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      Question

      According to Sales of Goods Act, 1930 which of the

      following accurately describes the legal effect of a person, who has sold goods but continues to possess them or holds the documents of title, delivering or transferring the goods or documents to a third party who receives them in good faith and without notice of the previous sale?
      A The delivery or transfer is considered invalid, and the original owner retains ownership rights. Correct Answer Incorrect Answer
      B The third party acquires ownership rights to the goods or documents of title. Correct Answer Incorrect Answer
      C The original owner must authorize the delivery or transfer for it to be legally valid. Correct Answer Incorrect Answer
      D The third party is required to return the goods or documents of title to the original owner. Correct Answer Incorrect Answer
      E The transaction is deemed null and void, and ownership remains with the original owner. Correct Answer Incorrect Answer

      Solution

      Section 30 of Sales of Goods act, 1930 According to the given statement, if a person who has sold goods continues to possess them or holds the documents of title and then delivers or transfers them to a third party, the third party who receives them in good faith and without notice of the previous sale obtains ownership rights to the goods or documents. This rule is based on the principle of good faith in commercial transactions. The third party is considered a bona fide purchaser, and their acquisition of the goods or documents is protected even if the original owner did not authorize the delivery or transfer.

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