TRANSFER OF PROPERTY

The essence of a contract of sale lies in the transfer of property in goods from the seller to the buyer. Section 4 of the Sale of Goods Act, 1930 confirms this by stating that the seller either transfers or agrees to transfer ownership of goods for a price.

To understand how and when this transfer occurs, goods are categorized into two main classes:

• Specific/Ascertained Goods: They are those goods which are identified and agreed upon at the time of contract of sale.
• Unascertained Goods: At the time of sale when goods are not unascertain then the goods are ascertained goods.

Transfer of Property in Specific or Ascertained Goods

Section 18 – Goods Must Be Ascertained

Section 18 of the Sales of Goods Act, 1930 provides that no property can pass unless the goods are ascertained.

Section 19 – Transfer as Intended by Parties

Section 19 of the Sales of Goods Act, 1930 provides that property is transferred at the moment the buyer and seller intend it to be transferred.

Case: Vasantha Vishwanathan vs V.K. Elayalwar (AIR 2001 SC 3367) – In this case it was held that the transfer of a motor vehicle was governed by this section.

Section 20 – Specific Goods in a Deliverable State

Section 20 of the Sales of Goods Act, 1930 provides that property passes when:

• The goods are specific.
• They are in a deliverable state.
• The contract is unconditional.

Section 21 – Specific Goods Not in Deliverable State

Section 21 of the Sale of Goods act, 1930 provides that When the contract is for the sale of specific goods but the goods at the time of the contract are not in a deliverable state, the property in such goods passes when the goods are put in a deliverable state and the notice of such is given to the buyer.

Section 22 – Goods to Be Weighed or Measured

Section 22 of the Sale of Goods act, 1930 provides that in the contract of sale of specific goods, the goods may be in deliverable state at the time of the making of the contract but, according to the contract , the seller may be bound to weigh, measure or test or do something else to fix the price. The property shall not be pass until the seller has done all that and buyer has notice of that.

Case- Simmons vs Swift [(1826) 108 ER 319]- In this case it was held that the loss caused due to unwieghed portion is to be beared by the seller before the buyer has possession of such goods.

Section 24 – Sale on Approval or Return Basis

Section 24 of the Sale of Goods act, 1930 which deals with goods delivered to the buyer on approval, provide that when the goods are sold on approval, on sale or return basis or on trial, the delivery of goods may be made to the buyer but that does not result in the transfer of property in the goods to the buyer. The property in such case passes when one or the other of the following conditions are satisfied:

• When the buyer signifies to the seller that he has approved or accepted the goods
• The property in such goods also passes to the buyer when the buyer adopts the transaction . Adopting the transaction consists of doing some act on the part of the buyer which indicates that he considers himself as the owner of the goods and then deals with them in that capacity.
• When the goods are sold on approval and the buyer neither signifies his approval nor does he give notice of rejection within the time fixed for the return of goods.

Transfer of Property in Unascertained Goods- Section 23

Key Conditions Under Section 23(1)

Ownership of unascertained goods passes to the buyer only when all the following conditions are satisfied:

1. Appropriation by Either Party: The goods must be specifically set aside or identified for the contract by either the seller or the buyer.
2. Mutual Assent: The party not doing the appropriation must give consent (express or implied).
   ➤ Example: If the seller chooses the goods, the buyer must agree to them — and vice versa.
3. Description Matches: The appropriated goods must be of the same description as agreed in the contract.
4. Unconditional Act: The appropriation must be unconditional. No more changes or swaps should be expected after this.

Section 23(2): Delivery to Carrier = Ownership Transfer

Section 23(2) provides that When the seller delivers the good to the buyer or to a carrier or other bailee for the pupose of transmission to buyer and does not reserve the right of disposal, he is deemed to have unconditionally appropriated the goods to the contract.

Section 26 – Risk Passes with Property

Section 26 of the Sale of Goods Act, 1930 addresses this concern through a simple rule:

This means that the person who owns the goods at the time of damage or loss is the one responsible. But of course, like most legal rules — there are some important exceptions!

Exceptions to the Rule in Section 26

1. Agreement to the Contrary

The section begins with the phrase “Unless otherwise agreed”, which gives freedom to the buyer and seller to create their own terms. If they agree that risk will pass before or after ownership — that agreement overrides the general rule. Example: If parties agree that risk transfers to the buyer on dispatch, even if ownership hasn’t passed, the buyer bears the risk from that point onward.

2. Delay in Delivery

According to the first proviso of Section 26:

Example: If the seller delays dispatch, and the goods get damaged during that period — the seller bears the loss.

3. Bailee Responsibility

The second proviso introduces another important exception — based on bailee liability:

Even if someone is not the owner, they may be responsible for loss if they are in possession of the goods as a bailee.

This ensures that the person in charge of goods doesn’t act negligently, even if ownership hasn’t transferred.

Conclusion

The Sale of Goods Act, 1930 provides a well-structured mechanism for transferring property in goods. Understanding when ownership and risk shift between parties is crucial in ensuring fair and secure trade practices.

Whether goods are specific, ascertained, or unascertained, the key lies in intention, agreement, and legal compliance. These provisions protect both buyers and sellers and help maintain trust in commercial transactions.

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