Transfer of Property

The main purpose of a contract of a sale is to transfer property . The property in the goods means ownership. When the goods is sold, it is the property in the goods that is transferred to the buyer. It should be noted that there is a difference between property in goods and the physical possession of the goods. A person may be in possession of the goods but he may not be owner of the goods.

Exceptions
There are some expections to the above rule. In other words, there of some situations in which a person, who is not the ownner of the goods may sell the goods and pass a better title than he himself has.

Following are the exceptions1. 2. 3. 4. 5. 6. Estoppel Sale by a merchantile agent Sale by one of joint owners Sale by person in possession under voidable contract Sale by seller in possession of goods after sale Sale by a buyer who is in possession of goods after sale or agreement to sell 7. Sale by an unpaid seller

ESTOPPEL
If the owner of the goods acts in such a manner that the other person leads to believe that the person selling the goods has authority to sell the goods, then he can not refuse the sellers authority to sell the goods. EXAMPLE: A told B in the presence and hearing of C that he (i.e. A) is the owner of certain goods. In fact, C is the owner of these goods. But he did not object at that time. Later on A sold goods to B. Here B will get good title and C will be estopped from denying As right to sell.

SALE BY A MERCHANTILE AGENT

Where the goods is in possession of a merchantile agent and sales is made by him in the ordinary course of his business, it shall be valid as if he was expressly authorised by the owner of the goods. But the buyer should have acted in good faith and had no notice at the time of sale, that the seller has no authority to sell the goods. EXAMPLE: A put his car to his mercantile agent to receive offers and not to sell. He also delivered a signed document to the agent. On the basis of this document, agent sold the car to buyer. Held that the buyer has clear title and the true owner i.e. A was estopped from denying buyers title.

SALE BY ONE OF JOINT QWNERS

If there are several joint owners of goods and any one of them, who has the sole possession, of the goods by permission of the other co-owners, sell goods to any person and the buyer purchase the goods in good faith and without notice or knowledge that the seller has no authority to sell, the ownership will be transferred to the buyer. EXAMPLE: A and b jointly purchased a car. A took the car to his house with the consent of B and later on he sold it to C. The buyer purchased the car in good faith without knowledge about the ownership of B. He will get a good title. It should be noted that the joint owner must be in possession with the consent of the other joint owners, otherwise the buyer will not acquire a good title.

SALE BY PERSON IN POSSESSION UNDER VOIDABLE CONTRACT

A person who has obtained possession of goods under a contract which is voidable on the ground of fraud, misrepresentation, coercion or under influence and he has sold the goods before the contract has been rescinded, the buyer will acquire a better title.
EXAMPLE: A purchased a house from B by fraud and sold it to C before the contract is cancelled. C bought the house in good faith without knowing about As fraud. C gets a good title

SALE BY SELLER IN POSSESSION OF GOODS AFTER SALE

If a seller has sold the goods but he is still in possession of goods or the documents of title and sold the same goods again to a third person, then the third person will get a good title if he has purchased the goods in the goods faith and without any notice of previous sale. It should be noted that the above rule does not apply where the goods have been delivered by the seller and subsequently the goods again come back to the seller due to some reason.

SALE BY A BUYER WHO IS IN POSSESSION OF GOODS AFTER SALE OR AGREEMENT TO SELL

Where a person has bought or agreed to buy goods and obtained the possession of goods with the consent of the seller and sell it to third person, the third party will get a good title even if there is any lien or other right of the original seller. It should be noted that the above rule does not apply where the buyer has got only an option to buy the goods as in case of hire-purchase agreement.

SALE BY AN UNPAID SELL

Where an unpaid seller, who has exercised his right of lien or stoppage in transit, re-sells the goods, the buyer requires a good title to the goods against the original buyer, even if no notice of resale is given.