186 Chapter 7The Sale of Goods Act 1979
Figure 7.2 shows an outline of the legal position where either the buyer or the seller has
become insolvent.The Sale of Goods Act rules on the passing of ownership
Sections 16 –20 of the Sale of Goods Act 1979 lay down rules which determine exactly when
the ownership of goods should pass from the seller to the buyer.Passing of ownership of specific goods
It has already been explained that specific goods are goods which are identified and agreed
upon at the time of sale. It has also been explained that specific goods are contrasted with
unascertained goods, which are not identified and agreed upon at the time of sale.
Having decided that the goods sold are specific, the next step is to apply ss. 17 and 18
of the SGA 1979. Section 17, which takes precedence over s. 18, provides that ownership
of specific goods passes when the parties intend it to pass. Section 17 also provides that
the intention of the parties can either be a term of the contract or can be inferred from the
conduct of the parties or the circumstances of the case.Example
On 7 July Belle agrees to buy Sam’s tractor (specific goods). A written contract is drawn up
and one of the terms states that ownership is to pass to Belle on 2 September. Ownership
will pass on 2 September, even though an application of s. 18 would have come to a differ-
ent conclusion. Section 17 takes precedence over s. 18.If s. 17 does not show when the parties intended the ownership to pass, then the first four
rules set out in s. 18 will have to be applied. As we shall see, the rules deal with different
types of specific goods.Rule 1 – Specific goods in a deliverable state
Section 18 Rule 1 provides that where specific goods in a deliverable state are uncondi-
tionally sold ownership passes to the buyer at the time of the contract, even if the times of
delivery and payment are postponed.
Goods are in a deliverable state when the seller has nothing more to do to the goods
themselves. Goods could be in a deliverable state even if they needed to be packed. Goods
would not be in a deliverable state if the seller had to overhaul them before the buyer was
to take delivery.Tarling vBaxter (1827)S sold a haystack to B on 6 January. The contract provided that B was to pay the price on
4 February and the haystack was not to be moved until 1 May. The haystack was burned
down on 20 January.
HeldOwnership had passed to the buyer on 6 January.