Transfer of Property and the Unpaid Seller's Rights

Transfer of Property (Ownership) in Goods: the moment ownership actually passes from seller to buyer matters enormously — it usually decides who bears the risk of loss or damage to the goods, who can sue a third party who damages or takes the goods, and what happens if either party becomes insolvent before the transaction is completed. The Act's guiding principle is that property in goods passes when the parties intend it to pass, judged from the terms of the contract, the conduct of the parties, and the circumstances of the case. Where the contract does not clearly show that intention, the Act supplies a set of default rules:

• In a sale of specific or ascertained goods, property generally passes when the contract is made, if the goods are in a deliverable state, unless the parties show a different intention (for example, if the seller still has to do something to the goods, like weighing or measuring them, to determine the price, ownership passes only once that act is completed).
• In a sale of unascertained goods, property does not pass until the goods are actually ascertained — that is, until specific goods answering the contract's description are identified and set apart (usually by appropriation — the seller or buyer selecting particular goods for the contract with the other party's assent).
• In a sale on "approval" or "sale or return" terms, property passes when the buyer signifies approval or acceptance, or does some other act adopting the transaction, or (if nothing is done) after a reasonable time has elapsed.

As a general working rule, "risk follows ownership" — the party who owns the goods at a given moment normally bears the risk of their accidental loss or damage, whether or not the goods have actually been delivered to them, unless the contract provides otherwise.

Rights of an Unpaid Seller: a seller who has not received the whole of the price, or whose bill of exchange/cheque taken as conditional payment has been dishonoured, is called an unpaid seller. The Act gives an unpaid seller certain special protections against the goods themselves, in addition to the ordinary right to sue the buyer for the price:

• Right of lien — the right to retain possession of the goods and refuse to deliver them until the price due is paid, so long as the seller is still in possession of the goods.
• Right of stoppage of goods in transit — where the buyer becomes insolvent, the unpaid seller who has already parted with possession of the goods (e.g. handed them to a carrier) but the goods have not yet reached the buyer, may resume possession of the goods while they remain in transit and retain them until the price is paid. …