When does ownership get transferred in a store?

Question

When somebody buys property in a store, is that ownership transferred when a successful payment is accepted at the till? Or does it not transfer until the buyer leaves the store?

Answer 1

The answer used to be handled by common law in common law countries (it is handled by statute in civil law jurisdictions such as Quebec), but in most jurisdictions, this has been superseded by specific statutes and treaties governing the sale of goods.

U.S. Law

In every U.S. state the answer to this question is governed by the Uniform Commercial Code, which is substantially similar to this version as enacted in Colorado:

Colorado Revised Statutes § 4-2-401. Passing of title - reservation for security - limited application of this section

Each provision of this article with regard to the rights, obligations, and remedies of the seller, the buyer, purchasers, or other third parties applies irrespective of title to the goods, except where the provision refers to such title. Insofar as situations are not covered by the other provisions of this article and matters concerning title become material, the following rules apply:

(1) Title to goods cannot pass under a contract for sale prior to their identification to the contract (section 4-2-501 ), and unless otherwise explicitly agreed, the buyer acquires by their identification a special property as limited by this title. Any retention or reservation by the seller of the title (property) in goods shipped or delivered to the buyer is limited in effect to a reservation of a security interest. Subject to these provisions and to the provisions of the article on secured transactions (article 9 of this title), title to goods passes from the seller to the buyer in any manner and on any conditions explicitly agreed on by the parties.

(2) Unless otherwise explicitly agreed, title passes to the buyer at the time and place at which the seller completes his performance with reference to the physical delivery of the goods, despite any reservation of a security interest and even though a document of title is to be delivered at a different time or place; and in particular and despite any reservation of a security interest by the bill of lading:

(a) If the contract requires or authorizes the seller to send the goods to the buyer but does not require him to deliver them at destination, title passes to the buyer at the time and place of shipment; but

(b) If the contract requires delivery at destination, title passes on tender there.

(3) Unless otherwise explicitly agreed, where delivery is to be made without moving the goods:

(a) If the seller is to deliver a tangible document of title, title passes at the time when and the place where the seller delivers such documents, and if the seller is to deliver an electronic document of title, title passes when the seller delivers the document; or

(b) If the goods are at the time of contracting already identified and no documents of title are to be delivered, title passes at the time and place of contracting.

(4) A rejection or other refusal by the buyer to receive or retain the goods, whether or not justified, or a justified revocation of acceptance revests title to the goods in the seller. Such revesting occurs by operation of law and is not a "sale".

(5) Notwithstanding any other provision of this section, when livestock have been delivered under a contract of sale, if on the accompanying brand inspection certificate or memorandum of brand inspection certificate the seller has conspicuously noted that payment of the consideration for the sale has not been received, title does not pass until payment is made.

The language in bold governs the scenario you post absent an agreement to the contrary, so ownership transferred when a successful payment is accepted at the till, and not when the buyer leaves the store.

But, suppose that you are buying a big cabinet. Then, title changes not when you check out at the register, but when the cabinet is moved from the loading dock at the furniture store to your pickup truck ten minutes later.

Also, the philosophy of the Uniform Commercial Code is to make many legal obligations that historically hinged upon title to the goods (i.e. ownership) instead have a statutory basis that doesn't refer to title. For example, the Uniform Commercial Code recognizes that risk of loss, or risk of insolvency, don't always coincide exactly with change in title. In the Uniform Commercial Code, title is a residual catchall that applies to the rights of the parties only in the absence of another express provision of the UCC.

The Uniform Commercial Code also has a number of exceptions to the general rule.

One is for identification as special property. For example, suppose that there are lots of granite slabs on a warehouse floor none of which is exactly the same. Then, title is transferred when someone slaps a "sold" sign on that slab or in the records of the store. (Something similar applies in the case of a layaway sale.)

When goods are in a warehouse, title can change by transferring a warehouse receipt without physically moving the goods. For example, this is how most transaction in gold bars and grain are handled.

A car changes title when the certificate of title is signed by the seller.

When goods are shipped, the parties can decide where along the way title transfers by saying F.O.B. "location" which is an acronym for "free on board" and means that title shifts when the goods reach that location.

The CISG

What if you are a Canadian business and you've driven across the border to Detroit to buy some inventory for your business? What law applies then?

In that case, the Convention on Contracts for the International Sale of Goods applies, and not the Uniform Commercial Code and Articles 66-69 of the CISG apply.

In the simple situation you describe, the UCC rule and and CISG default rule under Article 66 are the same. Title passes when the "the goods are handed over" to the buyer or to the first person in the delivery change if the buyer is taking delivery of the goods through a courier or delivery service.

Canada

I don't know what authority applies in Canada, although I suspect that the outcome in common law provinces would be the same in the simple scenario you pose.

Traditionally, civil law jurisdictions, like Quebec and Germany, make more of a distinction between "title" and "possession" than common law jurisdictions did historically.