THE NATIONAL LAW INSTITUTE UNIVERSITY, BHOPAL

THIRD TRIMESTER

FINAL DRAFT OF

LAW OF CONTRACT -II

TOPIC- NEMO DAT QUOD HABET (no one can transfer a better title in

property than he himself has)

SUBMITTED BY: SUBMITTED TO:

SIDDHARTH BHARGAVA Ms. NEHA

SHARMA

2019 BALLB (Hons.)55

SECTION- A

ENROLLMENT NO. - A-2097

 
CERTIFICATE
This is to certify that the Project titled-“NEMO DAT QUOD HABET (no one can transfer
a better title in property than he himself has)” has been prepared and submitted by
Siddharth Bhargava who is currently pursuing his B.A.LL.B. (Hons.) At National Law
Institute University, Bhopal in fulfilment of Constitutional Law-I course. It is also certified
this is original research report and this project has not been submitted to any other
university, nor has been published in any journal.

Date:

Signature of the Teacher:

 
ACKNOWLEDGEMENT:
This project has been made possible by the unconditional support of many people, I would
like to acknowledge and extend my heartfelt gratitude to Prof. (Dr.) V. Vijayakumar, and Ms.
Neha Sharma for guiding me throughout the development of this project into a coherent
whole by providing helpful insights and sharing their brilliant expertise.

I would also like to thank the members of the library staff and computer section for the
cooperation in making available the books and accessing the internet even during their free
time. I am deeply indebted to my parents, seniors and friends for all the moral support and
encouragement.

-SIDDHARTH BHARGAVA
TABLE OF CONTENTS:
1. INTRODUCTION
2. NEMO DAT QUOD NON HABET
3. SECTION 27 OF THE SALES OF GOODS ACT 1930.
4. SALE BY PERSON NOT BY THE OWNER- GENERAL RULE.
5. ESTOPPEL.
6. ESTOPPEL OF OWNER.
7. ESTOPPEL BY WORDS OR CONDUCT.
8. ESTOPPEL BY NEGLIGENCE.
9. EXCEPTIONS TO THE GENERAL RULE
10. SALE BY MERCANTILE AGENT
11. MERCANTILE AGENT
12. POSSESSION BY MERCHANTILE AGENT
13. POSSESSION MUST BE WITH CONSENT
14. SALE IN MARKET OVERT
15. REMEDIES
16. SECTION 28- SALE BY CO-OWNER
17. SECTION 29- SALE BY PERSON UNDER A VOIDABLE CONTRACT.
18. SECTION 30- DISPOSITION BY SELLER REMAINING IN POSSESSION.
19. DISPOSITION BY BUYER REMAINING IN POSSESSION
20. CONCLUSION
21. BIBLIOGRAPHY
22. REVIEW OF LITERATURE.
INTRODUCTION:
NEMO DAT QUOD NON HABET:

The Indian Contract Act 1872 comprises of 266 sections which was previously divided into
many different chapters and Section 1 to 75 deals with general principles of the contract and
from Section 76 to 123 of the original enactment deals with sale of goods. Section 27 of the
Indian Contract Act expresses this principle and the given principle is given in the section
21 of the British Sale of Goods Act 1979.

The maxim Nemo Dat Quod Non Habet basically means that “no one gives what they do not
have” is a legal rule which sometimes also called as Nemo Dat rule which means that the
purchase of a possession of some property from someone who has no ownership right on that
property also denies the purchaser any ownership title. It is also said that this maxim is to the
maxim “Nemo plus juris ad alium transferre potest quam ipse habet” rule, which also means
that “one cannot transfer to another more rights than one has”.

The second half of Part III of the Sales of Goods Act 1979 is entitled as “Transfer of Title”
and deals with the various cases in which a seller with no right of goods may pass a good title
to the third party. Basically, in these cases the question which arises in the mind is that which
of two innocent people is to suffer for the fraud of the third party.

Let take an example as A thief steals goods and sells them to someone who buys in good faith
and for some value and a person hands goods to an agent to obtain offers and the agent sells
them with authority and disposes of the proceeds and after that a swindler buys goods,
induces the seller to let him have them on credit and promptly resells or pledges them for
whatever he can get; a person sells goods, but retains possession of them and fraudulently
resells them to a third party.

In all these cases the law has to choose between rigorously upholding the rights of the owner
to his property, on the one hand, and protecting the interests of the purchaser who buys in
good faith and for value on the other hand. The Chapter III of the Sale of Goods Act 1930
comprising Sections 18 to 30 which deals with the effects of the contract with respect to the
transfer of property between the buyer and the seller.

As Lord Denning once put it:

“In the development of our law, two principle have striven for mastery. The first is for the
protection of property: no one can give a better title than he himself possesses and the
second is for the protection of commercial transactions: the person who takes in good faith
and for value without notice should get a better title. The first principle has held sway for a
long time, but it has been modified by the common law itself and by statute so as to meet the
needs of our times.”1

The first of these principles is of course still the general rule, and is affirmed by the Act in
Section 21(1):

Subject to this Act, where goods are sold by a person who is not their owner, 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, unless the owner of the goods is by his conduct
precluded from denying the seller’s authority to sell.

This rule is frequently dignified by the use of Latin in the tag nemo dat quod non habet, or
more shortly nemo dat. Some difficulty has arisen with the words ‘where goods are sold’ in
this section, and it has been held that this does not encompass a mere agreement to sell. 2 But
this is a somewhat confusing decision: the first part of Section 21(1) the negative part stating
that a non-owner cannot pass title.

As will become apparent some of the exceptions to the nemo dat rule are replicated in the
Sale of Goods Act 1979 from the Factors Act 1889. Since this text is intended to cover not
only dispositions of goods by sale, the Factors Act and not the Sale of Goods Act will be
referred to. The law is, however, the same.

To the nemo dat rule the law has developed exceptions within both the common law and,
more frequently, under statute. Before turning to the remedies of the parties these exceptions
will be discussed in turn:

(a) Sale in market overt.

(b) Sale by a mercantile agent.
(c) Sale by a seller in possession.
(d) Sale by a buyer in possession of the goods.
(e) Sale under a voidable title.
(f) Sale of cars subject to a hire purchase agreement.
1
Bishopsgate Motor Finance Corpn v Transport Brakes Ltd [1949] 1 KB 332, 336-7.
2
Shaw v. Commissioner of Met Police [1987] 1 WLR 1332.
 (g) Estoppel.
(h) Miscellaneous exceptions by way of possession proceedings against goods.

SECTION 27 OF THE SALES OF GOODS ACT 1930:

SALE BY PERSON NOT BY THE OWNER- GENERAL RULE:

The provisions of this Sales of Goods Act 1930 subject to any other law for the particular
time being where the goods or the property is sold by a person who is not the owner of that
property and who does not sell them under any authority and with consent of owner of the
goods, the buyer does not have better title on the goods than the seller had, except the
possessor of the goods is by manner excluded from repudiating the seller’s authority to sell.

It is provided that when a mercantile agent with the consent of the owner of the goods, or
may be in the possession of goods or of a document of title to goods, and any sale made by
him, while acting in the regular course of business as a mercantile agent shall be as valid sale
as if he was expressly authorized by the owner of the goods to make the same, provided that
the buyer act was in good faith and not at the time of the contract of sale notice that the seller
has no authority to sell.

There are two parts in the Section 27 in which the first part of this section expresses the
explanation of the Latin Maxim Nemo Dat Habet Quod Non and the second part of this
section deals with the two exceptions to the given principle.

This Section 27 gives two exceptions and more exceptions to this maxim and this principle
are given in section 28, 29 and 30 of the Sale of Goods Act.

ESTOPPEL:
The term estoppel is originated from a French word ‘Estoup’ which literally mean “shut the
mouth”. Basically the purpose of the estoppel is that a person who does an act in a good faith
at the words or by the conduct of other person should neither be suffered nor be deceived
while forming a contract of sale. The owner of the property or the goods by his act or any
conduct or any omission permits the buyer to believe that the seller of the goods has the right
to sell the goods and the real owner of the goods cannot refuse such sale.

Let take an example when a person sell goods of his mother in the presence of his mother, his
mother makes no objection but she was allowed to refuse her son’s authority to sell and the
sale which was made by her son was binding on her. So basically Estoppel arises from a
representation which the seller of goods had the absolute authority to sell the goods and when
that representation of facts or by conduct is innocently acted upon by the buyer, it becomes
too late to deny the seller’s authority and the Representation may arise from words,
declarations or it may arise from an act or omission of that act. Estoppel may be created by
the omission of an act or one’s duty while forming a contract of sale.

Let take an example in which if a person left his watch or any other accessory on the seat of
any park or playground or in coffee shop’s table and by chance it gets into the hands of the
purchaser then this is not an answer to true owner to say that this leaving of the ring or watch
is his carelessness or anything else which makes the finder able to pass it off as his own.3

Let take another example in which the owner of the car delivered his car for repair but due to
some reasons the mechanic does not complete the repairs and kept the car until the car got
crashed and after that he sold it to an gullible buyer for a very nominal price, from this the
buyer got the car repaired for 226 pounds. The court of law held the owner entitled to recover
the car from the mechanic but after paying him the expenses which occurred in the repairing
of the car.4

Exceptions:-

Estoppel arises from:-

1. act or omission - but the act or omission should be a legal obligation

2. Negligence - it is not mere a negligence but it must be with regard to the person.

TITLE BY ESTOPPEL:

ESTOPPEL OF OWNER:—
But though the general rule is as stated above, the owner may be estopped by his conduct
from denying the seller’s title and setting up his title against the buyer. The words “unless the
owner of the goods is by his conduct precluded from denying the seller’s authority to sell”
refer to estoppel of the owner.

3
farquharson Bros v. kings Co (1902) AC 325,336
4
Greenwood v.Bennet (1973) 1 QB 195.
The said words carve out an exception to the general rule. The estoppel may arise by words
or conduct which wilfully uses another to alter his position and to induce him to act on that
belief or stands by negligently or culpably and allows another to contract on the faith and
understanding as if me seller has the authority to sell, or is the owner or has apparent title to
the goods.

Negligence on the part of the owner, in order to constitute conduct precluding him from
denying the seller’s authority to sell, must be more than mere negligence in the management
of his own affairs and must amount to a disregard of his obligations towards the buyer.5

ESTOPPEL BY WORDS OR CONDUCT:

The best example of an owner holding out another to have authority to sell the goody is
contained in Shaw v Commissioner of Metropolitan Police [1987] 1 WLR 133 and also
Farquarson Bros v J. King &, Co. Ltd [1902] AC 325; Eastern Distributors v. Goldring
[1957] 1 QB 371). In that case of a young foreign student, had purchased a Porsche motor car
for £16,000. When the time came for him to return home he advertised the car for sale in a
newspaper for £17,000.

One L responded to the advert stating that he was a car dealer and that he had a buyer
interested in the car. O gave L possession of the car together with a letter stating that he had
sold the car to L. L then agreed to sell the car to B, who gave him a Cheque by way of deposit
which bounced. L then disappeared, the police took possession of the car and brought an
application to determine its ownership.

Noting that B had very little merit in their claim given that they had not paid a penny for the
car, it was held that B had not obtained a good title to it. Whilst O’s conduct in giving L
possession together with the letter was clearly conduct precluding him denying L’s authority
to sell, there had been no actual sale, merely an agreement to sell, consequently neither
Section21 of the 1979 Act nor the common law applied. However, had there been a sale and
an exchange of money, would have been precluded from denying B’s title.

Where the representation is by words as clear as those in Shaw, little difficulty arises as to
whether the owner has held the seller out as having sufficient authority to sell. However,
where the representation is by conduct, the picture is not so clear. In Commonwealth Trust

5
Heap v Motorists Advisory Agency, Ltd, ( I923) 1 KB 577.
Ltd v Atokey [1926] AC 720 had agreed to sell cocoa to L, but there remained some haggling
to be done over the price. L in turn sold the cocoa to B, who paid L the agreed price.

Applying Lickbarrow v. Mason (1787) 2 TR 63, it was held that this was sufficient for O to
be estoppel from denying the validity of the sale to B. It is important to note that all had done
here was to agree to sell goods on credit and give over possession of them. Given the courts
reaction after these cases Lickbarrow v Mason and Commonwealth Trust Ltd v Atokey can
probably be considered a high water mark; more will generally be required in order for an
estoppel to be established.

ESTOPPEL BY NEGLIGENCE:

It was noted at the start of this section that the broad principle in relation to estoppel was
established in Lickbarrow v Mason (1787) 2 TR 63 that ‘wherever one of two innocent
parties must suffer by the acts of a third, he who has enabled such third person to occasion
the loss must sustain it’. By their own carelessness, S the owner of goods may enable another
to be in a position whereby they may deal with the owner‘s goods. The question therefore
becomes when will of the owner be sufficiently careless as to protecting his goods from the
meddler for the courts to End that they should be bound by and suffer from this carelessness.

As will be seen, the answer to this would seem to be very rarely. Indeed, the only case where
estoppel by negligence appears to have succeeded in Coventry Shepherd & Co. v Great
Eastern Railway Co. (1883) II QBD 776. In that case the railway had accidentally issued two
delivery orders in respect of the same goods to the same person. That person was therefore
enabled to represent to the plaintiff that the goods were still at his disposal (when in fact he
had otherwise disposed of them under the other delivery order) and accordingly pledge the
goods with them.

It was held that the railway company were estopped by their own negligence. Coventry
Shepherd & Co. v Great Eastern Railway Co. is however an old case.

In Mercantile Credit Co. Ltd v Hamblin [1965] 2 QB 242, O wished to raise some money
against the security of her car. Trusting A she signed some hire purchase forms in blank and
allowed him to negotiate with the hire purchase company to see how much money he could
raise against the car. In fact, he completed the forms representing that he sold the car to the
company and that they bailed it back to under a hire purchase agreement. The Court of
Appeal held that whilst did a duty of care to the hire purchase company that, in the particular
circumstances of the case, she had not broken that duty in trusting A. It seems hard to
imagine circumstances of greater carelessness than to trust another with forms signed in
blank and to trust another to complete them.

EXCEPTIONS TO THE GENERAL RULE:

The following are the exceptions to the rule that no seller of goods can give to the buyer
thereof a better title than his own-

1. Where person without title selling the goods with consent or authority of the owner
(section 27).
2. Where an owner of goods is precluded by his conduct to deny the sellers authority to
sell
3. Sale by a mercantile agent (proviso to section 27).
4. Sale by one of the joint owners (section 28).
5. Sale by a person in possession under a voidable contract (section 29).
6. Sale by one who has already sold the goods but continues in possession thereof
[section 30(1)].
7. Sale by buyer obtaining possession before the property in the goods has vested in him
[section 30(2)].
8. Where an unpaid seller resells the goods when he has exercised his right of lien or
stoppage in transit (section 54).

All these exceptions are necessary for the protection of persons who deal bonafide for value
without notice and person dealing with mercantile agents. The words “subject to the
provisions of this Act and of any other law for the time being in force” are wide enough to
provide further exceptions as under:

1. Sale by a pawner under his power of sale (see section 176 of Indian Contract Act,
1872).
2. Sale by a Court Receiver under his powers under O 40 of Civil Procedure Code 1908.
3. Sale by Official Assignee under the Insolvency Law or by Liquidators under the
Indian Companies Act, 1956.
4. Sale by a mortgagor in possession to a buyer without notice of encumbrance.
5. Sale by a finder of goods pursuant to the provisions of section 169 of the Indian
Contract Act, 1872.
6. Sale by a master of the ship in case of necessity.
SALE BY MERCANTILE AGENT.
Mere possession of goods or of the documents of title to goods gives no power to dispose of
them. Thus a clerk in a merchant’s office who as such is possessed of delivery orders or other
documents of title for the purposes of his employment has no power to dispose of them. But it
is different when the person in possession of goods is a mercantile agent, such as a factor,
broker or auctioneer.

Lord Wright in Lowther v. Harris6 observed that a mere shopkeeper or servant cannot be a
mercantile agent. A person who has his own shop and gives receipts and takes cheque in his
own registered business name and earns commission is not a mere servant but agent even if
his discretionary authority is limited. A mercantile agent may act for only one principal and
may not have general occupation as agent. Persons who deal in picture and object of art on
commission can be mercantile agent. A sale by such a person of goods or the documents of
title to goods will pass a good title to the buyer-

1. if he is in possession of the goods or of the documents with the consent of the owner;
2. if the sale is made by him when acting in the ordinary course of business of a
mercantile agent;
3. if the buyer acts in good faith and has not at the time the contract of sale notice that
the seller has no authority to sell.

The common law of agency is preserved by the Factors Act 1889 and accordingly the acts of
an agent acting within the course of his express, implied or ostensible authority are binding
upon his principal. A detailed analysis of the law of agency outside the scope of this text and
the reader is directed to a general work on contract law.

Section 2 of the Factors Act 1889 (the 1889 Act) provides that where a mercantile agent is,
with the consent of the owner, in possession of goods or of the documents of title to goods,
any sale, pledge, or other disposition of the goods, made by him when acting in the ordinary
course of business of a mercantile agent, shall, subject to the provisions of this Act, be as
valid as if he were expressly authorised by the owner of the goods to make same; provided
that the person taking under the disposition acts in good faith, and has not at the time of the
disposition notice that the person making the disposition has not authority to make the same.

The general effect of 5. 2(1) is clear where a mercantile agent is given possession of goods by
their owner, the agent may dispose of them as if he had authority to do so and the buyer will
6
Lowther v Harris, (1926) A11 ER Rep 352: (1927) 1 KB 393.
gain a good title. There are, however, a number of phrases within the subsection which must
be discussed:

1. Mercantile agent.
2. Possession of the goods.
3. Consent of the owner.
4. Sale, pledge or other disposition.
5. Ordinary course of business.
6. Good faith and without notice.
7. Valid as if expressly authorised.

MERCANTILE AGENT:-
The proviso to the section validates a sale by a mercantile agent. A mercantile agent is one
who has, in the customary course of his business as such agent, authority either to sell goods,
or to consign goods for the purposes of sale, or to buy goods, or to raise money on the
security of goods [section 2(9) of the Sale of Goods Act, 1930]. A person having authority to
consign goods is called a forwarding agent.

The term “mercantile agent” does not include a mere servant or caretaker, or one who has
possession of goods for carriage, safe custody, or otherwise as an independent contracting
party. It only includes persons whose employment corresponds to that of some known kind of
commercial agent, e.g., a factor, an auctioneer or a broker.7

Mercantile agent: Section1(1) of the 1889 Act defines ‘mercantile agent’ as meaning a
mercantile agent having in the customary course of his business as Sue agent authority either
to sell goods or to consign goods for the purpose of sale or to buy goods or to raise money on
the security of goods. The mere fact that a person is given possession of the goods will not be
sufficient to make him an agent of the owner. Nor will he be an agent if he is given the goods
for another purpose --for example as a warehouseman (Oppenheimer v Attenborough [1908]
1 KB 221; Lowther v Harris [1927] 1 KB 393). He should, however, be given possession of
the goods for the purpose of Sale or ‘other disposition in the customary course of business’ if
he is to be brought within the definition. However, this does not mean that the agent must
take the shape of a well-recognised form of such an agent, i.e., a factor or broker. In Weiner v

7
Heyman v Flewker; (1863) 143 BR 205: 32 LJCP 132; Cole v North Western Bank, (1875) LR 10 CP 354,
372-373.
Harris [1910] 1 KB 285 jewellery was sent to F who ran a jeweller’s shop in Hatton Garden
on the following terms:

The goods referred to in that book mentioned are your property, and to remain so until sold or
paid for, they being only left with me for the purpose of sale or return, and not be kept as my
own stock. The goods I receive from you are to be entered at cost price, and my remuneration
for selling them is agreed at One half the prom. It was held that on its true construction F was
a mercantile agent. Whilst F kept his own stock of jewellery it was clear that this stock was to
be kept separate and the fact that he was to take his profit as a percentage, as opposed to a
fixed purchase price together with the fact that he would never become owner of the property,
pointed towards agency.

This case also shows that a mercantile agent can be such even though he acts in another
capacity (as seller of his own goods) as well. The fact that the agent has never acted as such
before does not prevent him being an agent (Mortgage Loan & Finance Co. of Australia v.
Richards (1932) SR (NSW) 50), nor does the fact that he has only one principal (Lowther v.
Harris [1927] 1 KB 393).

It therefore seems that the courts have given a liberal interpretation to the phrase. However,
the goods must be entrusted to the agent for the purpose of disposition and not some
unrelated purpose.

Finally, 36 of the 1889 Act states that where the sale or disposition is made by a clerk or
employee of the agent who is authorised to make such transactions in the ordinary course of
business, the disposition is deemed to have been made by the agent.

To constitute an agent he must be

1. a mercantile agent
2. having the customary course of his business as such agent authority to sell goods, etc.
A mere insurance agent who on a particular occasion is entrusted with pictures to sell
on commission is not a mercantile agent. It cannot be said of one who is merely an
insurance agent that he has “in the customary course of his business as such agent
authority,” etc. A pledge therefore of the pictures given to him for sale would not be
valid.
POSSESSION BY MERCHANTILE AGENT:-
The mercantile agent must have possession of the goods or of document of title to the goods
in his capacity as mercantile agent and not in other capacity. So where a warehouseman who
was also a broker had the goods qua warehouseman, it was held that he could not validly
pledge the goods received by him in his capacity as a warehouseman. Mercantile agent is in
possession of goods even if he obtains possession of goods by his fraud.

So in Lowther v Harris8 where mercantile agent was allowed to take certain tapestry away in
van after the real owner (plaintiff) had sanctioned of the goods to the buyer, it was held that a
mercantile agent was in possession though he (mercantile agent) never intended sale to be
made to just obtained by fraud possession of the goods from the real owner to pawn it to a
pledgee. But mercantile agent is not in possession of the goods when he had stolen the goods
from the real owner (plaintiff) who never parted with it.

POSSESSION MUST BE WITH CONSENT:

To validate a sale by a mercantile agent under this section he must be in possession of the
goods or of the documents of title to the goods with the consent of the owner. This implies
that he must have been entrusted with the goods, mercantile agent and not in any other
capacity, in other words, the capacity in which the agent receives the goods must be one
which clothes him with authority to sell or pledge the goods. Thus if a house is let furnished
to a person who happens to be an auctioneer, it is let to him as a tenant and not as an
auctioneer. He cannot therefore sell the furniture by auction and give a good title to the buyer.
The consent contemplated by this section is consent in fact. If the goods or documents are
obtained by theft there is no consent.9

Similarly there is no consent if the goods or documents are obtained by what is equivalent to
theft, as where A falsely pretending that he is B receives goods or documents from the owner.
But it is different if the buyer, who is the mercantile agent, has received the bill of lading
directly from the seller together with the invoice and bill of exchange. It may be held that the
buyer received the bill of lading with the consent of the owner [section 30(2)].10

8
Lowther v Harris, (1927) 1 KB 393: (1926) All ER Rep 352.
9
Lowther v Harris, (1927) 1 KB 393 z (1926) All ER Rep 352; See also Central National Bank v United
Industrial Bank, AIR 1954 SC 181: [1954] SCR 391 for a similar approach under section 30(2) of Sale of Goods
Act, 1930.
10
Cahn v Pockett’s Bristol Channel Co, (1899) 1 QB 643, 654, 659.
SALE IN MARKET OVERT
This exception to the nemo dat rule is included only for historical purposes it has been
abolished. Formerly, sales of goods made in a recognised market or in a shop in the City of
London were deemed to be an exception to the rule and the buyer would acquire a good title
to them. However, the Sale of Goods (Amendment) Act 1995 abolished this rule in relation to
any such sales made after the Act came into force (3 January 1995).

REMEDIES:
The nemo dat rule does not create any specific cause of action or remedy, it acts as a defence
to another cause of action brought by one of the injured parties. The purpose of this section is
therefore to direct the reader to the appropriate section in relation to each of the parties.

The owner of the goods may either bring an action against the person who has sold them in
excess of authority, stolen them from him or who is now in possession of them. An action for
conversion of the goods will lie against the thief, although in practice most thieves or
fraudsters have no money and cannot be traced.

Where the owner expects the buyer to have gained a good title to the goods he can either sue
against the agent’s contract of agency (if appropriate) or in conversion against the agent. If
the owner does not believe that the buyer has obtained good title to the goods, he may bring
an action requesting a declaration as to the ownership of the goods and possession of them.
The buyer may defend such proceedings on the basis that he has a good title by virtue of an
exception to the nemo dat rule.

SECTION 28

SALE BY CO-OWNER:
Ordinarily a co-owner could transfer his share only and hence this section enables a co-owner
to sell not only his own share but also of his other co-owners. This section lays down three
conditions for validating a sale by one of the co-owners,

1. he must be in sole possession by permission of his co-owners.

2. the purchaser acts in good faith, i.e., with honesty.
3. the purchaser had no notice at the time of the contract of sale that the seller had no
authority to sell.
“This is the fourth exception of the rule that a man cannot make a valid sale of goods which
do not belong to him. It is a reproduction of Exception 2 to section 108 of the Indian Contract
Act, 1872. A, B and C own certain cattle in common. A is left by B and C in possession of a
cow which he sells to D. D purchases bona-fide. The property in the cow is transferred to D.
This section has been applied to a joint Hindu family”.11

SECTION 29.

SALE BY PERSON UNDER A VOIDABLE CONTRACT:

This section is, in effect, the first part of Exception 3 to section 108 of the Indian Contract
Act, 1872 up to the words “buys them in good faith of the person in possession.” The
wording of the section is taken from section 23 of the English Sale of Goods Act, 1893. It is
the fifth exception to this rule that a man cannot make a valid sale of goods which do not
belong to him.

It deals with the case of a sale by a person who has obtained possession of goods under a
contract voidable under section 19 or section 19A of the Indian Contract Act, 1872.

Section 19 as s that where consent to an agreement defined in section 18, the agreement is
caused by coercion as defined in Section 15 and the Fraud as defined in the section 17 as
misrepresentation as defined in section 18, the agreement is a contract voidable at the option
of the party whose consent was so caused. Section 19A says that where consent to an
agreement is caused by undue influence as defined in Section 16, the agreement is a contract
voidable at the option of the patty whose consent was so caused.

Section 29 validates a sale by a person who has obtained possession of goods under a contract
voidable at the option of the other party on the ground of coercion, fraud, misrepresentation
or undue influence, provided the contract has not been rescinded by it. Other party at the time
of the sale.

A, by misrepresentation has B’s computer delivered for sale. A in turn sells it to C, who
purchases it bona-fide without knowing the misrepresentation practiced on B. The purchase
by C is complete, but will have a right of action for damage against A for the loss sustained
by him by such misrepresentation. A person may obtain possession of goods under a contract
which is voidable at the opinion of the lawful owner on the ground of fraud,
misrepresentation or coercion or on the ground of undue influence.
11
Taruck Chunder v Jodeshur; (1873) 11 Bengal LR 193
Possession so obtained is not by the free consent of the lawful owner as defined in section 14
of the Indian Contract Act, 1872. It is nevertheless possession of consent, and the person in
possession may make a valid pledge of the goods provided the contract has not been
rescinded at the time of the pledge.

SECTION 30

DISPOSITION BY SELLER REMAINING IN POSSESSION:

Sub-section (1) deals with dispositions by a seller continuing in possession of the goods after
sale. It says that where a person has sold goods but continues in possession of them or of
documents of title to them, he may sell them to a third person, and if such person obtains
delivery thereof in good faith and without notice of the previous sale, he gets a good title to
them, although the property in the goods has passed to the first buyer. A pledge, mortgage or
any other disposition of the goods is equally valid.

The disposition may be made not only by the seller in possession, but also by a mercantile
agent acting for him. A sells goods to B. B for his own convenience leaves the goods with A.
A fraudulently sells the goods to C, who buys them in good faith and without notice of the
sale to B. C gets a good title to the goods. The delivery of the goods by A to C has the same
effect as if A were expressly authorised by B to deliver the goods. This transaction is valid if
A pledged or mortgaged the goods to C. It is stated above that to enable the seller to pass a
good title-

1. the seller must continue possession of the goods or of the documents of title to goods
as a seller. Possession as a hirer or Bailee of the goods from the buyer after delivery
of the goods to him will not do.
2. the goods must have been delivered to the buyer or the documents of title must have
been transferred to him. A mere agreement for sale, pledge or then disposition will not
do.
3. good faith and absence of notice of the previous sale on the part of the second buyer.

DISPOSITION BY BUYER REMAINING IN POSSESSION:

Sub section (2) deals with the converse case of a sale or other disposition by the buyer of
goods in which the property has not yet passed to him. The section says that if the buyer
obtains possession of the goods, before the property in them has passed to him, with the
consent of the seller, he may sell, pledges otherwise dispose of the goods to a third person,
and if such person obtains delivery of the goods in good faith bid without notice of any lien
or other right of the original seller in respect of the goods, he will get a good title to them as
to an unpaid seller’s lien, as Section 47 as to his right of stoppage in transit.

CONCLUSION:
The legal system concerned with the protection of private property, and not open to any
countervailing policies, would assert with unabated vigour the maxim nemo dat quad non
habet, by which the transferee’s title could never exceed the title of the transferor and would
always be vulnerable to a superior title.

If, on the other hand, a legal system pursued to the same degree a policy of facilitating
transactions, again without countervailing policies, it would maintain that a transferee could
trust in the appearance of ownership created by possession of goods in the hands of {he
transferor.

The common law takes an intermediate position, starting from the nemo dat maxim and
grafting on a number of exceptions. A number of these are statutory ones enacted in response
to the needs of die commercial community. This pragmatic resolution of the irreconcilable
demands of private property protection and the facilitation of transactions.

BIBLIOGRAPHY:
1. BLACKSTONE’S SALES & SUPPLY OF GOODS & SERVICES, BLACKSTONE
PRESS LTD.
2. OXFORD’S THE SALES OF GOODS, BY M.G. BRIDGE
3. THE SALE OF GOODS BY P.S. ATIYAH, PITMAN PUBLISHING.
4. MULLA THE SALE OF GOODS ACT &THE INDIAN PARTNERSHIP ACT.
REVIEW OF LITERATURE:
Pollock & Mulla - The Sales of Goods Act:
The book originally authored by Sir Frederick Pollock and Sir Dinshaw Fardunji Mulla,
provides a section-wise study of the Sale of Goods Act, 1930 in light of judicial and
legislative developments. The commentary also compares the provisions of the Indian Act
with the relevant sections of the English Act. The new edition covers case law developments
in India and UK on the subject. Incorporates discussion on legislative developments in UK
such as the enactment of Consumer Rights Act 2015. Provides comparative analysis with the
UK Sale of Goods Act on which the Indian Act is based. Important precedents dating back to
the 1800s have been retained to explain the historical background and development of the
Act.