November 22, 2012

Does the agreement transfer the property ?

The question is to know when is the property transfered, and does the agreement between the parties have an effect on this transfer of property ?

We can have as example different system in different coutries :

We can observe in the French Civil Code, in the articles 1138 and 1583, that the property is acquired by the buyer at the moment the parties in contract have agreed about the object and the price. For example, the payment of money as nothing to do with the transfer of property.

In English law, there is no unified transfer system, but the rule on sale has been codified in the Sale of Goods Act 1893 and the Sale of Goods Act 1979. From that time there were three ways of transferring title in movables in English common law.

An other example is Austrian law, in which a contract of sale does not itself transfer the property. The agreement between the parties is not sufficient to transfer the property.

We will focus on French law and try to explain that, the fact that the transfer of the object is not a requirement for the transfer of property could be a disadvantage for the buyer. For example, if A sells a boat to B. They agree about the object, the price, a contract is formed, so the transfer of property is done. B is now the owner of the boat, even if he hasn’t paid yet the price. If between the moment of the agreement between the both parties, and the moment B receive the boat, this one has been destroyed, then B still has to pay A.

The transfer of property with the agreement between the parties is the general rule in French law, but the parties can agree that the transfer of property will happen at an other time.

Because there are different systems, we can then understand the need of the CISG, which provide a fair and uniform regime for contracts for the international sale of goods.

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