
the buyer, but when the property therein is transferred
to the buyer, the goods are at the buyer’s risk whether
delivery has been made or not:
Provided that where delivery has been delayed
through the fault of either buyer or seller, the goods
are at the risk of the party in fault as regards any loss
which might not have occurred but for such fault:
Provided also that nothing in this section shall affect
the duties or liabilities of either seller or buyer as a
bailee of the goods of the other party.
 Why there is a need to know when
property passes from seller to buyer
i) risk of loss or damage to goods is with the
owner ( if goods have not been lost or
damaged because of the other party’s fault)
ii) if property in goods passed to the buyer :
buyer cant reject the goods for BOC .
iii) Good titles can be given to third party once
property is goods has passed
iv) In cases where seller of buyer has gone
bankrupt
• to determine the rights of parties in the event
of a refusal to deliver by the seller or refusal
to accept delivery by the buyer
• To determine whether a buyer can sue a
carrier in tort if the goods are damaged in
transit.
• Hence there must be transfer of ownership (
or property) in the goods if the transaction is
to be covered SOGA.
 • CHAPTER III of SOGA 1957

• Effects Of The Contract

• Section 18 until section 30

• Transfer of property as between seller and
buyer
 TRANSFER OF PROPERTY IN GOODS -

Unascertained goods
perishing of goods

specific goods sale on approval or sale or

return
basis
- Important ascertained the time when property in goods
passes
- GR – title passes when the parties to a contract of sale
intend that it should pass

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Goods must be ascertained
Section 18 of SOGA.
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
1) Unascertained goods (goods defined by description)

Section 18

No property (ownership) in goods is transferred to buyer

UNLESS + UNTIL

goods are ascertained

e.g. contract to buy a new car in a larger consignment
• Property passes when intended to
pass
Section 19 of SOGA
(1) Where there is a contract for the
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
transferred.
.
• Section 19 (2) stated that the purpose of
ascertaining the intention of the parties , the
followings need to be considered;
i) the terms of the contract
ii) the conduct of the parties and the
circumstances of the case.
Section 19(3) of SOGA
Unless a different intention appears, the rules
for ascertaining the intention of the parties as
to the time at which the property in the goods
is to pass to the buyer are laid down in section
20 to 24.
• These rules are only presumptions and my be
varied by the contracting parties
a) Specific goods in a deliverable state
Section 20 of SOGA
- Where there is an unconditional contract for the
sale of specific goods in a deliverable state the
property in the goods passes to the buyer when
the contract is made
- it is immaterial whether the time of payment of
the price, or the time of delivery of the goods, or
both, is postponed.
Eg : Sam agrees to buy Hanks’s bicycle and Hank
agreed that Sam will pay him next week. The
property in goods passes immediately to Sam
even though no payment is made yet.
b) Specific goods to be put into a deliverable state
: section 21 of SOGA.
Where there is a contract for the sale of specific
goods and the seller is bound to do something to
the goods for the purpose of putting them into a
deliverable state, the property does not pass until
such thing is done and the buyer has notice
thereof.
Eg: Z agreed to buy W’s car provided that W give
the car a new coat of paint. Property in the car
passes only aft the car receives a new coat of
pain and Z has been notified of the same
c) Specific goods in a deliverable state when the
seller has to do anything thereto in order to
ascertain price : Section 22 of SOGA.
Where there is a contract for the sale of specific
goods in a deliverable state, but the seller is
bound to weigh, measure, test, or do some other
act or thing with reference to the goods for the
purpose of ascertaining the price, the property
does not pass until such act or thing is done and
the buyer has notice thereof.
Eg : A agrees to sell vegetables to B at the price of
RM 10 per kilogram, property in vegetables does
not pass until the vegetables have been weighed
and B was informed
• Sale of unascertained goods and appropriation
Section 23 of SOGA
(1) Where there is a contract for the sale of
unascertained or future goods by description and
goods of that description and in a deliverable
state are unconditionally appropriated to the
contract, either by the seller with the assent of
the buyer or by the buyer with the assent of the
seller, the property in the goods thereupon
passes to the buyer.
• Such assent may be express or implied, and may
be given either before or after the appropriation
is made.
a) A contract for unascertained goods is not sale but
agreement to sell.
• Unascertained goods are goods which cannot be
specifically identified at the time of the contract of sale
but are referred to by description
b) unconditionally appropriated to the contract, = an
overt act manifesting an intent to identify certain
goods as those attaching to the contract. The duty to
appropriate may be placed either with the seller or the
buyer.. commonly the seller..
eg weighing frm a bulk of goods :10 kilo of sugar from a
bagful..such appropriation by either the seller or buyer
must be approved by the other party. The
appropriation must be unconditional and the property
in good will pass without further requirement such as
payment.
• Section 23(2) of SOGA
“ Where, in pursuance of the contract, the seller
delivers the goods to the buyer or to a carrier or
other bailee (whether named by the buyer or
not) for the purpose of transmission to the
buyer, and does not reserve the right of
disposal, he is deemed to have unconditionally
appropriated the goods to the contract.
 Section 23(b)
• Property in goods passes to the buyer the
moment the goods are handed over to carrier
such as shipping company or trucking
company or rail authority.
• Carrier is prima facie the buyer’s agent for the
purpose of delivery but if it can be shown that
carrier is the agent of the seller, property will
pass once goods are delivered to the buyer.
• Goods sent on approval or “on sale or return”
Section 24 of SOGA
When goods are delivered to the buyer on
approval or “on sale or return”, or other similar
terms, the property therein passes to the buyer—
(a) when he signifies his approval or acceptance to
the seller or does any other act adopting the
transaction;
(b) if he does not signify his approval or acceptance
to the seller but retains the goods without giving
notice of rejection, then, if a time has been fixed
for the return of goods, on the expiration of such
time, and if no time has been fixed, on the
expiration of a reasonable time.
 SECTION 24
3) Sale on approval or sale or return basis.

When goods are delivered to the buyer ‘on approval’ or on sale or return
to in goods will passes to the buyer.

When the buyer signifies his approval

no X signify his approval to seller but
on acceptance to the seller or does
retains the goods
any other act adopting such
transaction

upon expiration of time Within reasonable

time if such time is
if timeis fixed not fixed

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• Covers good on trial, giving the buyer the
option to purchase on the terms specified.
• Pending decision : buyer is in lawful
possession as bailee.
• No problem if buyer elect to buy.
• ‘does any other act adopting the transaction’
is ambiguous
• Eg : if ABC Book store delivered books to
Nora : on approval and to be returned within
10 days without obligation if not satisfied.
a) Accepted the books
b) Sells books to Zack (any other act…)
c) Does not return the book within 10 days.
Query : Will property passed to Nora?
 RISK
GR Risk passes when property in the goods passes irrespective of whether delivery
has been made
- Risk borne by the owner

subject to variations by PARTIES

1)
SECTION 26 OF SOGA

Goods remain at seller’s risk until property is transferred to the buyer

When the property is transferred goods are at the buyer’s risk whether delivery has been
made or not

EXCEPTIONS:

- Delivery has been delayed through fault of either party

- Eg : Buyer ‘s refusal for delivery or failure to give instruction.

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• Special rule applies in overseas sales
-a) F.O.B. Contract (free on board) - once the goods are
on board a ship risk pass to the buyer although
unascertainable goods.

b)C.I.F Contract (cost insurance and freight - a contract

of sale under which price includes COST, INSURANCE +
FREIGHT)
- risk is transferred to the buyer on shipment although
property will not pass till the unconditional delivery of the bill
of lading
-Seller is entitled to payment upon the tender of the shipping
documents to buyer even when the goods shipped are lost in
transit. The buyer must look to the insurance taken out by the
seller to recover the loss.
 PERISABLE GOODS
Goods perishing before making of contract
Section 7. Where there is a contract for the sale
of specific goods, the contract is void if the
goods without the knowledge of the seller
have, at the time when the contract was
made, perished or become so damaged as no
longer to answer to their description in the
contract.
• Couturier v Hastie (1856) : the contract was
void if the subject matter of the contract no
longer existed at the time of the contract.
• Rendell v Turnbull (1908) 27 NZLR 1067 : a
contract for the sale of potatoes described as
table potatoes was void : potatoes had
become unfit for human consumption.
2) Goods perishing before sale but after
agreement to sell
Section 8 of SOGA
Where is an agreement to sell specific goods,
and subsequently the good, without any fault
on the part of the seller or buyer, perish, or
become so damaged as no longer to answer to
their description in the agreement, before the
risk passes to the buyer, the agreement is
thereby avoided.
• Refers to agreement where the risk has not
passed to the buyer.
• The property and the risk remain with the
seller,
• The seller is not liable for non delivery and
buyer is not liable to pay the price.
• If buyer has paid price in advance, the buyer
can recover the price paid for total failure of
consideration.