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TransferofPropertyasBetweenSellerandBuyer

Section18Goodsmustbeascertained

Goodsmustbeascertained:wherethereiscontractforthesaleofunascertainedgoods,
nopropertyinthegoodsistransferredtothebuyerunlessanduntilthegoodsare
ascertained
Synopsis
1. Transferofproperty
2. Propertycannotpassuntilthegoodsareidentified
3. Partofaspecificwhole
4. Propertyandrisk
5. Identificationofgoods
Transferofproperty

ThisandthefivefollowingsectionsoftheActdealwiththequestionforeshadowedby
section4oftheActandlaydownruleswhichassistindecidingthequestionwhenthe
objectofthecontractofsale,namely,thetransferofthepropertyinthegoodstothe
buyerhasbeenaffected.
Propertycannotpassuntilthegoodsareidentified
Itisaconditionprecedenttothepassingofthepropertyineverycasethat,the
individualityofthethingtobedeliveredshouldbeestablished.Inanygivencase,there
maybequestionwhetherthisconditionisfulfilledornot,anditmaybethatthe
propertywillnotpassevenifitisfulfilled,butuntilitis,thereisnopossibilityofthe
propertypassing.Itisessentialthatthearticleshouldbespecificandascertainedina
mannerbindingonboththeparties,forunlessthatbeso,thecontractcannotbe
construedascontracttopasthepropertyinthatcategory.
Whereaccordingtothetermsofthecontract,thesellerwastosupplywastecoalashas
andwhenitwasdischargedfromthebunkersofthepowerhouse,itwasheldthatthe
contractwasforthesaleofunascertainedgoodsand,thereforenopropertypassedto

thebuyertillthegoodswereascertained.(TejSinghVsStateofUttarPradeshand
others1981)
Partofaspecificwhole
Itisobviousthatifthecontractismerelyforthesaleofgoodsbydescription,suchasa
contractforsaleofacertainquantityofmaltingbarley,orfuturegoods,thenecessary
conditionisnotfulfilled.Norisitfulfilledevenifthegoodsaresofarascertainedthat
thepartieshaveagreedthattheyshallbetakenfromsomespecifiedlargerstock.The
partiesdidnotintendtotransferthepropertyinoneportionofthestockmorethanin
another,andthelawwhichonlygiveseffecttotheirintentiondoesnottransferthe
propertyinanyindividualportion(WhiteVs.Wilks1813).Andthemerefactthatan
orderforthedeliveryisgivenbythesellertothebuyer,andislodgedbythebuyerwith
awarehouseman,whoholdsthespecifiedlargerstockoutofwhichthegoodssoldare
tobetaken,isnotsufficienttotransferthepropertytothebuyer.(Laurie&Morewood
Vs.Dudin&sons1926)Thus,wheretheascertainmentofthegoodsdependsupon
theirbeingseparatedfromthebulkbythesellerorathirdpartyorthebuyer,bytheir
beingsevered,weighedormeasuredorsomeotherprocess,nopropertycanpassuntil
thisisdone(NationalCoalBoardVs.Gamble1959)
PropertyandRisk
Inthisclassofcase,itisnecessarytodistinguishthepassingofthepropertyfromthe
transferoftherisk;theriskusuallypasseswiththeproperty,butmaypass
independentlyofit;Thus,acceptanceofthedeliverywarrantforacertainquantityof
spiritoutofalargerbulkwhichwasliabletodeteriorateinstoragewasheldtoputthe
riskofdeteriorationonthebuyer,althoughhehadacquired,notpropertybutonly
undividedinterestinthewholebulk.Equally,itwouldseemthattherecanbenonein
anindividualpartofachattel,suchasatreewhichhasbeenfelled,ofwhichamarked
portionwassold,andofwhichtheotherportionistoberetainedbytheseller.Insuch
acase,itisconceived,thewholetreeremainsthepropertyoftheselleruntilthe
markedportionissevered,eveniftheseveranceistobedonebythebuyer.
Identificationofthegoods
Thecontractitselfmayprovidethatthepropertyshallpassonthehappeningofsome
specifiedevent,sufficienttoidentifythegoods,andoccasionallytheymaybecome
identifiedbyothermeans.Thus,inacasewherethesellersold250quartersofwheat
outofalargerbulkbelongingtohiminawarehouse,andthebuyertookdeliveryof400
quartersandpledgedtheremaining850quarterstoabank,andinthemeantimethe
sellersoldtheremainderofthebulkinthewarehouse,ofwhichdeliverywastaken,so

that850quartersonlywereleftinthewarehouse,itwasheldthatbythisprocessof
exhaustionthe850quartersbecameascertainedgoodsandpropertythereinpassedto
thebuyer,sothatthepledgeeacquiredatitletheretoagainsttheseller.(Wait&
MidlandBank1926)InStateofkarnatakaVs.TheWestCoastPaperMillsLtd.AIR
1986itwasheldthatwhereunderacontractacompanywaspermittedtoremove
bamboosfromtheforestareaatRs.10/perton,andthegovernmentbyasubsequent
orderenhancedthepricetoRs.20/perton,itwasheldthattheenhancedratewasno
applicabletothebambooscutalthoughnotremovedpriortothedateofthe
governmentorder,becauseonthebamboosbeingcutandextricated,thegoodsbeing
ascertainedandinadeliverablestate,thepropertyhadpassedtothecompany.

Section19.Propertypasseswhenintendedtopass
Wherethereisacontractforthesaleofspecificorascertainedgoodsthepropertyinthemis
transferredtothebuyeratsuchtimeasthepartiestothecontractintendittobetransferred.
2.Forthepurposeofascertainingtheintentionofthepartiesregardshallbehadtotheterms
ofthecontract,theconductofthepartiesandcircumstancesofthecase.
3.Unlessadifferentintentionappears,therolescontainedinsection20to24arerulesfor
ascertainingtheintentionofthepartiesastothetimeatwhichthepropertyinthegoodsisto
passtothebuyer.
Synopsis
1. Principlesfordeterminingwhetherthepropertyistransferred
2. Intentionoftheparties
Ascertainedgoods

Principlesfordeterminingwhetherthepropertyistransferred
Whenitappearsthatthegoodsthesubjectofthecontractarespecificor
ascertained,sothatitispossibleforthepropertytopasstothebuyer,itbecomes
necessarytodeterminewhetherithasactuallypassed;

Thissectionreproducesthisstatementinstatutoryform,andtherulesofconstruction
adoptedbycourtsarethosesetoutinSs20to24.
Intentionoftheparties
Thegoverningprinciplewhichshoulddetermineastothepassingofthepropertyinthe
goodsmustbetofindoutwhatistheintentionoftheparties.Itisopentotheparties
toagreethatthepropertyshallpassipsofactoimmediatelythegoodsbecome
ascertainedoreventhatitshallpassatsometimeafterthedeliveryiseffected.The
desirabilityofmakingexpressprovisionstothiseffectisdemonstratedbythe
consequencesofitsomissionfromtheContractAct.Itmighthavebeenthoughtthat,
evenintheabsenceofsuchaprovision,thecourtswouldbefreetogiveeffecttothe
intentionofthepartiestoalawfulcontractofsaleonsuchanimportantelementofthe
contractasthetransferoftheproperty,andthatviewhasonsomeoccasionsbeen
actedupon.
Whereacompanyhadtransferreditsplantandmachinerytothefinancecorporationandthe
onlyrightthecompanyhadwastoredeemanditwasclearthatthecompanycouldnotsellthe
samewithouttheconcurrenceofthefinancecorporationitwasheldthattheintentionofthe
partiesnotwithstandingthelanguageofthedocumentbetweenthecompanyandM/sRanga
EngineeringCompanywastotransferthepropertyonlyafterobtainingtheconsentofthe
financecorporationandtherewasnosaleuntilthen.(PPLookeVs.NJMathew&others1967)
Saleofsharesbecomescompleteassoonaspropertyinthesharesisintendedtobe
transferredtothebuyer.Suchintentiondoesnotdependonanyparticularformormodeof
transferandhastobegatheredfromthefactsofeachparticularcase.UnityCompanyPvt.Ltd.
Vs.DiamondSugarMills&othersAIR1971
Ascertainedgoods
Thentermascertainedgoods,whichalsooccursinSection58,isnotdefinedbythe
Act.Itis,however,clearthatthewordsspecificgoodsbearthemeaningassignedto
theminthedefinitionclause,goodsidentifiedandagreeduponatthetimeacontract
ofsaleismade.Ascertainedprobablymeansidentifiedinaccordancewiththe
agreementafterthetimeacontractofsaleismade.Sections23and25,therefore,
mustalsobereadsubjecttotheprovisionsofthissection,andregardmustbehadto
theintentionofthepartieswhenconsideringwhetherthepropertyhasorhasnot
passedinthecircumstancesdealtwithbythosesections.Whereteaktreestobecut
wereofmorethan12inchesgirth,itwasheldthattillitwasascertainedastowhich
treesfellwithinthedescriptiontheywerenotascertainedgoods.BadriPrasadVs.The
StateofMadhyaPradeshAIR1970SC.

Section20Specificgoodsinadeliverablestate
Wherethereisanunconditionalcontractforthesaleofspecificgoodsinadeliverable
state,thepropertyinthegoodspassestothebuyerwhenthecontractismade,anditis
immaterialwhetherthetimeofpaymentoforthetimeofdeliveryofgoods,orboth,is
postponed.
Examples

Thissectionmaybeillustratedbythefollowingexamples:

1.Saleonthe4thJanuaryofahaystackonthesellerslandatthepriceof145tothepaidon
the4thFebruary,thehaytobeallowedtoremainonthesellerslanduntilthe1stMay:nohay
tobecutuntilthepricewaspaid.Thepropertyinthehaystackpassedonthemakingofthe
contractandonthestackbeingdestroyedbyfire,thebuyermustbearthelossTarlingVs.
Baxter(1827)
Examples
2.Saleofaspecifiednumberofbushelsofoats,thecontentsofabininawarehouse.Theseller
givesadeliveryordertothebuyer,addressedtothewarehouseman,authorisingdeliveryofthe
oatstiothebuyer,andaskingthewarehousemantoweighthem,.Thewarehousemanaccepts
theorderandentersitinhisbooks.Thepropertyhaspassedtothebuyer,astheweighingwas
notnecessarytoidentifytheoatsortoascertaintheprice,butwasmerelyforthesatisfaction
ofthebuyer.SwanwikVs.Sothern(1839)
Section21Specificgoodstobeputintoadeliverablestate
Wherethereisacontractforthesaleofspecificgoodsandthesellerisboundtodo
somethingtothegoodsforthepurposeofputtingthemintoadeliverablestate,the
propertydoesnotpassuntilsuchthingisdoneandthebuyerhasnoticethereof.
Example

Thissectionmaybeillustratedbythefollowingexample:Saleofthewholecontentsofa
cisternofoil,theoiltobeputintocasksbythesellerandthentakenawaybythebuyer.Some
ofthecasksarefilledinthepresenceofthebuyer,buybeforeanyareremoved,orthe
remainderarefilled,filled,firedestroysthewholeoftheoil.Thebuyermustbearthelossof
theoilwhichhadbeenputintothecasks,thesellerthatoftheremainder.RuggVs.Minett
(1089)
Section22:Specificgoodsinadeliverablestate,whenthesellerhastodoanythingthereto
inordertoascertainprice:

Wherethereisacontractforthesaleofspecificgoodsinadeliverablestate,butthe
sellerisboundtoweigh,measure,testordosomeotheractorthingwithreferenceto
thegoodsforthepurposeofascertainingtheprice,thepropertydoesnotpassuntil
suchactorthingisdoneandthebuyerhasnoticethereof.
Examples
Thissectionmaybeillustratedbythefollowingexamples:
1.Saleofastackofbarkatacertainpriceperton,thebarktobeweighedbythesellersand
buyersagents.Partwasweighedandtakenaway,butbeforeanythingmorewasdoneaflood
carriedawaytheremainder.Thelossofthisfellontheseller.SimmonsVsSwift(1826)
2.Saleof289specifiedbalesofgoatskin,containing5dozenineachbale,atacertainpriceper
dozen.Bytheusageofthetrade,itwasthesellersdutytoseewhetherthebalescontainthe
numberspecifiedinthecontract.Beforethesellerhaddonethisthebalesweredestroyedby
fire.Thelossfellontheseller.ZaguryvsFurnell(1809)
Section23:Saleofunascertainedgoodsandappropriation.
1. Wherethereisacontractforthesaleofunascertainedorfuturegoodsbydescription
andgoodsofthatdescriptionandinadeliverablestateareunconditionally
appropriatedtothecontractassentofthebuyerorbythebuyerwiththeassentofthe
seller,thepropertyinthegoodsthereuponpassedtothebuyer.Suchassentmaybe
expressedorimplied,andmaybegiveneitherbeforeoraftertheappropriationmade.
2. DeliverytothecarrierWhereinpursuanceofthecontractthesellerdeliversthegoods
tothebuyerortothecarrierorotherbailee(whethernamedbythebuyerornot)for
thepurposeoftransmissiontothebuyer,anddoesnotreservetherightofdisposal,he
isdeemedtohaveunconditionallyappropriatedthegoodstothecontract.
Example
Thissectionmaybeillustratedbythefollowingexample:
1. Saleof20hogsheadsofsugaroutsugaroutofalargerquantity.Thesellerfillsfour
hogsheadswhichthebuyertakesaway.Subsequentlythesellerfillssixteenmore
hogsheads,andinformsthebuyerofthisaskinghimtocomeandtakethemaway.The
buyerpromisestodoso.Thepropertyhaspassedtothebuyer.
2. MrAcontractstoselltoMrBacertainquantityofliquoroutofabigcaskcontaininga
muchlargerquantity.Therequiredquantityisnotseparatedorbottled.Thepropertyin
theliquordoesnotpasstothepurchaser.

Example
Thissectionmaybeillustratedbythefollowingexample:
1. Saleof20hogsheadsofsugaroutsugaroutofalargerquantity.Thesellerfillsfour
hogsheadswhichthebuyertakesaway.Subsequentlythesellerfillssixteenmore
hogsheads,andinformsthebuyerofthisaskinghimtocomeandtakethemaway.The
buyerpromisestodoso.Thepropertyhaspassedtothebuyer.
2. MrAcontractstoselltoMrBacertainquantityofliquoroutofabigcaskcontaininga
muchlargerquantity.Therequiredquantityisnotseparatedorbottled.Thepropertyin
theliquordoesnotpasstothepurchaser.
Section24Goodssentonapprovaloronsaleorreturn
Whengoodsaredeliveredtothebuyeronapprovaloronsaleorreturnorother
similarterms,thepropertythereinpassestothebuyer
(a)whenhesignifieshisapprovaloracceptancetothesellerordoesanyotheract
adoptingthetransaction:
(b)ifhedoesnotsignifyhisapprovaloracceptancetothesellerbutretainsthegoods
withoutgivingnoticeofrejection,then,ifatimehasbeenfixedforthereturnofthe
goods,ontheexpirationofsuchtime,and,ifnotimehasbeenfixed,ontheexpiration
ofareasonabletime.
Examples
Thesectionmaybeillustratedbythefollowingexamples:
1.Goodsdeliveredonsaleorreturnarepledgedbythedeliveree.Hetherebybecomesthe
buyerofthegoods,andtheoriginalownercannotrecoverthegoodsfromthepledgee.
2.Goodsdeliveredonsaleorreturntothedefendantaredeliveredbyhimonsimilartermsto
another.Thelatterinturnhandsthemtoafourthperson,wholosesthem.Thedefendant,
beingunabletoreturnthegoods,mustpayforthemasifhehadactuallyagreedtobecomethe
buyer.
Section26Riskprimafaciepasseswithproperty
unlessotherwiseagreed,thegoodsremainatthesellersriskuntilthepropertytherein
istransferredtothebuyer,butwhenthepropertythereinistransferredtothebuyer,

butwhenthepropertythereinistransferredtothebuyer,thegoodsareatthebuyers
riskwhetherdeliveryhasbeenmadeornot.
Providedalsothatnothinginthissectionshallaffectthedutiesorliabilitiesofeither
sellerorbuyerasabaileeofthegoodsoftheotherparty.
Examples
Thissectionmaybeillustratedbythefollowingexamples;
1.Goodsinahouseheldonleaseandbelongingtothetenantweresoldbyauction
underconditionsexpresslyprovidingthatalllotsshouldbetakentobedeliveredatthe
fallofthehammer,afterwhichtimetheyshouldremainattheexclusiveriskofthe
purchaser.Therentofthehousewasinarrear,andafterthesalethelandlord
threatenedtodistressonthesegoods;topreventdistress,theauctioneerpaidtherent
andhandedthenetproceedsofthesaletotheoriginalownerofthegoods,thetenant.
Itwasheldthattheauctioneerhadnorighttomakethisdeduction,asthepropertyin
thegoodshadpasse0dtotherespectivebuyersandtheseller,therefore,hadnofurther
interestinthem;theauctioneer,inconsequence,hadnoimpliedauthorityfromhimto
paytherentinordertosavethegoodsfromdistress.SweetingVs.Turner(1871)
2.Thedefendantpurchased975balesofrice,beingthewholecontentsofagola,paid
earnestmoney,andtookpartdeliveryoftherice.Therestwasafterwardsdestroyedby
fire.Thepropertyinthewholehadpassedtohimandhewasheldliabletopaythe
balanceoftheprice.TheUnionofIndiaVs.TheWestPunjabFactoriesLtd.AIR1966
SC
3.Thedefendantcontractedtopurchase30tonsofapplejuice.Theplaintiffcrushed
theapples,putthejuiceincasksandkeptitpendingd3elivery.Thedefendantdelayed
takingdeliveryandthejuicewentputridandhadtobethrownaway.Thedefendant
wasliabletopaytheprice;thesellerhadbeeninapositiontosellthegoodselsewhere
andacquireothergoodsforthepostponedtimeofdeliveryandhehadnotdonesoand
therewassomelossinthemeanwhile,theresponsibilityforthelosswouldhavefallen
onhim,butinthepresentcasethesellerhadtokeepthegoodsreadyfordeliveryas
andwhenthebuyerproposedtotakethem.DembyHammilton&Co.Ltd.Vs.Barden
(EndeavourWinesLtd)1949