214 Chapter 7The Sale of Goods Act 1979
Agency (s. 21 SGA)
When an agent sells his principal’s goods, the whole point of the contract is that the agent
(who does not own the goods) passes ownership to the purchaser. However, in some ways
agency is not a true exception in that the owner (the principal) is really the one selling the
goods. He is just using an agent to create the contract of sale by giving the agent authority
to make the sale. Section 21 of the SGA impliedly recognises agency as an exception to the
nemo datrule.
All of the following exceptions can apply only if the person claiming to have gained
ownership acted in good faith and without notice of the seller’s lack of ownership.Estoppel (s. 21 SGA)
A person who is estopped from denying that someone else is the owner of goods is pre-
vented from denying it. Section 21 impliedly recognises estoppel as an exception to the nemo
datrule. So an owner of goods who represents that a seller has the right to sell the goods, or
who represents that a seller is the owner of the goods, will be estopped (prevented) from
denying this later. The following case provides an example of this.Estoppel will not arise merely because an owner is careless with his goods, or because he
gives possession of them to someone else. The owner must make a representation that
someone else has the right to sell his goods. However, this representation can be made by
conduct.Act 1889) Mercantile agency (s. 2(1) Factors
Section 2(1) of the Factors Act protects a person who buys goods from a mercantile agent.
It says that if a mercantile agent sells, pledges or disposes of goods this is as valid as if the
owner had expressly authorised him to do so. There are, however, six requirements which
need to be fulfilled:
(i) The agent must be a mercantile agent. That is to say, he must be in business and must,
at least occasionally, sell or deal with other people’s goods.
(ii) The agent must either be in possession of the goods or of documents of title to them.
(iii) This possession must have been gained with the consent of the owner.
(iv) Possession must have been acquired by the agent for some purpose connected with
sale.Eastern Distributors Ltd vGoldring (1957) (Court of Appeal)A car owner wanted to borrow money but could not provide adequate security. As part of
a complicated, fraudulent scheme to borrow the money, he gave a car dealer documents
which made it seem that the dealer owned the car. The scheme did not work, but, without
the owner’s knowledge or permission, the dealer sold the car to a finance company.
HeldThe finance company owned the car. The original owner had given the impression
that the car dealer had the right to sell the car, and so he was estopped from denying this
later.