Passing of Property

Passing of property

Property (i.e. ownership) cannot pass unless the goods are ascertained (i.e. the actual goods to be sold are identified). s.18 provides presumptions to determine when property will pass, both for specific goods (ascertained at the time of the contract) and goods unascertained at the time of contracting. These 'rules' can be excluded by contrary implication or express agreement.

Rule 1: in an unconditional contract for sale and delivery of specific goods in a deliverable state, property passes immediately on contract formation.

Rule 2: where the seller is bound to perform some condition before the sale is possible, property passes when this condition is performed.

Rule 3: where the seller is bound to measure or weigh the goods to ascertain the price, property passes when this is done and the buyer is notified.

Rule 4: when goods are delivered on sale or return, or on approval, property passes when the buyer adopts the transaction (or fails to give notice of rejection within a reasonable time).

Rule 5: in a sale of unascertained goods, the property will pass following an unconditional appropriation of goods or, where the sale is from a specified bulk, following ascertainment by exhaustion (i.e. removal of all the goods in the bulk but those destined for the buyer).

Seller does not have title

If the seller does not own the goods, the buyer generally cannot gain title, although he can sue for breach of the implied term as to title.

Seller has voidable title

Where the seller holds voidable title, title can pass to a buyer in good faith. If title is voided before the contract of sale is concluded, title cannot pass.