Sale by One of Several Joint Owners and Sale Under a Voidable Contract: Sections 28 and 29 of the Sale of Goods Act, 1930, and the Difference Between Void and Voidable Title

Two further exceptions to the nemo dat rule protect a buyer who deals with a person who appears to have full power to sell but whose title is limited or flawed. Under Section 28, a joint owner in sole possession with his co-owners' permission can pass a good title to a good faith buyer. Under Section 29, a person who obtained goods under a voidable contract can pass a good title before the contract is rescinded. The second exception turns entirely on the distinction between a contract that is void, which passes nothing, and one that is voidable, which passes a title that can be undone.

1. Sale by One of Several Joint Owners: Section 28

Section 28, Sale of Goods Act, 1930

If one of several joint owners of goods has the sole possession of them by permission of the co-owners, the property in the goods is transferred to any person who buys them of such joint owner in good faith and has not at the time of the contract of sale notice that the seller has no authority to sell.

The seller must be a joint owner, not a stranger.
He must have sole possession of the goods.
That possession must be by permission of the co-owners, who have therefore allowed him to appear as the only person entitled.
The buyer must act in good faith, without notice of the seller's lack of authority.
The co-owners' remedy is against the selling co-owner for their share of the proceeds, not against the buyer.

2. Sale Under a Voidable Contract: Section 29

Section 29, Sale of Goods Act, 1930

When the seller of goods has obtained possession thereof under a contract voidable under section 19 or section 19A of the Indian Contract Act, 1872, but the contract has not been rescinded at the time of the sale, the buyer acquires a good title to the goods, provided he buys them in good faith and without notice of the seller's defect of title.

The first contract must be voidable, not void. Sections 19 and 19A of the Contract Act cover contracts caused by coercion, fraud, misrepresentation and undue influence.
It must not have been rescinded when the second sale takes place.
The second buyer must act in good faith, without notice of the defect in his seller's title.
The original owner's remedy is against the person who defrauded him.

The two exceptions, and why the void or voidable question decides the result

3. Void and Voidable: Identity and Attributes

The typical case is a rogue who obtains goods by pretending to be someone he is not, and then sells them to an innocent buyer. If the original contract was void for mistake as to identity, no title ever passed to the rogue and he could pass none on, as in Cundy v. Lindsay (1878), where the sellers dealt by correspondence intending to deal only with a known firm. If the contract was merely voidable for fraud, the rogue obtained a title, and until the contract was rescinded he could pass it to a good faith buyer under Section 29. Where the parties dealt face to face, the courts presume that the seller intended to deal with the person in front of him, whatever name he gave, so the contract is usually voidable rather than void.

📖 Lewis v. Averay, [1972] 1 QB 198 (CA)

Facts: A man bought a car from a student, claiming to be a well-known actor and producing a studio pass to prove it. The student accepted his cheque and let him take the car. The cheque was dishonoured, and the rogue sold the car to an innocent buyer. The student sued the buyer.

Held: The Court of Appeal held that the buyer acquired a good title. The student had dealt with the person in front of him, and his mistake was as to that person's attributes, such as his creditworthiness, not his identity. The contract was voidable for fraud, not void, and it had not been rescinded when the rogue sold the car on.

Ratio: In a face-to-face dealing, a mistake about the buyer's identity is ordinarily a mistake about his attributes, making the contract voidable. A good faith purchaser before rescission takes a good title.

4. Rescission Before the Second Sale

📖 Car and Universal Finance Co. Ltd. v. Caldwell, [1965] 1 QB 525 (CA)

Facts: An owner sold his car to a rogue who paid with a cheque that was dishonoured. Before the rogue resold the car, the owner, unable to find him, informed the police and a motoring association and asked them to recover the car. The car later reached a buyer who claimed a good title.

Held: The Court of Appeal held that the owner had rescinded the contract before the resale. Where the fraudster deliberately disappears so that he cannot be told, the other party may rescind by clearly showing his intention to do so by other reasonable means, such as notifying the police. The rogue had no title when he resold.

Ratio: A voidable contract may be rescinded without communication to a fraudster who has absconded, by an overt act showing the intention to rescind. After that, Section 29 cannot protect a later buyer.

5. The Position Stated Shortly

Section 28: a joint owner in sole possession with his co-owners' permission passes good title to a good faith buyer without notice.
Section 29: a person holding goods under a contract voidable under Section 19 or 19A passes good title before rescission to a good faith buyer without notice.
A void contract passes no title, so no one can acquire title through it.
Cundy v. Lindsay: a contract void for mistake as to identity passed nothing.
Lewis v. Averay: in a face-to-face dealing the contract was voidable, and the good faith buyer prevailed.
Car and Universal Finance v. Caldwell: notifying the police rescinded the contract before the resale.