Acquiring Title

New Goods

When a product is manufactured or created, a new ownership/ title comes into existence.    The components / ingredients which have been incorporated and lost their identity, cease to be owned or possessed separately.  The components cease to have a separate title, once their identity is subsumed in that of the new product.

It is presumed that the creator of the new goods takes ownership.   There is no general rule applicable to all cases and manufacturing processes.

Difficult questions of interpretation  may arise as to whether and when the old goods cease to exist and new goods come into being. The substantial alteration of the goods does not destroy their separate title. However, their incorporation into something new, may do so, even if they could be separated.

The better view appears to be that where a person creates goods using materials to which he is not entitled, the person who has owned the constituent materials has a better title and may claim ownership to it against the creator. An alternative view is that the creator owns the product, but is liable in conversion for the materials used.


Manufacture I

Ownership arises in a new thing when it is created or manufactured.  Questions may arise where the component materials or ingredients are owned by different persons. A person who manufactures goods may agree to do so, for and on behalf of the suppliers of materials.  If he is an agent, the goods vest in his supplier as his principal from the outset.

Where materials lose their original identity, they are usually lost to their owner. The new item is presumed to belong to the person who has created or manufactured it unless he has committed a civil wrong in so doing. The question is whether the identity or nature of the original item is lost in the new item. While there is continuity of identity, the original owner of the materials retains ownership.


Manufacture II

Ownership arises in a new thing when it is created or manufactured.  Questions may arise where the component materials or ingredients are owned by different persons. A person who manufactures goods may agree to do so, for and on behalf of the suppliers of materials.  If he is an agent, the goods vest in his supplier as his principal from the outset.

Where materials lose their original identity, they are usually lost to their owner. The new item is presumed to belong to the person who has created or manufactured it unless he has committed a civil wrong in so doing. The question is whether the identity or nature of the original item is lost in the new item. While there is continuity of identity, the original owner of the materials retains ownership.

The presumptive position that the goods belong to the manufacturer can be varied by agreement.  A retention of title clause may provide that the product of the manufacturer is to be owned by the owner of the raw materials.


Accession

When a thing is changed from one type of thing to another, such as by grape being made into wine or bread from wheat or barley etc., the person who undertakes the operation is presumed to become owner. The previous goods cease to exist.

This principle does not apply to cases of fraud or wrongdoing. The person who undertakes the operation may be liable in conversion to the owner of the ingredients for the value of the goods converted, regardless of fraud or wrongdoing.

Where there is an addition to stolen property, the true owner on recovery may reclaim the benefit of the addition by accession. Under this approach, the accession to property stolen by a wrongdoer passes to the true owner. If, however, a bona fide purchaser or other innocent third-party has purchased the thing, the courts may favour that party.


Mixing I

Goods may be mixed to such an extent that it is impossible to separate them. Goods may be mixed or merged without a new item being created.  Where things are mixed up, so that they are no longer distinguishable, such as with liquids, corn, logs, then the principle of accession does not apply.

Where items belonging to two parties are mixed or merged, they each own them as tenants in common in proportion to their contributions. The goods must be of the same nature and quality for this purpose. If the above rules would lead to injustice, different principles may apply. If a small portion of the goods of one person is mixed with a larger portion of goods of the latter, by the latter’s negligence, it is likely that recovery for conversion of the small part will be allowed. The owner of the small part may become the owner of the whole.

The mixing must be by accident, agreement or the act a third party which is unauthorised. Where, a person wilfully causes or allows his assets or property to be mixed with another’s without the other’s knowledge or consent, the whole belongs to the other.


Mixing II

Where the mixing is wrongful (e.g. a trespass), the innocent contributor is presumed to be entitled to the whole, unless the wrongdoer can specifically prove that they are his. An alternative view is that the wrongdoer forfeits all rights. Some courts deem this approach to be overly harsh.

Where the wrongful mixing is done by one of the contributors, he may be liable to pay damages in respect of the difference between the value of the mixture and the contribution of the innocent party.  It is for the wrongdoer to prove the limit of the innocent party’s entitlement.


Mixing of Goods

Goods may be mixed to such an extent that it is impossible to separate them. Where two persons’ goods, which are of the same nature and quality are mixed, they own them as co-owners in proportion to the materials supplied by them which belonged to them.

Where the goods are wrongfully mixed, the innocent party is presumed entitled to the whole mixture, unless the wrongdoer can specifically prove that they are his. An alternative view is that the wrongdoer forfeits all rights. Some courts deem this approach to be overly harsh.


Transfer of Ownership by Delivery

The ownership of goods passes by “delivery”. Delivery is the physical or symbolic transfer of possession with the intention to transfer ownership. This may be done directly or through a third-party agent.

The delivery of goods need not be physical. It may, for example, involve passing control of the goods (e.g., by a transfer of a warehouse receipt) from one person to another. The warehouse receipt is not the same as title deeds. However, it is symbolic of possession and its delivery effects the transfer of ownership.

Delivery may take place by a symbolic act, for example, touching an item while giving words showing an intention to deliver possession. Symbolic / constructive delivery may arise by physical delivery of a document of title recognised by statute or custom as sufficient.

Constructive delivery involves the change in capacity in which a person who has custody or possession of goods, holds those goods. The warehouse keeper may agree with the consent of the person who has title to the goods and the transferee, that he will hold the goods on behalf of the transferee. The consent of all three parties is required.


Contract for Sale of Goods

A contract for the sale of goods does not transfer the ownership of goods by itself. Generally, the ownership passes by physical delivery after the contract. The transfer of title is not affected in writing, but by the subsequent delivery, which avoids liability the stamp duty.

A contract to transfer goods is enforceable. A sale contract will generally be enforced by way an order for damages by way of compensation for non-compliance. In some cases, such as where the goods are unique, an order for specific delivery may be granted by a court to enforce the contract.


Transfer of Goods by Deed

The ownership of goods may be transferred by sale or gift. In order to complete a gift, the goods must be transferred by deed or must be delivered with the intention of transferring them as a gift. A declared intention to give a gift is insufficient. It is a principle that equity will not aid a volunteer (a person who does not give something valuable in return).

Ownership of goods may be transferred by a deed of transfer without physical delivery. The deeds are “delivered”, in a different but analogous sense. This course is generally being inadvisable, as a conveyance of goods usually attracts stamp duty.

Unlike the case with real property (land and buildings), the transfer of goods by delivery does not require to be registered. Although the ownership and transfer of ownership of cars must be registered, this is a system regulatory control by the state authorities and is not a registration of title and transfers.

If the transfer of goods is effected by a document (not physical delivery), and possession of them is retained by the seller, then it may be registerable as a bill of sale. The requirements for registration is strict and onerous. In the case of a transfer by an individual, the transfer must be registered within 7 days in the High Court Central Office or other court offices.


Incorporation into Land and Buildings and Mixture

Where goods are incorporated into land or fixtures on land, the ownership passes to the owner of the land. For example, when bricks and materials are supplied to a building site, the ownership passes to the landowner once they are incorporated in the building. This may have the result that the ownership is lost, to the landowner or a party with security over that property, even if there is a retention of title clause.

Collective ownership of goods may arise when goods are mixed so that they become indistinguishable. If goods are mixed in these circumstances, the relevant owners have an interest in proportion to their shares. If they are mixed by accident for which neither is responsible, the owners become entitled to the whole in proportion to the contribution. Where one person wrongfully mixes goods with another’s goods without his approval, they become the property of the latter.

It has been held that the offspring of animals let on hire belong to the hiree and not the owner. This is on the basis that produce belongs to the person in possession. An alternative line of authority presumes the hirer to be the owner of the offspring.


Finding Goods

 

In general, where a person finds a movable/ chattel which is not in the possession of another, he takes good title to it against all persons except the true owner. The true owner may have abandoned the goods and his title. The movable may have been lost. Where the true owner has not abandoned the goods and can be traced by taking reasonable steps, then it may be a criminal offence if the finder appropriates those goods without taking those steps.

Finding goods which are not apparently possessed or controlled by another may raise difficult issues of interpretation. The legal concept of possession requires intention and control. The intention and control may be exercised through another such as an employee or agent. It is not a question of conscious intent. This matter of possession is interpreted by the courts retrospectively with reference to the facts and circumstances in the event of a dispute.

At common law, movables found by an employee in the course of his employment belong to the employer. Questions may arise as to whether the finding has taken place in the course of employment. Where the finding takes places on the employer’s premises, the employee is unlikely to acquire title. The employee’s possession may be that of the employer. Where the finding takes place off the employer’s premises during working hours, there may be circumstances in which the finding is outside the course of employment.


Finding in a Public Place

Where movables are found in a public place, unburied and unattached to the surface, difficult issues may arise, to which different approaches have been taken by the courts. The key consideration is whether the goods at that moment are in the possession of another. Possession is a concept that involves an element of control and intention and can raise difficult issues of interpretation of the facts and circumstances.

For example, in cases where money has been found dropped by an unknown person on the floor of a shop, it may or may not, depending on circumstances and the judicial approach, be found to have been in the possession, custody or control of the shopkeeper. Such a finding is necessary in order to displace the general principle that the finder obtains good title against all, but the true owner.

The issue turns on whether the owner of the premises had an “intention” to exclude others and maintain custody and control of everything on the premises. As in many other contexts, the intention is not necessarily conscious; it is imputed retrospectively by the courts. Where an owner has never taken possession of a particular place, it is more likely that the finder of goods in that place will take title to them, as against him.


Finding Issues

Where article or item is sold, then unless it is expressly or impliedly sold with its contents, the purchaser who finds an item or valuables within it, is not presumed to have acquired title to it. If the seller cannot be shown to have intended to part with his title to the item within, then that title to the thing within will continue with the seller/ owner.

The position is clear when the seller is aware of the existence of the item within, but unaware that it is in fact within. The position is more complex where he is unaware of the existence of the item. A person who possesses an item with another hidden item inside, may or may not have sufficient possession and control over the hidden item in the circumstances, so that he retains   good title to the thing within, as against a buyer or third person who finds it.

Even if the seller can be presumed to intend to retain possession of the item within, his right to take action to recover it will eventually become too late to assert under the Statute of Limitations.

Another may have already assumed possession of the goods, and that possession may continue, notwithstanding that its continuity is not apparent. The finder may not acquire title to the goods against a person who is not the true owner, where that other person has prior possession by effective control by which he continues to intend to exclude others.


Atypical Acquisition of Title

A person may become the owner of goods by reason of a transfer from a person in possession without title in certain circumstances.  The circumstances are set out in statute and are discussed in more detail in other articles.

There are a number of cases in which a person in  possession of goods may sell them and can give good title to a third party who acts in good faith.  This includes the case where the goods are put into the possession of a person for the purpose of sale, and the owner appoints that person his agent or thereby holds that person out, as having the authority to sell and transfer ownership.

Where goods are entrusted to a mercantile agent (who is not the agent of the owner as such) or where they are in the possession of an unpaid seller or unpaid purchaser, various statutes provide that those parties may sell the goods and transfer title to them to a third party who is without notice of the owner’s rights, free from the owner’s rights and interest in the goods.


Family Legislation

There are powers under family legislation to transfer and divide chattels on judicial separation and divorce. The ownership of chattels and other spousal assets may be determined and divided in family law proceedings between spouses based on a range of factors, on broadly discretionary grounds

Disputes between married persons relating to the ownership of property may be heard and determined under the summary procedure in the Married Woman’s Status Act. General principles of law will apply, including those of resulting trusts and the presumption of advancement.

The Married Woman’s Status Act procedure may deal with issues of ownership of household chattels between married persons. There is also a provision in relation to the ownership, division and sale of household chattels in the Family Home Protection Act. This legislation is procedural and does not allow for the transfer of ownership.

Where a chattel is purchased by one person with another’s money, it is presumed that it is held by the legal owner for the persons who have financed it under a resulting trust. This may create a co-ownership in equity between the legal owner and the person who has contributed to the purchase price in the proportions in which they have financed the property. In the case of persons in certain relationships such as spouses, where the property is put in both names, there is a presumption that there is intended to be beneficial joint ownership.


Termination of Ownership

Goods may be abandoned.  Time limits for their recovery may terminate.  They may be mixed or merged in something new or become a fixture.

Possession passes when a person dies, to his successors.  On insolvency, the official assignee or the trustee in bankruptcy acquires the bankrupt’s title to the property.  He will not obtain actual possession until it is transferred in accordance with bankruptcy rules.

Property may be abandoned by a cessation of control, actual and intention to control by the owner.


References and Sources

Irish Texts

Modern law of personal property in England and Ireland 1989  Bell

Consumer Law Rights & Regulation 014       Donnelly & White

Commercial Law White           2012 2nd ed

Commercial & Economic Law in Ireland        2011 White

Commercial Law 2015 Forde 3rd ed

Irish Commercial Precedents (Looseleaf)

Commercial & Consumer Law: Annotated Statutes 2000  O’Reilly

UK Texts

Personal Property Law: Text and Materials  2000  Sarah Worthington

Personal Property Law (Clarendon Law Series) 2015 Michael Bridge

The Law of Personal Property 2017   Professor Michael Bridge and Prof. Louise Gullifer

The Principles of Personal Property Law 2017  Duncan Sheehan

Crossley Vaines on Personal Property 1967 by J C Vaines

The Law of Bills of Sale 2017 James Weir

Palmer on Bailment 2009  Norman Palmer

The Reform of UK Personal Property Security Law: Comparative Perspectives  2012 John de Lacy

The Law of Personal Property Security 2007  Hugh Beale and Michael BridgeCases