Atiyah: Property, Ownership, Title, Possession

The SGA is divided into 2 sections: transfer of property as between seller & buyer, transfer
of title.

The terminology used by the SGA is rather strange.

‘Property’- defined by s61 of SGA- General property in goods, and not merely special
property

‘Property’ is commonly used by lawyers to signify title or ownership, and applied in

everyday usage of the sale of goods.

Yet, the SGA talks of the transfer of property separately from the transfer of title (split them
into 2 different headings), contrasting the transfer of property & the transfer of title.

The SGA also speaks of the transfer of property ‘as between the seller &buyer’ particularly.

This is rather strange as well, as the distinguishing feature of the property right is that they
bind not merely on the immediate parties to the contract/ transaction, but also binding on
all 3rd parties- Property binds the whole world.

How can there only be a transfer of property ‘as between seller & buyer’? (What is this
‘transfer of property as between seller & buyer’? What does it mean?)

-There is a mere transfer of rights and duties, from seller to buyer?

-There is a transfer of a property which affects the whole world?

-The term ‘Property’ is used to mean ‘Possession’? (Atiyah suggested that, at least it makes
sense when used the term in this sense when talks of a transfer as between seller & buyer)

3rd view has been precluded by SGA, as the Act makes clear that right to possession
depends on payment and delivery, and not on the passing of property. –suggesting that the
property and possession are 2 different entity.

The mere fact that one has property in the goods, does not confer on him a good title
against the whole world (dependant on circumstances- does the person who resells has the
right to sell? If yes, has title. Does it falls within the exception to Nemo Dat?), nor does it
confer on him the right to possession as against seller (dependant on payment & delivery).

The definition of ‘Property’ has been borrowed by CRA 2005. Under CRA 2005, ‘Ownership’
was given by the Act the same definition as ‘Property’ under SGA- as to mean ‘General
Property, not merely special property’. (s4(1) CRA 2005; s61 SGA)

This could mean that ‘Property’ & ‘Ownership’ is the same. Property is ownership;
Ownership is property.

Besides, the CRA 2005 also invokes the SGA scheme as its regime for passing of property in
consumer sales. (ss17-19, ss20A-20B)

The legal concept which the Act calls ‘Property’ can only be understood by considering the
legal consequences which flow from the/of passing of property. Could not determine the
definition of ‘Property’, so consider the after effect of ‘Property’- Rights acquired after
property passed. Cannot determine the definition of ‘famous’, so consider the after effect of
‘famous’- Likes on Instagram, Exposure on news etc. What rights flow from the passing of
property/ what sort of rights does the passing of property give to the buyer.

‘Property’ is not ‘Possession’:

Having ‘Property’ in the goods does not confer on a person the right to possession.

The passing of right to possession depends on the payment of the price for the goods &
delivery of goods. It does not depend on the passing of property.

One can have ‘Property’ in the goods without the possession of the goods. One can also
have the possession of the goods without the ‘Property’ in goods. (Bailor-Bailee
relationship)

(Buyer with ‘Property’ but without possession; Seller without ‘Property’ but with
possession)- buyer with P bankrupts w/o payment

It could be said that ‘Property’ aids the buyer/ ‘Property’ holder nothing, as the position
would be the same even if no property had passed. (With/ without property, buyer would
not get possession)

Example given by Atiyah: Resell, Pledge, Bankruptcy

Bankruptcy:

[Note: Property must pass in order for the seller to be entitled to sue for price of the goods]

When the buyer bankrupts, even though the buyer has ‘Property’ of the goods, his trustee
in bankruptcy could not claim the possession of the goods from the seller who is in
possession of the goods, if the buyer did not pay for the price of the goods. The seller also
could not be relegated to his right, to prove in the bankruptcy for the price.

The law does not offer protection for ‘Property’ holder (buyer) when he himself is without
the possession of the goods (seller has possession) and bankrupts.

In fact, the law protects the seller who has the possession of the goods (who has not
received the price for the goods) from the bankruptcy of the buyer (‘Property’ holder) who
has not pay the price for the goods-providing the seller with the right of stoppage in transit
if the buyer who has the property bankrupts without paying the price, when the seller has
already dispatched the goods to the buyer but before the buyer received them.

Property is not ‘Title’

(Buyer without ‘Property’ but with possession; Seller with ‘Property’ but without
possession)-Buyer with possession- buyer bankrupts [w/o payment as well]

 Effect of passing of property is somewhat limited as well

s25(1) provides that the buyer in possession (without property) can sell the goods to 3rd
party and able to pass a good title to 3rd party, binding on the original owner (first seller)

- (One of the exceptions to the Nemo Dat rule)

One may pass a good title without ‘Property’ (with possession; although the reason he can pass a good title may not
particularly be because of possession but rather because that it is one of the exceptions of the Nemo Dat rule. As long as the situations fall within the

exceptions to Nemo Dat rule, one may pass a good title.)

Possession + Property cannot pass Title (if Mala Fide)

s25(1) has a strange effect that, even the buyer with possession and property, he may not
pass a good title to a Mala Fide transferee.

However, where the seller reserved the ‘Property’ in the goods (by Reservation of Title
clause- Aluminium Industrie v Romalpa Aluminium) and delivered the goods to buyer and
property is only to pass on payment, the seller may be able to recover the goods delivered
when the buyer went into bankruptcy with the delivered goods.
In terms of recovering the goods when the person in possession of the goods bankrupts,
passing of ‘Property’ has important practical effect. (Can recover goods if with ‘Property’)

(Seller without ‘Property’ but with possession; buyer with ‘Property’ but without
possession)- Seller with possession

Where the seller, who is in possession of the goods, resells the goods to 3 rd party, rightfully
or wrongfully- transferring of property has little effect (similar to the above logic)

 Whether the seller can resell the goods to 3rd party (rightfully or wrongfully) and pass
the title to the 3rd party does not depend on the passing of ‘Property’
 Similar to above, buyer in possession, seller in possession is one of the exceptions to
Nemo Dat rule.
 s24
 Seller in possession (just like buyer in possession) can pass a good title to 3 rd party
(provided the 3rd party is Bona Fide purchaser) (Even though it is a wrongful transfer
as against the first buyer, who owns the property)

Same result would occur if the ‘Property’ was to pass on delivery instead of by mere
agreement. –meaning that the seller has both property and possession.

If the seller has both property & possession, the position of the ‘first buyer’ was as if the
contract of sale of goods does not exist at all. (The ‘first buyer’ could claim for damages for
non-delivery; in rare case, specific performance against the seller if the seller breach the
contract) The seller has the right to resell (has property + possession) regardless to the first
buyer. The seller can do what he wants as he is the owner of the goods and has possession
of the goods (has property + possession). The ‘first buyer’ did not have any proprietary
rights (Rights in rem) but only contractual rights (Rights in personam)—Therefore could not
sue for the goods, only can sue for the breach of the contract.

(Seller in possession without property (property passed to buyer), but bankrupts; buyer with
property without possession) *c/f situation where buyer bankrupts (1 st situation)

Prima facie, buyer could claim the goods from seller or liquidator or trustee in bankruptcy.
However, might be subjected to Bills of Sale Acts or Companies Act. – These Acts might
invalidate buyer’s rights to the goods or sale if the buyer did not register his ‘Property’
under the Act. (Both Act require the relevant party to register his right)

Reference to 3 other consequences flow from the passing of property:

 1. Risk passes with Property prima facie
2. Seller is not entitled to sue for price of the goods unless property has passed
--If buyer repudiates the contract before the passing of property, the seller’s remedy
is prima facie an action for damages for non-acceptance.

For these 2, one cannot really say that these consequences follow naturally or logically from
the passing of property. (No connection between these 2 with passing of property).

 The Roman law had much of the same rules as the English law in relation to risk. (1)
 Yet, it refused to recognise that property passed by mere contract of sale. (As a
result, risk cannot pass by mere contract of sale as well.)—Risk follows property,
property cannot pass by sale contract, risk cannot pass by sale contract.
(Risk has connection with property, but not with the conclusion of sale contract) (1)

 No necessary & logical connection between the right to sue for price and the passing
of property. (2)
A number of unfortunate consequences follow the present rules on the subject.

3. Passing of property can determine, in some circumstance, who is the proper

claimant to sue a 3rd party who has damaged or destroyed the goods.
 For example, when the goods are in transit to the buyer. Whether the property is
still lying with the seller or the buyer, determine the appropriate claimant.

 The property alone is not decisive. Usually, it is combined with some other rights-
right to possession or contractual rights against a 3rd party (carrier).

 Prima facie, the person who is entitled to sue in respect of goods damaged at sea is
usually the persons who holds the bill of lading.
--That person has a contractual rights against the 3rd party and property.
---Hence, rarely necessary to ask whether which (property or the contractual rights
against the 3rd party) that gives him the right to sue.

Illustrates effect of contractual rights without property:

 But a contractual right without property will not usually enable the claimant to sue,
because he will/has not suffered any damage.

--Example for the above:

 Right of property (possessory right) is necessary to establish a cause of action in tort
against someone who has been responsible for damaging or destroying the goods.
(The Aliakmon)
 (In particular- giving an example) In circumstances where the buyer does not have
the benefit of the Carriage of Goods by Sea Act 1992 and where goods are lost and
 damaged while in transit from the seller to a buyer, unless the property has passed
from seller to buyer before the damage occurred or that he has possessory title to
the goods, the buyer will have no rights to sue the carrier in tort.
(Margerine Union GmbH v Cambay Prince Steamship)

In most cases of carriage by sea this will not matter because the buyer will have
contractual rights against the carrier, either because he made the contract of
carriage or because the Carriage of Goods by Sea Act 1992 applies.

[Contractual rights without property will not usually enable the claimant (buyer) to
sue- except where buyer was covered by Carriage of Goods by Sea Act 1992, or there
is a contract of carriage made with the carrier (by seller, as agent of buyer, on behalf
of the buyer.)]
 But there are some unusual circumstances in which these contractual rights
(contract of carriage/ not covered by Carriage of Goods by Sea Act) are absent. In
that case, whether the property has passed (and if so, when) to the buyer will be a
matter of considerable of importance.

Sum up, consequences which flow form the mere passing of property:

1. If property passed to the buyer, the buyer generally have a good title to them, if the
seller becomes insolvent but goods remain in seller’s possession.
2. If goods are delivered subjected to reservation of title clause by the seller, seller may
have a good title to the goods, if the buyer becomes insolvent (with possession also
with the buyer).
3. The right to sue 3rd party for damaged or loss goods may depend on who has the
property.
4. The risk passes prima facie with property.
5. Generally, the seller can only sue for the price if the property passed (to buyer).

It will be observed that only the first 3 consequences (1, 2, 3) affect 3 rd parties.

Although the passing of property have important results as between the seller & buyer, its
effect (effect of passing of property) on 3rd parties in ordinary circumstances is minimal.

Lawson: ‘If we look at the other effects (other than the passing of risk following the passing
of property) of the transfer of the property as between buyer & seller in the common law
system, we shall see that they are for the most part, if not entirely, illusory.’

- Atiyah suggested that Lawson’s comment went too far- it was an exaggeration. There
have been marked signs of the increase of importance attached to passing of property in
recent years.
One of the chief problems of the existing law is that matters in relation to passing of
property are treated as if they concerns only with the parties to the contract, and (matters
regarding passing of property) can be adjusted entirely (contracting parties can ‘contracting
out’) according to the intention of the contracting parties.

Atiyah noted that the most important results of passing of property relate to rights of
trustees in bankruptcy, whom in the commercial sense, are treated as 3 rd parties.

---So whether the contracting parties should, without any regards to the interests of 3rd
party creditors, be permitted to adjust the passing/ non-passing of property in a contract of
sale to protect themselves against the risk of the other parties’ insolvency, is a serious
question.

At present, the rights of 3rd parties are occasionally protected by Companies Act.-requiring
registration of charges. (treating the 3rd parties’ rights as ‘charges.)

However, the right to property under contract of sale is not usually regarded by the law as ‘a
charge’ in the relevant sense.

It was suggested earlier by Atiyah that the SGA adopted the policy of allowing the property
to be transferred by contract alone (general rule), and then contained many elaborated
provisions designed to reverse the practical effect of this policy (exception). It was also
suggested that the law would have been much simpler if the SGA had adopted the rule of
Roman law that, the property passes on delivery and not before that.

Had this been done, all the special rights of the unpaid seller might have been
unnecessary, and also s24 & s25.

[Above suggesting- change the rule on passing of property to eliminate problems above
(who is proper claimant etc…), without the complex exceptions (unpaid seller’s rights, s24,
s25)]

It is today less clear that this is so. -The truth is that these problems cannot be resolved by
changing the rules of transfer of property.

Questions (problems) such as the below will still arise (despite changing the rule on passing
of property):

- Who is the proper claimant to sue a 3rd party for goods damaged/ lost in transit?
- Risk
- The right to sue for price
- Claims of a buyer against an insolvent seller (& those claiming through him)
- Claims of a seller against an insolvent buyer (& those claiming through him)
These claims must be settled with by the law. :

 One way is that, applying the traditional common law way, by trying to use a concept
like ‘property’ to decide most of the problems- while recognising that many
exceptions must be made.

This approach (Using a general concept while recognising exceptions) has its disadvantage
(as above) that the exceptions sometimes seem to eat up the rule.

 Alternatively, the law might have abandoned the ‘conceptual’ approach altogether,
and adopt the ‘specific issue’ approach.

 ‘Specific issue’ approach: - deal with each specific question (such as the buyer’s
ability to pass title to a 3rd party, the passing of risk, liability to pay for the price, etc.)
without the reference to the passing of property.

This is the approach of Art.2 of Uniform Commercial Code. (In force in US)
The alternative approach, while it has many attractions, fails to provide answers
for new problems, unforeseen by the law/ or problems newly created by subsequent
laws.

---As the ‘Specific issue’ approach avoids general solution such as the use of
organising concepts like property, it may therefore offer no solutions at all to new
problems.
---Prof.Atiyah suggested that the traditional common law approach (property) has at
least the virtue that in principle there’s always a way of meeting new problems:
-Namely, that, by looking who has the property of the goods at the relevant time,
and treating that person as the owner of the goods, with consequences which are
assumed to meet new problems.

Good illustration of this ability of the traditional common law approach:

The Span Terza- concerning conflicts over fuel oil on board chartered vessel.

The HOL held, the disputes between the charterer (owner of the fuel oil who chartered (rent) the ship) and
the mortgagee of the ship (ship owners mortgage the ship to this mortgagee; Mortgagee steps in to take the asset of the ship
owners, exercising his interests in ship owners’ goods, he argued that the fuel oil is part of the ship; as this is a mortgage, mortgagee can only take

what the ship owners own; One cannot mortgage something he does not have to the mortgagee; mortgagee can only claim through ship owners.)

in question, could be resolved by simply asking whether the fuel oil had been sold to
the ship owners so that the property in the fuel oil had passed to them, and that as a
result of that the mortgagee of the ship can claim for the fuel oil. (If the ship owners does not have
 the property in the fuel oil, although the ship owner (as mortgagor) had mortgage his ship, the mortgagee of the ship (claimant) cannot have the

fuel oil)

It was held that, the property in the fuel oil has not passed to the ship owners, so
that the mortgagee cannot have the fuel oil. The charterers still owned the oil and
had a prior right to that of the mortgagees, who could only claim through the ship
owners.

The previous editor of Atiyah’s text considered that in most cases the ‘Specific issue’
approach leads to clearer answers.
---After all, under the Uniform Commercial Code, the issue would probably be
resolved simply by asking if the mortgagee had a perfected security interest covering
the fuel oil under Art.9.
---The need to resort to such devices as retention of title clause does not arise, for
the same reason. (It could be resolved easily-under Uniform Commercial
Code-‘specific issue’ approach leads to clearer approach)

It is the deficiencies in our law of sale of goods that makes it useful to have a workhorse
(dependably performs hard work over a long time of period) concept such as ‘property’.

-Workhorse concept- a concept that dependably (trustworthy, reliable) performs

hard work over a long time of period.

It is because of the deficiencies in the law that having a workhorse concept such as
‘property’ will be useful.