Rule of transfer of title on sale

Introduction

The general rule of transfer of title on sale is that " the seller cannot transfer to the buyer of goods a better title he himself has." As per Section 27 of the Sale of Goods Act, 1930, " where goods are sold by a person who is not the owner thereof and who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had....." This is rule is expressed by the maxim, " nemo det quod non habet". It means no one can give what he has not got.

Exception

The above rule is subjected to some exceptions. They are- 

1. Transfer of title by estoppel- Estoppel means that a person who by his conduct or words lead another to believe that a certain state of affairs existed, would be estopped from denying later on that such a state of the affair did not exist. 

In reference to the sale of goods, estoppel may arise in any of the following ways- 

i) The owner standing by, when the sale is effected

ii) still more, by his assisting the sale

iii) by permitting goods to go into the possession of another with all the insignia of possession thereof and apparent title

iv) if he has otherwise acted or made representations to induce the buyer to alter his position to his prejudice.

2. An unauthorised sale by a mercantile agent- A mercantile agent means an agent having such authority either to sell goods or to consign goods for sale or to buy goods or to raise money on the security of goods. A mercantile agent can convey a good title to the buyer even though he sells goods without having authority from the principal to do so if certain conditions are fulfilled.

3. Sale by a joint venture- If one of several joint owners of goods has sole possession of them by permission of the co-owners, the property in the goods is transferred to any person who buys in good faith from such join owner without noticing the fact that the seller has no authority to sell.

4. Sale by a person in possession under voidable contract- If a person obtains possession of goods under voidable contract and he sells those goods before the contract rescinds, the buyer of such goods acquired good title provided he bought such goods in good faith.

5. Sale by the seller in possession after sale- Where a seller, after selling goods is still in possession of such goods or documents of title, he sells or pledges them, the buyer or pledgee will acquire a good title provided they act in good faith.

6. Resale by an unpaid seller- Where an unpaid seller, exercising his right of lien resells the goods, the subsequent buyer acquires a good title against the original buyer provided that he acted in good faith.

7. Sale by the buyer in possession after 'agreement to buy' - Where the buyer is in possession of goods or documents of title after agreeing to buy from the seller, resells or pledges such goods, will convey a good title to the purchaser provided he acts in good faith.