Sale of Goods Act: Transfer of Property and Risk

Corp /Buss Law
Author Name(s)
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Author Note

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Introduction
In the principles of Sale of Goods (SOG), the crucial moment is the determination of
when the risk and property pass from seller and goes to the buyer. In particular, it is the
determination of when the transaction for the sales matures and the ownership of the property
ceases to rescind with the seller and the buyer acquires the ownership. In law, property passes
from sellers to buyers whenever buyer the buyer transfers the required price to the seller and the
seller transfers the ownership. The Sale of Goods Act (SOGA) 1979 provides the guidance of the
circumstances surrounding these transfers. In understanding these rules, this paper uses a
scenario of Jack. In an intention to extent his art, Jack went to Fort Galleries Ltd, to purchase
some items.
(1) Jack agreed with Samantha, Fort Galleries Ltd assistant that he would collect the
painting the following days. However, the flood destroys the warehouse and the painting.
Whenever there is an agreement for the sale of goods, it is crucial to ascertain when the
ownership of the goods (property) passes from being in the possession of the seller and moves to
the buyer. In most cases, property does not pass to the buyer immediately after the payments.1
The SOGA provides the governing principles for the transfer of both the property and risk.
Usually, the law assumes that ownership of property and risk pass from the from the seller to the
buyer simultaneously at the time of the exchange.2
On the other hand, the law allows the parties to decide between themselves regarding
matters of the party that bears the risk. For instance, the United Nations Conventions on the
1 Indira Carr and Peter Stone, International Trade Law (4th ed, Routledge-Cavendish 2010) 25.
2 Ewoud Hondius, Viola Heutger and Christoph Jeloschek, Sales. (Hamburger Edition HIS 2016) 337
<http://public.eblib.com/choice/publicfullrecord.aspx?p=4746611> accessed 19 June 2019.

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Contract for international sale of goods (CISG) provides the contracting parties with legal rights
to decide freely on the terms they would want to include in the signed agreement.3
Normally, properties pass to buyer at the time when both parties, the buyer and the seller
are executing the contract, or after the execution.4 However, the actual possession may pass
sometimes later. The parties’ intention remains the focal point in determining the status of the
transfer. Along the principles of passing the property, the risk also passes prima facie with the
property.5 Nevertheless, this general principle is subject to exception where article 6 allows the
parties to agree how they risk would be transferred depending on the different times between the
negotiations and the actual transfer of the property.6
The information that we have regarding the case of Jack and Fort Galleries Ltd (FGL)
tells us that Jack selected the canvass print, and Samantha informed him that the print could be
ordered from the warehouse. Samantha then went ahead to make arrangements with the
warehouse, who in turn separated the paintings, and marked them for Jack. This information does
provide state clearly whether there were actual contractual terms decided between Jack and FGL.
In cases where the there are no clear contractual terms, Lord Hoffmann stated that judges need to
take a purposive approach in finding the objective intention apart from taking a 'literal' approach
which looks at the meaning of the words used.7 Therefore, in dealing with the case of Jack and
FGL, we need to look at the circumstances of their transaction, and use align the circumstances
3 United Nations Convention On Contracts For The International Sale Of Goods[CISG] 1980 Article 6.
4 Anwar Aboukdir, ‘The Timing of the Passing of Property and Risk under the English Sale of Goods
Act 1979, the CISG and the Libyan Law–the Interplay between the Principle of Party Autonomy and
the Default Rule’.
5 ibid.
6 Bradford Stone, ‘Contracts for the International Sale of Goods: The Convention and the Code’ (2014)
23 Mich. St. Int’l L. Rev. 753.
7 Investors Compensation Scheme v West Bromwich Building Society [1997] UKHL 28; [1998] 1 All ER
98; [1998] 1 WLR 896 (19 June, 1997).

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against the prevailing commercial laws to determine both the transfer and the allocation of the
risk.
The section 16 of SOGA provides that parties can only transfer goods after ascertaining
them.8 This means that the parties must identify the goods in which they intend to transfer in
their contract. Apart from ascertaining goods in writing, the law recognizes that goods can be
ascertained through conducts.9 This means that some action actions undertaken by the parties
after the contract are qualified in ascertaining goods. Given these principles, we can then make
conclusions by choosing them and the action of the FGL to separate and put the writing of Jack,
that the paintings that Jack selected were ascertained.
The next step is to find the intentions of the parties to transfer the ownership of the
paintings from FGL to Jack. The guiding principles can be found in SOGA sec 17 and 18.10
Whereas ascertainment of goods is a factor to the transfer, Section 17 provides that there must be
the intention of the parties to execute the actual transfer.11 Specifically, the act states that goods
are transferred when the parties intend them to pass.12 Considering the facts provided, the sale
made to Jack by FGL was a sale of specific goods. Therefore, property can be stated to have
passed to Jack the moment the painting was separated from the stock and Jack’s details were
written down on it. Section 18 confirms this by stating that in an unconditional contract, goods
pass to the buyer at the time of making the contract, and it is therefore immaterial to look at
whether payment was postponed or to be paid on delivery.13
8 The Sale of Goods Act 6.
9 Furmston, Sale & Supply of Goods (Routledge 2012) ss 57–59.
10 The Sale of Goods Act (n 8) ss 17 & 18.
11 Alexander von Ziegler, Transfer of Ownership in International Trade (Kluwer Law International BV
2011) 140.
12 The Sale of Goods Act (n 8) s 17.
13 ibid 18 rule 1.