Property Transfer Rule for Specific Goods
When an unconditional contract is made for the sale of specific goods which are in a deliverable state, the law presumes that the property (ownership) in those goods passes from the seller to the buyer at the time the contract is made.
Key Legal Principle
This is a fundamental rule under the Sale of Goods legislation. The critical conditions are:
- The contract must be for specific goods (goods identified and agreed upon at the time of the contract).
- The contract must be unconditional.
- The goods must be in a deliverable state (in a condition that the buyer is bound to accept them).
If these conditions are met, ownership transfers immediately upon the formation of the contract, regardless of whether payment or delivery happens later.
Analysis of Options
- Option 1: the contract is made - This aligns with the legal rule for specific goods in a deliverable state. Property passes upon contract formation. (Correct)
- Option 2: the payment is made - Payment timing affects when the price is due but not necessarily when ownership transfers under this rule.
- Option 3: the goods are delivered - Delivery is often simultaneous with or subsequent to ownership transfer. It's not the trigger point for specific goods in a deliverable state under an unconditional contract.
- Option 4: the goods are dispatched - Dispatch is an action taken by the seller, usually related to delivery, and does not determine the passing of property in this scenario.
Therefore, for specific goods in a deliverable state under an unconditional contract, the property passes to the buyer when the contract is made.
Important Questions from Sale of Goods Act, 1930 - Teaching
- Read Assertion (A) and Reason (R) and answer using code given below :
Assertion (A) : “Goods” means every kind of movable property including actionable claims and money and excludes stock and shares, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale.
Reason (R) : Above principle is laid down in Section 2 (7) of the Sale of Goods Act.
Code : - Which of the following statement is correct ?
- Which of the following statement is correct ?
- Match List – I with List – II and select the correct answer using codes given below :
List – I List – II (a) Goods in sale of goods (i) Bhopal Sugar Industries Ltd. V. STO (b) Consideration for a sale of goods (ii) Instalment Supply Ltd. V. STO (c) Sale and agreement to sale (iii) R.D. Goyal V. Reliance Industries Ltd. (d) Difference between contract of sale and contract of agency (iv) Aldridge V. Johnson
