The passing of ownership and risk 193(2) The bulk must have been identified either in the contract or by later agreement between
the parties. For example, the sale of 20 tons of the 100 tons of wheat currently stored
in the seller’s warehouse would be sufficiently identified if it was made plain that the
buyer was buying 20 tons out of that particular 100 tons. But if the seller happened to
have 100 tons of wheat in his warehouse, an agreement by the seller merely to sell the
buyer 20 tons of wheat would not mean that the wheat had been sufficiently identified.
(It would have been sufficiently identified if the parties subsequently agreed that the
20 tons was to be taken from the 100 tons in the seller’s warehouse.)
(3) The bulk must have been reduced to the quantity which the buyer bought (or to less
than this amount).
(4) The buyer must be the only buyer to whom goods are due out of that bulk. If all of these
conditions are satisfied, the remaining goods will have been ascertained and uncondi-
tionally appropriated by exhaustion, and consequently ownership will have passed to
the buyer.
Example
Barbara agrees to buy 30 tons of corn from the 100 tons of corn stored in Sid’s warehouse.
Sid removes 70 tons of corn from the warehouse. The remaining 30 tons are immediately
ascertained and unconditionally appropriated by exhaustion. Ownership of these 30 tons
therefore immediately passes to Barbara. If Sid had removed 80 tons from the warehouse,
the remaining 20 tons would have passed to Barbara. As regards the missing 10 tons,
Barbara could have sued Sid for short delivery or have chosen to reject the goods on the
grounds of short delivery (see p. 197).Undivided shares in unascertained goods which were a specified quantity of an
identified bulk
Sections 20A and 20B of the Sale of Goods Act 1979 were introduced into that Act by the
Sale of Goods (Amendment) Act 1995. Before ss. 20A and 20B were introduced, the rules on
the passing of ownership of unascertained goods could operate very unfairly when a buyer
had bought and paid for goods which formed part of an identified bulk. The following case
demonstrates this unfairness.
Re Wait (1927) (Court of Appeal)The seller owned 1,000 tons of wheat which was on board a certain ship. The seller sold
500 tons of this wheat to a buyer, who paid the price in full. Before the ship arrived in port,
the seller became insolvent.
HeldThe contract was for the sale of unascertained goods because the 500 tons which
the buyer had bought had not been identified and agreed upon at the time of sale. (It was
just any 500 tons out of the 1,000 tons.) As the sale was of unascertained goods, s. 16
provided that ownership could not pass to the buyer until the goods became ascertained.
The goods had not become ascertained at the time of the seller’s insolvency and so
ownership of the goods could not have passed to the buyer. Therefore, the buyer could
only hope to claim his money back from the seller’s liquidator as an unsecured creditor.