Ever heard the legal maxim “Nemo dat quod non habet”? It means: “No one can give what they do not have.” 🧠
This is the golden rule behind Section 27 of the Sale of Goods Act, 1930 — protecting the true owner’s rights over their property.
Section 27 – The General Rule
Section 27, as a general rule, attempts to protect the interests of the genuine owner by providing that if the products are sold by a person who is not the owner and who does not sell them under the authority or with the consent of the owner, the buyer gains no title to the goods.
But… There Are Exceptions!
There are certain exceptions where even a person without proper ownership can transfer a valid title to the buyer.
1. Transfer by Estoppel
As per the *proviso to Section 27*, if the true owner by their own conduct or statements leads the buyer to believe that the seller has authority to sell — then the owner is estopped (legally stopped) from denying the seller’s authority later.
In short: If you let someone appear as the owner, you can’t later say they weren’t.
2. Sale by a Mercantile Agent
Another exception under the proviso to Section 27, if a mercantile agent (like a broker or dealer) sells the goods while acting in the ordinary course of business, and the buyer acts in good faith, then the sale is valid — even if the agent didn’t have express permission from the owner.
Key Condition: The agent must be in possession with the owner’s consent.
3. Sale by One of the Joint Owners (Section 28)
If one co-owner of goods is in sole possession with the permission of the others, and sells the goods to a third party — that buyer gets a valid title if they act in good faith and have no notice of the seller’s limited rights.
4. Sale by Person in Possession under Voidable Contract (Section 29)
Under Section 29, if someone acquires possession of goods under a contract that is voidable under Section 19 or 19A of the Indian Contract Act (e.g., fraud, misrepresentation), and sells them before the contract is rescinded, the buyer gets a good title — again, if they buy in good faith.
5. Sale by Seller in Possession (Section 30(1))
If the seller, even after selling the goods, retains possession or holds documents of title and makes another sale to a second buyer — the second buyer gets a good title, provided:
- They buy in good faith
- They are unaware of the earlier sale
6. Sale by Buyer in Possession (Section 30(2))
If a buyer gets possession of goods (even though ownership hasn’t passed) and sells or pledges them to a third party — the third party gets a valid title if they act in good faith and have no idea that the original buyer had no authority to sell.
Example: A buyer takes delivery of goods but hasn’t paid the full price — he sells them to another person who’s unaware of this. That person gets a clean title.
References:
1. Sales of Goods Act, 1930- Bare Act
