Plain language law

New Zealand law explained for everyone

Contract and Commercial Law Act 2017

Sale of goods - Rights of unpaid seller against goods - Resale by buyer or seller

186: Transfer of document of title to person in good faith and for valuable consideration

You could also call this:

“How goods ownership papers affect buyer and seller rights”

If you have a document that gives you ownership of goods, and you give this document to someone else who takes it in good faith and pays for it, some important things happen.

If you sold the goods to this person, the original seller can’t claim the goods back, even if they haven’t been fully paid. The original seller loses their right to keep the goods or stop them from being delivered.

If you gave the document to the other person as a pledge (like a promise) or for some other valuable reason, the original seller can still try to claim the goods. However, they have to respect the rights of the person you gave the document to.

This rule helps protect people who buy goods in good faith, making sure they can keep what they bought even if there are issues with the original sale.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM6844400.

Topics:
Business > Fair trading Money and consumer rights > Consumer protection
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185: Effect of subsale or pledge by buyer, or

"Seller's rights when a buyer sells or uses unpaid goods"

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187: Sale not generally rescinded by lien or stopping goods in transit, or

"Seller's rights to hold or stop goods don't usually cancel the sale"

Part 3 Sale of goods
Rights of unpaid seller against goods: Resale by buyer or seller

186Transfer of document of title to person in good faith and for valuable consideration

  1. This section applies if—

  2. a document of title to goods has been lawfully transferred to a person (A) as buyer or owner of the goods; and
    1. A transfers the document of title to a person (B) who takes the document in good faith and for valuable consideration.

      1. Despite section 185,—

      2. if the transfer referred to in subsection (1)(b) was by sale, the unpaid seller’s right of lien, retention, or stopping the goods in transit is defeated; and
        1. if the transfer referred to in subsection (1)(b) was by pledge or other disposition for value, the unpaid seller’s right of lien, retention, or stopping the goods in transit may be exercised only subject to B’s rights.

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