Chapter 6: Implied contract terms as to title under the Sale of Goods Act 1979
| Library | Commercial Law 2012–2013 |
| Pages | 49-53 |
| Author | Jonathan Fitchen |
It is an implied condition of a contract of sale of goods that the seller has the right to sell the goods. If he does not, the buyer has the right to reject the goods, recover the purchase price, and receive damages for losses arising from the breach of the implied term. He is entitled to do this even if he has had possession and substantially enjoyed the use of the goods before discovering that the seller had no title to sell (
Claimant motor dealer bought a car from the defendant motor dealer. Unknown to either, the car was stolen. Claimant dealer sold to a third party. After two months of use the Police recovered the car from the third party who was refunded by Claimant. Claimant dealer then sued Defendant dealer for the price he had paid arguing total failure of consideration arising from the breach of s 12 of the Act. The court agreed that all of the purchase price should be returned and made no allowance for the depreciation in the value of the car caused by months of use by the refunded third party.
Section 12 strictly requires the seller to have the right to sell.
It may happen that the seller does not have title at the time the goods are sold and delivered, but that title is acquired at some later stage.
In the above example, P, who has not completed the hire purchase payments to O, sells the goods to Q who then sells them to R. P is liable to Q for breach of the implied condition as to title. Equally, Q is liable to R for the same reason. If, at some later stage, P completes the hire purchase payments to O, P will acquire good title which will immediately be ‘fed’ down the line of purchasers to R (
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