Commercial Law - Lecture Notes

TRANSFER OF TITLE
In some cases the expressions “Transfer of property as between seller and buyer” and
“Transfer of Title” have been used to mean the same thing. Notwithstanding, the Sale of
good Act 1893 seem to have contemplated a distinction. “The transfer of property as
between seller and buyer”, under sections 16 – 19 relates to a process by which ownership
passes from the one party to the other. In contrast, under “Transfer of title”, the concern is
with a number of situations in which a seller who is a non-owner, or a person with a
defective title, can nevertheless confer a good title on the buyer, and in doing so defeat the
claims of the true owner or of a person with a superior title.
The basic rule is summed up in the ancient maxim nemo dat quod non habet – that a peson
who does not own property, especially a thief, cannot confer a better title on another than
what he has in it.
• Cundy v. Lindsay (1878) 3 AC 459

• Jerome v. Bentley & Co [1952] 2 All ER 144
• Bishopsgate Motor Finance Corpn Ltd v. Transport Brakes Ltd [1949] 1 KB 322. Here,
Denning LJ observed: “In the development of our law, two principles have striven for
mastery. The first is for the protection of property: no one can give a better title than
he himself possesses. The second is for the protection of commercial transaction:
the person who takes in good faith and for value without notice should get a good
title. The first principle has held sway for a long time, but it has been modified by
common law itself and by statute so as to meet the needs of our own times”.
Exceptions:
1. Sale by an agent – Section 21 (1)
An agent is recognised, while acting within his authority, as having capacity to bind
his principal (owner) in contract entered into with third party (buyer). The contract is
deemed to be that of the owner and not the agent. A person who buys goods from
such an agent will get a good title.
2. Application of the doctrine of estoppel – Section 21 (1)
Where the owner has represented to the buyer that the person selling has the
competence to sell, he (owner) will be precluded or prevented from denying the
seller’s authority to sell.
• Commonwealth Trust v. Akotey [1926] AC 72
• Eastern Distributors Ltd v. Goldring [1957] 2 QB 600
• Henderson & Co v Williams [1895] 1 QB 521.
3. Disposition by a mercantile agent.
Section 21 (2) applies to disposition by a “mercantile agent” by preserving the rules
contained in the Factors Act 1889. The said Act defines a mercantile agent as a
person having in the course of his business authority either to sell or to buy or raise
money on goods. The Factors Act further provides under section 2 (1) that any sale
or disposition in the ordinary course of his business by a mercantile agent in
possession of goods or documents of title with the owner’s consent confers the
owner’s title on the buyer who take in good faith without notice of the agent’s lack
of authority.
• Weiner v. Harris [1910] 1 KB 285
• Lowther v. Harris [1927] 1 KB 393
4. Sale in Market overt – Section 22
This exception applies applied only where the market in question was open,
established public market constituted by law or custom. The market overt rule had
come to be regarded as archaic and had attracted criticism because it facilitated and
perhaps even encouraged, trafficking in stolen goods. It was abolished in England by
the Sale of Goods (Amendment) Act 1994.
• Owoyemi Motors and Finance Co. Ltd v. Haruna and Ajibola (1975) NNLR 180
5. Sale under a voidable title – Section 23

A seller will have a voidable title where the goods were obtained by him under a
contract induced by misrepresentation, undue influence, duress and drunkenness. A
voidable transaction must be distinguished from one which is wholly void, eg on the
ground of mistake of identity.
• Lewis v. Averay [1972] 1 QB 198
• Car & Universal Finance co Ltd v. Caldwell [1965] 1 QB 525
6. Sale by seller in continuing possession – Section 25 (1)
The object of this provision is to protect an innocent purchaser who is deceived by
the vendor’s physical possession of goods or documents and who is inevitably
unaware of legal rights which fetter his apparent power to dispose.
7. Sale by buyer in possession – Section 25 (2)
This provision seeks to protect an innocent person in his dealings with a buyer who
appears to have the right to deal with the goods. This section applies to a person
who has “bought or agreed to buy.” The buyer must have obtained possession of the
goods or documents of title with the consent of the seller and must have been actual
possession.
8. Sale under various Common law and Statutory Powers – Section 21 (2) (b).
These are authorised sales under the common law or statutory power of sale and
under the order of a court of competent jurisdiction. An example is the sale of
judgement debtor’s goods by judicial order obtained by a writ of execution and sale
(fieri facias) where the debtor remains unpaid.

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TRANSFER OF TITLE

• Cundy v. Lindsay (1878) 3 AC 459

5. Sale under a voidable title – Section 23

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