Question

BUSINESS LAW

There are exceptions to the English rule “Nemo dat quod non habet” which means “No one can give a better title than he has himself” as set out in Section 27 of the Sale of Goods Act 1957. Discuss the exceptions

Answer 1

Following are some of the exceptions of section 27 as the Sale of Goods Act 1957.

1. Sale by Mercantile Agent: A mercantile agent who is the possession of the goods or documents in question with the absolute consent of the owner. Such an agent can sell the goods when he/she is acting in what is called as the normal course of business of the mercantile agent. The sale shall be valid as long as the buyer acts in good faith, therefore, has doubt that the seller does not have any right to sell the goods. The transfer of title is deemed valid in such a case.

2. Sale by one of the joint owners: if one of several joint owners of goods enjoys the ownership of the good and that goods are purchased in the joint ownership. If the person who is having the sole possession sells these goods, the property, ownership and title of goods are transferred to the buyer. This sale shall be valid as long as the buyer acts in good faith and has no doubt that states seller is not in a position to sell these goods.

3. Sale by a person in possession of goods under voidable contract: When a person is in the rightful possession of goods under a contract which is voidable at the option of one party on the ground of coercion, misrepresentation, fraud or undue influence. If this person in possession of goods engages in their sale and therefore sells the goods to the buyer before the contract is rescinded by the original owner of the goods, then the buyer acquires a title of these goods.

4. Sale by Seller in possession after sale: A person who makes a sale of the goods but continues to be either in possession of them or has the documents which dictate title to them. This person has the option of selling these goods to another buyer.
If this buyer acts in the faith which is deemed good by the law and is unaware any the earlier sales, then he retains the good title to the goods.

5. Sale by Buyer in possession before the sale: When a person has bought or only agreed to buy the particular goods and gets the consent of the seller for the same sale of either the possession of the goods or the documents which carry the title to goods. He/she enjoys the right to sell, pledge or dispose of the goods to another person.

6. Estoppel: When the actual owner of the goods is stopped by the conduct from the act of denying the authority of the seller to sell, the buyer, in that case, gets a good title. However, to qualify a good title by estoppel, it needs to be proved that the actual or original owner has suffered or has held out the seller to sell the goods.

7. Sale by an Unpaid Seller: When the unpaid seller exercises his right of lien or stoppage of goods in transit and sells these goods to some another buyer, then the second buyer by default shall get the title of goods as against the original buyer indicating that the transfer of title is occurring.