Meaning
Statutory rules in Chinese civil law determine when ownership of a physical asset passes from a seller to a buyer. According to prc civil code article 224, the property right in a movable is transferred upon delivery unless the law provides otherwise. This principle underpins the majority of commercial sales transactions in the country.
Delivery Requirement
Physical handover is the most common method of satisfying the transfer condition. Under prc civil code article 224, the act of giving the buyer control over the goods completes the legal change in status. Symbolic delivery, such as handing over warehouse keys, also qualifies.
The law recognizes constructive delivery where the seller continues to hold the goods as a bailee for the new owner.
Contractual Variation
Parties to a transaction may agree on different terms for the transfer of title. While prc civil code article 224 sets the default, a retention of title clause can delay the transfer until full payment is received. These private agreements must be clearly drafted to supersede the statutory default.
Registration of certain movables like vehicles or ships is required to protect the transfer against third parties.
Risk Transfer
The point of delivery usually coincides with the shift in responsibility for loss or damage. Prc civil code article 224 aligns the legal ownership with the physical possession to simplify liability disputes. After delivery is complete, the buyer bears the burden of any subsequent casualty to the goods.
This rule applies even if the purchase price has not been fully settled.
