ANALYSIS ON

GENERAL RULES PERTAINING TO TRANSFER OF TITLE

BY

ADITYA RAJ

(BBA.LLB)
 In order to discuss the "Transfer of Title" we need to understand the law relating to the sale of goods.
The seller of goods must transfer title to the purchaser of the goods if they sell them. Sellers cannot
complete a sale transaction without transferring ownership of the goods and delivering possession to
buyers. Title to goods is usually transferred by the real owner to the new owner. Currently, judges and
legislators have to deal with unauthorised sales of goods frequently and with difficulty. When an
innocent person purchases goods from someone who has no authority to sell them, what should he or
she do? In this case, the law should either protect the original owner of the property or treat the sale of
the property to the innocent third party as valid, thus removing the original owner's rights?

As Denning L.J. noted in 1949, the problem was:

A struggle for mastery has taken place between two principles in the development of our law. In the first
place, property is protected: no one can give a title better than what he or she holds himself. Secondly,
commercial transactions ought to be protected: the person who accepts the transaction for value
without notice should be able to retain ownership of it.

As part of the transfer of title, the maxim Nemo dat quod non habet is included, which states that no
one can dispatch goods to others if he is not the legitimate owner. This is intended to protect the
genuine owners of goods. Unless the legitimate owner of the goods gives permission, any sale of the
goods will be unlawful and the purchaser will not receive title to the goods.

GENERAL REGULATIONS

As a general rule, no one can transfer better title than himself. If one has no ownership right to goods,
ownership cannot be transferred. In this case, it is the main problem conflict of ownership between the
owner of the goods and the ultimate purchaser of the goods. IN development of the nemo data rule,
two principles were established. These are :

i) property protection

ii) protection of business transactions such as the person who bought goods in good faith.

The nemo dat rule states that the buyer could not claim title to the goods he had purchased from a
seller who had no title at the time of the sale.4 In general, this rule remains in effect even if the buyer
does not know that the seller has no right to claim title goods and it is very difficult for the courts to
fairly decide the innocent party. For this reason, there are many exceptions to the nemo data rule to
protect the real owner and bona fide purchaser, especially estoppel, sale by commercial agent and sale
under a void contract.

The Nemo dat rule is set out in the Sale of Goods Act 1957 (SOGA 1957) which states:

Sale by person other than owner: Subject to this Act and other laws for the time being in force if the
goods are sold by a person who is not their owner, and who does not sell them on behalf of or without
the consent of the owner

The buyer does not acquire a better title to the goods than the seller had unless the owner of the
goodsthe goods exclude by their behavior to deny the seller's authorization to sell.
Provided that where the sales representative is with the consent of the owner, possession of goods or
proof of title to goods, any sale made by him the same applies when acting as part of a sales
representative's normal business activity as if expressly authorized by the owner of the goods to do so;
provided that the buyer acts in good faith and not at the time of the contract notice of sale that the
seller is not authorized to sell.

On appeal it was held that the contractor Ahmad was only a trustee and not the owner movables at the
time he sold them to the appellant. Since he had no claim to movable property or with the respondent's
prior consent to their sale, he could not transfer any ownership right to her appellant.

In the case of Syarikat Batu Sinar Sdn Bhd & Ors v UMBC Finance Bhd & Ors, second plaintiff, leasing
company Supreme Leasing Sdn Bhd bought a refurbished tractor from the third defendant, a tractor
dealer, and then leased it to the first plaintiff, a finance company a company called Syarikat Batu Sinar
Sdn Bhd. In the registration card, the third defendant (tractor dealer) was listed as the registered first
owner, the second plaintiff (leasing company) was the second owner and the third owner was the first
plaintiff. She carried the card handwritten in the sense that the second claimant claimed ownership.

At the time of purchase, plaintiffs did not know that the dealer had previously sold the tractor to the
first defendant a company called UMBC Finance Company without a registration card. The first
defendant did not register the ownership claim in the registration card. However, the first defendant
asked the seller to effect the registration and claimed ownership in a letter to seller. The first defendant
also claimed ownership by letter sent to the seller for registration with the registrar. The registration
card was left with dealer. The tractor also remained with the dealer.

EXCEPTIONS TO THE NEMO DAT RULE

First, exceptions to the nemo dat rule were codified in England in the nineteenth year century in the
Factors Acts 1889 and the Sale of Goods Act 1893. Currently these exemptions are provided in the Sale
of Goods Act 1957 in Malaysia and reached a settlement in the struggle to settle the supremacy
between the rights of the beneficial owners goods and innocent third parties. If the sale of goods falls
under the exception of no data, the real owner of the goods loses the right of ownership and an
innocent third party achieves title. Exceptions to the nemo data rule are described below:

Estoppel

The owner may, for various reasons, designate a person to hold his goods. In this situation, but if the
person sells the goods to the buyer before the owner and the owner shows his consent to the sale by
negotiation, ownership of the property passes and the buyer does achieve a good degree.15 For
example, Siti says in front of Mariyam that she wants to sell

Mariyam's laptop Laile and Mariyam was silent at that time. If Siti sells the laptop

Laila, Mariyam cannot protest that Siti sold her laptop without her and Laila's permission

he will get a good degree.

This principle was stated in the case of Eastern Distributors v. Goldring.

16 In this case, Sean

named Coker. But Sean J. Murphy didn't have enough money to pay the down payment to buy a car on
installments. Sean J. Murphy authorized Coker to sell his van on installments

finance company and obtain from the company a contract of sale to him under installment sale
conditions. Coker's authority to sell the van was limited to making transactions

sale and installment sale of a van and installment sale of a Chrysler car together. Thus

Coker had no authority to make one transaction without the other. Sean J. Murphy signed up

blank offer form and installment purchase agreement memorandum for each

vehicle and gave it to Coker and let him finish it. A sales receipt is included

the supply offer form contained a printed paragraph by which Coker certified

that the vehicle was his absolute property. Without obtaining any further authority

by Sean J. Murphy, Coker sold the van to the plaintiffs (Eastern Distributors Ltd) as his

own and plaintiffs accepted Sean J. Murphy's installment sale proposal regarding the van

as a genuine installment transaction and sent Sean J. Murphy's counterpart in due course

contract relating to delivery. Installment transaction involving a Chrysler car

was not implemented and Coker subsequently told Sean J. Murphy that the entire transaction

has been canceled. Within days, Sean J. Murphy sold a Bedford van he trusted

to be his own property to the defendant (Goldring) who bought it in good faith and without him

knowledge of Sean J. Murphy's dealings with the van. Sean J. Murphy has not made any payments

on the basis of an installment purchase agreement. The plaintiffs Eastern Distributors Ltd made a claim
for the supply or

its value from the defendant (Goldring) and third party Sean J Murphy.

In this case, the plaintiff Eastern Distributors Ltd was entitled to recover the supply from the company

defendant and the appeal was dismissed.