Section 27 of The Sale of Goods Act, 1930
Sale by person not the owner.
Subject to the provisions of this Act and of any other law for the time being in force, where goods are sold by a person who is not the owner thereof 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: Provided that, where a mercantile agent is, with the consent of the owner, in possession of the goods or of a document of title to the goods, any sale made by him, when acting in the ordinary course of business of a mercantile agent, shall be as valid as if he were expressly authorised by the owner of the goods to make the same; provided that the buyer acts in good faith and has not at the time of the contract of sale notice that the seller has not authority to sell.
Summary
- Generally, a person who does not own goods cannot give a buyer a better title than they themselves have.
- If a non-owner sells goods without the owner's authority, the buyer usually does not become the legal owner.
- An exception exists if the actual owner acts in a way that makes it look like the seller had authority to sell.
- A sale by a mercantile agent (a professional business agent) can be valid even if the owner did not specifically authorize it.
- For a sale by a mercantile agent to be valid, the agent must have possession of the goods with the owner's consent.
- A buyer is only protected in a mercantile agent sale if they act in good faith and do not know the seller lacks authority.
Practical examples
FAQ
1. Can I get legal ownership if I buy from someone who isn't the owner under The Sale of Goods Act, 1930, Section 27?
Under Section 27 of The Sale of Goods Act, 1930, you usually do not get a better title than the seller had, but you might be protected if the owner's conduct suggested the seller had authority or if the seller is a mercantile agent.
2. What is a mercantile agent under Section 27 of The Sale of Goods Act, 1930?
A mercantile agent, as used in Section 27 of The Sale of Goods Act, 1930, is a professional agent who, in the normal course of business, has authority to sell, buy, or raise money on the security of goods.
3. What does good faith mean for a buyer under The Sale of Goods Act, 1930, Section 27?
In Section 27 of The Sale of Goods Act, 1930, good faith means the buyer acted honestly and did not know that the seller lacked the legal right or authority to sell the goods.
4. When is an owner precluded from denying a sale under The Sale of Goods Act, 1930, Section 27?
Under Section 27 of The Sale of Goods Act, 1930, an owner is precluded (stopped) from denying the sale if their own conduct or actions led the buyer to believe that the seller had the right to sell the goods.
Test yourself
Q1.What is the general rule established by Section 27 of The Sale of Goods Act, 1930, regarding sales by non-owners?
Q2.Under Section 27 of The Sale of Goods Act, 1930, what must be true for a sale by a mercantile agent to be valid?
Q3.Which factor can prevent an owner from reclaiming goods sold by a non-owner under Section 27 of The Sale of Goods Act, 1930?
Q4.According to Section 27 of The Sale of Goods Act, 1930, what must a buyer lack to be protected in a mercantile agent sale?