Contract is made to buy 200 australian wine from a bulk retailer. contract is made on term that the retailer will store for pickup for 3 weeks. In the meantime before pickup the retailer goes bankrupt. Has the title passed ?
The Passing of Title
The basic rule
The basic rule as to the passing of title is in section 18 of sales of goods act. Which states;- Where there is a contract for the sale of unascertained goods, no property in the goods is transferred to the buyer unless and until the goods are ascertained. Sale of unidentified part of an identified bulk
It often happens that the transaction between seller and buyer is completed in all essentials, even to the extent of the buyer actually paying for the goods, while the goods are still in the possession of the seller himself or of a carrier. This has implications in relation to risk which will be considered later. But the other more disturbing consequence of s 16 was that a buyer might find that although he thought he had obtained the property in the goods and had paid for them, he had no property and remained vulnerable to the risk of the seller’s insolvency because of the purely accidental or fortuitous fact that the goods were not ascertained.
For example, In re London Wine Co (Shippers) Ltd (1986) PCC 121: a company sold wine to customers, while retaining possession of the wine. The customers paid for the wine, as well as for subsequent storage charges, and the seller gave the buyers “certificates of title”, but there was no actual earmarking or physical segregation of the wine sold to different customers. The wine company became insolvent, and the receiver claimed that all the wine still belonged to the company – a claim that was upheld.
The rules of equity cannot provide a solution to this problem. There is no room in sale of goods law for the notion that an equitable title might pass or an equitable interest be created, however well established...
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