Transfer of Ownership in Goods including Sale by a Non-owner and exceptions

The transfer of ownership of goods is a fundamental aspect of contracts of sale, governed by the Sale of Goods Act, 1930, in India. The act meticulously outlines how and when ownership of the goods passes from the seller to the buyer, which is crucial for determining the parties’ rights and liabilities.

General Principles of Transfer of Ownership

1. According to Contract:

The transfer of ownership in goods is generally determined by the terms of the contract between the seller and the buyer (Section 19).

2. Intention of Parties:

The primary factor in determining when the ownership of the goods is to be transferred is the intention of the parties, which must be gleaned from the terms of the contract, the conduct of the parties, and the circumstances of the case (Section 19).

3. Specific or Ascertained Goods:

In a contract for the sale of specific or ascertained goods, the ownership is transferred to the buyer at the time the parties to the contract intend it to be transferred. This can happen at the time of making the contract if such is the intention (Section 20).

4. Goods in a Deliverable State:

When goods are in a deliverable state, but the seller is bound to do something to ascertain the price, the ownership does not pass until such act or thing is done and the buyer has notice thereof (Section 21).

5. Goods to be Put into a Deliverable State:

If the goods need to be put into a deliverable state, the ownership passes to the buyer when this is done, and the buyer has been notified (Section 22).

6. Goods Sent on Approval or Sale or Return:

In cases where goods are sent on approval or “on sale or return,” the ownership passes to the buyer:

• When he signifies his approval or acceptance to the seller or does any act adopting the transaction.
• If he does not signify his rejection or return the goods within the time fixed or a reasonable time (Section 24).

Sale by a Non-owner

The general principle is that only the owner of goods can sell them, and a sale by a person not the owner, and without authority or consent, does not convey a good title to the buyer. However, there are exceptions to this rule:

1. Estoppel or Sale by Mercantile Agent:

When the owner of goods is by his conduct precluded from denying the seller’s authority to sell, a non-owner can pass good title (Section 27). Additionally, a mercantile agent with possession of the goods or with the consent of the owner can provide a good title to the buyer (Section 27).

2. Sale by One of Joint Owners:

If one of several joint owners of goods has the sole possession of them by permission of the co-owners, the property in the goods can be transferred to any person who buys them from such joint owner in good faith and without notice of the joint ownership (Section 28).

3. Sale under Voidable Title:

If the seller of goods has a voidable title thereto, but his title has not been voided at the time of the sale, the buyer acquires a good title to the goods, provided he buys them in good faith and without notice of the seller’s defect of title (Section 29).

4. Seller in Possession after Sale:

If a person having sold goods continues or is in possession of the goods, or of the documents of title to goods, the delivery or transfer by that person, or by a mercantile agent acting for him, of the goods or documents of title under any sale, pledge, or other disposition thereof to any person receiving the same in good faith and without notice of the previous sale, has the same effect as if the person making the delivery or transfer were expressly authorized by the owner of the goods to make the same (Section 30).

5. Buyer Obtaining Possession:

If a buyer, with the consent of the seller, obtains possession of the goods or documents of title, any sale, pledge, or other disposition of the goods made by him to any person receiving them in good faith and without notice of any lien or other right of the original seller in respect of the goods, has the same effect as if the buyer were a mercantile agent in possession of the goods or documents of title with the consent of the owner (Section 30).