Meaning of property:

S.61- Defines it as general property in goods. It is used to denote title or ownership. We are
only concerned about passing on full ownership in goods and not special property in goods.
We are not concerned about passing on small ownership rights if it is anything less than full
ownership. A strange thing is that most people bargain for the title and not the possession
of the goods.
Another strange thing is that In some places it is synonymous with the transfer of title, in
other places it draws a distinction between the transfer of property and the transfer of title.
When it draws a distinction it is trying to suggest that for a transfer of property to take
place, you need title and possession and it is only when the owner of goods has title and
possession of those goods that you will truly say that there has been a transfer of property.
In other places the SGA act uses the two words as interchangeable statement. You have to
be careful about what kind of statutory section you are dealing with when we are talking
about property which of those two meanings are we talking about and that is important.
Property rights binds both the contractual parties and third parties, whereas contractual
rights only bind parties to the contract
3 points: When we are talking about the meaning of property and the concept of the
property, there are three things we need to think about:
The object of the sale: This is the goods. What is the subject matter of the contract that we
are talking about and which goods are we saying are the subject matter of the contract.
The right to immediate control: This is the possession. Once you have purchased goods, you
are entitled to immediate control of possession of them. Section 28 requirement that if you
pay for good you are entitled to possession of them. This is something we need t think
about when thinking about transfer of property.
The general interest: This is ownership of goods. The sales of good acts is obsessed with
ownership- who owns good. But section 28 does not equate payment with ownership. It
equates payment with possession.
A sale : Where under a contract of sale the property in the goods is transferred from the
seller to the buyer the contract is called a sale – section 2(4) SGA
Agreement to sell: – Where under a contract of sale the transfer of the property in the
goods is to take place at a future time or subject to some condition later to be fulfilled the
contract is called an agreement to sell – section 2 (5)
The consequences of entering into a contract of sale as compared to an agreement to sell
are completely different as far as the passage of property is concerned. So whilst they are
both covered by the act, the right and liabilities of each party, to those kind of transactions
are completely different. Important to know what the differences are in terms of rights and
obligations of the parties in a sales contract and in an agreement to sale contract so you can
work out what the best course of action is under the SGA if for example one of those parties
needs a remedy. The main distinction between them is that in a sale property will be
transferred immediately. However, with an agreement to sell, property will be transferred
at some late point in time. This means that after the agreement to sell, as been entered
into, property remains with the seller for some period of time till certain conditions have
been satisfied before the transfer of property takes place. There is a lot more risks, nobody
knows exactly when the property passes.
Differences between Contract of sale and Agreement to sell:
Agreement to sell:
- Contract is still executory: It is still not being properly performed. It is a contract
under which both sides have performance obligations remaining. They still need to
do things under the contract.
- Buyer has rights in personam against the Seller but only the Seller can sue 3 rd
parties: So if you enter into a contract of sale as a buyer, all you can do in terms of
remedy is sue the seller you cannot start suing third parties. This means that the
buyers right in an agreement to sell are limited. If the seller doesn’t do what he is
meant to do, the buyer is quite vulnerable.
- Buyers only remedy against the Seller is damages for non-delivery (s.51)
- Sellers remedy against the Buyer is damages for non-acceptance (s. 50), the seller
continues to be responsible for the goods (storage, disposal etc.)
- S can sell the goods to a 3rd party and pass a good title, but the B cannot sell (as he
has no property rights) but can only agree to sell to a 3rd party.
- Risk of loss with the S (s. 20): The seller continues to be responsible for the goods.
Risk goes hand in hand with property. When property passes, risk passes. However,
the default provision of risk of loss will be with the seller. So any type of damages
goods will be on the seller unless the parties have contracted for something else.
- Contract may be frustrated if the goods perish (s. 7)
- If goods are requisitioned loss is borne by the S, damage/compensation payable to
the S.
- S’s insolvency, the B has no right to the goods, but only to the monies already paid
towards the full price and for damages suffered.
- B’s insolvency, the S can claim back the goods even though they have been delivered
- Profits or increase in value belong to the Seller. Like a compensation for bearing risk
Sale:
- Contract is executed: This means that the contract has been completed hand
property will pass on conclusion on the contract. What this means is that because
property is based, the buyer is able to sue third parties. This is the difference.
Buyer has rights in remedy against the Seller. Buyer can sue 3rd parties.
- B’s remedy against the S is in breach of contract (damages for non-delivery), but also
in tort (s.51).
 - S’s remedy against the B is damages for non-acceptance (s. 50), but also for the
contract price as the property has passed (s. 49). B has responsibilities in relation to
the goods.
- S cannot sell the goods to a 3rd party and pass a good title. Because he has no
property rights over the goods. But the B can sell (as he has property rights) with
good title.
- Risk of loss with the B (s. 20).
- Contract is not frustrated if the goods perish: contract cannot be frustrated when
risk has been allocated. This is because the parties have worked out who should bear
the risk. The allocation of risk is something that the parties have contemplated in an
executed contract. Therefore the doctrine of frustration cannot happen in an
executed contract
- If goods are requisitioned loss is borne by the B, damage/compensation payable to
the B.
- S’s insolvency because the Buyer may claim the goods..
- B’s insolvency, the S cannot claim back the goods but can claim the outstanding
amount of the price.
- Profits or increase in value belong to the buyer. This is because they bear the risk so
they get the profit.
Transfer of property as between the B and S ? We need to look at this contract to work out
whether it is:
- Transfer of rights and duties between the buyer and seller
- Transfer of property which affects the whole world.
Under SGA B’s right to possession depends either on
- Payment of the price or granting of credit
- Not on the passing of property: It does not depend on transfer of title or the passage
of property.
This is important for our summative. This is because it is this idea that possession and
property can be separated is critical when we come on to look at things like retention of title
clauses and it is this very idea that you can separate property and possession which allows
retention of title clauses to work in the first place as a credit mechanism. If you could not
separate property and possession, we couldn’t have things like retention of title because
they simply wouldn’t work.

The mere fact that the property in the goods has passed to the buyer does not confer on
him a title good against the whole world nor does it confer on him the right to possession as
against the seller.
The optimal method to understand the property in goods is to look at the consequences of
passing of property.
i.e. rights given to the B with the passing of property.
To obtain possession buyer needs to pay the price of the goods or the seller grant him a
credit (retention of title). Without payment of price immediate right to possession is not
possible. S. 28 delivery conditional on payment of the price
*Retention of title clause: A retention of title clause is a provision in a contract for the sale
of goods that the title to the goods remains vested in the seller until the buyer fulfils certain
obligations.
Because we have this concept that property and possession can be separated, retention of
title clauses recognizes that sometimes business need to buy a good and they need to use a
good in order to generate profit to be able to pay the original purchase price which is very
expensive. For instance, if you buy a 380 million pound oil rig, you ant just pay 380 million at
once. So what happens in commercial contracts is that a deposit will be put down and the
right to property right remains with the seller but the possession of the good is transferred
to the buyer and the buyer is allowed to use the good and the risk will be transferred to the
buyer(party who is using it). The seller keeps the property, but gives the buyer the
possession and the risk and the buyer carries on paying off as the good is generating an
income. They eventually will pay off the original purchase price and also get a bit of interest
for the seller as well. But all the time, the seller is protected, because the seller is holding on
to title of that good. Since the seller has transferred possession and risk to the buyer, if
anything happens to it, they are not going to be liable even when they have the property
right.
If the buyer resells the goods before obtaining possession, the sub-buyer’s right will be the
same as the original buyer.
- Depends on the payment of price
- But if the B has passed the documents of title to the 3rd Party, the seller’s rights are
defeated.
If the buyer does not get the ownership that he has bargained for, B can recover the whole
price that he has paid as total failure of consideration, even after possession and use of the
goods for a considerable time.
Retention of title clauses will become void if they are not registered under the companies
act(s 860 2006)- very important if you want to draft a retention of title clause for your
summative or future career.
Consequences of passing of the property: When risk passes is particularly important in
commercial law, largely because this concept determines which party is to bear the
accidental loss of or damage to the goods which form the subject matter of the contract.
Obviously there can be huge financial (and other consequences) which flow from this and
usually both parties are keen to ensure the risk remains with the other for as long as
possible.
Sometimes there will be insurance in place to deal with this (e.g. see s.32(3) of the SGA
which specifically contemplates this in delivery involving sea transit). However, sometimes
there are consequential losses which simply will not be covered by any insurance in place.
Therefore, this is one of the most important aspects in selling and buying goods and is an
incredibly important part of this course.
Risks: Unless otherwise agreed, the goods remain at the seller’s risk until the property(for
property do you mean transfer of title and possession) in them is transferred to the buyer,
but when the property in them is transferred to the buyer the goods are at the buyer’s risk
whether delivery has been made or not. Property and risk go together with the passage of
property unless the parties decide to separate those two things. The only time this happens
is the retention of title clauses. What will retention of title clause do You need to put an
express provision to override the default section 20 from applying.
The risk that the Act is concerned with is risk that the goods will be wholly or partly
destroyed or damaged. Risk must be linked to the act or fault of either of the parties or
must be expressly indicated in the contract (force majeure clauses). If one of the parties
causes damage to the goods, s20 subsection 2 sets out different defaults rules.
Head v Tattersall: Horse sold with an incorrect description. The K had a clause requiring the
B to return at a certain time if it did not have correct description. Otherwise he was to be
responsible for all faults if he did not bring back by the deadline. Horse injured and taken
back to the Seller.
Held: B (Head) was entitled to take back the horse and claim the whole monies paid back.
This was because of the express provision that allowed the buyer to take the horse back if it
did not fit the correct description. If that clause was not there, the buyer would not have
been able to take back the horse that was even injured.
S. 20(2) – fault of either party and liability as a bailee: If either party is at fault, that will
change the rule.
Demby Hamilton v Barden: In this case, 30 tons of apple Juice was to be collected by 3rd
parties as sub-buyers. Juice was not collected at the specified time and had to be thrown
away because it will spoil. It was held that because of s.20(2), the delay was due to the
buyers fault so therefore, they had to bear the risk/loss. If they were not at fault, s 20(1)
would have applied.
loss lay on the B (Barden), the delay in taking delivery was due to B’s fault.
Wiehe v Dennis Bros: B (Wiehe), contracted to buy a pony. While the pony was in the S’s
custody it was injured. It was held that the S were liable on the basis that no care was
shown while they were a bailee. If not for s20(2) the buyer would have been at the risk. Had
ownership.
If the risk has passed, the B will have to pay the full price even though the goods will not be
delivered, if the goods have been lost or destroyed. B cannot sue S for damages for failing to
make delivery or delivering less than the contracted amount.
If the risk has not passed when the loss or damage happens, the S cannot compel the B to
pay the price or to take delivery of any remains or sue B for refusing to take delivery.
The above does not apply to consumer sales. In consumer sales, (s. 29 CRA 2015) goods
remain at the trader’s risk until they come into the physical possession of the consumer
(certain exceptions in s.29(3) CRA 2015).
SGA 1979 – action for the price: The S is not entitled to sue for the price of the goods
unless the property has passed: (S. 49)
S. 49(2) – S has the right to sue for the price once the property has passed.
- Condition: s. 28 the seller must be ready and willing to deliver the goods in exchange
for the price.
- No action for the price if both the property and possession have not passed to the B.

If the B repudiates the K before this happens, the S’s remedy is an action for damages for
non acceptance.
- Why? Damages for what?
- S may have entered into contracts with 3rd parties and there may be losses arising
out of those contracts.
Passing of property determines who is the proper Claimant to sue a 3rd party who has
damaged or destroyed the goods while en route to the B.

- Property rights by themselves will not decisive. Right to possession or a contractual

right against a 3rd Party such as the carrier is necessary
- In terms of carriage of goods at sea, the person who is entitled to sue in respect of
goods damaged at sea is the person who holds the Bill of Lading and that person has
a contractual right both against the ship-owner and the property. Why? Symbolic
possession as well as the property passed to the B with the document.

A contractual right without a property right will not enable the Claimant to sue as he will
not have suffered damage. A right of property is necessary to establish a cause of action in
tort against someone who damaged or destroyed goods.
Leigh & Sillavan v Aliakmon Shipping: In this case, Cargo was damaged and the goods
remained the sellers property but the buyer was the one who suffered because he paid for
goods. So risk of damage was carried by the B even during the time when the goods
remained the S’s property. The court said that because property had not passed, the buyers
right was economic and in tort you could not claim for pure economic loss. If property right
had been transferred, that would have been good because they could have claimed under
the sales of good act.
However, Carriage of Goods at Sea 1992: Now the B has the right to sue the carrier in
contract.
Affecting 3rd parties:
Passing of property is between the B and S, but what happens if B or S becomes insolvent?
- B or S against the insolvent B or S will have a good title against a liquidator or trustee
in bankruptcy claiming through the S or B.
- Rights of 3rd parties are protected through the registration of charges section under
the CA 2006.

Frustration:S7
“Where there is an agreement to sell specific goods and subsequently the goods, without
any fault on the part of the seller or buyer, perish before the risk passes to the buyer, the
agreement is avoided.”
For there to be frustration,
(1) There must be a supervening event that "significantly changes the nature (not merely
the expense or onerousness) of the outstanding contractual rights";
(2) There must be no fault in either party;
(3) The supervening event must not have been "reasonably contemplated by the parties" at
the time of the contract;
(4) It must be unjust to hold the parties to the original contract.
Under English law frustration will result in the contract being terminated so that the parties
are excused from further performance. However, in order for a contract to be frustrated the
event in must be unforeseen, it must have occurred without the fault of either party to the
contract and it must either make the contract’s performance impossible or it must destroy
the fundamental purpose of the contract. Common law rules of frustration apply to the sale
of goods (s.62(2) SGA). However, s.7 of the Act provides for a specific circumstances in
which the doctrine of frustration applies.
Before the sale (during agreement to sell), the contract may be frustrated if the goods
perish because the contract is still executory (yet to be completed) and property is yet to be
passed but without the existence of goods the S cannot pass the property.
After the sale, contract is not frustrated if the goods perish, because the contract is now
executed and the risk is with the B.
Appleby v Myers: https://www.lawteacher.net/cases/appleby-v-myers.php
Contract for the erection of machinery. Payment was to be made on completion. When the
work was nearly finished but fire broke out and the premises and the machinery were
destroyed by fire. It was agreed that the contract was frustrated.
Question: whether compensation could be recovered for the work done?
Held: No. Obligation to pay only arose on completion of the contract.
This shows how vulnerable you are if you do not have the property rights.