C4 - Passing of Property

Question 1

The rules of property

Answer 1

Property is “the general property in goods”. The fact that property is transferred does not mean the buyer has title against the whole world or that the buyer has right to possession of the goods. To get posession, the price must be paid. If the seller has reserved property until payment, if the buyer goes bankrupt, the seller can recover the goods. A seller in possession of goods can pass good title to a bona fide transferree. Where goods are sold and property passes to the buyer but the seller remains in possession, if the seller becomes insolvent, the buyer can recover the property. The risk passes when the property passes. The seller cannot sue for the price until the property passes.

Question 2

Aluminium Industry v Romalpa

Answer 2

If the seller has reserved property until payment, if the buyer goes bankrupt, the seller can recover the goods. Reservation of title are when the contract states the title will only pass on payment. The seller had the right to use such a clause to retain the property in the goods and where the clause imposes on the buyer a fiduciary relationship with the seller, so that the seller can claim on the proceeds of sales of the goods by the buyer.

Question 3

Section 17: Passing of property of specific goods

Answer 3

Operty in secific and ascertained goods passes when the parties intend it to pass. Three exceptions:

1. Section 16 - no title can pass in goods until they are ascertained (except for 20A - goods in bulk).
2. Cannot pass title when the goods have ceased to exist (PST Energy 7 Shipping).
3. There can be no transfer of title of future goods.

Question 4

PST Energy 7 Shipping v OW Bunker

Answer 4

The transfer of title cannot happen when the goods have ceased to exist

Question 5

Deliverable state

Answer 5

The goods are in deliverable state when they are in such a state that the buyer would under the terms of the contract be bound to take delivery of them. If the goos are available, comply with the terms of the contract and the seller is in a position to pass the property in the goods to the buyer, so that the buyer has to take delivery of the goods, they are in a deliverable state.

Question 6

Tarling v Baxter

Answer 6

Contract for the sale of hay, the hay was to be cut only when they buyer paid the price. Before the price was paid, a fire destroyed the ahy, but it was held to be the buyer’s property already - an immediate sale was intended

Question 7

Rule 1

Answer 7

When specific goods in an unconditional contract are in a deliverable state, the property passes at the time the contract is made, whether or not delivery and payment are delayed.

Question 8

Rule 2

Answer 8

When the seller needs to do something to the property to put it in a deliverable state, then property does not pass until this has been done and the buyer has been notified.

Question 9

Underwood v Burgh Castle Brick

Answer 9

Rule 2. Machine was bolted on the floor at the time of contract and it was supposed to be on free rail. Held that the property did not pass until it was unbolted and put on the train.

Question 10

Philip Head v Showfront

Answer 10

Rule 2. Fitted carpets, with one of them having to be stitched. Carpets were laid on the floor, then stolen. The property had not yet passed and still at seller’s risk since the thing that needed to be done (the stitching) hadn’t been done yet.

Question 11

Kulkarni v Manor Credit

Answer 11

Rule 2. Until the license plates had been attached to the new car, it was not in a deliverable state since it couldn’t be driven.

Question 12

Rule 3

Answer 12

Where there is a sale of goods in a deliverable state but the seller has to do something to the goods like measure or weigh it, it does not pass until this has been done and the buyer notified.

Question 13

Turley v Bates

Answer 13

Rule 3. Here the property had passed because the weighing was stipulated to be done by the buyer.

Question 14

Rule 4

Answer 14

Sale or return. Property passes when the buyer accepts the goods, does an act consistent with accepting them or by the expiration of the return period or after a reasonable time without returning.

Question 15

Kirkham v Attenborogouh

Answer 15

Rule 4. Jewelry deliver on a sale or return basis. The buyer ‘pledged’ the jewelry, meaning he had adopted the transaction and the property had passed to him.

Question 16

Dennant v Skinner

Answer 16

Rule 1. Sold a car to a swindler at an auction, was given a check, but signed an agreement that the property did not pass until the check cleared. Too late! The hammer indicated the passing of the property!

Question 17

Rule 5

Answer 17

Unascertained goods. No property in the goods passes until the goods are ascertained. When the unascertained goods are in a deliverable state and are unconditionally appropriated to the contract the property will pass. The goods may be appropriated by the seller (putting the buyer’s name on it), or by the buyer (filling the petrol tank). Good are also appropriated by delivery

Question 18

Aldridge v Johnson

Answer 18

The one that was the barter of the bullocks against the barley. 155 bags filled but not the others - only these goods had passed in property, not the other ones, because they had now been ascertained.

Question 19

Internet sales

Answer 19

In sales over the internet, the property passes when the seller posts the goods with the consent of the buyer

Question 20

Healy v Howlett & Sons

Answer 20

Dispatched 190 boxes of fish, 20 to be labelled for the buyer, but there was a delay and the fish had deteriorated The risk was still on the seller as the property had not yet passed.

Question 21

Rohde v Thwaites

Answer 21

The buyer had contracted to buy 20 casks of sugar. He filled 20 casks, had 4 delivered but the buyer refused to take the others. Court held he could sue for the price of all 20 casks as the property had already passed to him on all 20, not only the 4 delivered.

Question 22

Langton v Higgins

Answer 22

Agreed to sell him the oil from the farm, sent him bottles for this. The bottles were filled but sold elsewhere. It was held the property had already passed on the oil as soon as it entered the bottles.

Question 23

Pignataro v Gilroy

Answer 23

140 bags of rice to be sold by sample, which were initially unascertained. Then wrote to the buyer that 125 were ready at one location and 15 at another. The bags were stolen. The risk was on the buyer as the property passed as soon as the goods were ascertained.

Question 24

Undivided Shares in a bulk

Answer 24

20A. Where the buyer has paid the price, he owns an undivided share of the bulk. - this gives consent to the boods being delivered to another owner - so any of them can sell and pass property on their given shares without taking possession. “bulk” means a mass of goods of the same kind which (1) is contained in a defined space or area, and (2) is such that any goods in the bulk are interchangeable with any other goods therein of the same number or quantity

Question 25

Sterns v Vickers

Answer 25

Sold some white spirits which was part of a bulk. The buyer resold the spirit, the second buyer didn’t wish to take delivery immediately. When he did collect, it had gone bad. Although property had not passed, the risk had passed.

Question 26

Passing of risk

Answer 26

S 20.1 allows the parties to define that the risk passes with physical possession of the goods. If this is not agreed, risk is with the seller until transfer of property, and from the buyer thereafter. If a delay is caused by either party and the goods suffer, the delaying party will carry the risk.

Question 27

Demby Hamilton v Barden

Answer 27

Apple juice went bad due to the delay of the buyer picking it up. The risk was on him even though property had not passed.

Question 28

Wiehe v Dennis Bros

Answer 28

S20.1 does not apply to the duties and responsibilities of the seller or buyer when the goods are in possession of buyer or seller as bailee or custodian.

Question 29

Wiehe v Dennis Bros

Answer 29

A pony was injured by 3rd party while it was in the custody of the seller - the seller was liable as baillee as he had failed to take proper care pending delivery.

Question 30

Frustation

Answer 30

If the goods are at the seller’s risk and they perish or deteriorate, although the buyer is not liable to pay the price, he can sue for damages if he has suffered. If they are at the buyer’s risk, the buyer is liable for the price even i the goods have perished or deteriorated. In such a case, if the seller has suffered loss, they can sue the buyer for damages for non-acceptance, unless the buyer can plead frustration.

Question 31

Section 7 : frustration

Answer 31

where there is an agreement to sell specific goods and subsequently the goods, without any faulr on the part of the seller or buyer, perish before the risk passes to the buyer, the agreement is avoided. So if the goods perish before the property passes, the seller must bear the loss and cannot claim the price. Also, the buyer cannot claim damages for non-delivery. Where section 7 doesn’t apply, the parties could still seek protection for frustration in common law remedies.

Question 32

Consequences of passing of property

Answer 32

1. IF the property has passed to the buyer he will generally have a good title to them if the seller becomes insolvent while the goods remain in the seller’s possession.
2. If the goods are delivered subject to a reservation of title (or property) by the seller, the seller MAY have a good title to the goods should the buyer become insolvent.
3. The right to sue a 3P for damage to, or loss of, the goods may depend on who has the property.
4. The risk passes prima facie when the property passes.
5. Generally speaking, the seller can only sue for the price if the property has passed.

Question 33

The Span Terza

Answer 33

The traditional method of possession v property. The traditional approach allows to meet new problems. Here, the dispute between a charterer and a mortgagee of the ship could be resolved simply asking whether fuel oil (which had been bought and paid by the charterers) had been sold to the shipowerns so that property had passed to them. It was held that it had not, so that the charterers still owned the oil and had a prior right to that of the mortgagees, who could only claim through the owners.

Question 34

Dennant v Skinner

Answer 34

The plaintiff sold a car at auction, but then told the swindler he could only have it if he signed a document that the title would not pass until the cheque cleared. He failed to reclaim the car, as the property had already passed in accordance with s.18, and s.17 could not apply.

Question 35

Unconditional contract

Answer 35

These are contracts without “conditions precedent”, or essential stipulations, these usually regard that the transfer doesn’t take place until payment is made.

Question 36

Varley v Whipp

Answer 36

The sale of a reaping machine was not an unconditional sale despite the fact that it was clearly not subject to any conditions precedent.

Question 37

Kursell v Timber Operations

Answer 37

Specific Goods, “Identified”. Here they sold all the timber in a Latvian forest that conformed to certain measurements on a particular date, the buyers to have 15 years to cut and remove the timber. The Latvian assembly nationalized the forest. Who owned the wood at the time? The property had not passed as the goods were not sufficiently identified, since not all the trees were to pass, but only the ones meeting the measurement.

Question 38

Deliverable state

Answer 38

Defects generally do not stop the property from passing even though the buyer is not bound to take delivery of faulty goods - if they are rejected, the property returns. THe possession of goods can probably always be transferrred if the parties intended to tranfsfer it, not matter the physical conditions.

Question 39

Underwood v Burgh Castle

Answer 39

SOld an engine that was riveted to the fllor. It was held that it was not in a deliverable state since it needed to be removed from the floor. Also, since there was some risk in taking it off, the parties were held to not have intended the property to pass at the moment of the contract.

Question 40

Re Anchor Line

Answer 40

Usually, the risk passes with the property, so this is sometimes useful to see if property has passed. Here, the property was held to not have passed because there was a specific clause placing the risk on the buyer, and if the property had passes, such a clause would have been unecessary, so held to not have passed. Once again, all the facts of the case matter.

Question 41

Nanka v Commonwealth Trust

Answer 41

Rule 3 only applies to acts to be done by the seller. Here, sold cocoa at a price per lb, with the purchaser to weigh the goods. Held to not be conditional, and the property had passed, because the onus was on the buyer to weigh it.

Question 42

Difference between sale on approval and sale or return (is this even a contract of sale?)

Answer 42

Rule 4 lays out that in these cases, the buyer must adopt the transaction. ANy action by the buyer inconsistent with his free power to return the goods is an act adopting the transaction. An express stipulation that property does not pass until the goods are paid is effective to rule this out, as it is a sign of a contrary intention by the seller.

Question 43

Atari v Electronic Boutique

Answer 43

It is sufficient if after giving notice, the buyer collects in the goods within a reasonable time to that the seller can resume the possession. It also supports the view that sale or return contracts are contracts of bailment up to the time the property passes.

Question 44

Weiner v Harris

Answer 44

Sent jewelry to F, a retailer, under a standing contract where the property was to remain the sellers until the goods were paid for. F pledged the jewels. The question: “Was it a transaction of goods taken on sale or return, or was it a transaction under which F became a mercantile agent to sell, with authority to sell, and bound to account to the P?) If the first case, rule 4 would be overriden and the seller protected. In the latter, he was a mercantile agent and enable to pass the property. In this case, held that he was a mercantile agent, and the second buyer was protected.

Question 45

CTN Cash v Gallagher

Answer 45

Delivery is ascertainment, but if the goods are delivered to wrong address, they remain at seller’s risk.

Question 46

Laurie v Dudin

Answer 46

The defendants were warehousement who were in possession of some maize belonging to A. A sold part of it to B and B resold to the plaintiffs, who obtained a delivery order. A, not having been paid by B, stopped delivery, and the plaintiffs then brought an action against the defendants. The court held that the goods had not passed because the goods were not identified.

Question 47

Re Blyth Shipbuilding

Answer 47

A agreed to build a ship to B, the price to be paid in instalments. On the payment of the first instalment, “the vessel and all materials and things appropriated for her should become and remain the absolute property of the purchaser. A went bankrupt during construction. It was held that the property in the incomplete ship had passed to the buyers, but what about the unworked and worked materials? Held that these had not been sufficiently appropriated to the contract, mainly because they had not yet been fixed to the body of the ship. Although complete and final fixing was not necessary, it was held that the goods must be substantially in position so that to remove them would have involved undoing work already done.

Question 48

Federspiel v Twigg

Answer 48

Manufactured bycicles for the buyer. They were made and packed with the buyer’s name on them, but before they could ship them, the sellers became insolvent. Had property passed? No. Here the sellers were responsible for delivery so there was one more thing the seller needed to do to ascertain finally to the contract and perform.

Question 49

Lennox v Puttick

Answer 49

Here, cf Federspiel, the generator were alloted and ready for pick up, and the buyer was responsible for picking up the goods and had been informed they were ready. Property had passed since the seller had done everything he was required to do under the contract.