TOPIC 3: SALE OF GOODS

(continue)

5. TRANSFER OF TITLE

Sec 27 (1) of SOGA: The general rule is that where goods are sold
by a person who is not the owner thereof and who does not sell them under the authority nor with the consent of the owner, the buyer acquire no better title to the goods than the seller had.

The English rule :-Nemo dat quod non habet (no one can dispose of that which is not his to dispose of.)
The rationale of this rule is to protect the right of
ownership. When a person sells goods which belong to someone else, the buyer cannot get a good title. The true owner still can recover the goods at law without paying any compensation to the buyer, even if the buyer had paid the seller for the goods.

However, there are exceptions for this general rule (nemo dat quod non habet rule).They are:i) Estoppel ii) Sale by mercantile agent iii) Sale by one of joint owner iv) sale under a voidable title v) Sale by seller in possession after sale vi) Sale by a buyer in possession

(1) Estoppel
Where the owner made a representation (by
statement or conduct) that the seller was entitled to sell the goods and the buyer relies on that representation, the buyer obtained a good title because the owner is estopped by his representation from denying the sellers authority to sell.

Eastern Distributors v Goldring [1957] 2 QB 600

Fact: The owner of a van, Murphy, allowed another a car
salesman to represent to the Plaintiff (hire purchase company) that he (the sales man) was the owner and could sell the vehicle. Plaintiff relied on this representation to purchase the van from the salesman. Meanwhile, Murphy sold the van to the Defendant. The Plaintiff claimed to repossess the vehicle.

Held: Plaintiff had a good title to the van as Murphy had

permitted the salesman to act as the owner and was therefore, estopped from denying the sellers authority to sell.

(2) Sale by Mercantile Agent

A person acts as a mercantile agent where he has
authority either to sell goods or to consign (deliver) goods for the purpose of sale or to buy goods or to raise money on the security of goods. Eg: second hand car dealer, broker or auctioneer

A person in possession of goods or document of title to

goods with the consent of owner can pass a good title to the buyer as a mercantile agent. by the owner of goods PROVIDED that the person taking the goods(buyer) acting in a good faith and has no notice that the agent did not have authority.
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The sale shall be valid as if he was expressly authorized

Pearson v Rose & Young Ltd [1950] 2 All ER

Pearson left his car with Hunt, a mercantile agent. He had not authorized Hunt to sell the car or he did not intend to pass the property in car. Shortly after Hunt obtained the car, he sold it to a third party. It was argued that a good title cannot pass because Pearson had not consented to Hunt having possession of the car.

Held: Eventhough possession was obtained by trick, this

was a sufficient consent.

(3) Sale by one of Joint Owner

Goods may be owned by more than one person. Sec 28 SOGA states that: If one of several joint owner of goods has the sole
possession of them by permission of the co-owners, the property in goods is transferred to any person who buys them from such joint owner in good faith and has not at the time of the contract of sale notice that the seller has no authority to sell.

 For example: A and B is co-owners of

Proton Perdana car. A with B consent used the car. A later without B consent sell the car to C. C will get a good title even though B did not give his consent provided C acted in good faith and has no notice that A has no authority to sell.

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(4.) Sale Under a Voidable Title

The seller may derive his title from an earlier

sale by the true owner. That earlier sale may have been voidable. (under Section 19 or 20 of the Contract Act 1957) but if the earlier sale was not rescinded at the time of the second sale, the buyer acquires good title provided he buys in good faith and without notice of any defect in title .

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 A contract is voidable when consent of the

original owner is caused by coercion, fraud, misrepresentation or undue influence. Bobby obtained goods from Ina by coercion and sells them to Dorris who buy them innocently. At the time Dorris buys the goods, Ina has not rescinded the contract made with Bobby. Dorris obtains good title to the goods.

Eg:

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(5.) Sale by a seller in possession after sale

Sec 30 SOGA A purchaser can obtain a good title to goods

when he buys from a seller who has already sold the goods to previous buyer but retained possession of goods or document of title to them, has then sold them to second purchaser.

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 As long as Second purchaser is in good

faith and has no notice of the previous sale he obtain a good title even though seller had no title to give to second purchaser. The first buyer will lose the title but he can take legal action against the seller who would be liable to him

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(6)

Sale by a buyer in possession

Sec 30(2) SOGA: If a buyer having bought or agreed to buy

goods, obtain possession of the goods or document of title with the consent of the seller, he can pass a good title to a subsequent buyer acting in a good faith, even if under the first transaction he has not obtained a good title.

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Newton of Wembley Ltd v Williams (1964) 3 ALL ER532

The Plaintiff sole a car to A who paid by cheque. Although he was
given possession of car, it was agreed that the property would not pass until the cheque was honoured. The cheque was dishonoured. But A had resold the car to B who bought it without knowledge of the position. B resold it to C, (Defendant). The Plaintiff tried to recover the car from C.

Held: A, the original owner was in possession with the consent of the

owner. Hence, he could pass a good title to B who later on transferred it to C. The Plaintiffs claim failed & C was therefore entitled to keep the car.

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REMEDIES FOR BREACH OF CONTRACT OF SALE OF GOODS

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REMEDIES FOR BREACH OF SALE OF GOODS CONTRACT A. SELLERS REMEDIES 1. Rights of unpaid seller against the goods There are three types of remedies: Lien Stoppage in transit Resale of goods

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(i) Lien
Sec 47 SOGA: A lien is a right of an unpaid seller in possession of

goods to retain them until the price has been paid or his debt secured or satisfied.

The seller has right to retain the goods if he is unpaid

seller and the right of retention operates until the seller is paid.

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(ii)

Right of stoppage in transit

Sec 50 SOGA
a) This is a right given to an unpaid seller who has handed the goods to an independent carrier for the purpose of having them transported to the buyer to recover the goods from the carrier and to hold them until the buyer pays the price.

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b) The right to stop exists for as long as the goods are in the hand of the independent carrier. The seller may exercise the right at any time before the goods are handed over to the buyer or before the carrier acknowledges to the buyer that the goods are being held for them. c) Stoppage will be carried out by unpaid seller giving notice to the carrier, altering original instructions. The carrier must obey his notice and the seller must pay the expenses of redelivery.

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(iii)

Right of Resale

Sec 54 SOGA As a seller, he may resell the goods and if he does so, the second buyer obtains good title and the original buyers right to the goods is defeated. Circumstances in which the unpaid seller may re-sell the goods:-

i) Where the goods are perishable in nature;

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ii)

Where unpaid seller gives notice of his intention to resell if the buyer does not within reasonable time, pay the price and the buyer does not do so; or

iii) Where in the contract, the seller reserves the right to dispose of the goods if the buyer does not pay, and the buyer does not do so.

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2. Rights of seller to sue for breach of contract

Personal remedies
(i)The seller will have right to sue the buyer for the price of goods where the buyer failed to pay for the goods after the property has passed to the buyer or the price is payable on a certain day regardless of the passing of the property. (Section 55) (ii)If the property has not passed to the buyer or the price is not payable on a certain day, the sellers remedy for buyers wrongful non payment will be an action in damages.

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(iii)

Action of damages for non acceptance. If the buyer wrongfully refuses to accept and pay for the goods, the seller may sue him for damages for non-acceptance (Section 56).

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B. THE BUYERS REMEDIES

1. Damages for non-delivery Where the seller wrongfully neglect or refuses to deliver the goods to the buyer, the buyer may sue the seller for damages for non-delivery.

2. Specific Performance In a contract for delivery of specific goods, the court may order the seller to perform the contract i.e by delivering the said goods to the buyer.

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3. Damages for breach of warranty Where there is a breach of warranty by the seller, the buyer may sue him for damages for breach of warranty. 4. Sue for special damages Buyer may sue the seller for the refund of the price in a case of breach of the contract made by seller. 5. Sue for wrongful detention of goods Where the title to the goods had passed to the buyer, he may sue the seller for tort of wrongful detention of goods.

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END OF LECTURE

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