Model Answer
0 min readIntroduction
The Sale of Goods Act, 1930, governs contracts concerning the transfer of ownership of goods. Two fundamental concepts within this Act are ‘passing of property’ and ‘delivery of goods’. While often occurring concurrently, they are distinct legal events with different implications. ‘Passing of property’ signifies the transfer of ownership rights from the seller to the buyer, while ‘delivery’ refers to the physical transfer of possession. Understanding this distinction is crucial for determining rights, liabilities, and risks associated with the goods sold. This answer will delineate these concepts, analyze their differences, and illustrate them with provisions of the Act and relevant case law.
Passing of Property: Transfer of Ownership
‘Passing of property’ is the central element in a sale, as it determines when ownership transfers from the seller to the buyer. Section 21 of the Sale of Goods Act, 1930, outlines the rules governing the time when property passes. It’s not merely physical transfer; it’s the transfer of all rights to enjoy and possess the goods. Several scenarios dictate when this occurs:
- Specific Goods & Contract for Sale: When the contract is made, property passes immediately if the goods are in existence and identified.
- Specific Goods & Contract for Sale of Future Goods: Property passes when the goods are ascertained (identified and agreed upon).
- Unascertained Goods: Property passes when the goods are agreed upon and brought into existence.
- Goods in Delivery: Property passes when the goods are in the process of being delivered and the buyer takes possession.
The case of Young v. Hein (1844) 3 Hare 467 illustrates this. A horse was sold under a condition that the buyer could return it if it proved unsound. The court held that property passed to the buyer despite the condition, as the contract didn’t explicitly reserve ownership until a trial period was completed.
Delivery of Goods: Transfer of Possession
‘Delivery’ as defined under Section 2(2) of the Act, is the voluntary transfer of possession from one person to another. It signifies the physical transfer of goods, but doesn’t necessarily equate to a transfer of ownership. Delivery can be:
- Actual Delivery: Physical handing over of goods.
- Constructive Delivery: Transfer of a document of title (e.g., bill of lading) giving the buyer control over the goods.
- Symbolic Delivery: Transfer of a key or other symbol representing the goods.
Section 33 of the Act deals with the buyer’s duty to take delivery. Failure to do so can lead to liabilities.
Distinguishing Passing of Property and Delivery
The key difference lies in the nature of the transfer. Passing of property is a transfer of rights, while delivery is a transfer of possession. One can occur without the other. Consider these scenarios:
| Scenario | Passing of Property | Delivery | Explanation |
|---|---|---|---|
| Sale on Approval | Delayed until approval | Immediate | Buyer has possession but ownership remains with the seller until approval. |
| Shipment Contracts | Upon shipment | Delayed until arrival | Ownership transfers when goods are shipped, but physical delivery occurs later. |
| Sale or Return | Remains with seller until bought | Immediate | Buyer has possession but doesn’t own the goods until they exercise the option to purchase. |
The case of Roberts v. Gray [1913] 1 KB 520 highlights the distinction. A buyer purchased a car on hire-purchase, but before completing the payments, it was stolen. The court held that as property hadn’t fully passed, the seller bore the loss, demonstrating that delivery without passing of property doesn’t confer full ownership rights.
Furthermore, risk of loss is generally linked to the passing of property (Section 23). Once property passes, the buyer bears the risk, even if physical delivery hasn’t occurred.
Conclusion
In conclusion, while often intertwined, ‘passing of property’ and ‘delivery of goods’ are distinct concepts under the Sale of Goods Act, 1930. Passing of property signifies the transfer of ownership rights, governed by specific rules outlined in the Act, while delivery is the physical transfer of possession. Understanding this distinction is vital for determining liabilities, risks, and the legal rights of both the buyer and seller. The interplay between these concepts, as illustrated by case law, underscores the importance of clearly defining the terms of a sale contract to avoid disputes.
Answer Length
This is a comprehensive model answer for learning purposes and may exceed the word limit. In the exam, always adhere to the prescribed word count.