Commercial Law and Transactions - Essay Example

30). This rule states that if a bona fide purchaser unknowingly purchases and subsequently sells stolen goods, he will be held liable in common law for the whole market price of those goods as at the date of transaction (Atiyah, 2005, p. 28). Common law states that the proper owner of the goods retains the legal title; as such, the nemo dat rule applies to the successive bona fide purchasers, implying that the actual owner can successfully bring an action against the fifth bona fide purchaser in trover as decided in Beverly Acceptances Ltd. v. Oakley, (1982) RTR 417.

1 Goode (2004, p. 16) notes that even though this rule was put in place to protect the true owners of personal property and to allow them to assert their superior title over anyone else over the property, the rule propagates to a greater extent injustice to bona fide purchasers. Besides, it propagates injustice to third parties who are innocent making them lose their claim the moment the true owner appears to assert his title (Sealy, Hooley, and Hooley, 2008, p. 23). Therefore, in order to prevent injustice on the bona fide purchaser and third parties, there are a number of exceptions to nemo dat rule which have been put in place in English law as noted in Lowther v.

Harris, (1927) 1 K.B 393.2 It is worth noting that these exceptions only provide a certain degree of protection to the bona fide purchaser and innocent third parties as well as well as the true or original owner (Goode, p. 2009, p. 45). In the English Law, this principle is clarified under the Sale of Goods Act. The Sale of Goods Act 1994 specifies that the seller has to fulfil certain responsibilities before goods are sold legally. Rose (2001, p. 14) says that one of the most important clause of this rule is the ‘retention of title’ that allows the seller to retain the title of goods until the goods have been fully paid for.

This clause forms a crucial part of any standard conditions and standard of sale. In Coventry Shepard & Co. v Great Eastern Railway Co., (1883) 11 QBD 776 it was decided that the original owner or the person authorised to sell the goods by its owner has the right to sell the goods and the buyer is enabled to enjoy possession of those goods free from any interference from any other party.3 As has been noted, there are several statutory exceptions to the nemo dat rule and they include the following: The first exception is estoppel, which implies that the buyer will acquire the title of the goods if the owner of the goods asserts right to sell.

Bridge (1997, p. 18) explains that estoppels may be raised through the following ways; conduct, words, and negligence. Estoppel by conduct is whereby the owner’s conduct indicates that he has the right to sell the goods as decided in Henderson & Co v Williams [1895] 1 QB 521.4 Estoppel by words is whereby there is an express authority by the owner that the seller has the right to dispose of the goods (Markesinis and Munday 1998, p. 34). Estoppel by negligence arises when the owner carelessly allows his goods to come into possession of a different person and that rogue goes ahead and sells it to innocent third