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Contract and Commercial Law Act 2017

Other commercial matters - Mercantile agents - Sales, pledges, and other dispositions by mercantile agents

297: Sale, pledge, or other disposition by agent in possession with owner’s consent is valid

You could also call this:

“Agent can sell or promise owner's stuff if they have permission”

When someone (let’s call them A) is in charge of selling things for another person (let’s call them B), and B has agreed to let A have the items or the papers that prove ownership of the items, some special rules apply.

If A sells, promises, or does something else with the items while doing their normal job of selling things for other people, it’s just as good as if B had clearly told A they could do it. This means the sale or promise is valid.

But there’s a catch. This rule only works if the person getting the items from A is honest and doesn’t know that A might not have permission to sell or promise the items.

There are more rules about this, but they’re explained in other parts of the law.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM6844638.

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296: Interpretation, or

"This part explains important words used in rules about buying, selling, and moving things."

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298: Buyer, etc, has notice of lack of authority if goods subject to perfected security interest, or

"Buyer should check if the seller really owns the goods"

Part 5 Other commercial matters
Mercantile agents: Sales, pledges, and other dispositions by mercantile agents

297Sale, pledge, or other disposition by agent in possession with owner’s consent is valid

  1. This section applies if a mercantile agent (A) is, with the consent of the owner of goods (B), in possession of the goods or of the documents of title to the goods.

  2. A sale, a pledge, or any other disposition of the goods made by A, when acting in the ordinary course of business as a mercantile agent, is as valid as if A were expressly authorised by B to make the sale, pledge, or other disposition.

  3. However, subsection (2) applies only if the person who takes the goods under the disposition—

  4. acts in good faith; and
    1. does not, at the time of the disposition, have notice that A has no authority to make the disposition.

      1. Subsection (2) is subject to the rest of this subpart.

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