1. Transfer of Ownership
i. Civil Law
1453 CCQ
The transfer of a real right in a certain and determinate property, or in several properties considered as a universality, vests the acquirer with the right upon the formation of the contract, even though the property is not delivered immediately and the price remains to be determined.
The transfer of a real right in a property determined only as to kind vests the acquirer with that right as soon as he is notified that the property is certain and determinate.
1455 CCQ
The transfer of a real right in an immovable property may not be set up against third persons except in accordance with the rules concerning the publication of rights.
1456 CCQ
The allocation of fruits and revenues and the assumption of risks incident to property forming the object of a real right transferred by contract are principally governed by the Book on Property.
The debtor of the obligation to deliver the property continues, however, to bear the risks attached to the property until it is delivered.
§ The concept of ownership is very important, as security over property can only be given by the owner of the property, and risk normally attaches to ownership.
Ascertained Property
§ property which has been specifically identified at the point of entering into the contract, the general RULE being that ownership will pass to the buyer by mere consent – it is an AUTOMATIC effect. See 1453 CCQ – no requirements of form.
Unascertained Property
§ Property which may be identified as to kind/nature and quantity, but not specifically identifiable at the time of entering into the contract.
§ At the point at which property becomes ascertained, the buyer must know that it has become such, because transfer of ownership may then take effect, accompanying with it the bearing of risk of loss.
Conditions for Transfer of Ownership
1. Object(s) must be ascertained (made certain and determined)
§ sale can be of identified unascertained property, but ownership will not pass until
§ sale can be by measurement = to identify the object you have to count them, weigh them, and measure them…property will pass only when… Failure to measure = failure to fulfil the condition of making the object of the contract ascertained, can apply for resolution on this basis (as was attempted in Interprovincial Lumber)
§ In Jobin’s opinion, you can seek specific performance of the obligation to measure (s. 1601 CCP)
2. Informing of the Buyer – 1453(2) CCQ
§ The buyer must be informed of the individuality or specificity of the property so as to know when she/he will become owner
§ The process of informing the buyer can be informal – not required by specific writing/form. The carrier of goods may even become the representative of the buyer
Interprovincial Lumber v. Matapedia [1973] C.A.
Facts: Contract for the sale of a large amount of lumber over a period of five months. The first shipment was delivered and accepted, but following a change in market conditions, the purchaser refused to accept subsequent deliveries. The vendor was successful in its action for damages. The purchaser appealed, claiming that the vendor had failed to deliver, that the subject goods were unascertained, that the vendor had not followed the proper procedures for resolution and was in default.
Holding: The facts of the case show that the purchaser’s refusal to accept the goods was the only reason the vendor did not continue to deliver. There is no requirement that the vendor continue to deliver, the fact that the price was not paid is sufficient to base a claim for resolution. In this case, the resolution of the K of sale was by operation of law, and there was no requirement for an application for judicial resolution. The refusal of the buyer to accept delivery was the violation of an essential condition of the contract, a breach giving rise to a right of resolution.
WHAT ABOUT TRANSFER OF OWNERSHIP – NOT DETERMINED GOODS, STILL HAD TO BE MEASURED???
Turcotte v. Lacombe [1975] C.A.
Facts: Purchaser bought nine buses, for a total price of $9,0000 to be paid by 10 monthly installments. The vendor failed to deliver the registration papers, thus preventing the purchaser from registering and using the buses.
Held: The failure to deliver the papers along with the buses constitutes a default on the part of the vendor (delivery incomplete). “Le vendeur est tenu, en un mot, de mettre l’acheteur en son lieu et place, et de lui procurer les moyens de faire tous actes de proprietaire.” Descotes c. Lauzon.
ii. Common Law
Sale of Goods Act s. 17-19, 12.3
OLRC Sales Report (p. 373)
Rules in the Sale of Goods Act (SGA) linked to/affected by the locus of title:
1. transfer of risk
2. the right to payment of the price
3. the right to reject specific goods
4. the seller’s rights of resale and the measurement of damages
Other non-sales rules whose effect depends on the locus of title:
1. the existence of an insurable interest
2. the right to claim the goods in bankruptcy
3. the right to sue third parties in conversion/for injury to the goods
4. exigibility of goods by execution
5. exposure to tax liability
6. liability as “owner” under the Motor Vehicles Act
7. criminal liability under penal/regulatory statutes
Rules under the SGA for determining the time of transfer of title – ss. 17-18
§ complex
§ highly subjective factors
1. Title cannot pass before the goods have been ascertained.
2. Where there is a contract for the sale of specific or ascertained goods, the parties’ own intentions govern as to the time of transfer.
3. Where the contract is silent on the question, the presumptive rules of s. 19 shall apply.
s. 19, Rule 5(i): The court must inquire as to whether the goods of the “correct description” and in a “deliverable state” were “unconditionally” appropriated to the contract, but also whether the buyer gave his “assent” to the appropriation and whether the assent was “express” or “implied”.
*The additional complication of reservation of title by the seller (i.e. pledge) was dealt with only recently through the adoption of the PPSA.
Varley v. Whipp [1900] QB
Case dealing with the sale by description (unseen goods) of a “second-hand self-binding reaping machine”, which turned out to be much older than what was described. The buyer is appealing a decision that found that the misdescription could only be treated as a breach of warranty, and not as grounds for rejecting the machine.
Holding: The key issues is whether the words relied upon were part of the description (identification of the machine), or merely part of a collateral warranty. Where a sale is by description alone (buyer has not seen the goods), and the buyer is relying on the description alone, the SGA s. 13 provides that “there is an implied condition that the goods shall correspond with the description, which is a different thing from a warranty.” Property shall pass in such a contract when it is accepted by the purchaser as fulfilling all conditions of the contract.
§ Breach of implied condition prevents transfer of title under presumptions of s. 19.
§ Court gives a very broad interpretation to “description”, some argue that it should be limited to cases where the identification of the goods which are the subject of a contract depends upon the description. (p. 174)
Ontario s. 12(3) SGA (breach of condition by seller = warranty, not grounds for rejection- reconcile with Varley?
Appropriation of Goods to the Contract
Carlos Federspiel
claration of trust by the company in favour of the customer”? The court finds that “the company cannot have intended to create an interest in its general stock of gold which would have inhibited any dealing with it otherwise than for the purpose of delivery under the non-allocated sale contracts.”
Trust arguments: A trust implies a restriction on the type of things the trustee can do with the money. In this case, there was no such restriction. Court analogizes this to a tenancy-in-common (a form of co-ownership) where all the buyers own the property in their individual ownership. However, a TIC implies that nothing can be done with the property without the consent of all the co-owners. In this case, property may have been dealt with without anyone’s permission.
The argument that the company is estopped from denying the existence of a right based on collateral promises is eventually dismissed for two reasons: an estoppel claim cannot function to alter underlying facts (i.e. the fact that the company represented that the buyers were the owners of the gold does not change the underlying fact that ownership never passed, and the promisor cannot on the basis of an estoppel claim be required to hand over property which by law belongs to another – the bank, the buyer is limited to recovery in damages); and estoppel cannot be asserted against a third party (the buyers cannot claim estoppel for the company’s promises against the bank, the court also rejects the argument that the bank steps into the company’s shoes upon the crystallisation of the charge) since the bank did not make the statements. Also, estoppel cannot be used as a sword.
Arguments relating to a relationship of bailment and trust were also rejected on the grounds of the absence of any identifiable property to which title or trust could attach.
Title to after-acquired bullion:
Same problems as above: property is still unascertained, and mixing of the old and new bullion is inconsistent with a trust.
Argument: that the contracts of sale “were agreements for the sale of goods afterwards to be acquired”. As such, upon the acquisition of bullion of the description in the contract, the purchaser received an equitable title, although legal title would not pass until the goods were ascertained and appropriated to the contract at the time of physical delivery to the buyer. This was rejected for the reason that there could be no way of knowing to which of the non-allocated sales a particular acquisition of gold was in satisfaction of.
Argument: the collateral promises operated to impress on the bullion a trust in favour of each purchaser upon the acquisition of bullion.
Argument: Party has a fiduciary relationship and has to act in the best interests of the party. A breach of a fiduciary relationship can result in proprietary rights (constructive trust). Most often, this applies to relationships between directors and shareholders. This involves a party who is vulnerable to the other. In this case, only the contract makes the buyer vulnerable, and that is insufficient. Otherwise, every contract would lead to a fiduciary duty and proprietary rights.
