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Commercial law discussion - 'Transfer of Title by a Non-Owner'.

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Introduction

Commercial Law Coursework This question is mainly concerned with the 'Transfer of Title by a Non-Owner'. Sections 21-26 of the Sale of Goods Act 1979 deal with the transfer of title. The general rule is that a person cannot give a better title than he himself possesses when he purports to sell goods. This is nest expressed by the legal maxim 'Nemo dat quod non habet' - no one gives who possesses not, that is to say, no person can give a greater title than that which they possess. Section 21(1) provides: 'subject to this Act, when goods are sold by a person who is not their owner and who does not sell them under the authority and consent of the owner, the buyer acquires no better title to the goods than the seller had...' The Act does not affect the provisions of the Factors Act or any enactment enabling the apparent owner of goods to dispose of them as if he were their true owner. At one time the only exception to this was sale in market overt, but in response to commercial pressures a steady flow of further exceptions have been introduced both by statute and common law, while the concept of market overt itself has been abolished. There are many exceptions to the nemo dat rule. The first one is Estoppel, this exception is\incorporated into s21(1) which ends: '...unless the owner of the goods is by his conduct precluded from denying the seller's authority to sell.' Section 21 can only operate to pass title when there has been a sale, if there is merely an agreement to sell then the doctrine of estoppel will not operate. ...read more.

Middle

is the owner of the car he does not have the right to sell the car because of the hire purchase terms. This is well illustrated by the leading case of Niblett v Confectioner's Materials (1921)1, where the plaintiffs bought tins of milk from the defendants. Some of the tins of milk were delivered bearing labels 'Nissly brand', which infringed the trademark of another manufacturer. That manufacturer persuaded Customs and Excise to impound the tins and the plaintiffs had to remove and destroy the labels, before they could get the tins back. It was held that the defendants were in breach of s12(1) because they did not have right to sell the tins in the condition in which they were, even though they owned them. This was clearly reasonable, as the plaintiffs had been left with a supply of unlabelled tins which would be difficult to dispose of. Similarly the defendant in Bishopsgate had no right to sell the car and is in breach of Section 12(1) of the Sale of Goods Act, which states: 'in a contract of sale, there is an implied condition on the part of the seller that in the case of a sale he has a right to sell the goods, and in the case of an agreement to sell he will have such a right at the time when the property is to pass.' The bona fide their party in the case can certainly recover, recover, by way of damages, any loss which he has suffered because of the breach. Further, the seller's obligation is stated to be a condition and the buyer is generally entitled to reject the goods when there is a breach of condition. ...read more.

Conclusion

Section 22(1) of the Sale of Goods Act 1979 provided: 'where goods are sold in market overt, according to the usage of the market, the buyer acquires a good title to the goods, provided he buys them in good faith and without notice of any defect or want of title on the part of the seller.' However this exception had been removed by the Sale of Goods (Amendment) Act 1994. as the Bishops gate case was in 1948, this exception would then have been allowed and so the third part would have obtained a good title however even though this rule has been abolished the innocent third party in this case still had good title to the car as he bought it in good faith and without notice of the hire purchase agreement. So all in all in my opinion I believe the law has achieved an even balance between the respective parties as in the case the hire purchase company couldn't recover the car as the third party bought the car in good faith and obtained a good title, and since cars were sold in the market by private sale as well as by public auction, the car was sold to the third party "in market overt, according to the usage of the market," within the Sale of Goods Act 1893 s. 22 (1) and, therefore, the third party was able to give a good title to the defendant, with the result that the hire purchase company could not recover. Words: 735 1 [1921] 3 K.B. 387 2 [1923] 2 K.B. 500 3 [1954] 1 W.L.R. 1286 4 [1987] 1 W.L.R. 1332 5 [1965] 1 Q.B. 560 ...read more.

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