3. Rules when intention can t be found RULE 1-4 ascertained specific goods RULE 5: Unascertained

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1 5. TRANSFER OF PROPERTY 1. Title possession and ownership Title = right to bring action against another (true ownership) Possession = holding of goods Ownership and possession may NOT co-exist either have ownership or you don t. 2. Intention For specific goods FIRST look at intention S22 (1)à These are to be transferred at the time the parties intended it to be (if cant find intention go under s23 rules) S 23 Intention can be determined by: postponement of payment, contractual agreement on transfer of risk, obligation to insure & if the contract is the sale of goods & land normally property would pass when the sale of land is complete E.g. Buyer buyers property and immediately insures it 3. Rules when intention can t be found RULE 1-4 ascertained specific goods RULE 5: Unascertained S23 RULE 1: Unconditional contract of goods in deliverable state Goods pass: when the contract is made, doesn t matter about time of payment or delivery - Can be overruled by agreement Preconditions of rule 1 before property passes: 1. Unconditional contract: contract is not subject to any condition suspensive of the passing of property 2. For the sale of specific goods: goods identified and agreed upon at the time the contract of sale is made 3. In a deliverable state: S 3(4). When the buyer would under contract be bound to take delivery of them NOT if something needs to be done to get delivered McPherson, Thom, Ketttle & Co v Dench Bros [1921] CLR 437 Sale of animal = unconditional on animal being sold è Sale of heifer by auction but Heifer disappeared before delivery RULE: If property had passed buyer bears risk of heifer where as if property hadn t passed seller bears risk. Seller sued buyer saying unconditional contract Buyer argued property hadn t passed because it was conditional. HELD: - Was an unconditional contract because of clear intention & was in deliverable state. - Therefore heifer passed when contract was made and buyer bears risk Bodilingo Pty Ltd v Webb Projects (1990) ASC instalments/10= had passed = deliverable state - Contract for sale of office equipment provided for a price to be paid in 10 monthly instalments - Purchaser went into liquidation after 5 th instalment - Seller wanted to recover goods rather than sue (said property hadn t passed) HELD: Property had passed - Seller unable to recover goods

2 S23 RULE 2: Specific goods not in deliverable state Where there is a contract for the sale of specific goods and the seller is bound to do something to the goods for the purpose of putting them into a deliverable state Goods pass: Property does not pass until put in deliverable state and buyer knows due to notification Worcester Works Preconditions of rule 2 before property passes: 1. Specific goods ascertained unique goods 2. Seller bound to do something to the goods to put them in a deliverable state. Bound means contractually bound - Worcester Works [1972] Deliverable state means being in such a state wherein the buyer would be bound under contract to take delivery of them S 3(4) Wallace v Safeway Caravan Mart (1975) 3 QL 224 Where caravan wasn t in deliverable state couldn t pass to buyer : Caravans purchased on the condition that the seller install a shower and deliver the caravan The caravans were stolen before the work was done HELD: The caravans were not in a deliverable state therefore the property and the risk had not passed to buyer The caravans would actually have had to have been both fixed and delivered before it would have been in a deliverable state Underwood v Burgh Castle Brick (1922) à Until all conditions of the contract are completed, than property is not passed. Irrespective of how close it is to being finished. S23 RULE 3: Specific goods in deliverable state to be weighted measured tested or to acquire ascertained price Where there is a contract for the sale of specific goods in a deliverable state, but the seller is bound to weigh measure test or do some other act or thing with reference to the goods for the purpose of ascertaining the price Goods pass: Property does not pass until such act or thing is done and the buyer has notice. Preconditions of rule 3 before property passes: 1. Specific goods 2. Deliverable state S 3(4) 3. Seller bound to weigh, measure test etc Nanka-Bruce v Commonwealth Trust Ltd [1926] AC 77 à the weighing, measuring or testing must be to ascertain the price not to satisfy the customer etc. National Coal Board v Gamble [1959] 1 QB 11 à This rule covers situations where specific goods are bought but the actual price cannot be known until either the extent or quality are known. S23 RULE 4: Specific goods on sale or approval or sale or returned Goods pass a) When buyer signifies their approval/acceptance to seller or does another act adopting transaction E.g. seller goods OR b) Retains the goods without giving notice of rejection, then, on expiry of a fixed time or if no time has been fixed, on the expiration of a reasonable time.

3 Preconditions to the application of Rule 4: The goods must have been delivered to the buyer on approval or on sale or return or other similar terms 1. Sale or approval: Sale conditional upon B approving item London Jewellers The buyer s rejection does not have to be reasonable Cammell Laird 2. Sale or return: Goods delivered on condition that they will be returned if B decides not to buy Kirkham v Attenborough Precondition satisfied by one of the following acts: 1. Price is paid 2. Buyer does an act adopting the transaction pledging goods to someone else 3. Buyer retains the goods beyond the fixed time or beyond a reasonable time Kirkham v Attenborough [1897] 1 QB 201 Pawing is not returning in same or return so owner couldn t recover A jewellery manufacturer (K) forwarded jewels to a seller on sale or return (Winter) The seller then pledged them to a pawnbroker (A) W couldn t pay K K sued W for goods. HELD Pawning was inconsistent with returning so K couldn t recover goods. Poole v Smith s Car Sales (Balham) Ltd [1962] 1 WLR 744 Holding good beyond reasonable time = property passed Poole was to leave a car with Smith s on sale or return Smith would sell it and then give Poole 325 The car was not sold after 3 months Poole demanded Smith return car or pay up Smith did not return the car for several weeks (damaged) Poole sued for price HELD Smith retained the car beyond a reasonable time - Property passed to Smith who had to pay the price This focuses upon the conduct of the buyer: 1. An act by the buyer adopting the transaction has been described as any act which is consistent only with their being the purchaser or by which they put it out of their power to return the goods à Kirkham v Attenborough [1897] 2. The seller s conduct may be relevant in determining what, in the circumstances is a reasonable time à Poole v Smiths Car Sales (Balham) [1962] - If goods are damaged or destroyed without fault of the buyer and the time fixed for their return, or a reasonable time, has passed, the buyer will not be liable for the price of the goods or for damages à Elphick v Barnes (1880) - If they buyer was accidently sent goods, they are only liable for damages caused by buyer intentionally. à Howard v Harris (1884)

4 S 23 RULE 5: Unascertained/future goods by description in deliverable state When there is a contract for the sale of unascertained or future goods by description, and goods of that description and in a deliverable state are unconditionally appropriated to the contract, either by the seller with the assent of the buyer, or by the buyer with the assent of the seller, the property in the goods thereupon passes to the buyer. Goods pass: Property will pass when goods are ascertained (separated from bulk), in a deliverable state and unconditionally appropriated and is able to be delivered. S21 PROPERTY CANNOT PASS UNTIL GOODS ARE ASCERTAINED is in absolute terms and overrides the express intention of the parties if they agree when property will be transferred. Preconditions to the application of Rule 5: - Being unconditionally appropriated to the contract Appropriation: Requirements: Identification/isolation of goods Putting in deliverable state Making/taking delivery (delivery must be actual or constructive) Unconditional: property in the goods must be intended to pass merely upon appropriation and not only once some further condition is satisfied. - Either buyer or the seller with the other s assent Assent may be implied or express Aldridge v Johnson (1857): assent took place because the buyer inspected the barley and then forwarded bags for the barley to be collected in = assent by the buyer before the appropriation. Wardar s v Norwood (1968) Ascertained = Delivery plus owners consent of kidneys Norwood imported kidney beans Wardar agreed to buy 600 of the 1500 cartons Engaged carrier to collect goods Carrier arrived to collect goods from pavement Goods were loaded on lorry (took 4 hours) Goods became unfrozen during loading and journey They arrived unfit for human consumption ISSUE: When did property pass? RULE: S21: goods only pass to buyer when they have been ascertained HELD: When goods were purchased, they were not ascertained (600 from 1500) Goods were ascertained when delivery taken with permission of owner of the cold store - When delivery note handed over: 8 am Plantiff (Warder) owned goods at the time damage was caused and P liable to pay seller for price of kidneys

5 Carlos Federspiel v Twigg & Co [1975] Free on board: Shipment appropriation occurs when put onto ship : CF entered into contract with TC to purchase bikes CF (buyer) paid for goods in full TC (seller) had marked boxes with name of the buyers TC went into liquidation before they could deliver (i.e. put goods on board ship) ISSUE: Was there unconditional appropriation? HELD: No unconditional appropriation until loaded onto ship Parties intended property would pass at time of shipment Seller could change his mind and give another batch to customer so it is not actually the last act Merely setting apart at warehouse not sufficient not last act for seller. Intention (by FOB terms) no passing until bikes put on ship. 4. Reservation of right to retake possession (s 24) Where there is a contract for sale of specific goods or whether goods are appropriated to contract seller can reserve right to disposal Seller may reserve a right of disposal (right to retake possession) of the goods until certain conditions (conditional appropriation) imposed by the seller are fulfilled Reservation may be express or implied. Example Seller Delivers pursuant to contract Bank Buyer Seller reserves the right to retake possession if bank does not clear cheque - No unconditional appropriation until cheque cleared 5. Transfer of Risk 1. General rule S25 S25: Unless otherwise agreed (for ascertained goods doesn t apply to unascertained goods) Risk passes with transfer of property regardless or whether delivered. If property HAS NOT passed S bears risk. If it HAS passed, B bears risk (unless stated otherwise) Seller Buyer 1. Sells second hand sofa 2. Paid for immediately by buyer 3. Delivery to be next day by seller If no intention evident, s 23 r 1 applies property passes at moment of sale Risk is with Buyer, even though Seller remains in possession 2.Exception: Risk in delivery and destruction of goods s25 3. FAULT PROVISION Demby Hamilton v Barden [1949] If delivery is delayed due to the fault of either party, risk sits with who is at fault. 28 Where delivery is delayed because of fault of B or S Party at fault bears risk Seller If S fails to deliver on time, and after due date for delivery goods are destroyed, S bears RISK even though PROPERTY passed to B at time of contract Buyer

6 3. Destruction of goods 4. NO FAULT PROVISIONS S 12 - Goods perish AFTER agreement (but before sale) Where there is an agreement to sell specific goods and subsequently the goods perish through no fault of either party before the risk has passed = TERMINATE What constitutes perishing? Goods do not have to perish altogether. Is sufficient if they altered in nature by damage/deterioration so that for business purposes they have become something they were not supposed to be à Asfar v Blundell [1896] RESULT: Contracts can be avoided or terminated. COMPENATION: If a buyer has paid for the goods, he can receive it back based on the total lack of consideration by the other party à Fibrosa v Fairbairn Preconditions of Section 12: 1) The risk must not have passed to the buyer. 2) If either party is at fault for causing the perishing 3) Only applies where the goods have perished. S 11 - Goods perish AT time of agreement Where there is a contract for the sale of specific goods, and without knowledge of seller the goods have perished at the time when the contract was made = VOID RESULT: Void It has been said that the goods were never to exist à McRae v Commonwealth Disposals Commission (1951)

7 6. Nemo Dat Rule S 27 S 27 RULE: Sale by a person not the owner and without authority; Buyer gains no better title (only possession for that time) than the seller, unless The owner has been precluded from denying the seller s authority by his own conduct. EFFECT: Owner who has right can recover possession OR bring action for delivery of them OR for damages for wrongful interference. 7. Exceptions to the Nemo Dat Rule RULE FOR EXCEPTIONS: Will only apply if the third party is innocent: Must have bought goods without knowledge that person didn t have authority to sell Expressed as buying in good faith, without notice Exceptions: 1. Precluding conduct (estoppel) s Sale by a mercantile agent s Sale under a voidable title s Seller in possession ss30/buyer in possession ss31 5. Miscellaneous 1. ESTOPPEL S 27 Owner is barred from saying seller didn t have authority to sell. Two ways in which the estoppel can arise: 1. Representation OR 2. Negligence Estoppel by representation S27 Requirements: 1. There must be words or conduct by the owner, which represents that another person, is the true owner 2. It must be clear and unequivocal 3. It must have been made by the true owner or his agent and 4. It must have been relied upon by the purchaser Motor Credits v Pacific Motor Auctions Possession of the goods is not enough to show a person is an apparent owner 1. MC sold cars through its agent, M, for several years. 2. It revoked M authority, but did not collect the cars from its showroom. 3. M entered into a contract with PMA, signing a document declaring that they had good title to the goods. HELD M did not have ostensible ownership to sell cars, as the mere possession of the goods was not enough to give rise to this representation

8 Eastern Distributors v Goldring [1957] 2 KB 600 Where representation made TP can claim property off anyone involved : Murphy (P - owner of van), let Coker (A - dealer), pretend that the van was his for the purpose of Murphy obtaining finance from ED for purchase of van & car. Murphy later thought agreement had ended (not received other car as expected) Murphy sold the van to Goldring (TP) Murphy also did not pay any instalments. Eastern Distributors sued for the van. RULE: P would be unable to deny A had authority to sell van if made representation HELD: Representation: hire purchase documents & allowing Coker to represent to ED that C was the owner RESULT: ED had acquired good title to van and could recover property from G BECAUSE M had no title to pass onto G 2. Estoppel by negligence Where seller permits the appearance of ownership due to failure of reasonable care Requirements: That a duty of care was owed to the plaintiff by the owner Owner must owe the buyer a duty of care à Johnson Matthey v Dascorp Often the owner will not owe a duty to a third party buyer. Silence/inaction will only bring about DOC where there is a duty to speak/act in a particular way owed to person or public à Moorgate Mercantile There was a breach of this duty. This duty must have been breached by the owner and the breach must have caused the buyer to buy the goods from the seller à Johnson Test à Moorgate Mercantile v Twitchings Whether a reasonable person in position of the acquirer would expect owner to take steps to make claim known Whether, in the face of an omission to do so, the "acquirer" could reasonably assume that no such title was claimed. A mere lack of prudence on the owner s part will be insufficient Leonard v Lelasi (197) 46 SASR Owner knowing about fraud and not doing anything = breach of duty of care Owner of an expensive car permitted C a to possess the car knowing that the person had fraudulently registered the car in their name. C then sold to Leonard and owner sued for car back. HELD: Owner entrusting C with possession PLUS allowing rego to change without taking action = duty of care owed to Leonard Therefore L could retain vehicle. Central Newbury Car Auctions Pty Ltd v Unity Finance [1957] Mere possession & just being careless = no DOC to rely on : CN does not register car CN applies to UF for finance purchase by purchaser CN gives purchaser possession of car and rego (still in another s name) on basis finance will likely come Purchaser sells car to M who sells to UF CN sues UF for car HELD: CN was careless but does not fall under negligence because they did NOT owe DOC to purchases because they did not know about fraud UF cant keep car because of no DOC

9 2. SALE BY MERCANTILE AGENT S 67 MA: A person who sells or deals with goods on behalf of the owners S 65 à Person who has in customary course of business authority to: - Sell goods - Consign goods for purpose of sale - Buy goods - Raise money on the security of goods or documents of title - Must have acted in same way as he would in ordinary course of business - E.g. selling hours. E.g. Second hand car dealers & auctioneers. NOT shops like Kmart S 67 à Outlines the agent s actual authority 1) It is not necessary that a person fit into the definition before they can be called MA. 2) MA is entrusted with the goods for sale and not merely for custody or repair. When will a MA be able to pass good title? 1) Entrusted with possession with consent MA must be given possession of goods/documents Universal Guarantee v Metters à Where goods were entrusted to agent for display only, the agent was a mere bailee and not an MA for sale. Pearson v Young à TP must prove the owner must consent to MA to having them for a purpose which is in some way or other connected with his business as a mercantile agent 2) As a mercantile agent Can t just be a friend Or other capacity, such a repair or display, must be to sell. 3) Ordinary course of business: Associated Midlands v Sanderson Motors à For TP establish the ordinary course of dealings look at: The commercial area in which the agent operates Whether the transaction was conducted within business hours At a proper place of business In an ordinary way for a mercantile agent so that there was nothing to put a purchaser on inquiry as to anything wrong being done. Oppenheiner v Attenborough & Son [1908] à If the sale has been for substantially less than the value of goods, has occurred outside normal business hours, or not from proper business premises, the requirement may not have been met. 4) Buyer must act in good faith and without notice (innocent third party): è Buyer must not have any actual notice as to the true nature of the title è There must be something suspicious and the seller must turn a blind eye for good faith to be lacking Associated Midland Corporation v Sanderson Motor 3. SALE UNDER VOIDABLE TITLE S 25 Voidable title: Where breach has occurred due to misrepresentation, duress, unconscionability or breach of fiduciary duty by the buyer and is voidable at the option of the innocent party. S 25 Where seller has voidable title but does not rescind before TP has bought goods title passes to TP and seller cannot rescind contract

10 Example of voidable title: A sells to B, A has right to avoid the contract E.g. mistake, misleading conduct Before A avoids, B sells to C C is unaware of the defect in title C acts in good faith C acquires good title to the goods Car & Universal Finance v Caldwell No communication needed to rescind contract if P does everything necessary Caldwell sold Norris a car who sold car to Universal Norris took the car but the cheque bounced. Caldwell had notified the police and attempted to notify Norris but could not find him. ISSUE: Could Caldwell renege without communication? HELD: Cardwell could renege contract BECAUSE he did everything he could to inform the other party of his decision. 4. SELLER/BUYER IN POSSESSION AFTER SALE S30 & S31 1. SECTION 30 - Seller in possession after sale RULE: Where Seller (S) first sells to a person who becomes the true owner (O), however the seller (S) remains in possession of the goods and wrongfully makes a second sale of the same goods to a third party (T). If the second buyer (T) buys the goods in good faith and without notice of the first sale, he or she will get good title to the goods Requirements 1. The seller must have continuing PHSYICAL possession over the goods 2. Physical possession must not have been interrupted so if it passes to B and then back to S this section will not operate Pacific Motor Auctions v Motor Credits 3. S30 will only apply where title has passed under a sale 4. Consent required for initial retention of possession EFFECT: Same effect as if the person making the delivery or transfer were expressly authorized by the owner of the goods to make the same Pacific Motor Auctions v Motor Credits : M (seller) bought cars to sell to MC (buyer) M still in possession, but sold to PMA. ISSUE: Was there a continuity of possession by M (seller) HELD: PMA obtained good title S30 applies because there was continuity of physical possession 2. SECTION 31 - Buyer in possession after sale Where buyer is placed in possession of goods before property has passed to him RULE: Where Buyer 1 agrees to buy goods à though they are not yet the true owner à is given possession of the goods à Buyer 1 then on-sells the goods to Buyer 2 before Buyer 1 acquires title to the goods.

11 Requirements Bought or agreed to buy Can be agreement to sell and agreement of sale However a person who is given goods to sell, by the owner, is not a buyer in possession Shaw v Commissioner of Police of the Metropolis [1987] Possession of the buyer Constructive or physical possession of good Buyer has consent of seller to obtain possession Consent obtained by fraud at the beginning of transaction will nevertheless constitute consent for the purpose à National Employers Mutual General Insurance Does not apply where the buyer has not obtained the goods with the consent of the seller E.g where the buyer stole the goods, then on-sold to an innocent third party: National Employers Mutual General Insurance 4) Delivery of the goods by buyer in possession to the third party S 3: Delivery voluntary transfer of possession from one person to another. Can be actual (handing over goods) or constructive (transfer of control) It. Key differences between sections 30 and 31 Possession/title S30: Applies only where there was a sale of title (so property has passed) S31 Applies to both sales and agreements to sell where purchaser takes possession (constructive/physical) but no property has passed because no title Consent S30: The seller need not remain in possession with the consent of the buyer (provided consent given originally for S to retain possession) US31: Seller must consent to B having possession Effect S30: Same effect as if the person making the delivery or transfer were expressly authorised by the owner of the goods to make the same S31: Same effect as if the person making the delivery or transfer were a mercantile agent entrusted by the owner of the goods or documents of title. 5. OTHER Writ of execution against goods S 82(1) A writ of performance against goods, does not influence title to those goods acquired by any person in good faith and for valuable consideration UNLESS person had notice of writ at the time they acquired the goods. Stolen goods If goods have been stolen and the offender is prosecuted to conviction, the property in the stolen goods reverts in the person who was the owner of the goods. Doctrine of accession Where A s goods are with B s because of accessory or where B s goods have become incorporated to A s goods to such an extent that they cannot be detached, B shall have title in both instances: Rendell v Associated Finance 6. SALE UNDER POWR OF SALE OR PURSUANT TO COURT ORDER S26 (B) s 26: title will pass to innocent TP if a sale is made under power of sale or pursuant to a court order. Examples might include: a person holding lien sells them (power of sale) or goods seized pursuant to court order and sold to satisfy a judgement debt.