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the buyer. If, however, the goods have come into the possession of the buyer, the seller is not even entitled to reclaim the goods from the buyer, unless the seller has reserved such a right. Consequently, he has no better right in relation to the creditors of the buyer.

(b)If the seller has reserved a right to rescind the contract, should the buyer fail to pay, the seller may reclaim the goods when the delay in payment is ‘not insignificant’: section 54 Sale of Goods Act. Such a reservation is effective as against the buyer’s creditors, i.e. the seller has a ius separationis in insolvency and execution. At one time it was disputed whether the seller must have reserved the title (i.e. ownership), but pursuant to a Supreme Court decision in 1975, it is clear that the seller need not reserve the title. It is sufficient, in respect of the buyer and third parties alike, that the seller has reserved a right to rescind the contract, since that is the desired remedy. The use of the term ownership is thus mere surplusage.138

(c)If the buyer becomes insolvent following the conclusion of the contract, the seller may prevent the goods from being delivered to the buyer, even when he agreed to a credit sale (sections 10 and 62 of the Sale of Goods Act). This right does not cease until the buyer comes into direct possession of the goods.139 Whether the seller can take advantage of this rule when the goods are in the hands of a carrier, depends also on the legislation concerning carriage. It is disputed whether, for instance, the seller must have retained a copy of the bill of lading, so as to be able to prevent the carrier from discharging his obligations by delivery to the buyer, even though the seller has informed the carrier that he wants to exercise his right of stoppage in transit.140

General remarks on transfer of ownership

According to the Code of Execution (chapter 4, section 17) and the Bankruptcy Act (chapter 3, section 3), only property ‘belonging’ to the debtor may be taken by execution or form part of an insolvency estate. In so far as title or ownership is a concept pursuant to Swedish law, the question of whether property belongs to the debtor or someone else is decided by other statutes or by precedents. When a buyer becomes

140NJA II 1936, 512 f., Grönfors, Sjölagens bestämmelser om godsbefordran 296; Håstad, Den nya köprätten 174 ff.; and Tiberg, SvJT 1993, 548 ff.

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is to sell the property of the debtor in order to satisfy all his or her creditors at the same time. In order to avoid unnecessary insolvencies, an alternative procedure exists, involving the reorganisation of enterprises.142 There also remains a procedure aimed at the rearrangement of the debts of a private person.143

The property which forms the insolvency estate roughly corresponds to the property that can be used for the satisfaction of the bankrupt’s creditors by the reorganisation and rearrangement procedures. The main purpose of a reorganisation, however, is not to sell the debtor’s property. Special efforts will be made to allow a private person to retain ownership of his home. Save for these special features of reorganisations and rearrangements, the rules concerning the effects of insolvency proceedings, described below, apply equally to reorganisation and rearrangement. As a matter of fact, the same rules apply also, in most cases, to executions.

Movable tangible goods sold by the bankrupt before insolvency are not included in the estate, even if left in the possession of the debtor, provided that the goods are specific or properly ascertained (individualised). Shares, bonds and other securities sold before insolvency are not included in the estate if the share certificates or similar documents are delivered to the buyer or a book-entry registration is made.144 In the case of an assignment of claims, a notice to the debitor cessus is required.145 Because protection from creditors in the insolvency of the seller is usually regarded as the most relevant criterion for the transfer of ownership to the buyer mentioned above, one could say that the prerequisites described represent at the same time the prerequisites of the transfer of ownership. Having said that, the buyer, after those prerequisites are fulfilled, would not be in an identical position to that of a typical owner. Above all, one must appreciate that the seller, having the sold goods or the share certificates or similar documents still in his or her possession, can, for example, sell or pledge them to some third

142See the Act on Reorganisation of Enterprise (laki yrityksen saneerauksesta/lag om företagssanering).

143See the Act on Rearrangement of Private Persons’ Debts (laki yksityishenkilön velkajärjestelystä/lag om skuldsanering för privatpersoner).

144See s. 22 of the Act on Promissory Notes (velkakirjalaki/lag om skuldebrev), chapter 3 s. 9 of the Companies Act (osakeyhtiölaki/lag om aktiebolag), the Act on Book-entry System (laki arvo-osuusjärjestelmästä/lag om värdeandelssystemet) and the Act on Book-entry Accounts (laki arvo-osuustileistä/lag om värdeandelskonton).

145See s. 31 of the Act on Promissory Notes (velkakirjalaki/lag om skuldebrev).

person. This third party will be protected against the first buyer if he or she gains possession of the goods or documents and is acting bona fide.146

On the facts of case 1, the seller (A) cannot terminate the contract of sale. The seller loses that right when the item sold is delivered to the buyer, irrespective of whether the buyer goes bankrupt.147 Nor does A have any preferential status as a creditor in the bankruptcy of the buyer. If the furniture had been delivered after the commencement of insolvency proceedings, the seller would be in a much better position.148

(b)According to a precedent149 of the Finnish Supreme Court, a resolutive clause, giving the seller only the right to terminate the sale if the buyer does not fulfil his or her obligations, does not protect the seller against other creditors, even if the clause is, unquestionably, binding inter partes. A retention of title clause, in contrast, normally provides full protection against a buyer’s creditors. This difference between suspensive clauses and resolutive clauses has often been criticised in the doctrine.150

(c)The seller has always the right of stoppage in transit, if B becomes bankrupt whilst the furniture remains in the hands of a carrier.151 The seller can, therefore, stop fulfilling his or her obligations and refrain from performance. The seller can, in particular, prevent the delivery of the goods. It does not, in this respect, make any difference whether a retention of title clause, or any similar clause, has been

146Book-entry registration or, in the case of the assignment of claims, notification to the debitor cessus, has a similar function of protecting the buyer against the insolvency creditors of the seller, but also as against later bona fide buyers or pledgees of the goods. The vulnerability of the buyer in relation to subsequent buyers or pledgees of seller is regarded as acceptable, primarily due to the fact that every owner who has entrusted his or her goods to the possession of someone else is similarly at risk of losing his or her goods to some third person who has obtained the goods acting in bona fide. In any event, because the transfer of property usually occurs as a gradual process, Finnish lawyers often evade taking any stand whatsoever on the question at what point ownership is transferred from the seller to the buyer. Rather they try to describe the process of transfer of ownership by reference to different legal relations and factual situations.

147See s. 54 of the Sale of Goods Act (kauppalak/köplag).

150See e.g. Havansi, Esinevakuusoikeudet 523--524 and 536--538.

151See s. 61 of the Sale of Goods Act and e.g. Tuomisto, Omistuksenpidätys ja leasing 196--197.