READING
CHAPTER 3
Law Commission Report no 215: Sale of Goods forming part of a Bulk: 1993
lecture 4. passing of property and risk of goods
Classification of goods
- Importance of passing of property? – time of passing of property is important because
only once the property has passed to the seller from the buyer, they can then sue for the
price
only if the property has passed, only then can the ownership pass to the third person
general rule – the risk of the good passes with the property
in case of a bankruptcy – to determine who has the right to keep.
- Specific / unascertained goods - In order to determine the exact time that property passes it is
important to classify the goods: Under SOGA (applies to B2B B2C in this regard), goods are classified
as either “specific” or “unascertained”
Specific goods are defined in section 61(1) SOGA as: “goods identified and agreed on at the
time the contract is made”: e.g. “this bottle of wine here”; most goods bought in the
supermarket at the cash desk
Unascertained goods are not defined by SOGA, but may be: -
1. purely generic goods e.g. “500 tons of sugar”: these may in turn be either:
future goods - if the seller does not own any goods of
the contract description at the date of the contract (e.g.: a ship to be built by
the seller) or
existing goods - if the seller does own goods of the
contract description, but the contract does not identify
the contract goods.
2. a specified quantity of unidentified goods from an identified source (or “bulk”, as it is
usually known) e.g. 500 tons of sugar out a cargo of 1000 tons (these may be future
or existing goods.
- Examples - B wishes to buy 6 bottles of a particular wine, Chateau X. He goes to the shop of S, a wine
merchant. Classify the goods in each of the following situations:
1. There are 6 bottles of Chateau X on the shelf in the shop, and B says, “I’ll take those” –
specific goods
2. There are no bottles of Chateau X in the shop, but S tells B that he has six bottles in his
cellar. B agrees to buy them – unascertained good (specified quantity of unidentified goods
from an identified source)
3. There are no bottles of Chateau X in the shop, so B orders “6 bottles of Chateau X”. S has 6
bottles of Chateau X at home, which he intends to sell to B - unascertained good
4. S has 12 bottles of Chateau X in his cellar, and B agrees to buy “6 bottles out of the 12
bottles of Chateau X currently in S’s cellar” - unascertained good (specified quantity of
unidentified goods from an identified source)
Rules for determining when property passes
- Time of the transfer of property: ss. 16-19 SOGA
- The rules vary depending on whether the contract is for the sale of specific or unascertained goods
A. Passing of property in specific/ascertained goods
- Property passes when the parties intend it to pass: s.17 SOGA
- For the purpose of ascertaining the intention of the parties regard shall be had to the terms of the
contract, the conduct of the parties and the circumstances of the case.
- Rules to determine the parties intention: s. 18 (1-4) SOGA (specific goods)
1. Where there is an unconditional contract for the sale of specific goods in a deliverable
state the property in the goods passes to the buyer when the contract is made, and it is
immaterial whether the time of payment or the time of delivery, or both, be postponed.
Unconditional contract: if there is nothing to prevent the property from passing
(Sealy/Hooley)
, Deliverable state (s. 61(5)): Goods are in such a state that the buyer would under
the contract be bound to take delivery of them (however, if the seller is bound to
do something to the goods in order for them to be ready to be handed over they
will not be in a deliverable state)
Dunant v Skinner & Collom [1948] 2 KB 164 (property passes in accordance with
the intention of the parties at the time of making the contract). At an auction
motor vehicle were sold to a man who was the highest bidder. The vehicles were
delivered to the buyer in exchange for a cheque and the buyer certified that the
ownership of the vehicle should not pass until the cheque had been cleared.
However, the check was dishonoured. Rule 1 applied. “Accordingly, upon the fall of
the hammer the property of this car passed to King unless that prima facie rule is
excluded from applying because of a different intention appearing or because there
was some condition in the contract which prevented the rule from applying. In my
view, this was clearly an unconditional contract of sale, and I can see nothing
whatever to make a different intention appear.”
2. Where there is a contract for the sale of specific goods and the seller is bound to do
something to the goods for the purpose of putting them into a deliverable state, the
property does not pass until the thing is done and the buyer has notice that it has been
done.
Underwood v Burgh Castle [1922] 1 KB 123 - Contract of sale for a condensing
machine which was standing bolted to a concrete emplacement at the time of the
agreement. The seller had promised to remove the machine and load it upon the
train. Rule 1 was not applicable, since goods were not in a deliverable state when
the contract was made.
3. Where there is a contract for the sale of specific goods in a deliverable state but the seller is
bound to weigh, measure, test, or do some other act or thing with reference to the goods
for the purpose of ascertaining the price, the property does not pass until the act or thing is
a done and the buyer has notice that it has been done.
Nanka-Bruce v Commonwealth Trust Ltd [1926] AC 77 - Rule 3 only applies if the
seller has the obligation to perform the act. If the goods are to be weighed by
another person, property will usually pass under r. 1 or r.2.
4. When goods are delivered to the buyer on approval or on sale or return or other similar
terms the property in the goods passes to the buyer:
(a) when he signifies his approval or acceptance to the seller or does any other act
adopting the transaction;
(b) if he does not signify his approval or acceptance to the seller but retains the goods
without giving notice of rejection, then, if a time has been fixed for the return of the
goods, on the expiration of that time, and, if no time has been fixed, on the expiration
of a reasonable time
The person to whom the goods have been delivered has the option of purchasing
the goods (Sealy/Hooley, 333).
Adoption of the transaction: buyer does something which substantially impedes his
ability to return the goods (e.g. resells the goods) (Dobson/Stokes, 43)
Kirkham v Attenborough [1897] 1 QB 201 – winter bought from
Kirkham(pawnbroker) a good on sale of return. He didn’t approve of the good. He
pledged the good with a pawnbroker. This was regarded by the court as breaking
the chain. Attenborough (the buyer pledges the goods with a pawnbroker)
Weiner v Gill [1906] 2 KB 574 – Jewellery sold on approval was delivered to a third
party by the purchaser. Property had not passed because the terms of the contract
indicated a clear intention that the property was not to pass until the payment to
the original seller was made.
Elphick v Barnes (1880) 5 CPD 321 - A horse was delivered on eight days trial and
died without the fault of either party before the return deadline. No sale at the
time of the death. (Under r. 4 (a) the buyer must show the adoption of the
transaction by a word/conduct).
Poole v Smith’s Car Sales (Balham) Ltd [1962] 1 WLR 744 - A car delivered to a car
dealer in August with authority to sell for a specific sum was not returned as
CHAPTER 3
Law Commission Report no 215: Sale of Goods forming part of a Bulk: 1993
lecture 4. passing of property and risk of goods
Classification of goods
- Importance of passing of property? – time of passing of property is important because
only once the property has passed to the seller from the buyer, they can then sue for the
price
only if the property has passed, only then can the ownership pass to the third person
general rule – the risk of the good passes with the property
in case of a bankruptcy – to determine who has the right to keep.
- Specific / unascertained goods - In order to determine the exact time that property passes it is
important to classify the goods: Under SOGA (applies to B2B B2C in this regard), goods are classified
as either “specific” or “unascertained”
Specific goods are defined in section 61(1) SOGA as: “goods identified and agreed on at the
time the contract is made”: e.g. “this bottle of wine here”; most goods bought in the
supermarket at the cash desk
Unascertained goods are not defined by SOGA, but may be: -
1. purely generic goods e.g. “500 tons of sugar”: these may in turn be either:
future goods - if the seller does not own any goods of
the contract description at the date of the contract (e.g.: a ship to be built by
the seller) or
existing goods - if the seller does own goods of the
contract description, but the contract does not identify
the contract goods.
2. a specified quantity of unidentified goods from an identified source (or “bulk”, as it is
usually known) e.g. 500 tons of sugar out a cargo of 1000 tons (these may be future
or existing goods.
- Examples - B wishes to buy 6 bottles of a particular wine, Chateau X. He goes to the shop of S, a wine
merchant. Classify the goods in each of the following situations:
1. There are 6 bottles of Chateau X on the shelf in the shop, and B says, “I’ll take those” –
specific goods
2. There are no bottles of Chateau X in the shop, but S tells B that he has six bottles in his
cellar. B agrees to buy them – unascertained good (specified quantity of unidentified goods
from an identified source)
3. There are no bottles of Chateau X in the shop, so B orders “6 bottles of Chateau X”. S has 6
bottles of Chateau X at home, which he intends to sell to B - unascertained good
4. S has 12 bottles of Chateau X in his cellar, and B agrees to buy “6 bottles out of the 12
bottles of Chateau X currently in S’s cellar” - unascertained good (specified quantity of
unidentified goods from an identified source)
Rules for determining when property passes
- Time of the transfer of property: ss. 16-19 SOGA
- The rules vary depending on whether the contract is for the sale of specific or unascertained goods
A. Passing of property in specific/ascertained goods
- Property passes when the parties intend it to pass: s.17 SOGA
- For the purpose of ascertaining the intention of the parties regard shall be had to the terms of the
contract, the conduct of the parties and the circumstances of the case.
- Rules to determine the parties intention: s. 18 (1-4) SOGA (specific goods)
1. Where there is an unconditional contract for the sale of specific goods in a deliverable
state the property in the goods passes to the buyer when the contract is made, and it is
immaterial whether the time of payment or the time of delivery, or both, be postponed.
Unconditional contract: if there is nothing to prevent the property from passing
(Sealy/Hooley)
, Deliverable state (s. 61(5)): Goods are in such a state that the buyer would under
the contract be bound to take delivery of them (however, if the seller is bound to
do something to the goods in order for them to be ready to be handed over they
will not be in a deliverable state)
Dunant v Skinner & Collom [1948] 2 KB 164 (property passes in accordance with
the intention of the parties at the time of making the contract). At an auction
motor vehicle were sold to a man who was the highest bidder. The vehicles were
delivered to the buyer in exchange for a cheque and the buyer certified that the
ownership of the vehicle should not pass until the cheque had been cleared.
However, the check was dishonoured. Rule 1 applied. “Accordingly, upon the fall of
the hammer the property of this car passed to King unless that prima facie rule is
excluded from applying because of a different intention appearing or because there
was some condition in the contract which prevented the rule from applying. In my
view, this was clearly an unconditional contract of sale, and I can see nothing
whatever to make a different intention appear.”
2. Where there is a contract for the sale of specific goods and the seller is bound to do
something to the goods for the purpose of putting them into a deliverable state, the
property does not pass until the thing is done and the buyer has notice that it has been
done.
Underwood v Burgh Castle [1922] 1 KB 123 - Contract of sale for a condensing
machine which was standing bolted to a concrete emplacement at the time of the
agreement. The seller had promised to remove the machine and load it upon the
train. Rule 1 was not applicable, since goods were not in a deliverable state when
the contract was made.
3. Where there is a contract for the sale of specific goods in a deliverable state but the seller is
bound to weigh, measure, test, or do some other act or thing with reference to the goods
for the purpose of ascertaining the price, the property does not pass until the act or thing is
a done and the buyer has notice that it has been done.
Nanka-Bruce v Commonwealth Trust Ltd [1926] AC 77 - Rule 3 only applies if the
seller has the obligation to perform the act. If the goods are to be weighed by
another person, property will usually pass under r. 1 or r.2.
4. When goods are delivered to the buyer on approval or on sale or return or other similar
terms the property in the goods passes to the buyer:
(a) when he signifies his approval or acceptance to the seller or does any other act
adopting the transaction;
(b) if he does not signify his approval or acceptance to the seller but retains the goods
without giving notice of rejection, then, if a time has been fixed for the return of the
goods, on the expiration of that time, and, if no time has been fixed, on the expiration
of a reasonable time
The person to whom the goods have been delivered has the option of purchasing
the goods (Sealy/Hooley, 333).
Adoption of the transaction: buyer does something which substantially impedes his
ability to return the goods (e.g. resells the goods) (Dobson/Stokes, 43)
Kirkham v Attenborough [1897] 1 QB 201 – winter bought from
Kirkham(pawnbroker) a good on sale of return. He didn’t approve of the good. He
pledged the good with a pawnbroker. This was regarded by the court as breaking
the chain. Attenborough (the buyer pledges the goods with a pawnbroker)
Weiner v Gill [1906] 2 KB 574 – Jewellery sold on approval was delivered to a third
party by the purchaser. Property had not passed because the terms of the contract
indicated a clear intention that the property was not to pass until the payment to
the original seller was made.
Elphick v Barnes (1880) 5 CPD 321 - A horse was delivered on eight days trial and
died without the fault of either party before the return deadline. No sale at the
time of the death. (Under r. 4 (a) the buyer must show the adoption of the
transaction by a word/conduct).
Poole v Smith’s Car Sales (Balham) Ltd [1962] 1 WLR 744 - A car delivered to a car
dealer in August with authority to sell for a specific sum was not returned as
