Introduction
This essay examines the legal issues arising from the contractual agreement between Headingley Innovative Technologies Limited (HIT) and Standard Apartments Residencies Limited (STAR) concerning the sale of 50 ‘ZooperWash’ washing machines. Specifically, it focuses on whether property and risk in the goods had passed from HIT to STAR prior to their destruction in a lorry accident. Drawing on provisions of the Sale of Goods Act 1979 (SGA 1979), relevant case law, and academic commentary, this analysis aims to clarify the principles of property transfer and risk allocation in commercial contracts. The discussion will address the concepts of specific goods, ascertainment, and the timing of property transfer, concluding with an assessment of the implications for both parties.
Property in Goods under the Sale of Goods Act 1979
Under the SGA 1979, property in goods refers to ownership, and its transfer from seller to buyer is governed by specific rules. Section 16 stipulates that property in unascertained goods cannot pass until the goods are ascertained. Once ascertained, Section 17 provides that property passes when the parties intend it to pass, which can be determined by the terms of the contract, conduct, or circumstances. In the present case, HIT set aside 50 ‘ZooperWash’ washing machines in its warehouse with STAR’s invoice placed on top. This action suggests an intention to allocate specific goods to STAR’s order, arguably rendering them ascertained (Underwood Ltd v Burgh Castle Brick and Cement Syndicate, 1922). However, merely setting goods aside may not be sufficient to indicate an intention to transfer property unless accompanied by further actions or explicit agreement (Wardar’s (Import & Export) Co Ltd v W Norwood & Sons Ltd, 1968).
Furthermore, Section 18 Rule 5(1) of the SGA 1979 presumes that in contracts for specific or ascertained goods, property passes when the goods are in a deliverable state and unconditionally appropriated to the contract by one party with the assent of the other. Here, although HIT segregated 50 machines, there is no clear evidence of STAR’s assent to this appropriation prior to delivery. Indeed, the subsequent loading of all 200 machines onto a lorry for multiple customers muddles the specificity of the goods allocated to STAR, raising doubts about whether unconditional appropriation occurred at the warehouse stage.
Risk and Its Transfer
Risk generally follows property under Section 20(1) of the SGA 1979, unless otherwise agreed. If property had not passed to STAR before the accident, risk would remain with HIT, meaning they bear the loss of the destroyed goods. Conversely, if property had transferred, STAR would suffer the loss. Given the ambiguity surrounding appropriation, it is likely that property—and thus risk—remained with HIT at the time of the accident. Academic commentary supports this cautious approach to property transfer in multi-delivery scenarios, noting that courts often require clear evidence of appropriation to protect buyers from premature risk (Bridge, 2017). Moreover, without a specific contractual term indicating otherwise, the default position under the SGA 1979 suggests risk stayed with HIT as the goods were not yet delivered to STAR’s premises.
Conclusion
In conclusion, the analysis indicates that property and risk in the 50 ‘ZooperWash’ washing machines likely remained with HIT at the time of their destruction. The lack of clear unconditional appropriation to STAR’s contract, coupled with the co-mingling of goods on the delivery lorry, suggests that the requirements for property transfer under Sections 16-18 of the SGA 1979 were not fully met. Consequently, HIT bears the loss of the destroyed goods. This case underscores the importance of explicit contractual terms and clear appropriation practices in commercial transactions to avoid disputes over property and risk allocation. For practitioners and businesses, it highlights the need to define such terms at the outset to mitigate potential financial losses.
References
- Bridge, M. G. (2017) The Sale of Goods. 4th ed. Oxford University Press.
- Underwood Ltd v Burgh Castle Brick and Cement Syndicate [1922] 1 KB 343.
- Wardar’s (Import & Export) Co Ltd v W Norwood & Sons Ltd [1968] 2 QB 663.
- Sale of Goods Act 1979 (as amended). UK Legislation.
