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

Arjun sold a machine to Bhavna but continued in possession of it. Arjun then pledged the machine to Chetan, who received it in good faith and without notice of the earlier sale. What is the effect under the Act?

The pledge to Chetan takes effect as if Arjun were expressly authorised by the owner. Because Arjun, having sold, remained in possession and Chetan received the goods in good faith without notice of the earlier sale, the Act protects Chetan.

  1. AThe pledge has the same effect as if Arjun were expressly authorised by the owner to make itCorrect
  2. BThe pledge is void because Arjun was no longer the owner
  3. CThe pledge is valid only if Bhavna ratifies it
  4. DThe pledge is valid only if Arjun is a mercantile agent

Explanation

Section 30(1) covers a seller who, having sold, remains in possession; a delivery or disposition by him to a person taking in good faith and without notice of the earlier sale has the same effect as if he were authorised by the owner. Ratification or agency status is not required.

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