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Sale of goods: title

It is often important to know when the title of goods passes. When the sale is of ascertained goods, title will normally pass according to the intention of the parties. The Sale of Goods Act 1893 states that where the contrary is not defined in the contract, if specific goods are named and are in a deliverable state, then the property passes immediately the contract is made. When the contract is for specific goods and something remains to be done to them before they can be delivered, then title passes when that something is done and the buyer is notified of it. Goods are in a deliverable state when they are in such a state that the buyer would be bound to accept them.

Where goods are unascertained, e.g. where an order is made for a quantity of goods, and the specific goods are not named, the intention of the parties is still relevant, but generally speaking title passes when goods are appropriated to the contract with the assent of the buyer and the buyer has been notified. The assent may be implied and may even be given before goods are appropriated. Where goods are on sale or return, title passes when the buyer either signifies his assent to the contract or retains the goods for an unreasonable length of time.

So far as the title of the seller is concerned, there is an implied condition in the Sale of Goods Act that the seller is entitled to the goods and is able to sell them, or will be when the time of sale comes. Or will be when the time of sale comes. Title to goods cannot pass a title to a third party. There are exceptions to this rule. For instance: (1) where, in a contract for sale, the buyer has possession of the documents of title, or the goods, with the assent of the true owner, the buyer is able to give a good title to an innocent third party. Also, where the seller retains the documents of title or the goods, after the ownership has passed to the buyer, the seller can give a good title to an innocent third party; (2) sales by factors; (3) sales in market overt; (4) sales of certain goods which are still subject to hire purchase agreements.

Reference: The Penguin Business Dictionary , 3rd edt.