S. 24
“When the seller of goods has a voidable title thereto but his title has not been avoided at the time of the sale, the buyer acquires a good title to the goods, provided he buys them in good faith and without notice of the seller’s defect of title.”

Void, null and void, null and void ab initio

s. 24 talks of a situation where there has been a voidable contract and goods have passed hands at a time before that contract was avoided meaning that a voidable contract can pass a good title so long as the transaction is entered into prior to that contract being avoided.  For instance if you enter into a contract through coercion, one can opt out and void the contract.   So long as the contract was entered into fraudulently, before the person who has the right to avoid the contract has not avoided the contract, then the contract is still good and the seller the person possessing the title prior to that contract being avoided can pass a good title.

Null and void contract is not avoidable because it does not exist, null and void ab initio

S. 26 (1)  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 ..

Transfer applies only to title

This section talks of delivery of transfer – weird, as these two don’t go together.  You don’t transfer documents of title you deliver.  In Nemo dat we are trying to see how the courts have gone about ameliorating justice for the owner of the goods who has bought goods in good faith and without faith from a non-owner.  This section is talking about seller in possession.  He is still in a position to sell those goods to a third party so who should get a better title?  There is the issue of balancing the equities.

If you go to the shops in market street for example and want to buy a suitcase, you buy it and tell the seller that you have gone to bring the vehicle but when you get back you find that the suitcase has been sold to somebody else, but the seller resells the same goods to another person, the second buyer will be a bona fide purchaser for value since he has bought the suit case without notice for value.

City Far Co. Ltd. V. Fureenbord (1937) AER 799


goods are stolen by T and T sells the goods to B.  Since T has no title to the goods he cannot pass a good title to B1.  Then the owner of the goods finds the goods with B1 who is claiming he bought the goods from T for value without notice.  T would ordinarily get prosecuted.  When the owner of the Goods discovers this, he does not go negotiating with T but goes directly to S and tells the owner to name his price so that he can pay for them to avoid a scandal. S names a price and T pays the price and buys the goods from S to cover up his own exposure as a thief.  Does a seller who at the time of sale had no title but subsequently acquires a good title; does the acquiring of a good title go to cover the deficiencies of the first mistake?

1.            T as a non-owner of the goods without authority cannot sell and pass a good title to B 1.  (Nemo dat basic rule).
2.            His subsequent acquisition of a good title from O has two facets, at the time when T and B entered into an agreement there was no title in T which he could pass, the original contract cannot be cured by the subsequent acquisition of title by T.
3.            The action by the seller to agree to have the goods bought by T original thief

s. 26 (1) deals with seller in possession and the seller has already sold the goods and possession has passed.  The seller can pass a good title to the 2nd buyer.

Where the buyer has acquired possession and does not have a good title and sells the goods to buyer 2, there is a contract of sale between the seller and Buyer 1 who has sold the goods but retains property.  The goods are with buyer but title with the seller.  Buyer 1 sells the goods to B 2 while the title is still with the seller.
Section 26(2)

The effect is that where the buyer has bought or agreed to buy and he/she acquires possession of those goods with the consent of the owner, any sale or pledge by the buyer even though title is still with seller so long as B2 buys in good faith and without notice, B2 has a good title.


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