Test: Transfer Of Ownership And Delivery Of Goods- 1 - CA Foundation MCQ

• In a sale on approval, ownership transfers when the buyer accepts the goods.
• Acceptance can occur explicitly or when the buyer uses or resells the goods.
• Ownership also transfers if the buyer does not return the goods within a specified time, indicating implicit acceptance.
• Adopting the transaction, such as acting in accordance with ownership, also transfers ownership.
• Thus, all conditions (A, B, and C) lead to ownership transfer, making option D the correct answer.

- Contract Nature: The contract was conditional, dependent on the horse being suitable for B's purpose after an 8-day trial.
- Unexpected Event: The horse died on the 3rd day without fault from either party.
- Legal Implications: Since the contract's fulfillment was contingent on the horse's trial, which couldn't be completed, the contract became impossible to fulfill.
- Conclusion: The contract is void due to the impossibility of performance caused by the unforeseen event.

- Reservation of Right to Disposal refers to the seller's right to retain control over the goods until certain conditions are met, usually payment.
- Specific Goods are goods that are identified and agreed upon at the time a contract of sale is made.
- This reservation is available for specific goods because they are already identified, allowing the seller to control the transfer of ownership.
- In contrast, unascertained goods are not identified until later, making such reservation impractical initially.

A Finder of goods has the power to sell the goods to give good title to the Buyer, if the owner of goods cannot be found with reasonable diligence.  Reasonable diligence refers to the due diligence. It refers to he care expected from a logical and reasonable person.

- In a sale of goods, risk typically passes to the buyer when ownership (title) is transferred.
- If B has paid part of the price and A insists on delivery, it implies the sale is complete.
- The loss of the bicycle after the sale completion means the risk is with B.
- Therefore, after B's part payment and A's insistence on delivery, B bears the risk of loss.

A contract for the sale of goods to be delivered at a future date is typically:

• Valid: Such contracts are common in commerce, allowing buyers and sellers to agree on the sale and delivery of goods at a later time. This is known as a forward contract.
• It remains valid even if the seller currently possesses the goods, as long as all legal requirements for a contract are met, such as mutual consent, legality, and consideration.

- The correct answer is B: Nemo Dat Quod Non Habet.
- This Latin phrase means "no one gives what they do not have."
- It indicates that a seller cannot transfer a better title to goods than they themselves possess.
- If a non-owner sells goods without the owner's consent, the buyer cannot obtain ownership rights.
- This principle protects property rights, ensuring only rightful owners or authorized sellers can convey full title.

- Appropriation of goods means selecting and earmarking or separating goods with the intention of using them to fulfill a contract of sale.
- This involves identifying specific goods from a larger stock that are to be delivered under the contract.
- The goods must be appropriated with the mutual consent of both the buyer and the seller.
- Once the goods are appropriated, they become specific goods, and the ownership may transfer depending on the terms of the contract.

- When A sends the book by post parcel, the post office acts as an agent for delivery.
- Once A dispatches the parcel, the responsibility typically shifts to the buyer, B.
- According to common commercial practices, when goods are sent via post, the risk of loss during transit is borne by the buyer unless otherwise agreed.
- Therefore, delivery to the post office is considered delivery to the buyer, allowing B to recover the price from A if the parcel is lost.

- When a buyer receives less quantity of goods than agreed, they have specific legal options.
- Option A: Accept the goods and pay at the contract rate, meaning the buyer agrees to take the lesser quantity and pays accordingly.
- Option B: Reject the goods, refusing to accept the delivery since it doesn't meet the contract terms.
- Option D: Either (A) or (B), as the buyer can choose to either accept the lesser quantity at the contract rate or reject the goods entirely.

- When the seller refuses to take back the goods, the buyer becomes a bailee.
- A bailee is an individual who temporarily holds or possesses goods or property belonging to another, with an obligation to return or dispose of them according to the terms of the contract.
- This role arises in situations where the seller does not reclaim goods, making the buyer responsible for their care, similar to holding them in trust for the seller.

- In contracts of sale, risk typically passes with ownership, unless otherwise agreed.
- In this scenario, ownership transferred to Ram once the goods were dispatched.
- The station master notifying Ram indicates that the goods were ready for delivery.
- Since the goods were destroyed after arrival and before Ram took delivery, the loss falls on Ram.
- Therefore, Bill can claim the payment as the goods were considered to be Ram's property upon dispatch.

- "Nemo dat quod non habet" is a Latin legal maxim meaning "no one can give what they do not have."
- This principle asserts that a person cannot transfer a better title to someone else than they themselves possess.
- Thus, if someone does not have ownership rights to an item, they cannot pass ownership to another party.
- This protects true owners from losing their property through unauthorized transfers and emphasizes the integrity of property rights.

- When the property in goods is transferred, ownership legally shifts to the buyer.
- If the buyer becomes insolvent after this transfer but before taking possession, the ownership does not revert to the seller.
- The Official Assignee, representing the insolvent buyer, is entitled to claim both the goods and their possession.
- This is because ownership implies the right to possession, irrespective of the buyer's insolvency.
- Therefore, option C is correct: the Official Assignee can claim both the goods and their possession.

- In a sale on approval or "sale or return" basis, the buyer evaluates goods before deciding to purchase.
- The property in the goods passes to the buyer in the following scenarios:
- A: When the buyer explicitly approves the goods, showing intent to buy.
- B: When the buyer performs any action that implies acceptance of the transaction, like using or reselling the goods.
- C: When the buyer keeps the goods beyond the agreed review period without returning them.
- Therefore, the property passes under all these conditions, making D: All of the above the correct answer.

- Risk Transfer: Once goods are delivered, the risk of loss or damage usually transfers to the buyer.
- Ownership and Responsibility: Delivery indicates the buyer now owns the goods and is responsible for any subsequent issues.
- Legal Principle: According to the principle of 'risk follows ownership', the buyer bears the loss post-delivery.
- Contract Terms: Unless otherwise specified in the contract, this is standard practice.
- Conclusion: Therefore, the buyer suffers the loss if goods are destroyed after delivery.

- Nemo dat quod non habet is a legal principle meaning "no one gives what they do not have."
- It implies that a person cannot transfer a better title than they possess.
- Prem Chand, not being the owner of the camera, cannot legally transfer ownership to Gopal.
- Gopal bought the camera in good faith at a public auction, but this does not override the original owner's rights.
- Therefore, Gopal cannot become the rightful owner.

- The Sale of Goods Act, 1930, governs the contract of sale of goods in India.
- According to the Act, the essence of a contract of sale is the transfer of ownership from the seller to the buyer.
- Physical delivery of goods is not required for the contract to be valid.
- The transfer of ownership can occur through various means, including documents of title or symbolic delivery.
- Therefore, the statement that physical delivery is not essential is True.

- In the Sale of Goods Act, 1930, the physical delivery of goods is not essential for a sale to be valid.
- A sale contract can be completed through constructive or symbolic delivery.
- Ownership and risk can transfer without physical delivery if parties agree.
- The Act recognizes various forms of delivery, including symbolic delivery (e.g., handing over documents of title).
- Therefore, the correct answer to the statement is "True," as physical delivery is not mandatory for the validity of a sale.

- When a buyer wrongfully refuses to accept and pay for goods, the seller can claim compensation.
- The correct claim is "Damages for non-acceptance," which covers the loss or damage suffered due to the buyer's breach.
- The seller is entitled to recover the difference between the contract price and the market price at the time of breach.
- The "Price for non-acceptance" typically refers to the full contract price, which isn't applicable here unless the goods can't be resold.

- In a sale or return transaction, ownership is not transferred until the buyer confirms the purchase.
- A gave the chain to B, but B didn't confirm the purchase, so A retains ownership.
- B gave it to C under similar terms, meaning B also retained ownership until C confirmed.
- Since C lost the chain before confirming the purchase, B, who retained ownership, bears the loss.

- Risk in Sale of Goods: In the context of sales, "risk" refers to the possibility that goods might be lost, damaged, or destroyed.
- Property of Ownership: Risk typically passes with the transfer of ownership. This means the buyer assumes the risk once they own the goods.
- Legal Principle: According to common law, risk passes with the property unless otherwise agreed upon. This aligns with the principle that once you own the goods, you also bear the risk associated with them.
- Correct Answer: A: Property of ownership.

- When a seller delivers more goods than ordered, the buyer has options under contract law.
- The buyer can:
- Accept the whole: Take all delivered goods even if it's more than ordered.
- Reject the whole: Refuse all goods due to excess delivery.
- Accept ordered quantity: Keep the correct amount and reject the surplus.
- This flexibility is intended to uphold fair trade practices and buyer satisfaction.
- Thus, the buyer can choose any of these actions, making D the correct answer.

- Actual Delivery: This involves the physical transfer of goods from the seller to the buyer, where the buyer takes possession of the goods.
- Constructive Delivery: Occurs when, although the goods are not physically transferred, actions are taken that signify transfer of ownership, such as handing over keys to a warehouse where goods are stored.
- Symbolic Delivery: Involves delivering something that represents the goods, like a bill of lading or other documents of title.
All these modes of delivery are legally recognized in contracts of sale.

- In a sale, the buyer becomes the owner of the goods once the transaction is complete.
- Ownership implies the transfer of title and all associated rights from the seller to the buyer.
- This contrasts with a bailee, who temporarily holds goods without ownership, and a hirer, who uses goods for a specific period without owning them.
- Thus, the position of a buyer in a sale is fundamentally that of an owner, not merely a temporary custodian or user.

- When a sale is made, the goods should be:
- Placed at the disposal of the buyer: This means the seller must ensure the buyer has the means and opportunity to take possession of the goods.
- This approach aligns with many sales contracts where the risk and responsibility transfer to the buyer once the goods are available for pickup.
- The seller doesn't have to deliver the goods to the buyer’s location unless explicitly agreed upon.

- Risk in Goods and Ownership: Risk typically transfers with ownership, meaning once a buyer owns the goods, they also bear the risk.
- Legal Principle: According to many legal systems, the risk of loss or damage to goods passes to the buyer when ownership is transferred.
- Ownership Transfer: This happens when the parties intend it, often specified in the contract. If not specified, it usually aligns with the point of sale.
- Implication: This means buyers must ensure goods after ownership to protect against loss or damage.

The passing of title or transfer of property is crucial in determining the legal rights and liabilities of both the seller and buyer. Here's why:

• It signifies the moment when ownership of the goods shifts from the seller to the buyer.
• The buyer gains the right to possess, use, and resell the goods.
• The seller is relieved from the responsibility for the goods and entitled to payment.
• Risks associated with the goods, such as damage or loss, typically transfer with the title.

Thus, it affects both parties, making option C the correct choice.

- Goods in Transit: When goods are being transported from seller to buyer, they are considered "in transit."
- Rejection by Buyer and Seller: If both reject the goods, the initial contract is disrupted, but it doesn't automatically end transit.
- Ownership and Responsibility: The carrier does not become the owner. The responsibility of deciding on the goods still lies with the seller or buyer until resolved.
- Conclusion: Since no party has accepted the goods, they remain in transit until further actions are taken.