Sale by a person who is not the owner 213All moneys clauses
An all moneys ROT clause states that ownership of the goods sold is not to pass to the buyer
until all sums owing to the seller, whether under the contract in question or under previous
contracts, have been paid. If such clauses are effective, they can mean that the buyer will
never own any of the goods which he has bought from the seller. For example, let us
suppose that a motor manufacturer supplies a car dealer with new cars every six weeks
under a contract containing an all moneys reservation of title clause. If the car dealer pays
for each delivery of cars two months after delivery, the car dealer will never completely
settle his debts to the manufacturer. If the clause is effective, the dealer will not own any of
the cars he has ever bought from the manufacturer.
A House of Lords case, Armour vThyssen Edelstahlwerke AG (1990), held that an all
moneys clause did not create a charge and that the clause was therefore valid. The logic was
that if the clause was effective then it prevented any property from ever passing to the
buyer company. As the buyer company never owned the property it could not issue a
charge in respect of it. However, in this case there was only one contract. It has been argued
in many subsequent cases that where an all moneys clause applies to several contracts, as
in the example above, a charge must have been created. The seller is claiming goods which
have been paid for in order to secure a debt, and if the debt is paid the security will cease
to exist.
There is some doubt about the law in this area. If the seller does manage to reclaim goods
sold under a previous contract, it seems likely that the buyer can reclaim the price paid
under that previous contract on the basis that there has been a total failure of consideration.
Windfall profit
Whenever the seller claims more than the original goods sold, so that a windfall profit
would be made if the claim was successful, this is likely to be a charge. The seller is
claiming some of the buyer’s property as security for a debt, and would cease to claim the
security if the debt was paid.
Sale by a person who is not the owner
An old common law rule states that nemo dat quod non habet(nobody gives what they do not
have). The rule means that a person who does not own goods cannot pass ownership to
anyone else.
Let us assume, for example, that Simon, without permission, sells Olive’s car to Bill.
Simon did not own the car and so cannot pass ownership to Bill. Ownership of the car will
remain with Olive.
The rule is reaffirmed by SGA 1979 s. 21. Despite the logic of this rule there are seven
exceptions to it:
(i) agency;
(ii) estoppel;
(iii) mercantile agency;
(iv) sale by person with voidable title;
(v) sale by seller in possession;
(vi) sale by buyer in possession;
(vii) sale of a motor vehicle obtained on hire-purchase.