Sales of goods act - Sale by non-owners

Introduction

Generally, owner is entitle to sale the goods, or his agent, or some authority he had appointed. What if non owner sales the goods which he don't have authority to ? Suppose You sell Mr Mallya, ferrari owned by Sachin, will Mr Mallya become real owner ? Well the obvious answer is "No" but sales of goods act provides some scenarios under which sale by non-owner become sale.

Nemo dat quod non habet,

Section 27 states that when seller don't have authority, then buyer will have same title (Or no better title) as that of seller.

Section is as below

Subject to the provisions of this Act and of any other act for the time being in force, where goods are sold by 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

The underlying principle is Nemo dat quod non habet, meaning "no one can transfer better title than his own. It follows from fundamental principle that no one can deprive others from their private property without his consent and no one can give what he has not.

To talk this in example, say you found I-phone in a mall. You are not owner. But you sell that I-Phone to another person. In this case the buyer will not get full title. His rights and interest will be same as that of founder of lost goods.

However this is general rule. There are certain exception wherein buyer get a good title in the goods. We will discuss those exception below;

Exception to Nemo dat quod non habet

Transfer of title by estoppel (Section 27)

For example, Mr Gaitonde have an i-phone. You are friend with Mr Gaitonde. You both are seating in a bar. You took i-phone of Mr. Gaitonde and sell it to the waiter in bar. Though Gaitonde is seating there, he didn't resist such transaction though he is owner of the i-phone. Waiter pays the money and took the phone. Later Mr Gaitonde cannot claim that he is the true owner and return the i-phone.

Here law of estoppel comes into picture where Mr Gaitonde cannot alter his earlier position. Here his implied agreement was their to sell the phone.

Sale by mercantile agent (Proviso to section 27)

Mercantile agent is one who is having in the customary course of business as such Agent's authority either to sell the goods, or to consign them for the purpose of sale, or to buy goods. or to raise money on the security of the goods.

If such agent have title or possession of goods, but don't have authority to sell, sales the goods to buyer, and buyer acts in good faith, meaning buyer don't know that mercantile agent don't have authority to sell, such sale would be valid and buyer will get a good title.

Below are some condition which needs to be satisfied to get good title by buyer.

• Seller should be mercantile agent
• This agent got the goods, or title with consent of real owner
• While selling goods he must act in ordinary course of business.
• The buyer should act in a good faith. If buyer know that the seller don't have authority to sell, he will not get a good title.

Sale by one of the joint owner (Section 28)

When property is owned by co-owner it has to sold by consent of all the owner. For example if expensive Car like Audi is owned by 4 owner, if they have to sell this car, permission of all owner is needed. However, if one of the owner is in possession and he acts as if he is the owner of car and Sells it to Mr Mallya, Mr Mallya will get a good title. It is also necessary that Mr Mallya buy it in a good faith. He must not know that Car is owned by 4 people. If he knows this and still buy from only one owner, he will not get good title.

Sale by a person in possession under a voidable Contract (Section 29)

If person is having a goods under voidable contract, and he sells it to third party, then third party will get a good title, provided it act in good faith.

Sale by the seller in possession (Section 30(1))

Assume you bought 100 bags of cement from Mr Bangur. Mr Bangur holds good behalf on you in his godown. If he sells those 100 bags of cement to Mr Ultra Tech, Mr Ultra Tech will get a good title. Provided Mr Ultra Tech should act in a good faith. If he knows that goods belong to you and still buys it, he will not get a good title.

Sale by the buyer in possession of goods (Section 30(2))

If buyer is in possession of goods, ownership of which is yet to pass to him sells good to third party, then this third party will get a good title of such goos.

Resale by an unpaid seller (Section 54(3))

If unpaid seller can resale the goods, the buyer of those goods will get a good title

Sale by Finder of Goods (Section 169 of Indian Contract Act)

This is general provision in Contract Act. Finder of goods can sale the goods though he don't have ownership in below scenarios

1. When thing is in danger of perishing or of losing the greater part of its value
2. When the lawful charges of the finder, in respect of the thing found, amount to two thirds of its value

Sale By Pawnee (Section 176 of Indian Contract Act)

If you deposit gold to Mr Mannapuram and take money from him and don't return the money. If Mr Manapuram sells this gold to Mr Muthut, Mr Muthut will get a good title

Sale in open Market

Chor Bazaar is one of the largest flea market in India, located in Mumbai in Kamathipura area. If you buy some thing from open market in good faith and without notice of any defect or want of title on the part the seller, you will get a good title.

So above are some scenarios wherein Non-owner too can sale goods and buyer gets a valid title or good title.

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