Business Laws and Management · Elements of Law relating to Sale of Goods

Sale by a Person Not the Owner: Section 27 and Exceptions

Updated 11 October 2026 · Fact-checked

Under Section 27 of the Sale of Goods Act, 1930, if a non-owner sells goods without the owner's authority or consent, the buyer gets no better title than the seller had (nemo dat). Exceptions protect a good-faith buyer: estoppel, mercantile agent, joint owner, voidable contract, and seller or buyer in possession.

Understand Sale by a Person Not the Owner

Start with the idea behind the rule. You cannot give what you do not have. The Latin maxim is nemo dat quod non habet. If a thief sells a stolen bike, the buyer gets no ownership, because the thief had none.

Section 27 says this in the Act. Where goods are sold by a person who is not the owner and who does not sell under the owner's authority or consent, the buyer acquires no better title than the seller had. So if the seller had no title, the buyer gets none, even if he paid in full and acted honestly.

The law also protects honest buyers and the flow of trade. So the Act gives exceptions. In each one, a buyer can get a good title even though the seller was not the owner. The common thread is that the buyer acts in good faith and the true owner somehow allowed the situation to arise.

The exceptions you must know are:

Estoppel (Section 27 itself): the owner's conduct stops him from denying the seller's authority.
Mercantile agent (proviso to Section 27).
Joint owner in sole possession (Section 28).
Voidable contract not yet rescinded (Section 29).
Seller in possession after sale (Section 30(1)) and buyer in possession after agreeing to buy (Section 30(2)).

There are further exceptions elsewhere in the Act and in other laws, but these are the ones this topic covers.

Key formulas to remember

General rule (nemo dat): Non-owner seller, no authority or consent → buyer's title = seller's title (no better); Section 27. Applies unless an exception or estoppel applies.
Estoppel: Owner's conduct precludes denying seller's authority → buyer gets good title; Section 27. The owner must have led the buyer to believe the seller could sell.
Mercantile agent: Agent in possession with owner's consent + ordinary course of business + buyer in good faith + no notice of lack of authority → sale valid; Proviso to Section 27. All conditions must be met. 'Mercantile agent' is defined in Section 2(9).
Joint owner: Sole possession by permission of co-owners + buyer in good faith + no notice → property passes; Section 28.
Voidable contract: Seller's contract voidable (Contract Act s.19 or 19A) + not rescinded at time of sale + buyer in good faith, no notice of defect → good title; Section 29. If rescinded before the sale, the buyer gets no good title.
Seller in possession after sale: Seller keeps goods or documents + re-delivers to a person in good faith without notice of earlier sale → effect as if authorised by owner; Section 30(1). Also covers a mercantile agent acting for him.
Buyer in possession: Buyer obtains goods or documents with seller's consent + passes to a person in good faith without notice of seller's lien or right → lien or right treated as not existing; Section 30(2). Applies to a person who bought or agreed to buy.

How to solve Sale by a Person Not the Owner questions

Use this order for any problem where someone sells goods that are not theirs.

1Identify the true owner and the person who sold. Check whether the seller is the owner.
2Check whether the seller sold with the owner's authority or consent. If yes, the sale is ordinary and valid.
3If not, apply the general rule in Section 27: the buyer gets no better title than the seller.
4Look for facts that fit an exception: owner's conduct (estoppel), a mercantile agent, a joint owner, a voidable contract, or someone in possession after sale or agreement to buy.
5For the exception you pick, tick off every condition: consent of owner, ordinary course of business, good faith, no notice, contract not yet rescinded.
6If all conditions are met, the buyer gets a good title. If any one fails, the general rule applies and the owner can recover the goods.
7Write a one-line conclusion naming the section.

Quickest way: Owner, possession, good faith check

When to use it: Use for one-mark MCQs in Paper 4 where a non-owner sells goods and you must pick who gets title.

Ask: did the owner give the goods to this seller voluntarily? If the goods were stolen or found, no exception helps, so the buyer gets no title.
If the owner handed over possession, look for a label: agent, joint owner, voidable, or seller or buyer who kept possession.
Check the buyer: good faith and no notice. If the buyer knew, pick the owner.
For voidable contracts, check if rescission happened before the sale. If yes, the buyer has no title.
Match the label to the section: agent (s.27 proviso), joint owner (s.28), voidable (s.29), possession after sale (s.30).

Common mistakes in Sale by a Person Not the Owner

Saying a buyer who paid full price always gets good title.
Students think payment protects the buyer.
Fix: Title depends on the seller's title or an exception. Without an exception, even a paying, honest buyer gets no better title than the seller had.
Applying the mercantile agent exception when the agent has no possession with the owner's consent.
Students remember 'agent' but skip the conditions.
Fix: Check all conditions: possession with owner's consent, sale in the ordinary course of a mercantile agent's business, good faith, and no notice.
Giving good title under Section 29 after the contract was rescinded.
Students miss the words 'has not been rescinded at the time of the sale'.
Fix: Good title passes only if the owner had not rescinded before the sale. If he had, the buyer gets none.
Ignoring the buyer's good faith.
Students focus on the seller's position only.
Fix: Every exception needs a buyer in good faith without notice. A buyer who knows of the defect or lack of authority is not protected.
Mixing up Section 30(1) and 30(2).
Both deal with possession and sound alike.
Fix: 30(1): the seller stays in possession after selling and sells again. 30(2): the buyer gets possession with the seller's consent and passes it on, defeating the original seller's lien.

Worked examples

Example 1

Ravi leaves his laptop with Sunil, a friend, to keep safe. Sunil sells it to Meena for ₹40,000. Meena does not know it belongs to Ravi. Ravi never said Sunil could sell it. Who gets the title?

Show the solution

Owner is Ravi. Seller is Sunil, who is not the owner.
Ravi did not authorise or consent to the sale.
Sunil is not a mercantile agent, not a joint owner, and there is no voidable contract or sale by a seller in possession after selling.
Ravi's conduct does not make him stop denying Sunil's authority; he only left the laptop for safekeeping.
So Section 27 applies: Meena gets no better title than Sunil, who had none.

Answer: Meena gets no title. Ravi can recover the laptop from her.

Example 2

Anita sells a car to Karan. Karan obtained it from Anita by fraud, so the contract is voidable. Anita has not rescinded it. Karan sells the car to Divya, who buys in good faith without knowing of the fraud. Can Anita recover the car from Divya?

Show the solution

Karan's contract with Anita is voidable under the Indian Contract Act, 1872.
Karan sold the car before Anita rescinded the contract.
Section 29 applies: the buyer acquires good title if she buys in good faith and without notice of the seller's defect of title.
Divya meets both conditions.
Had Anita rescinded before the sale to Divya, the result would differ and Divya would get no good title.

Answer: Divya gets a good title under Section 29. Anita cannot recover the car from her.

Exam tips

In Paper 4 MCQs, look for key phrases: 'in good faith', 'without notice', 'with the consent of the owner'. They decide the answer.
Learn the section number for each exception: 27 proviso (agent), 28 (joint owner), 29 (voidable), 30 (possession after sale).
Stolen goods are the classic no-title case. Sale by a thief gives no title unless an exception clearly applies.
In written-style answers, state the rule first, then the exception, then apply it to the facts in one line.

Practice questions from Elements of Law relating to Sale of Goods

Sale by a Person Not the Owner: frequently asked questions

What does nemo dat quod non habet mean?

It means no one can give what he does not have. In sale of goods, a seller who has no title cannot pass a good title to the buyer. Section 27 states this rule.

What is the exception for a mercantile agent?

A mercantile agent in possession of goods or documents of title with the owner's consent can make a valid sale if he acts in the ordinary course of his business. The buyer must act in good faith and have no notice that the agent lacks authority.

Does a buyer get good title from a voidable contract seller?

Yes, if the contract has not been rescinded at the time of the sale and the buyer acts in good faith without notice of the seller's defect of title. This is Section 29.

What is the difference between Section 30(1) and 30(2)?

Section 30(1) covers a seller who has sold goods but remains in possession and delivers them again to a good-faith buyer. Section 30(2) covers a buyer who got possession with the seller's consent and passes the goods to a good-faith person, who then takes free of the original seller's lien or right.