Transfer of Ownership and Delivery

Introduction:

We know that a contract of sale or an agreement to sell is entered into to pass the ownership of goods from the seller to the buyer. In our previous articles, we have discussed all the conditions and warranties attached to a contract of sale or an agreement to sell. With this article, we will understand the significance and rules of transferring property from the seller to the buyer.

What is the meaning of Transfer of Ownership?

Legally, in a sale, the ownership is transferred from the seller to the buyer. At this stage, the seller has no right to sell or transfer any property to anyone else and upon completion of the sale agreement, only the buyer will be a possessor, and all others such as the seller’s family members will be vested with non-possessory interests. Accordingly, such family members will have no right to deal with the property or exercise power over it. The transfer of ownership may also be referred to as sale, under possession, or delivery.

It should be noted that the transfer of ownership is not limited to tangible property. The rights and obligations attributed to the intellectual property owner may also be transferred in a sale transaction. For instance, if a literary work is sold after completion of the sale agreement at the time of transfer of ownership, only one possessor will hold all rights over it. Once transferred through a sale agreement or otherwise, neither seller’s heirs nor customers (other than one) have any right to deal with it or exercise any power over it.

What are the rules of Transfer of Ownership?

Firstly, a sale agreement or transfer agreement must be in writing. Secondly, the immediate transfer of property ownership is prohibited in a sale agreement (i.e., the transfer of ownership after the sale contract’s completion). The property cannot be conveyed back to the seller during this stage either. Even if possible, such an act would amount to negation of delivery and thus void contractual rights. This provision is meant to protect the buyer from being cheated by suppliers and wasting valuable time on fraudulent transactions. So, all promises made by any parties involved in the transaction at this stage shall be legal and binding. However, transfer of ownership may be affected by any other means if the sale agreement or transfer agreement provides for it. Thirdly, if the contract of sale or transfer agreement provides for the assignment of title or delivery to the buyer, then such a provision shall be adequate. The assignment by delivery is an act whereby the seller delivers the title deeds in favour of the buyer. However, this is not considered a transfer of ownership since it does not affect ownership since it has no effect on other people’s rights over the property being sold. Moreover, agreements to which a third party shall not be entitled cannot be carried out through assignment by delivery. Still, they can only be effected in another manner that does not impede others’ rights over such property.

Transfer of Property:

1) Unacertained Goods: In this situation, when the goods are not identified, and they may be subject to different conditions between the time of purchase and delivery, then at the time of delivery, before payment of price which shall be paid by cheque or otherwise any sum other than a lump sum or in cash, the property in all or any part of such goods shall pass to the buyer.

2) Ascertained Goods: The property in the goods passes to the buyer at the time and place of identification when the goods pass from their existing entire state to a new and different entire state.

3) Sale by Approval: At the time of identification, it may be possible that a specific part of the goods is subject to different conditions between the time of purchase and delivery. In such a case, before payment of the price, which shall be paid by cheque or otherwise any sum other than a lump sum or in cash, any part of such goods subject to different conditions between the time of purchase and delivery shall pass to the buyer.

4) When Right of Disposal is reserved: When the property in the goods may be subject to different conditions between the time of purchase and delivery, before payment of price which shall be paid by cheque or otherwise any sum other than a lump sum or in cash, such property passes to the buyer at the time of identification.

5) When Right of Disposal is reserved and when the Goods are valuable: When the property in the goods may be subject to different conditions between the time of purchase and delivery and they are valuable, then immediately on completion of the sale, no person is entitled to dispose of such goods without obtaining consent from him.

Conclusion:

This article has discussed the meaning of transfer of ownership and the rules governing it. It is an essential concept in any transaction and requires attention from all parties involved in the deal. One must have a clear understanding as to when the property in the