Passing of Title

Contract is made to buy 200 australian wine from a bulk retailer. contract is made on term that the retailer will store for pickup for 3 weeks. In the meantime before pickup the retailer goes bankrupt. Has the title passed ? The Passing of Title The basic rule The basic rule as to the passing of title is in section 18 of sales of goods act. Which states;- Where there is a contract for the sale of unascertained goods, no property in the goods is transferred to the buyer unless and until the goods are ascertained.Sale of unidentified part of an identified bulk The problem 1. It often happens that the transaction between seller and buyer is completed in all essentials, even to the extent of the buyer actually paying for the goods, while the goods are still in the possession of the seller himself or of a carrier. This has implications in relation to risk which will be considered later.But the other more disturbing consequence of s 16 was that a buyer might find that although he thought he had obtained the property in the goods and had paid for them, he had no property and remained vulnerable to the risk of the seller’s insolvency because of the purely accidental or fortuitous fact that the goods were not ascertained. 2. For example, In re London Wine Co (Shippers) Ltd (1986) PCC 121: a company sold wine to customers, while retaining possession of the wine.The customers paid for the wine, as well as for subsequent storage charges, and the seller gave the buyers “certificates of title”, but there was no actual earmarking or physical segregation of the wine sold to different customers. The wine company became insolvent, and the receiver claimed that all the wine still belonged to the company – a claim that was upheld. 3. The rules of equity cannot provide a solution to this problem. There is no room in sale of goods law for the notion that an equitable title might pass or an equitable interest be created, however well established and ppropriate such a doctrine might be in relation to the transfer of other types of property such as land or book debts. Thus attempts to establish an equitable interest by way of trust, lien, assignment or the equitable remedy of specific performance have met with no success. 4. In Re Wait [1927] 1 Ch 606 : W bought 1,000 tons of wheat which was expected to be loaded on a named vessel, the challenger, on 20 November 1925. The following day he contract to sell 500 tons of this to X. The wheat was shipped in one undivided load and one bill of lading or for the whole load was issued.X paid W on 5 February, and W went bankrupt on 24 Feb. W’s trustee claimed the whole 1,000 tons while X claimed that either he had an equitable assignment or charge on the 500 tons or that he was entitled to specific performance. The CA decided against X on all grounds. There had clearly been insufficient appropriation at law to pass the property. Atkin LJ held that since the SGA the rules for the transfer of property as between buyer and seller were dealt with comprehensively by the code in SGA there was no room for equitable relief. 5.In Re London Wine Co Shippers [1986] PCC 121 referred to above, having failed on the SGA, the claimants argued that the goods became subject to a valid and equitable trust or alternatively that each purchaser had a right to specific performance of his contract. The trust failed for uncertainty of subject matter. It was impossible to read into the assertion that a purchaser was the sole and beneficial owner of 10 cases of wine an intention that he should be the owner of such a proportion of the total stock now held as 10 bears to the total number of cases comprised in such stock. Therefore the title has still not passed.

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