Transfer of Ownership and Delivery of Goods (Part-4) - The Sale of Goods Act, 1930 CA CPT Notes | EduRev

Business Laws for CA Foundation

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CA CPT : Transfer of Ownership and Delivery of Goods (Part-4) - The Sale of Goods Act, 1930 CA CPT Notes | EduRev

The document Transfer of Ownership and Delivery of Goods (Part-4) - The Sale of Goods Act, 1930 CA CPT Notes | EduRev is a part of the CA CPT Course Business Laws for CA Foundation.
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SUMMARY

The property in the goods or beneficial right in the goods passes to the buyer at a point of time depending upon ascertainment, appropriation and delivery of goods. Risk of loss of goods prima facie follows the passing of property in goods. Goods remain at the seller’s risk unless the property therein is transferred to the buyer, but after transfer of property therein to the buyer the goods are at the buyer’s risk whether delivery has been made or not. An important rule regarding passing of title in goods is that the purchaser does acquire no better title to the goods than what the seller had.

This rule again is not applicable under certain circumstances.
Delivery of goods denotes the voluntary transfer of possession, which may be actual or even in some constructive form and which is again subject to various rules which help in deciding when the delivery becomes effective.


TEST YOUR KNOWLEDGE 

Multiple Choice Questions

1. The property in the goods means-

(a) Possession of the goods

(b) Ownership of the goods

(c) Custody of the goods

(d) Both (a) and (c)

2. In case of sale on approval, the ownership is transferred to the buyer when he-

(a) Accepts the goods

(b) Adopts the transaction
(c) Fails to return the goods

(d) In all the above cases

3. If a seller hands over the keys of a ware house containing goods to the buyer, it results in-

(a) Constructive delivery

(b) Actual delivery
(c) Symbolic delivery

(d) None of these

4. A sells to B 100 bags of wheat lying in C’s ware house. A orders to C to deliver the wheat to B.C agrees to hold the 100 bags on behalf of B and makes the necessary entry in his books. This is a–

(a) Actual delivery

(b) Constructive delivery

(c) Symbolic delivery
(d) None of the above

5. Selection of goods with the intention of using them in performance of the contract and with the mutual consent of the seller and the buyer is known as-

(a) distribution

(b) appropriation

(c) amortization

(d) storage

6. In contract of sale of goods, if the seller is not the owner of goods, then the title of the buyer shall-

(a) Not be same as that of the seller

(b) Be same as that of the seller

(c) Be better than that of the seller

(d) None of the above

7. Nemo dat quad non habet means-

(a) One cannot give what one does not have

(b) Let the buyer be beware

(c) Whatever is paid, is paid according to the intention or manner of the party paying

(d) None of these

8. The goods are at the risk of the party who has the-

(a) Ownership of the goods

(b) Possession of the goods

(c) Custody of the goods

(d) Both (b) and (c)

Answer to MCQs

1 (b)
2 (d)
3 (c)
4 (b)
5 (b)
6 (b)
7 (a)

8 (a)


Theoretical Questions

Question 1: “Nemo Dat Quod Non Habet”– “None can give or transfer goods what he does not himself own.” Explain the rule and state the cases in which the rule does not apply under the provisions of the Sale of Goods Act, 1930.

Question 2: What are the rules related to Acceptance of Delivery of Goods?

Answers to Theoretical Questions

1: Exceptions to the Rule Nemo dat Quod Non Habet: The term means, “none can give or transfer goods what he does not himself own”. Exceptions to the rule and the cases in which the Rule does not apply under the provisions of the Sale of Goods Act, 1930 are enumerated below:

(i) Sale by a Mercantile Agent: A sale made by a mercantile agent of the goods or document of title to goods would pass a good title to the buyer in the following circumstances, namely;

(a) if he was in possession of the goods or documents with the consent of the owner;

(b) if the sale was made by him when acting in the ordinary course of business as a mercantile agent; and

(c) if the buyer had acted in good faith and has at the time of the contract of sale, no notice of the fact that the seller had no authority to sell. (Proviso to Section 27).

(ii) Sale by one of the joint owners: If one of the several joint owners of goods has the sole possession of them with the permission of the others the property in the goods may be transferred to any person who buys them from such a joint owner in good faith and does not at the time of the contract of sale have notice that the seller has no authority to sell. (Section 28).

(iii) Sale by a person in possession under voidable contract: A buyer would acquire a good title to the goods sold to him by seller who had obtained possession of the goods under a contract voidable on the ground of coercion, fraud, misrepresentation or undue inuence provided that the contract had not been rescinded until the time of the sale (Section 29).

(iv) Sale by one who has already sold the goods but continues in possession thereof: If a person has sold goods but continues to be in possession of them or of the documents of title to them, he may sell them to a third person, and if such person obtains the delivery thereof in good faith without notice of the previous sale, he would have good title to them, although the property in the goods had passed to the first buyer earlier. A pledge or other deposition of the goods or documents of title by the seller in possession are equally valid. [Section 30(1)].

(v) Sale by buyer obtaining possession before the property in the goods has vested in him: Where a buyer with the consent of seller obtains possession of the goods before the property in them has passed to him, he may sell, pledge or otherwise dispose of the goods to a third person, and if such person obtains delivery of the goods in good faith and without notice of the lien or other right of the original seller in respect of the goods in good faith and without notice of the lien or other right of the original seller in respect of the goods, he would get a good title to them. [Section 30(2)].

(vi) Sale by an unpaid seller: Where on unpaid seller who had exercised his right of lien or stoppage in transit resells the goods, the buyer acquires a good title to the goods as against the original buyer [Section 54(3)].

(vii) Sale under the provisions of other Acts:

(i) Sale by an ocial Receiver or liquidator of the company will give the purchaser a valid title.

(ii) Purchase of goods from a finder of goods will get a valid title under circumstances.

(iii) Sale by a pawnee under default of pawnor will give valid title to the purchaser.

2: Rules related to acceptance of delivery: Acceptance is deemed to take place when the buyer-

(a) intimates to the seller that he had accepted the goods; or

(b) does any act to the goods, which is inconsistent with the ownership of the seller; or

(c) retains the goods after the lapse of a reasonable time, without intimating to the seller that he has rejected them (Section 42).

Ordinarily, a seller cannot compel the buyer to return the rejected goods; but the seller is entitled to a notice of the rejection. Where the seller is ready and willing to deliver the goods and requests the buyer to take delivery, and the buyer does not take delivery within a reasonable time, he is liable to the seller for any loss occasioned by the neglect or refusal to take delivery, and also reasonable charge for the care and custody of the goods (Sections 43 and 44).

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