TRANSFER OF TITLE
TRANSFER
OF TITLE
Title basically means
ownership. Sec 27 requires that for a seller to be able to transfer good title
to the buyer, he must first have title over the said goods - If a buyer bought
some goods from a seller who is not the owner nor have any authority to sell
them - the buyer does not acquire any tittle even if he has paid value in good
faith. This is the English Rule of nemo dat quod non habet (no one can
give a better title than he has himself). Rationale - to protect the right of
ownership
LIM
CHU LAI v ZENO LTD [1964] 30 MLJ 314
Zeno Ltd entered into an agreement
with a contractor named Ahmad who had contracts with the Petaling Jaya
Authority for construction of culverts. Under the contract between Zeno ltd and
Ahmad, the former was to provide with all the materials for the constructions
of the culverts. They bought the materials for the projects and delivered them
to the construction site. Ahmad’s contract with the PJ authority were cancelled
whereupon Zeno Ltd informed them that the materials on site belonged to them.
When Zeno Ltd attempted to sell the material, they discovered that the
materials had been sold by Ahmad to the Appellant. Action was commenced in
conversion.
Held
– (Federal Court)
Ahmad was merely a bailee and not the owner of the goods at the time he sold
them to the appellant because Ahmad had no title to the goods or authority to
sell them, it follow he could not pass any title to the appellant.
NG
NGAT SIANG v ARAB M’SIAN FINANCE [1988]
3 MLJ 319
The plaintiff bought a car from the
second defendant. To effect the transfer of ownership of the car into the
plaintiff’s name, the second defendant had to pay off MUI Finance from whom he
had earlier obtained a hire- purchase facility. For this purpose , the second defendant
retained the registration card. After obtaining the cancellation of indorsement
of MUI’s ownership, the second defendant sold the car to B whose purchase was
financed by the first defendant. The first defendant indorsed its ownership
claim on the registration card. The plaintiff applied to the court for a
determination as to whether he or the first defendant had a better title to the
car.
Held – Allowing the application. After a
full payment was made by the defendant to MUI Finance and MUI had relinquished
all rights to ownership over the car, the plaintiffs had acquired ownership to
the car and the second defendant’s further dealings on the car with the first
defendant therefore are illegal. To that end, the first defendant acquired no
title or interest over the car when they purchased it and their only remedy, if
any, is against second defendant personally for the return of the purchase
price but as against the plaintiff they cannot claim any right of ownership
over the car.
However, there are several exception to the rule as provided by Sec 27 to Sec 30 of SoGA.
1. Estoppel
Arises when the owner
of the goods is by his conduct precluded from denying the seller’s authority to
sell. Estoppel can be by record, by deed or by conduct.
2. Sale by
Merchantile Agent.
Mercantile agent is
defined under sec 2
Basic rule of agency is
that an agent may pass a good title in selling goods belonging to the principal
provided he is acting under the scope of his actual or apparent authority.
Requirements to satisfy
the provision:
- the
agent is in possession of the goods at the time of sale.
- the possession is with consent of the owner.
- the sale was made when acting in the ordinary course of
business of a merchantile agent.
- buyer must act in good faith and have no notice of the
agent's lack of authority at the time of
the sale.
3. Sale by one of
Joint Owner.
•
Goods may be owned by one or more persons.
•
Sale by one of the joint owner is valid notwithstanding
the absence of the other’s consent (sec.28)
•
Two conditions have to be satisfied:
- the seller have sole possession of the goods with
consent from the others.
- the buyer acts on good faith and have no notice of the
lack of authority at the time of the sale.
4. Sale under a
Voidable Title.
When the seller
acquires possession under a voidable contract and the contract has not been
rescinded at the time of the sale, the buyer gets a good title provide he is a
Bona Fide Purchaser For Value Without Notice of the seller’s defect of title
(sec 29)
A contract is voidable
under sec 19 & 20 of contracts Act1950 when consent of the original owner
is caused by coercion, fraud, misrepresentation or undue influence
5. Sale by a Seller
in Possession after Sale.
Where a person, having sold goods, continues or is in possession
of the goods or of the documents of title to the goods, the delivery or
transfer by that person or by a mercantile agent
acting
for him, of the goods or documents of title under any sale, pledge or other disposition thereof to any person receiving the same
in good faith and without notice of the previous sale shall have the same
effect as if the person making the delivery or transfer were expressly
authorized by the owner of the goods to make the same. Sec 30(1)
If a seller resells to
a second buyer the goods sold by him previously to the first buyer, the second
buyer then gets a good title over the first one but the latter take legal
action against the seller.
6. Sale by a Buyer
in Possession.
Where a person, having bought or agreed to
buy goods, obtains, with the consent of the seller, possession of the goods or the
documents of title to the goods, the delivery or transfer by that person or by
a mercantile agent acting for him of the goods or documents of title under any
sale, pledge, or other disposition thereof to any person receiving the same in
good faith and without notice of any lien or other right of the original seller
in respect of the goods shall have effect as if such lien or right did not exist.
If a buyer, having
bought or agree to buy goods, obtained possession of the goods or the title
document with the consent of the seller, he can pass good title to a subsequent
buyer of good faith for value without notice.
NEWTONS OF WEMBLEY LTD
v WILLIAMS [1965] 1 Q.B 560
The plaintiff sold a
car to A who paid by cheque. Although he was given possession, it was agreed
that the property would not pass until the cheque was honoured. The cheque was
dishonoured but A had resold the car to B who bought it without knowledge of
the position. B resold it to the defendant. The plaintiffs tried to recover the
car from him.
Held – A, the original
buyer, was in possession with the consent of the owner. Hence, he could pass a
good title to B, who in turn transferred it to the defendant. The defendant
was, therefore. entitled to keep the car.
TRANSFER OF TITLE
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