Significance of transfer of ownership
As the various rights and liabilities of the parties are linked with the transfer of ownership, it is therefore, necessary to determine the time at which the ownership of the goods is transferred to the buyer for the following reasons
- Risk passes with the transfer of ownership. Sometimes, the goods are lost or destroyed due to theft, fire, earthquakes, etc., then, subject to certain exceptions, the loss falls on the owner of the goods at the time they are lost or damaged.
- In case of breach of contract by the seller, the buyer may sue the seller to obtain the delivery of goods if the property has passed to him; otherwise, the buyer only has the right to recover damages from the seller and price, if already paid by him.
- In case of breach of contract by the buyer, the seller would be entitled only to sue the buyer to recover the price of the goods after the property has passed to the buyer. In case the transfer of property has not taken place, the sellerâ€™s right would be limited to keeping or regaining possession of his goods.
- In the event of insolvency of the seller or the buyer, the question of whether the Official Receiver or Assignee can take over the goods or not depends on whether the property in the goods has passed from the seller to the buyer.