The Property, Title and Debt in Sale of Goods

Introduction

The Sale of Goods Act, 1930 governs the sale of goods contracts. Contracts for the sale of goods are subject to the general contracting principles of the law, i.e. the Indian Contact Act. However, a contract for the sale of goods has other peculiar features, such as the transfer of possession of the goods, the fulfilment of buyer and seller’s rights and duties, solutions for breach of contract, terms and warranties provided under a contract for the sale of goods, etc. These quirks are the scope of the 1930 Sale of Goods Act regulations.

The term goods or property passing means a transfer of ownership that is governed by the principles of the Sale of Goods Act, 1930. It is a settled principle of law that the risk is also passed from the seller to the buyer along with ownership of the goods or property.

According to Section 3(36)[1], “movable property” is defined as “property of any description except immovable property.” Section 3(26)[2] provides that “immovable property shall include land, benefits to be derived from land and things attached to the earth or permanently attached to anything attached to the earth.”

Therefore, joint reading of the two parts gives us a simple meaning of something that is attached to the land may be referred to as “movable property” if there is an item involving severability. When deciding on the nature of the property, the element of severability is essential, and this element can be determined by determining the value of the property, the conditions of the contract and the party’s intention with regards to each other. For example, timber falls within the definition of “goods” as described in Section 2(7)[3]. In the case of Kanakapalam Estate v. State of Kerela,[4]it was stated that for selling purposes timber trees are cut off from the land and thereby become a commercial product.

In the case of Tata Consultancy Services v. State of Andhra Pradesh[5] it was held that property means general property over the goods as per the Sale of Goods Act and not merely a specific property.

In the case of Scientific Engg. House (P) Ltd. v. CIT,[6] it was stated that the use of the word ‘includes’ further extends the definition since it includes not only goods of the prescribed nature in the definition but also those things specifically provided by the interpretation clause

An individual who, in the normal course of business, fails to pay his debts or is unable to pay even his due debts is considered insolvent in the eyes of law. Section 2(8) stipulates the term “insolvent.” The law confers upon an insolvent person certain rights and duties.

In accordance with Section 2(4), we can confer that the Title to Goods Document includes a lading bill, dock warrant, certificate of warehouse keeper, railway receipt, multi-modal transport file, warrant or order for the delivery of goods. It also contains any other files used in the regular course of business demonstrating the actual possession of goods or proving the possessor’s authority to transfer or receive the goods. The paper is a very important document for taking any legal proceedings without which it is difficult to proceed at court.

Accordance with Section 2(11) of the Act, property usually means the ownership or title of the goods. There is a transfer of ownership in the process of a sale or we can say the transfer of the property from one party to the other.

Legal Principles concerning Goods Transfer

Under the umbrella of The Sale of Goods Act, 1930, there are four principles concerning the transfer of goods that the article will discuss and they are as follows:

Property transfer on sale of Specific or Inspected Goods

Sections 19 to Section 22 of the Sale of Goods Act, 1930 are a few Sections governing the transfer of goods in cases where the goods are specific and in nature ascertained:

Property to pass when intended (Section 19)[7]

Section 19 of the 1930 Sale of Goods Act is divided into further subparagraphs and the following are:

1. Where a contract for the sale of determined or specific goods exists, the convenience and consensus of both parties on which the property is intended to be transferred from the seller to the buyer shall set a specified time.
2. To understand the true intention of the contracting parties, one must pay attention to the circumstances and conduct of both parties to the contract. In the present case, the terms of the contract should also be given equal importance.
3. Except where there is an alternative intention, the principles laid down in Sections 20 to 24 of the Act will help to determine the contracting parties’ intention regarding the time the goods are about to be transferred from the seller to the purchaser.

Deliverable Specific Goods (Section 20)[8]

Section 20 of the Sale of Goods Act, 1930 concerns specific goods in a deliverable state and states: In a contract for the sale of specific goods which is of an unconditional nature, at the time of contract formation, the goods are transferred from the seller to the buyer. However, the only necessary precondition for the transfer of property is the fact that the goods must be present in a deliverable state. Delay in paying or delivering goods, or both, is not something that matters.

Specific goods to be placed into a deliverable condition (Section 21)[9]

Section 21 of the Sale of Goods Act, 1930: certain products to be placed in a deliverable state:

Where a contract for the sale of specific goods exists, the property in question in the transaction will only be passed on to the buyer if the seller performs the necessary acts and omissions to put the goods in a deliverable condition. In addition, notifying the buyer of the alterations is mandatory for the seller.

Specific goods are in deliverable condition but the seller must do something to establish the price (Section 22)[10]

Section 22 of the Sale of Goods Act, 1930: Specific goods are in a deliverable condition but the seller must do something to establish the price:

Where there is a contract in a deliverable state for the sale of specific goods, the seller will undoubtedly be bound to weigh, measure, test or perform the necessary demonstration or whatever is required in connection with the sale of those particular goods. He’ll do this to determine the proper value of the goods.

CASES

Badri Prasad v. State of Madhya Pradesh[11]

In the case of Badri Prasad Vs. State of Madhya Pradesh, the appellant entered into a contract with regard to certain forests in Madhya Pradesh. He was entitled to cut teak trees with a girth of more than 12-inch. Following the passage of the Abolition of Exclusive Property (Estates, Mahals. Alienated Lands) Act, the appellant was forbidden from cutting trees in the pursuit of his privileges under the contract.

He filed a suit claiming the specific performance of the contract on the grounds that:

• Forests and trees have not been covered by the Act in the State;
• Even if it had been granted, the standing timber had not been sold to the appellant in the State;
• In any case, a new contract was signed on 5 February 1955 and the appellant was entitled to its particular results.

The court held: the forest and the trees assigned to the State under the Act. The complainant was allowed to destroy more than 12-inch teak trees. However, it had to be decided which trees should come under the Definition. Until this has been created, prices shall not be decided in compliance with Section 9 of the Selling of Products Act.

Multanuak Chempal v. C.P Shah & Co.[12]

In the case of Multanuak Chempalal  v. C.P Shah & Co., Section 26 of the Selling of Products Act 1930 was addressed and it was maintained that the danger passes even after the property has been entered into in the arrangement. Thus, the parties may enter into a contract that provides for the transfer of risk before the transfer of the property.

Hoogly Chinsurah Municipality v. Spence Ltd[13]

In the case of Hoogly Chinsurah Municipality v. Spence Ltd, the Municipality of Hoogly Chinsurah has negotiated with Spence Ltd to buy a tractor on condition that, if the Municipality is not pleased, it refuses the tractor. The Municipality seized the tractor, used it for a month and a half, and then rejected it. The complaint was brought against Spence Ltd’s refusal to recognize it. The Court, while dismissing the appeal, held that the municipality had not only used the tractor but that a reasonable time had also elapsed. As a result, the property in the tractor had passed to the municipality and could not be rejected now.

Conclusion

Sales of goods are the most prevalent of all trade transactions. Information on product sales is important to everyone. The law relating to the sale of goods is included in the 1930 act of sale of goods whether it to be about the title, property or debt with regards to the same.

Questions

1. What is the scope of sales of goods Act, 1930?
2. What is the definition of property under this Act?
3. What do you mean by debt under this Act?
4. Judicial pronouncement with regards to the status of property?

[1] General Clauses Act 1897

[2] ibid

[3] Sales of Goods Act, 1930

[4] (1989) 73 STC 336

[5] (2005) 1 SCC 308

[6] (1986) 1 SCC 11

[7] The Sale of Goods Act, 1930

[8]Supra 1

[9] Sales of Goods, Act, 1930

[10] Sales of goods act, 1930

[11]1970 AIR 706, 1969 SCR (2) 380

[12] AIR 1970 Kant 106, AIR 1970 Mys 106, (1969)2 MysLj

[13] AIR 1978 Cal 49