SALE OF GOODS

Part 2

1. TRANSFER OF TITLE
2. REMEDIES FOR BREACH OF SALE OF GOODS AGREEMENT
5. TRANSFER OF TITLE

• Sec 27 (1) of SOGA:-

• The general rule is that “where goods are sold by a person who is
not the owner thereof and who does not sell them under the
authority nor with the consent of the owner, the buyer acquire no
better title to the goods than the seller had.”

2
However, there are exceptions for this general rule (nemo dat quod
non habet rule).They are:-

1. Estoppel
2. Sale by mercantile agent
3. Sale by one of joint owner
4. Sale under a voidable title
5. Sale by seller in possession after sale
6. Sale by a buyer in possession

3
(1) Estoppel

• Where the owner made a representation (by

statement or conduct) that the seller was entitled to
sell the goods and the buyer relies on that
representation, the buyer obtained a good title
because the owner is estopped by his representation
from denying the seller’s authority to sell.

4
Eastern Distributors v Goldring [1957] 2 QB
600
• Fact: The owner of a van, Murphy, allowed another a car salesman to represent
to the Plaintiff (hire purchase company) that he (the sales man) was the owner
and could sell the vehicle.

• Plaintiff relied on this representation to purchase the van from the salesman.
Meanwhile, Murphy sold the van to the Defendant. The Plaintiff claimed to
repossess the vehicle.

• Held: Plaintiff had a good title to the van as Murphy had permitted the salesman
to act as the owner and was therefore, estopped from denying the seller’s
authority to sell.

5
(2) Sale by Mercantile Agent

• A person acts as a mercantile agent where he has authority either to sell goods
or to consign (deliver) goods for the purpose of sale or to buy goods or to raise
money on the security of goods.
• Example: secondhand car dealer, broker or auctioneer.

• A person in possession of goods or document of title to goods with the consent

of owner can pass a good title to the buyer as a mercantile agent.

• The sale shall be valid as if he was expressly authorized by the owner of goods
PROVIDED that the person taking the goods(buyer) acting in a good faith and has
no notice that the agent did not have authority.

6
 Pearson v Rose & Young Ltd [1950] 2 All ER

• Pearson left his car with Hunt, a mercantile agent. He had not authorized
Hunt to sell the car or he did not intend to pass the property in car.
• By means of a trick, Hunt induced the Plaintiff to hand him the registration
book relating to the car.
• Shortly after Hunt obtained the car, Hunt sold it to a third party.
• It was argued that a good title cannot pass because Pearson had not
consented to Hunt having possession of the car.

• Held: Even though possession was obtained by trick, this was a sufficient
consent.

7
(3) Sale by one of Joint Owner
• Goods may be owned by more than one person.
• Sec 28 SOGA states that:
If one of several joint owner of goods has the sole possession of them by
permission of the co-owners, the property in 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 notice that the seller has no authority to sell.

• For example: A and B are co-owners of Proton Perdana car. A, with B’s consent,
used the car. A later without B’s consent, sold the car to C.
• Here, C will get a good title even though B did not give his consent provided C
acted in good faith and has no notice that A has no authority to sell.

8
(4.) Sale Under a Voidable Title

• The seller may derive his title from an earlier sale by the true owner.
That earlier sale may have been voidable (under Section 19 or 20 of
the Contract Act 1957).

• But if the earlier sale was not rescinded at the time of the second
sale, the buyer acquires good title provided he buys in good faith and
without notice of any defect in title .

9
• A contract is voidable when consent of the original owner is caused
by coercion, fraud, misrepresentation or undue influence.

• For example: Bobby obtained goods from Ina by coercion and sells
them to Dorris who buy them innocently.
• At the time Dorris buys the goods, Ina has not rescinded the contract
made with Bobby. Dorris obtains good title to the goods.

10
(5.) Sale by a seller in possession after sale

• Sec 30 SOGA
• A purchaser can obtain a good title to goods when he buys from
a seller who has already sold the goods to previous buyer but
retained possession of goods or document of title to them, has
then sold them to second purchaser.

11
• As long as the Second purchaser is in good faith and has no notice of
the previous sale, he obtain a good title even though seller had no
title to give to second purchaser.

• The first buyer will lose the title, but he can take legal action against
the seller who would be liable to him

12
(6) Sale by a buyer in possession

• Sec 30(2) SOGA:-

• If a buyer having bought or agreed to buy goods, obtain possession of
the goods or document of title with the consent of the seller, he can
pass a good title to a subsequent buyer acting in a good faith, even if
under the first transaction he has not obtained a good title.

13
Newton of Wembley Ltd v Williams (1964) 3 ALL ER532

• The Plaintiff sold a car to A who paid by cheque. Although he was given
possession of car, it was agreed that the property (title/ ownership)
would not pass until the cheque was honoured.
• The cheque was dishonoured. But A had resold the car to B who bought it
without knowledge of the position. B then subsequently resold it to C,
(Defendant). Thus, the Plaintiff tried to recover the car from C.

• Held: A, the original owner was in possession with the consent of the
owner. Hence, he could pass a good title to B who later on transferred it
to C. The Plaintiff’s claim failed & C was therefore entitled to keep the car.

14
REMEDIES FOR BREACH OF CONTRACT OF SALE
OF GOODS

15
REMEDIES FOR BREACH OF SALE OF GOODS CONTRACT

A. SELLER’S REMEDIES

1. Rights of unpaid seller against the goods

There are three types of remedies:-

• Lien
• Stoppage in transit
• Resale of goods

16
(i) Lien

• Sec 47 SOGA:
• A lien is a right of an unpaid seller in possession of goods to retain them until
the price has been paid or his debt secured or satisfied.

• The seller has right to retain the goods if he is unpaid seller and the right of
retention operates until the seller is paid.

17
(ii) Right of stoppage in transit
• Sec 50 SOGA

a) This is a right given to an unpaid seller who has handed the goods to an independent
carrier for the purpose of having them transported to the buyer to recover the
goods from the carrier and to hold them until the buyer pays the price.

b) The right to stop exists for as long as the goods are in the hand of the independent
carrier. The seller may exercise the right at any time before the goods are handed
over to the buyer or before the carrier acknowledges to the buyer that the goods are
being held for them.

c) Stoppage will be carried out by unpaid seller giving notice to the carrier, altering
original instructions. The carrier must obey his notice and the seller must pay the
expenses of re-delivery.
18
(iii) Right of resale
• Sec 54 SOGA
• As a seller, he may resell the goods and if he does so, the second buyer obtains good
title and the original buyer’s right to the goods is defeated.

• Circumstances in which the unpaid seller may re-sell the goods:-

i) Where the goods are perishable in nature;

ii) Where unpaid seller gives notice of his intention to resell if the buyer does not
within reasonable time, pay the price and the buyer does not do so; or

iii) Where in the contract, the seller reserves the right to dispose of the goods if
the buyer does not pay, and the buyer does not do so.
19
2. Rights of seller to sue for breach of contract

• Personal remedies
(i)The seller will have right to sue the buyer for the price of goods where the buyer
failed to pay for the goods after the property has passed to the buyer or the
price is payable on a certain day regardless of the passing of the property.
(Section 55)

(ii)If the property has not passed to the buyer or the price is not payable on a
certain day, the seller’s remedy for buyer’s wrongful non-payment will be an
action in damages.

(iii) Action of damages for non acceptance. If the buyer wrongfully refuses to
accept and pay for the goods, the seller may sue him for damages for non-
acceptance (Section 56).
20
B. THE BUYER’S REMEDIES

1. Damages for non-delivery

• Where the seller wrongfully neglect or refuses to deliver the goods to the
buyer, the buyer may sue the seller for damages for non-delivery.

2. Specific Performance
• In a contract for delivery of specific goods, the court may order the seller to
perform the contract i.e by delivering the said goods to the buyer.

21
3. Damages for breach of warranty
Where there is a breach of warranty by the seller, the buyer may sue
him for damages for breach of warranty.

4. Sue for special damages

• Buyer may sue the seller for the refund of the price in a case of
breach of the contract made by seller.

5. Sue for wrongful detention of goods

• Where the title to the goods had passed to the buyer, he may sue
the seller for tort of wrongful detention of goods.

22