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This is an article that been written by a famous legal writer that is Wu Min Aun. Through out this articles, we will find out the main issue that been brought up by the writer that is on definition of possession under section 30 of sales and goods act (SOGA). The writer discuss mainly on how thus the court interpreted the word possession. Besides that the writer compare the word possession been interpreted in our local court and the other common law court. Thus it gives a wider view upon how do we look and define possession. Besides that, the argument by many people on determines whether a third party that buys the goods can be said to have possession upon the goods. This article answer all that question that has been a controversial issue in sales of goods.
A is considered as a Bona Fide Third Party. we fuse them into Section 27 and 30 of SOGA.ARTICLES REVIEW 2. Lord Denning given a judgment in the case of Bishops gate Motor Finance Corporation Ltd v Transport Brakes Ltd1 develop two main principles under the rule. Mainly the nemo dat rule that is the first principle is been put in under Section 27 where it is the general rule to any transaction that involve under sales of goods. if the person is not the owner of the said goods. In the earlier paragraph of the article discuss on the general rule of the word possession and party that should has the possession. How thus the court interpreted the word possession. In a simple meaning. This rule is been written under the maxim of nemo dat rule. For example. the second sub issue arise where. While the second principle is protection of commercial transactions: the person who takes in good faith and for value without notice should get a good title Due to this two principles that been laid down by Lord Denning. Under Section 27 of SOGA stated that. Due to the interpretation. he has no right to sell the goods to any buyer. While Section 30 apply the second principle that is the exception towards the general rule of nemo dat. no one shall sell a goods that is not belong to him. not knowing that the said goods that been purchase was before that been sold to C.0 Issues The main issue in this article is mainly upon the interpretation of the word possession itself. how thus the court determine who is in the possession of the said goods. Breach of the term may put the seller liable for a breach of contract between him and the buyer. Referring to Section 30 where it is mainly to protect the right of the third party buyer that buy the goods by bona fide or in simple words buying the said goods from the seller not knowing or having no intention if he knew in buying the goods that been purchase by the other buyer before him. The first is the protection of property. First principle is. 1  1 KB 322 2|Page . A bought a car from B. No one can give a better title than he himself possesses.
the question of who is in possession and what is been interpreted as possession arise. Natwest was the party financing the dealer's transaction. Both of these sub sections protect the right of the second buyer or the third party purchaser in different situation. on appeal from the decision of the New South Wales Court of Appeal. obtained possession of them or their documents of title. Thus due to this two sub section. The dealer. At no time did the vehicles leave the dealer's possession. having bought or agreed to buy goods. Gamer's Motor Centre was not paid and so they seized the vehicles. the court look at the case of Gamer's Motor Centre2. Natwest brought action against them in detinue and conversion. The eight vehicles were then financed by Natwest.ARTICLES REVIEW Under Section 30 itself. The case came before the High Court by way of special leave. took delivery of eight vehicles from Gamer's Motor Centre on the term that they should be paid for within seven days. but the dealer was permitted to retain possession of the vehicles as Natwest's bailee. as buyer. 2 (1987) 163 CLR 236. one of whom was Evan & Rose Motors. First is when the third party bought the goods from the seller but at that particular time the seller was in the possession of the goods although it has been bought by previous buyer. there are two main limb that been cover the exception towards the third party. who became the new owners. Natwest issued cheques to the dealer for 90% of the value of the eight vehicles. While the second limb is when the third party purchaser buys the goods from the buyer himself when the buyer has the possession of the said goods or they are in possession of the said document title. having sold them continued in possession of them after sale. The fact of the case is. This dealer had a floor plan agreement for the financing of their inventory of used cars similar to the plan in Pacific Motor Auctions. 3|Page . To answer the main argument upon the interpretation of the word possession. a wholesaler. While under Section 30 (2) affords protection to those who deal with a buyer who. pending sale in the course of the dealer's business. Under Section 30 (1) it is a protection to those who buy goods from a seller who. sold motor vehicles to retail dealers.
confirms the view that the word 'possession' appearing in Section 28(1) and (2) of the New South Wales Act. For Australia. By a majority. a third party acting in good faith and without notice of the prior sale. Accordingly. The word 'delivery' is defined to mean 'voluntary transfer of possession from one person to another'. actual custody of the goods or documents of title to them. of the local Act. the dealer. having agreed to buy them from Gamer's Motor Centre. that is. The character of that possession had changed when Natwest paid 90% of the purchase price. through constructive delivery to Natwest. it seems clear that the case is now authority for the proposition that the word 'possession' appearing in different parts of the SOGA may bear different meanings. The majority of judges held that 'delivery' for the purpose of Section 28(2) retains its broader juridical definition and involved a change of possession that might be effected by 4|Page . bears the same meaning. meant actual delivery or whether it included constructive delivery. The dealer was in actual possession of the goods. namely. the challenge to the orthodox view occurs when it was decided that the word 'possession' appearing in s 5 of the New South Wales Act wherein a definition of 'delivery' is contained. the dealer. First. a seller or buyer in possession of the goods after sale must have actual custody of goods or the documents of title regardless of the capacity in which the goods are held (for example. According to their Honours. that case. bears a different meaning. appearing in Section 28(2) of the New South Wales Act. the High Court held that 'delivery' for the purpose of Section 28 of the New South Wales Act involved a change of possession that might be effected by constructive or symbolic delivery not amounting to actual physical delivery. had become its bailee. as a buyer in possession of the goods with consent of the seller. could pass a good title to Natwest.ARTICLES REVIEW The main question to be determined largely depended on whether the word 'delivery'. Secondly. which correspond with Section 30(1) and (2) of the local Act. In other words. read with Pacific Motor Auctions. as bailee). Section 5 and 28 of the New South Wales Act which correspond to Section 2 and 30 respectively.
appearing to be the owner of goods. and therefore. that is. Accordingly. the word 'delivery' is defined in terms of its legal meaning. delivery.. This decision affirms the majority views of Priestley and McHugh JJ in the New South Wales Court of Appeal. It was not concerned with the method by which possession of the goods was originally obtained by the seller or buyer in possession. 6 The Chief Justice rejected the argument that the word 'possession' should be given its common or ordinary meaning as actual physical custody. and that there was a constructive delivery by the dealer to Natwest of the eight vehicles with the consequence that title passed to Natwest. but his Honour added: ... In his view. but in its legal or technical sense. to treat 'delivery' as embracing constructive delivery is to enhance the protection given by s 28(2) to the innocent purchaser. the protection of an innocent third party dealing with a seller or buyer in possession of goods or the documents of title. Indeed. that the references in Section 28(2) of the Act to delivery included constructive delivery as well as physical delivery. There is no valid reason why his title should depend upon actual. Mason CJ argues that the inclusion in Section 28(2) of constructive delivery was consistent with the object of that section. not in its popular sense or as meaning actual custody. In the words of Mason CJ: . the definition of 'delivery' was designed to identify or describe the act which passes title to goods as between seller and buyer.ARTICLES REVIEW constructive or symbolic delivery not amounting to actual physical delivery. that object requires that the word 'possession' should be construed as actual custody. The mischief aimed at is a sale by a buyer in possession of goods or documents of title who is 5|Page . as distinct from constructive. There is therefore a strong foundation for the conclusion that the statutory definition of 'delivery' referred to 'possession'. To further support his decision.. these considerations have no application at all to the statutory definition of 'delivery' which is designed to identify or describe the acts which passes title to goods as between seller and buyer.
While the word actual possession is what most of us think of as possession that is. There is no point in confining the protection to the sub-buyer who takes under actual delivery. also sometimes called "possession in law. Looking to this case the two main arguments was whether the possession must be actual possession or constructive possession. however. a set of facts clearly indicate that an individual has possession of an object but that he or she has no physical contact with it. even if the person has no physical contact with it For example. the court interprets the possession as a constructive possession where the third party that is Newast that finance the vehicles has the possession upon the cars although the vehicles were not within their physical possession. In the case of Gamer's Motor Centre. Frequently. they do have knowledge of the items and the ability to exercise control over them. you have actual possession of your wallet.ARTICLES REVIEW not the owner of them. having physical custody or control of an object. These both possessions give a different interpretation that gives a different possession to the person who holds the property. the object being to protect the sub-buyer who is deceived by the appearance of ownership arising from possession. is by necessity very limited. Likewise. if you have your wallet in your jacket pocket. 6|Page . Most courts say that constructive possession. For example." exists where a person has knowledge of an object plus the ability to control the object. This type of possession. we can understand that the word constructive possession is legal theory used to extend possession to situations where a person has no hands-on custody of an object. Although they do not have actual physical custody of these items. people often keep important papers and other valuable items in a bank safety deposit box. under the doctrine of constructive possession. Within the scope of constructive possession. they are still considered in possession of the contents of their safety deposit box. Thus. a person wearing a watch has actual possession of the watch.
The warehouseman was in possession of the wine throughout both transactions The second case that been relied by the second view is Bank of New South Wales v Palmer4. He subsequently became insolvent. Constructive possession is only a myth that should not exist.ARTICLES REVIEW However. Later. but there had been no delivery or transfer of possession to the warehouseman after the sale. The plaintiff was misled as to the arrangements with the defendant because the boat builder had asserted that he was the owner of the boat. 3 4  2 Ch 415  2 NSWR 432 7|Page . Upon his bankruptcy. there are different views upon the said two different types of possession. The court held that the plaintiff was entitled to succeed under the first sale because there was no delivery to the warehouseman as required under Section 25 of the English Sale of Goods Act 1893. Where the fact of the case is. It failed because the court in the state of New South Wales held that the exception did not apply. the merchant pledged all the wine to the warehouseman for advances made by the latter in good faith and without notice of the previous sale. The merchant sold 250 dozen to the plaintiff who left them with the warehouseman. Under another agreement with the defendant. It was held that the merchant was a seller who had continued in possession of the goods after sale. the plaintiff bank attempted to take possession of the boat. Taking the case of Nicholson v Harper3. it was provided that the property in the boat was to pass to the defendant from the commencement of construction. That case concerned a boat builder who gave to the plaintiff bank a bill of sale over a boat which he was building for the defendant. Helsham J ruled that the words of the section must be read in a way that restricted 'delivery' to cases in which there is a 'change in physical possession of the goods or title deeds'. The boat builder retained possession of the boat that was being built throughout the period of construction. a merchant owned wine stored in the cellars of a warehouseman. The second view believes that the possession must be a physical possession. The second view oppose the first view that constructive possession is a possession that can be enjoy by third party although the goods is not within their physical possession.
0 Commentary 8|Page .ARTICLES REVIEW Looking to the relevant cases that been referred to. Helsham J clearly has shown in his judgment that constructive possession nevertheless can not be use to prove that the party has the possession of the said goods. 3. A person that has the possession is the one that own the goods where the goods were taken by actual possession. it clearly show to us that a possession must be a physical possession.
Second view rejects the constructive possession and upheld the actual possession in saying that possession must have a physical transfer of the goods towards the buyer and seller. He is known as a third party bona fide purchaser. where although the third party that is the party that finance the vehicles do not has the actual possession. Thus justice will not be deserved towards the innocent party. Going through the article and in understanding what the word possession is really all about. Looking at the case that been discuss earlier that is in the case of Gamer's Motor Centre . A has the possession of the car but he is bind with contractual obligation to pay to C in installment. C definitely can not claim the car from A as C do not have physical possession of the 9|Page . Upon the finance of the car. The question is why we need to interpreted very deep upon the word possession? This is because possession will determine whether the party that involve in the buying and selling of the goods has the ownership open the goods. he can still claim for the vehicles. I agree with the first view that a constructive possession that is a possession without the physical possession can claim their right at the courts. If we use actual possession only in order to claim the possession of the goods than the view of the court will be narrow. The word possession under SOGA has been laid under Section 27 and 30 of SOGA.ARTICLES REVIEW After reading through out the article. we can say that possession is not merely a physical transfer of the said goods but it involves in a bigger view. First view said that a possession can be constructive possession where although the party that do not have the actual possession that is the physical possession can still claim for the goods as the legal tittle has been transferred to them. For example. Thus if it is an actual possession. A bought a car from B. The issue rise when there is a third party purchaser that buys without knowledge that the goods have been sale earlier to another buyer. There are two different views in determining who has the possession and what can be interpreted as possession. we can understand that the argument in this article is mainly upon the definition of possession. but A finance his car to C. Using this case. B sold the car to A. A fail to pay to B.
But within the scope of constructive possession. Physical possession is the only possession that can be applied. it do not gives justice to the victim party. Thus looking at the example that been discuss. This is because the first view has more concrete understanding and evidence that can give the victim third party the right to claim the goods. Putting the situation with Section 30 of SOGA thus show that we adopt the first views that give a broad understanding in interpreting possession. The we akness that has been shown by the second view was.ARTICLES REVIEW car.0 Conclusion 10 | P a g e . the interpretation by the court is narrower. 4. then C has the right to claim the possession of the car from A due to the breach of contract made by A towards C.
this article that been written by Wu Min Aun has given a better understanding to the reader upon the right that been given by the law towards the third party purchaser. First is the actual possession where it is mainly about a possession must be in the form of physical possession where if a party want to claim the goods he must show that there is physical possession upon his part.ARTICLES REVIEW In conclusion. It is a possession that does not require the party that claims the goods to have physical possession but rather to show that he is the legal owner tittle of the goods. 11 | P a g e . While the second view is about the constructive possession. It shows that the actual possession gives a specific interpretation on who is the person that an claim the goods while the constructive possession gives a wider view. Given two different views and interpretation by different court show the strength and weaknesses of the views. Thus possession can be concluded to be in two different types.
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