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This and the five following sections of the Act deal with
the question foreshadowed by section 4 of the Act and
lay down rules which assist in deciding the question
when the object of the contract of sale, namely, the
transfer of the property in the goods to the buyer has
been affected.
2. Property cannot pass until the
goods are identified
It is a condition precedent to the passing of the property in
every case that, the ‘individuality of the thing to be delivered’
should be established. In any given case, there may be
question whether this condition is fulfilled or not, and it may
be that the property will not pass even if it is fulfilled, but
until it is, there is no possibility of the property passing. It is
essential that the article should be specific and ascertained
in a manner binding on both the parties, for unless that be
so, the contract cannot be construed as contract to pas the
property in that category.
Where according to the terms of the contract, the seller was
to supply waste coal ash as and when it was discharged
from the bunkers of the powerhouse, it was held that the
contract was for the sale of unascertained goods and,
therefore no property passed to the buyer till the goods
were ascertained. (Tej Singh Vs State of Uttar Pradesh
and others 1981)
3. Part of a specific whole
It is obvious that if the contract is merely for the sale of goods by
description, such as a contract for sale of a certain quantity of
malting barley, or future goods, the necessary condition is not
fulfilled. Nor is it fulfilled even if the goods are so far ascertained
that the parties have agreed that they shall be taken from some
specified larger stock. ‘The parties did not intend to transfer the
property in one portion of the stock more than in another, and the
law which only gives effect to their intention does not transfer the
property in any individual portion’(White Vs. Wilks 1813). And
the mere fact that an order for the delivery is given by the seller
to the buyer, and is lodged by the buyer with a warehouseman,
who holds the specified larger stock out of which the goods sold
are to be taken, is not sufficient to transfer the property to the
buyer.(Laurie & Morewood Vs. Dudin & sons 1926) Thus,
where the ascertainment of the goods depends upon their being
separated from the bulk by the seller or a third party or the buyer,
by their being severed, weighed or measured or some other
process, no property can pass until this is done (National Coal
Board Vs. Gamble 1959)
4. Property and Risk
In this class of case, it is necessary to distinguish the passing of
the property from the transfer of the risk; the risk usually passes
with the property, but may pass independently of it; Thus,
acceptance of the delivery warrant for a certain quantity of spirit
out of a larger bulk which was liable to deteriorate in storage was
held to put the risk of deterioration on the buyer, although he had
acquired, not property but only undivided interest in the whole
bulk. Equally, it would seem that there can be none in an
individual part of a chattel, such as a tree which has been felled,
of which a marked portion was sold, and of which the other
portion is to be retained by the seller. In such a case, it is
conceived, the whole tree remains the property of the seller until
the marked portion is severed, even if the severance is to be
done by the buyer.
5. Identification of the goods
The contract itself may provide that the property shall pass on the
happening of some specified event, sufficient to identify the goods, and
occasionally they may become identified by other means. Thus, in a
case where the seller sold 250 quarters of wheat out of a larger bulk
belonging to him in a warehouse, and the buyer took delivery of 400
quarters and pledged the remaining 850 quarters to a bank, and in the
meantime the seller sold the remainder of the bulk in the warehouse, of
which delivery was taken, so that 850 quarters only were left in the
warehouse, it was held that by this process of exhaustion the 850
quarters became ascertained goods and property therein passed to the
buyer, so that the pledgee acquired a title thereto against the
seller.(Wait & Midland Bank 1926) In State of karnataka Vs. The
West Coast Paper Mills Ltd. AIR 1986 it was held that where under a
contract a company was permitted to remove bamboos from the forest
area at Rs.10 /- per ton, and the government by a subsequent order
enhanced the price to Rs.20/- per ton, it was held that the enhanced
rate was no applicable to the bamboos cut although not removed prior
to the date of the government order, because on the bamboos being cut
and extricated, the goods being ascertained and in a deliverable state,
the property had passed to the company.
Section 19. Property passes when
intended to pass
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.
2. For the purpose of ascertaining the intention of the parties
regard shall be had to the terms of the contract, the conduct of
the parties and circumstances of the case.
3. Unless a different intention appears, the roles contained in
section 20 to 24 are 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.
Synopsis
1. Principles for determining whether the property is transferred
2. Intention of the parties
3. Ascertained goods
1. Principles for determining whether
the property is transferred
The general rule enunciated in this section follows from the nature of
the contract of sale, by which the property in the goods is transferred,
or agreed to be transferred, from the seller to the buyer in return for
the price.
This section reproduces s93 of the contract Act except that for the words ‘in the
absence of any specific promise’, the words ‘apart from any express contract’ have
been substituted. The words ’in the absence of any special promise’ have been
construed to mean an express stipulation as to delivery6 which relieves the buyer
from the obligation to apply for delivery or the necessary implication of such a
stipulation from the nature of the contract as expressed. It might also arise out of
usage or custom.
Even if there is an obligation on the part of the seller to inform the buyer when the
goods are in a deliverable state, it is not a ‘special promise’, though it may postpone
the obligation of the buyer to apply for delivery, and after the lapse of a reasonable
time, to enable the goods to be procured by the seller, the buyer would be entitled
and bound to apply for delivery.
When the applies for delivery and the seller then fails to deliver, the seller is guilty of
a breach of contract. So where the contract provided for delivery in all November on
seven day’s notice from the buyer, and the buyer gave the notice early in November,
it was held that by the terms of the contract the buyer had the right to fix the date in
November on which the delivery should be made, and the seller having failed to
deliver as required by the notice, was guilty of a breach of contract. Juggernath
Khan Vs. Machlachar (1881)
Section 36. Rules as to delivery
1. Whether it is for the buyer to take possession of the goods or fo
the seller to send the goods to the buyer is a question depending in
each case on the contract, express or implied, between the parties
Apart from any such contract, goods sold are to be delivered at the
place at which they are at the time of the sale, and goods agreed to
be sold are to be delivered at the place at which they are at the time
of the agreement to sell., if not then in existence, at the place a
which they are manufactured or produced.
2. Where under the contract of sale the seller is bound to send the
goods to he buyer, but no time for sending is fixed, the seller is bound
to send them within a reasonable time.
3. Where the goods at the time of sale are in the possession of a
third person, there is no delivery by seller to buyer unless and unt
such third person acknowledges to the buyer that he holds the goods
on his behalf :
Provided that nothing in this section shall affect the operation of the
issue or transfer of any document of title to goods.
4. Demand or tender of delivery may be treated as ineffectua
unless made at a reasonable hour. What is reasonable hour is a
question of fact.
5. Unless otherwise agreed, the expenses of and incidental to
putting the goods into a deliverable state shall be borne by the seller
Section 36. Rules as to delivery
Examples
The section may be illustrated by the following examples :
3. Sale of goods for ready money. The seller packs them up in the
buyer’s boxes in the buyer’s presence, but they remain in the seller’s
premises. This is not a delivery. Boulter Vs. Arnott (1833)
Section 38. Instalment Deliveries
1. Unless otherwise agreed, the buyer of goods is not bound to
accept delivery thereof by instalments.
2. Where there a contract for the sale of goods to be delivered by
stated instalments which are to be separately paid for, and the seller
makes no delivery or defective delivery in respect of one or more
instalments, or the buyer neglects or refuses to take delivery of or
pay for one or more instalments, it is a question in each case
depending on the terms of the contract and the circumstances of the
case, whether the breach of the contract is a repudiation of the whole
contract, or whether it is severable breach giving rise to a claim for
compensation, but not to a right to treat the whole contract as
repudiated.
Section 38. Instalment Deliveries
Examples
The section may be illustrated by the following examples :
1. Goods were sold and sent by the sellers at the request of the
buyer to shipping agents of the buyer, and were put on board a ship
by those agents. Subsequently, they were re-landed and sent back to
the sellers for the purpose of re-packing. While they were still in the
possession of the sellers for that purpose, the buyer became
insolvent. Thereupon the sellers refused to deliver them to the
buyer’s trustee in bankruptcy except upon payment of the price.
Held, that the sellers had lost their lien by delivering the goods to the
shipping agents, and their refusal to deliver the goods to the trustee
was wrongful. Valpy Vs. Gibson 1847
In order that the right may be exercised, the following conditions must
all be satisfied—the seller must be unpaid, the seller must have
parted with the possession of the goods and the buyer must not have
acquired it. This last condition, as appears from the next section is
that which is shortly expressed by saying that the goods are in transit.
Further, the right can only be exercised by a seller or a person in a
position analogous to that of a seller, the right to stop in transit is
unknown outside the law of sale of goods. Lastly, it is a right against
the goods themselves only.
Section 52. How stoppage to transit is
effected
1. The unpaid seller may exercise his right of stoppage in transit
either by taking actual possession of the goods, or by giving notice of
his claim to the carrier or other bailee in whose possession the goods
are. Such notice may be given either to the person in actual
possession of the goods or to his principal. In the latter case the
notice, to be effectual, shall be given at such time and in such
circumstances that the principal, by the exercise of reasonable
diligence, may communicate it to his servant or agent in time to
prevent a deliver to the buyer.