LEGAL MEANING OF TRANSFER OF GOODS

The Black’s law dictionary defines transfer as the passing of a thing or of property from one person to another. It is an act of the parties or of the law by which the title to property is conveyed from one person to another.

John Bouvier's 8th edition law dictionary of 1914 defined a transfer as "the act by which the owner of a thing delivers it to another person, with the intent of passing the rights which he has in it to the latter". A mere change of possession does not amount to transfer.

Transfer is only complete when ownership changes from one person to another. While possession is a de facto relationship in which one has the physical control over a good or property, ownership is a de jure relationship that denotes one’s legal control over a good. Transfer is concerned with change of ownership.

Transfer is closely intertwined with the power of control. The question to be asked in determining transfer is, who has control over the good? The point was decided in the taxation case of Estate of Sanford v. Commissioner, 308 US 39 - Supreme Court 1939 where it was held that a gift upon trust, with power in the donor to revoke it is not taxable as a gift because the transfer is incomplete, and that the transfer whether inter vivos or at death becomes complete and taxable only when the power of control is relinquished.

Similarly, according to the court in Burnet v. Chicago Portrait Co., 285 U.S. 1, 16, 20, a transfer is only complete when "the transferor has so parted with dominion and control as to leave in him no power to cause the beneficial title to be revested in himself."

Whether a transfer has been effected and is complete is a question of control over the good. Even where a party purports to have transferred a good to the buyer, the transfer will not be complete if he holds power and control over the good. This is so especially in contracts with a Retention of Title Clause, where property in the goods only vests in the buyer upon the fulfillment of a condition such as full payment of the purchase price. In such contracts, though possession of the goods may change hands from the seller to the buyer, transfer is not complete when the condition is fulfilled and the clause becomes ineffective in the contract.

As the court observed in the case of Burnett versus Guggenheim, 288 U.S. 280, 287, the essence of a transfer is the passage of control over the economic benefits of a good rather than technical changes. The court in Corliss versus Bowers, 281 U.S. 376, 378 was of a similar view when it stated that “retention of control over the disposition of the property……………..renders the transfer incomplete until the power is relinquished……………..”