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Transfer of Title by Non-Owner

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Nick Dowse Transfer of Title by Non-Owner Transfer of Title by Non-Owner – Structure of Answer 1. Whether or not [seller] was able to pass good title to [buyer] will depend on whether there is an exception to the general proposition that no one can transfer better title to goods than they themselves possess – the nemo dat rule. 2. General Position a. A person who is not the true owner of goods is prima facie unable to pass good title to them (Hillins v Fowler) b. The nemo dat rule is written into the SGA in s 24(1) of the Act. 3. Exceptions Generally a. There are a number of exceptions to the nemo dat rule. i. Exceptions used to balance commercial realities with the protection of property (Bishopsgate) rd b. Where an exception applies, title in the goods will pass to the 3 party even though the seller didn’t have title to them. c. The exceptions are: i. Apparent ownership/apparent authority to sell/estoppel (s 24(1) SGA) ii. Sale by a mercantile agent (MA) (s 3 Factors Act) iii. Seller in possession (s 27(1) SGA) iv. Buyer in possession (s 27(2) SGA) v. Sale under voidable title (s 25 SGA) vi. Miscellaneous exceptions 1. Writ of execution against goods (s 28 SGA) 2. Stolen goods (s 26 SGA) 3. Market overt 4. Doctrine of accession (Rendell v Associated Finance) d. To prove an exception, the onus is on the party claiming it applies. e. Additionally, the party asserting the exception must have acted in good faith and without notice of impropriety. 4. Estoppel Exception (Apparent Ownership, Apparent Authority to Sell) a. The last part of s 24(1) says “unless the owner of the goods is, by the owner’s conduct, precluded from denying the seller’s authority to sell” i. This has been held to incorporate thrdCL doctrine of estoppel (Sanderson) b. More than just a rule of evidence – gives 3 party good title against the world (Goldring) c. There must be a representation by the true owner that the seller had authority to sell i. This can be made by words or conduct (Moorgate) ii. The mere giving of possession of goods to another person, even if that person is a mercantile agent, is not a representation as to authority to sell (Marac Finance) iii. Examples: 1. true owner’s registration certificate for a car in the hands of the seller is not a representation that the seller is the owner/had authority to sell (Newbury) a. however, where goods and docs of title in possession of seller, do need to consider if circumstances constitute a sufficient representation that the possessor was the owner (Motor Credits) 2. financier’s letter saying that the loan is finalised, no debt owing = representation that had authority to sell (Big Rock v Esanda Finance) 3. true owner giving car dealer a hire-purchase agreement in blank and a delivery note = representation amounting to estoppel (Goldring) 4. true owner leaves vehicle with dealer with instructions to sell at or above certain price, dealer does so, but on terms unacceptable to true owner = true owner estopped from denying seller’s authority to sell, had armed them with the capacity to do so (Lloyds v Williamson) iv. This can also be shown through the true owner’s negligence: 1. Arises where the true owner has been negligent so that it has allowed the Page 1 of 5 Nick Dowse Transfer of Title by Non-Owner seller to represent that it is the owner or had authority to sell 2. Usually shown by failing to register the chattel, or by arming the seller with the indicia of title, or by signing a blank form. 3. Easily made out where registration is compulsory and this is not complied with (Sanderson) a. However, if merely optional, true owner will generally not be estopped from denying the authority to sell/apparent ownership (Sanderson) i. Exception: if true owner knew of the buyer’s reliance on an incorrect state of affairs on the register, will be estopped (Marac Finance) v. Can also be a representation by omission, wherein the true owner has breached a duty of care to an innocent purchaser, which induced the buyer to purchase the goods (Dascorp) 1. An owner is not estopped from denying authority to sell unless there is a breach of duty 2. i.e. will be an estoppel by omission where know some gold of yours is being stolen by an employee, even notify police, but do not notify gold dealers in the area. If gold dealer buys some of your gold, you are estopped from denying the employee’s authority to sell to the gold dealer (Dascorp) vi. If the seller is an agent with the actual or ostensible authority of the true owner to sell as principal, the true owner will be estopped from denying that authority (Pacific Motors) 1. However, if conducted outside business hours/in a dark alley etc, then the buyer should be on notice that something fishy is going on, so the true owner will not be estopped (Pacific Motors) 2. May still be an estoppel even where the actual authority has been revoked (Pacific Motors) d. The buyer must rely on that representation to their detriment i. Easily shown – will usually be the inducement for entering into the transaction with the apparent owner ii. Detriment = altering position = paying money to buy chattel e. Overall conclusion. 5. Sale by a mercantile agent (s 3 Factors Act) a. The exception for sale by a MA is contained in s 3 of the Factors Act and s 24(2)(a) SGA. i. When 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 the agent 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 the agent were expressly authorised by the owner of the goods to make the 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 (s 3 FA) b. The seller must be a mercantile agent i. A MA is a commercial intermediary who has the owner’s authority to sell or buy goods ii. Defined in s 2 Factors Act 1. A person, having, in the ordinary course of his business as such agent, authority either sell goods, or to consign goods for the purpose of sale, or to buy goods, or to raise money on the security of goods (s 2 Factors Act) iii. The definition is applied widely, so that it may be only the first time the agent has acted in such a capacity (Weiner v Harris) iv. The relevant time for determining if they are a MA is the time at which they receive the goods from the owner (Heap v Motorists) c. The MA must be in possession of the goods with the consent of the owner Page 2 of 5 Nick Dowse Transfer of Title by Non-Owner i. Deemed to be in possession where the agent has actual custody or control of the goods, or the documents as to their title (s 2(2) Factors Act) 1. Docs of title: a. Bill of lading b. Dock warrant c. Warehouse keeper’s certificate d. Warrant/order for delivery of goods e. Any other document showing title to goods f. Any document authorising the possessor of it to transfer or receive goods on behalf of the principal (s 2 Factors Act) ii. Consent to the possession must be in the capacity of a MA (Astley)
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