Emeka obtained a refrigerator from a commercial store under a hire purchase agreement. Before paying the final installment required to complete the purchase, Emeka sold the refrigerator to Grace, who bought it in good faith without knowledge of the agreement. Under the Sale of Goods Act, why does Grace NOT acquire a valid legal title to the refrigerator?
- Emeka was not the legal owner at the time of sale and could not pass a better title than he possessed.Answer
- BHire purchase agreements automatically transfer legal ownership to the buyer immediately upon signing the contract.
- CGrace breached an essential condition of the original commercial sales contract between Emeka and the store.
- DThe store's initial display of the refrigerator created a binding legal offer directly to Grace rather than an invitation to treat.
Answer
Grace does not acquire valid title because Emeka was not the legal owner of the refrigerator at the time of the sale and could not transfer a better title than he possessed under the rule of Nemo Dat Quod Non Habet.
The correct option correctly applies the fundamental legal maxim 'nemo dat quod non habet' (no one can give what he does not have). Under a hire purchase agreement, title to the goods remains with the owner/dealer until the final installment is paid. Because Emeka sold the refrigerator before paying the final installment, he had no title to pass to Grace.
Step-by-Step Solution
Key Concept
Nemo Dat Quod Non Habet and Transfer of Title in Sale of Goods
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