First Principles of Business Law

5. The Australian Consumer Law

5.8. Guarantee of good title and quiet possession

A sells used caravans and trailers. B goes to A's sale yard and finds a caravan that he likes. The price is $24,000. B offers $22.000 for the caravan, and A accepts the offer. A says that he will attend to the paperwork and B can collect the caravan the next day. But when B goes to collect the caravan, A says that there is a problem. A has discovered that the original owner of the caravan has not yet paid off everything owing to the manufacturer, and the manufacturer now wants to repossess the caravan, which he is entitled to do under his agreement with the original purchaser. A says he will deliver the caravan to B, but he cannot guarantee that the manufacturer won't be able to repossess it.

Click here to see section 51.  Click here to see section 52.  Click here to see section 53.

(a) It is not good enough for a commercial supplier of goods to deliver the physical possession of the goods to a consumer who buys them: there is also a guarantee that the buyer will get the right of ownership, free of any competing claims to the goods.

(b) A commercial seller who delivers physical possession of goods to a consumer who has purchased them is not responsible for any defects in the rights of ownership or for the existence of any competing claim to the goods, if the supplier did not know of these things at the time of the sale.