Property Law for Business Property is the thing over which the right of ownership is exercised
Property Law for Business
Property is the thing over which the right of ownership is exercised
Definition of property
According to John Austin ownership is said to exist when:
When the right is available against the whole world (Jus in rem)
Over a determinate thing Indefinite in point of disposition, and Unlimited in point of duration
Classification of property
Movable Property Immovable property
Tangible Property: Physical existence can be measured
Intangible Property: copyrights, patent rights
Movable and Immovable property
Transferable Non-transferable
Ex: Vehicles, books, utensils etc.
Ex: Land, houses, trees attached to the ground
Need not be registered Registration is compulsory
sales tax and central sales tax
Stamp duty is to be paid
Delivery of the movable property completes the transaction
Registration on the name of the transferee completes the transaction
Sale of Goods Act, 1930
Section 4 (1) of the Act, 1930 defines the contract of sale of goods:
It is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. It may be absolute or conditional
….contd Sale of Goods Act, 1930
Section 4 (3) deals with the concept of an agreement to sell:
The transfer of property in goods is to take place at a future time or subject to some condition thereafter to be fulfilled.
Sale and Agreement to sell
Executed contract Executory contract
Existing and specific goods Future and contingent goods
Risk of loss is borne by the buyer even though the seller possesses the goods
Loss falls on the seller
The seller can sue if the contract is breached
In case of breach, the seller can sue for damages
Sale and Agreement to sell
The seller will not have the right to re-sell – the subsequent buyer will not have good title to the goods
He can re-sell and the buyer will acquire good title. The original buyer can claim for damages.
Jus in rem ‘Jus in personam’
Performance of a contract of sale
Three stages: Passing of risk Transfer of possession of the goods and Transfer of ownership of title from the
seller to the buyer.
Essential elements of a sale
Parties: Two subject matter: immovable Transfer or conveyance:
Either registration or delivery of possession of the goods
Price or consideration
Transfer of Title
The seller must have a good title to the goods
Sale by a non-owner will not be transferring a better title
A person who does not possess the title cannot transfer the title
Nemo dat Quod non habet
‘No person can give a better title than what he has’ Shaik Buddan Sab vs. Nagamma (1977)
The defendant sold 12 acres of land to the plaintiff in 1947. The defendant has no right over the 6 acres of land. The plaintiff was asked to vacate and dispossess the 6 acres of land in 1967 by the true owners.
Nemo dat Quod non habet
The plaintiff sued the defendant for damages for 6 acres of land. The plaintiff took the ground of the nemo dat quod non habet
The defendant took the plea of caveat emptor’
Is the defendant liable to pay the amount back to the plaintiff?
….contd Nemo dat Quod non habet
Sale by non-owners: Where the goods are sold with the
consent of the true owner Sale by an agent Sale by one of the joint owners Sale with the consent of the true owner Sale by an unpaid seller
….contd Nemo dat Quod non habet
The Pawnee of the goods
A thief or finder of a negotiable instrument endorsed in blank or payable to bearer
Finder of goods – perishable in nature or Finder of goods - where the lawful charges
incurred in respect of goods amount to 2/3rds of its value and where the owner refuses to pay the charges
Borrowing against property as security
Borrowing against Property as Security Hypothecation Pledge and Hypothecation –
Bank Advances Mortgage of Immovable Property
Hypothecation
Parties to hypothecation: Hypothecator Hypothecatee
Hypothecator holds the goods as an agent but not as the owner. The goods are liable to be returned to the hypothecatee under certain circumstances.
Hypothecation
If the hypothecator refuses to return the goods, the hypothecatee has a right to claim in the court of law.
Difference b/w Pledge and Hypothecation: Possession
Hypothecation
Caselaw: In Bank of Chittor vs. Narsimhulu, A Cinema projector and some accessories were pledged with a bank.
The bank allowed the property to remain with the pledgers, since it is very important for running cinema. Later on the pledgers sold the machinery. It was held that the sale was subject to pledge.
Mortgage
Section 58 (a) of the Transfer of property Act, 1882 defines mortgage:
A mortgage is the transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced by way of loan, an existing or future debt or the performance of an engagement which may give rise to a pecuniary liability.
Mortgage
Parties to a mortgage: Transferor is called a “mortgagor” Transferee a “mortgagee” The principal money - “mortgage-
money” The instrument – mortgage-deed
Mortgage
Essential Features of a mortgage: Two parties – competent Transfer of interest Of Specific immovable property Such transfer is to provide security of
payment Consideration Registration
Kinds of Mortgage
Simple mortgage – possession & personal liability
Mortgage by conditional sale – Agree to sell
Usufructuary Mortgage - right to enjoy the benefits
English mortgage – repay on certain date, condition of
retransfer, enjoy the benefits Mortgage by deposit of title deeds- delivers the
title deeds, regtn not compulsory
Anomalous mortgage: combo of simple and usufructuary
Hire Purchase of Property( ICA,1872)
Nature of Hire-purchase Agreement: The goods are delivered on the
condition that the amount will be paid in timely installments
Title is acquired on payment of last installment only
The hirer can terminate the agreement- before the property passes on to him
Ingredients of Hire purchase Agreements
Hirer Owner Hire Hire-purchase price
It should be in writing and signed by both the parties
Contents of Hire-purchase agreement
The cash price and the hire-purchase price of the goods
The date of commencement of the agreement
The date, number and the amount of installments
The name of the person to whom the installment is to be paid.
Lease of property
Transfer of the possession of property for a fixed period of time
It shall specify the beginning and end of the term of lease
Right of interest in immovable property is transferred
Consideration is Rent or premium
Essentials of a Lease
The parties Subject-matter Demise or partial transfer Term or period of lease Consideration or Rent
Termination of Lease
Section 111 to 113 of the TP Act deals without the termination of lease:
By lapse of time By happening of an event By termination of lessor’s interest By merger On the expiration of the notice to quit
Exchange (Sec.118)
Two persons Mutual agreement to transfer the
ownership of one thing for the ownership of another
Essentials of a valid exchange
Presence of two parties Exclusive Ownership of property Mutual transfer of reciprocal estate Transfer of property includes movable
and immovable property Consideration for transfer is not price Formalities of sale must be complied
with
Gift (Section 122)
A gift is a transfer of ownership voluntarily or gratuitously
Parties to the Gift: Absence of consideration The Donor and the donee The subject matter The transfer and acceptance
Registration of Gift (S. 123)
Registration of a gift deed is compulsory in case of immovable property
Revocation of Gift (S.126) An incomplete gift can be revoked at
any time Mutual consent
Revocation of Gift
Under Mohammedan Law a gift may be revoked even after the delivery of possession:
Husband to wife Prohibited degrees of relation Charity or for any religious purpose
Revocation of Gift
Death of the donee Subject matter of gift is destroyed. When the gift is sold by the donee when some property is received in
exchange of the gift