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Commercial Law Part A1

Transfer of Title
• Legal and Equitable ownerships and interest
• Gift
• Nemo Dat Rule
• Exceptions:
1. Estoppel
2. Mercantile Agent
3. Power of Sale/Court Order
4. Market Overt
5. Sale Under a Voidable Title
6. Sale by seller continuing possession
7. Sale by buyer in possession
8. Sale by unpaid seller

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 COMMERCIAL LAW PART A

Exam Format – usually 1 Essay + 1 Problem Question

• Title (Nemo Dat and Exceptions)
o Separate the title change one by one from the chain of title
o Analyse in each case whether it is a valid transfer / complete gift
o If it is not, whether exceptions to nemo dat apply to the specific
transaction
o If no valid transfer – also tort of conversion

• Implied Terms
o Discuss any express term, briefly.
o Which section to be used? (Maybe more than one)
! Have a actual to refer " Sample
! Merely by words " Description
! Product Quality " s.16
o Any breach of implied terms?
o If yes, breach of contract " Remedies
o Seller in breach " Remedies for buyers
o Damages " Remoteness issue (Hedley v Baxendale)

• Passing of Property (once in 2/3 years)

o S.18 " s. 20
o Whether the products are ascertained
o Which rule in s.20 to apply

• Remedies (once in 2/3 years)

o Discuss every options seller/buyer have if the question is solely on
remedy

• Duties (rare)
o Whether seller had properly delivered the goods
! If No " Breach
! Remedies of Buyers
o Whether buyer wrongfully refuses to accept goods
! If yes " Breach
! Remedies of Seller

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 PART A1: TRANSFER OF TITLE
Suggested Answer Flow
A. Essay Answer:
1. Nemo Dat Rule

a. What is it
b. Codified in s.23(1) SOGO
c. Subject to exceptions n SOGO & FO

2. Evaluate importance: Without Nemo Dat Rule effect

a. Customer protection
b. Owner protection
c. Certainty

3. Exceptions (analyze one by one)

a. Enough
b. Over protective

4. Relationships to Modern Commercial Law

a. E-commerce
b. Cross border issue
c. Whether nemo dat rule fits in with these new changes?

5. Recommendations

a. Pros
b. Cons

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B. Problem Answer:
For each passing of property:
1. Contract of sales of goods?

2. Nemo Dat Rule s.23(1)

3. Exceptions: (pick and choose)

a. Estoppel? s.23(1)

b. Merchantville Agent? S. 23(1)

c. Power of Sale/ Court Order s.23(2)(b)

d. Market Overt S.24

e. Sale under a Voidable Title s.25

f. Sale by seller continuing possession S.27(1)

g. Sale by Buyer in possession S.27(2)

h. Sale by unpaid seller

4. What title passed (if any)?/ What could have been done to avoid (if
applies)?

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General Rule – Nemo Dat Rule
s.23(1) of Sales of Goods Ordinance
Subject to the provisions of the SOGO, Exception
where goods are sold by a person who is not the owner thereof, and who Nemo
does not sell them under the authority or with the consent of the owner, Dat
the buyer acquires no better title to the goods than the seller had
unless the owner of the goods is by his conduct precluded from denying Exception
the seller's authority to sell.

• S = absolute owner " B = absolute owner (no better than)

• S has no equitable interests " B has no equitable interests " CANNOT be
an absolute owner (no better than)

Exceptions to Nemo Dat

Exception 1: Estoppel (s.23(1), SOGO)
• This exception is from the “unless the owner of the goods is by his conduct
precluded from denying the seller's authority to sell”
• Rationale: Wherever one of two innocent persons must suffer by the acts of a
third, he who has enabled such third person to occasion the loss must sustain
it (Lickbarrow v Mason)
• Rarely does this test applied directly because “enabled” can be too
widely construed, but it is the rationale of s.23(1)
Key Issue: Whether the seller has apparent authority so that the owner of goods
will lose his title to the Third Party (Buyer) (Eastern Distributors Limited)
Effect: Third Party will get a good title against the whole world

(1) There is representation or conduct (less likely) by the owner

• If the owner does not represented that the “thief” or the “purported seller
has the authority, Estoppel cannot be applied. (Debs v Sibec
Developments Ltd)
• Communication / Representation between owner and the bailee / seller
would be sufficient to be a representation by the owner (Henderson & Co
v Williams)

(2) That the seller is the owner of the goods / owner’s agent to sell the goods
• Even though there has been a representation, the authority must be

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 referred to the owner but not another firm (Farquharson Bros & Co v C
King & Co)
• Merely allowing a person to have possession of his goods carries with it
no implication that that person has any authority to sell them, even if the
possession is given with a view to the person trying to find a buyer
(Jerome v Bentley)
• Even the person is entrusted to hold registration certificate of a car or
other document of title would not have apparaent authority. (Central
Newbury Car Auctions Ltd, Mercantile Bank of India)
o If this is the case, test whether he is a mercantile agent.

(3) Buyer has relied on this representation

Exception 2: Mercantile Agent (s.23(1), SOGO)

S23(2), SOGO: Nothing in SOGO shall affect the provisions of the Factors
Ordinance

Key Issue: Whether the goods sold are dispositions by mercantile agent?
Effect:
S3(1) of FO applies " s23(2) of SOGO applies
" Sale by mercantile agent is as valid as if expressly authorized by owner if the
buyer acted in good faith without notice
" owner is by his conduct precluded from denying the seller’s authority
" Buyer from mercantile agent has good title

S3, Factors Ordinance

Where a mercantile agent is, with the consent of the owner, in possession of
goods or of the documents of title to goods, any sale, pledge, or other disposition
of the goods, made by him when acting in the ordinary course of business of a
mercantile agent, shall, subject to the provisions of this Ordinance, be as valid as
if he were expressly authorized by the owner of the goods to make the same:

Provided that the person taking under the disposition acts in good faith, and has
not, at the time of the disposition, notice that the person making the disposition
has not authority to make the same.

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 (1) A Mercantile Agent – Statutory Definition
• S2, Factors Ordinance: Mercantile Agent means:
• a mercantile agent
• in the customary course of his business as such agent
• having authority to sell goods, consign goods for the purposes of sale,
buy goods, raise money on the security of goods
(2) MA must be in actual possession of the goods or the document of title to
the goods at the time of transaction

(3) Such Possession is obtained with consent of the owner

• Where the owner has once given consent to the mercantile agent
having possession, that consent is deemed to continue even although
it has been determined. (s3(2))
• If the consent to sale has condition (not below a certain amount of
money), such consent will stand even if the price sold was below the
condition (Folkes v King)

(4) MA must receive the goods in capacity as MA

• The consent to agent must be for the purpose which is in some way
connected with his business as mercantile agent (Pearson v Rose &
Young Ltd)
• If a man who is in other respects a mercantile agent but obtain the
goods not as a mercantile agent but in a different capacity, Buyer from
that man could not say they were in his possession as a mercantile
agent (Staff Motor Guarantee Ltd)

(5) Sale must take place in ordinary course of business of the MA (

• Acting in such way as a mercantile agent acting in the ordinary course
of business of a mercantile agent would act
• Within business hours, at a proper place of business, and in other
respects in the ordinary way in which a mercantile agent would act
• There is nothing to lead the buyer to suppose that anything wrong is
being done
• No notice is given to him that the disposition is one which the
mercantile agent had no authority to made.
o Oppenheimer v Attenborough & Son

**HOPE YOU ENJOYED IT, FOR OTHER PARTS OF COMMERICAL PART A

NOTE, PLEASE CONTACT LAWBOOSTER@GMAIL.COM**

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