Transfer of Title by Non-owners
Business Low Notes :-
General Rule: The general rule is that only the owner of goods can sell them. No one can convey a better title than he himself has. If a person transfers some goods not belonging to him, the transferee gets no title because how can one give what he himself does not own.
A finds a ring and after making reasonable effort to discover the owner sells it to B who buys without knowledge that A was merely a finder. But B does not get title to the ring and the true owner can recover the ring from B.
Exceptions to the General Rule: There are certain exceptions to the general rule, “Nemo
dat quod non habet”. In each of the following cases a person who is not an owner, can give to the transferee a good title to the goods,
- Sale by a Mercantile Agent: Where a mercantile agent is, with the consent of the owner, in possession of the goods or documents of title of the goods, any sale made by him, when acting in the ordinary course of business of mercantile agent, gives a good title to the buyer provided the buyer acts in good faith and has no notice that the agent had no authority to sell. Thus, ,a buyer who buys from a factor, broker or auctioneer gets a goods title to the goods even though the agent has exceeded his
- Sale by a Co-owner : If one of the joint owners of the goods has the sole possession of them by permission of the co-owners the property in goods passes to any person who buys them in good faith and no notice, at the time of the contract, that the seller had no authority to A, one of the joint owners of a diamond, holds it in his safe custody. He sells it to B who buys in good faith. B gets good title to the diamond.
- Sale by a person in possession under a voidable Contract : Where a person in possession of the goods under a voidable contract (through coercion or mis-representation) sells them, before the contract is avoided, to a buyer who buys in good faith and without notice of the seller’s defective title to the goods, the buyer gets a good title to the goods (The rule does not apply to a contract which is originally void).
- Sale by seller in possession after sale: Where a seller, after having sold the goods, continues to be in possession of the goods, or a document of title to the goods and again sells them or pledges the same either himself or through an agent to a person who acts in good faith and without notice of the previous sale such a person gets a good title to the goods .
A buys a picture from shop and leaves it with the shopkeeper. The shopkeeper sells it to B who
.has no knowledge of the sale to A. B gets a good title to the picture. A cannot get the picture from B. His only remedy is to sue the shopkeeper for damages.
- Sale by buyer in possession of goods over which the seller has some rights : Where a buyer, having bought or agreed to buy goods, obtains with the consent of the seller possession of the goods or the documents of title to the goods, and then sells, pledger the same either by himself or through a mercantile agent, the buyer or pledgee, who acts in good faith and without notice of lien of any other right of owner (i.e.. the original seller) gets a good title to the
A agreed to buy a car and pay for it, if his solicitor approved, and having obtained, possession of the car, sold it to G, but the solicitor disapproved of the transaction, C the bonafide buyer gets a good title, for A “agreed to buy it”.
But a person who has merely an option to buy, as in a hire-purchase agreement, the buyer cannot transfer title to a sub-buyer, however bonafide, for option to buy is not agreement to buy.
A entered into a hire-purchase agreement with B in relation to a piano on the condition that on paying 12 instalments of Rs.100 each the piano should be his property, After paying 6 instalments, B pawned the -piano with C, who took it in good faith. A can take back the piano from C.
- Sale under the implied authority of the owner or title by estoppel: Under certain circumstances the true ownW may be precluded, by his conduct from denying the seller’s authority to sell. When the true owner has acted in such a manner that the buyer has been induced to believe that the goods belong to somebody else and on that belief buys the goods, the owner could not recover goods from such person.
The lesee of a public house who allowed another person to sell the fixtures and fittings as if they were his own whereby third person was induced to buy them bonafide, He could not recover them from the buyer who gets good title to the goods.
Business Low Notes :-
There are some other cases in which non-owners can sell and pass good title to the goods. A receiver appointed by the Court, Official Assignee or Official Receiver under the Insolvency Acts, a Liquidator under the Companies Act, or all Executor or Administrator has authority to sell goods and pass good title.
Also, an unpaid seller exercise his right of lien or stop the goods in transit even where property has passed to the buyer and then sell them to some other person who will get good title to the goods. A pledgee or pawnee who is not the owner of the goods can sell them if-the pledger fails to pay on the agreed date and the buyer will get good title.
Safe in market overt. A person who buys goods in market overt, obtains a good title to the goods. ‘Market overt’ means an ‘open, public and legally constituted market’. Where goods are sold in market overt, the buyer acquires a good title to them irrespective of the seller’s title provided,
- The goods are sold in accordance with the usage of the market; and
- The buyer bought the goods in good faith and without notice of any defect of want or title on the part of the seller,
This practice is followed in England.
SELF CHECK TEST
- A buys a ring from B at a low price by undue influence and sells it to C who is an innocent buyer without notice of A’s defective Can B recover the ring from C?
- A obtained goods under an agreement which was found to be void, Did A get good title to the
- A horse was sold at a public auctior,. The horse was stolen property but this was not known to either the auctioneer or the Did the buyer get good title to the horse?
- A sent a piano to B on sale or return basis. After a week, from the date of the receipt of the piano by B, B pledges it as a security of a loan advanced to him by C. Does C get a good pledge ?
- A told B that he wished to buy B’s car. He drove the car for about 10 minutes came back to B and stated that he wanted to show it to his father, and then left with the car and never returned. Later A sold the car to C who sold it to D, B sued D for the recovery of the Will he succeed ?
- No, B cannot recover the ring from C, even if the contract is subsequently
- No, A did not get any title to the goods, even if we were a bonafide buyer for value and without any notice or any defect in the sellers
- No, the true owner can recover the horse ffofh the buyer as it does not come under Sec.
- Yes, C gets a good pledge, The Act of pledging the piano by B amounts to acceptance of the goods and the passing of property to
- Yes, B will succeed. A was guilty of theft and obtained no title to the car and so could convey no title to any buyer even though the ultimate buyer gave value and acted in good