When does property pass from the seller to the buyer?

Property in goods means ownership of the goods. It is different from possession of the goods. Possession refers to the custody of the goods. There may be situations where a person may be the owner of certain goods but not in possession of the same (or) vice-versa.

Transfer of property (or) passing of property: where the intention of the parties as to the time when the property in goods passes to the buyer cannot be ascertained from the contract, the rules contained in sections 20 to 24 apply. These rules are as follows:-

(A) Specific (or) ascertained goods:(section 20 to 22)

(i). Passing of property at the time of contract: where there is an unconditional contract of sale of specific goods in a deliverable state, the property in the goods passes to the buyer when a contract is made. The fact is that the postponement of the time of payment (or) delivery (or) both, will not affect the passing of property. Thus, goods are said to be in a deliverable state when they are in such a state that the buyer would under the contract be bound to take delivery of them.

(ii). Passing of property delayed beyond the date of the contract:

(a) Specific Goods not in a deliverable state: In case of specific goods to which something has to be done by the seller to put them into a deliverable state, but the fact is that the property passes only when such thing is done and the buyer has notice thereof.

(b) When the price of the goods is to be ascertained by weighing, etc: where there is a contract of sale of specific goods in the deliverable state, but the seller is bound to weight, measure, test (or) do some other thing with respect to them, for ascertaining the price, but the fact is that the property does bot pass until such act is done and the buyer has notice of it.

(B) Unascertained (or) future goods: In case of unascertained goods, the property in the goods is not transferred to the buyer unless and until the goods are

(i) Ascertained - Ascertainment is the process by which the goods answering to the description (or) quality stated in the contract, identified and set apart. Ascertained can be a unilateral act of the seller i.e., he alone may set apart the goods.

(ii) unconditional appropriated - It is unconditional when the seller does not reserve to himself the right of disposal of the goods. The appropriation may be done either by the seller with the assent of the buyer (or) by the buyer with the assent of the seller. Such assent may be expressed (or) implied and may be given either before (or) after the appropriation is made. If the contract is silent as to the party who is to appropriate the goods, the party who under the contract is first to act is the one who appropriates.

(C) Goods sent on approval (or) on sale (or) return basis:

When goods are delivered to the buyer on approval (or) on sale (or) return in such a case the ownership pass to the buyer as follows:

(i) Acceptance of goods: When he signifies his approval (or) acceptance to the seller.

(ii) Adoption of the transaction: When he does any other act adopting the transaction.

(iii) Failure to return the goods: The ownership shall pass to the buyer if the buyer fails to return the goods to the seller:-

a) Within specified time- if a certain time is fixed for the return of goods.

b) Within a reasonable time- if no time has been fixed for the return of goods.