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New Zealand law explained for everyone

Contract and Commercial Law Act 2017

Sale of goods - Effects of contract - Transfer of title

154: Buyer in possession after sale

You could also call this:

“When you buy something and sell it again before paying fully”

If you buy or agree to buy something, and the seller lets you have the item or its ownership papers, you might decide to sell it to someone else. This can happen even if you haven’t fully paid the first seller yet. If you (or someone acting for you) sell or pledge the item to another person who doesn’t know about any rights the first seller still has, it’s treated as if you had the right to sell it. This rule doesn’t apply if you’re holding the item with permission from someone who has a special legal interest in it.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM6844353.

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Business > Fair trading Money and consumer rights > Consumer protection
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Part 3 Sale of goods
Effects of contract: Transfer of title

154Buyer in possession after sale

  1. This section applies if—

  2. a person (A) has bought or agreed to buy goods; and
    1. A obtains, with the consent of the seller (B), possession of the goods or the documents of title to the goods; and
      1. A, or a mercantile agent acting for A, delivers or transfers the goods or documents of title under any sale, pledge, or other disposition, or under any agreement for sale, pledge, or other disposition, to another person (C); and
        1. C receives the goods or documents in good faith and without notice of any lien or other right of B in respect of the goods.

          1. The delivery or transfer to C has the same effect as if the person making the delivery or transfer were a mercantile agent in possession of the goods or documents of title with the consent of the owner.

          2. See subpart 2 of Part 5 (which relates to sales, pledges, or other dispositions by mercantile agents).

          3. Subsection (2) does not apply to a delivery or transfer of goods or documents of title to the goods by a person who is, with the consent of the holder of a perfected security interest, in possession of the goods or documents of title to the goods.

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