when a property in the goods is said to have been transferred from a seller to a buyer

1.0: Introduction.

The Sale of Goods Ordinance, Cap. 214, is the law which governs the contracts of sale of goods in Tanzania. It is thus; this statute which is going to be of our concern as we answer the question. Also case laws are cited to support the answers.

2.0: A definition of the concept “transfer of property in the goods” under the Sale of Goods Ordinance, Cap. 214.

Under the Sale of Goods Ordinance, Cap.214, the term transfer of property in the goods appears in the definition of the concepts ‘sale’ and ‘agreement to sale’, which is provided under s.3 (1) & (3).

According to s.3 (1)[1]:

         ‘A contract of sale of goods is a contract whereby the seller transfers

         or agrees to transfer the property in goods to the buyer for the

         money consideration…’ [emphasis is ours]

According to s.3 (3)[2]:

         ‘…where the transfer of the property in the goods is to take place at

        a future time or subject to some condition thereafter to be fulfilled,

       the contract is called an agreement to sell.’ [emphasis is ours]

It should be understood that the term goods as far as the Sale of Goods Ordinance is concerned includes all chattels personal other than things in action and money. It includes emblements, industrial growing crops, and things attached to or forming the part to the land, which are agreed to be severed before sale or under the contract of sale.[3]

Thus; constructing from the above section, the concept ‘transfer of property in the goods’ under the Sale of Goods Ordinance, Cap.214, should be taken to mean the movement, hand over, shift, relocation (and other words of the similar meaning) of ownership of the goods sold or agreed to be sold from a seller to a buyer.

3.0: The time as to when a property in the goods is said to have been transferred from the seller to the buyer.

It is important to ascertain the time when the property in the goods sold passes form the seller to the buyer. Unless otherwise agreed, the goods remains at the seller’s risk until the property therein is transferred to the buyer; but when the property therein is transferred to the buyer, the goods are at the buyer’s risk whether delivery has been made or not. Generally, any loss or damage to the goods falls to the owner and it is therefore essential to be able to ascertain the owner at any given point of the time. “Property” as used here, means the ownership of the goods.

Thus; the time as to when the property in the goods is transferred from one person to another is governed by s.20 of the Sale of Goods Ordinance, Cap.214, which provides for rules as follows:

Rule I.

Where there is an unconditional contract for sale of specific goods, in a deliverable state, the property in the goods passes to the buyer when the contract is made, and it is immaterial whether the time of payment, or the time for delivery, or both, be postponed.

This rule deals with contracts which are not subject to any condition precedent. Goods are in a “deliverable state” when it is possible voluntarily to transfer possession from one person to another.

In the case of Underwood Ltd. v. Burgh Castle Brick & Cement Co. Ltd.[4] The plaintiff sold a condensing engine to the defendant, free on rail. The engine weighed 30 tons and was embedded in the floor of a factory. It took weeks and cost 100 pounds to detach the engine and put it on a rail wagon. Part of the engine was damaged while loading it on the wagon and the plaintiff, the seller, claimed the purchase price on the grounds that the buyers must bear the risk and property in the engine had passed under Rule I. It was held that Rule I did not apply, because at the time when the contract was made the engine was not in a deliverable state. 

Rule II.

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, the property does not pass until such thing being done and the buyer has notice thereof.

This rule is just an extension of Rule I to a contract containing a condition precedent which must be complied with before the goods satisfy Rule I. At the stage when the condition is complied with, and the buyer is so notified, property passes.

Rule III.

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 other act or thing with reference to the goods for the purpose of ascertaining the price, the property does not pass until such act or thing be done and the buyer has notice thereof.

In the case of Mbugwa s/o Gakua v. Mwangi Mugwe[5], the court held that:..The words “do some other act or thing” must be interpreted ejusdem generis with “weigh, measure, test”…

Rule IV.

Where the goods are delivery to the buyer on approval or no sale or return or other similar terms, the property therein passes to the buyer:

(a)         when he signifies his approval or acceptance to the seller or does any other act adopting the transaction;

(b)         if he does not signify his approval or acceptance to the seller but retains the goods without giving any notice of the rejection, then, if a time has been fixed for the return of the goods, on the expiration of such time, and if no time has been fixed, on the expiration of a reasonable time. What is a reasonable time is a question of fact.

In Rule IV (a), an act adopting the transaction has been held to be any act inconsistent with the buyer’s ability freely to return the goods, for example, resale or a pledge of the goods.

Rule V.

(1)         Where there is a contract for the sale of unascertained or future goods by description and good 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 if the seller, the property in the goods thereupon passes to the buyer. Such assent may be express or implied, and may be given either before or after the appropriation.

(2)         Where, in pursuance of the contract, the seller delivers the goods to the buyer or to the carrier or other bailee or custodier (whether named by the buyer or not) for the purpose of transmission to the buyer, and does not reserve the right of disposal, he is deemed to have unconditionally appropriated the goods to the contract.

In the case of Incar Tanzania Ltd v. Magugu Farm Ltd and Cooperative and Rural Development Bank,[6] the court inter alia held that:

         “…where there is a contract of sale of unascertained goods by

         description and the goods of that description in a deliverable state

         are unconditionally appropriated to the contract, property in the

         goods thereupon passes to the buyer.”    

   

4.0: Conclusion.

Therefore; from the above discussion, the concept “transfer of property in the goods” means transfer of ownership, distinct from possession. Ownership means having a legal right over a certain thing, and possession simply means having something physically without necessarily owning it, and that section 20 of the Sale of Goods Ordinance provides for the time at which a property in goods can be said to have been transferred form one person to another. 

5.0: Bibliography.

Statute.

Sale of Goods Ordinance of 1931. [Cap. 214.]

Books.

Binamungu, C.S.M. (2000). Business Law: Student’s Manual;

                    Dar es Salaam: N.B.A.A.

Rogers, M. (1968). Outline of the Commercial Law in East Africa;

                   Nairobi: Legal Publications Limited.

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[1] Of Sale of Goods Ordinance, Cap.214.

[2] Ibid.

[3] S. 2 (1) of Sale of Goods Ordinance, Cap.214.

[4] (1922) 1 K.B. 343.

[5] (1949) 16 E.A.C.A. 1.

[6] (1995) T.L.R. 8.