Ans.
TRANSFER OF OWNERSHIP:
TIME OF TRANSFER
Sale of goods involves transfer of ownership of property
from the seller to the buyer. It is necessary to determine the precise moment
of time at which the ownership of the goods passes from the seller to the
buyer, because of the following reasons:
Risk passes with
property
The general rule is that risk prima facie passes with the
property. If the goods are lost or damaged by accident or otherwise, then,
subject to certain exceptions, the loss falls on the person who is the owner at
the time when the goods are lost or damaged.
Action against third
parties
If the goods are damaged by the action of third parties
it is the owner who can take action.
What is the effect of
insolvency?
In case of insolvency of either the buyer or the seller
it is necessary to know whether the goods will be taken over by the Official
Assignee. The answer depends upon whether the ownership of the goods is with
the party who has become insolvent.
Suit for price
Unless the contract provides otherwise, a suit for price
by the seller does not lie unless the property has passed to the buyer.
LAW RELATING TO PASSING
OF RISK IN CASE OF THE SALE OF GOODS
The basic principle is the risk prima facie passes with
the ownership. According to section 26—
Unless otherwise agreed, the goods remain at the seller's
risk until the property therein is transferred to the buyer. But when the
property therein is transferred to the buyer, the goods are at the buyer's risk
whether delivery has been made or not.
Thus risk and 'property' (ownership) go together. But it
is open to the parties to separate the risk from ownership. For example, the
parties may agree that risk will pass sometime after or before the property has
passed. The separation of risk from property can be made in the following ways.
Firstly, where delivery has been delayed due to fault of seller or the buyer,
the goods are at the risk of the party in fault. Secondly, risk and property
may be separated by a trade custom. Thirdly, risk and property can be separated
by the agreement of the parties.
