Transfer of Property in Goods under the Sale of Goods Act, 1930

Introduction

Transfer of property (ownership) in goods is a central concept under the Sale of Goods Act, 1930. It determines when ownership moves from seller to buyer. This is important because risk, rights, and liabilities depend on ownership. Sections 18 to 25 provide detailed rules for different situations.

Meaning / Definition

Transfer of property means transfer of ownership (legal right) in goods from seller to buyer. It is different from possession (physical control). A person may have possession but not ownership.

Modes or Types

General rule (Section 18)

No property in unascertained goods passes to the buyer unless and until the goods are ascertained (identified clearly).

Transfer of property in specific or ascertained goods

Property passes when intended (Section 19)

Ownership passes when both parties intend it to pass. This intention is determined from:

• Terms of the contract
• Conduct of parties
• Circumstances of the case

If intention is not clear, Sections 20–24 apply.

Specific goods in deliverable state (Section 20)

If:

• Goods are specific
• Goods are in deliverable state (ready for delivery)
• Contract is unconditional

Then ownership passes at the time of contract, even if:

• Payment is delayed
• Delivery is delayed

Specific goods to be put into deliverable state (Section 21)

If seller must do something to make goods deliverable:

• Ownership passes only after the act is completed
• Buyer must be informed

Specific goods where seller must ascertain price (Section 22)

If seller must:

• Weigh
• Measure
• Test
• Perform any act to fix price

Then ownership passes only after:

• Such act is completed
• Buyer is informed

Transfer of property in unascertained goods (Section 23)

Appropriation of goods

Ownership passes when:

• Goods are identified and set aside (appropriated), and
• Both parties agree (express or implied)

Consent may be:

• Before appropriation
• After appropriation

Delivery to carrier

Ownership passes when:

• Seller delivers goods to carrier/bailee for transmission
• Seller does not reserve right of disposal

Goods sent on approval or sale or return (Section 24)

Ownership passes:

• When buyer accepts goods, or
• Does any act adopting the transaction (like using goods), or
• Retains goods beyond agreed time or reasonable time

If rejected within time → ownership does not pass.

Reservation of right of disposal (Section 25)

Seller may retain ownership until conditions are fulfilled (usually payment).

Key points:

• Even if possession is transferred, ownership may not pass
• Seller controls transfer until condition is satisfied

Risk and ownership (Section 26)

• Risk generally passes with ownership
• However, parties may agree otherwise

If ownership passes → buyer bears loss
If ownership not passed → seller bears loss

Important Case Law

• Badri Prasad v. State of Madhya Pradesh
  Goods must be identified before ownership passes. Standing trees were not ascertained until identified.

• Multanmal Champalal v. C.P. Shah & Co.
  Risk follows ownership unless parties agree differently.

• Hoogly Chinsurah Municipality v. Spence Ltd.
  Use of goods and delay in rejection leads to passing of ownership.

Distinction / Comparison

Ownership vs Possession

Practical Example

A buys a TV from a store:

• If TV is ready → ownership passes immediately
• If installation is required → ownership passes after installation and notice

A sends 100 bags of rice out of 500:

• Until 100 bags are separated → no ownership transfer
• After separation → ownership passes

Goods sent on approval:

• If buyer uses goods → ownership passes
• If buyer returns in time → ownership does not pass

Summary

• Ownership transfer is different from possession
• Intention of parties is the primary rule (Section 19)
• Specific goods in deliverable state pass ownership immediately
• If seller must act, ownership passes after completion and notice
• Unascertained goods require identification (Section 18 & 23)
• Delivery to carrier may transfer ownership
• Goods on approval pass ownership only after acceptance or delay
• Seller can retain ownership by reserving right of disposal
• Risk generally follows ownership (Section 26)
• These rules determine rights, liabilities, and risk between parties