On Ownership Transfer In International Trade Of Goods

Ownership transfer in contract of the sale of goods is the major form of change of titles of moveable properties. Theoratical researches analyse transfer of ownership from perspective of change in rem and its public recognition and bonafide acquisition, rather focusing on legal consequence in rem law than methodology,object and timing of transfer; in practice, attention are given to compliance to contract law on issues like contract drafting, interpretation and performance as well as the subsequent dispute resolution, hence under specific circumstance,eg.insolvency, ownership appears a tough problem.As the most fundamental right of economical right in human society, ownership exists in a conceptual form, rather than a perceptive object. In real life, it has to be a recognizable hence it is concretized as possession, in rem of moveable properties (chattel). Possession is constructed as ownership, as a conclusion of reasoning and rationale of civil law system. Being perceptually transfer of possession, delivery becomes one of the acquisition modes of ownership. From epistemology of view, such institutional arrangement reflects legitimacy and legality of ownership transfer, in sense of empirical facts and rationality of human beings. This thesis is to analyze significance of delivery as to ownership transfer and mechanism of generating such significance from perspective of knowledge, norms and practice.Being core issue of sales contracts, transfer of ownership lies on cross road of contract law and law of rights in rem, whilst its effects are regulated by rights and obligations on laws of insolvency insurance,intellectual property and finance.Essential factors of international sales contracts, such as determination of jurisdiction and applicable laws due to nature of its multinational legal relations, participation of third parties in performance of the contract, diversified ownership transfer modes and delivery tools, externalities of ownership transfer and etc., complicate the ownership transfer.The thesis gives a static analytical observation to modes of ownership transfer in difference law systems as well as the effects. Ownership as jus in rem entitles the owner the right to be against any persons. Such nature requests actual transfer between the contract parties and recognizabililty of such transfer to relevant third parties. As a dynamic process, transfer of ownership is empowered by contracts or action in rem (Dingliche Einigung in German) or both.Delivery plays essential role in the process as it does not only generate the transfer but also make the it known third parties. Timing of fulfillment of the transfer in the sales contracts decides ownership and legal effects. Such timing is subject to when delivery takes place, more precisely, when and how delivery take places are decisive factors of judging occurrence of ownership transfer. On laws norms, delivery are in forms of goods delivery-direct transfer between the seller and buy or transfer to third party and document transfer. Theoretical research apparently pay insufficient attention to the forms and constitutive elements of delivery hence this thesis is dedicated to analyzing how ownership is transferred and its significance by defining concepts and comparing statutes as well as constitutive elements of delivery which generates the legal power of transfer including internal power and external power,while the later stands for the notification of transfer to third parties. Such analysis,through studying factors and applicable law of international trade, clarifying various delivery terms and types of documents,applying to different norms, will conclude that delivery-via shipments-in international trade is not fulfilled by handing goods over to carrier, nor handing over the unspecified documents but by buyer’s acquiring the documents which legally enable him to take possession of goods.In modern law system, as major international trade laws are United Nations Convention on Contracts for the International Sale of Goods (CISG) and Principles of International Commercial Contracts(PICC). Neither regulates the transfer of ownership. Theoretically and normatively effecting the modern law system, Roman law has evoluted its ownership transfer regulation from formalism to consensus (titulus) plus delivery(modus).Its influence to modern law systems covers its theory and norms of publicity and effects of delivery, good reason of delivery(iusta causa traditionis) and ownership generation by contract or actions in rem.To mark off different law system, with bench mark if delivery is taken as condition of ownership transfer, there are doctrine of autonomy and doctrine of formalism;with bench mark of ownership transfer is generated by contracts or actions in rem, there are doctrine of formalism of action in rem, formalism of contract, autonomism of contracts and autonomism of contract parties. Under law systems of formalism of action in rem and formalism of contract, delivery generates ownership transfer, while the difference lies in the delivery function in ownership transfer. Under automomism law system,eg.in France, ownership transfer occurs upon conclusion of contracts. Under common law system, intention of contract parties prevails. Upon absence of such intention, ownership of specified goods-specified upon conclusion of conclusion-is transferred on conclusion, which is same as automism system; ownership of unspecified goods are transferred upon delivery.On empirical facts, focus is given to exchange of goods and money in international trade. As an conceptual right, ownership becomes sensible upon damage or loss of goods caused by neither parties or insolvency,hence substantially grant corresponding legal position of the parties. As a legal action, ownership transfer decides legal rights and obligations of the entities:rights in rem law, obligation in contract law as well as risk transfer and insurable interests. Gain or loss is also decided by ownership under law of insolvency and detention of property. Roman law grants delivery to function to transfer ownership. To be empowered so, delivery must be excised by legally appropriated person, their consensus of ownership transfer of goods that are merchantable and their transfer of possession. On researches of Roman law, there are disputes on iusta causa traditionis. Explanation of iusta causa either goes to contracts or delivery itself. Fundamentally, function of delivery in ownership transfer is engineered by the consensus of transfer, which can be reached in contract or action in rem. However, delivery itself stands for consensus of transfer of ownership.Specification of goods have not yet attracted sufficient attention that it deserves. As a premise of delivery, specification does not only concerns with ownership transfer but also performance issues on law of obligations. Having its own leg value and function, specification is by no means regarded as same action as appropriation, in terms of nature, purpose and patterns as well as legal effects.Goods are in a physical existence with status complying with quantity, quality and packaging terms of contract through specification while appropriation is delivery after specification or seller’s requesting buyer to take over goods.Peculiar in common law system, stoppage in transit is seller’s right, which is excised when the buyer fails to effect payment, or even the buyer is insolvent. It serves purpose of preventing the buyer from directly possessing the goods, regardless of ownership transfer. Notwithstanding the buyer holds the ownership, it may be recovered by the seller under certain conditions. Stoppage in transit, being exception to power of ownership acquisition demonstrates one of the difference between civil law system and common law system:ownership is not an absolutely right, equitable relief to contractual rights prevails ownership.By function of stoppage in transit, seller’s right of payment defeats the ownership of the buyer who does not yet possessed the goods, so it resembles to lien.Given the fact that majority of goods in international trade are shipped to buyer by carrier, documents, eg.Bill of Lading(B/L) are delivered from seller to buyer. Delivery is done by documents has the rationale that these are receipts of carriers, evidence of shipping contracts. More significantly, these documents are the proofs of the buyer’s right of taking delivery of goods and his rights and obligation on the shipping contract. Whether or not B/L is a document of title, in terms of rem, depends if such right is establish on the B/L, but its delivery-transferring its possession to buyer-is undoubtedly a conceptual delivery which does not only symbolize the transfer constructive possession to buyer but also make it known to third parties. Such conceptual delivery are in 2 forms:constructive delivery with presentation of documents of title and delivery by order which is buyer’s constructive possession of goods by seller’s order given to carrier.Delivery is transfer of possession. Being different from direct delivery, constructive delivery only enables the buyer to take possession of goods from the carrier only after arrival at destination. Therefore legal power of constructive and to-order deliveries is justified by construction possession, the later offers protection of buyer’s right of possession of the goods in transit. Delivery timing is when buyer’s taking possession. Such conclusion is essential key to contract fulfillment, identification to entity of risk taking and insurable interest, determination of owner. Conclusive factors are initially subject to delivery modes of the contract. In case of delivery indirect delivery, such timing is ascertained as when the buyer obtains documents of title that with correct and lawful contents and formality to enable him to legally claim possession from the carrier.