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last updated: 29th July 2011

The transfer of ownership (or property in legal terminology) is important as it determines who owns the goods at a particular point during the contract. The main reason why this is important is from the point of view of risk, for example, who has responsibility for the goods when they are in transit to the buyer,

In a contract of sale, ownership transfers from the supplier to the buyer as follows:

  • specific goods ie goods that are identified and agreed 
    - the buyer takes ownership when the contract is made, irrespective of payment or delivery
     
  • future goods ie goods that are to be manufactured or acquired on the buyer’s behalf
    - the buyer takes ownership when he receives the goods allocated, or notice of their delivery
     
  • unascertained goods ie goods defined by description or by sample from a larger consignment
    - the buyer takes ownership when he receives the goods allocated, or notice of their delivery
     

Risk transfers with ownership so, for example, with specific goods, if something happens to the goods before they are delivered to you or they have been paid for, then your institution must bear the costs of any damage.

Whilst these are the most common rules for the passing of ownership, it should be borne in mind that there are additional rules, for example, if the goods have been modified by the supplier before delivery to the buyer.

If in doubt, check with your Head of Procurement.

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