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included in the contract of sale.152 The right of the seller exists ipso iure.

The insolvency administrator is always entitled, however, to make use of the contractual rights of the buyer. The administrator can, therefore, prevent the seller from terminating the contract, if the insolvency administrator agrees to fulfil the contract and either pays the purchase price or, if the price is not yet due, gives guarantees that the price will be paid promptly.153

Also, if the furniture was delivered to the buyer after the commencement of his or her insolvency proceedings, the furniture would have to be returned to the seller.154

Comparative observations

part (a)

Passing of ownership

On the facts of a common business contract for the sale of goods, where the goods have been delivered to the buyer, all systems under consideration arrive at the same solution with respect to the passing of ownership, i.e. the buyer has become the owner of the goods. This is not astonishing. The different doctrines as to the transfer of ownership in movable property (consensual and traditio systems, causal and abstract systems) only matter in cases where the underlying contract or the real agreement are missing, or suffering from some defect, or where delivery has not yet taken place. It was, however, not the purpose of this case closely to examine the different regimes on the transfer of ownership, which

152The right of stoppage in transit is not regarded as inconsistent with the fact that the buyer may be regarded as the owner of the goods. According to the general rules described above, in the answer to part (a), the buyer of the furniture would probably be protected against the insolvency creditors of the seller and he or she could, therefore, be regarded as the owner of these goods. Part (c) does not, however, concern the buyer’s protection against the creditors of the seller but the seller’s protection against the creditors of the buyer. As mentioned above, the question of the general prerequisites for the transfer of property is, generally, seen as less important by Finnish lawyers.

153See s. 63 of the Sale of Goods Act and e.g. Tuomisto, Vuokranantaja ja vuokralaisen konkurssi 81 ff.

154The insolvency administrator could, however, even in this case, make use of the contractual rights of the buyer, in the way described above.

is a complex issue that has given rise to an extensive debate.155 In so far as this first case touches upon these questions, it is merely intended to provide an opportunity briefly to set out the different regimes and thus to serve as a reference point for the following discussions. As we continue, we will see whether the differences in respect of the rules on the passing of ownership will in fact influence a legal system’s approach to the issue of security rights.

As to the general rules on the passing of ownership, there are three main dividing lines:

(i) The question of whether delivery is necessary separates the consensual systems from the traditio systems. The principle that ownership passes upon the mere conclusion of the contract of sale was first introduced in the French Code civil (articles 1138, 1583 C. civ.) and was subsequently adopted by Belgian, Italian and Portuguese law. In respect of contracts for the sale of goods, England, Ireland and Scotland may also be said to adhere to the consensus principle, since ownership passes when the parties intend it to pass. However, under the common law rules applicable outside the sphere of application of the Sale of Goods Act delivery usually156 remains a prerequisite for the transfer of ownership.

The necessity of delivery -- applicable also to the sale of goods -- subsists in German, Greek, Austrian, Spanish, Dutch and South African law. It is interesting to note that the Spanish Código civil, which was otherwise heavily influenced by the Code Napoléon, did not adopt the consensus principle but instead adhered to the requirements of titulus and modus.

Swedish, Finnish and Danish law may also be said to belong to this group although, as the Swedish and Danish reporters pointedly remark, their jurisdictions are less interested in the question of how the passing of ownership is to be construed than in the question what remedies are to be granted in specific situations. Accordingly, the Nordic systems distinguish between two perspectives. For the seller’s protection against the creditors of the buyer (in the latter’s insolvency) it is necessary that the seller has either retained possession of the movables or that he has reserved the right to terminate the contract (Sweden) or reserved title (Denmark, Finland). For the buyer’s protection against the creditors of

155See recently Drobnig, in: Towards a European Civil Code 495 ff.; Kreuzer, Recueil des Cours

259 (1996) 92 ff.; Van Vliet, Transfer of Movables; Wacke, ZEuP 2000, 254.

156For exceptions see English report, supra (a).

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the seller delivery of the goods or registration of the contract of sale is decisive in Sweden. In Denmark and Finland, the mere conclusion of the contract will secure the buyer if the sale relates to specific goods. If it relates to generic goods the seller must also have selected the goods with which he intends to fulfil the contract.

It should however be borne in mind that, for practical purposes, the gap between consensual and traditio systems is not as wide as it may seem since -- with the exception of Sweden -- all traditio systems under consideration allow actual delivery to be replaced with a constitutum possessorium.157

(ii)A second dividing line is drawn by the necessity to conclude a real agreement in addition to the contract of sale. Turning first to those jurisdictions which demand delivery, the real agreement is necessary for the transfer of ownership and is strictly separated from the contract of sale in German, Greek and South African law. In Austria and the Netherlands, the same approach is favoured by the doctrine although it is not found in the text of the respective Civil Codes. In Spain and Sweden, on the other hand, there is no need for a real agreement or for a special demonstration of the parties’ intent to pass ownership. In Sweden, the issue of specification is taken care of by the requirement of actual delivery or registration, for which the goods must also be individualised.

Turning towards the consensual systems, neither French nor English law (and the systems influenced by these two jurisdictions) know of a real agreement. However, the necessity for the parties to specify the objects of the transfer and to express their intent to pass ownership in these objects is present in the consensual systems as well.158

(iii)The third dividing line lies between causal and abstract systems. This will be discussed below, in the context of case 2.

Except for South African law, the passing of ownership in no jurisdiction depends on the payment of the purchase price, leaving aside for the moment the possibility of retention of title and the statutory rights of the unpaid seller. Even in South Africa, however, the rule that the transfer of ownership depends on payment can be set aside by a credit agreement as has happened in our case.

157See also Van Vliet, Transfer of Movables 200 f.; Wacke, ZEuP 2000, 254 (259 f.).

158See further Van Vliet, Transfer of Movables 202 ff. The rules respecting unascertained goods (see s. 18 Rule 5 of the Sale of Goods Act) are modelled on a contract so that, in a sense, there is a contract within a contract.

Unpaid seller’s statutory rights in the goods after delivery

A seller whose claim for the purchase price remains outstanding will usually have a personal claim against the buyer for payment or -- after having terminated the contract -- for the return of the goods. Of greater interest in our context, however, are the unpaid seller’s rights in respect of the goods themselves. They alone may provide a security with respect to other creditors of the buyer.

The majority of the jurisdictions do not grant to the unpaid seller any special rights if he delivers the goods and does not secure himself (e.g. through a retention of title clause). These countries are: Germany, England, Ireland, Scotland, Denmark, Sweden, Finland, Greece and Portugal. Austria also belongs to this group, but if no credit has been granted, a retention of title clause is implied into the contract. Similarly, in South Africa, if no credit has been granted, ownership does not pass without payment.

France, Belgium, Italy, Spain and the Netherlands, on the other hand, confer upon the unpaid seller certain statutory rights. With the exception of the Netherlands, however, they appear to be rarely invoked in practice. It is difficult to see any common denominator in these different statutory rights.

One criterion that determines the availability of certain statutory rights is the granting of credit. Italian law takes the view that a seller who has extended credit and did not secure himself against nonpayment, e.g. by a retention of title, does not deserve a statutory protection. Only when no credit was agreed upon does the unpaid seller have a statutory lien, whose value is, however, greatly diminished by the fact that it is only enforceable as against third-party creditors who know that the purchase price has not yet been paid. Therefore, in the buyer’s insolvency, the statutory lien will generally be useless.

French, Belgian and Dutch law, on the other hand, grant statutory rights to both the seller who provided credit and the seller who delivered the goods prior to payment even though he could have made use of his right to withhold performance.159 French and Belgian law, however, confer the special right of rei vindicatio (droit de revendication) and termination with third-party effect (droit de résolution)160 only to the second

159As to the right to withhold performance, see article 9.201 Principles of European Contract Law (July 1998) and the comparative commentaries to ex article 4.201 in Lando/Beale, Principles of European Contract Law I 165 ff.

160This right only exists in Belgium.