HOW TITLE IN SALE OF GOODS CONTRACTS WORK

In buy and sell agreement what one pays for or what one is really selling, when dealing with goods is title. Whenever you buy or sell items, e.g. a phone or complicated piece of machinery, what you are doing, as far commercial law or sale of goods contracts to be specific, is concerned is transferring the title you have in relation to those things to the buyer in exchange for consideration (price) or paying for the transfer of title in those things.

Title is what makes goods yours and this is what passes from the seller to the buyer. Title should be distinguished from possession, for possession is all about having custody of something but your rights in relation to those things are restricted. Think of title as you would think of ownership. If you give me your phone, this makes me to be in possession of the phone, but you are still the owner.

It is of paramount importance for a seller or buyer to understand how title in sale of goods contracts work since this is one of the implied conditions in sale of goods contracts. There is an implied condition on the part of the seller that in the case of a sale they have a right to sell the goods and in the case of an agreement to sell they will have such a right at the time when property is to pass.

This therefore will among other things mean that;

1. If the seller has no title he/she is liable in damages to the buyer

Rowland v. Divall (1923) 2.K.B 500.

bought a motor car from D. and used it for 4 months. D had no title to the car, and consequently R had to surrender the car to the true owner. R. sued to recover the total purchase price he had paid to D.

Held, he was entitled to recover it in full, notwithstanding that he had the use of the car for four months

2. If the goods delivered can be sold only by infringing a trademark, the seller has broken the condition that he has a right to sell the goods
3. In the event that the seller has a partial or limited ownership and it is clear that such seller intend to transfer only that limited ownership to the buyer, here there is no implied condition that the seller has a right to sell goods.

It is imperative for you to learn how title in sale of goods contracts work because the most important consequence of a contract of sale of goods is the transfer of ownership in the goods from the seller to the buyer because risk attached to those goods always follows such a transfer of ownership.