218 Chapter 7The Sale of Goods Act 1979
You should notice the following matters:
(i) The Act can pass ownership only to a private purchaser. It cannot directly pass owner-
ship to a motor dealer. However, once ownership has been passed to a private purchaser
he could of course pass ownership on to a motor dealer.
(ii) The private purchaser must act in good faith and in ignorance of the hire-purchase
agreement.
(iii) The protection applies only to motor vehicles on hire-purchase or sold under a con-
ditional sale. It does not apply to other goods on hire-purchase or sold under a
conditional sale.
(iv) The key to this provision is whether or not the first private purchaser acts in good faith.
If he does, then ownership passes to him. If he does not, ownership cannot pass to a
subsequent private purchaser acting in good faith.Example
Henry has taken a car on hire-purchase. He sells this car to Alan, a motor dealer. Alan sells
it to Bill, a private purchaser, who sells it to Cindy, another private purchaser, who sells it to
David, a motor dealer. Alan cannot gain ownership as he was a motor dealer. Bill is the first
private purchaser. If he acted in good faith then he gains ownership and this ownership is
passed on to Cindy and David. If Bill did not act in good faith, neither he, Cindy nor David
can gain ownership.Figure 7.11 gives an overview of the exceptions to the nemo datrule.Essential points
n The purpose of a contract of sale of goods is to pass ownership of the goods to the
buyer in return for payment of the price.
n Unless the buyer and the seller have agreed otherwise, the risk of the goods becoming
lost or damaged remains with the seller until ownership of the goods passes to the
buyer. If, however, the buyer deals as a consumer the risk will pass only when the
goods are delivered to the buyer.
n The seller has a duty to deliver the goods.
n The buyer has three duties: to accept the goods; to take delivery of the goods; and to
pay the price.
n The buyer can claim damages if the seller does not deliver the goods or if the seller
breaches a warranty.
n The seller can sue for the contract price only if the contract fixed a definite date for
payment or if ownership of the goods has passed to the seller.
n An unpaid seller is given three real remedies. These are to exercise a lien over the
goods, to stop the goods in transit or to resell the goods.
n The general rule is that a person who does not own goods cannot pass ownership to
anyone else. There are seven exceptions to this rule.