Sellers' Duties as to Title

As we have seen, the fundamental obligation of the seller under the Sale of Goods Act is to transfer the property in the goods. If he fails to do this because a third party has a better title to the goods, then arguably there is a total failure of consideration and the ‘sale’ is no sale at all. The consequence is that even though the buyer may have had valuable use from the goods, he is still entitled to his money back. This conclusion was actually reached in Rowland v. Divall. ³⁰ In the case of rapidly depreciating items, this confers an even greater benefit on the buyer. ³¹ In other words, although the title warranty is spelled out expressly in s. 12(1), it would seem to be superfluous to the extent that the very nature of a sale of goods under the Act requires the transfer of property. Furthermore, the consequence is that the normal compensatory principle of damages for breach of warranty contained in s. 53(2) does not seem to apply (indeed, the question of loss of the right of rejection does not appear to arise under s. 11(4)). The fallacy of Rowland v. Divall seems to stem from the word ‘property’. Property does not mean ‘ownership’ in English law in the sense of ‘dominium’. We are a relative title jurisdiction. ³² The seller in Rowland v. Divall did transfer something: a title good against all the world except the person with a better title. There was therefore a sale of goods. The goods had been physically delivered to the buyer, and he had accepted them. The matter should have proceeded as a question of damages for breach of warranty under s. 12(1) therefore, and the plaintiffs should have been limited to recovering his true loss, i.e. the usual principle of compensatory damages applied. This analysis avoids the problem of consumable goods: if the buyer has consumed the goods to which a third party had a better title, theoretically, on the Rowland v. Divall argument, he can still recover the price. The fact that s. 12(3) now makes it clear that there can be a contract under which a seller can transfer such title as he has seems to reinforce the argument that the concept of ‘property’ for the purposes of s. 2 of the Act as understood in Rowland v. Divall is wrong. ³³