Question 2 (a)
Custody and property; oil destroyed before all the drums were filled; goods on sale or return pledged
9 marks
- Time to write
- About 18 minutes
From an older CBCS paper
Question
Question 2 (a) · 9 marks“Custody of goods implies property in the goods.” Comment.
X agreed to sell Y the whole quantity of oil lying in a tanker in X’s godown. It was agreed that the oil would be filled into drums, and that the drums would then be delivered to Y. Some drums were filled in Y's presence; but a fire broke out before the remaining drums could be filled, destroying the whole quantity of oil. Who will bear the loss? Discuss.
On a sale or return basis, A delivers some jewellery to B. B pledges the jewellery with C. A sues B to recover the price. Will A succeed?
Reworded from the university paper; the task is the same. The original paper belongs to the University of Delhi. See DU's question bank.
Before you write
Read off the question and its marks
Read from the question
- Will A succeed…?A case problem: state the rule and its section, apply it to these facts, then answer in one line (yes or no, and why).
- (i)–(iii)3 items, each marked on its own: give each its share.
- CommentA statement to judge: take a stand on it in your first line, and come back to it at the end.
Write it in this order
The parts stand alone: start with the one you are surest of.
- Read the facts; underline who did what, and the exact question 1 min
- 1 (i) Custody and property 3 marks 5 min
- 2 (ii) Unascertained goods; loss of the oil 3 marks 5 min
- 3 (iii) Section 24: sale or return, pledge 3 marks 5 min
- Check: section named, answer stated in one line 2 min
Short on time? A few lines on every part beat a full answer to one: each part is capped at its own marks.
Try it first. About 18 minutes for 9 marks. Write it out, then open the solution.
Solution
Hover or tap a marked figure, like 72,000, to see how it is made and where else it appears.
(i) Custody is not property: the statement is incorrect. Passing of property means that ownership passes. Once the property has passed to the buyer, the goods are at the buyer's risk, though the goods may still be in the seller's possession. Ownership and custody can thus be in different hands: a seller may hold goods he no longer owns, and a bailee or pledgee holds goods owned by another. Custody of goods does not imply property in them.
(ii) Who bears the loss of the oil. Risk, prima facie, goes with ownership: whoever owns the goods when they are destroyed bears the loss. So the question is how far the property in the oil had passed to Y before the fire.
- The contract is for the whole of the oil in one identified tanker, so the goods are specific. X was bound to fill the oil into drums before delivery, that is, to do something to put the goods into a deliverable state. For specific goods of this kind, property passes only when that thing has been done and the buyer has notice of it (s. 21).
- The filled drums: each drum filled in Y's presence was in a deliverable state, and Y knew it. Property, and with it the risk, in the oil in those drums had passed to Y, so Y bears the loss of the filled drums.
- The oil still in the tanker: it had not yet been put into a deliverable state, so its property and risk were still with X, and X bears the loss of that oil.
The other reading. If the filling of all the drums is taken as one act that X had to complete before anything passed, the oil was never in a deliverable state as a whole; no property passed under s. 21, and X bears the entire loss.
(iii) Sale or return; pledge by B. Under s. 24, goods sent on sale or return become the buyer's when he approves them or does anything else that adopts the transaction, and pledging or reselling the goods is such an act. By pledging the jewellery with C, B treated it as his own: the property passed to him at that moment, and with it the obligation to pay the price. C, who took the pledge from the owner, holds it validly against A. A will succeed against B for the price.
Where the 9 marks sit
| # | Component | Marks |
|---|---|---|
| 1 | (i) Custody and property | 3 |
| 2 | (ii) Unascertained goods; loss of the oil | 3 |
| 3 | (iii) Section 24: sale or return, pledge | 3 |
| Total | 9 |
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