194 Chapter 7The Sale of Goods Act 1979
When we examined s. 16 earlier, we saw that it begins by saying that it is subject to s. 20A.
Section 20A allows a buyer who has bought a specified quantity of an identified bulk to
become a co-owner of the whole bulk even before his share of the bulk is ascertained.
However, the section is limited and will apply only if the following conditions are satisfied:
(i) The buyer must have bought a specified quantity of unascertained goods which form
part of a bulk.
(ii) The bulk must have been identified in the contract or by subsequent agreement
between the parties.
(iii) The buyer must have paid some or all of the price. The buyer becomes co-owner of the
whole bulk as soon as the price is paid, but only in proportion to the amount of the price
of the whole bulk which has been paid.Example
Re Waitcan be used as an example of how s. 20A operates. If the facts of the case were to
arise today, s. 20A would apply because the conditions which it sets out have been satisfied.
(The buyer bought and paid for a specified quantity of unascertained goods which formed
part of a bulk which was identified in the contract.) Therefore, as soon as the buyer paid the
price of his 500 tons he would become a half co-owner of the whole bulk of 1,000 tons
(because he has paid half of the price of the whole 1,000 tons). If the buyer had paid only
half the price of his 500 tons, he would have become a quarter co-owner of the whole bulk
of 1,000 tons (because he would have paid a quarter of the price of the whole bulk).Where several buyers become owners in common of a bulk, through the operation of s. 20A,
s. 20B allows the seller to deliver to each buyer the appropriate share of the bulk. Section
20B provides that all the buyers who became co-owners are taken to have agreed to this.
When a delivery is made to a buyer under s. 20B, s. 18 Rule 5 operates to pass ownership in
the goods delivered to that particular buyer. When ownership passes to this buyer, the
other buyers are given an increased percentage ownership of the remaining bulk.Example
Steve has 100 lawn mowers in his warehouse. Steve sells 50 of these to Bill and 30 to Ben.
The conditions set out in s. 20A are satisfied and Bill and Ben both become co-owners of
the 100 lawn mowers (Bill has half ownership and Ben has three-tenths ownership). Steve
delivers 50 of the lawn mowers to Bill. Bill becomes owner of these 50 lawn mowers (and
loses all co-ownership of the other 50) under s. 18 Rule 5 (goods matching the contract
description, and in a deliverable state, have been unconditionally appropriated to the con-
tract). Section 20B provides that Ben must assent to this delivery to Bill. As Steve has only
50 lawn mowers left, Ben becomes a three-fifths owner of these 50 lawn mowers.Sections 6 and 7 have no application to contracts for the sale of unascertained goods.
However, s. 20 does apply to such contracts and so the risk will pass with ownership of the
goods, unless the parties have agreed otherwise or unless s. 20(4) applies.
Figure 7.4 shows the rules on the passing of ownership in contracts for the sale of
unascertained goods.