78 Chapter 3The terms of the contract
Rowland vDivall (1923) (Court of Appeal)A thief stole a car from its owner and sold the car to the defendant. The claimant, a motor
dealer, bought the car from the defendant for £334. The claimant did the car up and sold it
to a customer for £400. On discovering that the car was stolen, the police took it from the
customer and returned it to its original owner. The customer complained to the claimant
who returned his £400. The claimant asked the defendant for the return of the £334 he had
paid. The defendant refused to pay, saying that he had no idea that the car was stolen.HeldThe claimant got all of his money back. Section 12(1) provides that the seller must
have the right to sell, and when the defendant sold the car to the claimant he did not have
this right because he did not own the car. The thief never owned the car. He therefore could
not pass ownership to the defendant, who could not pass ownership to the claimant, etc.
None of the parties except the original owner ever had the right to sell the car.
Atkin LJ held: ‘It seems to me that in this case there has been a total failure of considera-
tion, that is to say that the buyer has not got any part of that for which he paid the purchase
price. He paid the money in order that he might get the property, and he has not got it.’Figure 3.3Rowland vDivall(iv) Section 14(3) implies a condition that the goods are fit for the buyer’s purpose.
(v) Section 15(2) implies a condition that where goods are sold by sample the bulk will
correspond with the sample.
The terms implied by ss. 14(2) and (3) are implied only into sales of goods which are made
in the course of a business. The other terms are implied into all contracts of sale of goods.
These implied terms are vitally important and each one must be examined closely.The right to manage
Section 12(1) of the SGA 1979 provides that unless the circumstances show a different
intention:
There is an implied [condition] on the part of the seller that in the case of a sale he has a right to sell
the goods, and in the case of an agreement to sell he will have such a right at the time when the
property is to pass.
This term, like the others, is a condition. As we have seen, when a condition is breached
the injured party can treat the contract as terminated and also claim damages. If a seller
breaches a condition and the buyer chooses therefore to treat the contract as terminated, the
buyer will get all of the purchase price back.