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PASSING OF PROPERTY


Exactly when property passes depends on whether the goods are specific or unascertained
Section 2 (1)

Section 19
(1)“Where there is a contract for the sale of specific or ascertained goods, the property in them is transferred to the buyer at such time as the parties to the contract intend to it to be transferred.
(2)          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.”

Where the sale involves specific goods, property passes when the parties intend for property to pass.  Section 19 is the only section in Cap 31 that addresses local circumstances.

Section 19 (2) raises issues of what to consider when trying to ascertain intentions of the parties.

Section 20.    Unless a different intention appears, the following rules apply for ascertaining the intention of the parties as to the time at which the property in the goods is to pass to the buyer—
(a)          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;
(b)          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 that thing be done, and the buyer has notice thereof;
(c)          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 that act or thing be done, and the buyer has notice thereof;
(d)          When goods are delivered to the buyer on approval or “on sale or return” or other similar terms, the property therein passes to the buyer—
(i)                    When he signifies his approval or acceptance to the seller or does any other act adopting the transaction;
(ii)                  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, or, if not time has been fixed, on the expiration of a reasonable time;
Section 20 (a) to (d) deal with Sale of Goods Contract where the goods are specific and there are other things to be done.  In (b) where goods are specific and the seller has to put them in a deliverable state, until this has been done and the buyer notified property does not pass.

Section 20 (e)           (I)         where there is a contract for the sale of unascertained or future goods by description, and goods of that description, and in a deliverable state, are unconditionally appropriated to the contract, either by the seller with the assent of the buyer or by the buyer with the assent of the seller, the property in the goods thereupon passes to the buyer; and assent may be express or implied, and may be given either before or after the appropriation is made;

                                    (ii)        Where, in pursuance of the contract, the seller delivers the goods to the buyer or to a carrier or other bailee or custodian (whether named by the buyer or not) for the purpose of transmission to the buyer, and does not reserve the right of disposal, he is deemed to have unconditionally appropriated the goods to the contract.

Section 20 (e) does not deal with specific goods ‘appropriation’ means selected and put aside.  The action of appropriation makes the goods specific.  You still need to ascertain the intentions of the parties.       


                                   
Section 20 (d)

Illustration:    if you go to buy a Matatu and you say you want such and such a matatu and you are given one to test drive and when you come back from the test drive you have already written words on the matatu, that act is inconsistent with the rights of the owner.  Your action amounts to conversion.

S. 20 (d) (2)

The action of painting the vehicle is taken to indicate that property has passed.  The intention is that when the buyer does something inconsistent with the rights of the seller.

S. 20 (e)

The intention of the parties is that property will pass.

S. 20 (e) (ii)

Property passes upon delivery of goods in this Section.

Rules in Section 20

1.            Quite often the parties have no clear intention or expressly stated intention as to when the property will pass and therefore they don’t have the intention of deciding that actually you do not often get into that discussion normally.  The intentions of the parties which Section 20 deals with basically are imaginary.

2.            Even if the parties have expressed certain intentions, it will be of no consequence if property has already passed according to rules laid down in Section 20.  Section 20 deals with intentions i.e. 20 (e) which says where …   The property is meant to pass when the goods are either loaded or delivered to the agent of the buyer.  This is not the truth being that the intentions were never discussed.  It is the courts that will sit down and apply the said rules after there has been a breach.  The intention is only constructed by courts after the behaviour

 Dennant V. Skinner & Collom


Important for
1.            It shows when the term passing of property is appropriately used.  The property will have passed irrespective of intentions of the parties.

2.            The decision in Dennant V. Skinner raises a complication as to whether the Sale of Goods Law is a facilitative or command law.  These two rules are violated here and one is left wondering how to read
The facts of Dennant were as follows:
The plaintiff an auctioneer sold a car to Mr. X by auction.  Mr. X was a swindler and gave a false name and address and he asked the auctioneer to allow him to take the car (goods) away in return for his cheque.  The Plaintiff allowed Mr. X to take away the goods without paying and the auctioneer was left with a cheque but before the Swindler Mr. X took the goods away, the Plaintiff required him to sign a document, which stated that the title to the vehicle would not pass until the cheque cleared.  Mr. X upon receiving the goods sold the car to the Defendant and what went to court was the dispute as between the auctioneer (plaintiff) and the defendant (buyer) as to who had the better title.  The issue was whether the property in the car had passed from the auctioneer to the fraudster since you cannot transfer that which you don’t own and if X had no property in the car,  (the intention of the parties was that the property would not pass until the cheque was cleared).  We can say that the intention was clear that property did not pass since the cheque didn’t clear.

The other argument was that in an auction sale under Section 58 property in the goods passes to the highest bidder on the fall of the hammer.

It was held that applying Section 58, property passed to the fraudster when the hammer fell and by the time the parties signed the document, property had already passed.  Document was signed after the hammer had fallen and therefore X had property in the goods and could pass a good title to the buyer.  If you apply Section 20 (a) you arrive to the conclusion that property would pass after the payment was done. 
In the case of auction when is a contract made?  Is it at the fall of the hammer or at the agreed time?

Kursell V. Timber Operators & Contractors ltd


Section 20 (a)

You come across the term ‘deliverable state’; goods are in a deliverable state if the buyer will be bound to take delivery of those goods.
Does this mean that if the buyer is not bound to take delivery of goods, then the goods are not in a deliverable state?  When you talk of deliverable state, the buyer is not bound to take delivery if the goods are not deliverable or do not conform to the contractual terms and the buyer cannot be forced to take delivery.

Defects in the goods do not prevent the passing of property.  The fact that goods do not conform to specifications does not prevent the passing of property.  That is why the buyer cannot be forced to take delivery of goods if they do not conform to the contract.  Can a person reject his/her own goods?   The intention of the parties should have been that property would not pass until one has examined the goods and the goods conform to all specifications of the contract.   The intention in S. 35 that the property will not pass in goods until they have been examined and that they conform to the description and everything else in the contract.

 
 
 

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