Page 130 - DMGT407Corporate and Business Laws

Unit 5: Law of Sale of Goods

against the other joint-owners (s.28). In case of sale by a co-owner, good title can pass to Notes
the buyer only if the co-owner was in possession with the consent of the other co-owners.

Example: Radha and Shyam are co-owners of a ‘radiogram’. While the radiogram is in
possession of Radha, Shyam secretly takes it away and sells it to Pawan, a bona fide purchaser for
value. Pawan cannot get a good title to the radiogram, because though Shyam was a co-owner,
he was not in possession of the radiogram with the consent of the co-owner, i.e., Radha.
3. Sale by a person in possession under a voidable contract: A person who has obtained
possession of goods, under a contract which is voidable on the ground of fraud,
misrepresentation, coercion, or undue influence, can convey a good title provided the sale
takes place before the voidable contract is avoided (s.29).

Example: Kawal, by exercising undue influence, buys a car from Bimal at a very low
price and sells it to Kanta, an innocent purchaser. Kanta has a good title and Bimal cannot
recover the car from her even if the contract is subsequently set aside by him due to undue
influence of Kawal.

The provisions of s.29 are applicable only to a contract and not to an agreement which is
void ab initio.
4. Sale by a seller in possession of goods after sale: Where a seller having sold goods continues
in possession thereof or of document of title to the goods, the delivery or transfer by such
person or his mercantile agent, by way of sale, pledge or other disposition, will pass a
good title to the transferee, if such latter person is a bona fide purchaser for value and
without notice of the previous sale, etc. (s.30). The seller must be in possession as seller
and not in any other capacity. Thus, where the buyer asks the seller to keep the goods as
his bailee, the Section will not apply.

Example: Shyam sells 100 bags of sugar to Bali. Bali delays in taking the bags away. In
the meantime Shyam sells those bags to another innocent purchaser Kamal who takes it without
notice of prior sale and for value. Kamal would get a good title.
5. Sale by a buyer in possession of goods: Where a person having bought or agreed to buy
obtains, with the consent of the seller, possession of the goods or the documents of title to
the goods, the delivery or transfer by such person or by a mercantile agent acting for such
person, the goods or documents by way of sale, pledge or other disposition thereof will be
valid and effective, if the person receiving the same, acted bona fide and without notice of
the seller’s lien, if any [s.30 (2)].

Example: Amrik sells Bhatia some copper and delivers to him a bill of lading with a bill
of exchange. The buyer having obtained the bill of lading endorses it to Sultan who takes it
without notice of any objection to the buyer’s title. Bhatia subsequently becomes insolvent
without making payment of the price. The transfer of the bill of lading by Bhatia to Sultan is
effective against Amrik and therefore, the latter cannot stop the goods in transit.
However, a person in possession of goods under a hire purchase agreement which gives
him only an option to buy is not covered within this section, unless he has exercised his
option to buy.
6. Sale by an unpaid seller: According to s.54 (3), an unpaid seller of goods who has exercised
his right of lien or stoppage in transit can, even though the ownership in them has passed

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