Confusion of Goods Definition

What Is Confusion of Goods?

Confusion of goods is a legal term used to describe a situation when the goods or property of two or more parties become commingled to the point where each party's respective items can't be readily determined.

While the term can apply to money or property, it is most commonly used with physical goods such as fuel oils, grains, produce or minerals.

Confusion of goods is also referred to as "intermixture of goods."

The Basics of Confusion of Goods

Confusion of goods happens when the property of two or more entities become blended to the point that it is impossible to determine what belongs to which party. The goods are usually similar in nature. The group of goods can only be identified as a large mass. It can either happen on purpose or by accident.

Intentional Versus Malicious Confusion of Goods

The intentional confusion of goods happens when two or more parties mutually decide to commingle their goods. By doing so, those involved consider it to be for the betterment of each party. They may be able to share costs for storage or transport. In this instance, there is no criminal activity, and no negligent act takes place.

However, if one person deliberately mixes goods or property without the other party's consent, it is considered unlawful. The unknowing party may be awarded full rights to the entire property if malice is detected.

Real World Example of Confusion of Goods

A case of confusion of goods began in the 1970s, when Humble Oil Refining Group, which merged with Exxon in 1973, was sued for using a reservoir to store its extraneous gas. The company was accused of mixing its gas in the reservoir with that of certain royalty owners known as the Wests.

The Wests attested there was no way to tell who had the rights to the native and injected gas, and it was up to Humble to pay them for its deliberate confusion of goods. In a 1974 ruling, the Supreme Court in Texas ruled that "the act of commingling native and extraneous gas did not impose upon Humble the obligation of paying royalties on all gas thereafter produced from the reservoir, if the evidence establishes with reasonable certainty the volume of gas reserves upon which the Wests would have been entitled to royalties, absent injection of extraneous gas." The commingler, in this case, was Humble Oil.