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CMA Intermediate · Business Laws and Ethics · Sale of Goods Act, 1930

Gupta contracted to buy 50 tonnes of steel of a described grade from Rao Steels. Rao Steels handed over 50 tonnes of that grade, in a deliverable state, to a carrier for transmission to Gupta, and did not reserve the right of disposal. Which statement is correct?

Property passes to the buyer. Under Section 23(2), delivery to a carrier for transmission without reserving the right of disposal is deemed unconditional appropriation, and Section 23(1) then passes property. Arrival of goods or prior payment is not a condition.

  1. AThe seller is deemed to have unconditionally appropriated the goods to the contract, so property passes to the buyerCorrect
  2. BProperty cannot pass until the goods physically reach Gupta
  3. CProperty passes only if Gupta pays the price before delivery
  4. DProperty passes only when the carrier signs a separate agreement with Gupta

Explanation

Section 23(2) says that when the seller delivers goods to a carrier for transmission to the buyer and does not reserve the right of disposal, he is deemed to have unconditionally appropriated them to the contract. Under Section 23(1), property then passes. Arrival or prior payment is not required by this provision.

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