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Do the proposed sale of goods legislation reforms mean an end to confusion over transfer of ownership?
By Michelle Shean, a Partner in Restructuring and Insolvency at Fieldfisher specialising in non-contentious insolvency, business restructuring and turnaround
The Law Commission recently published a paper on suggested proposals for changes to the Sale of Goods Act 1979 (SGA) and the Consumer Rights Act 2015 in relation to the law of the transfer of ownership in goods in respect of consumer contracts.
I
t has long been felt that the language used in the SGA, and the complicated rules on
the passing of “property” in goods, essentially based on the language set out in the Sale of Goods Act 1893, is archaic and not fit for purpose in today’s consumer climate.
Whereas only a couple of decades ago, most transactions were carried out by consumers shopping in a store for an item which they then took away with them, the Office for National Statistics has information which reveals that online sales have increased from 19 per cent to 32 per cent since 2019.
We can likely attribute part of this increase to the artificial online economy created by COVID-19, though there is clearly a continuing trend towards online shopping. For goods sold online, ‘ownership’ is a complex issue under current sale of goods legislation.
There are three contractual scenarios in which ownership issues arise:
(i) contracts for goods which are identified and agreed on (goods physically bought
40 from shops and taken away);
(ii) contracts for goods which are not identified and agreed upon (goods bought online where the item bought is taken from a stock of identical items); and
(iii) contracts for goods forming part of a bulk – (which this article does not deal with)
Under the SGA, and in the absence of any contractual provision to the contrary, ownership (“title”) to goods will pass to the buyer at the latest once; (a) the goods are in a “deliverable state”; (b) they are unconditionally and irrevocably appropriated to the contract; and (c) there is an implied or express assent to both those factors by the buyer.
Ignoring the first of the contractual scenarios above, for goods bought online, ordered for manufacture, or requiring some further action to be taken before delivery or collection - for example, an inscription on a ring - when does ownership actually pass?
This is especially of concern for a buyer in an insolvency situation. Having paid the
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