Possession of goods gives rise to certain rights and duties so long the possession of goods continues. As soon as the possession is changed by way of sale, the rights and duties are also conveyed to the buyer with them unless otherwise intention between the parties. The intention of the parties regarding passing goods can prevail over the statute. So things change in regard to the goods before or after passing the property in goods. That’s why determining the precise moment at which ‘property in goods’ passes from the seller to the buyer bears much significance.
Passing ‘the property in goods’
Property in goods doesn’t mean possession of the property rather it indicates ownership of the property. There are two categories of legal rights in a chattel; ownership and possession. The general property in goods corresponds with ownership. Therefore, property in goods is separate from possession of goods. Merely passing property doesn’t confer ownership. For example- A has sold and delivered the title deed of some goods to B but didn’t deliver the possession yet. So property in goods can pass before possession. However, there have certain essentials before the property in goods passes to the buyer from seller such as ascertainment of goods and putting the goods in a deliverable state. Mere possession means custody of the goods.
So here passing refers to the transfer of ownership. Now the question may arise whether there is any time fixed by law when the property in goods will pass to the buyer. Property can pass from the seller to buyer at any time to the circumstances of the contract. It may pass by mere consent or different time according to the circumstances of the contract. There is no time fixed for passing the goods. The seller is bound to send them within a reasonable time and the seller should demand the delivery within a reasonable time. The reasonable time is a question of fact to be determined by circumstances.
Significance of determining the moment
As already discussed, passing the property implies the delivery of ownership. After the sale, the possession of the property may not pass but the ownership passes. So when the ownership passes, rights and duties associated therewith too pass. Therefore, the precise moment decides various rights and liabilities regarding the goods. That’s why there has manifold importance to determine the moment when the property in goods i,e ownership passes to the buyer from the seller. The matter is discussed in the following heads.
Risk associated with ownership: When a contract of sale is made, the question may arise who shall bear the risk if the goods are destroyed or damaged by an accident or any other unavoidable intervening events. Section 26 of the Sale of Goods Act, 1930 provides the law that the goods remain at the seller’s risk until passing to the buyer after that the goods are at buyer’s risk. Thus the rule is ‘risk follows ownership’. But the rule is neither absolute nor inflexible. The section begins with ‘unless otherwise agreed’. This is of great significance. Because here the agreement between the parties will prevail over law. So the parties to a contract of sale may agree that the risk will pass at a time different from the time of passing of property in goods.
For instance, in Consolidated Coffee Ltd vs Coffee Board , the parties agreed that the property would remain with the seller but at the buyer’s risk. In another case, the parties contracted that the risk would pass to the buyer at the time of dispatching. Being so, the claim of the plaintiff was negativated. The guiding rule was ‘resperit demino’ which means the loss falls on the buyer. Section 26 further provides the risk shall be borne by the parties in fault. In Demby Hamilton & Co. Ltd. Vs Barden, the loss was borne by the party in default. So, to determine the risk, it is important to determine the moment of the passing of goods.
Action against third party: Who is ‘third party’? In general sense, any person except the buyer or the seller is third party. Collins Dictionary defines ‘third party’ as ‘a third party is someone who is not of the main people involved in a business agreement or legal case but who is involved in it in a minor role.’ Where an actionable injury is caused by third party to goods in sale, it is only the person who has ownership can sue the third party. However, either party may with the consent of other sue for the benefit of whom it may concern.
Action by third party: It may happen the goods may cause damage to third party. Then he can only sue the person who is the owner in that particular time. Third party may have an interest in the goods to be sold. In this situation, he can bring action against the seller not against the buyer. Though it is immaterial who possesses the goods, it is important to know when the property in goods that is to say ‘ownership’ passes.
Remedy to unpaid seller: Section 55 contemplates that an unpaid seller can sue for the price of the goods. Where there is a contract for sale wherein the price is payable on a certain date, irrespective of delivery and the buyer wrongfully neglects or refuses to pay such price the seller may sue for the price even though the property has not been passed and the goods have not been appropriated to the contract. The same has happened in Dunlop vs Grote. So here also irrespective of delivery time, the moment of passing ownership that is to say property in goods is important.
Insolvency of seller: When the seller becomes insolvent, the question arises whether the Receiver can take over the property or not. That is dependent on whom the ownership prevails. The seller may pass ownership but before delivery he becomes insolvent. In that case, the receiver can’t claim against the goods. Prepayments do not usually pose any problems unless the seller becomes insolvent before delivering the goods. So it is very important to determine the very precise moment of passing ownership.
Insolvency of buyer: The same way when the buyer becomes insolvent, it is to be determined whether the property in the goods has been passed to the buyer or not. The buyer may not get delivery. If the buyer has ownership, the Receiver can take over the goods in consequence of insolvency.
Possession is considered prima facie evidence of ownership. But above discussion proves that in certain circumstances possession can’t prove ownership and in those circumstances, it is very important to know when the ownership passes. So it is now crystal clear how much it bears significance the moment when the property in goods passes to the buyer from the seller.
 The Sale of Goods Act, 1930, s 19
 Merrett, Louise. “The Importance of Delivery and Possession in the Passing of Title.” The Cambridge Law Journal 67, no. 2 (2008): 376-95. Accessed December 25, 2020. http://www.jstor.org/stable/25166410.
 Section 18
 Section 20
 Aboukdir, A, august 2016’Timing of the passing of property and risk under the English Sale of Goods Act 1979, the CISG and the Libyan law the interplay between the principle of party autonomy and the default rule’ ,University of Stirling.
 M C Kucchal, Vivek Kucchal ‘Mercantile Law ( Eighth edition)’ ,p 288
 1980 AIR 1468, 1980 SCR (3) 625
 Multanlal Chempalal vs C P Shah & Co.
 (1949),1All E.R. 435
 (1945) 2 C & K 153: 80 RR 834.
 Gengatharem, Rasiah, Protecting the Prepaying Buyer from the Seller’s Insolvency (2014).(2014) 22 Insolvency Law Journal 5 , UWA Faculty of Law Research Paper No. 2014-39 , Available at SSRN: http//ssrn.com/abstract=2503886
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