Sunday, 7 November 2010

Sale of Goods and pasage of property

In any commercial contract it is of paramount importance that each party is clear as to who bears the risk of damage to the goods subject to the contract and at what point property in them passes. The general rule is that he who has property in the goods also bears the risk, however determining when property passes it not always easy.

This post will look at Section 18, rule5  of The Sale of Goods Act 1979 which deals with the passage of property in unascertained goods. For purposes of space, the wording or the section is not repeated but the important issues raised under the section will be discussed. The importance of the rule is the presumtion that no property in the goods can pass until he goods are unconditinally appropriated to the contract. Most litigation has arisen  under the rule relates to  the interpretation of unconditional appropriation. Professors Sealey and Hooley in their book, Commercial law Text Cases and Materials (fourth edn pg 326) notes that the better interpretation of unconditional is the one adapted by professor Benjamin; 'unconitional' means 'not subject to any condition upon which the fulfillment of which the passing of the property depends'. On the other hand appropriation is best determined by looking at the approach taken by the courts.

Several cases are important in this regard. In Wait v Baker it was noted that appropriation may mean several things. for example it may mean the vendor making a selection, it is also noted to mean an agreement by both parties that  certain articles deliver in accordance with the contract. Sealey and Hooley says that determining when sufficient appropriation for the purposes of the Act is problematic. Even placing a persons name on a product may not be sufficient. In Carlos Federspiel & Co SA v Carles Twigg & Co Ltd, therefore the act of marking bicycles with the intended purchasers name and taking it to the expected point of delivery was not sufficient. the reasoning of the court was that the seller could always change his mind and deliver other bicycles. Logically this seems appropriate but a bit harsh on the expected purchaser.In an Earlier case, however the position was taken that handing bottles to a manufacturer of vegetable old and asking him to pour quantities of oil into the containers was sufficient.

It seems that from the cases examined that appropriation of unascertained goods for the purposes of The Sale of Goods Act 1979 will continue to be a problem for the carefree. In order to be certain that there has been  sufficient appropriation the parties will have to display the clearest of intention that the goods in question are clearly identified, and perhaps  actually placed in the possession of the intended buyer.


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