Have Property and Risk Goods Passed From the Seller to the Buyer?

Have property and/or risk goods passed from the seller to the buyer? • Who has property in the goods? a. Under s 6(1), the point of a sale is to transfer a property interest for a money consideration i. It is a total failure of consideration if this does not happen b. The assumption of many risks and the ability to assert many rights depends on who has property in the goods i. s 25: risk of loss remains with the seller until property passes to the buyer, regardless of whether possession has been transferred ii. s 23(2): property passes in an unconditional sale for specific goods in a deliverable state when K is made iii. Therefore, in an unconditional sale for specific goods in a deliverable state, risk passes to the buyer when the contract is made. c. There are 3 ways to transfer property/ownership from the seller to the buyer: i. At the time the contract is created (s 23(2)) ii. At the happening of an automatic event iii. When the parties fulfill an obligation: a. s 23(3): seller must do something to put goods in a deliverable state b. s 23(4): seller must weigh, measure, test, do something with reference to goods to ascertain price • Has property in the goods transferred to the buyer? Property and possession are not synonymous a. S 4 states that goods are in a deliverable state when they are in a condition where the buyer would be bound to take delivery of them – they are in the contracted for state b. S 22(1) states that property in specific or ascertained goods is transferred when the parties intend i. Parties should make this intention clear in the contract ii. If it is not clear what the parties intended, then move to s 23 c. Liberty Wine Merchants v Isaak: s 23 only applies if there is no discernible intention as to when property is to pass i. This intention does not need to be explicit – retailer and consumer context looks to what the retailer is selling and what the consumer is actually purchasing ii. Facts: wine homebrew store - wine kit sold and property transferred immediately, then can brew wine in store d. S 23(1): if the contract is silent as to intention as per s 22, then the following rules govern the passing of property: e. Specific Goods: i. S 23(2) if unconditional sale for specific goods in a deliverable state, property passes when the K is made ii. Leaf v International Galleries: therefore, the prima facie combination of s 15(4) + s 23(2) means that when the seller breaches a condition in these circumstances, buyer will never have the right to terminate the K a. Since this is unfair, courts will often construe one of the three requirements in s 23(2) to avoid this result: not an unconditional sale, not specific goods, not in a deliverable state iii. Kursell v Timer Operations: courts going out of their way to avoid unfairness that stems from 15(4) + 23(2) iv. Facts: contract to buy trees in forest, but it was nationalized and the buyer could not use the forest; seller claims property passed – court says they are unascertained – unclear which trees would be taken at outset f. S 23(3): if specific goods and the seller must do something to put them into a deliverable state, then property passes when this thing is done and the seller has given the buyer notice g. S 23(4): if specific goods in a deliverable state but the seller has to take steps to ascertain the price then property passes when this thing is done and the seller has given the buyer notice h. Unascertained / future goods: i. S 21: with unascertained goods, no property can be transferred to the buyer until the goods are ascertained i. Ascertainment is a necessary precondition to passing property, but property does not pass by virtue of it – intention is still the primary indicator j. S 23(7): if unascertained goods (they will become ascertained) or for future goods by description the property passes when goods fitting the description are unconditionally appropriated to the contract i. The contract is only an agreement to sell until the goods become existing or ascertained ii. Goods can be appropriated to the contract by the seller with the assent of the buyer (OR vice versa) k. Unconditional appropriation: process of agreeing that the goods provided are the goods that were described in K i. Carlos Federspiel v Charles Twigg: test for unconditional appropriation: a. One party must have an intention to attach the goods irrevocably to the contract b. The other party must then assent to this c. Must involve actual or constructive delivery of the goods to the buyer d. Risk passes when property passes, so if risk is still with the seller then there is a presumption that property has not passed to the buyer e. Appropriation is usually the last act done by the seller, usually when the goods leave their contract - Therefore, if the seller still has to do an important and decisive act there is a rebuttable presumption that the property will not pass to the buyer until this act is done l. Assent can be either express or implied i. Generally assumed that buyer waives requirement to assent to appropriated goods unless they insist on it a. Any implied assent to appropriation is withdrawn with notice of cancellation (Sells v Thomson) ii. Facts: buyer bought books, paid first shipment, cancelled order for second shipment, seller delivered and demands payment – buyer in BoC, but property did not pass because buyer did not assent, even though he waived requirement to assent in first shipment, only remedy is damages a. Bruce: make time of payment explicit in contract to avoid this • Which party bears the risk of a loss? a. Risk passes according to the intention of the parties i. If intention is unclear, risk passes along with property, regardless of if delivery has been made or not (25(1)) ii. Therefore, risk prima facie passes along with property according to the rules stipulated in s 23 b. S 25(2) stipulates that if delivery is delayed through the fault of either party, then the goods are at the risk of the party in fault in regards to any loss stemming from that fault i. If property has passed to the buyer, but the seller is at fault in delaying delivery of the goods and the buyer suffers losses, then the seller bears the risk (risk and property not the same here) c. Jerome v Clements Motor Sales: The statutory rule regarding transfer of property must give way to the intention of the parties and the circumstances of the case; if there is still uncertainty, look to s 23 i. For s 23(3), does not mater how trivial the thing left to be done is to put the goods into a deliverable state - if it hasn’t been done and buyer has not been given notice, then property hasn’t passed and neither has risk ii. Facts: contract for a car, needed minor repairs, but was destroyed during a garage fire – court said risk had not passed because property had not passed – it was not in deliverable state (strong dissent said it passed)