No one can give a better title of the goods than what he himself has. Explain this rule and give exceptions to the rule under the sale of Goods Act.
Transfer of title means transfer of ownership of the goods. The general rule as to transfer of title is that only the owner can transfer a good title. No one can give a better title than he himself has. This rule is expressed by the maxim “Nemo dat quad non habet” which means that no one can give what he himself has not. In other words, seller cannot give to the buyer of the goods a better title to those goods that he has himself given. Therefore if a person acquires possession of property by theft and sells it to another, the buyer acquires no title even if has. acted honestly and had paid the price. The general rule aims at protecting the interest of the true owner and is deemed necessary in the larger interest of the society.
Title by estoppel [Section 27] : Where the true owner by his conduct, act or omission leads the buyer to believe that
- The seller has the authority to sell, and
- Induces the buyer to buy the goods he shall be estopped from denying the fact of want of authority of the seller. The buyer in such a case shall get better title than that of the seller.
Sale by a mercantile agent [Section 27] : As a rule, a mercantile agent having an authority to sell goods conveys a good title to the buyer. A mercantile agent can convey a better title to the buyer even though he sells goods without having an authority from the owner to do so. The buyer will get a good title if the following conditions are satisfied:
- The sale must be made by a mercantile agent.
- He must be in possession of goods or of documents of title to goods with the consent of the owner.
- He must sell the goods while acting in the ordinary course of business of a mercantile agent.
- The buyer must act in good faith and should not have at the time of contract of sale noticed that the seller has no authority to sell.
Sale by one of joint owners [Section 28] : If one of several joint owners of goods has the sole possession of them by the permission of the co-owners, the property in the 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 noticed that the seller has no authority to sell.
Sale by a person in possession of goods under a voidable contract [Section 29] : A person who has obtained possession of goods under a contract which is voidable on the ground of fraud, re is representation, or undue influence, can convey a good title, provided
- The sale takes place before the voidable contract is avoided, and
- The buyer buys then in good faith and without notice of the seller’s defective title.
Sale by seller in possession of goods after. sale [Section 30(i)] : Sometimes the seller continues to be in possession of goods or documents of title to goods after sale. In such cases, the delivery or transfer of goods or documents of title under any sale by such person or his agent shall give a valid, title to a bona fide purchaser. In order to apply the provision of the section, following conditions should be fulfilled:
- The seller must continue in possession of the goods or documents of title to goods as a seller.
- The goods must have been delivered to the buyer or the documents of title must have been transferred to him.
- He second buyer should act in good faith and should not have any notice of the previous sale.
Sale by a buyer in possession of goods under an agreement to sale [Section 30 (2)] : Sometimes buyer obtains possession of the goods before the property in them has passed to him under an agreement to sell with the consent of the seller. Such buyer can sell the goods to a third person, if such person takes the delivery in good faith and without notice of any lien or other right of the original seller in respect of the goods, he will get a good title to them.
Sale by an unpaid seller: Where an unpaid seller who has exercised his right of lien or stoppage in transit resells the goods, the buyer acquires a good title to the goods as against the original buyer.
Exceptions under other Acts
- Sale by a finder of lost goods, if—(i) the owner cannot, with reasonable diligence be found. (ii) found, he refuse to pay lawful charges of the finder. (iii) the lawful charges of the finder amount to 2/3rd of their value. (iv) the goods are perishable.
- Sale by a Pawnee or Pledge.
- Sale by official receiver or assignee. In case of insolvency of an individual, his official receiver or any liquidator of a company, can confer a good title on the buyer