Business Laws and Ethics · Sale of Goods Act, 1930

Transfer of Title by Non-Owners under the Sale of Goods Act

Updated 10 October 2026 · Fact-checked

Under Section 27, a buyer from a non-owner gets no better title than the seller had (nemo dat quod non habet). Exceptions protect a good-faith buyer without notice: owner's conduct (estoppel), mercantile agent, joint owner, voidable contract, seller or buyer in possession. Check each exception's conditions to solve questions.

Understand Transfer of Title by Non-Owners

Title means ownership, the legal right over goods. Possession means physical control. A person can have one without the other. A tenant of a shop, a repairer or a transporter may hold goods without owning them.

The general rule is nemo dat quod non habet: no one can give what he does not have. Section 27 says that where goods are sold by a person who is not the owner, and who does not sell under the authority or with the consent of the owner, the buyer gets no better title than the seller had. So if a thief sells a stolen laptop, the buyer gets nothing, even if he paid in full and acted honestly. The true owner can recover the laptop.

The law also protects honest traders. If every buyer had to trace the full history of goods, trade would slow down. So the Act carves out exceptions where the owner has, by conduct or by handing over possession, put someone in a position to deceive an innocent buyer. In these cases the buyer gets a good title, and the original owner is left to claim against the wrongdoer.

The exceptions in the text supplied are: (1) the owner is precluded by his conduct from denying the seller's authority (Section 27); (2) a mercantile agent sells in the ordinary course of business (proviso to Section 27); (3) a joint owner in sole possession sells (Section 28); (4) a seller in possession under a voidable contract sells before the contract is rescinded (Section 29); (5) a seller who has already sold, but keeps the goods or documents of title, sells again (Section 30(1)); (6) a buyer who has obtained possession with the seller's consent sells on (Section 30(2)). In every one, the new buyer must act in good faith and without notice of the defect.

The common thread is the buyer's honesty. A buyer who knows, or has notice, that the seller has no authority cannot use any exception.

Key rules to remember

General rule (nemo dat): Buyer's title = Seller's title (Section 27); Applies where the seller is not the owner and sells without the owner's authority or consent. Unless an exception applies, the buyer gets no better title.
Estoppel exception: Owner's conduct precludes denial of seller's authority → buyer gets good title (Section 27); The owner's own conduct must have led the buyer to believe the seller had authority.
Mercantile agent: Consent of owner + possession of goods or document of title + ordinary course of business + good faith + no notice → sale valid (proviso to Section 27); All five conditions must be met. Section 2(9) defines a mercantile agent as one with customary authority to sell, consign for sale, buy, or raise money on goods.
Joint owner: Sole possession by permission of co-owners + good faith + no notice → property passes (Section 28); Without co-owners' permission for sole possession, this exception fails.
Voidable contract: Seller's contract voidable under Section 19 or 19A of the Contract Act + not rescinded at time of sale + good faith + no notice → good title (Section 29); If the original owner has already rescinded, the buyer gets no good title.
Seller in possession after sale: Seller keeps goods or documents + re-sells or pledges + buyer in good faith without notice of earlier sale → effect as if authorised by owner (Section 30(1)); Covers delivery or transfer by the seller or his mercantile agent.
Buyer in possession before payment: Buyer obtains possession with seller's consent + transfers to good-faith person without notice of seller's lien or right → lien treated as non-existent (Section 30(2)); Possession must be with the original seller's consent.

How to solve Transfer of Title by Non-Owners questions

Use this order for any problem on sale by a person who is not the owner.

1Identify who is the true owner and who sold the goods. Note who holds possession and who holds title.
2State the general rule: under Section 27, the buyer gets no better title than the seller had.
3Ask whether the seller had the owner's authority or consent. If yes, there is no title problem and the sale is valid.
4If not, test each exception in turn: owner's conduct, mercantile agent, joint owner, voidable contract, seller in possession, buyer in possession.
5For the exception that fits, list its conditions and tick each from the facts, especially good faith and no notice.
6Check timing where relevant, for example whether the voidable contract was rescinded before the sale.
7Conclude clearly: who gets title, and what remedy the original owner has against the wrongdoer.

Quickest way: Exception checklist: Who sold, who held, was the buyer honest?

When to use it: Use for MCQs and short case-based questions where time is tight.

Is the seller the owner or authorised? If yes, stop: valid sale.
If not, ask: how did the seller get the goods? Agent, co-owner, fraud-induced contract, or kept after selling?
Match to Section 27 proviso, 28, 29 or 30.
Check the buyer: good faith and no notice. If the buyer knew, the buyer loses.
Check the special trigger: consent of owner for the agent, not rescinded for voidable contract.
Theft or no consent at all: no title passes.

Common mistakes in Transfer of Title by Non-Owners

Saying a buyer always gets good title if he paid and acted honestly.
Students focus on the buyer's good faith and forget that good faith is needed in addition to an exception.
Fix: Start from Section 27: no better title. Good faith helps only when one of the exceptions also applies.
Treating a thief as someone who can pass title.
Confusing a thief with a person holding goods by the owner's consent.
Fix: In the listed exceptions, the owner gave possession or consent. A thief has neither, so the buyer gets no title.
Applying the mercantile agent exception without owner's consent to possession.
Students read only 'mercantile agent sale is valid'.
Fix: Check the full proviso: consent of owner to possession, ordinary course of business, good faith, and no notice.
Applying Section 29 when the voidable contract was already rescinded.
Students miss the phrase 'has not been rescinded at the time of the sale'.
Fix: Always check dates. If rescinded before the sale, the seller has no title and the buyer gets none.
Confusing title with possession.
Both are used loosely in everyday speech.
Fix: Title is ownership. Possession is physical control. Mere possession usually does not give power to pass title, except under the stated exceptions.
Ignoring notice.
Facts hide a hint that the buyer knew, such as a price far below market or a warning from the owner.
Fix: Read the facts for any sign of notice or lack of good faith before concluding.

Worked examples

Example 1

Meera, a Pune textile owner, gives 50 bales of cloth to Rakesh, a commission agent who regularly sells for traders, to keep in his godown. Rakesh, acting in the ordinary course of business, sells the bales to Sunil, who buys honestly and does not know that Rakesh had no authority to sell. Can Meera recover the bales from Sunil?

Show the solution

Meera is the owner. Rakesh sold without her authority, so the general rule of Section 27 would say Sunil gets no better title than Rakesh.
Check the proviso to Section 27. Rakesh is a mercantile agent, as he customarily sells goods for others (Section 2(9)).
Meera consented to Rakesh holding the goods.
Rakesh acted in the ordinary course of business of a mercantile agent.
Sunil acted in good faith and had no notice of the lack of authority.
All conditions are met, so the sale is as valid as if Meera had authorised it.

Answer: Meera cannot recover the bales from Sunil. Sunil gets a good title. Meera's remedy is against Rakesh.

Example 2

Arjun obtains a car from Bhavna by a misrepresentation, so the contract is voidable at her option under Section 19 of the Contract Act. Before Bhavna does anything, Arjun sells the car to Charu, who buys in good faith without knowing of the misrepresentation. Later Bhavna tries to rescind and claims the car. Decide.

Show the solution

Arjun is the seller and obtained possession under a contract voidable under Section 19 of the Contract Act.
Section 29 gives good title to the buyer if the contract had not been rescinded at the time of the sale.
Bhavna had not rescinded when Arjun sold to Charu.
Charu bought in good faith and without notice of Arjun's defect of title.
Bhavna's later rescission does not affect Charu's title.

Answer: Charu gets a good title under Section 29, so Bhavna cannot recover the car from her. Bhavna can take action against Arjun. If she had rescinded before the sale to Charu, Charu would get no good title.

Exam tips

For case-based questions, name the rule first (Section 27, nemo dat), then name the exception and give its section number only where the text supports it.
List the conditions as short bullets and tick each against the facts. Step marks come from this.
Always state the buyer's position and the original owner's remedy in the last line.
In MCQs, look for the trigger words: consent of owner, ordinary course of business, not rescinded, good faith, notice.
Remember the distinction between title and possession; a one-line definition can earn a mark in theory questions.

Practice questions from Sale of Goods Act, 1930

Transfer of Title by Non-Owners in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

CMA FoundationTransfer of Title by Non-Owners

Transfer of Title by Non-Owners: frequently asked questions

What does nemo dat quod non habet mean?

It means no one can give what he does not have. Under Section 27 of the Sale of Goods Act, a buyer from a non-owner gets no better title than the seller had, unless an exception applies.

What are the exceptions to the nemo dat rule?

The main ones are owner's conduct (estoppel), sale by a mercantile agent, sale by a joint owner in sole possession, sale under a voidable contract not yet rescinded, and re-sale by a seller or buyer in possession. Each requires good faith and no notice on the buyer's part.

What is the difference between title and possession?

Title is ownership, the legal right over goods. Possession is physical control. A person with possession alone usually cannot pass title, except where the Act's exceptions apply.

Does a buyer get good title from a thief?

No. A thief has no title and no authority from the owner. The buyer acquires no better title than the thief had, so the true owner can recover the goods.