What if the seller does not have the right to sell goods?

It can happen in consumer transactions that the owner of the goods agrees to sell them but in fact does not have the right to do so, that is, does not have title to the goods.

Where another person has a right to the goods and the seller neglects to tell the buyer, the seller will be in breach of contract.

For example, this often occurs in the sale of second-hand motor-cars, when it may turn out that the person selling, or purporting to sell, the car does not have the right to do so.

When the true owner comes along to claim the car, the consumer will lose it.

Section 51 of the ACL makes it a condition of all contracts of sale that the person supplying the goods under the contract has the right to sell.

The same is true of hire purchase agreements – where an item is loaned to the buyer as they progressively pay it off.

This does not necessarily mean that the consumer will be able to retain the goods, but it does mean if the supplier does not own the goods, the buyer will be able to take legal action against them.

As a result of this if the consumer loses what has been bought, the consumer will be able to sue the supplier for any loss suffered as a result (usually the purchase price plus any other damage suffered).

If you are in this situation and stand to lose a large amount of money, as a result of someone claiming goods you paid for, you should seek legal advice.