Question

Hugo, a 21-year-old man, is birthday shopping for his mother over the online classifieds. While browsing the Internet for sale ads, he notices a particularly good deal on a 14-carat gold necklace with matching 1/3-carat diamond earrings. The seller says the jewelry is brand new, still in the box, and wants only $359 for the entire set. Hugo immediately e-mails the seller and arranges for the purchase of the jewelry. Hugo pays the seller, receives the necklace and earrings, and intends to give them to his mother for her birthday.

1. Suppose that the reason the jewelry was brand new and at such a bargain price online was because the seller actually stole the jewelry. If the jewelry were stolen, what type of title would Hugo hold when he purchased the jewelry? Explain.

2. Now suppose that the goods were not stolen. The seller purchased the jewelry on clearance at wholesale price, and that is why he can offer such a good deal. Suppose, however, that Hugo bought the diamond jewelry with a check. Come to find out, it was a bad check and the check bounced. In this scenario, what kind of title does Hugo possess? Explain.

  

3. If Hugo's title is voidable, what can the seller do?

Answer 1

1. Since the Jewellery was stolen. the seller never held the title of ownership of the Jewellery before he sold it, so transfer of ownership is not possible between the seller and buyer, it resides with the original owner. Here the sale was a misrepresentation and fraudulent. hence the buyer Hugo is cheated and does not have legal ownership over the product.

2. If the check issued by Hugo becomes bad and bounces. his title will be voidable and upon discretion of court of law that the buyer. his title is deemed as void since there was no good faith from the side of buyer in transaction and he/ she had not payed for the good and service utilized.

3. If Hugo's title is voidable. seller can protect themselves by proving to the court that they conducted business in good faith and was not aware of the financial position of Hugo. in this case the seller can posses the goods back on the discretion of the court and recover their losses.