First Principles of Business Law

3. Property rights in chattels

3.3.1. Acquiring rights of ownership from a previous owner

The most usual way in which ownership of chattels is acquired is when one person (the transferor) transfers their rights of ownership to another (the transferee). This is called 'derivative acquisition' because the new owner derives their ownership from the previous owner.

For example, when a contract for the sale of goods is made, the seller of the goods undertakes to transfer what ownership rights they have to the buyer. The seller is the transferor of those rights, and the buyer, who is acquiring them, is the transferee. Similarly, in the case of a gift, the donor (the transferor) transfers their right of ownership in the chattel to the donee (the transferee).

In all such cases, it is important to know exactly when the right of ownership passes from the transferor to the transferee.

The examples in this part of the modules will help you to understand the relevant rules.