Misappropriated the proceeds. The buyer (A) resold the car to K the defendant. It was held that A had obtained a good title to the car from the merchantile agent and conveyed a good title to K, the ultimate buyer, and therefore F, the real owner cannot recover the car from K.

Transfer Of Title By Estoppels

As we have learnt earlier, estoppel arises when a person by his/her words or conduct makes another person believe that certain affairs existed. He/she later on not allowed to deny that such a state of affairs did not exist. Applying this rule to a contract of goods act, where the true owner of the goods by his act or omission leads an innocent buyer to believe that the seller has the authority to sell, later on he may be estoppel from denying the seller’s authority to sell. Section 27 concludes with the remark that the buyer may get a good title if “the owner of the goods is by his conduct precluded from denying the sellers authority to sell.” The basis of estoppel is that it would be unfair or unjust to allow a party to depart from particular state of affairs, which it has permitted another party to believe be true [Central Newbury Car Auction Ltd vs Finance Ltd]. Box 16.3 cites some examples on this count.

BOX 16.3 Transfer Of Title By Estoppel
Example 1

A selles the goods of B to C in his presence. B does not raise any objection to it. Here C will get a good title. In this case, if B, the real owner subsequently decides to deny A the authority to sell the goods, he (B) may be estoppel from doing so and the sale will be binding on B.

Example 2

A, the owner of wagon, allowed one of his employees, B, to have his (B’s) name painted on it. A did so with the aim of giving public an impression that the wagon belonged to B,C, an innocent buyer purchased the wagon from B, for value. It was held that C had acquired a good title and A was estoppel from denying B’s authority to sell [O’ connor vs Clark]. Thus, under the law of estoppel, the buyer gets the ownership despite the fact that the seller is not the true owner.

It must, however, be noted that the rule of estoppel may be applied for mere carelessness on part of the owner of goods. Negligible on the part of a person in conduct of his own affairs should supersede the mere carelessness and should also amount to a disregard of his obligation towards the defendant. For example, A, who deals in racehorses, allows B to take away one of his horses to show it to a potential customer. There is no customer, in fact, at that point of time and B rides for few days and then disposes it of to C. In this case, A, the true owner cannot be estoppeled from taking back his horse from C.

Sale By One Of The Joint Owners

Section 28 provides, if one of several joint owners of goods has sole possession thereof, with the permission of the others, the property in the goods is transferred to any person who buys them from such joint owner for value and without being aware of the fact that the seller has no authority to sell, the buyer will acquire a good title thereto. Ordinarily, a co-owner can only transfer his/her share, i.e, the buyer would obtain only the title of co-owner. But this section enables a co-owner to sell not only his/her share but also of other co-owners (provided the co-owner was in possession with the consent of other co-owners) and, thereby, constitute an exception to the rule that ‘no one can give what he has not got’. For instance, A,B and C are the joint – owner of a car. With the consent of B and C, the car was in the custody of A. A sells the car to P who purchases it for value. Without notice of the fact that A had no authority to sell, P gets a good title to the goods as he acted bona fide and for value.

Sale By A Person In Possession Under A Voidable Contract

As per section 29, if a person has obtained possession of goods under a contract that is voidable on the ground of fraud misrepresentation coercion or undue influence and he sell the goods to bonafide buyer before the contract has been rescinded, the buyer of the such goods acquire the goods title thereto. This exception is limited to contract of the sale of the goods obtained under the contract voidable under the section 19 or 19 A of the Indian Contract Act for the application of this exception the following condition must be satisfied. 1. the seller is in the possession of goods under voidable contract 2. the goods are sold before the contract has been rescinded, and 3. the buyer procures the goods faith and for value

for example, A buy misrepresentation includes B, a jeweler, to sell and deliver to him a diamond ring. This contract is voidable at the option of B under section 19 or 19A of the Indian Contract Act. but before B could rescind the contract, A resells the ring to C who buys the goods in faith. Thus, without notice of A’s defective title C acquires a good title

Sales By A Seller In Possession Of Goods After Sale

Section 30 (1) provides, ‘where a seller, after having sold the goods, continues in possession of goods or of the document of title to the goods, and again sells them himself or through his mercantile agent to a person who buys for value and without notice of the previous sale, such a buyer gets a good title to the goods. For example, A buys a TV set from B .