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Para 9.6.1 - Ownership Transfer | KartavyaDesk

Goods Manual

Original Rule Text

2. Unless otherwise stated in the contract, notwithstanding any inspection and approval by the Inspecting Officer on the contractor's premises, dispatch/ delivery/ in-transit, or any payments made to the contractor. Title of goods shall pass on to the Procuring Entity as specified by the terms of delivery and other conditions of the contract. Till such time, the Goods, and every constituent part thereof, whether in the possession or control of the contractor, his agents or servants or a carrier, or the joint possession of the contractor, his agents or servants and the Procuring Entity, his agents, or servants, shall remain in every respect at the risk of the contractor and the Contractor shall be responsible for all loss, destruction, damage, or deterioration of or to the Goods from any cause whatsoever while the Goods. The Contractor shall alone be entitled and responsible for making claims against any carrier in respect of non-delivery, short delivery, mis-delivery, loss, destruction, damage, or deterioration of the Goods entrusted to such carrier by the contractor for transmission to the ultimate consignee or the interim consignee, as the case may be.

What This Means

Para 9.6.1 of the Manual for Procurement of Goods, 2017, essentially deals with the transfer of ownership and risk related to goods being procured by the government. Even if a government inspector has checked and approved the goods at the supplier's location, during transit, or even after partial payment, the ownership (title) of the goods only transfers to the government (the 'Procuring Entity') when the contract terms specify. This is usually upon delivery and acceptance at the final destination.

Until that point, the supplier (the 'Contractor') remains responsible for the goods. This means if anything happens to the goods – loss, damage, destruction – while they are being transported or stored, the supplier bears the risk and is responsible for any claims against the carrier. This rule protects the government from bearing the risk of loss or damage to goods before they are officially received and accepted.

This rule affects all government departments and agencies involved in procuring goods, as well as the suppliers who contract with the government. It emphasizes the importance of clearly defining the point at which ownership and risk transfer in the procurement contract.

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Key Points

  • •Ownership of goods transfers to the Procuring Entity as specified in the contract, usually upon delivery and acceptance.
  • •The Contractor bears the risk of loss or damage to the goods until ownership transfers.
  • •The Contractor is responsible for making claims against carriers for any issues during transit.
  • •Inspection and approval by the Inspecting Officer, or partial payments, do not automatically transfer ownership.
  • •Contract terms must clearly define the point of ownership transfer.

Practical Example

The Ministry of Electronics and Information Technology (MeitY) contracts with 'Tech Solutions Pvt. Ltd.' to procure 500 laptops for ₹2,50,00,000. The contract specifies that ownership transfers upon successful delivery and installation at the designated government offices in Delhi. During transit, due to a truck accident, 50 laptops are damaged. According to Para 9.6.1, Tech Solutions Pvt. Ltd. is responsible for the loss and must file a claim with the transport company. MeitY is not responsible for the damaged laptops and is entitled to receive 500 fully functional laptops as per the contract. Tech Solutions Pvt. Ltd. must either replace the damaged laptops or bear the financial loss.

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Frequently Asked Questions

Does inspection of goods at the supplier's premises mean the government owns them?▼
No. Inspection and approval do not automatically transfer ownership. Ownership transfers as per the terms specified in the contract, usually upon delivery and acceptance.
Who is responsible if goods are damaged during transit?▼
The contractor (supplier) is responsible for any loss, destruction, or damage to the goods during transit until the ownership is transferred to the procuring entity as per the contract terms. They are also responsible for filing claims with the carrier.
What happens if the contract is silent on the point of ownership transfer?▼
While the rule emphasizes the importance of specifying the transfer point, in the absence of explicit terms, standard legal principles regarding the sale of goods would apply, potentially leading to disputes. It is crucial to always define the transfer point in the contract.
Does making an advance payment change the ownership rules?▼
No, advance payments do not automatically transfer ownership. The ownership transfer is governed by the delivery terms and other conditions specified in the contract, irrespective of any payments made.
What if the damage occurs after the goods are delivered but before they are formally accepted?▼
The contractor remains responsible until formal acceptance, assuming the contract specifies acceptance as the trigger for ownership transfer. The procuring entity should have a clear acceptance process to document the condition of the goods upon delivery.

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Test Your Knowledge

Question 1 of 3

According to Para 9.6.1 of the Manual for Procurement of Goods, 2017, when does the title of goods typically pass to the Procuring Entity?

Related Rules

Para 9.4Manual for Procurement of Goods, 2024 - Para 9.4 - Chapter 9Para 9.5.5Manual for Procurement of Goods, 2024 - Para 9.5.5 - Chapter 9Para 1.8.2Manual for Procurement of Goods, 2024 - Para 1.8.2 - Chapter 1Para 2.2.2Manual for Procurement of Goods, 2024 - Para 2.2.2 - Chapter 2Para 2.2Manual for Procurement of Goods, 2024 - Para 2.2 - Chapter 2

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