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Section 87: Sections 76 to 123 [Repealed by the Indian Sale of Goods Act, 1930]

Indian Contract Act • Official Statutory Text & Practice Guide

Statutory Regulation
Legal Standard
Competent Court / Tribunal
Act 1872
Section 86 All 266 Sections of Indian Contract Act Section 88

Legal Commentary & Landmark Judgments: Section 87

Section 87 of the Indian Contract Act, 1872 originally governed the transfer of ownership of goods sold on credit, providing that ownership passes immediately upon agreement execution notwithstanding deferred payment; repealed by Act 3 of 1930 and succeeded by Sections 19 and 20 of the Sale of Goods Act, 1930.

  • Credit Sale of Specific Goods: Applied to contracts for the sale of specific, identified goods where payment of the purchase price was postponed to a future date or spread across instalments.
  • Immediate Transfer of Title Rule: Ownership transferred immediately to the buyer upon contract formation, unless the parties explicitly stipulated otherwise, rendering the buyer owner despite non-payment.
  • Legislative Repeal and Modern Succession (Act 3 of 1930): Repealed by Act 3 of 1930 and subsumed under Sections 19 and 20 of the Sale of Goods Act, 1930, preserving the rule that postponement of payment does not postpone the passing of property.
Key Landmark Precedents:
  • Tarling v. Baxter (1827) 6 B&C 360: Classic common law authority codified in Section 87 and Section 20 SGA: sale of a haystack on credit where payment was deferred; the haystack burned down before payment; held that property passed immediately and the loss fell on the buyer.
  • State of Madras v. Gannon Dunkerley & Co. 1959 SCR 379: The Supreme Court traced the transfer of property principles in credit sales back to the Contract Act and Sale of Goods Act, affirming immediate vesting of title upon contract execution.
Courtroom Practice & Strategic Litigation Guidance:

To protect suppliers selling goods on credit against insolvency or third-party attachment, draft a comprehensive 'Romalpa' retention-of-title clause. Displace the default rule of Section 20 SGA (succeeding Section 87) by explicitly stating that title shall not pass until the purchase price has been received in full by the seller.

Section 86 All 266 Sections of Indian Contract Act Section 88