Section 27 of The Sale and Goods Act states that if the title of the seller is defective and if this defective title gets passed on to the buyer, then the buyer’s title will also be the same, and he will have no right to goods despite the fact that he acted in good faith and paid the price. In this contract the goods are transferred from one person to another in exchange for money, the main motive behind the making of such a contract is to transfer the rightful ownership and possession from the seller to the buyer, so this element will lay down the groundwork for the making of a contract. A Latin maxim, Nemo dat quod non-habet means that no one could transfer a better title than he himself has, only the owner of the goods can pass the lawful ownership or title of goods to the buyer. Section 27 of The Sale of Goods Act, if the title of the seller is defective and if this defective title is passed on to the buyer, then the buyer’s title would also be the same, and he will have no rights on goods despite the fact that he acted in good faith and paid the price.
In Cundy V Linsay, the claimant received an order for the sale of handkerchiefs from a person named Blenkarn, who signed in his name in a manner resembling “Blenkiron & Co.”, a reputed firm located at “123, Wood Street”. The purchaser further mentioned his address to be at “37, Wood Street, Cheapside”, to which the claimant sent the goods. Although no payment was made by Blenkarn, he sold the goods to a third person- the defendants.
In Blenkiron & Co it was stated that the claimants alleged that, as they sold the goods to Blenkarn under the mistaken assumption that they were selling it to them but, there was no real consent to the contract of sale. Consequently, there was no valid transfer of title, which remained with the claimants, and accordingly, they sued the defendants for the conversion of goods.
Section 28 of the Sales And Goods Act states that if more than one person has ownership rights in anything, and that thing is in the possession of a co-owned with the prior approval of other co-owners, and the co-owned sell that thing without consulting other co-owners, the buyer would not be deprived of complete ownership of that thing. But the transaction of sale and purchase shall be in good faith from the buyer’s side and the buyer have no idea that the seller has no authority to sell that thing.
Possession under voidable contract
Section 29 of the Goods And Sales Act states that if a seller gets possession of the goods under voidable contracts such as fraud, coercion, misrepresentation or undue influence, and sells those goods before the voidable contract is, the buyer will get a good title to the goods. If the goods are in possession under a voidable contract, the seller needs to rescind the contract but before rescinding the contract if the guilty party sell goods to another party who is not at fault and acted in good faith, then the real owner cannot claim the goods back because the buyer will have rightful claim over the goods.
For Example, X purchased a ring from Y, in good faith. But it turns out that Y had fraudulently obtained that ring from Z and the contract is voidable at the potion of Z, but before the contract could be terminated Y sold that ring to X. The court held that X will get a good title over the ring and Z cannot recover the ring. These two requirements are to be fulfilled to claim this exception firstly, voidable contract, secondly, the contract should not be rescinded at the time of the new contract. The goods are obtained under a voidable contract rather than void or void ab initio. If the contract of possession of goods was void or void ab intio the buyer will not get any rightful possession because the seller cannot transfer a better title than he has.
In Phillips V Brooks, Phillips was a jeweller. A person purchased a ring from him with a cheque and signed his name as “Sir George Bullough”. He also provided this person’s address. Phillips knew the person named Bullough and knew he lived at the mentioned address. So he allowed him to take the ring before the cheque cleared. The person turned out to be a fraudster and the cheque was dishonoured. The ring was pledged to Brooks Ltd. by the fraudster and Brooks Ltd. paid for it with bona fide intent. Later, a civil action was brought by Phillips against Brooks Ltd to recover the ring or its value. The claim made by Philips was allowed. Then there should be a contract of sale instead of an agreement to the sale of future goods or contingent goods.
Section 30(1) of the Sale of Goods Act states that when a seller has sold the goods to the buyer but the possession of goods remains with him and if during that possession seller sold those goods to someone else and that person has purchased goods in good faith and without notice of prior sales, he would have good title to them. It is essential that the seller should be in possession of goods as a seller not in an altered capacity like bailee.
X purchased a car from Y but the possession is still with Y, Y sold that car to Z because he was getting a higher price. Herein, Z does not know anything about the previous sale and purchases the car in good faith. In this situation, Z will get a good title over the car and X cannot claim that car back from Z. However, personal possession of goods is not important, goods should be at his disposal. In the case of City Fur Manufacturing V Fureenbond, Mr. H purchased a number of skins from a broker. Since the payment was pending, the goods remained in the broker’s warehouse. Mr. H sold them to the plaintiffs. The plaintiff gave him a bill of exchange to enable him to pay the broker and arrange delivery to the plaintiffs. Instead of arranging the same to same for the plaintiff, Mr. H pledged the goods to the defendants. The court held that the defendants have acquired a good title.
Section 30 (2) of the Sale of Goods Act states that if a buyer resells the goods that he had obtained with the consent of the seller but the actual sales have not yet been made if the buyer to whom goods have been resold have purchased the goods in good faith and without notice, he gets a rightful possession and ownership.
X took a car from Y with a promise that he will pay monthly instalments of Rs 10000/- for the next 15 months if wants to purchase the car or else he can pay the same amount as hiring charges. After a few instalments, X sold the car to Z. In this case, Y can recover the car from Z because X had neither purchased the car not have agreed to purchase the car in the future.
In Marten V Whales it was held that Marten and Theaker agreed that Marten will buy land from Theaker and in return Theaker will buy his car. There was a condition attached to it that Marten‟s solicitors approved the Theaker‟s title to land. The car’s possession was handed over to Theaker. Theaker further sold the car to Whale. Whale bought that car in good faith and without notice of Marten‟s rights. The sale was not carried out as Marten‟s solicitors refused to approve Theaker‟s title to land. Marten sued Whale for possession of the car. The court held that Theaker, who sold the car, had agreed to buy the same and, therefore, Whale acquired a good title to the same.