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Sale by Non Owner

This document summarizes exceptions to the general rule of sale by a non-owner under business law. It outlines 10 situations where a non-owner can transfer valid title to a buyer, including sales by a mercantile agent, joint owner, person in voidable contract, unpaid seller, finder of lost goods, or pledgee. Key exceptions include when the owner causes a buyer to believe the seller has authority to sell, or for a mercantile agent selling in the ordinary course of business. The document provides examples for each exception to illustrate how a buyer can acquire good title from a non-owner under certain circumstances defined in law.

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4K views4 pages

Sale by Non Owner

This document summarizes exceptions to the general rule of sale by a non-owner under business law. It outlines 10 situations where a non-owner can transfer valid title to a buyer, including sales by a mercantile agent, joint owner, person in voidable contract, unpaid seller, finder of lost goods, or pledgee. Key exceptions include when the owner causes a buyer to believe the seller has authority to sell, or for a mercantile agent selling in the ordinary course of business. The document provides examples for each exception to illustrate how a buyer can acquire good title from a non-owner under certain circumstances defined in law.

Uploaded by

fasiha
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Business law

Course Instructor: Asma Hameed Khan

Sale by non owner

1. INTRODUCTION

The general role is that only the owner of the goods can sell the goods. If the seller is not
the owner of the goods, the buyer cannot become the true owner of those goods even
though he has paid value for the goods. This protests the owner of the goods. The maxim
‘nemo dat quoted non habet’ means that no one can transfer a better title that he himself
processes.

Example. A sells car to which he is not owner to B who buys it for value and
without notice that A, is not the owner. The true owner can recover it from B.

2. EXCEPTIONS TO THE GENERAL RULE

(i) Sale by a mercantile agent (Section 27).


(ii) Sale by one of joint owner (Section 28)
(iii) Sale by a person in possession under a voidable contract. (Section 29).
(iv) Sale by one who has already sold the goods but continues in possession
thereof (Section 30 (1)).
(v) Sale by buyer obtaining possession before the property in goods have
vested in him (Section 30(2)).

All these exceptions are necessary for the protection of persons who deal confide
with mercantile agent and others mentioned in exceptions.

3. EXPLANATION OF EXCEPTIONS TO THE GENERAL RULE

The following are the cases under which a non-owner of goods can sell the goods and the
buyer become the true owner of those goods.

1. Person and the owner. Where the owner of the goods by his words or
conduct, or act or omission, causes the buyer to deliver that the seller has the
authority to sell them, he cannot afterwards deny the seller’s authority to sell.
The buyer in such a case gets a better title than the seller. (Section 27 clause
1)).
Example.

A sold his house in his presence to B. His father did not object. Later, he
cannot deny his son’s authority to sell. The sale is valid.

2. Sale by mercantile Agent. When a mercantile agent is, with the consent of
the owner, in possession of goods or documents of title to goods, any sale
made by him, in the ordinary course of business shall be valid provided the
buyer acts in good faith and without notice that the seller had no authority to
sell. (Provision to Section 27).

Illustration for a sale by mercantile agent is deemed to be valid.

(i) Possession must be with consent.


(ii) Sale must have been made when acting in the ordinary course of
business of a mercantile agent.

Illustration. A is a manufacturing jeweler. B is a person whose business it is


to travel about the contrary selling jewellery. A delivers certain articles of
jewellery to B upon the terms that they should remain the property of A until
sold or paid for B of pledges the jewllery with a pawn broker and money
lender. The pledge is valid B is a mercantile agent and as such has an sensible
authority to pledge the jewellery.

3. Joint owner. When one of the joint owners, who is in possession of the goods
by permission of his co-owner sells the goods, a by permission of his co-
owner sells the goods, a buyer will get a good title to the goods provided the
buyer buys them I good faith and without notice that the seller’s title was
defective at the time of contract. (Section 28).

Example. A, B and C are joint owner of firm authority to gives the A for
management of firm. Now A has valid authority to perform any further on
behalf of B and C.

4. Person in possession in voidable contract. When a person has obtained


possession of the goods under a voidable contract and sells them before the
contract has been cancelled, the buyer of such goods acquire a good title
provided the buyer acts in good faith an without notice of the seller’s defect of
title. (Section 29).

Example. A, by fraud buys a car from B, A sells the car to C before


cancellation of contract by B, C gets a good title.

5. Seller is possession with sale. When a person has sold goods but continues to
be in possession of them of the documents of title thereto, he may sell them to
a third person and if such person obtains delivery thereof in good faith and
without notice of the previous sale, he gets a good title to them although the
property in the goods has passed to the first buyer. (Section 30(1)).

Example. A sells cow to B, B leaves his cow with A, A fraudulently sells the
cow to C. C gets a good title to cow.

6. Buyer in possession before sale. Where the buyer obtains possession of the
goods before the property in such goods has passed to him with the consent of
the seller, he may sell, them to a third person and if such person obtains
delivery of the goods in good faith and without notice of any lien of the
original seller he will get a good title. (Section 30(2)).

Example. A agreed to buy a house if his advocate approved. A obtained


possession of a car and sold it to B. But the advocate disapproved. It was held
that the buyer has got a good title. (Marten vs Whale). (1917) 2 KB 480.\

7. Unpaid seller. Where an unpaid seller who has a right of lien or stoppage
seller who has a right of lien or stoppage in transit results the goods, the
buyer get a good title to the goods as against the original buyer in spite of the
fact that no notice of resale has been given to the original buyer. (Section
54(3)).

8. Finder of lost goods. A finder of the lost can also sell the goods under some
circumstance and the buyer will get a good title. (Section 169).

9. Pledgee. A pledge can also sell the goods under some circumstances. The
buyer gets a goods title (Section 176).
Example. A pledges his house to B and borrows Rs. 15 Lac. A does not pay
the loan. B sells the house to C. C gets a good title.

10. Exceptions under other acts. A non-owner can transfer a better title in the
following cases also.

(a) In case of insolvency of individuals and companies, the official


receiver can convey a better title to the buyer.
(b) In case of negotiable instruments, the holder in due course gets
a better title than that of transferor.

Example.

A becomes insolvent. B, the official receiver of A sells some goods


of A to X X. X gets a good title to goods.

4. CONCULUSION

Thus we conclude from above discussion that law regards the sale which
is made by person other than the owner of unless is it made by persons
mention specifically in The Sale of Goods Act, 1930.

_______________

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