Determining the time of transfer of ownership of goods from the seller to the buyer in a sale contract is crucial because this is the time when the buyer establishes ownership rights over the goods and has full right of disposal and transfer them. Generally, ownership rights are transferred when the parties have completed the delivery. However, in certain special cases, ownership may be transferred only after the parties meet specific conditions stipulated by law.
1. What is the Transfer of Ownership of Goods?
According to the provisions of the Commercial Law 2005, goods include items attached to land and all types of movable property, including those to be formed in the future. Based on Article 158 of the Civil Code 2015, ownership rights comprise the rights of an owner to possess, use and dispose of the property of the owner in accordance with law. Therefore, an individual is considered the owner of a property only when they have all three of these rights.
Thus, the transfer of ownership of goods refers to one party transferring their rights to possess, use, and dispose of goods to another party. Therefore, the buyer can only become the owner of the goods when the ownership is transferred, meaning the buyer has the right to use, possess, and dispose of the goods.
2. The Time of Transfer of Ownership in Sale Contract
According to legal regulations, ownership will be transferred from the seller to the buyer upon the delivery of the goods. However, depending on the parties’ agreement and relevant legal provisions, the time of transfer may vary.
2.1. For Ordinary Goods
According to Article 62 of the Commercial Law 2005, unless otherwise provided by law or agreed upon by the parties, ownership of goods shall be passed from the seller to the buyer from the time of handover of the goods. Thus, in a typical case, ownership is transferred to the buyer simultaneously with the completion of delivery by the seller. If the parties have a different agreement, ownership will be transferred according to that agreement.
2.2. For Goods Requiring Ownership Registration
Certain goods, such as real estate and some movable properties like cars, motorcycles, ships, and aircraft, must have ownership registered before being used or circulated. Therefore, when buying these goods, the buyer must register with the competent authority to establish their ownership of the purchased goods.
Thus, unlike ordinary goods, the time of ownership transfer for these goods is not based on the delivery of the goods, shipping documents, or payment but rather on the buyer completing the ownership registration procedures as stipulated by law.
2.3. For Goods Sold by The Method of Purchase After Trial
According to Article 452 of the Civil Code 2015, purchasing goods with a trial use option is when the parties agree that the buyer can keep and use the goods for a specified period before deciding whether to buy. During the trial period, the buyer may choose to buy or not; if the period expires without a response from the buyer, it is considered that the buyer has agreed to purchase under the conditions agreed upon before receiving the goods.
Therefore, in this case, although the goods have been delivered to the buyer for trial, ownership remains with the seller. However, during the trial period, the seller’s ownership rights are also limited, as the seller cannot sell, gift, lease, exchange, mortgage, or pledge the goods while waiting for the buyer’s response. Thus, even though the seller has delivered the goods to the buyer, this does not signify the time of ownership transfer. Ownership is only transferred to the buyer when the trial period ends without a response or the buyer agrees to buy and pays the seller.
2.4. For Goods Purchased on Deferred Payment Terms or Payment in Instalments
Buying by deferred payment or payment in instalments involves the seller delivering the goods to the buyer, who will pay part of the goods’ value upfront and pay the remainder in instalments with interest (if any).
According to Clause 1 of Article 453 of the Civil Code 2015, the parties may agree that the buyer will pay for the goods in instalments after receiving them. The seller retains ownership of the goods until the buyer has paid the full amount unless otherwise agreed. Therefore, in this case, although the goods have been delivered to the buyer, the buyer is not considered the owner until they have fully paid the agreed-upon amount.
The above is TNTP’s article on “The Time of Transfer of Ownership in Sale Contract”. We hope this article is beneficial to readers.
Sincerely,
